19th Apr 2011 07:05
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 nowretain 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 theseare mostly let on long leases. I therefore remain cautiously optimistic goingforward," 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 notconstitute the statutory accounts of London & Associated Properties PLC for theyears ended 31 December 2010 or 31 December 2009 but is derived from thoseaccounts. Statutory accounts for 2009 have been delivered to the Registrar ofCompanies and those for 2010 will be delivered in due course. The auditor hasreported on both the 2009 and 2010 accounts; their reports were (i)unqualified, (ii) did not include a reference to any matters to which theauditor 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 CompaniesAct 2006.Chairman's statementI am pleased to report on another period of satisfactory progress for LAPagainst a difficult economic backdrop. The quality of our portfolio of shoppingcentres reflects the high level of investment and strategic management which weapply to all of our assets. This has protected us from the worst of theproperty recession.As at 31 December 2010, our directly owned portfolio of shopping centres andother retail property was independently valued at £195 million compared to £214million the previous year. This follows a number of disposals of properties andon 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 theprevious year. However, again on a like for like basis, rental income grew by2.4%. We have achieved this increase in sustainable income in spite of sellingproperties which had a combined annualised rental income of £1.3 million perannum. This is a commendable achievement considering that tenant demand iswidely regarded as being weak and IPD reports that rental levels across theretail sector have dropped significantly.Void levels remain low at just 1.5% of our portfolio by rental value. This hasenabled us to drive our rental values forward, which in turn has supported ourvaluations. We have also been decisive in disposing of those properties fromwhich we could see no further opportunities for growth. During 2010, we soldAntiquarius in King's Road, Chelsea for £17.8 million. We acquired thisproperty as part of the London Portfolio in 2006 and, in 2009, we weresuccessful in achieving a listed building consent in the face of considerableopposition to our plans. We pre-let the retail space to Anthropologie, theAmerican fashion retailer, and carried out a significant refurbishment of theproperty. We believe that we had achieved maximum value of this asset, andconsequently saw little point in holding it at a time when prime London retailproperty was commanding premium values.Asset management continues to be a key feature of our business. At King EdwardCourt, Windsor, which now accouns for almost half the value of our portfolio,we undertook a redevelopment of three poorly configured units to provide threemodern shops. These had been pre-let to Fat Face, Robert Gatward Jewellers andMystique Lingerie. The new units achieved record rents per square footreinforcing the rental levels at the centre and demonstrating the continuingstrong demand from retailers for shops at King Edward Court.Orchard Square, Sheffield, has remained fully let during the year and we havebeen able to achieve growth at rent review. This led to rental values growingby 5% at this centre on an annualised basis. This centre plus King Edward Courtat Windsor account for rental income approaching £11 million per annum and thecombined annualised rents grew by 3% over the last year.Our two markets in Brixton have been strong performers in terms of rentalgrowth. These assets were also acquired as part of the London Portfolio. Since2009, we have spent considerable time and effort in re-branding the markets asmore exciting places to shop, with a particular emphasis on quality food andrestaurants as well as cutting edge fashion. The net result of this input isthat rents have grown by some 8% and Brixton Village, one of the markets, isfully let for the first time in some 20 years. As detailed in the ChiefExecutive's report, we have plans to work with a leading market operator toensure the next phase of this asset's growth.Under International Financial Reporting Standards (IFRS), the net assets of theGroup were £55.8 million. This compares to £59.1 million the previous year.However, this figure reflects the carrying cost of our interest rate swapswhich 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 attoday'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 wehad certainty over our interest payments which are our most significant item ofexpense. We do not trade these swaps. It is important to note that under thestandards of the European Real Estate Association (EPRA), as used by mostproperty companies, our net assets stood at £72.1 million in December 2010compared to £72.8 million as at December 2009. Under EPRA net asset per shareis now 87.5p compared to 91.5p a year ago. This largely reflects the issue ofadditional shares as part of last year's dividend.Operating profit, on a management adjusted basis, grew to £11.1 millioncompared with £9.7 million in 2009, as shown in the table in the FinanceDirector's report on page 17. This excludes marking to market the carryingvalues of our properties and financial instruments. The growth in operatingprofit is partly a result of lower property expenses and other overheadsincurred during the year. Our loss before tax over the same period hasincreased 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 £19.6million. 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 annualisednegative effect on cash flow of £0.5 million. The cost of breaking theover-hedge has fluctuated significantly over the year. We continue to monitorthis situation closely and will break the hedge when it is most appropriate todo so.It has been widely reported that bank lending remains subdued for real estatetransactions. Against this backdrop, we have explored alternative sources offinance from property funds looking for joint venture partners. While it is tooearly to report any specific deals, we are currently examining a potentialacquisition with one such partner and I hope to be able to report that thistransaction has successfully concluded in the near future. We are looking toco-invest with suitable partners and we continue to hold an unencumbered cashreserve of some £5 million to take advantage of opportunities as they arise.During the year we were appointed by Grant Thornton, a firm of charteredaccountants, to take on the asset management of a portfolio of shopping centreswhere they had been appointed as Administrators. Following the disposal of theproperties this project has now been completed. We understand that the bankclient of Grant Thornton regards the