LONDON &
ASSOCIATED
PROPERTIES
ANNUAL REPORT 2021
Contents
Annual General Meeting
15 June 2022
Announcement of half year results to 30 June 2022
Late August 2022
Announcement of annual results for 2022
Late April 2023
OVERVIEW
1 LAP at a glance
2 Chairman’s statement and Chief Executive’s review 2021
STRATEGIC REPORT
5 Financial and performance review
10 Principal activities, strategy & business model
10 Risks and uncertainties
11 Bisichi risks and uncertainties
12 Key performance indicators
13 Corporate responsibility
GOVERNANCE
15 Directors & advisors
16 Directors’ report
19 Corporate Governance
21 Governance Statement by the Chairman of The Remuneration Committee
22 Annual remuneration report
26 Remuneration Policy Summary
28 Audit committee report
29 Directors’ responsibilities statement
30 Independent auditor’s report
FINANCIAL STATEMENTS
36 Consolidated income statement
36 Consolidated statement of comprehensive income
37 Consolidated balance sheet
38 Consolidated statement of changes in shareholders’ equity
39 Consolidated cash flow statement
40 Group accounting policies
47 Notes to the financial statements
75 Five year financial summary
Financial calendar
London & Associated Properties PLC 2021 1
FINANCIAL HIGHLIGHTS
Fully diluted net
assets per equity share IFRS net assets
Properties portfolio
valuation*
34.78p £40.2m £66.9m
2020: 34.99p 2020: £39.5m 2020: £71.0m
*Includes investment properties, head leases,
assets held for sale and property inventory.
Excludes properties under management.
OVERVIEW
LAP at a glance
OVERVIEW
KEY PROJECTS HIGHLIGHT
Directly owned • Orchard Square, Sheffield
• Runcorn Manor Park Industrial Estate
• West Ealing development
• Kings Square, West Bromwich
• Adlington Court Industrial Estate, Warrington
• Food hub development at Sheffield complete and
trading
• Runcorn Industrial portfolio being managed actively
for rental growth
• Sale of Radcliffe portfolio at significantly above
December 2020 valuation
• Sale of largest unit at Runcorn for healthy profit on
original cost
• Ealing residential development property progressing
on plan
• New residential development in Purley in the
planning stage
Coal
production
• In South Africa, Black Wattle produced 1.04m
metric tonnes of Run of Mine Coal in 2021
(2020: 1.18m metric tonnes)
• Agreement signed to acquire an additional
6.1million metric tonnes of Run of Mine coal
contiguous to Black Wattle Colliery, the South
African mining operations, extending the life of
mine to eight years.
KEY PROJECTS
2 London & Associated Properties PLC 2021
OVERVIEW
Chairman’s statement and
Chief Executive’s review 2021
We are pleased to present the Chairman’s and Chief Executive’s
review for 2021. The first half of the year was marked by further
lockdowns and in the second half the Omicron variant created
significant headwinds. Nonetheless, LAP has made good progress overall.
We have achieved this by continuing to focus on reducing costs;
repositioning our portfolio away from fashion-orientated retail and
shopping centres; and maintaining intensive management of our assets.
CONSOLIDATED RESULTS
Our efforts over the last few difficult years have started to achieve
results. The result attributable to LAP shareholders was close to
breakeven (attributable loss £0.2 million as compared with £6.7 million
last year) and our attributable net assets are now £29.7 million as
compared with £29.9 million.
The consolidated property portfolio was valued at £66.9 million at
year end 2021. With some £4.2 million of property sales during the
year, the like for like comparison at year end 2020 is £66.8 million.
This slight increase in valuation reflects capital expenditure invested
of £1.0 million offset by valuation reductions of £0.9 million.
The lower overall valuation of £0.9 million resulted from a £1.75 million
reduction on one shopping centre asset; a £0.8 million inventory
impairment on a shopping centre redevelopment; an increase of
£1.2 million (20.5%) in our industrial portfolio; and an increase in the
remaining portfolio of community retail assets of £0.45 million (1.7%).
It should be borne in mind that these valuations were undertaken at
year end 2021 and the evidence suggests that values have improved
since then. Also, the improvement in industrial property valuations
and the greater resilience of community retail are encouraging as we
transition the business away from retail shopping centres.
Pleasingly like for like rental income for the Group (excluding sold
properties and bad debt charges) increased by £0.3 million (4.5%)
to £5.9 million. These results reflect a stabilisation of rents being
achieved on new lettings within the retail portfolio together with a
reduction in the number and value of concessions being provided
to tenants as a result of the pandemic.
Rental income resilience can also be seen in our occupancy levels,
which were 96.0% at year end (2020: 92.2%). An industrial unit
accounting for 1.0% of the current voids is now under offer. Rent
collection levels have improved with 83% of Q1 2022 rents received
to date compared to 53% at the corresponding time last year.
We have continued to cut company overheads during 2021, including
moving head office to smaller premises. As previously reported, in
2019 we outsourced all of our day to day property management activity
and consequently have fewer employees. We assigned the
remainder of the lease on our old premises in November 2021, which
means that the savings are yet to show in our figures: the annual
saving will be £0.2 million.
DEBT MANAGEMENT
LAP has continued to maintain excellent relationships with its lenders
and its record of never breaching a banking covenant remains intact.
No loans expired or were renewed in 2021. In 2022 there will be two
loan expiries, the £10 million debenture from Aviva, and the £13.3
million loan through QSix (formerly PMM), which is secured only against
Orchard Square in Sheffield with no recourse to LAP. The latter loan
has an option to extend for a further year subject to certain conditions.
LAP has engaged a debt advisor and has commenced the process of
seeking new lenders.We will keep shareholders updated as the
refinancing progresses.
LAP PROPERTY ACTIVITIES
Orchard Square, Sheffield
During 2021 we have made significant progress in repositioning this
former shopping centre into a mixed use and experiential location in
the heart of Sheffield. This has been facilitated by our joint venture
with Market Asset Management (“MAM”) through which we converted
a former ladieswear shop and a Starbucks into a street food venue
- Sheffield Plate - with six food retailers and two bars. It opened in
September at a total cost to LAP of £0.4 million. All the units were
let in advance of opening and there is a waiting list of operators.
Income to LAP and MAM is based on 20% of the operators’ turnover
and we will receive 50% of all income once operating expenses are
covered. LAP’s net share of income from this venture is projected to
be £0.1 million per annum.
As with hospitality venues across the country, trading in the important
run-up to Christmas was badly hit by the Omicron variant. However,
food sales are ahead of budget since the start of 2022. Further,
reviews have been consistently good and a number of local
publications (including the Sheffield Express and Star) have rated it
the best food place in Sheffield.
Elsewhere in Orchard Square, we are working to complement Sheffield
Plate by introducing further restaurants and bars. For example, and
since year end, we are currently under offer to a restaurant at a rent
of £56,000 per annum for the unit previously let to Fat Face. We
received three offers from restaurants and expressions of interest from
others which augurs well for repositioning the Square further away
from traditional retail as other units become available. In addition,
one of our original restaurant tenants is doubling the size of its unit.
We are confident that tenants will trade well at Orchard Square.
We have engaged marketing specialists to introduce a range of
events and activities within the Square to increase footfall and
spend. The appeal to customers will be further enhanced by the
weatherproofing that we will be installing during the next few
months following the award of a grant from the Future High Street
Fund in 2020. The grant will also be used to refurbish and re-brand
Orchard Square. The rest of Orchard Square remains fully let with
the exception of a unit being kept vacant as part of the creation of
eight flats for which planning permission has been granted.
London & Associated Properties PLC 2021 3
OVERVIEW Chairman’s statement and Chief Executive’s review 2021
West Bromwich
Kings Square in West Bromwich remains fully let. We are currently
under offer to sell this asset and further reduce the proportion of
shopping centres within our portfolio. As is always the case when an
asset is under offer, there is no guarantee that the other party will
perform. However, the buyer is highly credible and the purchase is of
strategic importance to it. The price agreed is in line with its valuation
and we will keep shareholders informed as matters progress.
Runcorn
At Manor Park in Runcorn, we refurbished two units during 2021.
The first of these was the largest in the portfolio at 38,500 sq ft.
Although intending to relet the unit, we received and accepted an
offer in May for the freehold of the unit at £2.35 million. The sale
completed in September 2021.
The second unit (15,000 sq ft) has since been let at a rent equating
to £5.50 per sq ft. The passing rent on our remaining units is sub-£5
per sq ft so this is a pleasing result and will have a positive effect on
rent reviews going forward.
Disposals
We sold two further assets during 2021. The first of these was a pair of
retail blocks in Radcliffe near Bury, Lancashire. These were sold in May
for £1.8 million against a book value of £1.7 million. The cash receipts
were placed on deposit to be reinvested. We also sold an arcade that
formed part of a block in Rugeley, Staffordshire for £0.5 million, which
was in line with book value. Although we exchanged unconditional
contracts in December 2021, completion took place in January 2022.
Proceeds were again reinvested.
Acquisition
Since year end we have acquired (for cash) four industrial units in
Warrington for £2.37 million. The units are fully let and produce
aggregate rent of £0.12 million per annum. However, we believe
them to be reversionary and look forward to implementing our asset
management plan.
West Ealing
We have now finalised all of the outstanding conditions attaching to
the planning consent obtained at the end of 2020 for 56 flats and
four retail units. This took longer than anticipated due to covid
related absences at the local authority. Since year end we and our
joint venture partners have instructed an agent to market this
investment as consented land. There is no certainty that there will
be a sufficiently attractive bid on this basis to induce us to sell, but
interest so far has been strong. Our alternative course of action
remains to build out the development. LAP owns 45% of the equity
investment in this asset and has invested £1.5 million in total.
Purley
We have also worked with the same joint venture partners to
acquire options on six semi-detached houses with large gardens in
Purley, London. A planning application has since the year end been
submitted for 44 flats and 4 town houses. We will update
shareholders on progress in due course.
The remainder of our portfolio has performed well and remains
effectively fully let.
DRAGON RETAIL PROPERTIES
Dragon owns a property in Clifton, Bristol let to Boots the Chemist
and Lizard Lounge, one of Bristol’s best-known nightclubs. After a
difficult period during lockdown when neither tenant paid rent, we
are pleased to report that rental payments have resumed.
Dragon’s loan of £1.2 million from Santander expired in September
2020, although it has been extended several times as we have
sought to refinance with a new lender following Santander’s
withdrawal from the retail property lending market. We are now in
the due diligence process with another established lender and hope
to complete a new loan in the near future.
BISICHI PLC
For 2021, Bisichi plc, our 42% owned subsidiary, made a profit before
interest, tax, depreciation and amortisation (EBITDA) of £5.8 million
(2020: loss: £2.4 million) and an operating profit before depreciation,
fair value adjustments and exchange movements (Adjusted EBITDA) of
£5.0 million (2020: loss: £1.1 million). £4.3 million in adjusted EBITDA
was attributable to the second half of the year.
The most challenging priority for Bisichi was the continuity of its South
African mining and processing operations, particularly during the peak
of the Covid-19 pandemic. In early 2020, when global coal demand
fell, the average weekly price of Free on Board (FOB) coal from Richards
Bay Coal Terminal (API4 price) fell from a high of US$92 in January
2020 to $44 in mid-April 2020. Thereafter, prices remained largely
supressed until the end of 2020. Under these very difficult
circumstances, Bisichi worked to ensure that its South African
operations continued operating in an efficient manner until global
economic activity and markets improved.
As 2021 unfolded, the improvement in global economic activity had
a significant impact on demand for coal in the international market,
alleviating many of the challenges its South African operations faced
in 2020. Strong demand for coal in the seaborne market resulted in
significantly higher API4 prices, particularly in the second half of the
year - when the price peaked at over $245 in October. Overall, the
API4 price averaged $125 in 2021 compared to $65 in 2020. Despite
constraints in transporting coal for export on the South African rail
network which were largely beyond Bisichi’s control, at Sisonke Coal
Processing (our South African coal processing operation) it was able
to take advantage of the improved international coal price by
increasing export sales during the year to 320,000 metric tonnes
(2020: 230,000 metric tonnes). The overall increase in revenue,
operating costs and earnings during the year was mainly attributable
to coal processing operations.
4 London & Associated Properties PLC 2021
STRATEGIC
REPORT
The overall performance of Bisichi’s South African operations would
have been even better if it had not encountered some difficult mining
conditions at Black Wattle, its mining operation, which adversely
impacted coal production during the period. Overall, the mine
produced 1.04 million metric tonnes compared to 1.18 million
metric tonnes in 2020.
During the year Bisichi continued to work closely with Vunani
Mining, its BEE partner in Black Wattle, to seek further opportunities
to extend the life of mine at Black Wattle. At the end of last year,
Black Wattle signed an agreement to acquire an additional coal
reserve contiguous to Black Wattle which required further drilling to
ascertain its commercial viability and indicative size. Recently
concluded geological assessment indicates an expected run of mine
tonnage of 6.1 million metric tonnes. This reserve will be mined by
opencast methods, the coal will be processed at Sisonke Coal
Processing, and then sold into existing markets. This new reserve,
which is subject to regulatory approval, will extend Black Wattle’s
life of mine to eight years. Vunani Mining played a key role in
acquiring these reserves, and will share equally in any distributable
income as part of their non-controlling interest in Black Wattle.
Looking forward, Bisichi expects its mining production to improve
further once it completes its transition into new mining areas at
Black Wattle in the first half of 2022. In addition, coal market
conditions continue to improve. In the first quarter of this year,
the weekly API4 price averaged $238 and exports from its South
African operations in the same period have been in line with the
average export tonnages achieved in 2021. However, looking
beyond the first quarter, uncertainties remain, particularly with
regard to the international coal price and the impact of constraints
in transporting coal for export on the South African rail network.
In the UK, Bisichi saw annual rental revenue from its retail property
portfolio remain stable in 2021 at £1.12 million (2020: £1.18 million).
For the year ended 31 December 2021 Bisichi’s directors have
recommended an ordinary dividend of 4p (2020: Nil) per share and a
special dividend of 2p (2020: Nil) per share. LAP will receive £0.3 million.
Finally, we would like to thank employees, advisors and stakeholders
for their ongoing efforts and support.
Sir Michael Heller, John Heller,
Chairman Chief Executive
28 April 2022
STRATEGIC REPORT Chairman’s statement and Chief Executive’s review 2021
London & Associated Properties PLC 2021 5
STRATEGIC
REPORT
Financial and performance review
The financial statements for 2021 have been
prepared to reflect the requirements of IFRS 10.
This means that the accounts of Bisichi PLC (a
London Stock Exchange main market quoted
company – BISI) (“Bisichi”), have been
consolidated with those of LAP.
Bisichi continues to operate as a fully independent company and
currently LAP owns only 41.52% of the issued ordinary share
capital. However, because related parties also have shareholdings in
Bisichi and there is a wide disposition of other shareholdings, LAP is
deemed under IFRS 10 to have effective control of Bisichi for
accounting purposes. This treatment means that the income and net
assets of Bisichi are disclosed in full and the value attributable to the
“non-controlling interest” (58.48%) is shown separately in the equity
section as a non-controlling interest. There is no impact on the net
assets attributable to LAP shareholders.
Dragon Retail Properties Limited (“Dragon”) and West Ealing
Projects Limited (“West Ealing”), are both 50:50 joint ventures with
Bisichi and are also consolidated. A new joint venture, Development
Physics Limited (“DPL”) is owned 33% each by LAP, Bisichi and a
third party. This too is consolidated.
Shareholders are aware that LAP is a property business with a
significant investment in a listed mining company.
The effect of consolidating the results, assets and liabilities of the
property business and the mining company make the figures
complex and less transparent. Property company accounts are
already subject to significant volatility as valuations of property
assets as well as derivative liabilities can be subject to major
movements based on market sentiment. Most of these changes,
though, have little or no effect on the cash position and it is, of
course, self-evident that cash flow is the most important factor
influencing the success of a property business. We explain the
factors affecting the property business first, clearly separating these
from factors affecting the mining business which we do not manage.
Comments about Bisichi (the mining business) are based on information
provided by the independent management of that company.
This report comments on the performance of each of the Group’s
segments separately.
LONDON & ASSOCIATED PROPERTIES PLC
Our key objective is to ensure that we offer safe and secure
environments in which people can live, work and visit.
LAP’s core objectives in 2021 have continued to be:
• Provide environments in which tenants can thrive.
• Continually improve the business’ operating cashflow.
• Reduce exposure to the retail sector.
• Ensure gearing is at an appropriate level.
• Maintain sufficient cash in the business to be able to take
advantage of opportunities as they arise.
The last couple of years and the effects of the global pandemic have
accelerated trends driving change in the way real estate is used by
workers and the public. LAP’s long-standing strategy of divestment
away from shopping centres and towards industrial property has
meant that these changes have not had a significant effect on the
business. Our diversified portfolio has been resilient in 2021, with
our industrial portfolio performing strongly, as has our community-
based retail portfolio, serving local communities in the areas where
they live and increasingly work.
In spite of the Government imposed moratorium on normal debt
enforcement procedures, the business has received a significant
proportion of rents due. Many of our tenants are owner managed
businesses serving their local community. We do not have a
significant exposure to large fashion led retailers who have been
hardest hit by changing customer buying patterns. The below table
outlines the proportion of rent receipts, by quarter billed, at 28
March 2022. The figures in brackets show those recovered at a
similar time last year (21 April 2021). It is pleasing to note the
improvement in rent receipts year on year.
PERIOD % RECOVERY
Q2 2021 (Q2 2020) 93% (92%)
Q3 2021 (Q3 2020) 92% (91%)
Q4 2021 (Q4 2020) 92% (78%)
Q1 2022 (Q1 2021) 83% (53%)
Property Investment Activity
During 2021 two properties were sold further progressing our twin
strategy of divesting away from retail property and recycling capital
into areas where there is greater scope to increase value through asset
management activities. We sold a retail portfolio in Radcliffe and a large
single unit at our industrial property in Runcorn. These sales generated
gross proceeds of £4.65 million and a net profit of £436,000.
In January 2022 part of the proceeds of these sales was reinvested and
we completed the acquisition of an industrial property in Warrington
for £2.37 million, where we feel there is significant rental and value
growth available. £1 million has been placed on deposit with the
lender who had the security over the Radcliffe property, awaiting
deployment. In January 2022, we also completed the sale of a retail
market in Rugeley with gross proceeds of £420,000, which is shown
as a current asset in the Balance Sheet.
We will look to continue our diversification away from retail when
opportunities arise that would enhance shareholder value.
LAP continues to look for investment opportunities, particularly
within the industrial sector.
Property Development Activity
In 2020 and in early 2021, development activity was slowed due
to the uncertainty around the cash requirements on the business
arising as a result of the pandemic, but was restarted in Q2 2021.
In September 2021, we completed the development of a street
food hub at our property in Sheffield, branded Sheffield Plate. This
was an important step in the reposition of this asset towards a food
and beverage led offering in Sheffield city centre.
6 London & Associated Properties PLC 2021
STRATEGIC REPORT Financial and performance review
INCOME STATEMENT
BUSINESS ANALYSIS
2021
£’000
2020
£’000
Rental income 5,024 4,377
Service charge income 852 795
Management income from third party properties 18 18
LAP Revenue 5,894 5,190
Direct property costs (2,181) (2,192)
Impairment of inventory (816) (2,300)
Overheads (2,345) (2,317)
Depreciation (241) (258)
Operating profit/(loss) 311 (1,877)
Finance income 12 5
Finance expenses (1,713) (2,200)
Result before valuation movements (1,390) (4,072)
Other segment items
Net decrease on revaluation of investment properties (316) (664)
Profit on disposal of investment properties 436 -
Decrease in value of other investments - (20)
Loss on disposal of fixed assets (133) -
Adjustment to interest rate derivative 130 (200)
Revaluation and other movements 117 (884)
LAP loss for the year before taxation (1,273) (4,956)
Note: The figures exclude inter-company transactions.
The above figures for LAP and commentary below exclude management
fee income from Bisichi and Dragon of £236,000 (2020: £236,000).
LAP generated an operating profit of £0.3 million (2020: loss of
£1.9 million). A significant element of this result arises from the
non-cash items of depreciation and inventory impairment.
Adjusting for these, LAP generated an operating profit excluding
depreciation and inventory impairment of £1.4 million (2020: £0.7
million). This is a pleasing outcome that we hope will continue with
further asset management initiatives.
LAP generates the majority of its income from property rentals,
property management fees and development activities.
Like for like rental income was up by £0.1 million (2.9%), which
reflects a stabilisation of rents being achieved on new lettings within
the retail portfolio together with a reduction in the number and value
of concessions being provided to tenants as a result of the pandemic.
Further overhead initiatives in 2021 achieved a reduction in
overheads of £0.3 million. However, staff costs have increased by £0.3
million in 2021, as compared with 2020 when no staff bonuses were
paid, and the Chief Executive waived an element of his remuneration.
The net effect is that overheads have not changed year on year.
While lending arrangements did not change materially from 2020
and interest paid on all facilities was similar to last year, a long
standing provision of £0.5m for contingent interest was no longer
required, resulting in a decrease in finance expenses.
Investment property valuation reductions of £0.3 million (2020:
£0.7 million) arose from a decrease in retail property values of £1.5
million (2020: £1.9 million) and an increase in industrial property
values of £1.2 million (2020: £1.2 million). In the 2021 valuation our
community retail assets achieved an increase of £0.25 million but
this was over-shadowed by a reduction of £1.75 million relating to
one shopping centre in the West Midlands. This further strengthens
our view that community retail investments are showing signs of
recovery with the market differentiating between these assets
(where there are low vacancy rates and competitive demand for
space) and fashion focused retail investments.
While the loss on disposal of fixed assets of £0.1 million is small, it
arose from our decision to move to smaller serviced offices and
dispose of the remaining two years of our head office lease in
Mayfair. This happened in November 2021 and will generate
reductions in overhead costs in 2022 and beyond on both a cash
and accounting basis of £0.2 million.
Excluding the impairment of trading properties, the adjusted loss
before valuation movements was £0.6 million (2020: £1.8 million).
This excludes management income from Bisichi and Dragon.
Producing a profit through the activities described above, combined
with the refinancing of expensive long term debt in 2022 as well as
generating more rental income, through ongoing asset management
initiatives, remains the business’ key focus for the future.
We continue to progress our broader realisation plans for this
property including creating potential residential opportunities.
LAP continues to develop and refurbish all its properties to provide
environments in which tenants can thrive.
Our joint venture residential developments are discussed in more
detail later in this review.
Funding
LAP has two loans reaching the end of their terms within the next
twelve months, a 25 year debenture with Aviva of £10 million
ending in August 2022 and a 3 year loan with Phoenix CRE S.à.r.l
with a current principal outstanding of £13.3 million, ending in
September 2022, with an option to extend to September 2023.
The Aviva debenture is secured with a mixture of industrial and
community retail assets currently valued at £16.985 million.
We are in the process of refinancing this debenture with a lower
cost medium term loan using the existing security alongside
additional unencumbered industrial and community retail properties,
currently valued at circa £2.8 million.
The Phoenix CRE S.à.r.l loan is secured against Orchard Square,
Sheffield. There are currently a number of development activities
being carried out at this property, which, as stated above, have been
delayed due to the pandemic. So that we can complete the current
development phases we will activate the loan’s extension option, to
enable us to maximise the value of this asset, prior to considering
our options which include selling the asset and repaying this loan.
All of LAP’s loans are covenant compliant.
London & Associated Properties PLC 2021 7
STRATEGIC REPORT Financial and performance review
BALANCE SHEET
SEGMENT ASSETS
2021
£’000
2020
£’000
- Non-current assets – property 28,386 33,383
- Non-current assets – property, plant & equipment 840 797
Trading assets 25,213 25,013
- Cash & cash equivalents 5,473 3,413
- Current assets – others 1,635 978
Total assets excluding investment in joint ventures 61,547 63,584
Segment liabilities
Borrowings (30,981) (30,889)
Current liabilities (5,172) (5,898)
Non-current liabilities (3,148) (3,526)
Total liabilities (39,301) (40,313)
Net assets 22,246 23,271
Note: The figures exclude inter-company transactions.
Total assets, consisting mainly of trading and investment properties,
have reduced from £63.6 million to £61.5 million. This was due
principally to an £0.8 million impairment reducing our Sheffield
development property to net realisable value, an £0.3m reduction in
the value of investment properties and using current assets to
reduce liabilities by £1.0m.
The reduction in non-current property assets is mostly as a result of
the sale of two properties during the year at a carrying value of
£4.17 million along with a £0.3 million investment property
revaluation deficit and the reclassification of an investment property
carried at £0.75 million, as a current asset following a decision by
Directors to sell the property before the year end.
The increase in property, plant and equipment relates to a change in
the head office location of the Company. The lease comes to an end in
2024 at which point the asset will be fully depreciated. The present
value of future rentals of £0.75 million is included within liabilities.
Trading assets include Sheffield Orchard Square, which is currently
being developed for sale and two London residential developments
in West Ealing and Purley. All of these properties are held at the
lower of cost and net realisable value.
Borrowings have remained consistent year on year, with the same
facilities in place at the end of the year as were in place at the start
of the year.
LAP’s main borrowings consist of a £13.3 million term loan facility
expiring in September 2022, a debenture of £10 million repayable in
August 2022 a £3.6 million term loan facility expiring in 2028 and a
rolling development loan relating to West Ealing of £4.2 million that
expires in April 2022 and is currently being refinanced with a new
lender. As in previous years, all loans and debentures are secured on
core property and are covenant compliant at the year end.
GEARING
2021
£’000
2020
£’000
Total borrowings 30,981 30,889
Less cash and cash equivalents (5,473) (3,413)
Net borrowings 25,508 27,476
Total Equity 22,246 23,271
114.7% 118.1%
The business has not set a target gearing level but monitors its debt and asset values constantly to maintain an appropriate level, taking into
account market sentiment, the availability and cost of debt and cash flow forecasts.
CASH FLOW
CASH FLOW FROM OPERATIONS
2021
£’000
2020
£’000
Cash inflows from operating activities 398 250
Cash inflows/(outflows) from investing activities 4,141 (300)
Cash outflows from financing activities (2,479) (2,246)
Net increase/(decrease) in cash and cash equivalents 2,060 (2,296)
Cash and cash equivalents at 1 January 3,413 5,709
Cash and cash equivalents at 31 December 5,473 3,413
Note: The figures within the LAP cashflow include inter-company transactions such as management fee income of £236,000 (2020: £236,000).
Cash inflows from operating activities take account of expenditure on
development properties of £1.0 million (2020: £0.4 million). Excluding
this expenditure, adjusted cash inflows from operating expenditure
were £1.4 million (2020: £0.6 million). A significant proportion of this
improvement has arisen following the lifting of pandemic trading
restrictions and subsequent improvement in rents received.
Investing activities include the sale of two properties, as discussed
above, for net proceeds of £4.1 million received in the year.
A further £0.4 million of proceeds relating to the sale of one of the
properties, will be received over the next two years.
Financing activities in 2021 largely related to interest payments for the
servicing of debt, no significant new finance has been put in place over
the past two years. In 2021 loans on investment properties were paid
down by £0.6 million (2020: £0.2 million) and receipts from loans on
development properties were £0.5 million (2020: £0.1 million).
8 London & Associated Properties PLC 2021
STRATEGIC REPORT Financial and performance review
WEST EALING PROJECTS LIMITED
West Ealing is a 50:50 joint venture between LAP and Bisichi
created with the purpose of delivering a primarily residential
development in West Ealing, London. The joint venture owns 90%
of the property which is under development and on which £7.48
million has been spent to date (2020: £7.06 million), West Ealing is
disclosed within LAP in the segmental analysis in note 1 to the
financial statements. There is a linked development loan of £4.20
million (2020: 4.03 million), described further in note 18. Planning
permission is held for the creation of 56 new residential apartments
and ground floor shops on the site.
DEVELOPMENT PHYSICS LIMITED
Development Physics is a 1/3:1/3:1/3 joint venture between LAP,
Bisichi and Metroprop Real Estate, set up in the year, with the
purpose of delivering a residential development of 44 flats and 4
town houses in Purley, London. Development Physics acquired a
series of options on the site and has registered for planning
permission for its development. £0.2 million has been spent to date
on the development.
BISICHI PLC
Although the results of Bisichi PLC have been consolidated in these
financial statements, the Board of LAP has no direct influence over
the management of Bisichi. The comments below are based on the
published accounts of Bisichi.
The Bisichi group results are stated in full in its published 2021 financial
statements which are available on its website www.bisichi.co.uk.
Bisichi has two core revenue streams – investment in retail property
in the UK and coal mining in South Africa.
The Bisichi group’s profit before tax was £2.8 million (2020: loss
£4.9 million). The movement compared to the prior year can be
attributed mainly to higher prices achieved for coal and higher coal
sale volumes in the second half of the year.
UK retail property investments were valued at the year end at
£10.70 million (2020: £10.47 million). The property portfolio is
actively managed by LAP and generated rental income of £0.9
million in the year (2020: £0.9 million).
Bisichi has a structured trade finance facility with Absa Bank Limited
for R85 million held by Sisonke Coal Processing (Pty) Limited, a
100% subsidiary of Black Wattle Colliery (Pty) Limited. This facility
comprises of an R85 million revolving facility to cover the working
capital requirements of the group’s South African operations. The
facility is renewable annually on 25 January and is secured against
inventory, debtors and cash that are held in the group’s South
African operations.
Bisichi holds a 5 year term facility of £3.9 million with Julian Hodge
Bank Limited at an initial LTV of 40%, with the loan being secured
against the company’s UK retail property portfolio. The amount
repayable on the loan at year end was £3.8 million (2020: £3.8
million). The debt package has a five-year term and is repayable at
the end of the term in December 2024. The interest cost of the loan
is 4.00% above Bank of England base rate. The loan is secured by
way of a first charge over the investment properties in the UK which
are included in the financial statements at a value of £10.5 million.
No banking covenants were breached by Bisichi during the year.
Bisichi’s cash and cash equivalents increased during the year by
£1.5 million (2020: decrease of £4.1 million). After taking into
account an exchange gain of £0.1 million (2020: £0.2 million) on the
translation of year end net balance of cash and cash equivalents
that were held in South African Rands, the net balance of cash and
cash equivalents (including bank overdrafts) at year end was a cash
positive amount of £0.5 million (2020: cash negative of £1.1
million).
Bisichi has considerable financial resources available at short notice
including cash and cash equivalents (excluding bank overdrafts) of
£3.0 million (2020: £3.7 million) and listed investments of £4.3
million (2020: £2.6 million) as at year end. The above financial
resources total £7.3 million (2020: £6.4 million).
Bisichi’s net assets at 31st December 2021 were £16.7 million
(2020: £14.9 million), with a profit after tax of £1.7 million and
exchange gains of £0.1 million.
Bisichi continues to seek to expand its operations in South Africa
through the acquisition of additional coal reserves. In the UK, Bisichi
is looking forward to progressing its development in West Ealing
and Development Physics as well as expanding on its equity
investment portfolio. This is in line with Bisichi’s overall strategy of
balancing the high risk of mining operations with a dependable cash
flow and capital appreciation from UK property investment
operations and equity investments.
DRAGON RETAIL PROPERTIES LIMITED
Dragon is a UK property investment company. The company has a
Santander bank loan of £1.2 million secured against its investment
property, see note 18, which was covenant compliant at the end of
the year.
The loan originally expired in October 2020 but has been extended
to April 2022, and the lender has offered to extend this further if
required. We have agreed terms with a new lender to refinance this
loan in full and are expecting to complete this shortly.
