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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| London & Associated Properties Plc | LSE:LAS | London | Ordinary Share | GB0005234223 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 11.00 | 10.00 | 12.00 | 11.00 | 11.00 | 11.00 | 0.00 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Agents & Mgrs | 100.24M | 2.7M | 0.0317 | 3.47 | 9.39M |
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TIDMLAS
FOR IMMEDIATE RELEASE
28 APRIL 2017
LONDON & ASSOCIATED PROPERTIES PLC:
RESULTS FOR 12 MONTHS TO 31 DECEMBER 2016
HIGHLIGHTS
LAP:
* Directly owned property values rose to GBP89.2 million from GBP88.8 million
* Rental income increased to GBP6.2 million (2015: GBP6.1 million)
* Revenue levels maintained at GBP6.7 million (2015: GBP6.8 million)
* Voids of just 2.15% by rental income
PROPERTIES:
* Orchard Square:
+ Negotiated new 10 year lease with anchor tenant T K Maxx
+ Virgin Money completed cutting edge banking offer complete with bowling
alley and cinema
* Brixton:
+ Two markets remain fully let and an ever-lengthening waiting list of
retailers
* West Bromwich:
+ Continues to benefit from bus station and tram interchange at centre's
rear
+ Centre once again effectively fully occupied
* Harrogate Portfolio:
+ All three centres continue to trade well and have high occupancy levels
GROUP:
* "Continues to make steady progress against continuing backdrop of
uncertainty and transition"
* Substantial reduction in pre-tax losses to GBP0.97 million from GBP2.09 million
* Group net assets of GBP48.6 million (2015: GBP49.7 million)
* Final dividend increase of 3% to 0.165p per share recommended
BISICHI MINING:
* Achieved EBITDA of GBP2.4 million (2015: GBP1.4 million) in challenging market
conditions
* Property portfolio performed well:
+ Net revenue of GBP1.06 million (2015: GBP1.01 million)
+ UK investment properties valued at GBP13.25 million (2015: 12.8 million)
"Another satisfactory year in the property business of LAP despite a continuing
backdrop of uncertainty and transition in the retailing world," Sir Michael
Heller, Chairman, and John Heller, Chief Executive.
Contact:
London & Associated Properties PLC Tel:
020 7415 5000
John Heller, Chief Executive, or Anil Thapar, Finance Director
Baron Phillips Associates
Tel: 07767 444193
Baron Phillips
LONDON & ASSOCIATED PROPERTIES
ANNUAL REPORT 2016
Contents
OVERVIEW...........................................................................................................................................................
3
LAP at a
glance....................................................................................................................................................
3
Chairman and Chief Executive's
statement........................................................................................................
5
STRATEGIC
REPORT.......................................................................................................................................
9
Financial
review....................................................................................................................................................
9
Principal activities, strategy & business
model.................................................................................................
13
Risks and
uncertainties......................................................................................................................................
13
Bisichi risks and
uncertainties...........................................................................................................................
14
Key performance
indicators...............................................................................................................................
14
Corporate
responsibility.....................................................................................................................................
15
GOVERNANCE.................................................................................................................................................
17
Directors &
advisors..........................................................................................................................................
17
Directors'
report.................................................................................................................................................
19
Corporate
Governance.......................................................................................................................................
24
Governance Statement by the Chairman of The Remuneration
Committee.................................................... 26
Annual remuneration
report................................................................................................................................
27
Remuneration policy
summary..........................................................................................................................
32
Remuneration
policy..........................................................................................................................................
34
Audit committee
report.......................................................................................................................................
38
Directors' responsibilities
statement..................................................................................................................
39
Independent auditor's
report...............................................................................................................................
40
FINANCIAL
STATEMENTS............................................................................................................................
42
Consolidated income
statement........................................................................................................................
42
Consolidated statement of comprehensive
income..........................................................................................
43
Consolidated balance
sheet...............................................................................................................................
44
Consolidated statement of changes in shareholders'
equity.............................................................................
46
Consolidated cash flow
statement.....................................................................................................................
48
Group accounting
policies..................................................................................................................................
50
Notes to the financial
statements.......................................................................................................................
58
Five year financial
summary..............................................................................................................................
