+44 (0)207 415 5000
2nd Floor, 12 Little Portland Street, London, W1W 8BJ
FOR IMMEDIATE RELEASE
* April 2011
LONDON & ASSOCIATED PROPERTIES PLC:
PRELIMINARY RESULTS FOR THE 12 MONTHS TO 31 DECEMBER 2010
HIGHLIGHTS
London & Associated Properties PLC is a well- established specialist shopping
centre and retail investor and asset manager.
* Rental income increased 2.4% on like-for-like basis to £16.5m
* Property portfolio value grew 1% on like-for-like basis to £195mUnder EPRA
net assets stood at £72.0m EPRA net asset value per share now 87.5p
* Management adjusted Operating profit up 14.1% to £11.1m
* Maintaining cash element of dividend - final dividend of 0.4p per share
recommended making total of 1.15p per share
* Void levels very low at only 1.5% of portfolio by rental value
* Antiquarius on King's Road sold for £17.8m
* Asset management key feature of business:
*
+ Rental values at Orchard Square grew by 5%
+ Redevelopment of units in King Edward Court achieved record rents
+ Re-branding of Brixton markets has led to 8% rental growth
+ Brixton Village fully let for the first time in 20 years
+ Since year end agreed terms to let Brixton markets in their entirety to
In Shops Ltd
"I remain confident that the quality of our assets and our ability to drive
rental income through intensive management means we are well placed to make
further progress through 2011," Michael Heller, Chairman.
"We have disposed of almost half our portfolio over the last five years and now
retain a core group of quality assets in which we have invested significantly.
Our top five centres account for almost our entire portfolio by value and these
are mostly let on long leases. I therefore remain cautiously optimistic going
forward," John Heller, Chief Executive.
Contact:
London & Associated Properties 020 7415 5000
John Heller, Chief Executive
Robert Corry, Finance Director
Baron Phillips Associates 020 7920 3161
Baron Phillips
Financial Information:
The financial information presented in this preliminary announcement does not
constitute the statutory accounts of London & Associated Properties PLC for the
years ended 31 December 2010 or 31 December 2009 but is derived from those
accounts. Statutory accounts for 2009 have been delivered to the Registrar of
Companies and those for 2010 will be delivered in due course. The auditor has
reported on both the 2009 and 2010 accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of the Companies
Act 2006.
Chairman's statement
I am pleased to report on another period of satisfactory progress for LAP
against a difficult economic backdrop. The quality of our portfolio of shopping
centres reflects the high level of investment and strategic management which we
apply to all of our assets. This has protected us from the worst of the
property recession.
As at 31 December 2010, our directly owned portfolio of shopping centres and
other retail property was independently valued at £195 million compared to £214
million the previous year. This follows a number of disposals of properties and
on a like for like basis the valuation of our portfolio grew by 1%.
Rental income in 2010 was £16.5 million compared to £17.1 million in the
previous year. However, again on a like for like basis, rental income grew by
2.4%. We have achieved this increase in sustainable income in spite of selling
properties which had a combined annualised rental income of £1.3 million per
annum. This is a commendable achievement considering that tenant demand is
widely regarded as being weak and IPD reports that rental levels across the
retail sector have dropped significantly.
Void levels remain low at just 1.5% of our portfolio by rental value. This has
enabled us to drive our rental values forward, which in turn has supported our
valuations. We have also been decisive in disposing of those properties from
which we could see no further opportunities for growth. During 2010, we sold
Antiquarius in King's Road, Chelsea for £17.8 million. We acquired this
property as part of the London Portfolio in 2006 and, in 2009, we were
successful in achieving a listed building consent in the face of considerable
opposition to our plans. We pre-let the retail space to Anthropologie, the
American fashion retailer, and carried out a significant refurbishment of the
property. We believe that we had achieved maximum value of this asset, and
consequently saw little point in holding it at a time when prime London retail
property was commanding premium values.
Asset management continues to be a key feature of our business. At King Edward
Court, Windsor, which now accouns for almost half the value of our portfolio,
we undertook a redevelopment of three poorly configured units to provide three
modern shops. These had been pre-let to Fat Face, Robert Gatward Jewellers and
Mystique Lingerie. The new units achieved record rents per square foot
reinforcing the rental levels at the centre and demonstrating the continuing
strong demand from retailers for shops at King Edward Court.
Orchard Square, Sheffield, has remained fully let during the year and we have
been able to achieve growth at rent review. This led to rental values growing
by 5% at this centre on an annualised basis. This centre plus King Edward Court
at Windsor account for rental income approaching £11 million per annum and the
combined annualised rents grew by 3% over the last year.
Our two markets in Brixton have been strong performers in terms of rental
growth. These assets were also acquired as part of the London Portfolio. Since
2009, we have spent considerable time and effort in re-branding the markets as
more exciting places to shop, with a particular emphasis on quality food and
restaurants as well as cutting edge fashion. The net result of this input is
that rents have grown by some 8% and Brixton Village, one of the markets, is
fully let for the first time in some 20 years. As detailed in the Chief
Executive's report, we have plans to work with a leading market operator to
ensure the next phase of this asset's growth.
Under International Financial Reporting Standards (IFRS), the net assets of the
Group were £55.8 million. This compares to £59.1 million the previous year.
However, this figure reflects the carrying cost of our interest rate swaps
which has been marked to market as a negative £13.6 million, a liability some £
7.3 million greater than at the end of 2009. Had the swaps been valued at
today's date, the £7.3 million additional charge would be £ 1.7 million.
We have stated previously that these swaps were contracted to ensure that we
had certainty over our interest payments which are our most significant item of
expense. We do not trade these swaps. It is important to note that under the
standards of the European Real Estate Association (EPRA), as used by most
property companies, our net assets stood at £72.1 million in December 2010
compared to £72.8 million as at December 2009. Under EPRA net asset per share
is now 87.5p compared to 91.5p a year ago. This largely reflects the issue of
additional shares as part of last year's dividend.
Operating profit, on a management adjusted basis, grew to £11.1 million
compared with £9.7 million in 2009, as shown in the table in the Finance
Director's report on page 17. This excludes marking to market the carrying
values of our properties and financial instruments. The growth in operating
profit is partly a result of lower property expenses and other overheads
incurred during the year. Our loss before tax over the same period has
increased to £4.2 million from £2.5 million although this is after deducting a
£3.5 million expense incurred in breaking swaps with a nominal value of £19.6
million. The annual cash saving from breaking these swaps is £0.8 million.
We remain over-hedged by a nominal £10.4 million. This has an annualised
negative effect on cash flow of £0.5 million. The cost of breaking the
over-hedge has fluctuated significantly over the year. We continue to monitor
this situation closely and will break the hedge when it is most appropriate to
do so.
It has been widely reported that bank lending remains subdued for real estate
transactions. Against this backdrop, we have explored alternative sources of
finance from property funds looking for joint venture partners. While it is too
early to report any specific deals, we are currently examining a potential
acquisition with one such partner and I hope to be able to report that this
transaction has successfully concluded in the near future. We are looking to
co-invest with suitable partners and we continue to hold an unencumbered cash
reserve of some £5 million to take advantage of opportunities as they arise.
During the year we were appointed by Grant Thornton, a firm of chartered
accountants, to take on the asset management of a portfolio of shopping centres
where they had been appointed as Administrators. Following the disposal of the
properties this project has now been completed. We understand that the bank
client of Grant Thornton regards the result as a great success. LAP received a
fee for advising on the management of the centres and overseeing the disposal
in 2011.
Total Group assets, including those of Bisichi Mining PLC, our associate
company, and Dragon Retail Properties, our joint venture with Bisichi, now
stand at £289 million compared to £306 million the previous year.
Bisichi Mining PLC, our associate company, had a difficult year and our share
of their loss after taxation was £0.5 million. This was as a result of lower
coal prices combined with a strong South African Rand against the US dollar and
a shortage of railway trucks to transport the coal. Measures have been taken to
address these issues and it is expected that they will return to acceptable
profitability in the second half of 2011.
We believe that LAP has performed well against a testing economy, although we
remain mindful of the reduced bank lending currently available, and the
negative forces facing consumers following last year's budget. As a result, the
Board has taken the decision this year to maintain the cash element of the
dividend at the level paid in 2010. There will be a final dividend of 0.4p
payable on 1 July 2011 to shareholders on the register as at 10 June 2011,
making a total dividend for the year of 1.15p. However, the Board has decided
against the capitalisation issue of new shares as in previous years as this is
felt to be too dilutive at the current price.
Michael Stevens will be retiring this year after 25 years as a director and
Company Secretary of LAP. I would like to take this opportunity to thank him
for all of his hard work over this time, and wish him well in his retirement.
We have promoted Heather Curtis, who joined the company in 2002,to Group
Company Secretary.
The economy in 2011 shows little sign of being an improvement over 2010. I
remain confident that the quality of our assets and our ability to drive rental
income through intensive management means that we are well placed to make
further progress through 2011.
Finally I would like to thank all of the directors, staff and advisors who have
contributed to our progress this year.
Michael Heller
Chairman
15 April 2011
Chief Executive's Report
2010 was another difficult year for the UK economy with bank lending remaining
subdued. This lack of funding has contributed to a polarisation in investor
demand with cash buyers being predominant. These investors look for well-let
property where tenant demand remains high and rental growth is still
achievable.
Our portfolio of retail property comes into this category. We have
significantly re-profiled our portfolio in the last 5 years and disposed of £
178 million of mature property where we felt we would be unable to deliver
further growth. Initially we disposed of secondary shopping centres at a time
when net initial yields were lower than deposit rates, yet investor demand for
this type of asset remained high. More recently, we have been selling assets
with long leases and excellent covenants, again to meet investor demand. Over
this period we have also been investing heavily into our asset base. King
Edward Court, Windsor and Orchard Square, Sheffield account for 72% of our
property portfolio, and we have spent a combined £46 million on them over the
last 5 years. This capital expenditure has produced better configured units to
meet modern retailer demand. These units were pre-let to quality tenants on
long leases.
During 2010, we spent £0.5 million on developing and improving our properties.
This produced an incremental annualised income of £0.16 million. We currently
have no substantial development work underway, although we are constantly
looking to improve our assets and grow rents.
Our property portfolio is now valued at £194.9 million, and our top five
properties by value account for over 90% of this total. All of these properties
are well-let and all of them have either delivered rental income growth over
the last year or confirmed their growth potential. Across the portfolio, our
average weighted unexpired lease term is 7.2 years. Over 63% of our leases by
rental value run for more than 5 years and 31% for more than 10 years. We have
voids of just 1.5%. All of this combines to provide resilience during this
property recession.
Group rental income on a like for like annualised basis grew by 2.4% to £15.6
million compared with £15.2 million in 2009. This has been achieved against a
widely reported reduction in rental levels across most parts of the country.
Our top 50 tenants account for 74% of our gross rents. 93% of all rents were
collected within two weeks of the December quarter day.
We disposed of Antiquarius in King's Road Chelsea during the year for £17.82
million compared to a book value of £17.0 million as at year end 2009. This
followed the completion of the lease in 2009 to Anthropologie at £1.15 million
per annum and represented a net initial yield of 5.74%. We paid down our
revolving credit facility by £12.75 million from the cash proceeds.