result as a great success. LAP received afee for advising on the management of the centres and overseeing the disposalin 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 shareof their loss after taxation was £0.5 million. This was as a result of lowercoal prices combined with a strong South African Rand against the US dollar anda shortage of railway trucks to transport the coal. Measures have been taken toaddress these issues and it is expected that they will return to acceptableprofitability in the second half of 2011.We believe that LAP has performed well against a testing economy, although weremain mindful of the reduced bank lending currently available, and thenegative forces facing consumers following last year's budget. As a result, theBoard has taken the decision this year to maintain the cash element of thedividend at the level paid in 2010. There will be a final dividend of 0.4ppayable 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 decidedagainst the capitalisation issue of new shares as in previous years as this isfelt to be too dilutive at the current price.Michael Stevens will be retiring this year after 25 years as a director andCompany Secretary of LAP. I would like to take this opportunity to thank himfor 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 GroupCompany 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 HellerChairman15 April 2011Chief Executive's Report2010 was another difficult year for the UK economy with bank lending remainingsubdued. This lack of funding has contributed to a polarisation in investordemand with cash buyers being predominant. These investors look for well-letproperty where tenant demand remains high and rental growth is stillachievable.Our portfolio of retail property comes into this category. We havesignificantly 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 deliverfurther growth. Initially we disposed of secondary shopping centres at a timewhen net initial yields were lower than deposit rates, yet investor demand forthis type of asset remained high. More recently, we have been selling assetswith long leases and excellent covenants, again to meet investor demand. Overthis period we have also been investing heavily into our asset base. KingEdward Court, Windsor and Orchard Square, Sheffield account for 72% of ourproperty portfolio, and we have spent a combined £46 million on them over thelast 5 years. This capital expenditure has produced better configured units tomeet modern retailer demand. These units were pre-let to quality tenants onlong 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 currentlyhave no substantial development work underway, although we are constantlylooking to improve our assets and grow rents.Our property portfolio is now valued at £194.9 million, and our top fiveproperties by value account for over 90% of this total. All of these propertiesare well-let and all of them have either delivered rental income growth overthe last year or confirmed their growth potential. Across the portfolio, ouraverage weighted unexpired lease term is 7.2 years. Over 63% of our leases byrental value run for more than 5 years and 31% for more than 10 years. We havevoids of just 1.5%. All of this combines to provide resilience during thisproperty recession.Group rental income on a like for like annualised basis grew by 2.4% to £15.6million compared with £15.2 million in 2009. This has been achieved against awidely 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 werecollected within two weeks of the December quarter day.We disposed of Antiquarius in King's Road Chelsea during the year for £17.82million compared to a book value of £17.0 million as at year end 2009. Thisfollowed the completion of the lease in 2009 to Anthropologie at £1.15 millionper annum and represented a net initial yield of 5.74%. We paid down ourrevolving credit facility by £12.75 million from the cash proceeds.During 2010, we were appointed by Grant Thornton as asset manager on aportfolio of three shopping centres in Burnley, Cardiff and Harlow. The fundthat owned these shopping centres had been placed into administration and thecentres 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 £120million. We marketed the centres through leading investment agents and sincethe year end the disposal completed at £145 million. LAP received fees fromGrant Thornton for the work undertaken and we are in discussion to take onfurther similar appointments.Following the financial crisis there is still much stress in the UK bankingsystem and lack of credit at acceptable terms. As a result, we have enteredinto talks with a number of property funds with a view to establishing jointventures. One of these is at an advanced stage of making an acquisitionalthough contracts have not yet been exchanged. I am, however, confident thatthe transaction will conclude in the near future and we will make anappropriate 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 asmall office suite. Since the year end we have been able to negotiate thesurrender of leases on two shops where we had less vibrant retailers. The firstof these was originally let to a musical instrument retailer at £72,000 perannum. This unit has now been re-let to Prªt Manger for a new caf© 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 recordfor this part of the centre.The second unit had previously been let to a discount book retailer. The unitis now under offer to an established, upmarket gift retailer at an increasedrent. The new lease should complete soon.In September 2010, Boots the Chemist vacated its 14,000 sq. ft. Shop, havingtaken a lease on the much larger, former Woolworths store outside ourownership. The lease on our shop continued until 2015. We have, since the yearend, accepted a surrender of this lease in exchange for a payment of £1.025million, equivalent to over two and a half year's rent. We intend to dividethis unit into three smaller units and incorporate the vacant first flooroffices.We have seen a high level of retailer interest in these units and already haveoffers on all of them from exciting retailers. I look forward to announcing thelettings in due course. We have made a planning application to change the shopfronts on these units and, subject to obtaining this consent, anticipate thatthe development will be let and completed during 2011.
Sheffield
Orchard Square has remained fully let throughout 2010. As a result, we havebeen able to grow the rents by some 8% over the previous year as the rentallevels established by our successful lettings in previous years filter throughto other shops in the centre. Orchard Square is anchored by reputedly one ofthe most successful TK Maxx stores in the country, and most of the shops arelet at rents of between £80 and £90 Zone A. We believe this to be anundemanding level for a major city centre.