Dragon paid management fees of £72,000 (2020: £72,000) split
equally between the two joint venture partners. Dragon has net
assets of £1.3 million (2020: £1.3 million). Dragon continues to
trade at near break even after tax.
ACCOUNTING JUDGEMENTS AND GOING
CONCERN
The most significant judgements made in preparing these accounts
relate to the carrying value of the properties and investments. The
Group uses external property valuers to determine the fair value of
most of its properties.
Under IFRS10 the Group has included Bisichi PLC in the
consolidated accounts, as it is deemed to be under the effective
control of LAP and has therefore been treated as a subsidiary.
The Directors exercise their commercial judgement when reviewing
the Group’s cash flow forecasts and the underlying assumptions on
which the forecasts are based. The Group’s business activities,
together with the factors likely to affect its future development, are
set out in the Chairman’s Statement and Chief Executive’s Review
and in this Report. Further disclosure of specific factors affecting
going concern are discussed in more detail in the going concern
section of the group accounting policies section of the financial
statements. In addition, the Directors consider that Note 21 to the
financial statements sets out the Group’s objectives, policies and
processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities;
and its exposure to credit risk, liquidity risk and other risks.
STATEMENT REGARDING SECTION 172 OF THE UK
COMPANIES ACT
Section 172 of the UK Companies Act requires the Board to report
on how the directors have had regard to the matters outlined below
in performing their duties. During the year, the Directors consider
that they have acted in a way, and have made decisions that would
most likely promote the success of the Group for the benefit of its
members as a whole as outlined in the matters below:
London & Associated Properties PLC 2021 9
STRATEGIC REPORT Financial and performance review
• The likely consequences of any decision in the long term: see
Principal Activity, Strategy & Business Model and Risks and
Uncertainties on pages 10 to 11;
• The interests of the Group’s employees; ethics and compliance;
fostering of the Company’s business relationships with suppliers,
customers and others; and the impact of the Group’s operations
on the community and environment: see Corporate Responsibility
and Sustainability reports on pages 13 to 14;
• The need to act fairly between members of the Company: see the
Corporate Responsibility section on pages 13 to 14;
• The desirability of maintaining a reputation for high standards of
business conduct: see the Corporate Governance section on pages
19 to 20.
GOING CONCERN
LAP
In reviewing going concern it is necessary to consider separately the
position of LAP Group and Bisichi. Although both are consolidated into
group accounts (as required by IFRS 10), they are managed independently
and in the unlikely event that Bisichi was unable to continue trading this
would not affect the ability of LAP Group to continue operating as a going
concern. The same would be true for Bisichi in reverse.
The directors have reviewed the cash flow forecasts of the LAP
Group and the underlying assumptions on which they are based for
the 15 months from the date of signing. The LAP Group’s business
activities, together with the factors likely to affect its future
development, are set out in the Chairman and Chief Executive’s
Statement and Financial Review. In addition, Note 21 to the
financial statements sets out the Group’s objectives, policies and
processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities;
and its exposure to credit risk and liquidity risk.
Directors assess the longer term prospects of the business over a
four year time horizon as covered by the Group’s annual rolling
four-year strategic financial plan. This is considered to be the
optimum balance between our need to plan for the long term,
recognising that property investment is a long-term business, and
the progressively unreliable nature of forecasting in later years.
There are two significant loans expiring in the second half of 2022
that directors fully anticipate will be refinanced in full and on time.
This is discussed further in the Going Concern section of the
Accounting Policies and Note 21 to the financial statements.
As our tenants return to more normalised trading conditions
following the lifting of all restrictions imposed in response to the
pandemic, we do not consider uncertainty arising specifically as a
result of the pandemic to be a going concern risk. Tenant arrears
increased as a result of the pandemic but this effect is not ongoing.
Bisichi
Detailed budget and cash flow forecasts for Bisichi’s operations
demonstrate that Bisichi has sufficient resources to meet its liabilities
as they fall due for at least the next 12 months and that Bisichi will be
able to manage its business risks and have adequate cash resources to
continue in operational existence for the foreseeable future. Further
details can be found in the Bisichi plc 2021 Financial Statements
which are available on their web site: www.bisichi.co.uk.
Overall Position
With a quality property portfolio comprising a majority of tenants with
long leases supported by suitable financial arrangements, the Directors
believe that the group property operations (including Bisichi and
Dragon) are well placed to address the current business risks
successfully, despite the continuing uncertain economic climate. The
mining operations too, as a key industry in South Africa, have a positive
future. It is also relevant that LAP would be able to continue as a viable
business if Bisichi were to face unexpected problems as there are no
cross guarantees and LAP is not dependent on the income from Bisichi.
Having made enquiries and having considered the principal risks
facing the Group, including liquidity and solvency risks, and material
uncertainties, the Directors have a reasonable expectation that the
Group and the Company have adequate resources to continue in
operational existence for the foreseeable future. Thus, they
continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
TAXATION
The LAP Group tax strategy is to account for tax on an accurate and
timely basis. We only structure our affairs based on sound
commercial principles and wish to maintain a low tax risk position.
We do not engage in aggressive tax planning.
The LAP Group (excluding Bisichi and Dragon) has unused tax losses
and deductions with a potential value of £11.1 million (2020: £8.0
million). As LAP returns to profit, these tax losses and deductions
should be utilised.
DIVIDENDS AND FUTURE PROSPECTS
Due to the current economic uncertainties, the LAP Board has agreed
that it will not be recommending a dividend for the financial year
ending 31 December 2021 (2020: £nil).
Looking forwards to medium term trading, we intend to pursue our
previously stated strategies. These include further reducing the
Group’s reliance on shopping centres although we feel that our
value-orientated properties with low reliance on fashion retailers have
inbuilt defensive qualities. We do not need to fire-sell assets therefore,
but we are prepared to enter into negotiations with parties that have
approached us to explore disposals or joint ventures to redevelop
certain assets within our portfolio. A number of these negotiations are
ongoing although we are not yet able to say if any will come to
fruition. A retail market in Rugeley was sold for gross proceeds of
£520,000 in January 2022.
We will also pursue our policy of investing in other asset classes,
including industrial property where we have enjoyed success and in
further joint ventures to undertake residential development. Our
development in Ealing has received planning consent and options for
either building out the development or seeking to sell our shares in the
joint venture are being considered currently. Our development in
Purley is currently in the planning stage. We acquired an industrial
property in Warrington in January 2022 for £2.37 million, which we
believe has potential for both value and rental growth.
We continue to progress the development of the Sheffield shopping
centre. Planning permission has been granted for 8 apartments above
ground floor level to be built in a space previously used for property
management activities and not income producing. We are planning to
commence the development of the central square to enable year-
round activities to further support all of the tenants at the property,
particularly the new street food operation, Sheffield Plate, completed
this year and other new food, beverage and entertainment venues at
the property. Both of these developments have been allocated
funding by the local council.
Bisichi
In the first quarter of 2022, the API4 price average was $238 and
exports from Bisichi’s South African operations in the first quarter of
2022 have been in line with the average export tonnages achieved
in 2021. The API4 price averaged $125 in 2021 compared to $65 in
2020.
However, looking beyond the first quarter, uncertainties remain,
particularly in regard to the sustainability of the higher international
coal price and the impact of continued constraints in transporting
coal for export on the South African rail network.
Bisichi continues to seek opportunities to expand its operations in
South Africa through the acquisition of additional coal reserves.
10 London & Associated Properties PLC 2021
STRATEGIC REPORTSTRATEGIC REPORT
Principal activities, strategy & business model
The LAP Group’s principal business model is the investment in and management and development of industrial and retail property through
direct investment and joint ventures.
The principal activity of Bisichi PLC is coal mining in South Africa. Further information is available in its 2021 Financial Statements which are
available on their web site: www.bisichi.co.uk
STRATEGIC PRIORITIES ARE OUR STRATEGY IS
Maximising income By achieving an appropriate tenant mix and providing vibrant environments with excellent facilities
we can increase tenant demand for space and enhance income.
Creating quality property We look to improve the tenant experience at all our properties by achieving an appropriate tenant
mix and a vibrant trading environment through investment activity, enhancement, refurbishment
and development.
Capital strength We operate within a prudent and flexible financial structure. Our gearing policy provides financial
stability whilst giving capacity and flexibility to look for further investments.
Maintain the value of investment
in Bisichi
By encouraging the Bisichi management to maximise sustainable profits and cash distributions.
Risks and uncertainties
DESCRIPTION OF RISK DESCRIPTION OF IMPACT MITIGATION
Pandemic risk Health and safety of employees and
stakeholders. Risks related to business
interruption and tenant failures as
outlined below.
Strategies for mitigating the risks have been defined
and specific measures are in place.
ASSET MANAGEMENT:
Tenant failure Financial loss. Initial and subsequent assessment of tenant covenant
strength combined with an active credit control function.
Leases not renewed Financial loss. Lease expiries regularly reviewed. Experienced teams
with strong tenant and market knowledge who
manage appropriate tenant mix.
Asset liquidity (size and
geographical location)
Assets may be illiquid and affect flexing
of balance sheet.
Regular reporting of current and projected position
to the Board with efficient treasury management.
PEOPLE:
Retention and
recruitment of staff
Unable to retain and attract the best
people for the key roles.
Nomination Committee and senior staff review
skills gaps and succession planning. Training and
development offered.
REPUTATION:
Business interruption Loss in revenue.
Impact on footfall.
Adverse publicity.
Potential for criminal/civil proceedings.
Documented Recovery Plan in place.
General and terrorism insurance policies in place
and risks monitored by trained security staff.
Health and Safety policies in place.
CCTV in centres.
FINANCING:
Fluctuation in property
values
Impact on covenants and other loan
agreement obligations.
Secure income flows.
Regular monitoring of LTV and IC covenants and other
obligations.
Focus on quality assets.
Reduced availability of
borrowing facilities
Insufficient funds to meet existing debts/
interest payments and
operational payments.
Efficient treasury management.
Loan facilities extended where possible.
Regular reporting of current and projected position
to the Board.
Loss of cash and deposits Financial loss. Only use a spread of banks and financial institutions
which have a strong credit rating.
Fluctuation of interest rates Uncertainty of interest rate costs. Manage derivative contracts to achieve a balance
between hedging interest rate exposure and
minimising potential cash calls.
London & Associated Properties PLC 2021 11
STRATEGIC REPORT
Bisichi risks and uncertainties
Bisichi (although it is consolidated into group accounts as required by IFRS 10) is managed independently of LAP. The risks outlined below
are an abbreviated summary of the risks reported by the Directors of Bisichi to the shareholders of that Company. Full details are available
in the published accounts of Bisichi (www.bisichi.co.uk).
These risks, although critical to Bisichi, are of less significance to LAP which only has a minority investment of 41.52% in the company. In
the unlikely event that Bisichi was unable to continue trading, it would not affect the ability of LAP to continue operating as a going
concern.
DESCRIPTION OF RISK DESCRIPTION OF IMPACT MITIGATION
Coal prices can be impacted materially
by market and currency variations,
geopolitical and pandemic factors
Affects sales value and therefore
margins.
Bisichi primarily focuses on managing its
underlying production and processing
costs to mitigate coal price volatility as
well as from time to time entering into
forward sales contracts with the goal of
preserving future revenue streams. The
Group has not entered into any such
contracts in 2020 and 2021.
Bisichi assesses on an ongoing basis the
impact that the pandemic, geo-political
events in Ukraine, regulatory changes
related to climate change and
governmental CO
2
emission
commitments may have on the
Group’s mining operations and
future investment decisions.
Mining operations are inherently risky.
Mineral reserves, regulations, licensing,
power availability, health and safety can
all damage operations
Loss of production causing loss
of revenue.
Use of geology experts, careful
attention to regulations, health and
safety training, employee dialogue to
minimise controllable risks.
Currency risk Affects realised sales value and
therefore margins.
Regular monitoring and review of
forward currency situation.
Cashflow variation because of mining risks,
commodity price or currency variations
Variations can deliver significant
shifts in cash flow.
UK property investments used to
offset high risk mining operations.
There has been no change in the risks faced by either LAP or Bisichi.
12 London & Associated Properties PLC 2021
STRATEGIC REPORT
Key performance indicators
The Group’s Key Performance Indicators are selected to ensure clear alignment between its strategy and shareholder interests.
The KPIs are calculated using data from management reporting systems.
STRATEGIC PRIORITY KPI PERFORMANCE
MAXIMISING INCOME – LIKE FOR LIKE PROPERTY INCOME
To increase the like-for-
like income from each
property year on year.
Like-for-like rental income
as a percentage of the
prior year rental.
The like-for-like rental income of the
group by property has increased by
£253,000 (4.5%) (2020: decrease of
£258,000 and 5.3%).
In the continuing difficult trading
environment, this is considered
positive.
MAXIMISING INCOME – OCCUPANCY
We aim to maximise
the total income in our
properties by achieving
full occupancy.
The estimated rental value
("ERV") of the empty units
as a percentage of our
total income.
Void levels decreased to 3.97%
(2020: 7.85%). In 2021, 1.17%
of these are attributable to
refurbishment activities (2020:
4.27%). Void levels excluding
refurbishment activities of 2.8%
(2020: 3.6%) is considered positive.
CAPITAL STRENGTH – GROWTH IN NET ASSET VALUE PER SHARE
The net assets per
share is the principal
measure used by the
group for monitoring its
performance and is an
indicator of the level of
reserves available for
distribution by way of
dividend.
Movement in the net
assets per share.
The net assets per share reduced
by 0.21 pence per share (0.6%) to
34.78p (2020: 34.99p).
This is a satisfactory result.
CHANGE IN LIKE-FOR-LIKE
INCOME*
VOIDS
NET ASSETS PER SHARE
2019
2019
6.0
8.0
9.0
75.0
4.0
50.0
2.0
25.0
0.0
0.0
2020
2020
2021
2021
2019
500
250
0.0
-250
-500
2020 2021
London & Associated Properties PLC 2021 13
STRATEGIC REPORT
Corporate responsibility
SUSTAINABLE DEVELOPMENT
Bisichi’s Black Wattle continues to strive to conduct business in a safe,
environmentally and socially responsible manner. Some highlights of
their Health, Safety and Environment performance during 2021:
• Black Wattle Colliery recorded two Lost time Injuries during 2021
(2020: One).
• No cases of Occupational Diseases were recorded.
• Zero claims for the Compensation for Occupational Diseases were
submitted.
In South Africa, the new government regulated Broad-Based Socio-
Economic Empowerment Charter for the Mining and Minerals
Industry, 2020 (New Mining Charter) came into force from March
2020. The New Mining Charter is a regulatory instrument that
facilitates sustainable transformation, growth and development of the
mining industry. Bisichi is committed to fully complying with the New
Mining Charter and providing adequate resources to this area in order
to ensure opportunities are expanded for historically disadvantaged
South Africans (HDSAs) to enter the mining and minerals industry. In
addition, Bisichi continue to adhere to and make progress in terms of
their Social and Labour Plan and various BEE initiatives. A fuller
explanation of these can be found in Bisichi’s 2021 Financial
Statements which are available on their web site: www.bisichi.co.uk
GREENHOUSE GAS REPORTING
As a quoted organisation incorporated in the UK, we have reported
on all emission sources required under the Companies (Directors’
Report) and Limited Liability Partnerships (Energy and Carbon
Report) Regulations 2018 for the period 1st January 2021 to 31st
December 2021.
The emissions are detailed in Tables 1, 2 and 3 below.
We have employed the Financial Control definition to outline our
carbon footprint boundary, reporting Scope 1 & 2 emissions only for
both landlord & tenant-controlled areas of LAP owned properties
and facilities.
LAP has landlord-controlled areas in Kings Square, Orchard Square,
Brewery Street, Shipley, and Bridgend. Properties that LAP manage
on behalf of others or are not wholly owned by LAP are excluded
from our footprint boundary. An estimate of the emissions
associated with the LAP offices on Bruton Place has been included
in this year’s calculations.
Emissions for landlord-controlled areas have been calculated based
on actual consumption data collected from each property. Emissions
from tenant-controlled areas have been calculated based on floor
area and energy consumption benchmarks for general retail services
in the UK.
We have used the main requirements of the ISO14064-1 standard
and HM Government Environmental Reporting Guidelines (2019)
including streamlined energy and carbon reporting guidance.
Emission factors were from the UK Government’s GHG Conversion
Factors for Company Reporting 2021.
As well as reporting Scope 1 and Scope 2 emissions, the regulations
require that at least one intensity ratio is reported for the given
reporting period. The intensity figure below shows emissions in
tCO
2
e per thousand pounds revenue.
Energy efficiency
Due to the impacts of the pandemic, LAP have not implemented
any energy efficiency programs or specific measures during the
2021 year.
1 ISO14064-1:2018 - Greenhouse gases - Part 1: Specification with guidance at
the organization level for quantification and reporting of greenhouse gas
emissions and removals
Table 1. Landlord & tenant controlled areas
EMISSIONS SOURCE tCO
2
e 2021 2020 CHANGE
Scope 1 emissions Natural gas 59 38 55%
Refrigerants 0 0 n/a
Scope 2 emissions Electricity 1,443 1,523 -5%
Total tCO
2
e 1,502 1,561 -4%
Intensity ratio (tCO
2
e/£k) 0.289 0.299
Table 2. LAP controlled areas
EMISSIONS SOURCE tCO
2
e 2021 2020
2
CHANGE
Scope 1 emissions Natural gas 57 38 52%
Refrigerants 0 0 n/a
Scope 2 emissions Electricity 115 64 80%
Total tCO
2
e 172 101 70%
2
Totals differ due to rounding
Table 3. Tenant controlled areas
EMISSIONS SOURCE tCO
2
e 2021 2020 CHANGE
Scope 1 emissions Natural gas 1 0 n/a
Refrigerants 0 0 n/a
Scope 2 emissions Electricity 1,330 1,459 -8.9%
Total tCO
2
e 1,331 1,459 -8.8%
14 London & Associated Properties PLC 2021
STRATEGIC REPORT Corporate responsibility
Table 4. Coal mining carbon footprint
2021
CO
2
E
TONNES
2020
CO
2
E
TONNES
Emissions source:
Emissions from the combustion of fuel or the operation of any facility including fugitive emissions from
refrigerants use
41,960 46,162
Emissions resulting from the purchase of electricity, heat, steam or cooling by the company for its own
use (location based)
12,040 12,482
Total gross emissions/tCO
2
e 54,000 58,644
Intensity:
Intensity 1 Tonnes of CO
2
per pound sterling of revenue 0.0011 0.0020
Intensity 2 Tonnes of CO
2
per pound of coal produced 0.0516 0.0497
KWH KWH
Energy consumption used to calculate above emissions 83,079,614 N/A
Of which UK 10,186 N/A
ENVIRONMENT
United Kingdom
The Group’s principal UK activity is property investment, which involves
renting premises to commercial businesses. We seek to provide those
tenants with good quality premises from which they can operate in an
efficient and environmentally friendly manner. Where possible,
improvements, repairs and replacements are made in an environmentally
efficient manner and waste re-cycling arrangements are in place at all
the Company’s locations.
South Africa
The Bisichi group’s principal activity in South Africa is coal mining.
Under the terms of the mine’s Environmental Management
Programme approved by the Department of Mineral Resource
(“DMR”), Black Wattle undertakes a host of environmental
protection activities to ensure that the approved Environmental
Management Plan is fully implemented. A performance assessment
audit was conducted to verify compliance to their Environmental
Management Programme and no significant deviations were found.
EMPLOYEE, SOCIAL, COMMUNITY AND HUMAN
RIGHTS
The Group’s policy is to attract staff and motivate employees by
offering competitive terms of employment. The Group provides equal
opportunities to all employees and prospective employees including
those who are disabled and operates in compliance with all relevant
national legislation.
The Group believes that it is in the interest of shareholders to consider
social and human rights issues when conducting business. Various
policies and initiatives implemented by the Group that fall within these
areas are discussed within this report.
ANTI-SLAVERY AND HUMAN TRAFFICKING
The Group is committed to the prevention of the use of forced labour
and has a zero tolerance policy for human trafficking and slavery.
The Group’s policies and initiatives in this area can be found within the
Group’s Anti-slavery and human trafficking statement found on the
Group’s website at www.lap.co.uk.
DIVERSITY AND EQUALITY
The Board recognises the importance of diversity, both in its
membership, and in the Group’s employees. It has a clear policy to
promote diversity across the business. The Board considers that
quotas are not appropriate in determining its composition and has
therefore chosen not to set targets. All aspects of diversity, including
but not limited to gender, are considered at every level of recruitment.
Gender diversity of the Board and the Group is set out below.
DIRECTORS, EMPLOYEES AND GENDER
REPRESENTATION
At the year end the LAP Group (excluding Bisichi and Dragon), had
6 directors (6 male, 0 female), 2 senior managers (1 male, 1 female)
and 11 employees (7 male, 4 female).
BISICHI PLC
In terms of directors, employees and gender representation, at the year
end the Group had 9 directors (8 male, 1 female), 6 senior managers
(5 male, 1 female) and 229 employees (160 male, 69 female).
Detailed information relating to the Bisichi Strategic Report is available
in its 2021 financial statements.
Approved on behalf of the board of directors
Jonathan Mintz
Finance Director
28 April 2022
London & Associated Properties PLC 2021 15
GOVERNANCE
Directors & advisors
EXECUTIVE DIRECTORS
Sir Michael Heller MA FCA*
(Chairman)
John A Heller LLB MBA
(Chief Executive)
Jonathan Mintz FCA
(Finance Director)
NON-EXECUTIVE DIRECTORS
Howard D Goldring BSC (ECON) ACA
†
Howard Goldring was, until 2020, Executive Chairman of Alberon
Holdings Limited which specialises in the discretionary management of
investment portfolios for pension funds, charities, family trusts and
private clients. He also acted as an advisor providing high level asset
allocation advice to family offices and pension schemes. He has been
a member of the LAP Board since July 1992, and has over 40 years’
experience of the real estate market. He was a director of Baronsmead
VCT 2 PLC from 2010-2016, and has specialised in providing many
companies with investor relations support.
Clive A Parritt FCA CF FIIA
#†
Clive Parritt joined the board on 1 January 2006. He is a chartered
accountant with over 40 years’ experience of providing strategic,
financial and commercial advice to businesses of all sizes. He is a
director of Brown Advisory US Smaller Companies plc and a
member of the Performance, Audit and Risk Committee of Arts
Council England. Until April 2016 he was Group Finance Director of
Audiotonix Limited (an international manufacturer of audio mixing
consoles). He has chaired and been a director of a number of other
public and private companies. Clive Parritt was President of the
Institute of Chartered Accountants in England and Wales in
2011-12. He is Chairman of the Audit Committee and as Senior
Independent Director he chairs the Nomination and
RemunerationCommittees.
Robin Priest MA
Robin Priest joined the board on 31 July 2013. He is a senior
advisor to Alvarez & Marsal LLP (“A&M”) and to a major listed
German real estate investment fund manager. He has more than 38
years’ experience in real estate and structured finance. He was
formerly Managing Director of A&M’s real estate practice, advising
private sector and public sector clients on both operational and
financial real estate matters. Prior to joining A&M, Robin was lead
partner for Real Estate Corporate Finance in London with Deloitte
LLP and before this he founded and ran a property company backed
by private equity. He is also a trustee of London’s Oval House
Theatre.
* Member of the nomination committee
† Member of the audit, remuneration and nomination committees
# Senior independent director
SECRETARY & REGISTERED OFFICE
Jonathan Mintz FCA
2nd Floor, 12 Little Portland Street,
London W1W 8BJ
AUDITOR
Kreston Reeves LLP
PRINCIPAL BANKERS
Phoenix CRE Sàrl
Santander UK plc
Metro Bank plc
SOLICITORS
Pinsent Masons LLP
Wake Smith Solicitors Limited
STOCKBROKER
Shore Capital Markets Limited
REGISTRARS & TRANSFER OFFICE
Link Group
Shareholder Services
The Registry
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
UK telephone: 0871 664 0300
International telephone: +44 371 664 0300
(Calls cost 12p per minute plus your phone company’s access
charge. Calls outside the United Kingdom will be charged at the
applicable international rate).
Lines are open between 9.00am to 5.30pm, Monday to Friday,
excluding public holidays in England and Wales.
Website: www.linkassetservices.com
Email: enquiries@linkgroup.co.uk
Company registration number
341829 (England and Wales)
WEBSITE
www.lap.co.uk
E-MAIL
admin@lap.co.uk
16 London & Associated Properties PLC 2021
GOVERNANCE
GOVERNANCE
Directors’ report
The Directors submit their report and the audited
financial statements for the year ended
31 December 2021.
STRATEGIC REPORT
A comprehensive review and assessment of the Group’s activities
during the year as well as its position at the year end and prospects
for the forthcoming year are included in the Chairman’s Statement
and Chief Executive’s Review and the Strategic Report. These
reports can be found on pages 2 to 14 and should be read in
conjunction with this report.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were property
investment and development, as well as investment in joint ventures
and an associated company. The associated company is Bisichi PLC
(Bisichi) in which the Company holds a 41.52 % interest. Bisichi is
listed on the main market of the London Stock Exchange and
operates in England and South Africa with subsidiaries which are
involved in overseas mining and mining investment. The results,
together with the assets and liabilities, of Bisichi are consolidated
with those of LAP in accordance with the terms of IFRS 10 even
though the Group only has a minority interest – under IFRS 10 the
58.48% majority interest is disclosed as a “non-controlling interest”.
BUSINESS REVIEW AND POST BALANCE SHEET
EVENTS
Review of the Group’s development and performance
A review of the Group’s development and performance can be
found below and should be read in conjunction with the Strategic
Report on pages 5 to 14.
Details of any post balance sheet events are disclosed in Note 29 to
the financial statements.
FUTURE DEVELOPMENTS
The Group continues to look for new opportunities to acquire real
estate assets where it feels it can increase value by applying its intensive
management skills. At the same time, it seeks to reduce its interest
payments on its loans as they expire or where opportunities arise to
refinance on better terms. We also seek to improve our existing estate
through the continued pursuit of asset management initiatives.
PROPERTY ACTIVITIES
The Group is a long-term investor in property. It acquires
properties, actively manages those assets to improve rental income,
and thus seeks to enhance the value of its properties over time.
In reviewing performance, the principal areas regularly monitored
by the Group include:
• Rental income – the aim of the Group is to maximise the
maintainable income from each property by careful tenant
management supported by sympathetic and revenue enhancing
development. Income may be affected adversely by the inability
of tenants to pay their rent, but careful monitoring of rent
collection and tenant quality helps to mitigate this risk. Risk is also
minimised by a diversified tenant base, which should limit the
impact of the failure of any individual tenant.
• Developments – the Group develops customer-focused spaces
to generate returns and portfolio income growth above that
available from standing investments alone.
• Cash flow – allowing for voids, acquisitions, development
expenditure, disposals and the impact of operating costs and
interest charges, the Group aims to maintain a positive cash flow
over time.
• Financing costs – the exposure of the Group to interest rate
movements is managed partly by the use of swap and cap
arrangements (see Note 21 for full details of the contracts in
place) and also by using loans with fixed terms and interest rates.
These arrangements are designed to ensure that our interest
costs are known in advance and are always covered by
anticipated rental income.
• Property valuations – market sentiment and economic conditions
have a direct effect on property valuations, which can vary
significantly (upwards or downwards) over time. Bearing in mind
the long term nature of the Group’s business, valuation changes
have little direct effect on the ongoing activities or the income
and expenditure of the Group. Tenants generally have long term
leases, so rents are unaffected by short term valuation changes.
Borrowings are secured against property values and if those
values fall very significantly, this could limit the ability of the
Group to develop the business using external borrowings. The
risk is minimised by trying to ensure that there is adequate cover
to allow for fluctuations in value on a short term basis.
It continues to be the policy of the Group to realise property assets
when the valuation of those assets reaches a level at which the
directors consider that the long-term rental yield has been reached.
The Group also seeks to acquire additional property investments on
an opportunistic basis when the potential rental yields offer scope
for future growth.
INVESTMENT ACTIVITIES
The investments in joint ventures and Bisichi are for the long term.
LAP manages the UK property assets of Bisichi. However, the
principal activity of Bisichi is overseas mining investment (in South
Africa). While IFRS 10 requires the consolidation of Bisichi, the
investment is held to generate income and capital growth over the
longer term. It is managed independently of LAP and should be
viewed by shareholders as an investment and not a subsidiary. The
other listed investments are held as current assets to provide the
liquidity needed to support the property activities while generating
income and capital growth.
Investments in property are made through joint ventures when the
financing alternatives and spreading of risk make such an approach
desirable.
DIVIDEND
In the light of the current uncertain economic environment, the
directors are not recommending payment of a final dividend for
2021 (2020: Nil per share).
London & Associated Properties PLC 2021 17
GOVERNANCE Directors’ report
THE COMPANY’S ORDINARY SHARES HELD IN TREASURY
At 31 December 2021, 216,715 (2020: 218,197) ordinary shares were
held in Treasury with a market value of £26,006 (2020: £17,456).
Treasury shares held at 1 January 2021
at 31 December 2021
218,197
216,715
1,482 shares were issued to employees in the year in place of cash for
dividends associated with shares held within the share incentive plan.
Treasury shares are not included in issued share capital for the purposes
of calculating earnings per share or net assets per share and they do
not qualify for dividends payable.
INVESTMENT PROPERTIES
The freehold and long leasehold properties of the Company, its
subsidiaries, Dragon and Bisichi were revalued as at 31 December
2021 by independent professional firms of chartered surveyors
– Allsop LLP, London (72.3 per cent of the portfolio), Carter Towler,
Leeds (27.7 per cent). The valuations, which are reflected in the
financial statements, amount to £37.9 million (2020: £42.6 million).
Property of £25.7 million (2020: £25.0 million) is included under
current assets, with £25.2 million of inventory (2020: £25.0 million),
at the lower of cost or net realisable value and £0.5 million as assets
held for sale (2020: £nil), at the net sale proceeds on completion of
the sale in January 2022.
Taking account of prevailing market conditions, the valuation of the
properties at 31 December 2021 resulted in a decrease of £0.1 million
(2020: decrease of £2.3 million). The proportion of this revaluation
attributable to the Group (net of taxation) is reflected in the
consolidated income statement and the consolidated balance sheet.
FINANCIAL INSTRUMENTS
Note 21 to the financial statements sets out the risks in respect of
financial instruments. The board reviews and agrees overall treasury
policies, delegating appropriate authority for applying these policies
to the Chief Executive and Finance Director. Financial instruments
are used to manage the financial risks facing the Group and
speculative transactions are prohibited. Treasury operations are
reported at each board meeting and are subject to weekly internal
reporting. Hedging arrangements are in place for the Company, its
subsidiaries and joint ventures in order to limit the effect of higher
interest rates upon the Group. Where appropriate, hedging
arrangements are covered in the Chairman and Chief Executive’s
Statement and the Financial Review.
DIRECTORS
Sir Michael Heller, J A Heller, J Mintz, H D Goldring, C A Parritt and
R Priest were Directors of the company for the whole of 2021.
Sir Michael Heller, H D Goldring and J Mintz are retiring by rotation
at the Annual General Meeting in 2022 and offer themselves for
re-election.
Sir Michael Heller is Executive Chairman and has been a Director
since 1971. He has a contract of service determinable upon six
months’ notice. Sir Michael Heller is a chartered accountant and a
member of the nomination committee. He is Executive Chairman of
Bisichi Mining PLC, our associate company. The board has
considered the re-appointment of Sir Michael Heller and
recommends his re-election as a Director.