During 2010, we were appointed by Grant Thornton as asset manager on a
portfolio of three shopping centres in Burnley, Cardiff and Harlow. The fund
that owned these shopping centres had been placed into administration and the
centres had suffered from under investment and lack of direction as a result.
LAP conducted a strategic review and identified a number of areas where the
centres could be improved. We carried out a number of strategic lettings,
including redeveloping shops where necessary, and applied our rigorous
management controls to reduce irrecoverable costs.
At the time of our appointment, the centres were independently valued at £120
million. We marketed the centres through leading investment agents and since
the year end the disposal completed at £145 million. LAP received fees from
Grant Thornton for the work undertaken and we are in discussion to take on
further similar appointments.
Following the financial crisis there is still much stress in the UK banking
system and lack of credit at acceptable terms. As a result, we have entered
into talks with a number of property funds with a view to establishing joint
ventures. One of these is at an advanced stage of making an acquisition
although contracts have not yet been exchanged. I am, however, confident that
the transaction will conclude in the near future and we will make an
appropriate announcement to shareholders in due course.
I will now report on some of our major centres.
King Edward Court, Windsor
King Edward Court remained fully let throughout 2010 with the exception of a
small office suite. Since the year end we have been able to negotiate the
surrender of leases on two shops where we had less vibrant retailers. The first
of these was originally let to a musical instrument retailer at £72,000 per
annum. This unit has now been re-let to Prêt à Manger for a new café concept at
£85,000 per annum. This not only brings a more exciting retailer to the centre,
but also a rental level equating to a Zone A level of £116 per sq.ft., a record
for this part of the centre.
The second unit had previously been let to a discount book retailer. The unit
is now under offer to an established, upmarket gift retailer at an increased
rent. The new lease should complete soon.
In September 2010, Boots the Chemist vacated its 14,000 sq. ft. Shop, having
taken a lease on the much larger, former Woolworths store outside our
ownership. The lease on our shop continued until 2015. We have, since the year
end, accepted a surrender of this lease in exchange for a payment of £1.025
million, equivalent to over two and a half year's rent. We intend to divide
this unit into three smaller units and incorporate the vacant first floor
offices.
We have seen a high level of retailer interest in these units and already have
offers on all of them from exciting retailers. I look forward to announcing the
lettings in due course. We have made a planning application to change the shop
fronts on these units and, subject to obtaining this consent, anticipate that
the development will be let and completed during 2011.
Sheffield
Orchard Square has remained fully let throughout 2010. As a result, we have
been able to grow the rents by some 8% over the previous year as the rental
levels established by our successful lettings in previous years filter through
to other shops in the centre. Orchard Square is anchored by reputedly one of
the most successful TK Maxx stores in the country, and most of the shops are
let at rents of between £80 and £90 Zone A. We believe this to be an
undemanding level for a major city centre.
Brixton
Since late 2009, we have invested considerable time and effort in establishing
our two Brixton markets as cutting edge retail and leisure locations. Initially
we worked with a specialist marketing company to offer pop-up shops to entice
new retailers into a location that had suffered over the years from high
vacancies and low investment. The vast majority of these early retailers
converted into full leases at market rents at the end of their trial periods.
Once we had established a critical mass of new exciting retailers, word of
mouth and positive press articles created sufficient interest to ensure that
these markets are now fully let for the first time in approximately 20 years.
While this project has been a success throughout 2010, we do not feel LAP has
the resources to develop the Brixton Markets further. Consequently, since the
year end we have agreed terms to let the two markets to In Shops Ltd, a
subsidiary of Groupe Geraud, Europe's largest private market operator. The
leases are at a base rent of £817,500 per annum with a profit share on the net
rent above that amount. This increases to a 50:50 profit share on any net rent
above £1,017,500. There will be a saving of direct staff costs and other
central overheads and therefore we expect this deal to be cash neutral at the
outset.
We are confident that In Shops shares our belief that Brixton will become one
of the most successful market areas in London. In Shops has the resources,
energy and experience to enable this to take place, and we expect to benefit
from its success through the profit share in the medium term.
King's Square, West Bromwich
We invested heavily during 2010 in re-gearing the leases of our anchor tenants
at this shopping centre. These accounted for 29% of the centre's gross rental
income. The centre's age meant that a number of the original leases there had
less than 12 months until expiry. As a result of the re-gearing, the centre's
future is much more stable and we will be able to concentrate on driving rents
forward in the future.
Other Properties
As shareholders will be aware, we have deliberately sought to position the rest
of our portfolio at the value end of retailing. We believe that this offers us
significant defensive qualities in the current economic environment as our
tenants are less dependent on discretionary spending. Last year, tenant
failures across the whole portfolio were limited to an aggregate rental income
of £127,000 per annum. These units have now been re-let at broadly the same
rent.
Outlook
We remain concerned that the outlook for UK consumers will continue to impact
upon retail property in general. However, we believe that the property market
will experience differing levels of success dependent on location,
affordability of rents and attractiveness of the individual centres. We have
sold almost half our portfolio over the last five years and now retain a core
of quality assets in which we have invested significantly. Our top five centres
account for almost our entire portfolio by value and these are mostly fully let
on long leases. I therefore remain cautiously optimistic going forward.
John Heller
Chief Executive
15 April 2011
FINANCE DIRECTOR'S REPORT
In 2010, we again concentrated our efforts on managing cash flow. We have also
reviewed our unutilised banking facilities and reduced them wherever possible.
As a result we have achieved a net annualised cash saving of £0.3 million.
As a result of the continuing crisis in the UK banking sector and, as mentioned
in the Chief Executive's review, we have commenced negotiations with a number
of property funds to provide alternative sources of finance.
Cash flow
Net cash increased over the year from £1.44 million to £4.72 million. This was
after the repayment of £11.58 million of debt. Term debt reduced from £148.38
million to £136.80 million. This compares favourably with a peak level of £
163.70 million at the end of 2007. Antiquarius, our property in Chelsea,
London, was sold in August for £17.8 million and the sale of the Foxtons unit
in Islington completed in January 2010.
The utilisation of the cash over the year is shown in the graph below:
Our Revolving Credit Facility with the Royal Bank of Scotland was extended
during the year and will now expire in September 2012. We also reduced the
total facility to £60 million from £90 million. This facility has been reduced
further to £47 million since the year end because we considered it unlikely
that we would borrow further against the facility before expiry.
Income statement
The Group's loss before tax as reported under IFRS was £10.69 million compared
to a profit of £21.4 million in 2009. This volatility in our results reflects a
number of changes in value which are taken directly to our Income Statement.
Firstly, there have been considerable swings in the interest rates which have
affected the fair value of our derivatives and this has led to a loss of £7.28
million (2009: £13.27 million profit). Secondly, the revaluation of our
property portfolio has shown an increase of £1.57 million (2009: £9.42
million). The table below shows the underlying performance of the Group on a
management adjusted basis.
2010 2009
Cash Non-cash Per income Cash Non-cash Per
items items statement items items income
statement
£'000 £'000 £'000 £'000 £'000 £'000
Net rental income 10,366 10,366 9,517 9,517
Income and gains on 43 43 148 148
investments held for
trading
Profit on sale of 637 637 14 14
investment properties
Net change on 1,569 1,569 9,422 9,422
revaluation of
investment properties
Net change in value 89 89 178 178
of investments held
for trading
Operating profit 11,046 1,658 12,704 9,679 9,600 19,279
Share of joint 174 (912) (738) 131 1,078 1,209
ventures and
associates
Interest rate - (7,280) (7,280) - 13,269 13,269
derivative
Net interest (11,858) (11,858) (12,350) (12,350)
(Loss) / profit (638) (6,534) (7,172) (2,540) 23,947 21,407
before taxation and
exceptional items
Exceptional item -- (3,515) (3,515) - - -
interest derivative
break cost
(Loss) / profit (4,153) (6,534) (10,687) (2,540) 23,947 21,407
before taxation
The interest charge, excluding the change in fair value of derivatives and
one-off costs incurred on the termination of interest rate swaps, was cut in
the year to £11.9 million (2009: £12.4 million). This is due to the reduction
in the level of debt and the reduced swap contracts.
During the year we reduced our long term hedging to be more in line with the
total debt outstanding. The total value of our swaps was £125.4 million against
a long term debt of £115.1 million. This was reduced in the year from £145.0
million and the £3.5 million cost of breaking the swaps has been shown as an
expense in the income statement. This strategy of hedging our interest payments
means that we are protected against future interest fluctuations. We do not
trade our swaps and we try to align them to the debt levels we have in the
Group at any given time.
Rental income during the year reduced to £16.5 million (2009: £17.1 million).
On a like for like basis the group's rental income, excluding joint ventures,
increased by 2.4% to £15.6 million (2009: £15.2 million), as shown in the table
below.
2010 2009
£'000 £'000
Annual rental income from properties still 15,550 15,187
held
Income from properties sold 435 1,361
Revenue as per income statement 15,985 16,548
Overheads were down 22.4% to £3.8 million (2009: £4.9 million). This partly
reflects increased fees received from managing third party assets, as well as
lower direct costs.
Operating profit, excluding property and other investment revaluations,
increased to £11.0 million (2009: £9.7 million), a rise of 14.1%. Excluding
exceptional items we improved the net result by £1.9 million in the year.
The tax charge in the year shows a credit of £7.2 million. This is made up of a
current tax credit in relation to prior years of £0.9 million and deferred tax
credit of £6.3 million. This deferred tax charge has arisen due to a £2.0
million movement in the derivatives, valuation of the properties, including the
indexation, of £2.8 million, and other timing differences of £1.5 million.
Balance sheet
The underlying net assets of the Group on a management adjusted basis are shown
in the table below.
2010
Per IFRS Deferred Mark-to-market Head EPRA
balance tax of interest leases
sheet swaps Adjusted
net
assets
£'000 £'000 £'000 £'000 £'000
Investment properties 223,610 (28,664) 194,946
Other fixed assets 2,558 2,558
Investments in 8,646 8,646
associate and joint
ventures
Other assets 4,809 4,809
Other liabilities (52,377) 2,671 13,627 28,664 (7,415)
Net debt (131,485) (131,485)
Net assets 55,761 2,671 13,627 72,059
Adjusted NAV per share 87.5p
2009
Per IFRS Deferred Mark-to-market Head Adjusted
balance tax of interest leases net
sheet swaps assets
£'000 £'000 £'000 £'000 £'000
Investment properties 243,109 (29,485) 213,624
Other fixed assets 2,621 2,621
Investments in 9,440 9,440
associate and joint
ventures
Other assets 4,678 4,678
Other liabilities (54,395) 7,393 6,347 29,485 (11,170)
Net debt (146,349) (146,349)
Net assets 59,104 7,393 6,347 72,844
Adjusted NAV per share 91.5p
Group net assets under IFRS were £55.8 million at the year end. The more
meaningful EPRA figure shows net assets of £72.1 million, equivalent to 87.5p
per share. The EPRA NNNAV reduced to 66.7p per share, predominately due to the
increase in the number of shares in issue as a result of paying a proportion of
last year's final dividend in shares.