Brixton
Since late 2009, we have invested considerable time and effort in establishingour two Brixton markets as cutting edge retail and leisure locations. Initiallywe worked with a specialist marketing company to offer pop-up shops to enticenew retailers into a location that had suffered over the years from highvacancies and low investment. The vast majority of these early retailersconverted 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 ofmouth and positive press articles created sufficient interest to ensure thatthese 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 hasthe resources to develop the Brixton Markets further. Consequently, since theyear end we have agreed terms to let the two markets to In Shops Ltd, asubsidiary of Groupe Geraud, Europe's largest private market operator. Theleases are at a base rent of £817,500 per annum with a profit share on the netrent above that amount. This increases to a 50:50 profit share on any net rentabove £1,017,500. There will be a saving of direct staff costs and othercentral overheads and therefore we expect this deal to be cash neutral at theoutset.We are confident that In Shops shares our belief that Brixton will become oneof 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 benefitfrom 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 tenantsat this shopping centre. These accounted for 29% of the centre's gross rentalincome. The centre's age meant that a number of the original leases there hadless than 12 months until expiry. As a result of the re-gearing, the centre'sfuture is much more stable and we will be able to concentrate on driving rentsforward in the future.Other Properties
As shareholders will be aware, we have deliberately sought to position the restof our portfolio at the value end of retailing. We believe that this offers ussignificant defensive qualities in the current economic environment as ourtenants are less dependent on discretionary spending. Last year, tenantfailures across the whole portfolio were limited to an aggregate rental incomeof £127,000 per annum. These units have now been re-let at broadly the samerent.OutlookWe remain concerned that the outlook for UK consumers will continue to impactupon retail property in general. However, we believe that the property marketwill experience differing levels of success dependent on location,affordability of rents and attractiveness of the individual centres. We havesold almost half our portfolio over the last five years and now retain a coreof quality assets in which we have invested significantly. Our top five centresaccount for almost our entire portfolio by value and these are mostly fully leton long leases. I therefore remain cautiously optimistic going forward.John HellerChief Executive15 April 2011FINANCE DIRECTOR'S REPORTIn 2010, we again concentrated our efforts on managing cash flow. We have alsoreviewed 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 mentionedin the Chief Executive's review, we have commenced negotiations with a numberof 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 wasafter the repayment of £11.58 million of debt. Term debt reduced from £148.38million 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 unitin 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 extendedduring the year and will now expire in September 2012. We also reduced thetotal facility to £60 million from £90 million. This facility has been reducedfurther to £47 million since the year end because we considered it unlikelythat 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 comparedto a profit of £21.4 million in 2009. This volatility in our results reflects anumber of changes in value which are taken directly to our Income Statement.Firstly, there have been considerable swings in the interest rates which haveaffected the fair value of our derivatives and this has led to a loss of £7.28million (2009: £13.27 million profit). Secondly, the revaluation of ourproperty portfolio has shown an increase of £1.57 million (2009: £9.42million). The table below shows the underlying performance of the Group on amanagement 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 148investments held for trading Profit on sale of 637 637 14 14investment properties Net change on 1,569 1,569 9,422 9,422revaluation of investment properties Net change in value 89 89 178 178of 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 1,209ventures and associates Interest rate - (7,280) (7,280) - 13,269 13,269derivative Net interest (11,858) (11,858) (12,350) (12,350) (Loss) / profit (638) (6,534) (7,172) (2,540) 23,947 21,407before 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 21,407before taxation
The interest charge, excluding the change in fair value of derivatives andone-off costs incurred on the termination of interest rate swaps, was cut inthe year to £11.9 million (2009: £12.4 million). This is due to the reductionin the level of debt and the reduced swap contracts.During the year we reduced our long term hedging to be more in line with thetotal debt outstanding. The total value of our swaps was £125.4 million againsta long term debt of £115.1 million. This was reduced in the year from £145.0million and the £3.5 million cost of breaking the swaps has been shown as anexpense in the income statement. This strategy of hedging our interest paymentsmeans that we are protected against future interest fluctuations. We do nottrade our swaps and we try to align them to the debt levels we have in theGroup 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
tablebelow. 2010 2009 £'000 £'000 Annual rental income from properties still 15,550 15,187held 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 partlyreflects increased fees received from managing third party assets, as well aslower 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 acurrent tax credit in relation to prior years of £0.9 million and deferred taxcredit of £6.3 million. This deferred tax charge has arisen due to a £2.0million movement in the derivatives, valuation of the properties, including theindexation, 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 shownin 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 8,646associate 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 9,440associate 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 91.5pGroup net assets under IFRS were £55.8 million at the year end. The moremeaningful EPRA figure shows net assets of £72.1 million, equivalent to 87.5pper share. The EPRA NNNAV reduced to 66.7p per share, predominately due to theincrease in the number of shares in issue as a result of paying a proportion oflast year's final dividend in shares.
Accounting Judgements and going concern
The most significant judgements made in preparing these accounts relate to thecarrying value of the properties, investments and hedges which are stated atopen market value. The Group uses external professional valuers to determinethe values of our properties. Interest rate hedges (as explained above) arestated at net present value of the extra costs arising to maturity compared tocurrent market rates.The Directors exercise their commercial judgements when reviewing the cash flowforecasts of Group and the underlying assumptions on which they are based. TheGroup's business activities, together with the factors likely to affect itsfuture development, are set out in the Chairman's Statement, the ChiefExecutive's Report and in this Report. In addition the directors considerednote 17 to the financial statements which include the company's objectives,policies and processes for managing its capital; its financial risk managementobjectives; details of its financial instruments and hedging activities; itsexposure to credit risk and liquidity risk.With a quality portfolio comprising a majority of long leases and suitablefinancial arrangements, the directors believe the company is well placed tomanage its business risks successfully despite the continuing uncertaineconomic climate. The directors therefore have a reasonable expectation thatthe company has adequate resources to continue in operational existence for theforeseeable future. Thus they continue to adopt the going concern basis ofaccounting in preparing the annual financial statements.