91
Financial calendar
Annual General Meeting
6 June 2017
Announcement of half year results to 30 June 2017
Late August 2017
Announcement of annual results for 2017
Late April 2018
OVERVIEW
LAP at a glance
London & Associated Properties PLC ("LAP") is a main market listed group which
invests in UK shopping centres and retail property whilst also managing
property assets for institutional clients. LAP owns and/or manages GBP221 million
of property investments.
The Group also holds a substantial investment in Bisichi Mining PLC, which
operates coal mines in South Africa and owns UK property investments. In
accordance with IFRS 10 the results of Bisichi have been consolidated in the
group accounts.
Looking to create environments where retailers can thrive.
Financial highlights
Fully diluted net assets per share
44.83p
2015: 47.26p
IFRS net assets
GBP48.6m
2015: GBP49.7m
Portfolio valuation*
GBP221m
2015: GBP246m
*Including properties under management
KEY PROJECTS HIGHLIGHT
Wholly owned * Orchard Square, A number of value enhancing lettings at Orchard
Sheffield Square, Sheffield
* Market Row and
Brixton Village
Brixton
* King Square,
West Bromwich
Joint ventures * Langney Shopping Joint venture with Columbus Capital in Langney.
and management Centre Investment in joint venture sold in March 2016
Eastbourne
Investments and * Kingsgate Co-investment with Oaktree Capital Management and
management Centre, manage three of
Dunfermline their shopping centres
* The Rushes
Centre,
Loughborough
* The Vancouver
Quarter Centre
Kings Lynn
Coal production * In South Africa, Black Wattle produced 1.26 million metric tonnes
of Run of Mine Coal in 2016 (2015: 1.58 million metric tonnes)
Chairman and Chief Executive's statement
We are pleased to report another satisfactory year in the property business of
LAP despite a continuing backdrop of uncertainty and transition in the
retailing world. Our comments below deal primarily with the LAP property
business with supplementary comments about our investment in Bisichi Mining
PLC, in which we own 41.5%, being based on the comments of the Bisichi
management.
The Referendum in June 2016 for the United Kingdom's planned withdrawal from
the European Union has led to a number of retailers delaying their expansion
plans as adverse currency movements and political upheaval combine to create a
much more difficult trading environment. In addition, the ongoing shift towards
online retailing has led to further consolidation within the occupier market,
which, in turn, has led to a greater surfeit of units. Many retailers have
either reduced their estate or merged. Finally, retailer insolvencies have
added further to the number of vacant units competing for tenants. Total property assets under management in which we have a financial interest were valued at GBP220.7 million as at 31 December 2016 compared to GBP226.9 million in 2015. This includes those of Bisichi, Dragon Retail Properties (our joint venture with Bisichi) and Project Harrogate (our joint venture with Oaktree Capital Management). Total occupancy of the group property portfolio stands at 97.9%. For shareholders to get a proper understanding of the accounts, it is necessary to consider separately the position of LAP and Bisichi. Although both are consolidated into group accounts (as required by IFRS 10), they are managed independently. Consolidated RESULTs Group net assets at the year-end were GBP48.63 million (2015: GBP49.65 million). Most of this change is attributable to a reduction of GBP1.3 million in recoverable deferred tax. It should be noted that the group has a potential future benefit of GBP5.4 million in respect of unrecognised taxation losses available to offset future profits and gains. At the same time GBP0.8 million (2015: GBP0.6 million) of liabilities relates to a mark to market of interest rate derivatives, primarily swaps that were taken out to hedge a loan from Santander and which expire at the same date. We do not intend to repay the loan early and therefore these derivative liabilities are unlikely to crystalise. The Group loss after valuation movements and before taxation for the year was GBP 0.97 million (2015: GBP2.09 million). A full breakdown of group income and results by sector is included in the financial review on page 15 and in the segmental analysis in Note 1 to the accounts. Over the course of the next 18 months, a legacy debenture of which GBP3.75million is outstanding, with a coupon of 11.6% will be repaid. We are already talking to potential lenders about a refinancing of the properties held as collateral and are confident that this will lead to a significant reduction in interest payable. We will keep shareholders informed as negotiations progress. LAP property activities LAP's rental income actually rose from GBP6.1 million to GBP6.2 million. Once again our intensive management style has enabled us to maintain our total revenue levels at GBP6.7 million (2015: GBP6.8 million). The small drop in total property revenue was due to lower management income from third party properties of GBP0.5 million as compared to GBP0.7 million in 2015 following the disposal of an investment. At the same time, LAP's direct property costs fell from GBP1.5 million to GBP1.2 million. Much of this drop is attributable to lower vacancy costs following new lettings but we also