Howard Goldring has been a Director since 1992 and has a contract
of service determinable upon three months’ notice. He is an
Independent Director and a member of the audit, nomination and
remuneration committees. Howard Goldring is a chartered
accountant and global asset allocation specialist. He was Executive
Chairman of Alberon Holdings Limited until 2020. His specialized
economic knowledge and broad commercial experience are of
significant benefit to the business. The board has considered the
re-appointment of Howard Goldring and recommends his re-election
as a Director.
Jonathan Mintz has been a Director since 2019 and is also the
Company Secretary. He has a contract of employment determinable
upon three months’ notice. Jonathan Mintz is an ACA qualified
Finance Director experienced in real estate, consultancy, and
construction in the UK and internationally. He has worked in the
property and infrastructure sector for the majority of his career,
holding senior positions with listed and private property and
construction businesses. The board has considered the re-appointment
of Jonathan Mintz and recommends his re-election as a Director.
DIRECTORS’ INTERESTS
The interests of the Directors in the ordinary shares of the
Company, including family and trustee holdings, where appropriate,
can be found on page 23 in the Annual Remuneration Report.
Substantial shareholdings
31 DEC 2021 31 DEC 2020
NO. % NO. %
Sir Michael Heller
and family
48,080,880 56.35 48,080,511 56.35
Stonehage Fleming
Investment
Management Ltd
7,513,214 8.81 7,663,214 8.98
James Hyslop 5,286,258 6.20 4,886,258 5.73
Maland Pension Fund 3,500,000 4.10 3,515,472 4.12
The Company does not consider that the Heller family has a controlling
share interest irrespective of the number of shares held as no
individual party holds a majority and there is no legal obligation for
shareholders to act in concert. The Directors do not consider that
any single party has control.
The Company is not aware of any other holdings exceeding 3 per
cent of the issued share capital.
SHARE CAPITAL AND TAKEOVER DIRECTIVE
The Company has one class of share capital, namely ordinary shares.
Each ordinary share carries one vote. All the ordinary shares rank
pari passu. There are no securities issued by the Company which
carry special rights with regard to control of the Company.
The identity of all significant direct or indirect holders of securities
in the Company and the size and nature of their holdings is shown
in “Substantial Shareholdings” above.
The rights of the ordinary shares to which the HMRC approved
Share Incentive Plan relates are exercisable by the trustees on
behalf of the employees.
There are no restrictions on voting rights or on the transfer of
ordinary shares in the Company, save in respect of treasury shares.
The rules governing the appointment and replacement of Directors,
alteration of the articles of association of the Company and the
powers of the Company’s Directors accord with usual English
company law provisions. Each Director is subject to re-election at
least every three years.
The Company is not party to any significant agreements that take
effect, alter or terminate upon a change of control of the Company
following a takeover bid. The Company is not aware of any agreements
between holders of its ordinary shares that may result in restrictions
on the transfer of its ordinary shares or on voting rights.
There are no agreements between the Company and its Directors or
employees providing for compensation for loss of office or
employment that occurs because of a takeover bid.
18 London & Associated Properties PLC 2021
GOVERNANCE Directors' report
STATEMENT AS TO DISCLOSURE OF INFORMATION
TO THE AUDITOR
The Directors in office at the date of approval of the financial
statements have confirmed that, so far as they are aware, there is
no relevant audit information of which the auditor is unaware. Each
of the Directors has confirmed that they have taken all the steps
that they ought to have taken as a Director in order to make them
aware of any relevant audit information and to establish that it has
been communicated to the auditor.
INDEMNITIES AND INSURANCE
The Articles of Association of the company provide for it to indemnify,
to the extent permitted by law, directors and officers (excluding the
Auditor) of the company, including officers of subsidiaries and associated
companies, against liabilities arising from the conduct of the Group’s
business. The indemnities are qualifying third party indemnity provisions
of the Companies Act 2006 and each of these qualifying third party
indemnities was in force during the course of the financial year ended
31 December 2021 and as at the date of this Directors’ report. No
amount has been paid under any of these indemnities during the year.
The Group maintains Directors and Officers insurance, which is
reviewed annually and is considered to be adequate by the
Company and its insurance advisers.
DONATIONS
No political donations were made during the year (2020: £Nil). No
donations for charitable purposes were made during the year (2020:
£Nil).
CORPORATE RESPONSIBILITY
Environment
The environmental considerations of the group’s South African coal
mining operations are covered in the Bisichi PLC Strategic Report.
The group’s UK activities are principally property investment
whereby premises are provided for rent to commercial businesses.
The group seeks to provide those tenants with good quality
premises from which they can operate in an efficient and
environmentally efficient manner and waste re-cycling arrangements
are in place at all the company’s locations.
Greenhouse gas emissions
Details of the group’s greenhouse gas emissions for the year ended
31 December 2021 can be found on pages 13 and 14 of the
Strategic Report.
Employment
The group’s policy is to attract staff and motivate employees by offering
competitive terms of employment. The group provides equal
opportunities to all employees and prospective employees including
those who are disabled. The Bisichi PLC Strategic Report gives details of
the Bisichi group’s activities and policies concerning the employment,
training, health and safety and community support and social
development concerning the Bisichi group’s employees in South Africa.
GOING CONCERN
The directors have reviewed the cash flow forecasts of the Group and
the underlying assumptions on which they are based. The Group’s
business activities, together with the factors likely to affect its future
development, are set out in the Chairman’s Statement and Chief
Executive’s Review and in the Financial and Performance Review. In
addition, note 21 to the financial statements sets out the Group’s
objectives, policies and processes for managing its capital; its financial
risk management objectives; details of its financial instruments and
hedging activities; and its exposure to credit risk and liquidity risk.
With secured banking facilities, sound financial resources, low void
rates and long term leases in place the Directors believe it remains
appropriate to adopt the going concern basis of accounting in
preparing the annual financial statements.
The Bisichi directors continue to adopt the going concern basis
of accounting in preparing the Bisichi annual financial statements.
CORPORATE GOVERNANCE
The Corporate governance report can be found on pages 19 and 20
of the annual report and accounts.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at Meeting Room 2, 12
Charles II Street, St James, London SW1Y 4QU on Wednesday 15
June 2022 at 10.00 a.m. Items 1 to 8 will be proposed as ordinary
resolutions. More than 50 per cent. of shareholders’ votes cast at
the meeting must be in favour for those ordinary resolutions to be
passed. The Directors consider that all of the resolutions to be put
to the meeting are in the best interests of the Company and its
shareholders as a whole and accordingly the board unanimously
recommends that shareholders vote in favour of all of the resolutions
as the Directors intend to do in respect of their own beneficial
holdings of ordinary shares. Please note that the following paragraphs
are only summaries of certain of the resolutions to be proposed at
the Annual General Meeting and do not represent the full text of
the resolutions. You should therefore read this section in conjunction
with the full text of the resolutions contained in the notice of
Annual General Meeting which accompanies this Directors’ Report.
ORDINARY RESOLUTIONS
Resolution 8 – Authority to allot securities
Paragraph 8.1.1 of Resolution 8 would give the Directors the authority
to allot shares in the Company and grant rights to subscribe for or
convert any security into shares in the Company up to an aggregate
nominal value of £2,841,200. This represents approximately 1/3
(one third) of the ordinary share capital of the Company in issue
(excluding treasury shares) as at 26 April 2022 (being the last
practicable date prior to the publication of this Directors’ Report).
In line with guidance issued by the Institutional Voting Information
Service (IVIS), paragraph 8.1.2 of Resolution 8 would give the directors
the authority to allot shares in the Company and grant rights to
subscribe for or convert any security into shares in the Company up to
a further aggregate nominal value of £2,841,200, in connection with
an offer by way of a rights issue. This amount represents approximately
another 1/3 (one third) of the ordinary share capital of the Company
in issue (excluding treasury shares) as at 26 April 2022 (being the
last practicable date prior to the publication of this Directors’ Report).
The Directors’ authority will expire on the earlier of 31 August 2023
or the next AGM. The Directors do not currently intend to make use
of this authority. However, if they do exercise the authority, the
Directors intend to follow best practice as recommended by the
IVIS regarding its use (including as regards the Directors standing for
re-election in certain cases).
OTHER MATTERS
Kreston Reeves LLP has acted as auditor since its appointment
at the 2021 AGM on 15 June 2021. Kreston Reeves LLP has
expressed its willingness to continue in office as auditor. A proposal
will be made at the Annual General Meeting for its reappointment.
By order of the board
Jonathan Mintz
Secretary
For and on behalf of London & Associated Properties PLC
2nd Floor, 12 Little Portland Street
London, W1W 8BJ
London & Associated Properties PLC 2021 19
GOVERNANCE
Corporate Governance
The Company has adopted the Corporate Governance
Code for Small and Mid-Size Quoted Companies
(the QCA Code) published by the Quoted Companies
Alliance. The QCA Code provides governance
guidance to small and mid-size quoted companies.
The paragraphs below set out how the Company
has applied this guidance during the year. The
Company has complied with the QCA Code
throughout the year.
PRINCIPLES OF CORPORATE GOVERNANCE
The board promotes good corporate governance in the areas of risk
management and accountability as a positive contribution to
business prosperity. The board endeavours to apply corporate
governance principles in a sensible and pragmatic fashion having
regard to the circumstances of the business. The key objective is to
enhance and protect shareholder value.
BOARD STRUCTURE
During the year the board comprised the Chairman, the Chief
Executive, one other executive Director and three non-executive
Directors. Their details appear on page 15. The board is responsible
to shareholders for the proper management of the Group.
The Directors’ responsibilities statement in respect of the accounts
is set out on page 29. The non-executive Directors have a particular
responsibility to ensure that the strategies proposed by the
executive Directors are fully considered. To enable the board to
discharge its duties, all Directors have full and timely access to all
relevant information and there is a procedure for all Directors, in
furtherance of their duties, to take independent professional advice,
if necessary, at the expense of the Group. The board has a formal
schedule of matters reserved to it and normally has eleven regular
meetings scheduled each year. Additional meetings are held for
special business when required.
The board is responsible for overall Group strategy, approval of
major capital expenditure and consideration of significant financial
and operational matters.
The board committees, which have written terms of reference, deal
with specific aspects of the Group’s affairs:
• The nomination committee is chaired by C A Parritt and
comprises one other non-executive Director and the executive
Chairman. The committee is responsible for proposing candidates
for appointment to the board, having regard to the balance and
structure of the board. In appropriate cases recruitment
consultants may be used to assist the process. All Directors are
subject to re-election at a maximum of every three years.
• The remuneration committee is responsible for making
recommendations to the board on the Company’s framework of
executive remuneration and its cost. The committee determines
the contract terms, remuneration and other benefits for each of
the executive directors, including performance related bonus
schemes, pension rights, option grants and compensation
payments. The board itself determines the remuneration of the
non-executive Directors. The committee comprises two non-
executive Directors and it is chaired by C A Parritt. The executive
Chairman of the board is normally invited to attend. The Annual
Remuneration Report is set out on pages 22 to 25.
• The audit committee comprises two non-executive Directors and
is chaired by C A Parritt. The audit committee report, with its
terms of reference, is set out on page 28. The Chief Executive
and Finance Director are normally invited to attend.
BOARD AND BOARD COMMITTEE MEETINGS HELD
IN 2021
The number of regular meetings during the year and attendance
was as follows:
MEETINGS
HELD
MEETINGS
ATTENDED
Sir Michael Heller Board
Nomination committee
Remuneration committee
10
1
1
10
1
1
J A Heller* Board
Audit committee
10
2
10
2
J Mintz* Board
Audit committee
10
2
10
2
C A Parritt Board
Audit committee
Nomination committee
Remuneration committee
10
2
1
1
10
2
1
1
H D Goldring Board
Audit committee
Nomination committee
Remuneration committee
10
2
1
1
9
2
1
1
R Priest Board 10 10
*Attended audit committee by invitation.
PERFORMANCE EVALUATION – BOARD,
BOARD COMMITTEES AND DIRECTORS
The performance of the board as a whole, its committees and the
non-executive Directors is assessed by the Chairman and the Chief
Executive and is discussed with the senior independent non-
executive Director. Their recommendations are discussed at the
nomination committee prior to proposals for re-election being
recommended to the board. The performance of executive
Directors is discussed and assessed by the remuneration committee.
The senior independent Director meets regularly with the Chairman,
executive and non-executive Directors individually outside of formal
meetings. The Directors will take outside advice in reviewing
performance but have not found this to be necessary to date.
20 London & Associated Properties PLC 2021
GOVERNANCE Corporate Governance
INDEPENDENT DIRECTORS
The senior independent non-executive Director is C A Parritt. The
other independent non-executive Directors are H D Goldring and R
Priest. R Priest provides services to the Company on a fee paying
basis. C A Parritt also provides some advisory services as part of his
accounting practice.
The board encourages all three non-executive Directors to act
independently and does not consider that length of service of any
individual non-executive Director, has resulted in the inability or
failure to act independently. In the opinion of the board the three
non-executive Directors continue to fulfil their roles as independent
non-executive Directors. Their background and skills are set out on
page 15.
The independent Directors exchange views regularly between board
meetings and meet when required to discuss corporate governance
and other issues concerning the Group.
INTERNAL CONTROL
The Directors are responsible for the Group’s system of internal
control and for reviewing its effectiveness at least annually, and for
the preparation and review of its financial statements. The board
has designed the Group’s system of internal control in order to
provide the Directors with reasonable assurance that assets are
safeguarded, that transactions are authorised and properly recorded
and that material errors and irregularities are either prevented or
would be detected within a timely period. However, no system of
internal control can eliminate the risk of failure to achieve business
objectives or provide absolute assurance against material
misstatement or loss. The key elements of the control system in
operation are:
• The board meets regularly on full notice with a formal schedule of
matters reserved for its decision and has put in place an
organisational structure with clearly defined lines of responsibility
and with appropriate delegation of authority;
• There are established procedures for planning, approval and
monitoring of capital expenditure and information systems for
monitoring the Group’s financial performance against approved
budgets and forecasts;
• The responsible executives are required regularly to undertake a
full assessment process to identify and quantify the risks that face
the functional activities for which they are responsible and assess
the adequacy of the prevention, monitoring and modification
practices in place for those risks. In addition, regular reports about
significant risks and associated control and monitoring procedures
are made to the executive Directors. The process adopted by the
Group accords with the guidance contained in the document
“Internal Control Guidance for Directors on the Combined Code”
issued by the Institute of Chartered Accountants in England and
Wales. The audit committee receives reports from external
auditors and from executive Directors of the Group. During the
period the audit committee has reviewed the effectiveness of the
system of internal control as described above. The board receives
periodic reports from all committees.
• There are established procedures for the presentation and review
of the financial statements and the Group has in place an
organisational structure with clearly defined lines of responsibility
and with appropriate delegation of authority.
There are no internal control issues to report in the annual report
and financial statements for the year ended 31 December 2021. Up
to the date of approval of this report and the financial statements,
the board has not been required to deal with any related material
internal control issues. The Directors confirm that the board has
reviewed the effectiveness of the system of internal control as
described during the period.
COMMUNICATION WITH SHAREHOLDERS
Prompt communication with shareholders is given high priority.
Extensive information about the Group and its activities is provided
in the Annual Report. In addition, a half-year report is produced for
each financial year and published on the Company’s website. The
Company’s website www.lap.co.uk is updated promptly with
announcements and Annual Reports upon publication. Copies from
previous years are also available on the website.
The share price history and market information can be found at
https://www.londonstockexchange.com/stock/LAS/london-
associated-properties-plc/company-page. The company code is LAS.
There is a regular dialogue with the Company’s stockbrokers and
institutional investors. Enquiries from individuals on matters relating
to their shareholdings and the business of the Group are dealt with
promptly and informatively.
The Company’s website is under continuous development to enable
better communication with both existing and potential new
shareholders.
THE BRIBERY ACT 2010
The Company is committed to acting ethically, fairly and with
integrity in all its endeavours and compliance with the Company’s
anti–bribery code is monitored closely.
London & Associated Properties PLC 2021 21
GOVERNANCE
Governance statement by the Chairman
of the remuneration committee
The remuneration committee is pleased to present
its report for the year ended 31 December 2021.
The report is presented in two parts in accordance
with the remuneration regulations.
The first part is the Annual Remuneration Report which details
remuneration awarded to Directors and non-executive Directors
during the year. The shareholders will be asked to approve the
Annual Remuneration Report as an ordinary resolution (as in
previous years) at the AGM in June 2022.
The second part is the Remuneration Policy which details the
remuneration policy for Directors, can be found at www.lap.co.uk.
The current remuneration policy was subject to a binding vote
which was approved by shareholders at the AGM in July 2020. The
approval will continue to apply for a 3 year period commencing from
then. The committee reviewed the existing policy and deemed that
no changes were necessary to the current arrangements.
Both of the reports have been prepared in accordance with The
Large and Medium-sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013.
The Company’s auditor, Kreston Reeves LLP is required by law to
audit certain disclosures and where disclosures have been audited
that is indicated in the independent auditor’s report.
C A Parritt
Chairman, Remuneration Committee
28 April 2022
22 London & Associated Properties PLC 2021
GOVERNANCE
Annual remuneration report
THE FOLLOWING INFORMATION HAS BEEN AUDITED
Single total figure of remuneration for the year ended 31 December 2021
SALARY
AND FEES
£’000
BONUSES
£’000
BENEFITS
£’000
LONG TERM
INCENTIVE
AWARDS
£’000
PENSIONS
£’000
TOTAL
2021
£’000
TOTAL FIXED
REMUNERA-
TION
£’000
TOTAL
VARIABLE
REMUNERA-
TION
£’000
Executive Directors
Sir Michael Heller* 7 - 68 - - 75 75 -
Sir Michael Heller - Bisichi 83 - - - - 83 83 -
J A Heller 533 - 25 - 32 590 590 -
J Mintz 160 50 8 - 15 233 183 50
783 50 101 - 47 981 931 50
Non-executive Directors
H D Goldring*+ 18 - 13 - - 31 31 -
C A Parritt*+ 37 - - - - 37 37 -
R Priest* 35 - - - - 35 35 -
90 - 13 - - 103 103 -
Total 873 50 114 - 47 1,084 1,034 50
J A Heller has an entitlement to an employer pension contribution of £31,500 for 2021 (2020: £30,000). He has elected for this not to be
paid at this time.
Single total figure of remuneration for the year ended 31 December 2020
SALARY
AND FEES
£’000
BONUSES
£’000
BENEFITS
£’000
LONG TERM
INCENTIVES
AWARDS
£’000
PENSIONS
£’000
TOTAL
2020
£’000
TOTAL FIXED
REMUNERA-
TION
£’000
TOTAL VARI-
ABLE REMU-
NERATION
£’000
Executive Directors
Sir Michael Heller* 7 - 62 - - 69 69 -
Sir Michael Heller - Bisichi 83 - - - - 83 83 -
J A Heller 348 - 40 - 30 418 418 -
J Mintz 160 - 4 - 15 179 179 -
598 - 106 - 45 749 749 -
Non-executive Directors
H D Goldring+ 18 - 11 - - 29 29 -
C A Parritt*+ 37 - - - - 37 37 -
R Priest* 35 - - - - 35 25 -
90 - 11 - - 101 101 -
Total 688 - 117 - 45 850 850 -
* Note 25 “Related party transactions”
+ Members of the remuneration committee for years ended 31 December 2020 and 31 December 2021. C A Parritt was the chair of the remuneration committee
throughout both years.
Benefits include the provision of car, health and other insurance and
subscriptions.
Sir Michael Heller is a director of Bisichi PLC, (a subsidiary for IFRS
10 purposes) and received a salary from that company of £82,500
(2020: £82,500) for services. He did not receive a bonus in 2021
(2020: £Nil).
Although Sir Michael Heller receives reduced remuneration in
respect of his services to LAP, the Company does supply office
premises, property management, general management, accounting
and administration services for a number of companies in which Sir
Michael Heller has an interest. The board estimates that the annual
value of these services, if supplied to a third party, would have been
£300,000 (2020: £300,000). Further details of these services are
set out in Note 25 to the financial statements “Related party
transactions”.
J A Heller is a director of Dragon Retail Properties Limited, (a
subsidiary for IFRS 10 purposes) and received benefits from that
company of £3,404 (2020: £11,132) for services. This is included in
the remuneration figures disclosed above. J A Heller did not draw
£185,000 of his salary in 2020 due to economic uncertainty at that
time.
The remuneration figures for C A Parritt include fees paid to his
accountancy practice for consultancy services provided to the
Group. This is detailed in Note 25 to the financial statements.
R Priest provides consultancy services to the Group. This is detailed
in Note 25 to the financial statements.
London & Associated Properties PLC 2021 23
GOVERNANCE Annual remuneration report
Summary of directors’ terms
DATE OF
CONTRACT UNEXPIRED TERM NOTICE PERIOD
Executive Directors
Sir Michael Heller 1 January 1971 Continuous 6 months
John Heller 1 May 2003 Continuous 12 months
Jonathan Mintz 11 February 2019 Continuous 3 months
Non-executive Directors
H D Goldring 1 July 1992 Continuous 3 months
C A Parritt 1 January 2006 Continuous 3 months
R Priest 31 July 2013 Continuous 3 months
STATEMENT OF DIRECTORS’ SHAREHOLDINGS AND SHARE INTERESTS
Directors’ interests
The interests of the Directors in the ordinary shares of the Company, including family and trustee holdings, where appropriate, were as follows:
BENEFICIAL
INTERESTS
NON-BENEFICIAL
INTERESTS
31 DEC 21 1 JAN 21 31 DEC 20 1 JAN 20
Sir Michael Heller 5,749,341 5,749,341 19,277,931 19,277,931
J A Heller 1,872,410 1,872,041
†
14,073,485 †14,073,485
J Mintz 100,000 - - -
H D Goldring 19,819 19,819 - -
C A Parritt 36,168 36,168 - -
R Priest - - - -
† These non-beneficial holdings are duplicated with those of Sir Michael Heller.
TOTAL PENSION ENTITLEMENTS
Two directors had benefits under money purchase schemes. Under
his contract of employment, one Director was entitled to a regular
employer contribution (currently £15,000 a year). Under his contract
of employment, the other Director was entitled to a regular
employer contribution (currently £31,500 a year) but has elected
not to receive it. There are no final salary schemes in operation. No
pension costs are incurred on behalf of non-executive Directors.
There are no additional benefits payable to any Director in the
event of early retirement.
SHARE INCENTIVE PLAN (SIP)
In 2006 the Directors set up an HMRC approved share incentive
plan (SIP). The purpose of the plan, which is open to all eligible LAP
executive Directors and head office based staff, is to enable them to
acquire shares in the Company and give them a continuing stake in
the Group.
The SIP comprises four types of share – (1) free shares under which
the Company may award shares of up to the value of £3,000 each
year, (2) partnership shares, under which members may save up to
£1,500 per annum to acquire shares, (3) matching shares, through
which the Company may award up to two shares for each share
acquired as a partnership share, and (4) dividend shares, acquired
from dividends paid on shares within the SIP.
1. Free shares: No free shares were issued in 2020 or 2021.
2. Partnership shares: No partnership shares were issued in 2020
or 2021.
3. Matching shares: The partnership share agreements for the year
to 31 October 2021 provide for two matching shares to be
awarded free of charge for each partnership share acquired.
No partnership shares were acquired in 2021 (2020: nil).
Matching shares will usually be forfeited if a member leaves
employment in the Group within five years of their grant.
4. Dividend shares: Dividends on shares acquired under the SIP will
be utilised to acquire additional shares. Accumulated dividends
received on shares in the SIP to 31 December 2021 amounted to
£156 (2020: £Nil). Of these J A Heller received 369 shares valued
at £39 (2020: Nil). No other Directors received dividend shares.
The SIP is set up as an employee benefit trust. The trustee is
London & Associated Securities Limited, a wholly owned subsidiary
of LAP, and all shares and dividends acquired under the SIP will be
held by the trustee until transferred to members in accordance with
the rules of the SIP.
SHARE OPTION SCHEMES
The Company has an HMRC approved scheme (Approved Scheme).
It was set up in 1986 in accordance with HMRC rules to gain HMRC
approved status which gave the members certain tax advantages.
There are no performance criteria for the exercise of options under
the Approved Scheme, as this was set up before such requirements
were considered to be necessary. No Director has any options
outstanding under the Approved Scheme nor were any options
granted under the Approved Scheme for the year ended 31
December 2021.
A share option scheme known as the “Non-approved Executive
Share Option Scheme” (Unapproved Scheme) which does not have
HMRC approval was set up during 2000. At 31 December 2021
there were no options to subscribe for ordinary shares outstanding.
The exercise of options under the Unapproved Scheme is subject to
the satisfaction of objective performance conditions specified by
the remuneration committee which conforms to institutional
shareholder guidelines and best practice provisions. Further details
of this scheme are set out in Note 23 “Share Capital” to the financial
statements.
PAYMENTS TO PAST DIRECTORS
No payments were made to past Directors in the year ended 31
December 2021 (2020: none).
PAYMENTS FOR LOSS OF OFFICE
No payments for loss of office were made in the year ended 31
December 2021 (2020: none).
24 London & Associated Properties PLC 2021
GOVERNANCE Annual remuneration report
The beneficial holdings of Directors shown above include their interests in the Share Incentive Plan.
No share awards were made to the Directors in the year, and accordingly no discretion was exercised in determining any award or bonus
payment as a result of any share price appreciation.
There are no requirements or guidelines for any Director to own shares in the Company.
THE FOLLOWING INFORMATION IS UNAUDITED:
The graph illustrates the Company’s performance as compared with a broad equity market index over a five year period.
Performance is measured by total shareholder return. The directors have chosen the FTSE All Share – Total Return Index as a
suitable index for this comparison as it gives an indication of performance against a large spread of quoted companies.
The middle market price of London & Associated Properties PLC ordinary shares at 31 December 2021 was 12.0p (2020:
8.0p). During the year the share middle market price ranged between 18.0p and 8.0p.
Total Shareholder Return
REMUNERATION OF THE CHIEF EXECUTIVE OVER THE LAST TEN YEARS
YEAR CEO
CHIEF EXECUTIVE SINGLE
TOTAL FIGURE OF
REMUNERATION
£’000
ANNUAL BONUS PAYMENT
AGAINST MAXIMUM
OPPORTUNITY*
%
LONG-TERM INCENTIVE
VESTING RATES
AGAINST MAXIMUM
OPPORTUNITY*
%
2021 J A Heller 590 0% n/a
2020 J A Heller 418 0% n/a
2019 J A Heller 648 0% n/a
2018 J A Heller 870 20% n/a
2017 J A Heller 487 11% n/a
2016 J A Heller 569 18% n/a
2015 J A Heller 762 41% n/a
2014 J A Heller 835 49% n/a
2013 J A Heller 716 n/a n/a
2012 J A Heller 417 n/a n/a
*There were no formal criteria or conditions to apply in determining the amount of bonus payable or the number of shares to be issued prior to 2014.
In light of the prevailing economic situation at the time the Chief Executive did not draw £185,000 (35%) of his salary in 2020.
PERCENTAGE CHANGE IN EXECUTIVE AND NON-EXECUTIVE DIRECTOR REMUNERATION (AUDITED)
The table below shows the percentage change in remuneration of the Directors undertaking the role of Chief Executive Officer, Finance
Director and Non-Executive Directors and the average of Company’s colleagues in London & Associated Properties PLC on a full-time
equivalent basis.
London & Associated Properties FTSE All Share Index
01/01/202001/01/201901/01/201801/01/2017
35
55
75
95
115
135
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London & Associated Properties PLC 2021 25
GOVERNANCE Annual remuneration report
DIRECTOR
BASE SALARY %
CHANGE 2021 V 2020
BENEFITS %
CHANGE 2021 V 2020
BONUSES %
CHANGE 2021 V 2020
Executive:
Sir Michael Heller 0% 10% 0%
J A Heller 53%
1
-38% 0%
J Mintz 0% 100% 100%
Non-Executive:
H D Goldring 0% 18% 0%
C A Parritt 0% 0% 0%
R Priest 0% 0% 0%
Colleague pay 0% 0% 100%
1
J A Heller waived a portion of his salary in 2020 which resulted in a 53% increase year on year. His base salary entitlement was unchanged
from 2020.
RELATIVE IMPORTANCE OF SPEND ON PAY
The total expenditure of the Group on remuneration to all employees (Note 26 refers) is shown below:
2021
£’000
2020
£’000
Employee Remuneration 8,999 7,289
Distributions to shareholders 0 0
In addition, on 30 July 2020, there was a binding vote on the resolution to approve the Remuneration Policy. The results are detailed below
% OF VOTES
FOR
% OF VOTES
AGAINST
NUMBER OF
VOTES
WITHHELD
Resolution to approve the Remuneration Report (15 June 2021) 77.57 22.43 0
Resolution to approve the Remuneration Policy (30 July 2020) 80.73 19.27 27,265
Although a number of shareholders voted against the approval of the remuneration report at the 2021 AGM, the Remuneration Committee
and the Board believe that the current remuneration policy (approved by shareholders in 2020) is still appropriate. They have noted that a
number of shareholders voted against the remuneration report. However, they believe that it is essential to reward executive directors at a
commercial rate and that the payments are in accordance with the agreed Policy.
STATEMENT OF IMPLEMENTATION OF
REMUNERATION POLICY
The policy was approved at the AGM in June 2020 and was
effective from 1 August 2020. The vote on the remuneration policy
is binding in nature. The Company may not then make a
remuneration payment or payment for loss of office to a person
who is, is to be, or has been a director of the Company unless that
payment is consistent with the approved remuneration policy, or
has otherwise been approved by a resolution of members. During
the year there were no deviations from the procedure for the
implementation of the remuneration policy as set out in the policy.
CONSIDERATION BY THE DIRECTORS OF MATTERS
RELATING TO DIRECTORS’ REMUNERATION
The Remuneration Committee considered the executive Directors’
remuneration and the Board considered the non-executive Directors’
remuneration in the year ended 31 December 2021. No increases were
awarded and no external advice was taken in reaching this decision. The
Company did not engage any consultants to provide advice or services
to materially assist the remuneration committee’s considerations.
SHAREHOLDER VOTING
At the Annual General Meeting on 30 July 2020, there was an
advisory vote on the resolution to approve the Remuneration
Report, other than the part containing the remuneration policy.
26 London & Associated Properties PLC 2021
GOVERNANCE
Remuneration policy summary
The remuneration policy summary below is an extract
of the group’s current remuneration policy on directors’
remuneration (excluding Bisichi PLC), which was
approved by a binding vote at the 2020 AGM. The
approved policy took effect from 1 August 2020.
POLICY TABLE
ELEMENT PURPOSE POLICY OPERATION OPPORTUNITY AND PERFORMANCE CONDITIONS
Executive directors
Base salary To recognise:
Skills
Responsibility
Accountability
Experience
Value
Considered by remuneration committee on appointment
Set at a level considered appropriate to attract, retain, motivate
and reward the right individuals
Reviewed annually whenever there is a change
of role or operational responsibility
Paid monthly in cash
There is no prescribed maximum salary or maximum rate of increase, although any
increase in excess of inflation is unlikely, unless there are changes in responsibility
No individual director will be awarded a base salary in excess of £575,000 a year
No specific performance conditions are attached to base salaries
Pension To provide competitive retirement benefits Company contribution offered at up to 10% of base salary as part
of overall remuneration package
The contribution payable by the Company is
included in the director’s contract of employment
Paid into money purchase schemes
Company contribution offered at up to 10% of base salary as part of overall
remuneration package
No specific performance conditions are attached to pension contributions
Benefits To provide a competitive benefits package Contractual benefits include:
Car or car allowance
Group health cover
Death in service cover
Permanent health insurance
The committee retains the discretion to approve
changes in contractual benefits in exceptional
circumstances or where factors outside the
control of the Group lead to increased costs
(e.g. medical inflation)
The costs associated with benefits offered are closely controlled and reviewed on an
annual basis
No director will receive benefits of a value in excess of 30% of their base salary
No specific performance conditions are attached to contractual benefits
Annual
bonus
To reward and incentivise In assessing the performance of the executive team, and in particular
to determine whether bonuses are merited the remuneration
committee takes into account the overall performance of the business,
as well as individual contribution to the business in the period
The remuneration committee is using its discretion
to determine the level of bonus on an annual basis
In assessing performance consideration is given
to the level of net rental income, cash flow, voids,
realised development gains and income from
managing joint ventures, as well as NAV changes.