Dividends
The company is proposing a final dividend of 0.4p, payable on 1 July 2011 toshareholders on the register as at 10 June 2011. This makes a total dividendfor the year of 1.15p.The directors have decided against the capitalisationissue of new shares as in the previous two years, as this is felt to be toodilutive 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 Director15 April 2011Consolidated income statementfor 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 9,422investment properties
Net increase in value of investments 89
178held 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) 1,485after 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) 19,052the 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 sheetat 31 December 2010 2010 2009 Notes £'000 £'000 Non-current assets Market value of properties attributable to 194,946 213,624Group 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
702trading 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 50,465shares) 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 40,3062009 Profit for year - - - - - 19,052 19,052 Other comprehensive income: Currency translation - - 220 - - - 220in associate Total other - - 220 - - - 220comprehensive income Total comprehensive - - 220 - - 19,052 19,272income 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 59,104December 2009 Loss for year - - - - - (3,495) (3,495) Other comprehensive income: Currency translation - - 314 - - - 314in associate Total other - - 314 - - - 314comprehensive income Total comprehensive - - 314 - - (3,495) (3,181)income Transaction with owners: Equity share options - - - - - 2 2in associate Minority interest on - - - - - (199) (199)share disposal in associate Issue of own shares 162 (176) - - - - (14)and expenses Disposal of own - - - - 973 - 973shares 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 55,761December 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 equivalentsFor the purpose of the cash flow statement, cash and cash equivalents comprisethe 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 preparedin accordance with International Financial Reporting Standards (IFRS), asadopted by the European Union and with those parts of the Companies Act 2006applicable to companies reporting under IFRS.The company has elected to prepare the parent company's financial statements inaccordance with UK GAAP, as applied in accordance with the provisions of theCompanies Act 2006 and these are presented in note 25. The financial statementsare prepared under the historical cost convention, except for the revaluationof freehold and leasehold properties and financial assets held for trading andfair value of interest derivatives. The group financial statements arepresented in Pounds Sterling and all values are rounded to the nearest thousandpounds (£'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 thecarrying value of the properties, investments and interest rate hedges whichare stated at open market value. The Group uses external professional valuersto determine the values of our properties.The Directors exercised their commercial judgements when reviewing the cashflow forecasts of the Group and the underlying assumptions on which they arebased. The Group's business activities, together with the factors likely toaffect its future development, are set out in the Chairman's Statement, theChief Executive's Report and Finance Director's Report. In addition theDirectors considered note 17 of the financial statements which includes thecompany's objectives, policies and processes for managing its capital; itsfinancial risk management objectives; details of its financial instruments andhedging 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 businessrisks despite the current uncertain economic outlook. The Directors thereforehave a reasonable expectation that the company has adequate resources tocontinue in operational existence for the foreseeable future. Thus theycontinue to adopt the going concern basis of accounting in preparing the annualfinancial statements.Key judgements and estimatesThe preparation of the financial statements requires management to makeassumptions and estimates that may affect the reported amounts of assets andliabilities and the reported income and expenses, further details of which areset out below. Although management believes that the assumptions and estimatesused 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 theEU but are not effective for the year ended 31 December 2010 and have not beenadopted 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 consolidationThe Group accounts incorporate the accounts of London & Associated PropertiesPLC and all of its subsidiary undertakings, together with the Group's share ofthe results and net assets of its joint ventures and associate.
Subsidiaries
Subsidiaries are those entities controlled by the Group. Control is assumedwhen the Group has the power to govern the financial and operating policies ofan entity or business and to economically benefit from its activities.Subsidiaries acquired during the year are consolidated using the acquisitionmethod. 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 venturesInvestments in joint ventures, being those entities over whose activities theGroup has joint control, as established by contractual agreement, include theappropriate share of the results and net assets of those undertakings.
Associates
Undertakings in which the Group has a participating interest of not less than20% of the voting capital and over which it has the power to exert significantinfluence are defined as associated undertakings. The financial statementsinclude the appropriate share of the results and reserves of thoseundertakings.
Goodwill
Goodwill arising on acquisition is recognised as an intangible asset andinitially measured at cost, being the excess of the cost of the acquired entityover the Group's interest in the fair value of the assets and liabilitiesacquired. Goodwill is carried at cost less accumulated impairment losses.Goodwill arising from the difference in the calculation of deferred tax foraccounting purposes and fair value in negotiations is judged not to be an assetand is accordingly impaired on completion of the relevant acquisition.
Revenue
Rental incomeRental income arises from operating leases granted to tenants. An operatinglease is a lease other than a finance lease. A finance lease is one wherebysubstantially all the risks and rewards of ownership are passed to the lessee.Rental income is recognised in the group income statement on a straight-linebasis over the term of the lease. This includes the effect of lease incentivesto tenants, which are normally in the form of rent free periods. Contingentrents, being the difference between the rent currently receivable and theminimum lease payments, are recognised in property income in the periods inwhich they are receivable. Rent reviews are recognised when such reviews havebeen 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 revenueRevenue in respect of listed investments held for trading represents investmentdividends received and profit or loss recognised on realisation. Dividends arerecognised in the income statement whenthe dividend is received.Property operating expensesProperty operating expenses are expensed as incurred and any property operatingexpenditure not recovered from tenants through service charges is charged tothe income statement.
Group accounting policies continued
Employee benefits
Share based remunerationThe 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- termincentive plan and the options granted under the share option scheme isdetermined at the date of grant. This fair value is then expensed on astraight-line basis over the vesting period, based on an estimate of the numberof shares that will eventually vest. At each reporting date, the fair value ofthe non-market based performance criteria of the long-term incentive plan isrecalculated 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. Forlisted investments, fair value is the bid market listed value at the balancesheet date. Realised and unrealised gains or losses arising from changes infair value are included in the income statement of the period in which theyarise.