worked hard to reduce expenses and fees. Shopping centre values generally were affected by deteriorating market sentiment and we were unable to escape this market shift altogether. Nevertheless, our directly owned properties were valued at the year-end at GBP 89.2 million compared to GBP88.9 million in the preceding year. We believe our core property holdings will continue to interest investors as they are all either part of a major city that will remain a destination in its own right; a differentiated offer which forms part of a leisure experience; or they fulfil a role providing convenient retail facilities. Orchard Square, Sheffield Orchard Square continued to trade well in 2016. Currently there is only one vacant unit within the Square, which arose following the insolvency of a tenant in the second half of the year. The unit is being let on a temporary basis, and we are in discussions with a number of retailers for a permanent lease. In May 2016, we re-geared our lease with TK Maxx, the anchor tenant of the Centre which trades from a 45,000 square feet unit. We now have an unbroken 10 year lease from March 2016 at an annual rent of GBP475,000 compared to GBP625,000 previously. This rental adjustment reflects in part market conditions - particularly the competition we faced from other landlords within Sheffield for this highly regarded retailer - and partly the lack of a rent free period that such a letting would normally attract. We are very pleased that TK Maxx confirmed Orchard Square to be its favoured location in Sheffield, and believe that this re-gearing will assist us in attracting new retailers to the scheme as well as securing lease renewals from our existing tenants. Elsewhere within the Centre, Virgin Money completed the development of its cutting-edge banking offer which incorporates a bowling alley, cinema, reading room and other non-traditional banking services. The end result is dramatic, and makes for an exciting experience for visitors to the Centre. We are also carrying out a number of smaller lettings in the Centre where existing leases are expiring. These include a nail bar/beautician and a tattooist, which all form part of the shopping-as-leisure experience. We have also worked with pop-up retail operators to put food trucks within our Centre to attract shoppers. These retailers have been well received by the public. Finally, we refurbished the common parts and a floor of offices over Virgin Money during the course of the year. As a result, we have signed a new lease with one of the existing office tenants whose lease was expiring, and we are in discussions for a new lease on the only vacant office floor. Brixton These two markets remain fully let with an ever-lengthening waiting list of retailers. Brixton exemplifies successful modern shopping as it combines independent retail with interesting street food and a non-High Street feel. This tangible experience cannot be replicated online and our markets are a destination for shoppers and diners from all over London and beyond. We expect this strong trend towards experiential shopping to continue enhancing the prospects of these markets. The redevelopment of the land opposite the rear of Brixton Village is now to commence in 2017 following a number of unforeseen delays resulting from the need to assemble all of the land on behalf of the Council. This will see a further 303 apartments being built to the rear of our markets West Bromwich This Shopping Centre has, for some years, felt the effect of too many available shops within the town centre following the 473,000 square feet development of a large Tesco and additional retail space on the opposite side of the High Street to our own Centre. Nevertheless, we continue to benefit from the bus station and tram interchange at the rear of our scheme which has ensured the Centre remains popular with shoppers. We have steadily filled the void units caused by aggressive poaching of our tenants on terms we were unwilling to match by the adjacent developer, and the Centre is once again approaching full occupancy. Retailers aiming at value and convenience, trade extremely well from this location, and we are confident that trading will continue to be positive here in the future. Other The rest of our portfolio continues to trade well and LAP's portfolio has a void level of just 2.15% (2015: 2.07%). Harrogate Portfolio Kings Lynn This Centre continues to trade well. During the year, we secured planning permission and freeholder consent for the redevelopment of a former Beales department store whose lease had recently expired. The consent is for 33,000 square feet of retail across five units, including a 20,000 square feet anchor store, and the headlease was re-geared to enable us to extend the footprint of the building over existing walkways. We have agreed a new lease with an anchor tenant, and will shortly exchange an agreement for lease, enabling demolition of the existing building and construction of the new property to commence. Elsewhere within the scheme, our Sainsbury foodstore sub-let half its space to B&M Retail. While we do not benefit in rental terms, this sub-letting has contributed to increased footfall throughout the Centre Loughborough Occupancy at this Centre has remained extremely high throughout the year, restricting the number of