Accounting Judgements and going concern
The most significant judgements made in preparing these accounts relate to the
carrying value of the properties, investments and hedges which are stated at
open market value. The Group uses external professional valuers to determine
the values of our properties. Interest rate hedges (as explained above) are
stated at net present value of the extra costs arising to maturity compared to
current market rates.
The Directors exercise their commercial judgements when reviewing the cash flow
forecasts of 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 Statement, the Chief
Executive's Report and in this Report. In addition the directors considered
note 17 to the financial statements which include the company's objectives,
policies and processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities; its
exposure to credit risk and liquidity risk.
With a quality portfolio comprising a majority of long leases and 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.
Dividends
The company is proposing a final dividend of 0.4p, payable on 1 July 2011 to
shareholders on the register as at 10 June 2011. This makes a total dividend
for the year of 1.15p.The directors have decided against the capitalisation
issue of new shares as in the previous two years, as this is felt to be too
dilutive on the net asset per share of the company.
Our associated company Bisichi Mining PLC, in which we hold a 41.7% stake, had
a difficult year and suffered losses after taxation of £1.3 million. This
figure is after a revaluation surplus under IFRS of £0.1 million.
I feel confident that the continued policy of prudently managing the Group's
cash resources will benefit us as we go through this period of uncertainty.
Robert Corry,
Finance Director
15 April 2011
Consolidated income statement
for the year ended 31 December 2010
2010 2009
Notes £'000 £'000
Gross rental income
Group and share of joint ventures 16,503 17,067
Less: joint ventures - share of rental (518) (519)
income
Revenue 1 15,985 16,548
Direct property expenses (1,839) (2,166)
Overheads (3,780) (4,865)
Property overheads 1 (5,619) (7,031)
Net rental income 1 10,366 9,517
Listed investments held for trading 3 43 148
Profit on sale of investment properties 637 14
Net increase on revaluation of 1,569 9,422
investment properties
Net increase in value of investments 89 178
held for trading
Operating profit 1 12,704 19,279
Share of loss of joint ventures after 10 (233) (276)
tax
Share of (loss)/profit of associate 11 (505) 1,485
after tax
Profit before interest and taxation 11,966 20,488
Interest rate derivatives 17 (7,280) 13,269
Interest rate derivatives break costs 17 (3,515) -
Finance income 5 64 90
Finance expenses 5 (11,922) (12,440)
(Loss)/profit before taxation (10,687) 21,407
Income tax 6 7,192 (2,355)
(Loss)/profitfor the yearattributable to (3,495) 19,052
the owners of the parent
Basic (loss)/profit per share 8 (4.24)p 24.32p
Diluted (loss)/profit per share 8 (4.24)p 24.32p
The revenue and operating result for the year is derived from continuing
operations in the United Kingdom.
consolidated balance sheet
at 31 December 2010
2010 2009
Notes £'000 £'000
Non-current assets
Market value of properties attributable to 194,946 213,624
Group
Present value of head leases 28,664 29,485
Property 9 223,610 243,109
Plant and equipment 9 612 816
Investments in joint ventures 10 1,163 1,396
Investments in associated company 11 7,483 8,044
Held to maturity investments 12 1,946 1,805
234,814 255,170
Current assets
Trade and other receivables 13 4,092 3,976
Financial assets-investments held for 14 717 702
trading
Cash and cash equivalents 8,584 8,655
13,393 13,333
Total assets 248,207 268,503
Current liabilities
Trade and other payables 15 (10,022) (11,427)
Financial liabilities - borrowings 16 (3,863) (7,216)
Current tax liabilities - (741)
(13,885) (19,384)
Non-current liabilities
Financial liabilities-borrowings 16 (136,206) (147,788)
Interest rate derivatives 17 (13,627) (6,347)
Present value of head leases on properties (28,664) (29,485)
Deferred tax 18 (64) (6,395)
(178,561) (190,015)
Total liabilities (192,446) (209,399)
Net assets 55,761 59,104
Equity attributable to the owners of the
parent
Share capital 19 8,554 8,392
Share premium account 4,866 5,042
Translation reserve in associate 30 (284)
Capital redemption reserve 47 47
Retained earnings (excluding treasury 44,342 50,465
shares)
Treasury shares 19 (2,078) (4,558)
Retained earnings 42,264 45,907
Total shareholders' equity 55,761 59,104
Net assets per share 8 66.71p 74.22p
Diluted net assets per share 8 66.69p 74.19p
These financial statements were approved by the board of directors and
authorised for issue on 15 April 2011 and signed on its behalf by:
M A Heller R J Corry
Director Director
Company Registration No. 341829
Consolidated statement of changes in shareholders' equity
for the year ended 31 December 2010
Retained Earnings
Translation Capital Treasury Retained Total
Share Share reserves in redemption Earnings equity
capital premium reserve shares excluding
treasury
shares
associate
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 8,232 5,236 (504) 47 (6,237) 33,532 40,306
2009
Profit for year - - - - - 19,052 19,052
Other comprehensive
income:
Currency translation - - 220 - - - 220
in associate
Total other - - 220 - - - 220
comprehensive income
Total comprehensive - - 220 - - 19,052 19,272
income
Transactions with
owners:
Equity share options - - - - - (76) (76)
in associate
Issue of own shares 160 (194) - - - - (34)
and expenses
Disposal of own - - - - 521 - 521
shares
Loss on transfer of - - - - 1,158 (1,158) -
own shares
Dividends paid - - - - - (885) (885)
Transactions with 160 (194) - - 1,679 (2,119) (474)
owners
Balance at 31 8,392 5,042 (284) 47 (4,558) 50,465 59,104
December 2009
Loss for year - - - - - (3,495) (3,495)
Other comprehensive
income:
Currency translation - - 314 - - - 314
in associate
Total other - - 314 - - - 314
comprehensive income
Total comprehensive - - 314 - - (3,495) (3,181)
income
Transaction with
owners:
Equity share options - - - - - 2 2
in associate
Minority interest on - - - - - (199) (199)
share disposal in
associate
Issue of own shares 162 (176) - - - - (14)
and expenses
Disposal of own - - - - 973 - 973
shares
Loss on transfer of - - - - 1,507 (1,507) -
own shares
Dividends paid - - - - - (924) (924)
Transactions with 162 (176) - - 2,480 (2,628) (162)
owners
Balance at 31 8,554 4,866 30 47 (2,078) 44,342 55,761
December 2010
All the above are attributable to the owners of the parent.
Consolidated statement of comprehensive income
for the year ended 31 December 2010
2010 2009
£'000 £'000
(Loss)/profitfor the year (3,495) 19,052
Other comprehensive income:
Currency translation in associate 314 220
Other comprehensive income for the year net of tax 314 220
Total comprehensive income for the period (3,181) 19,272
attributable to owners of the parent
Consolidated cash flow statement
for the year ended 31 December 2010
2010 2009
£'000 £'000
Operating activities
Profit before interest and taxation 11,966 20,488
Depreciation 197 210
Profit on disposal of non-current assets (3) (3)
Profit on sale of investment properties (637) (14)
Net increase on revaluation of investment properties (1,569) (9,422)
Share of loss/(profit) of joint ventures and associate 738 (1,209)
after tax
Net increase in value of investments held for trading (89) (178)
(Increase)/decrease in net current assets (1,019) 2,303
Cash generated from operations 9,584 12,175
Income tax repaid/(paid) 111 (444)
Cash inflows from operating activities 9,695 11,731
Investing activities
Investment in loan stock in joint ventures (141) -
Property acquisitions and improvements (754) (3,763)
Sale of properties 21,302 17,805
Purchase of office equipment and motor vehicles (78) (133)
Sale of office equipment and motor vehicles 86 27
Interest received 64 90
Dividends received from associate and joint ventures 173 273
Cash inflows from investing activities 20,652 14,299
Financing activities
Issue expenses (14) (34)
Sale of treasury shares 973 521
Equity dividends paid (924) (885)
Interest paid (15,525) (12,132)
Repayment of short term loan from joint ventures - (225)
Repayment of medium term bank loan (11,575) (12,750)
Cash outflows from financing activities (27,065) (25,505)
Net increase in cash and cash equivalents 3,282 525
Cash and cash equivalents at beginning of year 1,439 914
Cash and cash equivalents at end of year 4,721 1,439
Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise
the following balance sheet amounts:
2010 2009
£'000 £'000
Cash and cash equivalents (before bank overdrafts) 8,584 8,655
Bank overdrafts (3,863) (7,216)
Cash and cash equivalents at end of year 4,721 1,439
£0.6million of cash deposits at 31 December 2009 was charged as security to Axa
Annuity Company. This was released in 2010.
Group accounting policies
The following are the principal group accounting policies:
Basis of accounting
The group financial statements for the year ended 31 December 2010 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 UK GAAP, as applied in accordance with the provisions of the
Companies Act 2006 and these are presented in note 25. 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 and
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.
London & Associated Properties PLC is a public listed parent company,
incorporated and domiciled in England and quoted on the London Stock Exchange.
The Company registration number is 341829.
Going concern
The most significant judgements made in preparing these accounts relate to the
carrying value of the properties, investments and interest rate hedges which
are stated at open market value. The Group uses external professional valuers
to determine the values of our properties.
The Directors exercised their commercial judgements when reviewing 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 Statement, the
Chief Executive's Report and Finance Director's Report. In addition the
Directors considered note 17 of the financial statements which includes the
company's objectives, policies and processes for managing its capital; its
financial risk management objectives; details of its financial instruments and
hedging activities; its exposure to credit risk and liquidity risk.
With sound financial resources and long term leases in place with the tenants,
the Directors believe that the company is well placed to manage its business
risks despite the current uncertain economic outlook. 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.
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 which are contained in the Directors' Report.
International Accounting Standards (IAS/IFRS)
At the date of approval of these financial statements, the following new
Standards and interpretations which have been applied in these financial
statements, were in issue:
IFRS 2 (amended) Group Cash Settled Share-based payment transactions
Improvements to IFRS: 2007-2009 annual improvements
Other than additional disclosure, there is no material impact on reported
income or net assets.
The following standards and interpretations have been issued and adopted by the
EU but are not effective for the year ended 31 December 2010 and have not been
adopted early:
IAS 24 (revised) Related Party Disclosures
IAS 32 (amended) Financial Instruments: Presentation
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
The adoption of the standards and interpretations in issue but not yet
effective is not expected to have a material impact on the financial statements
of the Group.
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 and associate.
Subsidiaries
Subsidiaries are those entities controlled by the Group. Control is assumed
when the Group has the power to govern the financial and operating policies of
an entity or business and to economically benefit from its activities.
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 trading subsidiary companies are set out in
note 25.4.
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.
Associates
Undertakings in which the Group has a participating interest of not less than
20% of the voting capital and over which it has the power to exert significant
influence are defined as associated undertakings. The financial statements
include the appropriate share of the results and reserves of those
undertakings.
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
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
Property operating expenses are expensed as incurred and any property operating
expenditure not recovered from tenants through service charges is charged to
the income statement.
Group accounting policies continued
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.
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. 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.
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.