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 overdraftsBank loans and overdrafts are included as financial liabilities on the groupbalance sheet net of the unamortised discount and costs of issue. Interestpayable on those facilities is expensed as a finance cost in the period towhich it relates.Debenture loansThe debenture loans are included as a financial liability on the balance sheetnet of the unamortised costs on issue. The cost of issue is recognised in thegroup income statement over the life of the debenture. Interest payable todebenture holders is expensed in the period to which it relates.Finance lease liabilitiesFinance lease liabilities arise for those investment properties held under aleasehold interest and accounted for as investment property. The liability iscalculated as the present value of the minimum lease payments, reducing insubsequent reporting periods by the apportionment of payments to the lessor.Lease payments are allocated between the liability and finance charges so as toachieve a constant financing rate. Contingent rents payable, such as rentreviews or those related to rental income, are charged as an expense in theperiod in which they are incurred.Interest rate derivativesThe Group uses derivative financial instruments to hedge the interest rate riskassociated with the financing of the group's business. No trading in suchfinancial instruments is undertaken. At each reporting date, these interestrate derivatives are recognised at their fair value to the business, being theNet Present Value of the difference between the hedged rate of interest and themarket rate of interest for the remaining period of the hedge.Where a derivative is designated as a hedge of the variability of a highlyprobable forecast transaction i.e. an interest payment, the element of the gainor loss on the derivative that is an effective hedge is recognised directly inequity. When the forecast transaction subsequently results in the recognitionof a financial asset or a financial liability, the associated gains or lossesthat were recognised directly in equity are reclassified into the incomestatement in the same period or periods during which the asset acquired orliability assumed affects the income statement i.e. when interest income orexpense is recognised.The gain or loss arising from any adjustment to the fair value to the businesscalculation is recognised immediately in the group income statement when thecriteria set out in IAS 32 allowing the movements to be shown in equity havenot been met.Treasury sharesWhen the Group's own equity instruments are repurchased, consideration paid isdeducted from equity as treasury shares until they are cancelled. When suchshares are subsequently sold or reissued, any consideration received isincluded in equity.Investment propertiesValuation
Investment properties are those that are held either to earn rental income orfor capital appreciation or both, including those that are undergoingredevelopment. They are reported on the Group balance sheet at fair value,being the amount for which an investment property could be exchanged betweenknowledgeable and willing parties in an arm's length transaction. The valuationis undertaken by independent valuers who hold recognised and relevantprofessional qualifications and have recent experience in the locations andcategories of properties being valued. Surpluses or deficits resulting fromchanges in the fair value of investment property are reported in the Groupincome statement in the period in which they arise.Capital expenditureInvestment properties are measured initially at cost, including relatedtransaction costs. Additions to capital expenditure, being costs of a capitalnature, directly attributable to the redevelopment or refurbishment of aninvestment property, up to the point of it being completed for its intendeduse, are capitalised in the carrying value of that property. The redevelopmentof an existing investment property will remain an investment property measuredat fair value and is not reclassified. Capitalised interest is calculated withreference to the actual rate payable on borrowings for development purposes, orfor that part of the development costs financed out of borrowings thecapitalised interest is calculated on the basis of the average rate of interestpaid 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 amortisationIn applying the fair value model to the measurement of investment properties,depreciation and amortisation are not provided in respect of investmentproperties.Plant and equipmentOther non-current assets, comprising motor vehicles and office equipment, aredepreciated at a rate of between 10% and 33% per annum which is calculated towrite off the cost, less estimated residual value of the assets, on a straightline basis over their expected useful lives.Income taxesThe charge for current taxation is based on the results for the year asadjusted for disallowed or non-assessable items. Tax payable upon realisationof revaluation gains recognised in prior periods is recorded as a current taxcharge with a release of the associated deferred tax. Deferred tax is the taxexpected to be payable or recoverable on differences between the carryingamounts of assets and liabilities in the financial statements and thecorresponding tax bases used in the tax computations, and is accounted forusing the balance sheet liability method. Deferred tax liabilities aregenerally recognised for all taxable temporary differences and deferred taxassets are recognised to the extent that it is probable that taxable profitswill be available against which deductible temporary differences can beutilised. In respect of the deferred tax on the revaluation surplus, this iscalculated on the basis of the chargeable gains that would crystallise on thesale of the investment portfolio as at the reporting date. The calculationtakes account of indexation on the historic cost of properties and anyavailable capital losses. Deferred tax is calculated at the tax rates that areexpected to apply in the period when the liability is settled or the asset isrealised. Deferred tax is charged or credited in the group income statement,except when it relates to items charged or credited directly to equity, inwhich case it is also dealt with in equity.Cash and cash equivalentsCash comprises cash in hand and on demand deposits, net of bank overdrafts.Cash equivalents comprise short-term, highly liquid investments that arereadily convertible to known amounts of cash and which are subject to aninsignificant risk of changes in value and originalmaturities of three monthsor less.Ordinary SharesShares are classified as equity when there is no obligation to transfer cash orother assets. Incremental costs directly attributable to the issue of newshares are shown in equity as a deduction, net of tax, from the proceeds.Segmental ReportingFor management reporting purposes, the Group is organised into businesssegments distinguishable by economic activity. The Group's only businesssegments are investment properties and other investments. These businesssegments are subject to risks and returns that are different from those ofother business segments and are the primary basis on which the Group reportsits segment information. This is consistent with the way the Group is managedand with the format of the Group's internal financial reporting.Notes to the financial statementsfor the year ended 31 December 2010
1.Segmental analysis
Operating Segments are based on the internal reporting and operationalmanagement of the Group. The Group is organised into Property and otherinvestments.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 - 14investment properties
Net increase/(decrease) 1,569 - 1,569 9,422
- 9,942on revaluation of investment properties Net increase/(decrease) - 89 89 - 178 178on revaluation of investments held for trading
Operating profit/(loss)* 12,572 132 12,704 18,953 326 19,279