Achieved results are then compared with
expectation taking account of market conditions
Bonuses are generally offered in cash or shares
The current maximum bonus will not exceed 80% of base salary in any one year
but the remuneration committee reserves the power to award up to 150% in an
exceptional year
Performance conditions will be assessed on an annual basis
The performance measures applied may be financial, non-financial, corporate,
divisional or individual and in such proportion as the remuneration committee
considers appropriate
Share
options
To provide executive directors with
a long-term interest in the company
Where it is necessary to attract, retain, motivate and reward the right
individuals, the directors may establish new schemes to replace any
expired schemes
Offered at appropriate times by the
remuneration committee
The aggregate number of shares over which options may be granted under all of the
company’s option schemes (including any options and awards granted under the
company’s employee share plans) in any period of ten years, will not exceed, at the
time of grant, 10% of the ordinary share capital of the company from time to time
Share options will be offered by the remuneration committee at their discretion and
will be subject to appropriate performance criteria at the time.
Share incentive
plan (SIP)
To offer a shorter term incentive in the
company and to give directors a stake in
the group
Offered to executive directors and head office staff
Maximum participation levels are set by HMRC Of any bonus awarded, Directors may opt to have maximum of £3,000 per year paid
in ‘Free Shares’ under the SIP scheme rules
Non-executive directors
Base salary To recognise:
Skills
Responsibility
Experience
Risk
Value
Considered by the board on appointment
Set at a level considered appropriate to attract, retain and motivate
the individual
Experience and time required for the role are considered on
appointment
Reviewed annually No individual non-executive director will be awarded a base salary in excess of
£40,000 a year
No performance conditions are attached to base salaries
Pension No pension offered
Benefits No benefits offered except in exchange for sacrificing fees.
Share options Non-executive directors do not participate in the share option schemes
Notes to the Remuneration Policy
The remuneration committee considers the performance
measures outlined in the table above to be appropriate
measures of performance and that the KPIs chosen align the
interests of the directors and shareholders.
In setting the policy, the Remuneration Committee has taken
the following into account:
London & Associated Properties PLC 2021 27
GOVERNANCE Remuneration policy summary
• The need to attract, retain and motivate individuals of a calibre
who will ensure successful leadership and management of the
company
• The LAP Group’s general aim of seeking to reward all employees
fairly according to the nature of their role and their performance
• Remuneration packages offered to similar companies within the
same sector
• The need to align the interests of shareholders as a whole with
the long-term growth of the Group; and
• The need to be flexible and adjust with operational changes
throughout the term of this policy
The remuneration of non-executive directors is determined by the
board, and takes into account additional remuneration for services
outside the scope of the ordinary duties of non-executive directors.
For details of remuneration of other company employees please see
page 25
A copy of the full policy can be found at www.lap.co.uk.
POLICY TABLE
ELEMENT PURPOSE POLICY OPERATION OPPORTUNITY AND PERFORMANCE CONDITIONS
Executive directors
Base salary To recognise:
Skills
Responsibility
Accountability
Experience
Value
Considered by remuneration committee on appointment
Set at a level considered appropriate to attract, retain, motivate
and reward the right individuals
Reviewed annually whenever there is a change
of role or operational responsibility
Paid monthly in cash
There is no prescribed maximum salary or maximum rate of increase, although any
increase in excess of inflation is unlikely, unless there are changes in responsibility
No individual director will be awarded a base salary in excess of £575,000 a year
No specific performance conditions are attached to base salaries
Pension To provide competitive retirement benefits Company contribution offered at up to 10% of base salary as part
of overall remuneration package
The contribution payable by the Company is
included in the director’s contract of employment
Paid into money purchase schemes
Company contribution offered at up to 10% of base salary as part of overall
remuneration package
No specific performance conditions are attached to pension contributions
Benefits To provide a competitive benefits package Contractual benefits include:
Car or car allowance
Group health cover
Death in service cover
Permanent health insurance
The committee retains the discretion to approve
changes in contractual benefits in exceptional
circumstances or where factors outside the
control of the Group lead to increased costs
(e.g. medical inflation)
The costs associated with benefits offered are closely controlled and reviewed on an
annual basis
No director will receive benefits of a value in excess of 30% of their base salary
No specific performance conditions are attached to contractual benefits
Annual
bonus
To reward and incentivise In assessing the performance of the executive team, and in particular
to determine whether bonuses are merited the remuneration
committee takes into account the overall performance of the business,
as well as individual contribution to the business in the period
The remuneration committee is using its discretion
to determine the level of bonus on an annual basis
In assessing performance consideration is given
to the level of net rental income, cash flow, voids,
realised development gains and income from
managing joint ventures, as well as NAV changes.
Achieved results are then compared with
expectation taking account of market conditions
Bonuses are generally offered in cash or shares
The current maximum bonus will not exceed 80% of base salary in any one year
but the remuneration committee reserves the power to award up to 150% in an
exceptional year
Performance conditions will be assessed on an annual basis
The performance measures applied may be financial, non-financial, corporate,
divisional or individual and in such proportion as the remuneration committee
considers appropriate
Share
options
To provide executive directors with
a long-term interest in the company
Where it is necessary to attract, retain, motivate and reward the right
individuals, the directors may establish new schemes to replace any
expired schemes
Offered at appropriate times by the
remuneration committee
The aggregate number of shares over which options may be granted under all of the
company’s option schemes (including any options and awards granted under the
company’s employee share plans) in any period of ten years, will not exceed, at the
time of grant, 10% of the ordinary share capital of the company from time to time
Share options will be offered by the remuneration committee at their discretion and
will be subject to appropriate performance criteria at the time.
Share incentive
plan (SIP)
To offer a shorter term incentive in the
company and to give directors a stake in
the group
Offered to executive directors and head office staff
Maximum participation levels are set by HMRC Of any bonus awarded, Directors may opt to have maximum of £3,000 per year paid
in ‘Free Shares’ under the SIP scheme rules
Non-executive directors
Base salary To recognise:
Skills
Responsibility
Experience
Risk
Value
Considered by the board on appointment
Set at a level considered appropriate to attract, retain and motivate
the individual
Experience and time required for the role are considered on
appointment
Reviewed annually No individual non-executive director will be awarded a base salary in excess of
£40,000 a year
No performance conditions are attached to base salaries
Pension No pension offered
Benefits No benefits offered except in exchange for sacrificing fees.
Share options Non-executive directors do not participate in the share option schemes
28 London & Associated Properties PLC 2021
GOVERNANCE
Audit committee report
The committee’s terms of reference have been
approved by the board and follow published
guidelines, which are available on request from the
company secretary.
The audit committee’s primary tasks are to:
• review the scope of external audit, to receive regular reports from
Kreston Reeves LLP and to review the half-yearly and annual
accounts before they are presented to the board, focusing in
particular on accounting policies and areas of management
judgement and estimation;
• monitor the controls which are in force to ensure the integrity
of the information reported to the shareholders;
• act as a forum for discussion of internal control issues and
contribute to the board’s review of the effectiveness of the
Group’s internal control and risk management systems and
processes;
• to review the risk assessments made by management, consider
key risks with action taken to mitigate these and to act as a forum
for discussion of risk issues and contribute to the board’s review
of the effectiveness of the Group’s risk management control and
processes;
• consider once a year the need for an internal audit function;
• advise the board on the appointment of the external auditors,
the rotation of the audit partner every five years and on their
remuneration for both audit and non-audit work; discuss the
nature and scope of their audit work and undertake a formal
assessment of their independence each year, which includes:
i) a review of non-audit services provided to the Group and
related fees;
ii) discussion with the auditors of their written report detailing
all relationships with the Company and any other parties that
could affect independence or the perception of
independence;
iii) a review of the auditors’ own procedures for ensuring the
independence of the audit firm and partners and staff
involved in the audit, including the regular rotation of the
audit partner; and
iv) obtaining a written confirmation from the auditors that,
in their professional judgement, they are independent.
MEETINGS
The committee meets at least twice a year prior to the publication of the
annual results and discusses and considers the half year results prior to
their approval by the board. The audit committee meetings are attended
by the external audit partner, chief executive, finance director and
company secretary. During the year the members of the committee also
meet on an informal basis to discuss any relevant matters which may
have arisen. Additional formal meetings may be held as necessary.
During the past year the committee:
• met with the external auditors, and discussed their reports to
the audit committee;
• approved the publication of annual and half year financial results;
• considered and approved the annual review of internal controls;
• decided that there was no current need for an internal audit function
due to the scale of the business and processes in place;
• agreed the independence of the auditors and approved their fees
for both audit and non-audit services as set out in Note 2 to the
financial statements;
• noted the revised procedures applied by the auditors following
the FRC comments on the 2018 audit, concluded in March 2020;
• the chairman of the audit committee has also had separate
meetings and discussions with the external audit partner; and
• conducted a tender process to appoint Kreston Reeves as the
company’s auditor.
FINANCIAL REPORTING
As part of its role, the Audit Committee assessed the audit findings
that were considered most significant to the financial statements,
including those areas requiring significant judgement and/or
estimation. When assessing the identified financial reporting matters,
the committee assessed quantitative materiality primarily by
reference to the carrying value of the group’s total assets, given that
the group operates a principally asset based business. When determining
quantitative materiality, the Board also gave consideration to the
value of revenues generated by the group and net asset value, given
that they are key trading and business KPIs. The qualitative aspects
of any financial reporting matters identified during the audit process
were also considered when assessing their materiality. Based on the
considerations set out above we have considered quantitative
errors individually or in aggregate in excess of approximately £1.153
million in relation to the Group and £0.626 million in relation to the
parent company and £0.3 million for the Bisichi group to be material.
EXTERNAL AUDITOR
The 2021 financial year is the first year in which Kreston Reeves LLP
has acted as auditor to London & Associated Properties PLC.
Kreston Reeves was appointed on 15 June 2021 at the AGM. Prior
to this RSM UK Audit LLP acted as auditor, resigning in 2021 under
the mandatory audit firms rotation rules.
In the United Kingdom London & Associated Properties PLC
provides extensive administration and accounting services to Bisichi
PLC, which has its own audit committee and employs Kreston
Reeves LLP as its auditor.
C A Parritt
Chairman – Audit Committee
28 April 2022
London & Associated Properties PLC 2021 29
GOVERNANCE
Directors’ responsibilities statement
Directors are responsible for preparing the
Strategic Report and the Directors’ Report, the
Directors’ Remuneration Report and the financial
statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare group and company
financial statements for each financial year. The directors have
elected under company law to prepare group financial statements in
accordance with UK-adopted international accounting standards.
The directors have also prepared the Group Financial Statements in
accordance with the requirements of international financial
reporting standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union. The directors have
elected under company law to prepare the company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and
applicable law) including FRS 101 “Reduced Disclosure Framework”.
The group financial statements are required by law and international
accounting standards in conformity with the requirements of the
Companies Act 2006 and UK-adopted international financial
reporting standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union to present fairly the
financial position and performance of the group; the Companies Act
2006 provides in relation to such financial statements that
references in the relevant part of that Act to financial statements
giving a true and fair view are references to their achieving a fair
presentation.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and the company and of the
profit or loss of the group for that period.
In preparing each of the group and company financial statements,
the directors are required to:
a. select suitable accounting policies and then apply them
consistently;
b. make judgements and accounting estimates that are reasonable
and prudent;
c. for the group financial statements, state whether applicable
UK-adopted international accounting standards and international
financial reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union have been
followed, subject to any material departures disclosed and
explained in the Financial Statements;
d. for the company financial statements, state whether applicable
UK accounting standards have been followed, subject to any
material departures disclosed and explained in the company
financial statements;
e. prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and the
company will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the group’s and the
company’s transactions and disclose with reasonable accuracy at
any time the financial position of the group and the company and
enable them to ensure that the financial statements and the
Directors’ Remuneration Report comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the
group and the company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
DIRECTORS’ STATEMENT PURSUANT TO THE
DISCLOSURE GUIDANCE AND TRANSPARENCY
RULES
The Directors consider that the Annual Report and Accounts, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s and
Company’s position and performance, business model and strategy
Each of the directors, whose names and functions are listed on page
15 confirm that, to the best of each person’s knowledge:
a. the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of
the assets, liabilities, financial position and loss of the company
and the undertakings included in the consolidation taken as a
whole; and
b. the Strategic Report contained in the Annual Report includes a
fair review of the development and performance of the business
and the position of the company and the undertakings included in
the consolidation taken as a whole, together with a description of
the principal risks and uncertainties that they face.
The directors are responsible for the maintenance and integrity of
the corporate and financial information included on the London &
Associated Properties PLC website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
30 London & Associated Properties PLC 2021
GOVERNANCE
Independent auditor’s report
TO THE SHAREHOLDERS OF LONDON & ASSOCIATED PROPERTIES PLC
FOR THE YEAR ENDED 31 DECEMBER 2021
OPINION
We have audited the financial statements of
London & Associated Properties PLC (the ‘parent
company’) and its subsidiaries (the ‘Group’) for the
year ended 31 December 2021 which comprise
the consolidated income statement, consolidated
statement of comprehensive income, consolidated
and company balance sheets, consolidated and
company statements of changes in shareholders’
equity, consolidated cash flow statement and
notes to the financial statements, including a
summary of significant Group accounting policies.
The financial reporting framework that has been
applied in their preparation of the group financial
statements is applicable law and UK adopted
international accounting standards. The financial
reporting framework that has been applied in the
preparation of the parent company financial
statements is applicable law and United Kingdom
Accounting Standards, including FRS 101 Reduced
Disclosure Framework (United Kingdom Generally
Accepted Accounting Practice).
In our opinion:
• the financial statements give a true and fair view of the state of
the Group’s and of the parent company's affairs as at 31
December 2021 and of the Group’s profit for the year then ended;
• the group financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
• the parent company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
• the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities
for the audit of the financial statements section of our report. We are
independent of the Group and the parent company in accordance with
the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied
to listed public entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all of
our audits we also addressed the risk of management override of
internal controls, including evaluating whether there was evidence
of bias by the directors that represented a risk of material
misstatement due to fraud.
COVERAGE OVERVIEW
GROUP
REVENUE
GROUP
PROFIT/
(LOSS)
BEFORE TAX
GROUP NET
ASSETS
Full statutory audit
(Kreston Reeves
and BDO)
99.9%
94.5%
90.8%
Limited procedures 0.1% 5.5% 9.2%
Totals at
31 December 2021:
100%
100%
100%
We tailored the scope of our audit to ensure that we performed
sufficient work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Group and the parent company, the accounting processes and
controls, and the industry in which they operate.
Our scoping considerations for the Group audit were based both on
financial information and risk. As noted above limited assurance audit
work – which is to say the audit of balances and transactions material
at a group level – was only applied in respect of a small element of the
group. The below table summarises for the parent company, and its
subsidiaries, the level of assurance gained:
GROUP COMPONENT LEVEL OF ASSURANCE
London & Associated Properties PLC Full statutory audit (Kreston Reeves LLP)
Analytical Properties Limited Full statutory audit (Kreston Reeves LLP)
Orchard Square Limited Full statutory audit (Kreston Reeves LLP)
Dragon Retail Limited Full statutory audit (Kreston Reeves LLP)
London & Associated Management
Services Limited
Full statutory audit (Kreston Reeves LLP)
LAP Ocean Holdings Limited Full statutory audit (Kreston Reeves LLP)
Analytical Properties Holdings
Limited
Full statutory audit (Kreston Reeves LLP)
West Ealing Projects Limited Full statutory audit (Kreston Reeves LLP)
Bisichi PLC Full statutory audit (Kreston Reeves LLP)
Mineral Products Limited Full statutory audit (Kreston Reeves LLP)
Bisichi (Properties) Limited Full statutory audit (Kreston Reeves LLP)
Bisichi Northampton Limited Full statutory audit (Kreston Reeves LLP)
Black Wattle Colliery (Pty) Limited Full statutory audit (BDO South Africa
Incorporated)
Sisonke Coal Processing (Pty) Limited Full statutory audit (BDO South Africa
Incorporated)
Black Wattle Klipfontein (Pty) Limited Full statutory audit (BDO South Africa
Incorporated)
All other group undertakings Limited assurance
London & Associated Properties PLC 2021 31
GOVERNANCE Independent auditor’s report
REVENUE RECOGNITION:
Significance and nature of key risk How our audit addressed the key risk
Revenue is a key performance indicator for users in assessing
the group’s financial statements. Revenue generated has a
significant impact on cash inflows and profit before tax for the
group. As such revenue is a key determinant in profitability and
the group’s ability to generate cash.
Revenue comprises two key revenue streams: the property
rental income and sale of coal.
Rental income is recognised in the Group income statement on
a straight-line basis over the term of the lease.
Coal revenue is recognised when the customer has a legally
binding obligation to settle under the terms of the contract.
Rental income revenue was recalculated based on the terms included
in signed lease agreements. Again, the recognition stages detailed in
the relevant standards were carefully considered to ensure revenue
recognised was in line with these and a substantive approach was
taken.
Sales of coal and coal processing services in the period were tested
from the trigger point of the sale to the point of recognition in the
financial statements, corroborating this to contract sales or service
terms and the recognition stages detailed in IFRS 15.
Revenue streams were further analytically reviewed via comparison to
our expectations. Expectations were based on a combination of prior
financial data, budgets and our own assessments based on industry
competitors.
Cut-off of revenue was reviewed for sales of coal by analysing sales
recorded during the period just before and after the financial year end
and determining if the recognition applied was appropriate, whilst
rental income cut-off has been reviewed by generating a proof in total
of the income from the tenancy agreements and comparing to the
income per the nominal ledger.
Walkthrough testing was performed to ensure that key systems and
controls in place around the revenue cycle operated as designed.
The accuracy of revenue disclosures in the accounts were confirmed
to be consistent with the revenue cycle observed and audited. The
completeness of these disclosures was confirmed by reference to the
full disclosure requirements as detailed in IFRS 15.
KEY OBSERVATIONS COMMUNICATED TO THE AUDIT COMMITTEE
We have no concerns over the material accuracy of revenue recognised in the financial statements.
VALUATION/IMPAIRMENT OF INVESTMENT PROPERTIES AND INVENTORY:
Significance and nature of key risk How our audit addressed the key risk
Investment properties comprise freehold and long leasehold
land and buildings, whilst properties classified as inventory are
properties which are currently being developed.
Investment properties are carried at fair value in accordance
with IAS 40 and are revalued annually by professional external
surveyors and included in the balance sheet at their fair value.
Gains or losses arising from changes in the fair values of
assets are recognised in the consolidated income statement
in the period to which they relate. In accordance with IAS 40,
investment properties are not depreciated.
The fair value of the head leases is the net present value of the
current head rent payable on leasehold properties until the
expiry of the lease.
Appropriate classification of each property was considered, IAS 40
for investment properties, IAS 2 for inventory and IFRS 5 for non-
current assets held for sale, to ensure each property has been classified
correctly and therefore accounted for and disclosed within these
financial statements in accordance with the relevant standard.
External valuation reports were obtained and vouched to stated fair
values. The competence and independence of the valuation experts
was carefully considered to ensure that the reports they produce can
be relied upon.
A meeting was held with the valuers to challenge the assumptions
in their report and discuss the movements in the values of specific
properties.
Supporting calculations for the long leasehold land and buildings were
reviewed to ensure they are materiality accurate and any assumptions
are considered to be reasonable.
KEY OBSERVATIONS COMMUNICATED TO THE AUDIT COMMITTEE
We have no concerns over the material accuracy of investment properties and inventory values recognised in the financial statements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest
effect on the overall audit strategy, the allocation of resources in
the audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. This is not a
complete list of all risks identified by our audit.
32 London & Associated Properties PLC 2021
GOVERNANCE Independent auditor’s report
VALUATION/IMPAIRMENT OF MINING RESERVES:
Significance and nature of key risk How our audit addressed the key risk
The purpose of mine development is to establish secure working
conditions and infrastructure to allow the safe and efficient
extraction of recoverable reserves.
Depreciation on mine development costs is not charged
until production commences or the assets are put to use. On
commencement of full commercial production, depreciation is
charged over the life of the associated mine reserves extractable
using the asset on a unit of production basis.
The unit of production calculation is based on tonnes mined
as a ratio to proven and probable reserves and also includes
future forecast capital expenditure. The cost recognised includes
the recognition of any decommissioning assets related to mine
development.
The accounting requirements of IFRS 6 and IAS 16 were considered
to ensure capitalisation of costs to mine development under IAS 16
was appropriate.
In considering impairment indicators, as governed by IAS 36, the
life of mine assessment was obtained. All significant input variables
were considered and stress-tested to assess headroom between
modelling and the value of mine development.
Consideration was given to the competence and independence
of the technical expert involved with the production of historic
technical reports on which the life of mine assessment is partially
built.
Depreciation of mine development was recalculated based on
the unit of production basis to ensure accurately recorded. This
basis was also considered for reasonableness by reference to the
accounting policies of industry peers.
The accuracy and appropriateness of mine development disclosures
in the accounts were confirmed to be consistent with the mine
development accounting cycle observed and audited.
KEY OBSERVATIONS COMMUNICATED TO THE AUDIT COMMITTEE
We have no concerns over the material accuracy of mining reserves and development values recognised in the financial statements.
OUR APPLICATION OF MATERIALITY
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of our audit
procedures. When evaluating whether the effects of misstatements, both individually and on the financial statements as a whole, could reasonably
influence the economic decisions of the users we take into account the qualitative nature and the size of the misstatements. Based on our
professional judgement, we determined materiality as follows:
GROUP PARENT COMPANY
Materiality £1,153,000 £626,000
Basis for determining materiality 3% of net assets 3% of net assets
Rationale for benchmark applied The group's principal activity is that of
investment, management and development
of industrial and retail property and
exploration and mining operation. To this
end, the business is highly asset focused.
Therefore, a benchmark for materiality of the
net assets of the group is considered to be
appropriate.
The parent company’s principal activity is that
of investment, management and development
of industrial and retail property. To this end, the
business is highly asset focused. Therefore,
a benchmark for materiality of the net assets
of the group is considered to be appropriate.
Performance materiality £807,000 £440,000
Basis for determining performance
materiality
70% of materiality 70% of materiality
Rationale for performance materiality
applied
On the basis of our risk assessments,
together with our assessment of the Group’s
overall control environment, our judgement
was that performance materiality was 70%
of our planning materiality. In assessing the
appropriate level, we consider the nature of
the group and that this is our first year of
undertaking the audit of the Group.
On the basis of our risk assessments,
together with our assessment of the
Company’s overall control environment, our
judgement was that performance materiality
was 70% of our planning materiality. In
assessing the appropriate level, we consider
the nature of the group and that this is our
first year of undertaking the audit of the
Company.
Triviality threshold £58,000 £31,000
Basis for determining triviality threshold 5% of materiality 5% of materiality
London & Associated Properties PLC 2021 33
GOVERNANCE Independent auditor’s report
We reported all audit differences found in excess of our triviality
threshold to the directors and the Audit Committee.
For each Group company within the scope of our Group audit, we
allocated a materiality that is less than our overall Group materiality.
The range of materiality allocated across each Group company was
between £227,000 and £1,000. The scope of our audit was
influenced by our application of materiality as we set certain
quantitative thresholds for performance materiality and use these
thresholds as a consideration tool to help to determine the scope of
our audit and the nature, timing and extent of our audit procedures
on the individual financial statement line items and disclosures and
in evaluating the effect of misstatements, both individually and in
aggregate on the financial statements as a whole.
We determined component materiality for the parent company to be
capped at below group materiality. This was also the case for group
subsidiaries registered outside of the UK. For the trading subsidiaries,
3% of that subsidiary’s net assets was used. Performance materiality
was calculated at 70% of component materiality.
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the
Directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the Directors’ assessment of the Group and parent
company’s ability to continue to adopt the going concern basis of
accounting including the following:
• Gaining an understanding of the systems and controls around
managements’ going concern assessment, including for the
preparation and review process for forecasts and budgets.
• Evidence was obtained that management have undertaken a formal
going concern assessment, including sensitivity analysis on cash
flow forecasts, clear consideration of external factors including the
COVID pandemic and the war in Ukraine and the potential liquidity
impact of these on cash balances including available facilities.
• We have evaluated the financial strength of the business at the
year end date.
• We tested the mechanical integrity of forecast model by checking
the accuracy and completeness of the model, including
challenging the appropriateness of estimates and assumptions
with reference to empirical data and external evidence.
• Based on our above assessment we performed our own
sensitivity analysis in respect of the key assumptions
underpinning the forecasts.
• We considered post year end performance of the business and any
significant events which may impact the going concern of the group.
• The group's banking facility documentation was reviewed to
ensure that any covenants in place have not been breached.
• We reviewed the adequacy and completeness of the disclosure
included within the financial statements in respect of going concern.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the group’s
or the parent company’s ability to continue as a going concern for a
period of at least twelve months from when the financial statements
are authorised for issue.
In relation to the Group and Parent Company’s reporting on how they
have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the directors’
statement in the financial statements about whether the directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections of
this report.
OTHER INFORMATION
The other information comprises the information included in the
annual report other than the financial statements and our auditor’s
report thereon. The directors are responsible for the other
information contained within the annual report. Our opinion on the
financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements, or our knowledge obtained in the
course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If,
based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
OUR OPINION ON THE REMUNERATION REPORT
Kreston Reeves has audited the Annual remuneration report set out
on pages 22 to 25 of the Annual Report for the year ended 31
December 2021. The directors of the Company are responsible for
the preparation and presentation of the Remuneration Report in
accordance with the Companies Act 2006. Kreston Reeves’
responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with International
Accounting Standards. In Kreston Reeves’ opinion, the
Remuneration Report of the Group for the year, complies with the
requirements of the Companies Act 2006.
OPINIONS ON OTHER MATTERS PRESCRIBED BY
THE COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’
report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared
in accordance with applicable legal requirements.
34 London & Associated Properties PLC 2021
GOVERNANCE Independent auditor’s report
MATTERS ON WHICH WE ARE REQUIRED TO
REPORT BY EXCEPTION
In the light of our knowledge and understanding of the Group and
parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic
report or the directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
• adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the parent company financial statements are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are
not made; or
• we have not received all the information and explanations we
require for our audit
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the directors’ statement in
relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Group’s and Parent
Company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified set out on page 18;
• Directors’ explanation as to its assessment of the group’s
prospects, the period this assessment covers and why the period
is appropriate set out on page 9;
• Directors’ statement on whether it has a reasonable expectation
that the group will be able to continue in operation and meets its
liabilities set out on page 9;
• Directors’ statement on fair, balanced and understandable set out
on page 29;
• Board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on pages 10 to 11;
• Section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems set
out on page 20; and
• Section describing the work of the Audit Committee set out on
page 28.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement
(set out on page 29), the directors are responsible for the
preparation of the financial statements and for being satisfied that
they give a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are responsible
for assessing the Group’s and parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or parent company or
to cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF
THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance with
laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is
detailed below:
CAPABILITY OF THE AUDIT IN DETECTING
IRREGULARITIES, INCLUDING FRAUD
Based on our understanding of the group and industry, and through
discussion with the directors and other management (as required by
auditing standards), we identified that the principal risks of non-
compliance with laws and regulations related to health and safety,
anti-bribery and employment law. We considered the extent to
which non-compliance might have a material effect on the financial
statements. We also considered those laws and regulations that
have a direct impact on the preparation of the financial statements
such as the Companies Act 2006, IFRS, FRS 101, taxation
legislation and mining laws and regulations. We communicated
identified laws and regulations throughout our team and remained
alert to any indications of non-compliance throughout the audit. We
evaluated management’s incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of
override of controls) and determined that the principal risks were
related to posting inappropriate journal entries to increase revenue
or reduce expenditure, management bias in accounting estimates
and judgemental areas of the financial statements including the
valuation of investment properties and the mining reserves. Audit
procedures performed by the group engagement team and
component auditors included:
London & Associated Properties PLC 2021 35
GOVERNANCE Independent auditor’s report
• We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Group and determined that
the most significant are those that relate to the reporting
framework and the relevant tax compliance regulations in the
jurisdictions in which London & Associated Properties PLC
operates. In addition, we concluded that there are certain
significant laws and regulations that may have an effect on the
determination of the amounts and disclosures in the financial
statements, mainly relating to health and safety, employee
matters, bribery and corruption practices, environmental and
certain aspects of company legislation recognising the regulated
nature of the Group’s mining and oil and gas activities and its
legal form; and
• Detailed discussions were held with management to identify any
known or suspected instances of non- compliance with laws and
regulations; and
• Challenging assumptions and judgements made by management
in its significant accounting estimates; and
• Confirmation of related parties with management, and review of
transactions throughout the period to identify any previously
undisclosed transactions with related parties outside the normal
course of business; and
• Reading minutes of meetings of those charged with governance;
and
• Performing analytical procedures with automated data analytics
tools to identify any unusual or unexpected relationships,
including related party transactions, that may indicate risks of
material misstatement due to fraud;
Because of the inherent limitations of an audit, there is a risk that
we will not detect all irregularities, including those leading to a
material misstatement in the financial statements or non-compliance
with regulation. This risk increases the more that compliance with a
law or regulation is removed from the events and transactions
reflected in the financial statements, as we will be less likely to
become aware of instances of non-compliance.
As part of an audit in accordance with ISAs (UK), we exercise
professional judgment and maintain professional scepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures
made by the directors.
• Conclude on the appropriateness of the directors’ use of the
going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the
Group’s or the parent company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group or the
parent company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the Group to
express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the
Group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
Other matters which we are required to address
We were appointed by the audit committee on 19 November 2021
to audit the financial statements for the year ending 31 December
2021. Our total uninterrupted period of engagement is 1 year,
covering the year ended 31 December 2021.
The non-audit services prohibited by the FRC’s Ethical Standard
were not provided to the group or the parent company and we
remain independent of the group and the parent company in
conducting our audit.
Our audit opinion is consistent with the additional report to the
audit committee.
USE OF OUR REPORT
This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to them in
an auditor report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company’s members as a body, for
our audit work, for this report, or for the opinions we have formed.