Where a derivative is designated as a hedge of the variability of a highly
probable forecast transaction i.e. an interest payment, the element of the gain
or loss on the derivative that is an effective hedge is recognised directly in
equity. When the forecast transaction subsequently results in the recognition
of a financial asset or a financial liability, the associated gains or losses
that were recognised directly in equity are reclassified into the income
statement in the same period or periods during which the asset acquired or
liability assumed affects the income statement i.e. when interest income or
expense is recognised.
The gain or loss arising from any adjustment to the fair value to the business
calculation is recognised immediately in the group income statement when the
criteria set out in IAS 32 allowing the movements to be shown in equity have
not been met.
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 valuation
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 accounted for on completion of
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.
Plant and equipment
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.
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 accounted for
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. 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.
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 originalmaturities of three months
or less.
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.
Segmental Reporting
For management reporting purposes, the Group is organised into business
segments distinguishable by economic activity. The Group's only business
segments are investment properties and other investments. 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 segment information. This is consistent with the way the Group is managed
and with the format of the Group's internal financial reporting.
Notes to the financial statements
for the year ended 31 December 2010
1.Segmental analysis
Operating Segments are based on the internal reporting and operational
management of the Group. The Group is organised into Property and other
investments.
Business segments
2010 2009
Property Listed Total Property Listed
investments investments Total
£'000 £'000 £'000 £'000 £'000 £'000
Rental income 15,985 - 15,985 16,548 - 16,548
Property overheads (5,619) - (5,619) (7,031) - (7,031)
Net rental income 10,366 - 10,366 9,517 - 9,517
Listed investment income - 43 43 - 148 148
Profit on sale of 637 - 637 14 - 14
investment properties
Net increase/(decrease) 1,569 - 1,569 9,422 - 9,942
on revaluation of
investment properties
Net increase/(decrease) - 89 89 - 178 178
on revaluation of
investments held for
trading
Operating profit/(loss)* 12,572 132 12,704 18,953 326 19,279
Total assets (excluding 237,023 717 237,740 256,556 702 257,258
investments in associate
and joint ventures)
Total liabilities (52,377) - (52,377) (53,654) - (53,654)
(excluding borrowings
and current tax)
Borrowings (140,194) - (140,194) (155,004) - (155,004)
Net assets 44,452 717 45,169 47,898 702 48,600
Current tax liabilities: - (741)
non segmental
Investments in joint 3,104 3,196
ventures: non segmental
(notes 10 and 12)
Investments in 7,483 8,044
associate: non segmental
(note 11)
Investments in unlisted 5 5
companies
Net assets as per 55,761 59,104
balance sheet
Other segment items:
Finance income 64 - 64 90 - 90
Finance expenses 11,992 - 11,992 12,440 - 12,440
Depreciation 197 - 197 210 - 210
Capital expenditure 567 - 567 3,594 - 3,594
Rental income
Joint Ventures
Group Analytical Dragon Group
excl.joint Retail Share
ventures Ventures Properties Total 2010 2009
£'000 £'000 £'000 £'000 £'000 £'000
Rental income 15,985 830 206 17,021 16,503 17,067
Direct property expenses (1,839) (58) (12) (1,909) (1,874) (2,201)
Overheads (3,780) (226) (135) (4,141) (3,960) (5,011)
10,366 546 59 10,971 10,669 9,855
Less: attributable to joint (303) (338)
ventures
Net rental income 10,366 9,517
*Operating profit is defined as profit before tax and excludes the share of
profit & losses of joint ventures and associate, finance income and expenses,
and the movement of interest rate derivatives.
Geographical segments
At net rental income level, the Group operates in the United Kingdom only. The
directors consider it to be the only geographical segment of the business.
Further information in respect of the property reportable segment is included
within the primary statements. No customer represents revenue in excess of 10
per cent of total revenue (2009: none).
notes to the financial statements
for the year ended 31 December 2010
2. (Loss)/profit before taxation
2010 2009
£'000 £'000
(Loss)/profit before taxation is arrived at after charging/
(crediting):
Staff costs (note 21) 2,631 3,361
Depreciation on tangible fixed assets - owned assets 197 210
Operating lease rentals - land and buildings 375 385
Profit on disposal of motor vehicles and office equipment (3) (3)
Amounts payable to the auditor in respect of both audit and
non-audit services
Audit services:
Statutory - company and consolidation 84 81
- subsidiaries 41 54
Further assurance services 6 10
Other services 9 8
140 153
Staff costs and depreciation of tangible fixed assets are included in
overheads.
3. Listed investments held for trading
2010 2009
£'000 £'000
Investment sales 119 1,948
Dividends receivable 15 60
134 2,008
Cost of sales (86) (1,835)
48 173
Attributable overheads (5) (25)
Net income from listed investments 43 148
4. Directors' emoluments
2010 2009
£'000 £'000
Emoluments 1,262 1,759
Defined contribution pension scheme contributions 86 241
1,348 2,000
Details of directors' emoluments and share options are set out in the
remuneration report.
5. Finance income and expenses
2010 2009
£'000 £'000
Finance income 64 90
Finance expenses
Interest on bank loans and overdrafts (2,164) (3,013)
Other loans (2,134) (2,108)
Interest on derivatives adjustment (5,575) (5,338)
Interest on obligations under finance leases (2,049) (1,981)
Total finance expenses (11,922) (12,440)
(11,858) (12,350)
notes to the financial statements
for the year ended 31 December 2010
6. Income tax
2010 2009
£'000 £'000
Current tax
Corporation tax on (loss)/profit of the period - -
Adjustments in respect of previous periods (861) (1,232)
Total current tax (861) (1,232)
Deferred tax
Origination and reversal of timing differences (1,578) (1,052)
Revaluation of investment properties (2,781) 658
Accelerated capital allowances 97 270
Fair value of interest derivatives (2,038) 3,715
Adjustments in respect of previous periods (31) (4)
Total deferred tax (note 18) (6,331) 3,587
Tax on (loss)/profit on ordinary activities (7,192) 2,355
Factors affecting tax charge for the year
The corporation tax assessed for the year is different from that at the
standard rate of corporation tax in the United Kingdom of 28 per cent (2009: 28
per cent). The differences are explained below:
(Loss)/profit on ordinary activities before taxation (10,687) 21,407
Taxation on ordinary activities at 28 per cent (2009: (2,992) 5,994
28%)
Effects of:
Expenses not deductible for tax purposes - 4
Other differences (3,265) (2,059)
Joint ventures and associate (43) (348)
Deferred tax rate adjustment - -
Adjustment in respect of prior years (892) (1,236)
Tax (credit)/charge for the period (7,192) 2,355
The main component of other differences in the reconciliation relates to
potential indexation for capital gains of £3.2 million (2009: indexation
allowance £1.9 million).
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.
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.
7. Dividend
2010 2009
Per £'000 Per £'000
share share
Dividends paid during the year relating to the 1.15p 924 1.15p 885
prior period
Dividends to be paid:
Interim dividend for 2010 paid on 21 January 0.75p 627 0.75p 597
2011
Proposed final dividend for 2010 0.40p 337 0.40p 327
1.15p 964 1.15p 924
The proposed final dividend will be payable on 1 July 2011 to shareholders
registered at the close of business on 10 June 2011 subject to approval at
Annual General Meeting.
notes to the financial statements
for the year ended 31 December 2010
8. (Loss)/profit per share and net assets per share
(Loss)/profit per share have been calculated as follows: 2010 2009
(Loss)/profitfor the year for the purposes of basic and diluted (3,495) 19,052
(loss)/profitper share (£'000)
Weighted average number of ordinary shares in issue for the 82,389 78,345
purpose of basic (loss)/profitper share ('000)
Basic (loss)/profit per share (4.24)p 24.32p
Weighted average number of ordinary shares in issue for the 82,389 78,345
purpose of diluted (loss)/profitper share ('000)
Fully diluted (loss)/profit per share (4.24)p 24.32p
Weighted average number of shares in issue is calculated after excluding
treasury shares of 1,957,534 (2009:4,293,051).
There was no dilutive effect of the outstanding options in either year.
Net assets per share have been calculated as follows:
Net assets Shares in issue Net assets per
share
2010 2009 2010 2009 2010 2009
£'000 £'000 `000 `000 Pence Pence
Basic
At 31 December 55,761 59,104 83,585 79,629 66.71 74.22
Dilution adjustments for
shares subject to option
agreements:
Issue of outstanding share 28 28 70 70
options
Diluted 55,789 59,132 83,655 79,699 66.69 74.19
9. Property and plant and equipment
Investment Properties
Freehold Leasehold Leasehold Office
Total equipment
over under
and motor
50 years 50 years
vehicles
£'000 £'000 £'000 £'000 £'000
Cost or valuation at 1 January 243,109 83,598 159,511 - 1,734
2010
Reclassification - - (576) 576 -
Additions 489 - 489 - 78
Disposals (20,736) (3,736) (17,000) - (226)
Decrease in present value of (821) - (821) - -
head leases
Increase/(decrease) on 1,569 3,111 (1,472) (70) -
revaluation
Cost or valuation at 31 223,610 82,973 140,131 506 1,586
December 2010
Representing assets stated at:
Valuation 194,946 82,973 111,473 500 -
Present value of head leases 28,664 - 28,658 6 -
Cost - - - - 1,586
223,610 82,973 140,131 506 1,586
Depreciation at 1 January 2010 - - - - 918
Charge for the year - - - - 197
Disposals - - - - (141)
Depreciation at 31 December - - - - 974
2010
Net book value at 1 January 243,109 83,598 159,511 - 816
2010
Net book value at 31 December 223,610 82,973 140,131 506 612
2010
notes to the financial statements
for the year ended 31 December 2010
9. Property and plant and equipment continued
Investment Properties
Freehold Leasehold Leasehold Office
Total equipment
over under
and motor
50 years 50 years
vehicles
£'000 £'000 £'000 £'000 £'000
Cost or valuation at 1 January 245,770 95,272 150,498 - 1,682
2009
Additions 3,461 1,450 2,011 - 133
Disposals (17,791) (17,791) - - (81)
Increase in present value of 2,247 - 2,247 - -
head leases
Increase on revaluation 9,422 4,667 4,755 - -
Cost or valuation at 31 243,109 83,598 159,511 - 1,734
December 2009
Representing assets stated at:
Valuation: 213,624 83,598 130,026 - -
Present value of head leases 29,485 - 29,485 - -
Cost - - - - 1,734
243,109 83,598 159,511 - 1,734
Depreciation at 1 January 2009 - - - - 765
Charge for the year - - - - 210
Disposals - - - - (57)
Depreciation at 31 December - - - - 918
2009
Net book value at 1 January 245,770 95,272 150,498 - 917
2009
Net book value at 31 December 243,109 83,598 159,511 - 816
2009
The leasehold and freehold properties, excluding the present value of head
leases, were valued as at 31 December 2010 by external professional firms of
chartered surveyors. The valuations were made at open market value.