Total assets (excluding 237,023 717 237,740 256,556 702 257,258investments 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 3,196ventures: non segmental (notes 10 and 12) Investments in 7,483 8,044associate: non segmental (note 11) Investments in unlisted 5 5companies Net assets as per 55,761 59,104balance 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 - 3,594Rental 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 includedwithin the primary statements. No customer represents revenue in excess of 10per 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
1484. 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 beable to claim capital allowances in excess of depreciation in future years, butat a slightly lower level than in the current year.Deferred tax provision has been made for gains on revaluing investmentproperties. At present it is not envisaged that any tax will become payable inthe 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 885prior period Dividends to be paid: Interim dividend for 2010 paid on 21 January 0.75p 627 0.75p 5972011
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 -
1,7342010 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 1,586December 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 - - - - 9742010 Net book value at 1 January 243,109 83,598 159,511 - 8162010
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 -
1,6822009 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 - 1,734December 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 - - - - 9182009 Net book value at 1 January 245,770 95,272 150,498 - 9172009
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 1,396Analytical Ventures Limited (Analytical Ventures) - unlisted propertyinvestment company. The company owns 50 per cent of the issued share capitaland £1,940,860 of loan stock of Analytical Ventures. The remaining 50 per centof the issued share capital and £1,800,000 of loan stock is owned by UberiorVentures Limited. Analytical Ventures is incorporated and operates in Englandand 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 aboard of directors with neither party having overall control.Dragon Retail Properties Limited (Dragon) - unlisted property trading andinvestment company. The company owns 50 per cent of the issued share capital.The remaining 50 per cent is owned by Bisichi Mining PLC. Dragon isincorporated and operates in England and Wales and has issued share capital of500,000 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 8,044The company owns 42 per cent (2009: 42 per cent) of the issued share capital ofBisichi 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 (propertyinvestment) and South Africa (coal mining). Bisichi is an associatedundertaking because London & Associated Properties PLC has a participatinginterest. Bisichi has an independent board of directors which controls itsoperating 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
702portfolio 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 5,000cent £1.7 million First Mortgage Debenture Stock 2016 at 8.67 1,700 1,700per cent £5 million First Mortgage Debenture Stock 2018 at 11.6 per 5,000 5,000cent £10 million First Mortgage Debenture Stock 2022 at 8.109 9,804 9,787per 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 £60million bank revolving credit facility repayable in September 2012 and the longterm £70 million term bank loan repayable in November 2014 are secured onspecific freehold and leasehold properties which are included in the financialstatements 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 instrumentsTreasury policyThe Group enters into derivative transactions such as interest rate swaps andforward exchange contracts in order to help manage the financial risks arisingfrom the Group's activities. The main risks arising from the Group's financingstructure are interest rate risk, liquidity risk and market price risk. Thepolicies for managing each of these risks and the principal effects of thesepolicies on the results are summarised below.
Interest rate risk
Treasury activities take place under procedures and policies approved andmonitored by the Board to minimise the financial risk faced by the Group. Thebank loans are secured by way of a first charge on certain fixed assets. Therates 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 tointerest risk and to refinancing risk. In effect the Group seeks to borrow foras long as possible at the lowest acceptable cost. Efficient treasurymanagement and strict credit control minimise the costs and risks associatedwith this policy which ensures that funds are available to meet commitments asthey fall due. Cash and cash equivalents earn interest at rates based on LIBORin the UK. These facilities are considered adequate to meet the Group'santicipated 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 andnon-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 riskAt the balance sheet date there were no significant concentrations of creditrisk. The maximum exposure to credit risk is represented by the carrying amountof each financial asset in the balance sheet. The Group only deposits surpluscash with well-established financial institutions of high quality creditstanding.
Borrowing facilities
At 31 December 2010 London & Associated Properties PLC was within its bankborrowing facilities and was not in breach of any of the covenants. Overdraftsare renewable annually. Term loan repayments are as set out below. Details ofother 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 35,105Hedge profilea) 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 yearswap for £15.4 million (2009: £35 million) with a 7 year call option in favourof the bank, taken out in November 2007, at 4.76 per cent and a 20 year swapfor £40 million with a 7 year call option in favour of the bank, taken out inDecember 2007, at 4.685 per cent.b) There is a hedge to cover the £70 million term bank loan drawn. It consistsof a 20 year swap for £70 million with a 7 year call option in favour of thebank, taken out in November 2007, at 4.76 per cent.At the year end the amount recognised was £9,811,000 deficit (2009: £4,570,000deficit) being the estimated financial effect of the fair value to the businessof 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 thebusiness of these hedging instruments. This has been calculated as the NetPresent Value of the difference between the 17 year interest rate, which was3.85 per cent at 31 December 2010 against the rate payable under the specifichedge. 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 byapproximately £1,600,000 for each 0.1% change in interest rate. The banks owninitial 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 crystallisethe derivatives.Under IAS 39 the hedges are not deemed to be eligible for hedge accounting andany movement in the value of the hedges is therefore charged directly to theconsolidated income statement. The banks have an option to cancel the hedges inNovember 2014 and January 2015. The cost to the Group to exit the instrumentsbefore 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 exitthe 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 financialinstruments that are measured in the balance sheet at fair value, this requiresdisclosure of fair value measurements by level of the following fair valuehierarchy:
* 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 13,269Capital structure
The Group sets the amount of capital in proportion to risk. It ensures that thecapital structure is commensurate to the economic conditions and riskcharacteristics to the underlying assets. In order to maintain or adjust thecapital structure, the Group may adjust the capital structure, vary the amountof dividends paid to shareholders, return capital to shareholders, issue newshares 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 itsdebt to equity ratio (gearing levels). This is calculated as the net debt(loans less cash and cash equivalents) as a percentage of the equity. During2010 this decreased to 189.8 per cent (2009: 223.6 per cent) which wascalculated 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. Allthe debt, apart from the overdrafts, is at fixed rates of interest as shown innotes 16 and 17. The Group does not have any externally imposed capitalrequirements.