Stephen Tanner BSc(Econ) FCA (Senior Statutory Auditor)
For and on behalf of
Kreston Reeves LLP
Chartered Accountants
Statutory Auditor
London
28 April 2022
36 London & Associated Properties PLC 2021
NOTES
2021
£’000
2020
£’000
Group revenue 1 56,477 35,018
Operating costs (53,457 ) (39,942 )
Operating (loss)/profit 3,020 (4,924 )
Finance income 4 34 30
Finance expenses 4 (2,543 ) (2,869 )
Result before revaluation and other movements 511 (7,763 )
Non–cash changes in valuation of assets and liabilities and other movements
Exchange (losses)/gains (121 ) 39
Decrease in value of investment properties 8 (111 ) (2,269 )
Profit on disposal of investment properties 436 –
Loss on disposal of fixed assets (133 ) –
Increase in value of trading investments 812 67
Decrease in value of other investments – (20 )
Adjustment to interest rate derivative 21 130 (200 )
Profit/(loss) for the year before taxation 2 1,524 (10,146 )
Income tax (charge)/credit 5 (698 ) 1,086
Profit/(loss) for the year 826 (9,060 )
Attributable to:
Equity holders of the Company (152 ) (6,704 )
Non-controlling interest 24 978 (2,356 )
Profit/(loss) for the year 826 (9,060 )
Earnings per share
Loss per equity share - basic and diluted 7 (0.18 )p (7.86 )p
Consolidated statement of comprehensive
income
for the year ended 31 December 2021
2021
£’000
2020
£’000
Profit/(loss) for the year 826 (9,060 )
Other comprehensive expense:
Items that may be subsequently recycled to the income statement:
Exchange differences on translation of Bisichi PLC foreign operations (63 ) (464 )
Other comprehensive expense for the year net of tax (63 ) (464 )
Total comprehensive income/(expense) for the year net of tax 763 (9,524 )
Attributable to:
Equity shareholders (177 ) (6,866 )
Non–controlling interest 940 (2,658 )
Total comprehensive income/(expense) for the year net of tax 763 (9,524 )
FINANCIAL
STATEMENTS
Consolidated income statement
for the year ended 31 December 2021
financial state-
ments
London & Associated Properties PLC 2021 37
FINANCIAL STATEMENTS
Consolidated balance sheet
at 31 December 2021
NOTES
2021
£’000
2020
£’000
Non–current assets
Market value of properties attributable to Group 8 37,945 42,640
Present value of head leases 8 3,221 3,344
Property 41,166 45,984
Mining reserves, property, plant and equipment 9 9,917 10,986
Investments at fair value through profit and loss ("FVPL") 14 3,631 1,746
Current assets
Inventories - Property 12 25,213 25,013
Inventories - Mining 13 1,253 3,445
Assets held for sale 10 504 –
Trade and other receivables 15 9,917 8,190
Corporation tax recoverable 19 –
Investments in listed securities held at FVPL 16 685 833
Cash and cash equivalents 8,518 7,194
Total assets 100,823 103,391
Current liabilities
Trade and other payables 17 (15,197 ) (16,133 )
Borrowings 18 (31,405 ) (10,274 )
Lease liabilities 19 (513 ) (514 )
Interest rate derivatives (70 ) –
Current tax liabilities (726 ) (209 )
(47,911 ) (27,130 )
Non–current liabilities
Borrowings 18 (7,259 ) (30,853 )
Interest rate derivatives 21 – (200 )
Lease liabilities 19 (3,734 ) (3,865 )
Provisions 20 (1,391 ) (1,442 )
Deferred tax liabilities 22 (309 ) (355 )
(12,693 ) (36,715 )
Total liabilities (60,604 ) (63,845 )
Net assets 40,219 39,546
Equity attributable to the owners of the parent
Share capital 23 8,554 8,554
Share premium account 4,866 4,866
Translation reserve (Bisichi PLC) (1,055 ) (1,030 )
Capital redemption reserve 47 47
Retained earnings (excluding treasury shares) 17,415 17,567
Treasury shares 23 (144 ) (144 )
Retained earnings 17,271 17,423
Total equity attributable to equity shareholders 29,683 29,860
Non–controlling interest 24 10,536 9,686
Total equity 40,219 39,546
Net assets per share attributable to equity shareholders 7 34.78 p 34.99 p
These financial statements were approved by the board of directors and authorised for issue on 28 April 2022 and signed on its behalf by:
Sir Michael Heller Jonathan Mintz Company Registration No. 341829
Director Director
38 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS
Consolidated statement of changes in
shareholders’ equity
for the year ended 31 December 2021
SHARE
CAPITAL
£’000
SHARE
PREMIUM
£’000
TRANSLA-
TION
RESERVES
£’000
CAPITAL
REDEMP-
TION
RESERVE
£’000
TREASURY
SHARES
£’000
RETAINED
EARNINGS
EXCLUDING
TREASURY
SHARES
£’000
TOTAL
EXCLUDING
NON–
CON-
TROLLING
INTERESTS
£’000
NON–
CON-
TROLLING
INTERESTS
£’000
TOTAL
EQUITY
£’000
Balance at 1 January 2020 8,554 4,866 (868 ) 47 (144 ) 24,271 36,726 12,407 49,133
Loss for year – – – – – (6,704 ) (6,704 ) (2,356 ) (9,060 )
Other comprehensive expense:
Currency translation – – (162 ) – – – (162 ) (302 ) (464 )
Total other comprehensive
expense
Total comprehensive
expense
Transactions with owners:
Dividends – non–controlling
interests
Transactions with owners – – – – – – – (63 ) (63 )
Balance at 31 December
2020
(Loss)/profit for year – – – – – (152 ) (152 ) 978 826
Other comprehensive
expense:
Currency translation – – (25 ) – – – (25 ) (38 ) (63 )
Total other comprehensive
expense
Total comprehensive
expense
Transactions with owners:
Dividends – non–controlling
interests
Transactions with owners – – – – – – – (90 ) (90 )
Balance at 31 December 2021 8,554 4,866 (1,055 ) 47 (144 ) 17,415 29,683 10,536 40,219
London & Associated Properties PLC 2021 39
FINANCIAL STATEMENTS
Consolidated cash flow statement
for the year ended 31 December 2021
NOTES
2021
£’000
2020
£’000
Operating activities
Profit/(loss) for the year before taxation 1,524 (10,146 )
Finance income 4 (34 ) (30 )
Finance expense 4 2,543 2,869
Decrease in value of investment properties 8 111 2,269
Increase in value of trading investments (812 ) (47 )
Adjustment to interest rate derivative 21 (130 ) 200
Profit on sale of invenstment properties (436 ) –
Depreciation 9 2,815 2,455
Loss on disposal of non-current assets 133 –
Development expenditure on inventories 12 (1,016 ) (398 )
Exchange adjustments 121 (39 )
Change in inventories 2,921 1,173
Change in receivables (1,813 ) (380 )
Change in payables (107 ) 3,717
Cash generated from operations 5,820 1,643
Income tax paid (216 ) (198 )
Cash inflows from operating activities 5,604 1,445
Investing activities
Acquisition of investment properties, mining reserves, plant and equipment (1,871 ) (3,515 )
Sale of investment properties 4,219 –
Disposal of other investments 705 253
Acquisition of other investments (1,630 ) (1,379 )
Interest received 34 30
Cash inflows/(outflows) from investing activities 1,457 (4,611 )
Financing activities
Interest paid (2,621 ) (2,675 )
Interest obligation under finance leases (199 ) (178 )
Repayment of lease liabilities (235 ) (231 )
Lease assignment costs paid (101 ) –
Receipt of bank loan - Bisichi PLC 46 61
Repayment of bank loan - Bisichi PLC (317 ) (200 )
Repayment of bank loan - Dragon Retail Properties Ltd (21 ) –
Receipt of bank loan - London & Associated Properties PLC 522 105
Repayment of bank loan - London & Associated Properties PLC (606 ) (169 )
Equity dividends paid - non-controlling interests – (63 )
Cash outflows from financing activities (3,532 ) (3,350 )
Net increase/(decrease) in cash and cash equivalents 3,529 (6,516 )
Cash and cash equivalents at beginning of year 2,348 8,691
Exchange adjustment 105 173
Cash and cash equivalents at end of year 5,982 2,348
The cash flows above relate to continuing operations.
Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise the following balance sheet amounts:
2021
£’000
2020
£’000
Cash and cash equivalents (before bank overdrafts) 8,518 7,194
Bank overdrafts 18 (2,536 ) (4,846 )
Cash and cash equivalents at end of year 5,982 2,348
£1,000,000 of cash deposits at 31 December 2021 were charged as security to bank loans (2020: £nil).
40 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS
Group accounting policies
The following are the principal Group accounting policies:
BASIS OF ACCOUNTING
The Group financial statements are prepared in accordance with UK
adopted international accounting standards and the requirements of
the Companies Act 2006 and are additionally required under the
Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority to prepare the group financial statements in
accordance with international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union. The consolidated financial statements transitioned
to UK-adopted international accounting standards for the financial
period beginning 1 January 2021. There was no impact or change in
accounting policies from the transition. UK adopted International
Accounting Standards differs in certain respects from International
Financial Reporting Standards as adopted by the EU. The differences
have no material impact on the Financial Statements for the periods
presented, which therefore also comply with International Reporting
Standards as adopted by the EU.
The directors have elected under company law to prepare the
company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law) and these are presented in Note 30.
The financial statements are prepared under the historical cost
convention, except for the revaluation of freehold and leasehold
properties and financial assets at fair value through profit and loss as
well as fair value of interest rate derivatives at fair value.
The Group financial statements are presented in Pounds Sterling
and all values are rounded to the nearest thousand pounds (£’000)
except when otherwise stated.
The functional currency for each entity in the Group is the currency
of the country in which the entity has been incorporated. Details of
the country in which each entity has been incorporated can be
found in note 11.
The exchange rates used in the accounts were as follows:
£1 STERLING: RAND £1 STERLING: DOLLAR
2021 2020 2021 2020
Year-end rate 20.7672 20.0145 1.3706 1.3663
Annual average 20.4060 21.0936 1.3685 1.2833
a public limited company incorporated and domiciled in England
quoted on the London Stock Exchange. The Company registration
number is 341829. LAP and its subsidiaries (“the Group”) consist of
LAP, all of its subsidiary undertakings, including Bisichi PLC (“Bisichi”)
and Dragon Retail Properties Limited (“Dragon”). The Group without
Bisichi and Dragon is referred to as LAP Group.
GOING CONCERN
In reviewing going concern it is necessary to consider separately the
position of LAP Group and Bisichi. Although both are consolidated
into group accounts (as required by IFRS 10), they are managed
independently and in the unlikely event that Bisichi was unable to
continue trading this would not affect the ability of LAP Group to
continue operating as a going concern. The same would be true for
Bisichi in reverse.
The directors have reviewed the cash flow forecasts of the LAP
Group and the underlying assumptions on which they are based for
the 15 months from the date of signing. The LAP Group’s business
activities, together with the factors likely to affect its future
development, are set out in the Chairman and Chief Executive’s
Statement and Financial Review. In addition, Note 21 to the
financial statements sets out the Group’s objectives, policies and
processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities;
and its exposure to credit risk and liquidity risk.
As our tenants return to more normalised trading conditions
following the lifting of all restrictions imposed in response to the
pandemic, we do not consider uncertainty arising as a result of the
pandemic to be an ongoing going concern matter. Tenant arrears
increased as a result of the pandemic but this effect is not ongoing.
There are two significant loans which expire in 2022, the potential
outcomes of which the directors have examined in detail when
considering going concern. The directors have also considered the
debt covenants on existing loans and the effects that a wide range
of property valuation movements would have on these and the
Group’s ability to mitigate these effects. Debt refinancing in 2022 is
the key going concern issue.
Subsequent to year end in the first quarter of 2022 geo-political
events in Ukraine resulted in higher global energy prices. Although
the final outcome of the events in Ukraine is uncertain, the
Directors at present do not foresee the events having a significant
negative impact on the Group’s UK and South African operations’
ability to remain in operation for the foreseeable future.
Debt Refinancing
The £10 million, 8.109% Aviva debenture expires in August 2022.
Based on 31 December 2021 external valuations of the security held
against this debenture, this has a loan to value of 58.9%. The security
for this loan consists of a mix of industrial and community retail
property. We are currently sourcing a new loan secured by these
properties and other unencumbered properties held by the company
and expect to conclude this in good time to repay the Aviva debenture
in full and achieve significant ongoing debt service cost savings.
The £13.3 million, 5.95% + SONIA (with 1% to 1.5% collar),
Phoenix CRE S.à r.l. term loan expires in September 2022, and is
secured against the Orchard Square, Sheffield property, currently
valued by the bank at £19.0 million, with a loan to value of 69.9%.
Orchard Square, Sheffield is a development property with a number
of value enhancing opportunities that we continue to explore prior
to a sale. The loan has a one-year extension, which we will look to
take up in order that development activities can be progressed and
the value of the property optimised prior to a sale. Should a valuation
by the bank result in an LTV breach then we consider there to be
sufficient resources within the Group to cure this. Should the directors
decide not to cure any breach then the property would be sold and
the equity remaining after the repayment of the loan remitted to
the Group. The directors do not consider that this would present a
going concern risk to the Group based on likely cashflow effects.
Dragon has a £1.16 million 2.75% + bank base rate Santander term
loan that expires in April 2022. An offer has been received from a
new lender to refinance this loan in full, the particulars of which are
being considered currently. Santander has offered an extension to
the existing loan, should it be required, to enable a smooth
transition to the new lender.
Group accounting policies
London & Associated Properties PLC 2021 41
FINANCIAL STATEMENTS Group accounting policies
Broadway Regen has a £3.2 million 7.0% development loan expiring in
April 2022. This is a residential development which is expected to have
strong returns. An offer for a new loan has been received from a new
lender at an improved debt cost and is expected to be in place in time to
refinance the existing loan.
Bisichi PLC
The directors note the consideration of going concern by the Bisichi
board, but also note that any failure of Bisichi would not itself impact on
the going concern status of the LAP group for the reasons set out on
page 8 of the financial statements.
The directors believe that the LAP Group has adequate resources to
continue in operational existence for the foreseeable future and that the
LAP Group is well placed to manage its business risks. Thus they
continue to adopt the going concern basis of accounting in preparing
the annual financial statements.
The Bisichi directors continue to adopt the going concern basis of
accounting in preparing the Bisichi annual financial statements.
INTERNATIONAL FINANCIAL REPORTING
STANDARDS (IFRS)
The Group has adopted all of the new and revised Standards and
Interpretations issued by the International Accounting Standards
Board (“IASB”) that are relevant to its operations and effective for
accounting periods beginning 1 January 2021.
The Group has not adopted any Standards or Interpretations in
advance of the required implementation dates.
Certain new accounting standards and amendments are effective
for annual periods beginning after 1 January 2021, and have not
been applied in preparing these Financial Statements:
• Amendments to IFRS 3 Business Combinations Reference to the
Conceptual Framework
• Amendments to IAS 16 Property, Plant and Equipment - Proceeds
before Intended Use
• Amendments to IAS 37 Provisions, Contingent Liabilities,
Contingent Assets Onerous Contracts – Cost of Fulfilling a
Contract
The amendments that are not yet effective are not expected to
have a material impact on the Group in the current or future
reporting periods and on the foreseeable future transactions.
We are committed to improving disclosure and transparency and
will continue to work with our different stakeholders to ensure they
understand the detail of these accounting changes. We continue to
remain committed to a robust financial policy.
KEY JUDGEMENTS AND ESTIMATES
The preparation of the financial statements requires management to
make assumptions and estimates that may affect the reported
amounts of assets and liabilities and the reported income and
expenses, further details of which are set out below. Although
management believes that the assumptions and estimates used are
reasonable, the actual results may differ from those estimates.
Further details of the estimates and judgements which may have a
material impact on next year’s financial statements are contained in
the Directors’ Report.
PROPERTY OPERATIONS
Fair value measurements of investment properties
An assessment of the fair value of these assets is undertaken
annually. The fair value measurements are estimated based on the
amounts for which the assets and liabilities could be exchanged
between market participants. To the extent possible, the
assumptions and inputs used take into account externally verifiable
inputs. However, such information is by nature subject to
uncertainty and is discussed further in the Directors’ Report and
shown in note 8.
Inventories - Property
When the Group begins to redevelop an existing investment
property with a view to sale, the property is transferred to inventory
and held as a current asset. The property is re-measured to fair
value as at the date of the transfer with any gain or loss being taken
to the income statement. The re-measured amount becomes the
deemed cost at which the property is then carried in trading
properties plus any costs for asset management initiatives or
development in preparation for sale and subject to any provision
required to reduce cost to net realisable value.
In assessing the net realisable value of a property development, the
directors make significant estimates and judgements regarding, inter
alia, forecast sales and costs per square foot, gross internal area,
affordable housing allocations and appropriate rates of financing.
The degree to which these variables can be accurately forecast will
depend on the stage of development of the particular project and
the impact of changes in these assumptions to the net realisable
value could be material. Further detail is included in note 12.
TRADE DEBTORS
An estimate of lifetime expected credit losses under IFRS 9 using
the simplified approach has been made by the Directors considering
historic trade debtor recoveries, specific knowledge of individual
debtors and forward looking macro-economic factors. Further detail
is included in note 21.
MINING OPERATIONS
Life of mine and reserves
The directors of Bisichi consider their judgements and estimates
surrounding the life of the mine and its reserves to have significant
effect on the amounts recognised in the financial statements and to
be an area where the financial statements are subject to significant
estimation uncertainty. The life of mine remaining is currently
estimated at 8 years. This life of mine is based on the group’s
existing coal reserves including reserves acquired but subject to
regulatory approval. The life of mine excludes future coal purchases
and coal reserve acquisitions. The group’s estimates of proven and
probable reserves are prepared utilising the South African code for
the reporting of exploration results, mineral resources and mineral
reserves (the SAMREC code) and are subject to assessment by an
independent Competent Person experienced in the field of coal
geology and specifically opencast and pillar coal extraction.
Estimates of coal reserves impact assessments of the carrying value
of property, plant and equipment, depreciation calculations and
rehabilitation and decommissioning provisions. There are numerous
uncertainties inherent in estimating coal reserves and changes to
these assumptions may result in restatement of reserves. These
assumptions include geotechnical factors as well as economic
factors such as commodity prices, production costs and yield.
Group accounting policies
42 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Group accounting policies
DEPRECIATION, AMORTISATION OF MINERAL
RIGHTS, MINING DEVELOPMENT COSTS AND
PLANT & EQUIPMENT
The annual depreciation/amortisation charge is dependent on
estimates, including coal reserves and the related life of the mine,
expected development expenditure for probable reserves, the
allocation of certain assets to relevant ore reserves and estimates of
residual values of the processing plant. The charge can fluctuate
when there are significant changes in any of the factors or
assumptions used, such as estimating mineral reserves which in turn
affects the life of mine or the expected life of reserves. Estimates of
proven and probable reserves are prepared by an independent
Competent Person. Assessments of depreciation/amortisation rates
against the estimated reserve base are performed regularly. Details
of the depreciation/amortisation charge can be found in note 9.
PROVISION FOR MINING REHABILITATION
INCLUDING RESTORATION AND DE-
COMMISSIONING COSTS
A provision for future rehabilitation including restoration and
decommissioning costs requires estimates and assumptions to be
made around the relevant regulatory framework, the timing, extent
and costs of the rehabilitation activities and of the risk free rates
used to determine the present value of the future cash outflows.
The provisions, including the estimates and assumptions contained
therein, are reviewed regularly by management. The Group engages
an independent expert to assess the cost of restoration and
decommissioning annually as part of management’s assessment of
the provision. Details of the provision for mining rehabilitation can
be found in note 20.
MINING IMPAIRMENT
Property, plant and equipment representing the Group’s mining
assets in South Africa are reviewed for impairment at each reporting
date. The impairment test is performed using the approved Life of
Mine plan and those future cash flow estimates are discounted
using asset specific discount rates and are based on expectations
about future operations. The impairment test requires estimates
about production and sales volumes, commodity prices, proven and
probable reserves (as assessed by the Competent Person), operating
costs and capital expenditures necessary to extract reserves in the
approved Life of Mine plan. Changes in such estimates could impact
recoverable values of these assets. Details of the carrying value of
property, plant and equipment can be found in note 9.
The impairment test indicated significant headroom as at 31
December 2021 and therefore no impairment is considered
appropriate. The key assumptions include: coal prices, including
domestic coal prices based on recent pricing and assessment of
market forecasts for export coal; production based on proven and
probable reserves assessed by the independent Competent Person
and yields associated with mining areas based on assessments by
the Competent Person and empirical data. A 10% reduction in
average forecast coal prices or a 14% reduction in yield would give
rise to a breakeven scenario. However, the Bisichi directors consider
the forecasted yield levels and pricing to be appropriate and
supportable best estimates.
BASIS OF CONSOLIDATION
TThe Group accounts incorporate the accounts of LAP and all of its
subsidiary undertakings, together with the Group’s share of the
results and net assets of its joint ventures.
Non–controlling interests in subsidiaries are presented separately
from the equity attributable to equity owners of the parent
company. When changes in ownership in a subsidiary do not result
in a loss of control, the non–controlling shareholders’ interests are
initially measured at the non–controlling interests’ proportionate
share of the subsidiaries’ net assets. Subsequent to this, the carrying
amount of non–controlling interests is the amount of those interests
at initial recognition plus the non–controlling interests’ share of
subsequent changes in equity. Total comprehensive income is
attributed to non–controlling interests even if this results in the
non–controlling interests having a deficit balance.
SUBSIDIARIES
Subsidiaries are entities controlled by the Group. The Group controls
an entity when it is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries acquired
during the year are consolidated using the acquisition method. Their
results are incorporated from the date that control passes.
All intra Group transactions, balances, income and expenses are
eliminated on consolidation. Details of the Group’s subsidiary
companies are set out in Note 11.
The directors are required to consider the implications of IFRS 10
on the LAP investment in Bisichi PLC (“Bisichi”). Related parties also
have shareholdings in Bisichi. When combined with the 42% held by
LAP and, taking account of the wide disposition of other
shareholders, there is potential for LAP and these related parties to
exercise voting control over Bisichi. IFRS 10 makes it clear that
possible voting control is of more significance than actual
management control.
For this reason the directors have concluded that there is a
requirement to consolidate Bisichi with LAP. While, in theory, they
could achieve control, in practice they do not get involved in the day
to day operations of Bisichi. The directors have presented
consolidated accounts using the published accounts of Bisichi but it
is important to note that any figures, risks and assumptions
attributable to that company are the responsibility of the Bisichi
Board of directors.
As a result of treating Bisichi as a subsidiary, Dragon Retail Properties
Limited, West Ealing Projects Limited and Development Physics
Limited are also subsidiaries for accounting purposes, as LAP and
Bisichi’s combined ownership in these entities exceeds 50%.
GOODWILL
Goodwill arising on acquisition is recognised as an intangible asset
and initially measured at cost, being the excess of the cost of the
acquired entity over the Group’s interest in the fair value of the
assets and liabilities acquired. Goodwill is carried at cost less
accumulated impairment losses. Goodwill arising from the difference
in the calculation of deferred tax for accounting purposes and fair
value in negotiations is judged not to be an asset and is accordingly
impaired on completion of the relevant acquisition.
REVENUE
The Group’s revenue from contracts with customers, as defined
under IFRS 15, includes sales of coal and property income from
rents, service charge and management fees.
London & Associated Properties PLC 2021 43
FINANCIAL STATEMENTS Group accounting policies
Rental income
Rental income arises from properties where leases have granted
tenants a right of occupation and use of the properties. Rental
income and lease incentives are recognised in accordance with IFRS
16 Leases. Rental income from investment property is recognised as
revenue on a straight-line basis over the lease term. Lease
incentives and costs associated with entering into tenant leases are
amortised over the lease term. Rent reviews are recognised when
such reviews have been agreed with tenants.
Changes in the scope or the consideration for a lease, that was not
part of the original terms and conditions, which might arise as a
result of lease concessions, are accounted as a lease modification.
Lease modifications are accounted for as a new lease from the
effective date of the modification, considering any prepaid or
accrued lease payments relating to the original lease as part of the
lease payments for the new lease.
Service charge income
Service charge income, property fee income and management fees
are recognised in accordance with IFRS 15 Revenue from contracts
with customers, which prescribes accounting nor taxable profit the
use of a five-step model for the recognition of revenue. These
income streams are recognised as revenue in the period in which
they are earned.
Reverse surrender premiums
Payments received from tenants to surrender their lease obligations
are recognised immediately in the income statement.
Dilapidations
Dilapidations monies received from tenants in respect of their lease
obligations are recognised immediately in the income statement.
Other revenue
Revenue in respect of listed investments held for trading represents
investment dividends received and profit or loss recognised on
realisation. Dividends are recognised in the income statement when
the dividend is received.
PROPERTY OPERATING EXPENSES
Operating expenses are expensed as incurred and any property
operating expenditure not recovered from tenants through service
charges is charged to the income statement.
EMPLOYEE BENEFITS
Share based remuneration
The Group operates a long–term incentive plan and two share
option schemes. The fair value of the conditional awards on shares
granted under the long–term incentive plan and the options granted
under the share option scheme is determined at the date of grant.
This fair value is then expensed on a straight–line basis over the
vesting period, based on an estimate of the number of shares that
will eventually vest. At each reporting date, the fair value of the
non–market based performance criteria of the long–term incentive
plan is recalculated and the expense is revised. In respect of the
share option scheme, the fair value of options granted is calculated
using the binomial method.
PENSIONS
The Company operates a defined contribution pension scheme. The
contributions payable to the scheme are expensed in the period to
which they relate.
FOREIGN CURRENCIES
Monetary assets and liabilities are translated at year end exchange
rates and the resulting exchange rate differences are included in the
consolidated income statement within the results of operating activities
if arising from trading activities, including inter-company trading
balances and within finance cost / income if arising from financing.
For consolidation purposes, income and expense items are included
in the consolidated income statement at average rates, and assets
and liabilities are translated at year end exchange rates. Translation
differences arising on consolidation are recognised in other
comprehensive income. Foreign exchange differences on
intercompany loans are recorded in other comprehensive income
when the loans are not considered trading balances and are not
expected to be repaid in the foreseeable future. Where foreign
operations are sold or closed, the cumulative exchange differences
attributable to that foreign operation are recognised in the consolidated
income statement when the gain or loss on disposal is recognised.
Transactions in foreign currencies are translated at the exchange
rate ruling on transaction date.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised in the Group’s
consolidated statement of financial position when the group
becomes a party to the contractual provisions of the instrument.
Financial assets
Financial assets are classified as either financial assets at amortised
cost, at fair value through other comprehensive income (“FVTOCI”)
or at fair value through profit or loss (“FVPL”) depending upon the
business model for managing the financial assets and the nature of
the contractual cash flow characteristics of the financial asset.
A loss allowance for expected credit losses is determined for all
financial assets, other than those at FVPL, at the end of each
reporting period. The Group applies a simplified approach to
measure the credit loss allowance for trade receivables using the
lifetime expected credit loss provision. The lifetime expected credit
loss is evaluated for each trade receivable taking into account
payment history, payments made subsequent to year end and prior
to reporting, past default experience and the impact of any other
relevant and current observable data. The group applies a general
approach on all other receivables classified as financial assets. The
general approach recognises lifetime expected credit losses when
there has been a significant increase in credit risk since initial recognition.
The Group no longer recognises a financial asset when the
contractual rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another party. The Group does
not recognise financial liabilities when the Group’s obligations are
discharged, cancelled, or have expired.
Investments
Current financial asset investments and other investments classified
as non-current (“The investments”) comprise shares in listed
companies. The investments are measured at fair value. Any
changes in fair value are recognised in the consolidated income
statement and accumulated in retained earnings.
Trade and other receivables
Trade receivables are recorded at amortised cost. As the interest
that would be recognised from discounting future cash payments
over the short payment period is not considered to be material,
trade receivables which do not carry any interest are stated at their
nominal value as reduced by credit loss allowances for estimated
recoverable amounts.
44 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Group accounting policies
Trade and other payables
Trade and other payables are non-interest bearing and are stated at
their nominal value, as the interest that would be recognised from
discounting future cash payments over the short payment period is
not considered to be material.
Bank loans and overdrafts
Bank loans and overdrafts are included as financial liabilities on the
Group balance sheet net of the unamortised costs of issue. The cost
of issue is recognised in the consolidated income statement over
the life of the bank loan. Interest payable on those facilities is
expensed as a finance cost in the period to which it relates.
Debenture loans
The debenture loan is included as a financial liability on the balance
sheet net of the unamortised costs on issue. The cost of issue is
recognised in the consolidated income statement over the life of the
debenture. Interest payable to debenture holders is expensed in the
period to which it relates.
Leases
At inception, the Group assesses whether a contract is or contains a
lease. This assessment involves the exercise of judgement about
whether the Group obtains substantially all the economic benefits from
the use of that asset, and whether the Group has the right to direct the
use of the asset. The Group recognises a right-of-use (“ROU”) asset and
the lease liability at the commencement date of the lease.
Lease liabilities include the present value of payments which generally
include fixed payments and variable payments that depend on an index
(such as an inflation index). Each lease payment is allocated between the
liability and finance cost. The lease payments are discounted using the
interest rate implicit in the lease if that rate can be readily determined or
if not, the incremental borrowing rate is used. The finance cost is
charged to profit or loss over the lease period so as to produce a
constant rate of interest on the remaining balance of the liability for each
period. In the cashflow statement the principal and interest portions of
the lease payments are classified within financing activities.
The ROU asset is measured at a cost based on the amount of the initial
measurement of the lease liability, plus initial direct costs and the cost of
obligations to refurbish the asset, less any incentives received. The ROU
asset (other than the ROU assets that relate to land or property that
meets the definition of investment property under IAS 40) is depreciated
over the shorter of the lease term or the useful life of the underlying
asset. The ROU asset is subject to testing for impairment if there is an
indicator of impairment. ROU assets are included in the heading
Property, plant and equipment, and the lease liability is included in the
headings current and non-current lease labilities on the Balance Sheet
Lease liabilities arise for those investment properties held under a
leasehold interest and recorded as investment property. The liability
is calculated as the present value of the minimum lease payments,
reducing in subsequent reporting periods by the apportionment of
payments to the lessor. Lease payments are allocated between the
liability and finance charges to achieve a constant financing rate.
Contingent rents payable, such as rent reviews or those related to
rental income, are charged as an expense in the period in which they
are incurred.
The Group has elected not to recognise ROU assets and liabilities for
leases where the total lease term is less than or equal to 12 months, or
for low value leases under £10,000. The payments for such leases are
recognised in the Income Statement on a straight-line basis over the
lease term.
Interest rate derivatives
The Group uses derivative financial instruments to hedge the
interest rate risk associated with the financing of the Group’s
business. No trading in such financial instruments is undertaken. At
each reporting date, these interest rate derivatives are recognised at
their fair value to the business, being the Net Present Value of the
difference between the hedged rate of interest and the market rate
of interest for the remaining period of the hedge.
Ordinary shares
Shares are classified as equity when there is no obligation to
transfer cash or other assets. Incremental costs directly attributable
to the issue of new shares are shown in equity as a deduction, net
of tax, from the proceeds.
Treasury shares
When the Group’s own equity instruments are repurchased,
consideration paid is deducted from equity as treasury shares until
they are cancelled. When such shares are subsequently sold or
reissued, any consideration received is included in equity.
INVESTMENT PROPERTIES
Valuation
Investment properties are those that are held either to earn rental
income or for capital appreciation or both, including those that are
undergoing redevelopment for future use as an investment
property. They are reported on the Group balance sheet at fair
value, being the amount for which an investment property could be
exchanged between knowledgeable and willing parties in an arm’s
length transaction. The directors’ property valuation is at fair value.
The external valuation of properties is undertaken by independent
valuers who hold recognised and relevant professional qualifications
and have recent experience in the locations and categories of
properties being valued. Surpluses or deficits resulting from changes
in the fair value of investment properties are reported in the Group
income statement in the period in which they arise.
The Group owns a number of properties on long term and short-
term leaseholds. These are leased out to tenants under operating
leases, are classified as investment properties or development
properties as appropriate and included in the balance sheet at fair
value. The obligation to the freeholder or superior leaseholder for
the buildings element of the leasehold is included in the balance
sheet at the present value of the minimum lease payments at inception.