2010 2009
£'000 £'000
Allsop LLP 96,750 205,865
BNP Paribas Real Estate 4,196 4,023
King Sturge LLP 94,000 -
Directors' valuation - 3,736
194,946 213,624
Add: Present value of headleases 28,664 29,485
223,610 243,109
Upper Street, Islington, which was held at Directors' valuation at 31 December
2009, was sold in January 2010 for £3.8 million.
The historical cost of investment properties, including total capitalised
interest of £6,051,000 (2009: £6,051,000) was as follows:
2010 2009
Freehold Leasehold Short Freehold Leasehold Short
Leasehold Leasehold
Over 50 Over 50
years years
£'000 £'000 £'000 £'000 £'000 £'000
Cost at 1 January 80,608 133,462 - 96,308 131,451 -
Reclassification - (785) 785 - - -
Additions - 489 - 1,450 2,011 -
Disposals (4,300) (11,700) - (17,150) - -
Cost at 31 December 76,308 121,466 785 80,608 133,462 -
notes to the financial statements
for the year ended 31 December 2010
10. Investment in joint ventures
2010 2009
£'000 £'000
Group share of:
Turnover 518 519
Loss before tax (226) (242)
Taxation (7) (34)
Loss after tax (233) (276)
Non-current assets 6,333 6,565
Current assets 1,500 1,582
Current liabilities (3,712) (3,871)
Non-current liabilities (2,958) (2,880)
Net assets 1,163 1,396
Analytical Ventures Limited (Analytical Ventures) - unlisted property
investment company. The company owns 50 per cent of the issued share capital
and £1,940,860 of loan stock of Analytical Ventures. The remaining 50 per cent
of the issued share capital and £1,800,000 of loan stock is owned by Uberior
Ventures Limited. Analytical Ventures is incorporated and operates in England
and Wales and has issued share capital of 7,558,000 ordinary shares (2009:
7,558,000 ordinary shares of £1 each). Analytical Ventures is managed by a
board of directors with neither party having overall control.
Dragon Retail Properties Limited (Dragon) - unlisted property trading and
investment company. The company owns 50 per cent of the issued share capital.
The remaining 50 per cent is owned by Bisichi Mining PLC. Dragon is
incorporated and operates in England and Wales and has issued share capital of
500,000 ordinary shares of £1 each (2009:500,000 ordinary shares of £1 each).
Dragon is managed by a board of directors with neither party having overall
control.
Shares in joint ventures: 2010 2009
£'000 £'000
At 1 January 1,396 1,793
Share of loss after tax (233) (276)
Dividend received - (121)
(233) (397)
At 31 December 1,163 1,396
11. Investments in associated company
2010 2009
£'000 £'000
Bisichi Mining PLC - listed mining and
property investment company
Group share of:
Turnover 13,681 12,094
(Loss)/profit before tax (725) 2,039
Taxation 220 (554)
(Loss)/profit after tax (505) 1,485
Non-current assets 10,718 9,971
Current assets 4,811 4,308
Current liabilities (4,162) (4,345)
Non-current liabilities (3,720) (1,890)
Minority interest (164) -
Net assets 7,483 8,044
notes to the financial statements
for the year ended 31 December 2010 continued
11. Investments in associated company continued
2010 2009
£'000 £'000
Share in associate:
At 1 January 8,044 6,567
Share of (loss)/profit after tax (505) 1,485
Equity share options 2 (76)
Currency translation 314 220
Dividend received (173) (152)
Minority interest (199) -
(561) 1,477
At 31 December 7,483 8,044
The company owns 42 per cent (2009: 42 per cent) of the issued share capital of
Bisichi Mining PLC (Bisichi), a company registered in England and Wales.
Bisichi has an issued share capital of 10,451,506 ordinary shares of 10p each,
and its principal countries of operation are the United Kingdom (property
investment) and South Africa (coal mining). Bisichi is an associated
undertaking because London & Associated Properties PLC has a participating
interest. Bisichi has an independent board of directors which controls its
operating and financial policies.
The market (bid) value of this investment at 31 December 2010 was £8,700,000
(2009: £7,611,000).
12. Held to maturity investments
2010 Unlisted Loan 2009 Unlisted Loan
Total Stock Stock
Shares Total Shares
in joint in joint
ventures ventures
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 January 1,805 5 1,800 1,805 5 1,800
Loan stock issue 180 - 180 - - -
Repayments (39) - (39) - - -
At 31 December 1,946 5 1,941 1,805 5 1,800
13. Trade and other receivables
2010 2009
£'000 £'000
Trade receivables 1,089 736
Amounts due from associate and joint ventures 328 196
Other receivables 206 437
Prepayments and accrued income 2,469 2,607
4,092 3,976
The directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
14. Investments held for trading
2010 2009
£'000 £'000
Market bid value of the listed investment 717 702
portfolio
Unrealised deficit of market value over cost (395) (467)
Listed investment portfolio at cost 1,112 1,169
All investments are listed on the London Stock Exchange.
15. Trade and other payables
2010 2009
£'000 £'000
Trade payables 256 691
Amounts owed to joint ventures 1,133 1,165
Other taxation and social security costs 981 825
Other payables 801 789
Accruals and deferred income 6,851 7,957
10,022 11,427
The directors consider that the carrying amount of trade and other payables
approximates to their fair value.
notes to the financial statements
for the year ended 31 December 2010 continued
16. Borrowings
Current borrowings - amounts falling due within one year
2010 2009
£'000 £'000
Bank overdrafts (unsecured) 3,863 7,216
Non-current borrowings - amounts falling due after more
than one year
Term borrowings
Debenture stocks:
£5 million First Mortgage Debenture Stock 2013 at 11.3 per 5,000 5,000
cent
£1.7 million First Mortgage Debenture Stock 2016 at 8.67 1,700 1,700
per cent
£5 million First Mortgage Debenture Stock 2018 at 11.6 per 5,000 5,000
cent
£10 million First Mortgage Debenture Stock 2022 at 8.109 9,804 9,787
per cent*
21,504 21,487
Term bank loans:
£60 million revolving credit facility repayable in 2012*+ 44,855 56,494
£70 million term bank loan repayable in 2014* 69,847 69,807
114,702 126,301
136,206 147,788
*The £10 million debenture and bank loans are shown after deduction of
outstanding amortised issue costs.
+The £60 million facility was reduced from £90 million and the term extended by
a year to September 2012.
Interest payable on the term bank loans is variable being based upon the London
inter-bank offered rate (LIBOR) plus margin.
First Mortgage Debenture Stocks 2013, 2016, 2018 and 2022, the long term £60
million bank revolving credit facility repayable in September 2012 and the long
term £70 million term bank loan repayable in November 2014 are secured on
specific freehold and leasehold properties which are included in the financial
statements at a value of £192.1 million.
The bank loans and debentures are secured by way of a first charge over the
investment properties in the UK.
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.
17. Financial instruments
Treasury policy
The Group enters into derivative transactions such as interest rate swaps andforward 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. The
policies for managing each of these risks and the principal effects of these
policies on the results are summarised below.
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
bank loans are secured by way of a first charge on certain fixed assets. The
rates of interest vary based on LIBOR in the UK.
Sensitivity analysis
As all term debt has been covered by hedged derivatives it is not considered
that there is any material sensitivity for the Group to changes in interest
rates.
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.
notes to the financial statements
for the year ended 31 December 2010 continued
17. Financial instruments continued
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.
Less 2-5 Over 5 2010
than years years Total
1 year
£'000 £'000 £'000 £'000
Bank overdrafts (floating) 3,863 - - 3,863
Debentures (fixed) - 5,000 16,700 21,700
Bank loans (floating)* - 115,104 - 115,104
Trade and other payables 10,022 - - 10,022
(non-interest)
13,885 120,104 16,700 150,689
Less 2-5 Over 5 2009
than 1 years years Total
year
£'000 £'000 £'000 £'000
Bank overdrafts (floating) 7,216 - - 7,216
Debentures (fixed) - 5,000 16,700 21,700
Bank loans (floating)* - 126,679 - 126,679
Trade and other payables 11,427 - - 11,427
(non-interest)
18,643 131,679 16,700 167,022
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.
*All the bank loans are fully hedged with appropriate interest derivatives.
Details of all hedges are shown below.
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.
Borrowing facilities
At 31 December 2010 London & Associated Properties PLC was within its bank
borrowing facilities and was not in breach of any of the covenants. Overdrafts
are renewable annually. Term loan repayments are as set out below. Details of
other financial liabilities are shown in notes 15 and 16.
The Group has undrawn facilities of £16,033,000 (2009: £35,105,000) as follows:
2010 2009
£'000 £'000
Overdrafts 1,137 1,784
Term facilities expiring in two to five years 14,896 33,321
16,033 35,105
Hedge profile
a) There is a hedge to cover part of the £60 million revolving credit facility,
which currently covers the full £45 million drawn. It consists of a 20 year
swap for £15.4 million (2009: £35 million) with a 7 year call option in favour
of the bank, taken out in November 2007, at 4.76 per cent and a 20 year swap
for £40 million with a 7 year call option in favour of the bank, taken out in
December 2007, at 4.685 per cent.
b) There is a hedge to cover the £70 million term bank loan drawn. It consists
of a 20 year swap for £70 million with a 7 year call option in favour of the
bank, taken out in November 2007, at 4.76 per cent.
At the year end the amount recognised was £9,811,000 deficit (2009: £4,570,000
deficit) being the estimated financial effect of the fair value to the business
of these hedging instruments less the deferred tax thereon.
During the year the Company broke £19.6 million of the 4.76 per cent swap at a
cost of £3.515 million.
The Directors have estimated the financial effect of the fair value to the
business of these hedging instruments. This has been calculated as the Net
Present Value of the difference between the 17 year interest rate, which was
3.85 per cent at 31 December 2010 against the rate payable under the specific
hedge. This has given a liability at 31 December 2010 of £13,627,000 (2009: £
6,347,000) as shown in the balance sheet and this value changes by
approximately £1,600,000 for each 0.1% change in interest rate. The banks own
initial quotation at 31 December 2010 to close each of the hedges was £
16,236,000 (2009: £9,918,000). It is not the company's intention to crystallise
the derivatives.
Under IAS 39 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. The banks have an option to cancel the hedges in
November 2014 and January 2015. The cost to the Group to exit the instruments
before November 2014 and January 2015 has been attributed a cost by the bank of
£5,679,000 (2009:£8,466,000). It is not the intention of the Directors to exit
the instruments and this cost has not been recognised.
During the year the company broke £19.6 million of the 4.76 per cent swap at a
cost of £3.515 million.
notes to the financial statements
for the year ended 31 December 2010 continued
17. Financial instruments continued
Fair value of financial instruments
Fair value estimation
Effective 1 January 2009, the Group adopted amendment to IFRS 7 for financial
instruments that are measured in the balance sheet at fair value, this requires
disclosure of fair value measurements by level of the following fair value
hierarchy:
* 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).