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 andother receivables and investments. The Group has no significant concentrationof credit risk as exposure is spread over a large number of counterparties andcustomers. The credit risk in liquid funds and derivative financial instrumentsis limited because the counterparties are banks with high credit ratingsassigned by international credit-rating agencies. The Group's credit risk isprimarily attributable to its trade receivables. The amounts presented in thebalance sheet are net of allowances for doubtful receivables, estimated by theGroup's management based on prior experience and the current economicenvironment.
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 asfollows: 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 2,122per cent) Post tax fair value (3,520) (5,388) (5,457)adjustment Post tax fair value (4.21)p (9.40)p (9.91)padjustment - 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 theinterests in associate and joint ventures are insignificant. There is no timelimit 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
11,00010p 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
160during 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 7,963reporting 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 2July 2010, from the amount standing to the credit of the Company's sharepremium account and less costs incurred of £14,000. The existing shareholdersas at 4 June 2010 were entitled to the new Capitalisation Issue ordinary sharesas 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 6,237January 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 4,558December
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 31December 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 - - - 70,000exercised Shares allocated over which options 1,549,955 - - - 1,549,955have 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 2010there 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 31December 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 - - - 550,000have 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 thecompany 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 & AssociatedProperties 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 itssubsidiaries.
Directors
London & Associated Properties PLC provides office premises, propertymanagement, general management, accounting and administration services for anumber of private property companies in which M A Heller and J A Heller have aninterest. Under an agreement with M A Heller no charge is made for theseservices on the basis that he reduces by an equivalent amount the charge forhis services to London & Associated Properties PLC. The board estimates thatthe 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 InvestmentsLimited, London & South Yorkshire Securities Limited, Metroc Limited, PenrithRetail 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 Goldringis a majority shareholder and director. Delmore provides consultancy servicesto 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 theirremunerations including employers national insurance for the year were £1,504,000 (2009: £2,192,000). All other disclosures required including interestin share options in respect of those directors are included within theremuneration 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 6,967inclusive 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 29,485lease liabilities Finance lease liabilities are in respect of leased investment property. Manyleases provide for contingent rent in addition to the rents above, usually aproportion 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 93,621 129,04324. 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 accountingThe financial statements have been prepared under the historical costconvention as modified to include the revaluation of freehold and leaseholdproperties and fair value adjustments in respect of current asset investmentsand interest rate hedges and in accordance with applicable accountingstandards. All accounting policies applied are consistent with those of priorperiods.Investment properties are accounted for in accordance with SSAP 19, "Accountingfor Investment Properties", which provides that these should not be subject toperiodic depreciation charges, but should be shown at open market value. Thisis contrary to the Companies Act 2006 which states that, subject to anyprovision for depreciation or diminution in value, fixed assets are normally tobe stated at purchase price or production cost. Current cost accounting or therevaluation of specific assets to market value, as determined at the date oftheir last valuation, is also permitted.The treatment of investment properties under the Companies Act 2006 does notgive a true and fair view as these assets are not held for consumption in thebusiness but as investments, the disposal of which would not materially affectany manufacturing or trading activities of the enterprise. In such a case it isthe current value of these investments, and changes in that current value,which are of prime importance. Consequently, for the proper appreciation of thefinancial position, the accounting treatment required by SSAP 19 is consideredappropriate for investment properties. Details of the current value andhistorical cost information for investment properties are set out in note25.3.Depreciation or amortisation is only one of the many factors reflected inthe annual revaluation and the amount that might otherwise have been showncannot 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 assetsa) Investment propertiesAn external professional valuation of investment properties is carried outevery year. Properties professionally valued by Chartered Surveyors are on anexisting use open market value basis, in accordance with the PracticeStatements contained within the RICS valuation standards 2010 prepared by theRoyal Institution of Chartered Surveyors.