Capital expenditure
Investment properties are measured initially at cost, including
related transaction costs. Additional expenditure of a capital nature,
directly attributable to the redevelopment or refurbishment of an
investment property held for future use as an investment property,
up to the point of it being completed for its intended use, is
capitalised in the carrying value of that property. Where there is a
change of use, such as commencement of development with a view
to sale, the property is transferred to inventory at deemed cost,
which is its fair value on the date of the change in use. Capitalised
interest is calculated with reference to the actual rate payable on
borrowings for development purposes, or for that part of the
development costs financed out of borrowings the capitalised
interest is calculated on the basis of the average rate of interest paid
on the relevant debt outstanding.
Disposal
The disposal of investment properties is recorded on completion of
the contract. On disposal, any gain or loss is calculated as the
difference between the net disposal proceeds and the valuation at the
last year end plus subsequent capitalised expenditure in the period.
Depreciation and amortisation
In applying the fair value model to the measurement of investment
properties, depreciation and amortisation are not provided.
London & Associated Properties PLC 2021 45
FINANCIAL STATEMENTS Group accounting policies
OTHER ASSETS AND DEPRECIATION
OTHER ASSETS AND DEPRECIATION
The cost, less estimated residual value, of other property, plant and
equipment is written off on a straight–line basis over the asset’s
expected useful life. Residual values and useful lives are reviewed,
and adjusted if appropriate, at each balance sheet date. Changes to
the estimated residual values or useful lives are accounted for
prospectively. The depreciation rates generally applied are:
Motor vehicles 25–33 per cent per annum
Office equipment 10–33 per cent per annum
ASSETS HELD FOR SALE
Non-current assets are classified as held-for-sale if it is highly
probable that they will be recovered primarily through sale rather
than through continuing use. Such assets are generally measured at
the lower of their carrying amount and fair value less costs of sale.
Impairment losses on initial classification as assets held-for-sale and
subsequent gains and losses on remeasurement are recognised in
profit or loss. Once classified as held-for-sale, intangible assets and
property, plant and equipment are no longer amortised or
depreciated, and any equity-accounted investment is no longer
equity accounted.
INVENTORIES–PROPERTY
PProperties held as trading inventory are those which are being
developed with a view to sale. Inventories are recorded at the lower
of cost and net realisable value. If the net realisable value of
inventory is lower than its carrying value, an impairment loss is
recorded in the income statement. If, in subsequent periods, the net
realisable value of inventory that was previously impaired increases
above its carrying value, the impairment is reversed to align the
carrying value of the property with the net realisable value.
Inventory is presented on the balance sheet within current assets.
INCOME TAXES
The charge for current taxation is based on the results for the year
as adjusted for disallowed or non–assessable items. Tax payable
upon realisation of revaluation gains recognised in prior periods is
recorded as a current tax charge with a release of the associated
deferred tax. Deferred tax is the tax expected to be payable or
recoverable on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax
bases used in the tax computations and is recorded using the
balance sheet liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that taxable
profits will be available against which deductible temporary
differences can be utilised. In respect of the deferred tax on the
revaluation surplus, this is calculated on the basis of the chargeable
gains that would crystallise on the sale of the investment portfolio
as at the reporting date. The calculation takes account of indexation
on the historic cost of properties and any available capital losses.
Deferred tax is calculated at the tax rates that are expected to apply
in the period when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the Group income statement,
except when it relates to items charged or credited directly to
equity, in which case it is also dealt with in equity.
DIVIDENDS
Dividends payable on the ordinary share capital are recognised as a
liability in the period in which they are approved.
CASH AND CASH EQUIVALENTS
Cash comprises cash in hand and on-demand deposits. Cash and
cash equivalents comprise short-term, highly liquid investments that
are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value and original
maturities of three months or less.
The cash and cash equivalents shown in the cashflow statement are
stated net of bank overdrafts that are repayable on demand in accordance
with IAS 7. This includes the structured trade finance facility held in
South Africa as detailed in note 21. These facilities are considered
to form an integral part of the treasury management of the Group
and can fluctuate from positive to negative balances during the period.
BISICHI PLC
Mining revenue
Coal revenue is derived principally from export revenue and
domestic revenue.
Both export revenue and domestic revenue is recognised when the
customer has a legally binding obligation to settle under the terms
of the contract when the performance obligations have been
satisfied, which is once control of the goods has transferred to the
buyer at the delivery point. For export revenue this is generally
recognised when the product is delivered to the export terminal
location specified in the customer contract, at which point control of
the goods have been transferred to the customer. For domestic coal
revenues this is generally recognised on collection by the customer
from the mine or from the mine’s rail siding when loaded into
transport, where the customer pays the transportation costs.
Fulfilment costs to satisfy the performance obligations of coal
revenues such as transport and loading costs borne by the Group
from the mine to the delivery point are recoded in operating costs.
Coal revenue is measured based on consideration specified in the
contract with a customer on a per metric tonne basis. Both export
and domestic contracts are typically on a specified coal volume basis
and less than a year in duration. Export contracts are typically linked
to the price of Free on Board (FOB) Coal from Richards Bay Coal
Terminal (API4 price). Domestic contracts are typically linked to a
contractual price agreed.
Mining costs
Expenditure is recognised in respect of goods and services received.
Where coal is purchased from third parties at point of extraction the
expenditure is only recognised when the coal is extracted and all of
the significant risks and rewards of ownership have been transferred.
Mining reserves, plant and equipment
The cost of property, plant and equipment comprises its purchase
price and any costs directly attributable to bringing the asset to the
location and condition necessary for it to be capable of operating in
accordance with agreed specifications. Freehold land is not
depreciated. Other property, plant and equipment is stated at
historical cost less accumulated depreciation. The cost recognised
includes the recognition of any decommissioning assets related to
property, plant and equipment.
Heavy surface mining and other plant and equipment is depreciated
at varying rates depending upon its expected usage. The depreciation
rates generally applied are between 5-10 per cent per annum, but
limited to the shorter of its useful life or the life of the mine.
Other non–current assets, comprising motor vehicles and office
equipment, are depreciated at a rate of between 10% and 33% per
annum which is calculated to write off the cost, less estimated
residual value of the assets, on a straight line basis over their
expected useful lives.
46 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Group accounting policies
Mine inventories
Inventories are stated at the lower of cost and net realisable value.
Cost includes materials, direct labour and overheads relevant to the
stage of production. Cost is determined using the weighted average
method. Net realisable value is based on estimated selling price less
all further costs to completion and all relevant marketing, selling and
distribution costs.
Mine provisions
Provisions are recognised when the Group has a present obligation
as a result of a past event which it is probable will result in an
outflow of economic benefits that can be reliably estimated.
A provision for rehabilitation of the mine is initially recorded at
present value and the discounting effect is unwound over time as
a finance cost. Changes to the provision as a result of changes in
estimates are recorded as an increase/decrease in the provision and
associated decommissioning asset. The decommissioning asset is
depreciated in line with the Group’s depreciation policy over the life
of mine. The provision includes the restoration of the underground,
opencast, surface operations and de-commissioning of plant and
equipment. The timing and final cost of the rehabilitation is
uncertain and will depend on the duration of the mine life and
the quantities of coal extracted from the reserves.
Mine impairment
Whenever events or changes in circumstance indicate that the
carrying amount of an asset may not be recoverable that asset is
reviewed for impairment. This includes mining reserves, plant and
equipment and net investments in joint ventures. A review involves
determining whether the carrying amounts are in excess of the
recoverable amounts.
An asset’s recoverable amount is determined as the higher of its fair
value less costs of disposal and its value in use. Such reviews are
undertaken on an asset-by-asset basis, except where assets do not
generate cash flows independent of other assets, in which case the
review is undertaken on a company or Group level.
If the carrying amount of an asset exceeds its recoverable amount
the carrying value is written down to its estimated recoverable
amount (being the higher of the fair value less cost to sell and value
in use). Any change in carrying value is recognised in the
comprehensive income statement.
Mine reserves and development cost
The purpose of mine development is to establish secure working
conditions and infrastructure to allow the safe and efficient
extraction of recoverable reserves. Depreciation on mine
development is not charged until production commences or the
assets are put to use. On commencement of full commercial
production, depreciation is charged over the life of the associated
mine reserves extractable using the asset on a unit of production
basis. The unit of production calculation is based on tonnes mined
as a ratio to proven and probable reserves and also includes future
forecast capital expenditure. The cost recognised includes the
recognition of any decommissioning assets related to mine
development.
Post production stripping
In surface mining operations, the Group may find it necessary to
remove waste materials to gain access to coal reserves prior to and
after production commences. Prior to production commencing,
stripping costs are capitalised until the point where the overburden
has been removed and access to the coal seam commences.
Subsequent to production, waste stripping continues as part of the
extraction process as a run of mine activity. There are two benefits
accruing to the Group from stripping activity during the production
phase: extraction of coal that can be used to produce inventory and
improved access to further quantities of material that will be mined
in future periods. Economic coal extracted is accounted for as
inventory. The production stripping costs relating to improved
access to further quantities in future periods are capitalised as a
stripping activity asset, if and only if, all of the following are met:
• it is probable that the future economic benefit associated with
the stripping activity will flow to the Group;
• the Group can identify the component of the ore body for which
access has been improved; and
• the costs relating to the stripping activity associated with that
component or components can be measured reliably.
In determining the relevant component of the coal reserve for which
access is improved, the Group separates its mine into geographically
distinct sections or phases to which the stripping activities being
undertaken within that component are allocated. Such phases are
determined based on assessment of factors such as geology and
mine planning.
The Group depreciates deferred costs capitalised as stripping assets
on a unit of production method, with reference to the tons mined
and reserve of the relevant ore body component or phase.
SEGMENTAL REPORTING
For management reporting purposes, the Group is organised into
business segments distinguishable by economic activity. The
Group’s business segments are LAP operations, Bisichi operations
and Dragon operations. These business segments are subject to
risks and returns that are different from those of other business
segments and are the primary basis on which the Group reports its
segmental information. This is consistent with the way the Group is
managed and with the format of the Group’s internal financial
reporting. Significant revenue from transactions with any individual
customer, which makes up 10 per cent or more of the total revenue
of the Group, is separately disclosed within each segment. All coal
exports are sales to coal traders at Richard Bay’s terminal in South
Africa with the risks and rewards passing to the coal trader at the
terminal. Whilst the coal traders will ultimately sell the coal on the
international markets the Group has no visibility over the ultimate
destination of the coal. Accordingly, the export sales are recorded as
South Africa revenue.
LAP and its subsidiaries (“the Group”) consist of LAP, all of its
subsidiary undertakings, including Bisichi PLC (“Bisichi”) and Dragon
Retail Properties Limited (“Dragon”). The Group without Bisichi and
Dragon is referred to as LAP Group.
London & Associated Properties PLC 2021 47
FINANCIAL STATEMENTSFINANCIAL STATEMENTS
Notes to the financial statements
for the year ended 31 December 2021
1. RESULTS FOR THE YEAR AND SEGMENTAL ANALYSIS
These operating segments (LAP, Bisichi and Dragon) are each viewed separately and have been so reported below.
Business segments
BUSINESS ANALYSIS
LAP
£’000
BISICHI
£’000
DRAGON
£’000
2021
TOTAL
£’000
Rental income 5,024 904 125 6,053
Service charge income 852 130 23 1,005
Management income from third party properties 18 – – 18
Mining – 49,401 – 49,401
Group Revenue 5,894 50,435 148 56,477
Direct property costs (2,181) (200) (25) (2,406)
Impairment of inventory - property (816) – – (816)
Direct mining costs – (38,008) – (38,008)
Overheads (2,345) (7,035) (32) (9,412)
Depreciation (241) (2,571) (3) (2,815)
Operating profit 311 2,621 88 3,020
Finance income 12 22 – 34
Finance expenses (1,713) (799) (31) (2,543)
Result before valuation movements (1,390) 1,844 57 511
Other segment items
Net (decrease)/increase on revaluation of investment properties (316) 255 (50) (111)
Profit on disposal of investment properties 436 – – 436
Exchange losses – (121) – (121)
Net increase on revaluation of investments held for trading – 812 – 812
Loss on disposal of fixed assets (133) – – (133)
Adjustment to interest rate derivative 130 – – 130
Revaluation and other movements 117 946 (50) 1,013
Loss for the year before taxation (1,273) 2,790 7 1,524
Segment assets
- Non-current assets - property 28,386 10,700 2,080 41,166
- Non-current assets - plant & equipment 840 9,065 12 9,917
- Non-current assets - other – 3,631 – 3,631
- Inventory - property 25,213 – – 25,213
- Current assets - others 1,131 10,367 376 11,874
- Assets held for sale 504 – – 504
- Cash & cash equivalents 5,473 3,018 27 8,518
Total assets 61,547 36,781 2,495 100,823
Segment liabilities
Borrowings (30,981) (6,519) (1,164) (38,664)
Current liabilities (5,172) (11,272) (62) (16,506)
Non-current liabilities (3,148) (2,286) – (5,434)
Total liabilities (39,301) (20,077) (1,226) (60,604)
Net assets 22,246 16,704 1,269 40,219
Major customers
Customer A – 23,206 – 23,206
Customer B – 12,656 – 12,656
Customer C – 6,169 – 6,169
These customers are for mining revenue in South Africa.
GEOGRAPHIC ANALYSIS
UNITED
KINGDOM
£’000
SOUTH
AFRICA
£’000
2021
TOTAL
£’000
Revenue 7,300 49,177 56,477
Operating loss 183 2,837 3,020
Non-current assets excluding investments 42,066 9,017 51,083
Total net assets 36,784 3,435 40,219
Capital expenditure 409 1,781 2,190
48 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Notes to the financial statements
1. RESULTS FOR THE YEAR AND SEGMENTAL ANALYSIS CONTINUED
BUSINESS ANALYSIS
LAP
£’000
BISICHI
£’000
DRAGON
£’000
2020
TOTAL
£’000
Rental income 4,377 919 108 5,404
Service charge income 795 156 21 972
Management income from third party properties 18 - - 18
Mining - 28,624 - 28,624
Group Revenue 5,190 29,699 129 35,018
Direct property costs (2,192) (142) (5) (2,339)
Impairment of inventory - property (2,300) - - (2,300)
Direct mining costs - (24,645) - (24,645)
Overheads (2,317) (5,820) (28) (8,165)
Exchange losses - (38) - (38)
Depreciation (258) (2,193) (4) (2,455)
Operating loss/(profit) (1,877) (3,139) 92 (4,924)
Finance income 5 25 - 30
Finance expenses (2,200) (641) (28) (2,869)
Result before valuation movements (4,072) (3,755) 64 (7,763)
Other segment items
Net decrease on revaluation of investment properties (664) (1,295) (310) (2,269)
(Decrease)/increase in value of other investments (20) 39 - 19
Net increase on revaluation of investments held for trading - 67 - 67
Adjustment to interest rate derivative (200) - - (200)
Revaluation and other movements (884) (1,189) (310) (2,383)
Loss for the year before taxation (4,956) (4,944) (246) (10,146)
Segment assets
- Non-current assets - property 33,383 10,471 2,130 45,984
- Non-current assets - plant & equipment 797 10,174 15 10,986
- Cash & cash equivalents 3,413 3,768 13 7,194
- Inventories - property 25,013 - – 25,013
- Non-current assets - other - 1,746 – 1,746
- Current assets - others 978 11,037 453 12,468
Total assets
63,584 37,196
2,611 103,391
Segment liabilities
Borrowings (30,889) (9,053) (1,185) (41,127)
Current liabilities (5,898) (10,866) (92) (16,856)
Non-current liabilities (3,526) (2,343) 7 (5,862)
Total liabilities (40,313) (22,262) (1,270) (63,845)
Net assets
23,271 14,934
1,341 39,546
Major customers
Customer A - 9,042 – 9,042
Customer B - 7,588 – 7,588
Customer C - 6,291 – 6,291
These customers are for mining revenue in South Africa.
GEOGRAPHIC ANALYSIS
UNITED
KINGDOM
£’000
SOUTH
AFRICA
£’000
2020
TOTAL
£’000
Revenue 6,521 28,497 35,018
Operating loss (1,323) (3,601) (4,924)
Non-current assets excluding investments 46,842 10,128 56,970
Total net assets 36,636 2,910 39,546
Capital expenditure 365 3,435 3,800
Group revenue is external to the Group and the directors consider that inter segmental revenues are not material.
London & Associated Properties PLC 2021 49
FINANCIAL STATEMENTS Notes to the financial statements
2. LOSS BEFORE TAXATION
2021
£’000
2020
£’000
Profit/(loss) before taxation is stated after charging/(crediting):
Staff costs (see note 26) 8,999 7,289
Depreciation on tangible fixed assets - owned assets 2,577 2,200
Depreciation on tangible fixed assets - right of use 238 255
Exchange loss (121) 39
Amounts payable to the auditor in respect of both audit and non-audit services
Audit services
Statutory - Company and consolidation 41 88
Subsidiaries - audited by KR (2020: RSM) 71 19
Subsidiaries - audited by other auditors 8 110
Further assurance services 6 4
Other services – 9
126 230
Staff costs are included in overheads.
3. DIRECTORS’ EMOLUMENTS
2021
£’000
2020
£’000
Emoluments 1,037 805
Defined contribution pension scheme contributions 47 45
1,084 850
Sir Michael Heller received £83,000 (2020: £83,000) as a Director of Bisichi PLC.
Details of directors’ emoluments and share options are set out in the remuneration report.
4. FINANCE INCOME AND EXPENSES
2021
£’000
2020
£’000
Finance income 34 30
Finance expenses
Interest on bank loans and overdrafts (1,345) (1,615)
Other loans (1,121) (968)
Interest on lease obligations (77) (286)
Total finance expenses
(2,543) (2,869)
5. INCOME TAX
2021
£’000
2020
£’000
Current tax
Corporation tax on profit of the period 750 30
Corporation tax on profit of previous periods (19) 2
Total current tax 731 32
Deferred tax
Loss relief 386 109
Origination of timing differences (99) 117
Revaluation of investment properties 227 (201)
Accelerated capital allowances (111) (1,143)
Unredeemed capital reductions (443) –
Adjustment in respect of prior years 7 –
Total deferred tax (note 22) (33) (1,118)
Tax on profit on ordinary activities 698 (1,086)
50 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Notes to the financial statements
5. INCOME TAX CONTINUED
Factors affecting tax charge for the year
The corporation tax assessed for the year is different from that at the effective rate of corporation tax in the United Kingdom of 19.00 per
cent (2020: 19.00 per cent). The differences are explained below:
2021
£’000
2020
£’000
Profit/(loss) for the year before taxation 1,524 (10,146)
Taxation at 19 per cent (2020: 19 per cent) 290 (1,927)
Effects of:
Capital gains / (losses) on disposal (63) –
Other differences 59 334
Losses not recognised 52 973
Non taxable income 174 –
Adjustment in respect of prior years (19) 2
Deferred tax rate adjustment 205 (468)
Income tax charge for the year 698 (1,086)
Analysis of United Kingdom and overseas tax:
United Kingdom tax included in above:
2021
£’000
2020
£’000
Corporation tax - 18
Adjustment in respect of prior years (19) -
Current tax (19) 18
Deferred tax 74 (14)
55 4
Overseas tax included above:
2021
£’000
2020
£’000
Corporation tax 750 12
Adjustments in respect of prior years - 2
Current tax 750 14
Deferred tax (107) (1,104)
643 (1,090)
Overseas tax is derived from the Group’s South African mining operation. The deferred tax rate adjustment arises due to the deferred tax
rate used in the UK for the year of 25% (2020: 19%) and the corporation tax rate assessed in South Africa for the year of 28% (2020: 28%)
being different from the corporation tax rate in the UK.
Factors that may affect future tax charges:
Based on current capital expenditure plans, the Group expects to continue to be able to claim capital allowances in excess of depreciation
in future years, but at a slightly lower level than in the current year.
A deferred tax provision has been made for gains on revaluing investment properties.
The Finance (no. 2) Act 2017 was substantively enacted on 16 November 2017. This includes a restriction on the utilisation of brought
forward tax losses and corporate interest in certain circumstances effective from 1 April 2017.
An increase in the rate of corporation tax to 25% from April 2023 was substantially enacted on 24 May 2021. The impact of this increase in
the Corporation Tax rate, which will be recognised in 2023, is likely to be negligible.
6. DIVIDEND
No dividends were paid in the year relating to the current or prior period (2020: Nil)
The Directors are not recommending a final dividend for 2021 (2020: Nil), because of the uncertain state of the global economy.
7. LOSS PER SHARE AND NET ASSETS PER SHARE
Loss per equity share has been calculated as follows:
2021 2020
Loss attributable to equity shareholders for the year (£’000) (152) (6,704)
Weighted average number of ordinary shares in issue (’000) 85,326 85,325
Loss per equity share (0.18)p (7.86)p
Weighted average number of shares in issue is calculated after excluding treasury shares of 216,715 (2020: 218,197).
Net assets per equity share have been calculated as follows:
2021 2020
Net assets attributable to equity shareholders (£’000) 29,683 29,860
Shares in issue (’000) 85,326 85,325
Net assets per equity share 34.78p 34.99p
London & Associated Properties PLC 2021 51
FINANCIAL STATEMENTS Notes to the financial statements
8. INVESTMENT PROPERTIES
TOTAL
£’000
FREEHOLD
£’000
LEASEHOLD
OVER 50 YEARS
£’000
LEASEHOLD
UNDER 50
YEARS
£’000
Cost or valuation at 1 January 2021 45,984 29,953 15,834 197
Transfer to assets held for sale (note 10) (504) (504) – –
Capital expenditure 90 90 – –
Disposals (4,170) (4,170) – –
Decrease in present value of head leases (123) – (123) –
(Decrease)/increase on revaluation (111) 1,654 (1,775) 10
At 31 December 2021 41,166 27,023 13,936 207
Representing assets stated at:
Valuation 37,945 27,023 10,721 201
Present value of head leases 3,221 – 3,215 6
41,166 27,023 13,936 207
At 31 December 2021 41,166 27,023 13,936 207
At 31 December 2020 45,984 29,953 15,834 197
TOTAL
£’000
FREEHOLD
£’000
LEASEHOLD
OVER
50 YEARS
£’000
LEASEHOLD
UNDER
50 YEARS
£’000
Cost or valuation at 1 January 2020 47,906 30,658 17,041 207
Acquisition of property 329 329 - -
Increase in present value of head leases 18 - 18 -
Decrease on revaluation (2,269) (1,034) (1,225) (10)
At 31 December 2020 45,984 29,953 15,834 197
Representing assets stated at:
Valuation 42,640 29,953 12,497 190
Present value of head leases 3,344 – 3,337 7
45,984 29,953 15,834 197
The leasehold and freehold properties, excluding the present value of head lease, were valued as at 31 December 2021 by professionally
qualified independent firms of chartered surveyors. The valuations were made at fair value. The directors’ property valuations in 2020 were
made at fair value.
2021
£’000
2020
£’000
Allsop LLP 27,420 31,620
Carter Towler 10,525 10,270
Directors’ valuations - 750
37,945 42,640
Add: present value of headleases 3,221 3,344
41,166 45,984
Head leases on investment property represent the right-of-use asset on certain investment property that has a head lease interest. In the
current year total cash outflow for head leases and other lease liabilities is £0.2 million (2020: £0.2 million). A number of these leases
provide for payment of contingent rent, usually a proportion of net rental income, in addition to fixed rents.
The historical cost of investment properties, including total capitalised interest of £1,161,000 (2020: £1,161,000) was as follows:
FREEHOLD
£’000
2021
LEASEHOLD
OVER 50
YEARS
£’000
LEASEHOLD
UNDER 50
YEARS
£’000
FREEHOLD
£’000
2020
LEASEHOLD
OVER 50
YEARS
£’000
LEASEHOLD
UNDER 50
YEARS
£’000
Cost at 1 January 35,542 18,883 785 35,213 18,883 785
Transfer to assets held for sale (note
10)
(674) – – – – –
Additions 90 – – 329 – –
Disposals (4,205) – – – – –
Cost at 31 December 30,753 18,883 785 35,542 18,883 785
52 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Notes to the financial statements
8. INVESTMENT PROPERTIES CONTINUED
Each year external valuers are appointed by the executive directors on behalf of the Board. The valuers are selected based upon their
knowledge, independence and reputation for valuing assets such as those held by the Group.
Valuations are performed annually and are performed consistently across all properties in the Group’s portfolio. At each reporting date
appropriately qualified employees of the Group verify all significant inputs and review the computational outputs. Valuers submit their
report to the Board on the outcome of each valuation.
Valuations take into account tenure, lease terms and structural condition. The inputs underlying the valuations include market rent or
business profitability, likely incentives offered to tenants, forecast growth rates, yields, EBITDA, discount rates, construction costs including
any specific site costs (for example section 106), professional fees, developer’s profit including contingencies, planning and construction
timelines, lease regear costs, planning risk and sales prices based on known market transactions for similar properties to those being valued.
Valuations are based on what is determined to be the highest and best use. When considering the highest and best use the valuer will
consider, on a property by property basis, its actual and potential uses which are physically, legally and financially viable. Where the highest
and best use differs from the existing use, the valuer will consider the cost and likelihood of achieving and implementing this change in
arriving at the valuation.
There are often restrictions on Freehold and Leasehold property which could have a material impact on the realisation of these assets. The
most significant of these occur when planning permission or lease extension and renegotiation of use are required or when a credit facility is
in place. These restrictions are factored into the property’s valuation by the external valuer.
The methods of fair value measurement are classified into a hierarchy based on the reliability of the information used to determine the
valuation, as follows:
Level 1: valuation based on inputs on quoted market prices in active markets.
Level 2: valuation based on inputs other than quoted prices included within level 1 that maximise the use of observable data directly or
from market prices or indirectly derived from market prices.
Level 3: where one or more significant inputs to valuations are not based on observable market data.
CLASS OF PROPERTY
LEVEL 3
CARRYING /
FAIR VALUE
2021
£’000
CARRYING/
FAIR VALUE
2020
£’000
VALUATION
TECHNIQUE
KEY UNOBSERVABLE
INPUTS
RANGE
(WEIGHTED
AVERAGE)
2021
RANGE
(WEIGHTED
AVERAGE)
2020
Freehold –
external valuation
27,023 29,205 Income capitalisation Estimated Rental Value
Per sq ft p.a
Equivalent Yield
£6 – £33
(£17)
5.5% – 14.7%
(9.3%)
£5 – £33
(£15)
5.5% – 16.7%
(10.3%)
Leasehold over
50 years –
external valuation
10,721 12,495 Income capitalisation Estimated Rental Value
Per sq ft p.a
Equivalent Yield
£5 – £10
(£7)
5.8% – 22.3%
(16.5%)
£5 – £10
(£7)
5.8% – 22.7%
(15.6%)
Leasehold under 50
years –
external valuation
201 190 Income capitalisation Estimated Rental Value
Per sq ft p.a
Equivalent Yield
£5 – £5
(£5)
28.8% - 28.8%
(28.8%)
£5 – £5
(£5)
31.6% – 31.6%
(31.6%)
Freehold –
Directors’ valuation
- 750 Income capitalisation Estimated Rental Value
Per sq ft p.a
Equivalent Yield
n/a £4 – £4
(£4)
12.1% – 12.1%
(12.1%)
At 31 December 37,945 42,640
There are interrelationships between all these inputs as they are determined by market conditions. The existence of an increase in more
than one input would be to magnify the input on the valuation. The impact on the valuation will be mitigated by the interrelationship of two
inputs in opposite directions, for example, an increase in rent may be offset by an increase in yield.
The table below illustrates the impact of changes in key unobservable inputs on the carrying / fair value of the Group’s properties.
ESTIMATED RENTAL VALUE
10% INCREASE OR (DECREASE)
EQUIVALENT YIELD
25 BASIS POINT CONTRACTION
OR (EXPANSION)
2021
£’000
2020
£’000
2021
£’000
2020
£’000
Freehold – external valuation 2,700(2,700) 2,918/(2,918) 852(799) 859/(809)
Leasehold over 50 years – external valuation 1,072(1,072) 1,250/(1,250) 193(186) 255/(244)
Leasehold under 50 years – external valuation 20(20) 19/(19) 2/(2) 2/(1)
Freehold – Directors’ valuation n/a 75/(75) n/a 16/(15)
London & Associated Properties PLC 2021 53
FINANCIAL STATEMENTS Notes to the financial statements
9. MINING RESERVES, PLANT AND EQUIPMENT
TOTAL
£’000
MINING
RESERVES
£’000
MINING
EQUIPMENT
£’000
RIGHT OF
USE ASSET -
OFFICE
BUILDING
£’000
OFFICE
EQUIPMENT
AND MOTOR
VEHICLES
£’000
Cost at 1 January 2021 31,589 1,138 28,371 1,164 916
Exchange adjustment (1,115) (41) (1,059) – (15)
Additions 2,604 – 1,772 788 44
Disposals (1,409) – (21) (1,164) (224)
At 31 December 2021 31,669 1,097 29,063 788 721
Accumulated depreciation at 1 January 2021 20,603 1,123 18,399 466 615
Exchange adjustment (761) (41) (710) – (10)
Charge for the year 2,815 7 2,498 238 72
Disposals in year (905) – (21) (660) (224)
Accumulated depreciation at 31 December 2021 21,752 1,089 20,166 44 453
Net book value at 31 December 2021 9,917 8 8,897 744 268
Cost at 1 January 2020 29,860 1,226 26,674 1,054 906
Exchange adjustment (1,852) (88) (1,733) – (31)
Valuation increase 110 – – 110 –
Additions 3,471 – 3,430 – 41
Cost at 31 December 2020 31,589 1,138 28,371 1,164 916
Accumulated depreciation at 1 January 2020 19,388 1,212 17,405 211 560
Exchange adjustment (1,240) (89) (1,136) – (15)
Charge for the year 2,455 – 2,130 255 70
Accumulated depreciation at 31 December 2020 20,603 1,123 18,399 466 615
Net book value at 31 December 2020 10,986 15 9,972 698 301
Included in the above line items are right-of-use assets over the following:
TOTAL
£’000
MINING
EQUIPMENT
£’000
OFFICE
BUILDING
£’000
OFFICE
EQUIPMENT
AND MOTOR
VEHICLES
£’000
Net book value at 1 January 2021 1,006 263 698 45
Exchange adjustment (6) (6) - -
Additions 823 - 788 35
Disposals (504) - (504) -
Depreciation (308) (38) (238) (32)
Net book value at 31 December 2021 1,011 219 744 48
Net book value at 1 January 2020 924 52 843 29
Revaluation 109 - 109 -
Additions 284 248 - 36
Exchange adjustment (18) (18) - -
Depreciation (293) (19) (254) (20)
Net book value at 31 December 2020 1,006 263 698 45
10. ASSETS HELD FOR SALE
2021
£’000
2020
£’000
At 1 January – –
Transfer from investment property (note 8) 504 –
At 31 December 504 –
In December 2021 a retail market in Rugeley was placed for sale with an auction house and the sale subsequently completed in January
2022. The property was therefore reclassified as an asset held for sale at 31 December 2021 and valued at its sales value less costs of sale
before being transferred.