2010
Level 1 Level 2 Level 3 Total Gain/
(loss) to
£'000 £'000 £'000 £'000 income
statement
£'000
Financial assets
Other financial assets held for
trading
Quoted equities 717 - - 717 15
Financial liabilities
Derivative financial instruments
Interest rate swaps - - 13,627 13,627 (7,280)
2009
Level Level 2 Level 3 Total Gain/
1 (loss) to
£'000 £'000 £'000 income
£'000 statement
£'000
Financial assets
Other financial assets held for
trading
Quoted equities 702 - - 702 178
Financial liabilities
Derivative financial instruments
Interest rate swaps - - 6,347 6,347 13,269
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 to the underlying assets. In order to maintain or adjust the
capital structure, the Group may adjust the capital structure, 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. During
2010 this decreased to 189.8 per cent (2009: 223.6 per cent) which was
calculated as follows:
2010 2009
£'000 £'000
Total debt 140,069 155,004
Less cash and cash equivalents (8,584) (8,655)
Net debt 131,485 146,349
Total equity 69,388 65,451
189.5% 223.6%
The gearing reduced primarily due to the reduction in the debt in the year. All
the debt, apart from the overdrafts, is at fixed rates of interest as shown in
notes 16 and 17. The Group does not have any externally imposed capital
requirements.
Financial assets
Financial assets are disclosed in notes 12, 13 and 14 and above.
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.
notes to the financial statements
for the year ended 31 December 2010 continued
17. Financial instruments continued
Financial assets maturity
Cash and cash equivalents all have a maturity of less than three months.
2010 2009
£'000 £'000
Cash at bank and in hand 8,584 8,655
These funds are primarily invested in short term bank deposits maturing within
one year bearing interest at the bank's variable rates. £Nil (2009: £0.6
million) of the cash is secured against the 2022 First Mortgage Debenture.
Financial liabilities maturity
Repayment of borrowings
2010 2009
£'000 £'000
Bank loans and overdrafts:
Repayable on demand or within one year 3,863 7,216
Repayable between two and five years 114,702 126,301
118,565 133,517
Debentures:
Repayable between two and five years 5,000 5,000
Repayable in more than five years 16,504 16,487
140,069 155,004
Certain borrowing agreements contain financial and other conditions that if
contravened by the Group, could alter the repayment profile.
Group undrawn banking facilities
which expire within one year 1,137 1,784
which expire in two to five years 14,896 33,321
16,033 35,105
Interest rate risk and hedge profile
2010 2009
£'000 £'000
Fixed rate borrowings 21,700 21,700
Floating rate borrowings
- Subject to interest rate swap 125,400 145,000
- Excess hedge (10,296) (11,105)
136,804 155,595
Average fixed interest rate 9.69% 9.69%
Weighted average swapped interest rate 5.57% 5.58%
Weighted average cost of debt on overdrafts, bank loans 6.12% 5.97%
and debentures
Average period for which borrowing rate is fixed 8.5 years 9.5 years
Average period for which borrowing rate is swapped 16.9 years 17.9 years
The swapped interest rate have calls by the bank 3.9 years 4.9 years
The Group's floating rate debt bears interest based on LIBOR for the term bank
loans and Bank base rate for the overdrafts.
notes to the financial statements
for the year ended 31 December 2010 continued
17. Financial instruments continued
Total financial assets and liabilities
The Group's financial assets and liabilities and their fair values are as
follows:
2010 Fair 2009
Fair Carrying
Value Carrying
value value
value
£'000 £'000 £'000 £'000
Cash and cash equivalents 8,584 8,584 8,655 8,655
Financial assets - 717 717 702 702
investments held for trading
Other assets 4,092 4,092 3,976 3,976
Derivative liabilities (13,627) (13,627) (6,347) (6,347)
Bank overdrafts (3,863) (3,863) (7,216) (7,216)
Bank loans (115,104) (114,702) (126,679) (126,301)
Present value of head leases (28,664) (28,664) (29,485) (29,485)
on properties
Other liabilities (10,022) (10,022) (12,168) (12,168)
Before debentures (157,887) (157,485) (168,562) (168,184)
Fair value of debenture stocks
Fair value of the 2010 2009
Group's debenture Book Fair
liabilities: Value value Fair value Fair Value
adjustment adjustment
£'000 £'000 £'000 £'000
Debenture stocks 21,700 26,589 (4,889) (7,483) (7,579)
Tax at 28 per cent (2009: 28 1,369 2,095 2,122
per cent)
Post tax fair value (3,520) (5,388) (5,457)
adjustment
Post tax fair value (4.21)p (9.40)p (9.91)p
adjustment - basic pence per
share
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 2010 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.
notes to the financial statements
for the year ended 31 December 2010 continued
18. Deferred tax
2010 2009
£'000 £'000
Balance at 1 January 6,395 2,808
Transfer to profit and loss account (6,331) 3,587
Balance at 31 December 64 6,395
The deferred tax balance comprises the
following:
Revaluation of investment properties 2,953 5,733
Accelerated capital allowances 2,213 2,116
Fair value of interest derivatives (3,815) (1,777)
Short-term timing differences 1,320 1,321
2,671 7,393
Loss relief (2,607) (998)
Provision at end of period 64 6,395
The directors consider the temporary differences arising in connection with the
interests in associate and joint ventures are insignificant. There is no time
limit in respect of the Group tax loss relief.
19. Share capital
Number of Number of 2010 2009
ordinary ordinary
10p shares 10p shares
2010 2009
£'000 £'000
Authorised: Ordinary shares of 110,000,000 110,000,000 11,000 11,000
10p each
Allotted, issued and fully paid 83,922,029 82,316,972 8,392 8,232
Ordinary shares of 10p - issued 1,620,682 1,605,057 162 160
during the year
Share capital 85,542,711 83,922,029 8,554 8,392
Less: held in Treasury (see (1,957,534) (4,293,051) (196) (429)
below)
"Issued share capital" for 83,585,177 79,628,978 8,358 7,963
reporting purposes
The company has one class of ordinary shares which carry no right to fixed
income.
The company issued a further 1,620,682 new ordinary shares of 10p each on 2
July 2010, from the amount standing to the credit of the Company's share
premium account and less costs incurred of £14,000. The existing shareholders
as at 4 June 2010 were entitled to the new Capitalisation Issue ordinary shares
as authorised at the Annual General Meeting on 7 June 2010.
Treasury shares
Number of ordinary 10p shares Cost/issue
value
2010 2009 2010 2009
Date Price £'000 £'000
excl.
costs
Shares held in Treasury at 1 4,293,051 5,873,865 4,558 6,237
January
Issued to meet directors Jan-10 106.18p (2,069,524) (1,214,400) (2,198) (1,290)
bonuses(Feb 09 -106.18p)
Issued to meet share options - - (50,000) - (53)
exercised(Feb 09 -106.18p)
Issued for new share - - (21,780) - (23)
incentive plan (Mar 09
-106.18p)
Issued to meet staff bonuses Jan-10 106.18p (88,021) (96,261) (93) (102)
(May 09 -106.18p)
Issued to meet directors' Oct-10 106.18p (19,097) - (20) -
bonuses
Issued for new share Oct-10 106.18p (23,702) - (25) -
incentive plan
Issued for new share Dec-10 106.18p (135,173) (198,373) (144) (211)
incentive plan (Dec 09
-106.18p)
Shares held in Treasury at 31 1,957,534 4,293,051 2,078 4,558
December
notes to the financial statements
for the year ended 31 December 2009 continued
19. Share capital continued
Share Option Schemes
Employees' share option scheme (Approved scheme)
At 31 December 2010 the following options to subscribe for ordinary shares were
outstanding, issued under the terms of the Employees' Share Option Scheme:
Number of shares Date of grant Option Price Normal Exercise Date
70,000 14 October 2003 39.5p 14 October 2006 to 13
October 2013
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 2010 is as follows:
Changes during the year
At 1 Options Options Options At 31
January lapsed December
2010 Exercised granted 2010
Shares issued to date 2,367,604 - - - 2,367,604
Options granted which have not been 70,000 - - - 70,000
exercised
Shares allocated over which options 1,549,955 - - - 1,549,955
have not been granted
Total shares allocated for issue to 3,987,559 - - - 3,987,559
employees under the scheme
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 2010
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.
A summary of the shares allocated and options issued under the scheme up to 31
December 2010 is as follows:
Changes during year
Changes during the year
At 1 Options Options Options At 31
January lapsed December
2010 Exercised granted 2010
Shares issued to date 450,000 - - - 450,000
Options granted which have not been - - - - -
exercised
Shares allocated over which options 550,000 - - - 550,000
have not yet been granted
Total shares allocated for issue to 1,000,000 - - - 1,000,000
employees under the scheme
notes to the financial statements
for the year ended 31 December 2010 continued
20. Related party transactions
Cost Amounts Owed Cash advanced
recharged to (to) by to (by)
(by) related related party related party
party
£'000 £'000 £'000
Related party:
Analytical Ventures Limited
Current Account 42 4 -
Dragon Retail Properties
Limited
Current account 72 72 -
Loan account - (1,205) -
Bisichi Mining PLC
Current account 359 (i) 326 -
Directors and key management
M A Heller and J A Heller 10 (ii) - -
H D Goldring (Delmore Asset (25) (iii) - -
Management Limited)
C A Parritt (25) (iv) - -
Totals at 31 December 2010 433 (803) -
Totals at 31 December 2009 406 (1,021) 225
Nature of costs recharged - (i) Management fees (ii) Property management fees
(iii) Portfolio management fees (iv) Consultancy fees.
The related party companies above are the associate and joint ventures and are
treated as non current asset investments - details are shown in Note 10 and 11.
Analytical Ventures Limited (joint venture)
Analytical Ventures Limited (Analytical Ventures) is owned 50 per cent by the
company and 50 per cent by the Bank of Scotland.
Dragon Retail Properties Limited (joint venture)
Dragon Retail Properties Limited (Dragon) is owned 50 per cent by the company,
and 50 per cent by Bisichi Mining PLC.
Dragon had surplus cash which was deposited equally with London & Associated
Properties PLC and Bisichi Mining PLC.
The company provides office premises, property management, general management,
accounting and administration services for both joint ventures.
Bisichi Mining PLC (associate)
The company provides office premises, property management, general management,
accounting and administration services for Bisichi Mining PLC and its
subsidiaries.
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 M A Heller and J A Heller have an
interest. Under an agreement with M A 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 £
275,000 for the year (2009: £275,000).
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 £40,000 (2009: £40,000) for
work done for two charitable foundations,
the Michael & Morven Heller Charitable Foundation and the Simon Heller
Charitable Trust.
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.
M A Heller is a director of Bisichi Mining PLC, the associated company and
received a salary of £75,000 (2009: £75,000) for services.
The directors are considered to be the only key management personnel and their
remunerations including employers national insurance for the year were £
1,504,000 (2009: £2,192,000). All other disclosures required including interest
in share options in respect of those directors are included within the
remuneration report.
21. Employees
The average number of employees, including directors, of the Group during the
year involved in management and administration was 36 (2009: 37).
2010 2009
£'000 £'000
Staff costs during the year were as follows:
Salaries and other costs 1,873 2,575
Social security costs 386 325
Pension costs 372 461
2,631 3,361
notes to the financial statements
for the year ended 31 December 2010 continued
22. Capital Commitments
2010 2009
£'000 £'000
Commitments to capital expenditure contracted for at - 500
the year end
The Group's share of capital commitments of joint ventures at the year end
amounted to £Nil (2009: £Nil).