The cost of improvements includes attributable interest.
b) Other tangible fixed assetsOther tangible fixed assets are stated at historical cost. Depreciation isprovided on all other tangible fixed assets at rates calculated to write eachasset down to its estimated residual value evenly over its expected usefullife. The rates generally used are - office equipment - 10 to 33 per cent perannum, 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 assetsThese comprise investments in subsidiaries and investments in AnalyticalVentures Limited and Dragon Retail Properties Limited (unlisted jointventures), Bisichi Mining PLC (listed associate), and in unlisted companieswhich are all held for the long term. Provision is made for any impairment inthe value of fixed asset investments.b) Investments held as current assetsInvestments held for trading are included in current assets and are revalued tofair value. For listed investments, fair value is the bid market listed valueat the balance sheet date. Realised and unrealised gains or losses arising fromchanges in fair value are included in the income statement of the period inwhich they arise.Financial InstrumentsBank loans and overdraftsBank loans and overdrafts are included in creditors on the company balancesheet at the amounts drawn on the particular facilities. Interest payable onthose facilities is expensed as a finance cost in the period to which itrelates.Interest rate derivativesThe company uses derivative financial instruments to hedge the interest raterisk associated with the financing of the company's business. No trading insuch financial instruments is undertaken. At each reporting date, theseinterest rate derivatives are recognised at their fair value to the business,being the Net Present Values of the difference between the hedged rate ofinterest 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 highlyprobable forecast transaction i.e. an interest payment, the element of the gainor loss on the derivative that is an effective hedge is recognised directly inequity. When the forecast transaction subsequently results in the recognitionof a financial asset or a financial liability, the associated gains or lossesthat were recognised directly in equity are reclassified into the incomestatement in the same period or periods during which the asset acquired orliability assumed affects the income statement i.e. when interest income orexpense 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 venturesInvestments in joint ventures, being those entities over whose activities theGroup has joint control as established by contractual agreement, are includedat cost.Deferred taxationDeferred tax is recognised in respect of all timing differences that haveoriginated but not reversed at the balance sheet date where transactions orevents that result in an obligation to pay more tax in the future or a right topay less tax in the future have occurred at the balance sheet date. Timingdifferences are differences between the company's taxable profits and itsresults as stated in the financial statements. Deferred tax is measured at theaverage tax rates which are expected to apply in the periods in which timingdifferences are expected to reverse, based on tax rates and laws that have beenenacted or substantially enacted by the balance sheet date. Deferred tax ismeasured on a non-discounted basis.Leased assets and obligationsAll leases are "Operating Leases" and the annual rentals are charged to theprofit and loss account on a straight line basis over the lease term. Rent freeperiods or other incentives received for entering into a lease are accountedfor over the period of the lease so as to spread the benefit received over thelease term.Retirement benefitsFor defined contribution schemes the amount charged to the profit and lossaccount in respect of pension costs and other post retirement benefits is thecontributions payable for the year. Differences between contributions payablein the year and contributions actually paid are shown as either prepayments oraccruals 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 - 1,776January 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 1,632December 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 - - - 961January 2010 Charge for the year 196 - - - 196 Disposals (137) - - - (137) Depreciation at 31 1,020 - - - 1,020December 2010 Net book value at 1 87,333 62,678 23,840 - 815January 2010 Net book value at 31 86,758 63,123 22,523 500 612December 2010
The freehold and leasehold properties were valued as at 31 December 2010 byexternal professional firms of chartered surveyors. The valuations were made atopen market value on the basis of existing use. The increase in book value wastransferred 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 52010 Subsidiary companiesThe company owns 100 per cent of the ordinary share capital of the followingcompanies 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 19,63825.6. Investments 2010 2009 £'000 £'000
Market value of the listed investment 717
702portfolio 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
5,000at 11.3 per cent
£1.7 million First Mortgage Debenture Stock 1,700
1,7002016 at 8.67 per cent
£5 million First Mortgage Debenture Stock 2018 5,000
5,000at 11.6 per cent
£10 million First Mortgage Debenture Stock 9,804
9,7872022 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 outin 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 85,172Hedge profileThere 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 7year call option in favour of the bank, taken out in November 2007, at 4.76 percent and a 20 year swap for £40 million with a 7 year call option in favour ofthe bank, taken out in December 2007, at 4.685 per cent.At the year end the amount recognised was £4,166,000 deficit (2009: £2,219,000deficit) being the estimated financial effect of the fair value to the businessof these hedging instruments less the deferred tax thereon.The Directors have estimated the financial effect of the fair value to thebusiness of these hedging instruments. This has been calculated as the NetPresent Value of the difference between the 17 year interest rate, which was3.85 per cent at 31 December 2010 against the rate payable under the specifichedge. 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 31December 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 havean option to cancel the hedge in January 2015, to which they separatelyattribute a cost of £2,511,000 (2009: £4,518,000), even though this is afterthe expiry of the term loans and the level of the hedges closely equate to theamount of the loans outstanding. Any movement in the value of the hedges hastherefore to be charged directly to the Income Statement. The cost to thecompany to exit the instruments before January 2015 has been attributed a costby the bank of £2,511,000 (2009:£4,518,000). It is not the intention of theDirectors 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 financialinstruments that are measured in the balance sheet at fair value, this requiresdisclosure of fair value measurements by level of the following fair valuehierarchy:
* 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 Over20101 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 asfollows: 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 capitalDetails of share capital, treasury shares and share options are set out in note19.25.11. 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 transactionswith 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
91ventures Investment 12 12 12 15 17properties-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 11.84share 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) 21.76and 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) 15.22shareholders (Loss)/earnings per share - (4.24)p 24.32p (62.30)p (16.40)p 20.00pbasic (Loss)/earnings per share - (4.24)p 24.32p (62.30)p (16.40)p 19.97pfully 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 £mstatement Net cash inflow from 9.58 12.18 12.02 3.97 3.44operating activities Capital investment and 20.42 13.94 (6.09) 9.84 (26.86)financial investment
Note: ^Excluding the present value of head leases
vendorRelated Shares:
London & Associated Properties