54 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Notes to the financial statements
11. SUBSIDIARY COMPANIES
In accordance with Section 409 of the Companies Act 2006 a full list of subsidiaries, the principal activity, the country of incorporation and
the percentage of equity owned, as at 31 December 2021 is disclosed below:
ENTITY ACTIVITY
PERCENTAGE
OF SHARE
CAPITAL REGISTERED ADDRESS
COUNTRY OF
INCORPORATION
Analytical Investments Limited (note F) Dormant 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Analytical Portfolios Limited (note F) Dormant 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Analytical Properties Holdings Limited Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Analytical Properties Limited Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Analytical Ventures Limited (note F) Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
24 Bruton Place Limited (note F) Dormant 100% 12 Little Portland Street, London W1W 8BJ England and Wales
24 BPL (Harrogate) Limited (note F) Investment 88% 12 Little Portland Street, London W1W 8BJ England and Wales
24 BPL (Harrogate ) Two Limited (note F) Investment 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Brixton Village Limited (note F) Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Market Row Limited (note F) Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Newincco 1243 Limited (note F) Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Newincco 1244 Limited (note F) Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Newincco 1245 Limited (note F) Property
Management
Services
100% 12 Little Portland Street, London W1W 8BJ England and Wales
Newincco 1299 Limited (note F) Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Newincco 1300 Limited (note F) Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
LAP Ocean Holdings Limited Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
LAP Ocean Two Limited (note F) Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
London & Associated Limited (note F) Dormant 100% 12 Little Portland Street, London W1W 8BJ England and Wales
London & Associated (Rugeley) Limited Dormant 100% 12 Little Portland Street, London W1W 8BJ England and Wales
London & Associated Securities Limited Dormant 100% 12 Little Portland Street, London W1W 8BJ England and Wales
London & Associated Management
Services Limited
Property
Management
Services
100% 12 Little Portland Street, London W1W 8BJ England and Wales
London & African Investments Limited (note F) Dormant 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Orchard Chambers Residential Limited Dormant 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Orchard Square Limited Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Bisichi PLC (note D) Coal mining 41.52% 12 Little Portland Street, London W1W 8BJ England and Wales
Mineral Products Limited (notes A, D) Share dealing 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Bisichi (Properties) Limited (notes A, D) Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Bisichi Mining (Exploration) Limited (notes A, D) Holding
company
100% 12 Little Portland Street, London W1W 8BJ England and Wales
Sisonke Coal Processing (pty) Limited
(notes A, D)
Coal
processing
62.5% Samora Machel Street, Bethal Road,
Middelburg, Mpumalanga, 1050
South Africa
Black Wattle Colliery (Pty) Limited (notes A, D) Coal mining 62.5% Samora Machel Street, Bethal Road,
Middelburg, Mpumalanga, 1050
South Africa
Bisichi Coal Mining (Pty) Limited (notes A, D) Coal mining 100% Samora Machel Street, Bethal Road,
Middelburg, Mpumalanga, 1050
South Africa
Urban First (Northampton) Limited (notes A, D) Dormant 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Bisichi Trustee Limited (notes A, D) Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Bisichi Mining Management Services Limited
(notes A, D)
Dormant 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Ninghi Marketing Limited (notes A, D) Dormant 90.1% 12 Little Portland Street, London W1W 8BJ England and Wales
Bisichi Northampton Limited (notes A, D) Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Amandla Ehtu Mineral Resource Development
(Pty) Limited (notes A, D)
Dormant 70% Samora Machel Street, Bethal Road,
Middelburg, Mpumalanga, 1050
South Africa
Black Wattle Klipfontein (Pty) Limited
(notes A, D)
Coal mining 62.5% Samora Machel Street, Bethal Road,
Middelburg, Mpumalanga, 1050
South Africa
Dragon Retail Properties Limited (notes B, D) Property 50% 12 Little Portland Street, London W1W 8BJ England and Wales
Newincco 1338 Limited (notes C, F) Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
West Ealing Projects Limited (notes B, D) Property 50% 12 Little Portland Street, London W1W 8BJ England and Wales
Broadway Regen Limited (notes D, E) Property 90% 73 Cornhill, London, EC3V 3QQ England and Wales
Development Physics Limited (notes D, G) Property 33.3% 12 Little Portland Street, London W1W 8BJ England and Wales
DP (Pampisford) Limited (notes D, H) Property 100% 12 Little Portland Street, London W1W 8BJ England and Wales
Details on the non–controlling interest in subsidiaries are shown under note 25.
Companies shown as Dormant are exempt from audit by virtue of s479A Companies Act 2006.
Note A: these companies are owned by Bisichi and the equity shareholdings disclosed relate to that company.
Note B: this entity is a joint venture owned 50% by LAP and 50% by Bisichi.
Note C: this company is owned by Dragon and the equity shareholdings disclosed relate to that company.
Note D: Bisichi, Dragon, West Ealing Projects, Development Physics and their subsidiaries are included in the consolidated financial
statements in accordance with IFRS 10.
Note E: This company is 90% owned by West Ealing Projects and the equity shareholdings disclosed relate to that company.
Note F: These companies have been dissolved after the 31st December 2021.
Note G: This entity is a joint venture owned 33.33% by LAP and 33.33% by Bisichi
Note H: This company is 100% owned by Development Physics and the equity shareholdings disclosed relate to that company.
London & Associated Properties PLC 2021 55
FINANCIAL STATEMENTS Notes to the financial statements
12. INVENTORIES - PROPERTY
Development property and infrastructure:
2021
£’000
2020
£’000
At 1 January 25,013 26,915
Capitalised expenditure 738 116
Capitalised interest 278 282
Impairments (816) (2,300)
At 31 December 25,213 25,013
The net realisable value of developments is assessed by the directors and is subject to key estimates made in respect of future sales prices
and build costs. Variations in these assumptions can have significant effects on the net realisable value of developments.
In 2018 the Group acquired a development property through West Ealing Projects Limited a 50:50 joint venture with Bisichi. This property
is held at cost of £7.481 million (2020: £7.056 million) and is currently being developed for sale.
In 2018 the Group decided to develop for sale Orchard Square, Sheffield and transferred the asset to inventory. In 2019 part of this
property was sold. The remainder of the property is held at a value of £17.5 million, being cost of £22.4 million less an impairment provision
of £4.9 million, and continues to be developed for sale. A 5% movement in the estimated sales price of this development would have an
effect of £2.4 million (2020: £2.4 million) on its net realisable value. A 5% movement in the estimated build costs of this development would
have an effect of £1.8 million (2020: £1.8 million) on its net realisable value. The uncertainties in the assumptions used to calculate the net
realisable value of this development will reduce over time, but will not resolve within the next 12 months due to the duration of this project.
In 2021 the group acquired an option over a residential development opportunity in Purley, London through a joint venture held 33:33:33
with Bisichi and an external partner. This property is held at cost of £0.232 million (2020: £nil) and is currently being developed for sale.
13. INVENTORIES - MINING
2021
£’000
2020
£’000
Coal
Washed 1,185 2,924
Mining production 59 394
Work in progress – 111
Other 9 16
1,253 3,445
14. CURRENT ASSET INVESTMENTS AT FVPL
2021
TOTAL
£’000
2020
TOTAL
£’000
UNLISTED
SHARES
£’000
LOAN
STOCK
£’000
At 1 January 1,746 287 – 287
Additions 1,630 1,379 20 1,359
Gain / loss 701 201 – 201
Disposals (446) (101) – (101)
Impairments – (20) (20) –
At 31 December 3,631 1,746 – 1,746
The non-current asset investments belong to Bisichi and are all listed on UK and overseas stock exchanges (Level 1 hierarchy) as follows:
2021
£’000
2020
£’000
Net book and market value of readily realisable investments listed on stock exchanges in
the United Kingdom
1,564 959
Net book and market value of readily realisable investments listed on overseas stock
exchanges
2,067 787
3,631 1,746
15. TRADE AND OTHER RECEIVABLES
2021
£’000
2020
£’000
Trade receivables 7,387 6,610
Other receivables 1,383 940
Prepayments and accrued income 1,147 640
9,917 8,190
Note 21 details the group’s credit risk management and loss allowances held for trade receivables.
56 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Notes to the financial statements
16. INVESTMENTS IN LISTED SECURITIES HELD AT FVPL
2021
£’000
2020
£’000
Market value of listed Investments:
Listed in United Kingdom 478 567
Listed outside United Kingdom 207 266
685 833
Original cost of listed investments 846 1,098
Unrealised deficit of market value versus cost (161) (265)
The investments in listed securities held at FVPL belong to Bisichi and the market value of listed investments is derived from their quoted
share price on public markets (Level 1 hierarchy).
17. TRADE AND OTHER PAYABLES
2021
£’000
2020
£’000
Trade payables 7,284 7,191
Other taxation and social security costs 45 618
Other payables 4,494 3,570
Accruals and deferred income 3,374 4,754
15,197 16,133
The directors consider that the carrying amount of trade and other payables approximates to their fair value.
18. BORROWINGS
2021
£’000
CURRENT
2021
£’000
NON-CURRENT
2021
£’000
CURRENT
2020
£’000
NON-CURRENT
Other loans (Bisichi) 130 14 264 144
£1.25 million term bank loan (secured) repayable by 2022 (Dragon)* 1,164 – 1,185 –
Bank overdrafts (secured) (Bisichi) 2,536 – 4,846 –
£14 million term bank loan (secured) repayable by 2022 at 6.95 per cent* 13,251 – 193 13,449
£0.04 million term loan (unsecured) repayable by 2026 at 2.5 per cent 8 29 4 36
£10 million first mortgage debenture stock 2022 at 8.109 per cent* 9,990 – – 9,973
£3.96 million term bank loan (secured) repayable by 2024 (Bisichi)* – 3,839 – 3,799
£4.2 million term loan (secured) - repayable by 2022 (Broadway Regen) 4,192 – 3,670 –
£3.932 million term loan (secured) repayable by 2028* 134 3,377 112 3,452
31,405 7,259 10,274 30,853
Borrowings analysis by origin:
2021
£’000
2020
£’000
United Kingdom 35,984 35,873
South Africa 2,680 5,254
38,664 41,127
* The £10 million debenture and bank loans are shown after deduction of un-amortised issue costs.
Interest payable on the term bank loans is variable being based upon the relevant bank’s base rate or the Sterling Overnight Index Average
(SONIA) plus margin.
No banking covenants were breached by the group during the year, other than mentioned below.
The £14 million term loan taken out in September 2019, with Phoenix CRE S.à r.l., is secured by way of a charge on a single freehold
property, included in the financial statements as inventory at a value of £17.5 million. This loan has an interest rate of 5.95% above SONIA,
where SONIA has a minimum and maximum rate of 1.0% and 1.5%, respectively. Following a bank valuation in April 2021, the facility was
placed into cash trap. In July 2021 the loan was paid down by an additional £0.3 million to take the facility out of cash trap. There is an
option for the borrower to extend this loan for a further year to September 2023.
The First Mortgage Debenture Stock August 2022 is secured by way of a charge on specific freehold and leasehold properties which are
included in the financial statements at a value of £17.0 million.
In September 2018 a 10 year term, loan of £3.932 million was taken out with Metro Bank secured by way of a charge on freehold and leasehold
properties which are included in the financial statements at a value of £6.6 million. There is also £1.0 million of cash held as security following
the sale of the Radcliffe property, that was previously charged to this loan. The interest cost of the loan is 2.95 per cent above the bank’s base
rate and the loan is amortised over a 20 year repayment profile, with a final bullet payment after 10 years.
London & Associated Properties PLC 2021 57
FINANCIAL STATEMENTS Notes to the financial statements
18. BORROWINGS CONTINUED
In South Africa, an R85million trade facility is held with Absa Bank Limited by Sisonke Coal Processing (Pty) Limited (“Sisonke Coal
Processing”) in order to cover the working capital requirements of Bisichi’s South African operations. The interest cost of the loan is at the
South African prime lending rate plus 3.8% The facility is renewable annually each January, is repayable on demand and is secured by way of
a first charge over specific pieces of mining equipment, inventory and the debtors of the relevant company which holds the loan which are
included in the financial statements at a value of £8.84 million. All banking covenants were either adhered to or waived by Absa Bank
Limited during the year.
Bisichi holds a £3.96million term loan facility with Julian Hodge Bank Limited. The loan is secured against Bisichi’s UK retail property
portfolio. The debt package has a five year term and is repayable at the end of the term in December 2024. The interest cost of the loan is
4.00% above the Bank of England base rate. The loan is secured by way of a first charge over the investment properties in the UK which are
included in the financial statements at a value of £10.53 million. No banking covenants were breached during the year.
The bank loan of £1.17 million (Dragon) which is repayable in April 2022 is secured by way of a first charge on specific freehold property
which is included in the financial statements at a value of £2.08 million. The interest cost of the loan is 2.75 per cent above the bank’s base
rate. Terms have been agreed with a new lender to refinance this loan in full and this is progressing. An extension of the existing loan is
available, to allow time for refinancing discussions to be concluded.
The bank loan of £4.122 million (Broadway Regen) which is repayable in April 2022, following an extension of the facility, is secured by way
of a first charge on a specific freehold development property, which is included in the financial statements at £7.5 million. The interest cost
of the loan is fixed at 7.0% per annum. A credit approved offer to refinance this loan with a new lender has been received and accepted and
will repay the existing lender in full.
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.
Analysis of the changes in liabilities arising from financing activities:
2021
£’000
BANK
BORROWINGS
2021
£’000
LEASE
OBLIGATIONS
2020
£’000
BANK
BORROWINGS
2020
£’000
LEASE
OBLIGATIONS
Balance at 1 January 41,127 4,379 41,183 4,266
Exchange adjustments (148) (6) (386) (18)
Cash movements excluding exchange adjustments (2,491) (39) 131 (329)
Valuation movements 176 (87) 199 460
Balance at 31 December 38,664 4,247 41,127 4,379
19. LEASE LIABILITIES
2021
TOTAL
£’000
2021
HEAD
LEASES ON
INVESTMENT
PROPERTY
1
£’000
2021
OFFICE
£’000
2021
OTHER
£’000
2020
TOTAL
£’000
Minimum lease payments fall due:
Within one year 565 208 287 70 550
Second to fifth year 1,623 823 527 273 1,569
After five years 18,973 18,973 - - 20,233
21,161 20,004 814 343 22,352
Future finance charges on lease liabilities (16,914) (16,783) (67) (64) (17,973)
Present value of lease liabilities 4,247 3,221 747 279 4,379
Present value of lease liabilities:
Within one year 513 206 253 54 514
Second to fifth year 1,478 759 494 225 1,438
After five years 2,256 2,256 - - 2,427
4,247 3,221 747 279 4,379
Lease liabilities greater than one year are £3,734,000 (2020: £3,865,000).
1
Many head leases on investment properties provide for contingent rent in addition to the rents above, usually a proportion of rental income.
Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.
58 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Notes to the financial statements
20. PROVISIONS
2021
£’000
2020
£’000
At 1 January 1,442 1,554
Exchange adjustment (51) (112)
At 31 December 1,391 1,442
The above provision relates to mine rehabilitation costs in Bisichi.
21. FINANCIAL INSTRUMENTS
Total financial assets and liabilities
The Group’s financial assets and liabilities and their fair values are as follows:
2021 2020
FAIR
VALUE
£’000
CARRYING
VALUE
£’000
FAIR
VALUE
£’000
CARRYING
VALUE
£’000
Cash and cash equivalents 8,518 8,518 7,194 7,194
Investments - non-current assets 3,631 3,631 1,746 1,746
Investments - current assets 685 685 833 833
Trade and other receivables 9,917 9,917 8,190 8,190
Other assets 8,770 8,770 7,550 7,550
Derivative liabilities (70) (70) (200) (200)
Bank overdrafts (2,536) (2,536) (4,846) (4,846)
Bank loans (26,153) (26,138) (26,308) (26,308)
Lease liabilities (4,247) (4,247) (4,379) (4,379)
Other liabilities (11,778) (11,778) (11,262) (11,262)
Total financial liabilities before debentures (13,263) (13,248) (21,482) (21,482)
Fair value of debenture stocks
Fair value of the Group’s debenture liabilities:
BOOK
VALUE
£’000
FAIR
VALUE
£’000
2021
FAIR VALUE
ADJUSTMENT
£’000
2020
FAIR VALUE
ADJUSTMENT
£’000
Debenture stocks (10,000) (10,124) (124) (315)
Tax at 19 per cent (2020: 19 per cent) – – 24 60
Post tax fair value adjustment – – (100) (255)
Post tax fair value adjustment – basic pence per share – – (0.12p) (0.30p)
Except for debenture stocks there is no material difference between the carrying value and fair value of financial liabilities or financial assets.
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.
Treasury policy
The Group enters derivative transactions such as interest rate swaps, interest rate collars and forward exchange contracts in order to help
manage the financial risks arising from the Group’s activities. The main risks arising from the Group’s financing structure are interest rate
risk, liquidity risk and market price risk, credit risk, commodity price risk and foreign exchange risk. The policies for managing each of these
risks and the principal effects of these policies on the results are summarised below.
Sensitivity analysis
The Group has variable interest term debts which are covered by derivatives. Additionally, the Group has a variable interest term debt with
minimum and maximum rates. At 31 December 2021, with other variables unchanged, a 1% increase in interest rates would change the
profit/loss for the year by £126,000 (2020: £155,000).
London & Associated Properties PLC 2021 59
FINANCIAL STATEMENTS Notes to the financial statements
21. FINANCIAL INSTRUMENTS CONTINUED
Interest rate risk
Treasury activities take place under procedures and policies approved and monitored by the Board to minimise the financial risk faced by
the Group.
The Bisichi United Kingdom bank loans and overdraft are secured by way of a first charge on certain fixed assets. The rates of interest vary
based on Bank of England base rate in the UK.
The Bisichi South African bank loans are secured by way of a first charge over specific pieces of mining equipment, inventory and the
debtors of the relevant company which holds the loan. The rates of interest vary based on PRIME in South Africa.
The £3.932 million bank loan is secured by way of a first charge on specific freehold and leasehold property. The rate of interest varies
based on the bank’s base rate.
The £1.17 million bank loan (Dragon) is secured by way of a first charge on specific freehold property. The rate of interest varies based on
the bank’s base rate.
The £4.122 million bank loan (Broadway Regen) is secured by way of first charge on a specific freehold development property. This loan is
based on a fixed interest rate of 7.0%.
The £14 million bank loan is secured by way of first charge on a specific freehold development property held in inventory. The rates of
interest vary based on SONIA in the UK, with a minimum SONIA of 1% and a maximum SONIA of 1.5%.
Liquidity risk
The Group’s policy is to minimise refinancing risk by balancing its exposure to interest risk and to refinancing risk. In effect the Group seeks
to borrow for as long as possible at the lowest acceptable cost. Efficient treasury management and strict credit control minimise the costs
and risks associated with this policy which ensures that funds are available to meet commitments as they fall due. Cash and cash
equivalents earn interest at rates based on banks’ base rates in the UK. The cash resources and funding facilities together are considered
adequate to meet the Group’s anticipated cash flow requirements for the foreseeable future.
In South Africa, a R85million trade facility is held with Absa Bank Limited by Sisonke Coal Processing (Pty) Limited (“Sisonke Coal
Processing”) in order to cover the working capital requirements of Bisichi’s South African operations. The interest cost of the loan is at the
South African prime lending rate plus 3.8% The facility is renewable annually each January, is repayable on demand and is secured against
inventory, debtors and cash that are held by Sisonke Coal Processing (Pty) Limited. The facility is included in cash and cash equivalents
within the cashflow statement.
In the UK, Bisichi holds a £3.96 million term loan facility with Julian Hodge Bank Limited. The loan is secured against the group’s UK retail
property portfolio. The debt package has a five year term and is repayable at the end of the term in December 2024. The interest cost of
the loan is 4.00% above the Bank of England base rate.
The £14 million term loan with Pheonix CRE S.à r.l. is secured on a single freehold property and is repayable in September 2022. The
interest cost is 5.95% above SONIA, where SONIA has a minimum and maximum rate of 1.0% and 1.5%, respectively. There is an option to
extend this loan for one year to September 2023.
The table below analyses the Group’s financial liabilities (excluding interest rate derivatives) into maturity groupings and also provides details
of the liabilities that bear interest at fixed, floating and non–interest bearing rates.
2021
TOTAL
£’000
LESS THAN
1 YEAR
£’000
2-5 YEARS
£’000
OVER
5 YEARS
£’000
Bank overdrafts (floating) 2,536 2,536 – –
Debentures (fixed) 10,000 10,000 – –
Bank loans (fixed) 4,229 4,200 29 –
Bank loans (floating)* 22,002 14,679 4,426 2,897
Lease liabilities 21,161 565 1,623 18,973
Trade and other payables (non-interest) 11,778 11,778 – –
71,706 43,758 6,078 21,870
2020
TOTAL
£’000
LESS THAN
1 YEAR
£’000
2-5 YEARS
£’000
OVER
5 YEARS
£’000
Bank overdrafts (floating) 4,846 4,846 – –
Debentures (fixed) 10,000 – 10,000 –
Bank loans (fixed) 3,710 3,674 36 –
Bank loans (floating)* 23,108 1,754 18,619 2,735
Lease liabilities 22,352 550 1,569 20,233
Trade and other payables (non-interest) 16,016 16,016 – –
80,032 26,840 30,224 22,968
The Group would normally expect that sufficient cash is generated in the operating cycle to meet the contractual cash flows as disclosed
above through effective cash management.
* Certain bank loans are fully hedged with appropriate interest derivatives. Details of all hedges are shown on the next page.
.
60 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Notes to the financial statements
21. FINANCIAL INSTRUMENTS CONTINUED
Market price risk
The Group is exposed to market price risk through interest rate and currency fluctuations.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
The Group is mainly exposed to credit risk on its cash and cash equivalents, trade and other receivables. The maximum exposure to credit
risk is represented by the carrying amount of each financial asset in the balance sheet which at year end amounted to £21,601,000 (2020:
£17,323,000).
To mitigate risk on its cash and cash equivalents, the group only deposits surplus cash with well-established financial institutions of high
quality credit standing.
The Group’s credit risk is primarily attributable to its trade receivables. Ageing of past due gross trade receivables and the carrying amount
net of loss allowances is set out below.
GROSS
AMOUNT
£’000
2021
LOSS
ALLOWANCE
£’000
NET CARRYING
AMOUNT
£’000
GROSS
AMOUNT
£’000
2020
LOSS
ALLOWANCE
£’000
NET CARRYING
AMOUNT
£’000
0-30 days 6,604 (144) 6,460 4,310 (135) 4,175
31-60 days 29 (16) 13 1,570 (6) 1,564
61-90 days 250 (7) 243 15 (3) 12
91+ days 1,140 (469) 671 1,330 (471) 859
8,023 (636) 7,387 7,225 (615) 6,610
Being:
Mining 6,158 - 6,158 4.944 - 4,944
Property 1,865 (636) 1,229 2,281 (615) 1,666
8,023 (636) 7,387 7,225 (615) 6,610
Gross trade receivables mainly consist of amounts invoiced for rent, service charge and management fees and the sales of coal and all are
inclusive of VAT and form part of Revenue (see Note 1).
Trade receivables are presented in the balance sheet net of loss allowances. The Group applies the IFRS 9 simplified approach to measuring
expected credit losses (ECLs) which uses a lifetime expected loss allowance for all trade receivables. Expected loss rates are based on the
historic credit loss experienced and adjusted for current and forward information affecting the ability of the individual customers to settle
receivables.
In the current and prior reporting period, the current and forward information considers the impact of Covid-19. Trade receivables are
written off when there is no reasonable expectation of recovery.
In determining the ECLs an analysis of various factors has been performed on a customer by customer basis and considers the impact of
Covid-19 and economic conditions. These factors include an assessment of the customer’s default risk based on: industry and geographic
location; and payment record, which includes how many days past due the receivable is, payment concessions granted and credit rating.
ECLs are recognised net of securities held for the customer.
Potential customers are evaluated for creditworthiness and where necessary collateral is secured. There is no concentration of credit risk
within the lease portfolio to either business sector or individual company as the Group has a diverse customer base with no one customer
accounting for more than eight per cent of property rental income.
The loss allowances for trade receivables as at 31 December reconcile to the opening allowances as follows:
2021
£’000
2020
£’000
Opening loss allowance at 1 January 615 308
Increase in loan loss allowance recognised in profit and loss during the year 290 307
Receivables written off during the year as uncollectable (262) -
Unused amount reversed (7) -
Closing loss allowance at 31 December 636 615
As at 31 December 2021, the Group held a loss allowance provision for trade receivables of £636,000 (2020: £615,000) and the impairment
risk remains low with the loss allowance of £636,000 million representing 10.5% of total gross rental income for the year (2020: 11.4%).
Customers’ credit ratings are reviewed regularly. The Group’s review includes measures such as the use of external ratings and establishing
purchase limits for each customer.
The Group exposure to credit risk on its other receivables is mitigated through ongoing review of the underlying performance and resources
of the counterparty including evaluation of different scenarios of probability of default and expected loss applicable to each of the
underlying balances.
London & Associated Properties PLC 2021 61
FINANCIAL STATEMENTS Notes to the financial statements
21. FINANCIAL INSTRUMENTS CONTINUED
Foreign exchange risk
Only Bisichi is subject to this risk. All trading is undertaken in the local currencies except for certain export sales which are invoiced in US
Dollars. It is not the Bisichi Group’s policy to obtain forward contracts to mitigate foreign exchange risk on these contracts as payment
terms are within 15 days of invoice or earlier. Funding is also in local currencies other than inter-company investments and loans and it is
also not the Bisichi Group’s policy to obtain forward contracts to mitigate foreign exchange risk on these amounts. During 2021 and 2020
the Bisichi Group did not hedge its exposure of foreign investments held in foreign currencies.
The principal currency risk to which the Bisichi Group is exposed in regard to inter-company balances is the exchange rate between Pounds
Sterling and South African Rand. It arises as a result of the retranslation of Rand denominated inter-company trade receivable balances held
within the UK which are payable by South African Rand functional currency subsidiaries.
Based on the Bisichi Group’s net financial assets and liabilities at 31 December 2021, a 25% strengthening of Sterling against the South
African Rand, with all other variables held constant, would decrease the Bisichi Group’s profit after taxation by £218,000 (2020: £360,000).
A 25% weakening of Sterling against the South African Rand, with all other variables held constant would increase the Bisichi Group’s profit
after taxation by £364,000 (2020: £601,000).
The 25% sensitivity has been determined based on the average historic volatility of the exchange rate.
The table below shows the Bisichi currency profiles of cash and cash equivalents:
2021
£’000
2020
£’000
Sterling 1,397 1,641
South African Rand 1,017 809
US Dollar 604 1,318
3,018 3,768
Cash and cash equivalents earn interest at rates based on LIBOR in Sterling and Prime in Rand.
The tables below shows the Bisichi currency profiles of net monetary assets and liabilities by functional currency:
2021:
UK
£’000
SOUTH AFRICA
£’000
Sterling 1,123 -
South African Rand 65 (5,088)
US Dollar 1,462 -
2,650 (5,088)
2020:
UK
£’000
SOUTH AFRICA
£’000
Sterling (70) -
South African Rand 39 (8,878)
US Dollar 1,736 -
1,705 (8,878)
Borrowing facilities
At 31 December 2021 the Group was within its bank borrowing facilities and was not in breach of any of the covenants. Term loan
repayments are as set out at the end of this note. Details of other financial liabilities are shown in Notes 17, 18 and 19.
Interest rate and hedge profile
2021
£’000
2020
£’000
Fixed rate borrowings 14,219 13,683
Floating rate borrowings
– Subject to interest rate collar 13,251 13,642
– Other borrowings 11,194 13,802
38,664 41,127
Average fixed interest rate
Weighted average collared interest rate 7.77% 7.80%
Weighted average cost of debt on overdrafts, bank loans and debentures 6.95% 6.95%
Average period for which borrowing rate is fixed 6.81% 7.04%
Average period for which borrowing rate is swapped 0.6 years 2.1 years
0.7 years 1.7 years
The Group’s floating rate debt bears interest based on Bank of England base rate, Banks’ base rate and SONIA for the term bank loans and
bank base rate for the overdraft.
At 31 December 2021 the Group had a £14 million floating rate loan to September 2022, where SONIA has a minimum and maximum rate
of 1.0% and 1.5%, respectively. At the year end the fair value liability in the accounts was £70,000 (2020: £200,000), as valued by the Group.
62 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Notes to the financial statements
21. FINANCIAL INSTRUMENTS CONTINUED
Fair value of financial instruments
Fair value estimation
The Group has adopted the amendment to IFRS 7 for financial instruments that are measured in the balance sheet at fair value. This
requires the methods of fair value measurement to be classified into a hierarchy based on the reliability of the information used to
determine the valuation, as follows:
– Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
– Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (level 2).
– Inputs for the asset or liability that are not based on observable market data (that is unobservable inputs) (level 3).
LEVEL 1
£’000
LEVEL 2
£’000
LEVEL 3
£’000
TOTAL
£’000
2021
GAIN/(LOSS)
TO INCOME
STATEMENT
£’000
Financial assets
Quoted equities – non-current assets 3,631 – – 3,631 701
Quoted equities – current assets 685 – – 685 (161)
Financial liabilities
Interest rate collar – 70 – 70 130
LEVEL 1
£’000
LEVEL 2
£’000
LEVEL 3
£’000
TOTAL
£’000
2020
GAIN/(LOSS)
TO INCOME
STATEMENT
£’000
Financial assets
Quoted equities – non-current assets 1,746 – – 1,746 201
Quoted equities – current assets 833 – – 833 (135)
Financial liabilities
Interest rate swaps – 200 – 200 (200)
Capital structure
The Group sets the amount of capital in proportion to risk. It ensures that the capital structure is commensurate to the economic conditions
and risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may vary the amount of
dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group considers its capital to include share capital, share premium, capital redemption reserve, translation reserve and retained
earnings, but excluding the interest rate derivatives.
Consistent with others in the industry, the Group monitors its capital by its debt to equity ratio (gearing levels). This is calculated as the net
debt (loans less cash and cash equivalents) as a percentage of the equity calculated as follows:
2021
£’000
2020
£’000
Total debt 42,911 45,506
Less cash and cash equivalents (8,518) (7,194)
Net debt 34,393 38,312
Total equity 40,294 39,748
85.4% 96.4%
The Group does not have any externally imposed capital requirements.
Following the introduction of IFRS 16 total debt now includes lease liabilities.
Financial assets
The Group’s principal financial assets are bank balances and cash, trade and other receivables, investments and assets held for sale. The
Group has no significant concentration of credit risk as exposure is spread over a large number of counterparties and customers. The credit
risk in liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by
international credit–rating agencies. The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the
balance sheet are net of allowances for doubtful receivables, estimated by the Group’s management based on prior experience and the
current economic environment.
Financial assets maturity
Cash and cash equivalents all have a maturity of less than three months.
2021
£’000
2020
£’000
Cash at bank and in hand 8,518 7,194
These funds are primarily invested in short term bank deposits maturing within one year bearing interest at the bank’s variable rates.
London & Associated Properties PLC 2021 63
FINANCIAL STATEMENTS Notes to the financial statements
21. FINANCIAL INSTRUMENTS CONTINUED
Financial liabilities maturity
The following table sets out the maturity profile of contractual undiscounted cashflows of financial liabilities as at 31 December:
Repayment of borrowings
2021
£’000
2020
£’000
Bank loans and overdrafts:
Repayable on demand or within one year 21,415 10,274
Repayable between two and five years 4,455 18,145
Repayable after five years 2,804 2,735
28,674 31,154
Debentures:
Repayable within one year 9,990 -
Repayable between two and five years - 9,973
38,664 41,127
Certain borrowing agreements contain financial and other conditions that if contravened by the Group, could alter the repayment profile.