23. Commitments under operating and finance leases
Operating leases on land and buildings
At 31 December 2010 the Group has total future minimum commitments under
non-cancellable operating leases on land and buildings as follows:
2010 2009
£'000 £'000
Within one year 399 390
In the second to fifth years inclusive 1,197 1,495
After five years - -
1,596 1,885
Operating lease payments represent rentals payable by the Group for its office
premises.
The leases are for an average term of 5 years and rentals are fixed for an
average of one year.
Present value of head leases on properties
Minimum lease Present value of minimum
payments lease payments
2010 2009 2010 2009
£'000 £'000 £'000 £'000
Amounts payable under finance
leases:
Within one year 1,821 1,874 1,821 1,874
In the second to fifth years 7,285 7,497 6,970 6,967
inclusive
After five years 229,114 234,145 20,073 20,644
238,220 243,516 28,864 29,485
Future finance charges on (209,556) (214,031) - -
finance leases
Present value of finance 28,664 29,485 28,864 29,485
lease liabilities
Finance lease liabilities are in respect of leased investment property. Many
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:
2010 2009
£'000 £'000
Within one year 11,811 13,156
In the second to fifth years inclusive 40,537 48,079
After five years 41,273 67,808
93,621 129,043
24. Contingent Liabilities
There were no contingent liabilities at 31 December 2010 (2009: £Nil), except
as disclosed in Note 17.
notes to the financial statements
for the year ended 31 December 2010 continued
25. Company financial statements
Company balance sheet at 31 December 2010
Notes 2010 2009
£'000 £'000
Fixed assets
Tangible assets 25.3 86,758 87,333
Other investments:
Associated company 25.4 358 358
Subsidiaries and others 25.4 46,431 46,290
25.4 46,789 46,648
133,547 133,981
Current assets
Debtors 25.5 22,553 19,638
Investments 25.6 717 702
Bank balances 5,966 6,653
29,236 26,993
Creditors
Amounts falling due within one year 25.7 (42,416) (25,171)
Net current (liabilities)/assets (13,180) 1,822
Total assets less current liabilities 120,367 135,803
Creditors
Amounts falling due after more than 25.8 (72,146) (81,063)
one year
Net assets 48,221 54,740
Capital and reserves
Share capital 25.10 8,554 8,392
Share premium account 25.11 4,866 5,042
Capital redemption reserve 25.11 47 47
Revaluation reserve 25.11 13,407 13,779
Treasury shares 25.10 (2,078) (4,558)
Retained earnings 25.11 23,425 32,038
Shareholders' funds 48,221 54,740
These financial statements were approved by the board of directors and
authorised for issue on 15 April 2011 and signed on its behalf by:
M A Heller R J Corry
DirectorDirector
Company Registration No. 341829 notes to the financial statements
for the year ended 31 December 2010 continued
25.1. Company
accounting policies
The following are the main accounting policies of the company:
Basis of accounting
The financial statements have been 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 and in accordance with applicable accounting
standards. All accounting policies applied are consistent with those of prior
periods.
Investment properties are accounted for in accordance with SSAP 19, "Accounting
for Investment Properties", which provides that these should not be subject to
periodic depreciation charges, but should be shown at open market value. This
is contrary to the Companies Act 2006 which states that, subject to any
provision for depreciation or diminution in value, fixed assets are normally to
be stated at purchase price or production cost. Current cost accounting or the
revaluation of specific assets to market value, as determined at the date of
their last valuation, is also permitted.
The treatment of investment properties under the Companies Act 2006 does not
give a true and fair view as these assets are not held for consumption in the
business but as investments, the disposal of which would not materially affect
any manufacturing or trading activities of the enterprise. In such a case it is
the current value of these investments, and changes in that current value,
which are of prime importance. Consequently, for the proper appreciation of the
financial position, the accounting treatment required by SSAP 19 is considered
appropriate for investment properties. Details of the current value and
historical cost information for investment properties are set out in note
25.3.Depreciation or amortisation is only one of the many factors reflected in
the annual revaluation and the amount that might otherwise have been shown
cannot be separately identified or quantified.
The financial statements have been prepared on a going concern basis. Further
details of which are contained in the Directors' report.
Revenue
Revenue comprises rental income, listed investment sales, dividends and other
income. The profit or loss on disposal of properties is recognised on
completion of sale.
Dividends receivable
Dividends are credited to the profit and loss account when the dividend is
received.
Tangible fixed assets
a) Investment properties
An external professional valuation of investment properties is carried out
every year. Properties professionally valued by Chartered Surveyors are on an
existing use open market value basis, in accordance with the Practice
Statements contained within the RICS valuation standards 2010 prepared by the
Royal Institution of Chartered Surveyors.
The cost of improvements includes attributable interest.
b) Other tangible fixed assets
Other tangible fixed assets are stated at historical cost. Depreciation is
provided on all other tangible fixed assets at rates calculated to write each
asset down to its estimated residual value evenly over its expected useful
life. The rates generally used are - office equipment - 10 to 33 per cent per
annum, and motor vehicles - 20 per cent per annum, on a straight line basis.
Investments
Long term investments are described as participating interests and are
classified as fixed assets. Short term investments are classified as current
assets.
a) Investments held as fixed assets
These comprise investments in subsidiaries and investments in Analytical
Ventures Limited and Dragon Retail Properties Limited (unlisted joint
ventures), Bisichi Mining PLC (listed associate), and in unlisted companies
which are all held for the long term. Provision is made for any impairment in
the value of fixed asset investments.
b) Investments held as current assets
Investments held for trading are included in current assets and are revalued to
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.
Financial Instruments
Bank loans and overdrafts
Bank loans and overdrafts are included in creditors on the company balance
sheet at the amounts drawn on the particular facilities. Interest payable on
those facilities is expensed as a finance cost in the period to which it
relates.
Interest rate derivatives
The company uses derivative financial instruments to hedge the interest rate
risk associated with the financing of the company'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 Values of the difference between the hedged rate of
interest and the rate of interest for the remaining period of the hedge.
Where a derivative is designated as a hedge of the variability of a highly
probable forecast transaction i.e. an interest payment, the element of the gain
or loss on the derivative that is an effective hedge is recognised directly in
equity. When the forecast transaction subsequently results in the recognition
of a financial asset or a financial liability, the associated gains or losses
that were recognised directly in equity are reclassified into the income
statement in the same period or periods during which the asset acquired or
liability assumed affects the income statement i.e. when interest income or
expense is recognised.
The gain or loss arising from any adjustment to the fair value to the business
is recognised in the income statement.
Debtors
Debtors do not carry any interest and are stated at their nominal value as
reduced by appropriate allowances for estimated recoverable amounts.
Creditors
Creditors are not interest bearing and are stated at their nominal value.
Joint ventures
Investments in joint ventures, being those entities over whose activities the
Group has joint control as established by contractual agreement, are included
at cost.
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right to
pay less tax in the future have occurred at the balance sheet date. Timing
differences are differences between the company's taxable profits and its
results as stated in the financial statements. Deferred tax is measured at the
average tax rates which are expected to apply in the periods in which timing
differences are expected to reverse, based on tax rates and laws that have been
enacted or substantially enacted by the balance sheet date. Deferred tax is
measured on a non-discounted basis.
Leased assets and obligations
All leases are "Operating Leases" and the annual rentals are charged to the
profit and loss account on a straight line basis over the lease term. Rent free
periods or other incentives received for entering into a lease are accounted
for over the period of the lease so as to spread the benefit received over the
lease term.
Retirement benefits
For defined contribution schemes the amount charged to the profit and loss
account in respect of pension costs and other post retirement benefits is the
contributions payable for the year. Differences between contributions payable
in the year and contributions actually paid are shown as either prepayments or
accruals at the balance sheet date.
notes to the financial statements
for the year ended 31 December 2010 continued
25.2. (Loss)/profit for the financial year
The company's loss for the year was £6,182,000 (profit 2009: £1,613,000). 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.
25.3. Tangible assets
Investment
Properties
Total Freehold Long Short Office
leasehold leasehold Equipment
and motor
vehicles
£'000 £'000 £'000 £'000 £'000
Cost or valuation at 1 88,294 62,678 23,840 - 1,776
January 2010
Reclassification - - (570) 570 -
Additions 78 - - - 78
Disposals (222) - - - (222)
Increase/(decrease) on (372) 445 (747) (70) -
revaluation
Cost or valuation at 31 87,778 63,123 22,523 500 1,632
December 2010
Representing assets
stated at:
Valuation 86,146 63,123 22,523 500 -
Cost 1,632 - - - 1,632
87,778 63,123 22,523 500 1,632
Depreciation at 1 961 - - - 961
January 2010
Charge for the year 196 - - - 196
Disposals (137) - - - (137)
Depreciation at 31 1,020 - - - 1,020
December 2010
Net book value at 1 87,333 62,678 23,840 - 815
January 2010
Net book value at 31 86,758 63,123 22,523 500 612
December 2010
The freehold and leasehold properties were valued as at 31 December 2010 by
external professional firms of chartered surveyors. The valuations were made at
open market value on the basis of existing use. The increase in book value was
transferred to revaluation reserve.
2010 2009
£'000 £'000
Allsop LLP 81,950 82,495
BNP Paribas Real Estate 4,196 4,023
86,146 86,518
The historical cost of investment properties, including total capitalised
interest of £1,222,000 (2009: £1,222,000) was as follows:
Freehold Long Short
Leasehold
Leasehold
£'000 £'000 £'000
Cost at 1 January 2010 54,620 18,078 -
Reclassification - (785) 785
Additions - - -
Disposals - - -
Cost at 31 December 2010 54,620 17,293 785
Long leasehold properties are held on leases with an unexpired term of more
than fifty years at the balance sheet date.
notes to the financial statements
for the year ended 31 December 2010 continued
25.4. Other investments
Shares in Loan stock Shares Loan Shares in Unlisted
Total in in stock
subsidiary subsidiary joint in joint associate shares
companies companies Ventures ventures
Cost £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2010 46,648 40,663 3,658 164 1,800 358 5
Loan stock issued 180 - - - 180 - -
Repayments (39) - - - (39) - -
At 31 December 46,789 40,663 3,658 164 1,941 358 5
2010
Subsidiary companies
The company owns 100 per cent of the ordinary share capital of the following
companies that are trading, all of which are registered in England and Wales:
Activity % Held by % Held by
company Group
LAP Ocean Holdings Limited Property investment 100 100
Antiquarius Limited Property investment - 100
Brixton Village Limited Property investment - 100
Market Row Limited Property investment - 100
Ski Investments Limited Property investment - 100
Analytical Properties Property investment 100 100
Holdings Limited
Analytical Properties Limited Property investment - 100
Analytical Properties (St Property investment - 100
Helens) Limited
London & Associated Property Management 100 100
Management Services Limited Services
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 associate and joint ventures are set out in notes 10 and 11.