22. DEFERRED TAX LIABILITIES
2021
£’000
2020
£’000
Balance at 1 January 355 1,654
Transferred to consolidated income statement (33) (1,118)
Exchange adjustment (13) (181)
Balance at 31 December 309 355
The deferred tax balance comprises the following:
Revaluation of properties 347 113
Accelerated capital allowances 2,718 2,916
Short-term timing differences (557) (486)
Unredeemed capital deductions (1,057) (645)
Losses and other deductions (1,142) (1,543)
Deferred tax liability provision at end of year: 309 355
There is no time limit in respect of the Group tax loss relief.
In addition, the Group has unused losses and reliefs with a potential value of £11,145,000 (2020: £8,022,000), which have not been
recognised as a deferred tax asset. As the Group returns to profit, these losses and reliefs can be utilised. The valuation of losses is based
on a 25% tax rate (2020: 19%).
23. SHARE CAPITAL
The Company has one class of ordinary shares which carry no right to fixed income.
NUMBER OF
ORDINARY 10P
SHARES
2021
NUMBER OF
ORDINARY 10P
SHARES
2020
2021
£’000
2020
£’000
Authorised: ordinary shares of 10p each 110,000,000 110,000,000 11,000 11,000
Allotted, issued and fully paid share capital 85,542,711 85,542,711 8,554 8,554
Ordinary shares of 10p - issued during the year – –
Less: held in Treasury (see below) (216,715) (218,197) (22) (22)
"Issued share capital" for reporting purposes 85,325,996 85,324,514 8,532 8,532
Treasury shares
NUMBER OF ORDINARY
10P SHARES COST /ISSUE VALUE
2021 2020
2021
£’000
2020
£’000
Shares held in Treasury at 1 January 218,197 218,197 144 144
Issued for share incentive plan - dividends investment (Dec 2020 - 10.5p) (1,482) – – –
Shares held in Treasury at 31 December 216,715 218,197 144 144
64 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Notes to the financial statements
23. SHARE CAPITAL CONTINUED
Share Option Schemes
Employees’ share option scheme (Approved scheme)
At 31 December 2021 there were no options to subscribe for ordinary shares outstanding, issued under the terms of the Employees’ Share
Option Scheme.
This share option scheme was approved by members in 1986, and has been approved by Her Majesty’s Revenue and Customs (HMRC).
There are no performance criteria for the exercise of options under the Approved scheme, as this was set up before such requirements
were considered to be necessary.
A summary of the shares allocated and options issued under the scheme up to 31 December 2021 is as follows:
CHANGES DURING THE YEAR
AT 1
JANUARY
2021
OPTIONS
EXERCISED
OPTIONS
GRANTED
OPTIONS
LAPSED
AT 31
DECEMBER
2021
Shares issued to date 2,367,604 – – – 2,367,604
Shares allocated over which options have not been granted 1,549,955 – – – 1,549,955
Total shares allocated for issue to employees under the scheme 3,917,559 – – – 3,917,559
Non–approved Executive Share Option Scheme (Unapproved scheme)
A share option scheme known as the “Non–approved Executive Share Option Scheme” which does not have HMRC approval was set up
during 2000. At 31 December 2021 there were no options to subscribe for ordinary shares outstanding.
The exercise of options under the Unapproved scheme is subject to the satisfaction of objective performance conditions specified by the
remuneration committee which confirms to institutional shareholder guidelines and best practice provisions.
A summary of the shares allocated and options issued under the scheme up to 31 December 2021 is as follows:
CHANGES DURING THE YEAR
AT 1
JANUARY
2021
OPTIONS
EXERCISED
OPTIONS
GRANTED
OPTIONS
LAPSED
AT 31
DECEMBER
2021
Shares issued to date 450,000 – – – 450,000
Shares allocated over which options have not yet been granted 550,000 – – – 550,000
Total shares allocated for issue to employees under the scheme 1,000,000 – – – 1,000,000
The Bisichi PLC Unapproved Option Schemes
Details of the share option schemes in Bisichi are as follows:
YEAR OF GRANT
SUBSCRIPTION
PRICE PER SHARE
PERIOD WITHIN
WHICH OPTIONS
EXERCISABLE
NUMBER OF SHARES
FOR WHICH OPTIONS
OUTSTANDING AT
31 DECEMBER 2020
NUMBER OF
SHARE OPTIONS
ISSUED/EXERCISED/
(CANCELLED)
DURING YEAR
NUMBER OF SHARES
FOR WHICH OPTIONS
OUTSTANDING AT
31 DECEMBER 2021
2015 87.0p Sep 2015 – Sep 2025 300,000 – 300,000
2018 73.5p Feb 2018 - Feb 2028 380,000 – 380,000
The exercise of options under the Unapproved Share Option Schemes, for certain option issues, is subject to the satisfaction of the
objective performance conditions specified by the remuneration committee, which will conform to institutional shareholder guidelines and
best practice provisions in force from time to time.
There are no performance or service conditions attached to 2015 and 2018 options which are outstanding at 31 December 2021.
2021
NUMBER
2021
WEIGHTED
AVERAGE
EXERCISE PRICE
2020
NUMBER
2020
WEIGHTED
AVERAGE
EXERCISE PRICE
Outstanding at 1 January 680,000 79.5p 680,000 79.5p
Outstanding at 31 December 680,000 79.5p 680,000 79.5p
Exercisable at 31 December 680,000 79.5p 680,000 79.5p
London & Associated Properties PLC 2021 65
FINANCIAL STATEMENTS Notes to the financial statementsFINANCIAL STATEMENTS Notes to the financial statements
24. NON–CONTROLLING INTEREST (“NCI”)
2021
£’000
2020
£’000
As at 1 January 9,686 12,407
Share of profit/(loss) for the year 978 (2,356)
Dividends paid (90) (63)
Exchange movement (38) (302)
As at 31 December 10,536 9,686
The following subsidiaries had material NCI:
Bisichi PLC
Black Wattle Colliery (Pty) Ltd
Summarised financial information for these subsidiaries is set out below. The information is before inter–company eliminations with other
companies in the Group.
BISICHI PLC
2021
£’000
2020
£’000
Revenue 50,520 29,805
Profit/(loss) for the year attributable to owners of the parent 1,491 (3,354)
Profit/(loss) for the year attributable to NCI 215 (440)
Profit/(loss) for the year 1,706 (3,794)
Other comprehensive expense attributable to owners of the parent (52) (395)
Other comprehensive expense attributable to NCI (8) (69)
Other comprehensive expense for the year (60) (464)
Balance sheet
Non–current assets 24,526 23,646
Current assets 13,582 15,004
Total assets 38,108 38,650
Current liabilities (14,135) (16,175)
Non–current liabilities (6,138) (6,286)
Total liabilities (20,273) (22,461)
Net assets at 31 December 17,835 16,189
Cash flows
From operating activities 5,209 1,065
From investing activities (2,684) (4,267)
From financing activities (1,070) (926)
Net cash flows 1,455 (4,128)
The non–controlling interest comprises of a 37.5% shareholding in Black Wattle Colliery (Pty) Ltd, a coal mining company incorporated in
South Africa.
Summarised financial information reflecting 100% of the underlying subsidiary’s relevant figures, is set out below.
BLACK WATTLE COLLIERY (PTY) LIMITED (“BLACK WATTLE”)
2021
£’000
2020
£’000
Revenue 49,225 28,555
Expenses (47,787) (31,498)
Profit/(loss) for the year 1,438 (2,943)
Other comprehensive income - -
Total comprehensive income for the year 1,438 (2,943)
Balance sheet
Non–current assets 9,019 10,130
Current assets 9,329 9,781
Current liabilities (14,287) (16,915)
Non–current liabilities (1,904) (2,224)
Net assets at 31 December 2,157 772
The non–controlling interest relates to the disposal of a 37.5% shareholding in Black Wattle in 2010. The total issued share capital in Black
Wattle Colliery (Pty) Ltd was increased from 136 shares to 1,000 shares at par of ZAR1 (South African Rand) through the following shares issue:
– a subscription for 489 ordinary shares at par by Bisichi Mining (Exploration) Limited increasing the number of shares held from 136 ordinary
shares to a total of 625 ordinary shares;
– a subscription for 110 ordinary shares at par by Vunani Mining (Pty) Ltd;
– a subscription for 265 “A” shares at par by Vunani Mining (Pty) Ltd
66 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Notes to the financial statements
24. NON–CONTROLLING INTEREST (“NCI”) CONTINUED
Bisichi Mining (Exploration) Limited is a wholly owned subsidiary of Bisichi PLC incorporated in England and Wales.
Vunani Mining (Pty) Ltd is a South African Black Economic Empowerment company and minority shareholder in Black Wattle.
The “A” shares rank pari passu with the ordinary shares save that they will have no dividend rights until such time as the dividends paid by Black
Wattle Colliery (Pty) Ltd on the ordinary shares subsequent to 30 October 2008 will equate to ZAR832,075,000.
A non–controlling interest of 15% in Black Wattle is recognised for all profits distributable to the 110 ordinary shares held by Vunani Mining (Pty)
Ltd from the date of issue of the shares (18 October 2010). An additional non–controlling interest will be recognised for all profits distributable
to the 265 “A” shares held by Vunani Mining (Pty) Ltd after such time as the profits available for distribution, in Black Wattle Colliery (Pty) Ltd,
before any payment of dividends after 30 October 2008, exceeds R832,075,000.
On 12 April 2022 the total issued share capital in Black Wattle Colliery (Pty) Ltd was increased further from 1000 shares to 1002 shares at par of
R1 through the following share issue:
a subscription of 1 “B” Share at par by Bisichi Mining (Exploration Limited);
a subscription of 1 “B” Share at par by Vunani Mining (Pty) Ltd
The “B” shares rank pari passu with the ordinary shares save that they have sole rights to the distributable profits attributable to certain mining
reserves held by Black Wattle Colliery (Pty) Ltd. A non-controlling interest is recognised for all profits distributable to the “B” shares held by
Vunani Mining (Pty) Ltd from the date of issue of the shares (12 April 2022).
25. RELATED PARTY TRANSACTIONS
COST
RECHARGED
TO (BY)
RELATED
PARTY
£’000
AMOUNTS
OWED
BY (TO)
RELATED
PARTY
£’000
ADVANCED TO
(BY) RELATED
PARTY
£’000
Related party:
Simon Heller Charitable Trust
Current account (63) – –
Loan account – (700) –
Directors and key management
M A Heller and J A Heller 18 (i) – –
J Mintz – 10 10
C A Parritt (18) (ii) – –
R Priest (35) (ii) (9) –
London & Associated Securities – – (179)
Totals at 31 December 2021 (98) (699) (169)
Totals at 31 December 2020 (108) (709) –
Nature of costs recharged – (i) Property management fees (ii) Consultancy fees.
Directors
London & Associated Properties PLC provides office premises, property management, general management, accounting and administration
services for a number of private property companies in which Sir Michael Heller and J A Heller have an interest. Under an agreement with
Sir Michael Heller no charge is made for these services on the basis that he reduces by an equivalent amount the charge for his services to
London & Associated Properties PLC. The board estimates that the value of these services, if supplied to a third party, would have been
£300,000 for the year (2020: £300,000).
The companies for which services are provided are: Barmik Properties Limited, Cawgate Limited, Clerewell Limited, Cloathgate Limited,
Ken–Crav Investments Limited, London & South Yorkshire Securities Limited, Metroc Limited, Penrith Retail Limited, Shop.com Limited,
South Yorkshire Property Trust Limited, Wasdon Investments Limited, Wasdon (Dover) Limited, and Wasdon (Leeds) Limited.
In addition the Company received management fees of £10,000 (2020: £10,000) for work done for two charitable foundations, the Michael
& Morven Heller Charitable Foundation and the Simon Heller Charitable Trust.
The Simon Heller Trust has placed on deposit with LAP £700,000 at an interest rate of 9% which is refundable on demand.
An interest free loan of £10,000 was made to J Mintz during the year and remained outstanding at year end.
R Priest provided consultancy services to the Company on an invoiced fee basis.
In 2012 a loan was made by Bisichi to one of the Bisichi directors, Mr A R Heller, for £116,000. Interest is payable on the director’s Loan at
a rate of 6.14 per cent. There is no fixed repayment date for the director’s Loan. The loan amount outstanding at year end was £41,000
(2020: £41,000) and no repayment (2020: £nil) was made during the year.
The directors are considered to be the only key management personnel and their remuneration including employer’s national insurance for
the year was £1,186,000 (2020: £920,000). All other disclosures required, including interest in share options in respect of those directors,
are included within the remuneration report.
26. EMPLOYEES
The average number of employees, including directors, of the Group during the year was as follows:
2021 2020
Production 214 221
Administration 32 34
246 255
Staff costs during the year were as follows:
2021
£’000
2020
£’000
Salaries and other costs 8,274 6,651
Social security costs 347 236
Pension costs 378 402
8,999 7,289
27. CAPITAL COMMITMENTS
2021
£’000
2020
£’000
Commitments for capital expenditure approved and contracted for at the year end 81 485
28. LEASE 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:
2021
£’000
2020
£’000
2021 5,024 5,013
2022 4,244 4,418
2023 3,384 3,637
2024 2,786 2,829
2025 + 17,637 18,553
33,075 34,450
29. CONTINGENT LIABILITIES AND EVENTS AFTER THE REPORTING PERIOD
There were no contingent liabilities at 31 December 2021 (2020: £Nil), except as disclosed in Note 21.
Bank guarantees have been issued by the bankers of Black Wattle Colliery (Pty) Limited on behalf of the Company to third parties. The
guarantees are secured against the assets of the Company and have been issued in respect of the following:
2021
£’000
2020
£’000
Rail siding & transportation 48 50
Rehabilitation of mining land 1,700 1,441
Water & electricity 46 48
1,794 1,539
The interpretation of laws and regulations in South Africa where Bisichi operates can be complex and can lead to challenges from or
disputes with regulatory authorities. Such situations often take significant time to resolve. Where there is a dispute and where a reliable
estimate of the potential liability cannot be made, or where Bisichi, based on legal advice, considers that it is improbable that there will be
an outflow of economic resources, no provision is recognised.
Black Wattle Colliery (Pty) Ltd is currently involved in a tax dispute in South Africa related to VAT. The dispute arose during the year ended
31 December 2020 and is related to events which occurred prior to the years ended 31 December 2020. As at the date of this report, the
Group has been advised that it has a strong legal case, that it has complied fully with the legislation and, therefore, no economic outflow is
expected to occur. Because of the nature and complexity of the dispute, the possible financial effect of a negative decision cannot be
measured reliably. Accordingly, no provision has been booked at the year end. At this stage, the Group believes that the dispute will be
resolved in its favour.
In January 2022 the Group sold a retail market in Rugeley, Staffordshire for £520,000.
In January 2022 the Group acquired an industrial property in Warrington, Cheshire for £2.37 million.
Except for these transactions there were no other events or transaction that require adjustment or disclosure.
FINANCIAL STATEMENTS Notes to the financial statements
67 London & Associated Properties PLC 2021
68 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Notes to the financial statements
30. COMPANY FINANCIAL STATEMENTS
Company balance sheet at 31 December 2021
NOTES
2021
£’000
2020
£’000
Fixed assets
Tangible assets 30.3 20,556 24,582
Other investments:
Associated company 30.4 489 489
Subsidiaries and others 30.4 4,545 45,459
5,034 45,948
25,590 70,530
Current assets
Assets held for sale 504 –
Debtors 30.5 7,191 6,170
Cash and cash equivalents 3,707 2,557
11,402 8,727
Current liabilities
Amounts falling due within one year 30.6 (3,618) (47,592)
Borrowings 30.7 (9,990) –
Net current liabilities (2,206) (38,865)
Total assets less current liabilities 23,384 31,665
Non-current liabilities
Amounts falling due after more than one year 30.7 (1,383) (11,448)
Deferred tax falling due after more than one year (451) (671)
Net assets 21,550 19,546
Capital and reserves
Share capital 30.9 8,554 8,554
Share premium account 4,866 4,866
Capital redemption reserve 47 47
Treasury shares 30.9 (144) (144)
Retained earnings 8,227 6,223
Shareholders’ funds 21,550 19,546
The profit for the financial year was £2,004,000 (2020: loss of £4,421,000)
These financial statements were approved by the board of directors and authorised for issue on 28th April 2022 and signed on its behalf by:
Sir Michael Heller Jonathan Mintz Company Registration No. 341829
Director Director
London & Associated Properties PLC 2021 69
FINANCIAL STATEMENTS Notes to the financial statements
30. COMPANY FINANCIAL STATEMENTS CONTINUED
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2021
SHARE
CAPITAL
£’000
SHARE
PREMIUM
£’000
CAPITAL
REDEMPTION
RESERVE
£’000
TREASURY
SHARES
£’000
RETAINED
EARNINGS
EXCLUDING
TREASURY
SHARES
£’000
TOTAL
EQUITY
£’000
Balance at 1 January 2020 8,554 4,866 47 (144) 10,644 23,967
Loss for the year – – – – (4,421) (4,421)
Total comprehensive expense – – – – (4,421) (4,421)
Balance at 31 December 2020 8,554 4,866 47 (144) 6,223 19,546
Profit for the year – – – – 2,004 2,004
Total comprehensive income – – – – 2,004 2,004
Balance at 31 December 2021 8,554 4,866 47 (144) 8,227 21,550
£8.2 million (2020: £6.2 million) of retained earnings (excluding treasury shares) is distributable.
30.1. COMPANY
Accounting policies
The following are the main accounting policies of the Company:
Basis of preparation
The financial statements have been prepared on a going concern basis and in accordance with Financial Reporting Standard 101 ’Reduced
Disclosure Framework’ (FRS 101) and Companies Act 2006. The financial statements are prepared under the historical cost convention as
modified to include the revaluation of freehold and leasehold properties and fair value adjustments in respect of current asset investments
and interest rate hedges.
The results of the Company are included in the consolidated financial statements. No profit or loss is presented by the Company as
permitted by Section 408 of the Companies Act 2006.
In these financial statements, the company has applied the exemptions available under FRS 101 in respect of the following disclosures:
• Cash Flow Statement and related notes;
• Comparative period reconciliations for share capital, tangible fixed assets and intangible assets;
• Disclosures in respect of transactions with wholly owned subsidiaries;
• Disclosures in respect of capital management;
• The effects of new but not yet effective IFRSs;
• Disclosures in respect of the compensation of Key Management Personnel.
As the consolidated financial statements include the equivalent disclosures, the Company has also taken the exemptions under FRS 101
available in respect of the following disclosures:
• IFRS 2 Share Based Payments in respect of Group settled share based payments;
• The disclosures required by IFRS 7 and IFRS 13 regarding financial instrument disclosures have not been provided apart from those
which are relevant for the financial instruments which are held at fair value and are not either held as part of the trading portfolio or
derivatives.
Key judgements and estimates
The preparation of the financial statements requires management to make assumptions and estimates that may affect the reported amounts
of assets and liabilities and the reported income and expenses, further details of which are set out below. Although management believes
that the assumptions and estimates used are reasonable, the actual results may differ from those estimates. Further details of the estimates
are contained in the Directors’ Report and in the Group accounting policies.
Investments in subsidiaries, associated undertakings and joint ventures
Investments in subsidiaries, associated undertakings and joint ventures are held at cost less accumulated impairment losses.
70 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Notes to the financial statements
30.1. COMPANY CONTINUED
Fair value measurements of investment properties and investments
An assessment of the fair value of certain assets and liabilities, in particular investment properties, is required. In such instances, fair value
measurements are estimated based on the amounts for which the assets and liabilities could be exchanged between market participants. To
the extent possible, the assumptions and inputs used take into account externally verifiable inputs. However, such information is by nature
subject to uncertainty. The fair value measurement of the investment properties may be considered to be less judgemental where external
valuers have been used as is the case with the Company.
The following accounting policies are consistent with those of the Group and are disclosed on pages 40 to 46 of the Group financial
statements.
• Revenue
• Property operating expenses
• Employee benefits
• Financial instruments
• Investment properties
• Other assets and depreciation
• Assets held for sale
• Income taxes
• Leases
30.2. RESULT FOR THE FINANCIAL YEAR
The Company’s result for the year was a profit of £2,004,000 (2020: loss of £4,421,000). 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.
30.3. TANGIBLE ASSETS
INVESTMENT PROPERTIES OFFICE
TOTAL
£’000
FREEHOLD
£’000
LEASEHOLD
OVER 50 YEARS
£’000
LEASEHOLD
UNDER 50
YEARS
£’000
EQUIPMENT
AND MOTOR
VEHICLES
£’000
OFFICE
BUILDING
£’000
Cost or valuation at 1 January 2021 25,296 16,050 7,539 196 347 1,164
Transfer to assets held for sale (504) (504) – – – –
Additions in the year 1,878 1,090 – – – 788
Disposals (5,407) (4,020) – – (223) (1,164)
Decrease in present value of head
leases
(94) – (94) – – –
Increase/(decrease) on revaluation (541) 1,199 (1,750) 10 – –
Cost or valuation at 31 December 2021 20,628 13,815 5,695 206 124 788
Representing assets stated at:
Valuation 19,716 13,815 5,695 206 – –
Cost 912 – – – 124 788
20,628 13,815 5,695 206 124 788
Depreciation at 1 January 2021 714 – – – 248 466
Charge for the year 241 – – – 3 238
Disposals (883) – – – (223) (660)
Depreciation at 31 December 2021 72 – – – 28 44
Net book value at 1 January 2021 24,582 16,050 7,539 196 99 698
Net book value at 31 December 2021 20,556 13,815 5,695 206 96 744
The freehold and leasehold properties, excluding the present value of head leases and directors’ valuations, were valued as at 31 December
2021 by professional firms of chartered surveyors. The valuations were made at fair value. The directors’ property valuations were made at
fair value.
London & Associated Properties PLC 2021 71
FINANCIAL STATEMENTS Notes to the financial statements
30.3. TANGIBLE ASSETS CONTINUED
2021
£’000
2020
£’000
Allsop LLP 18,765 21,990
Directors’ valuation - 750
18,765 22,740
Add: Present value of headleases 951 1,045
19,716 23,785
The historical cost of investment properties was as follows:
FREEHOLD
£’000
LEASEHOLD
OVER 50 YEARS
£’000
LEASEHOLD
UNDER 50
YEARS
£’000
Cost at 1 January 11,553 9,333 785
Transfer to assets held for sale (674) – –
Additions 1,090 – –
Disposals (4,004) – –
Cost at 31 December 2021 7,965 9,333 785
Head leases on investment property represent the value attributed to the right of the Company to occupy and use investment property that
has a head lease interest. In the current year total cash outflow for head leases is £0.1 million (2020: £0.1 million). A number of these leases
provide for payment of contingent rent, usually a proportion of net rental income, in addition to fixed rents.
Office building represents the value attributed under IFRS 16 to the right of the Company to occupy its sole office building. In the current
year total cash outflow for the office lease liability is £0.3 million (2020: £0.2 million).
30.4. OTHER INVESTMENTS
COST OR VALUATION
TOTAL
£’000
SHARES IN
SUBSIDIARY
COMPANIES
£’000
SHARES IN
JOINT
VENTURES
£’000
SHARES IN
ASSOCIATE
£’000
At 1 January 2021 45,948 45,295 164 489
Repayment of Investment (40,252) (40,252) – –
Impairment provision (662) (662) – –
At 31 December 2021 5,034 4,381 164 489
Subsidiary companies
Details of the Company’s subsidiaries, joint ventures and associates are set out in Note 11. Dragon is a joint venture and Bisichi and
Development Physics are associates of the Company.
During the year the Company impaired its investment in Orchard Square Limited by £662,000 (2020: impairment of £2,463,000), following
a reduction in the carrying value of the Orchard Square, Sheffield development property.
During the year the company simplified its internal capital structure reducing the value of capital within its subsidiaries and returning this
capital to the company through the repayment of intercompany balances. Subsequently impairment provisions on the carrying value of
these investments was carried out to match the reduction in capital.
30.5. DEBTORS
2021
£’000
2020
£’000
Trade debtors 499 598
Amounts due from associate and joint ventures 1,114 995
Amounts due from subsidiary companies 4,547 4,154
Other debtors 370 102
Prepayments and accrued income 661 321
7,191 6,170
72 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Notes to the financial statements
30.6. CURRENT LIABILITIES
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2021
£’000
2020
£’000
Trade payables 42 48
Amounts owed to subsidiary companies 321 43,632
Amounts owed to joint ventures 156 156
Other taxation and social security costs 45 117
Lease liabilities 314 298
Other creditors 1,486 1,397
Accruals and deferred income 1,254 1,944
3,618 47,592
During the year the company simplified its internal capital structure reducing the value of capital within its subsidiaries and returning this
capital to the company through the repayment of intercompany balances.
Borrowings
Borrowings relate to the £10 million debenture which is shown after deduction of un–amortised issue costs. The debenture is repayable in
August 2022 and further details are set out in note 18.
30.7. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
2021
£’000
2020
£’000
Lease liabilities 1,383 1,475
Term Debenture stocks:
£10 million First Mortgage Debenture Stock 2022 at 8.109 per cent* – 9,973
1,383 11,448
REPAYMENT OF BORROWINGS:
2021
£’000
2020
£’000
Debentures:
Repayable within one year 9,990 –
Repayable between two and five years – 9,973
Repayable in more than five years – –
9,990 9,973
LEASE LIABILITIES
2021
TOTAL
£’000
2021
HEAD LEASES
ON INVESTMENT
PROPERTY
1
£’000
2021
OFFICE
£’000
2020
TOTAL
£’000
Minimum lease payments fall due:
Within one year 347 60 287 331
Second to fifth year 768 242 526 796
After five years 7,153 7,153 - 7,933
8,268 7,455 813 9,060
Future finance charges on lease liabilities (6,571) (6,504) (67) (7,287)
Present value of lease liabilities 1,697 951 746 1,773
Present value of lease liabilities:
Within one year 314 60 254 298
Second to fifth year 717 225 492 743
After five years 666 666 - 732
1,697 951 746 1,773
Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.
1 Many head leases on investment properties provide for contingent rent in addition to the rents above, usually a proportion of rental income.
London & Associated Properties PLC 2021 73
FINANCIAL STATEMENTS Notes to the financial statements
30.8. DEFERRED TAX LIABILITY
2021
£’000
2020
£’000
Deferred Taxation
Balance at 1 January (671) (345)
Transfer to profit and loss account 220 (326)
Balance at 31 December (451) (671)
The deferred tax balance comprises the following:
Accelerated capital allowances (466) (438)
Short–term timing differences (278) (208)
Revaluation of investment properties 293 (25)
Deferred tax liability at year end (451) (671)
30.9. SHARE CAPITAL
Details of share capital, treasury shares and share options are set out in Note 23.
30.10. RELATED PARTY TRANSACTIONS
COST
RECHARGED
TO (BY)
RELATED
PARTY
£’000
AMOUNTS
OWED
BY (TO)
RELATED
PARTY
£’000
ADVANCED TO
(BY) RELATED
PARTY
£’000
Related party:
Development Physics Limited
Current account – 76 76
Dragon Retail Properties Limited
Current account 36 (i) (156) –
Bisichi PLC
Current account 200 (ii) 41 –
Simon Heller Charitable Trust
Current account (63) – –
Loan account – (700) –
Directors and key management
M A Heller and J A Heller 18 (i) – –
J Mintz – – 10 10
C A Parritt (18) (iii) – –
R Priest (35) (iii) (9) –
London & Associated Securities – – (179)
Totals at 31 December 2021 138 (738) (93)
Totals at 31 December 2020 128 (822) –
Nature of costs recharged – (i) Management fees (ii) Property management fees (iii) Consultancy fees
During the period, the Company entered into transactions, in the ordinary course of business, with other related parties. The company has
taken advantage of the exemption under paragraph 8(k) of FRS101 not to disclose transactions with wholly owned subsidiaries.
Dragon Retail Properties Limited – ‘Dragon’ is owned equally by the Company and Bisichi PLC.
Bisichi PLC – The company has 41.52 per cent ownership of ‘Bisichi’.
Other details of related party transactions are given in note 25.
30.11. EMPLOYEES
THE AVERAGE WEEKLY NUMBER OF EMPLOYEES OF THE COMPANY DURING THE YEAR WERE AS FOLLOWS:
2021
£’000
2020
£’000
Directors & Administration 17 19
STAFF COSTS DURING THE YEAR WERE AS FOLLOWS:
2021
£’000
2020
£’000
Salaries 1,279 1,139
Social Security costs 158 139
Pension costs 71 121
1,508 1,399
74 London & Associated Properties PLC 2021
FINANCIAL STATEMENTS Notes to the financial statements
30.12. CAPITAL COMMITMENTS
There was a capital commitment of £40,000 at 31 December 2021, being approved and contracted for (2020: £Nil).
30.13. FUTURE AGGREGATE MINIMUM RENTALS RECEIVABLE
The Company leases out its investment properties to tenants under operating leases. The future aggregate minimum rentals receivable
under non–cancellable operating leases are as follows:
2021
£’000
2020
£’000
2021 1,454 1,623
2022 1,161 1,372
2023 889 1,115
2024 606 878
2025 + 2,348 2,737
6,458 7,725
30.14. CONTINGENT LIABILITIES AND POST BALANCE SHEET EVENTS
There were no contingent liabilities at 31 December 2021 (2020: £Nil).
In January 2002 the Company sold a retail market in Rugeley, Staffordshire for £520,000.
In January 2022 the Company acquired an industrial property in Warrington, Cheshire for £2.37 million.
Except for these transactions there were no other events or transaction that require adjustment or disclosure.
London & Associated Properties PLC 2021 75
FINANCIAL STATEMENTSFINANCIAL STATEMENTS
Five year financial summary
2021
£M
2020
£M
2019
£M
2018
£M
2017
£M
Portfolio size
Investment properties–LAP^ 25 31 31 32 62
Investment properties–Dragon Retail Properties 2 2 2 2 3
Investment properties–Bisichi ^ 11 10 12 13 13
Assets held for sale-LAP 1 - - 2 36
Inventories-LAP 25 25 27 39 -
64 68 72 88 114
Portfolio activity £M £M £M £M £M
Acquisitions 0.09 0.33 0.14 6.55 –
Disposals (4.17) – (12.59) (36.44) –
Additions to inventory at cost 1.02 0.39 0.41 6.26 –
(3.06) 0.72 0.14 (23.63 –
Consolidated income statement £M £M £M £M £M
Group income 56.48 35.02 63.97 56.65 47.87
Profit/(loss) before tax 1.52 (10.15) (4.54) 1.27 11.28
Taxation (0.70) 1.09 (0.95) (0.68) (2.98)
(Loss)/profit attributable to shareholders (0.15) (6.70) (6.48) (2.08) 7.69
(Loss)/earnings per share – basic and diluted (0.18)p (7.86)p (7.59)p (2.44)p 9.01p
Dividend per share 0.00p 0.00p 0.00p 0.18p 0.30p
Consolidated balance sheet £M £M £M £M £M
Shareholders’ funds attributable to equity shareholders 29.70 29.86 36.73 43.38 45.86
Net borrowings, excluding lease obligations 30.15 33.93 27.65 35.99 58.42
Net assets per share 34.80p 34.99p 43.04p 50.83p 53.74p
Consolidated cash flow statement £M £M £M £M £M
Cash generated from operations 5.82 1.64 14.98 1.92 10.29
Notes:
^ Excluding the present value of head leases
76 London & Associated Properties PLC 2021
LONDON & ASSOCIATED PROPERTIES PLC
EMAIL: ADMIN@LAP.CO.UK
www.lap.co.uk
FSC
®
C001785