25.5. Debtors
2010 2009
£'000 £'000
Trade debtors 639 382
Amounts due from subsidiary companies 17,525 17,601
Amounts due from associate and joint ventures 328 196
Deferred tax asset (note 25.9) 2,657 267
Other debtors 41 25
Prepayments and accrued income 1,363 1,167
22,553 19,638
25.6. Investments
2010 2009
£'000 £'000
Market value of the listed investment 717 702
portfolio
Unrealised deficit of market value over cost (395) (467)
Listed investment portfolio at cost 1,112 1,169
All investments are listed on the London Stock Exchange.
notes to the financial statements
for the year ended 31 December 2010 continued
25.7. Creditors: Amounts falling due within one year
2010 2009
£'000 £'000
Bank overdrafts (unsecured) 3,863 7,191
Amounts owed to subsidiary companies 31,659 9,729
Amounts owed to joint ventures 1,133 1,165
Corporation tax - 741
Other taxation and social security costs 649 576
Other creditors 328 360
Accruals and deferred income 4,784 5,409
42,416 25,171
25.8. Creditors: Amounts falling due after more than one year
2010 2009
£'000 £'000
Interest rate derivatives 5,787 3,082
Term Debenture stocks:
£5 million First Mortgage Debenture Stock 2013 5,000 5,000
at 11.3 per cent
£1.7 million First Mortgage Debenture Stock 1,700 1,700
2016 at 8.67 per cent
£5 million First Mortgage Debenture Stock 2018 5,000 5,000
at 11.6 per cent
£10 million First Mortgage Debenture Stock 9,804 9,787
2022 at 8.109 per cent*
21,504 21,487
Term bank loans:
Repayable after more than two years*+ 44,855 56,494
72,146 81,063
*The £10 million debenture and bank loans are shown after deduction of
un-amortised issue costs.
+The £60 million facility was reduced from £90 million and the term extended by
a year to September 2012.
Details of terms and security of overdrafts, loans and debentures are set out
in note 16.
Repayment of borrowings:
Bank loans and overdrafts:
Repayable within one year 3,863 7,191
Repayable between two and three years 44,855 56,494
48,718 63,685
Debentures:
Repayable between three and five years 5,000 5,000
Repayable in more than five years 16,504 16,487
70,222 85,172
Hedge profile
There is a hedge to cover part of the £60 million revolving credit facility,
which currently covers the full £45 million drawn.
It consists of a 20 year swap for £15.4 million (2009: £35 million) with a 7
year call option in favour of the bank, taken out in November 2007, at 4.76 per
cent and a 20 year swap for £40 million with a 7 year call option in favour of
the bank, taken out in December 2007, at 4.685 per cent.
At the year end the amount recognised was £4,166,000 deficit (2009: £2,219,000
deficit) being the estimated financial effect of the fair value to the business
of these hedging instruments less the deferred tax thereon.
The Directors have estimated the financial effect of the fair value to the
business of these hedging instruments. This has been calculated as the Net
Present Value of the difference between the 17 year interest rate, which was
3.85 per cent at 31 December 2010 against the rate payable under the specific
hedge. This has given a liability at 31 December 2010 of £5,787,000 (2009: £
3,082,000) as shown in the balance sheet. The banks own initial quotation at 31
December 2010 to close each of the hedges was £7,180,000 (2009: £5,047,000).
The hedges arenot deemed to be eligible for hedge accounting, as the banks have
an option to cancel the hedge in January 2015, to which they separately
attribute a cost of £2,511,000 (2009: £4,518,000), even though this is after
the expiry of the term loans and the level of the hedges closely equate to the
amount of the loans outstanding. Any movement in the value of the hedges has
therefore to be charged directly to the Income Statement. The cost to the
company to exit the instruments before January 2015 has been attributed a cost
by the bank of £2,511,000 (2009:£4,518,000). It is not the intention of the
Directors to exit the instruments and this cost has not been recognised.
During the year the company broke £19.6 million of the 4.76 per cent swap at a
cost of £3.515 million.
notes to the financial statements
for the year ended 31 December 2010 continued
25.8. Creditors: Amounts falling due after more than one year continued
Fair value of financial instruments
Fair value estimation
Effective 1 January 2009, the Group adopted amendment to FRS29 for financial
instruments that are measured in the balance sheet at fair value, this requires
disclosure of fair value measurements by level of the following fair value
hierarchy:
* 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).
2010
Level 1 Level 2 Level 3 Total Gain/
(loss) to
£'000 £'000 £'000 £'000 income
statement
£'000
Financial assets
Other financial assets held for
trading
Quoted equities 717 - - 717 15
Financial liabilities
Derivative financial
instruments
Interest rate swaps - - 5,787 5,787 (2,705)
2009
Level 1 Level 2 Level 3 Total Gain/
(loss) to
£'000 £'000 £'000 £'000 income
statement
£'000
Financial assets
Other financial assets held for
trading
Quoted equities 702 - - 702 178
Financial liabilities
Derivative financial
instruments
Interest rate swaps - - 3,082 3,082 6,844
notes to the financial statements
for the year ended 31 December 2010 continued
25.8. Creditors: Amounts falling due after more than one year continued
Liquidity
The table below analyses the company's financial liabilities into maturity
Groupings and also provides details of the liabilities that bear interest at
Fixed, floating and non-interest bearing rates.
Less than Over2010
1 year2-5 years 5 years Total
£'000 £'000 £'000 £'000
Bank overdrafts (floating) 3,863 - - 3,863
Debentures (fixed) - 5,000 16,700 21,700
Bank loans (floating)* - 45,104 - 45,104
Trade and other payables 38,553 - - 38,553
(non-interest)
42,416 50,104 16,700 109,220
Less 2-5 Over 5 2009
than 1 years years
year Total
£'000 £'000 £'000 £'000
Bank overdrafts (floating) 7,191 - - 7,191
Debentures (fixed) - 5,000 16,700 21,700
Bank loans (floating)* - 56,679 - 56,679
Trade and other payables 17,980 - - 17,980
(non-interest)
25,171 61,679 16,700 103,550
The company 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.
*The bank loans are fully hedged with appropriate interest derivatives. Details
of the hedges are shown above.
Total financial assets and liabilities
The company's financial assets and liabilities and their fair values are as
follows:
Fair 2010 Fair 2009
value Carrying value Carrying
value value
£'000 £'000 £'000 £'000
Cash and cash equivalents 5,966 5,966 6,653 6,653
Investments 717 717 702 702
Other assets 22,553 22,553 19,638 19,638
Bank overdrafts (3,863) (3,863) (7,191) (7,191)
Bank loans (45,104) (44,855) (56,679) (56,494)
Derivative liabilities (5,787) (5,787) (3,082) (3,082)
Other liabilities (38,553) (38,553) (17,980) (17,980)
Before debentures (64,071) (63,822) (57,939) (57,754)
Additional details of borrowings and financial instruments are set out in notes
16 and 17.
notes to the financial statements
for the year ended 31 December 2009 continued
25.9. Provisions for liabilities and charges
2010 2009
£'000 £'000
Deferred Taxation
Balance at 1 January (267) (1,350)
Transfer to profit and loss account (2,390) 1,083
Balance at 31 December (2,657) (267)
No provision has been made for the approximate taxation liability at 28 per
cent (2009: 28 per cent) of £992,000 (2009: £649,000) which would arise if the
investment properties were sold at the stated valuation.
The deferred tax balance comprises the following:
Accelerated capital allowances 1,243 1,189
Fair value of interest derivatives (1,620) (863)
Short-term timing differences 153 233
Losses (2,433) (826)
Provision at end of period (2,657) (267)
25.10. Share capital
Details of share capital, treasury shares and share options are set out in note
19.
25.11. Reserves
Share Capital Revaluation Retained Total
Premium redemption reserve
Account reserve Earnings
£'000 £'000 £'000 £'000 £'000
Balance at 1 January 2010 5,042 47 13,779 32,038 50,906
Decrease on valuation of - - (372) - (372)
investment properties
Retained loss for year - - - (6,182) (6,182)
Dividends paid in year - - - (924) (924)
Loss on disposal of Treasury - - - (1,507) (1,507)
Shares
Capitalisation issue of new (176) - - - (176)
ordinary shares and expenses
Balance at 31 December 2010 4,866 47 13,407 23,425 41,745
25.12. Related party transactions
Details of related party transactions are given in note 20.
As provided under Financial Reporting Standard 8: Related Party Disclosures,
the company has taken advantage of the exemption from disclosing transactions
with other Group companies.
25.13. Capital commitments
2010 2009
£'000 £'000
Commitments to capital expenditure contracted for at the - -
year end
25.14. Commitments under operating leases
At 31 December 2010 the company had annual commitments under non-cancellable
operating leases on land and buildings as follows:
2010 2009
£'000 £'000
Expiring in more than one year but less than 390 -
five years
Expiring in more than five years - 390
In addition, the company has an annual commitment to pay ground rents on its
leasehold investment properties which amount to £344,000 (2009: £323,000).
25.15. Contingent liabilities
There were no contingent liabilities at 31 December 2010 (2009: £Nil), except
as disclosed in Note 25.8.
Five year financial summary
2010 2009 2008 2007 2006
£m £m £m £m £m
Portfolio size
Investment properties-Group^ 195 214 219 248 193
Investment properties-joint 13 13 13 3 91
ventures
Investment 12 12 12 15 17
properties-associate
220 239 244 266 301
Portfolio activity £m £m £m £m £m
Acquisitions - - 9.18 112.71 50.70
Disposals at book value (20.74) (17.79) (15.33) (41.37) (1.62)
Capital Expenditure 0.49 3.46 9.73 9.15 5.13
(20.25) (14.33) 3.58 80.49 54.21
Consolidated income statement £m £m £m £m £m
Rental income - Group and 16.50 17.07 16.77 14.26 11.84
share of joint ventures
Less: attributable to joint (0.52) (0.52) (0.27) (1.23) (3.95)
venture partners
Group rental income 15.98 16.55 16.50 13.03 7.89
Profit/(loss) before interest 11.97 20.49 (24.91) (16.59) 21.76
and tax
(Loss)/profit before tax (10.69) 21.41 (57.27) (23.89) 18.32
Taxation (7.19) 2.36 (9.81) (11.38) 3.11
(Loss)/profit attributable to (3.49) 19.05 (47.45) (12.50) 15.22
shareholders
(Loss)/earnings per share - (4.24)p 24.32p (62.30)p (16.40)p 20.00p
basic
(Loss)/earnings per share - (4.24)p 24.32p (62.30)p (16.40)p 19.97p
fully diluted
Dividend per share 1.15p 1.15p 1.15p 1.95p 1.85p
Consolidated balance sheet £m £m £m £m £m
Shareholders' funds 55.96 59.10 40.30 88.99 101.86
Net borrowings 130.77 145.65 157.17 147.54 86.12
Net gearing 238.68% 246.44% 390.01% 165.79% 84.55%
Net assets per share - basic 66.95p 74.22p 52.73p 116.86p 133.62p
- fully diluted 66.92p 74.19p 52.70p 116.73p 133.47p
Consolidated cash flow £m £m £m £m £m
statement
Net cash inflow from 9.58 12.18 12.02 3.97 3.44
operating activities
Capital investment and 20.42 13.94 (6.09) 9.84 (26.86)
financial investment
Note: ^Excluding the present value of head leases