asset management initiatives we have been able to undertake. Dunfermline This Centre has traded well all year and we have been able to carry out a number of lease extensions to existing retailers as well as new lettings to various retailers. Dragon Retail Properties Dragon's principal asset is a building in Clifton, Bristol. During the year, the building remained fully occupied and was valued at GBP2.6 million (2015: GBP2.6 million). MINING ACTIVITIES BY Bisichi Mining Plc The management of Bisichi report that for the year ended 31 December 2016, the company achieved earnings before interest, tax, depreciation and amortisation (EBITDA) of GBP2.4 million (2015: GBP1.4 million), a significant improvement on the previous year despite the impact on Black Wattle, its direct coal mining subsidiary in South Africa, of both mining challenges and a sluggish coal market for most of the year. For the first half of 2016 Black Wattle continued to supplement production from its own reserves with coal mined at Blue Nightingale under an agreement to purchase Run of Mine coal. Unfortunately, the quality of the Blue Nightingale coal deteriorated as the reserve came to an end and the higher cost per tonne produced, along with supressed coal prices, impacted on overall earnings during the first half of the year. In anticipation of the Blue Nightingale reserve coming to an end, management plans were already in place to increase production from Black Wattle's own reserves. Part of this plan entailed increasing the production from an existing opencast area at Black Wattle as well as the development of a new opencast area to replace the coal purchased from Blue Nightingale. In these new opencast areas Bisichi has had to deal with stone contamination issues which have affected both yield and mining production through the washing
plant and have consequently impacted on their earnings in the second half of
the year. Management are initiating various infrastructure improvements to the
coal washing plant which will be completed by the end of the second quarter of
2017. The new infrastructure will assist in reducing stone contamination
through the plant and will allow Black Wattle to mine at a higher rate of
production at our opencast areas and increase yield.
As a result of the lower production in the second half of the year, overall Run
of Mine production from Black Wattle decreased in 2016, with total production
for the year of 1.26 million metric tonnes (2015: 1.58 million metric tonnes).
Black Wattle continues to perform well under the
Quattro Programme, which allows junior black-economic empowerment coal
producers direct access to the coal export market via Richards Bay Coal
Terminal.
Looking forward into 2017, coal prices have continued to remain stable at
somewhat higher levels compared to the prior year and Bisichi continues to see
strong demand for coal in both the domestic and export markets.
Bisichi's property portfolio is managed by LAP and continues to perform well.
Overall, net Property revenue (excluding joint ventures) was GBP1.06 million
(2015: GBP1.01 million). The increase, compared to the prior year, can mainly be
attributed to the contribution to revenue from a new retail property in
Northampton, which was acquired in October 2015.
The property portfolio was externally valued at 31 December 2016 and the value
of UK investment properties attributable to the group at year end was GBP13.25
million (2015: GBP12.8 million).
Bisichi has decided to hold the dividend at the 2015 level and will recommend a
final dividend of 3p (2015: 3p). LAP's cash share of this is GBP177,000 (2015: GBP
177,000).
Dividend
Your directors are pleased to recommend a dividend of 0.165p, an increase of 3%
over 2015.
Finally, we would like to thank all of our staff and advisors for their hard
work during the course of the year.
Sir Michael Heller, John Heller,
Chairman Chief Executive
27 April 2017
STRATEGIC REPORT
Financial review
The financial statements for 2016 have been prepared to reflect the
requirements of IFRS 10. This means that the accounts of Bisichi Mining PLC (a
London Stock Exchange main market quoted company - BISI) ("Bisichi"), have been
consolidated with those of LAP.
Bisichi continues to operate as a fully independent company and currently LAP
owns only 41.52% of the issued ordinary share capital. However, because related
parties also have shareholdings in Bisichi and there is a wide disposition of
other shareholdings, LAP is deemed under IFRS 10 to have effective control of
Bisichi for accounting purposes. This treatment means that the income and net
assets of Bisichi are disclosed in full and the value attributable to the
"non-controlling interest" (58.48%) is shown separately in the equity section
as a non-controlling interest. There is no impact on the net assets
attributable to LAP shareholders.
Dragon Retail Property Limited ("Dragon"), our 50:50 joint venture with Bisichi
is also consolidated.
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 have
endeavoured to 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.
LOANS
Long term debt of LAP (excluding Bisichi and Dragon which are detailed
separately below), consists of a GBP45 million facility expiring in July 2019 and
two debentures: one of GBP10 million expiring in August 2022 and another of GBP3.75
million with GBP0.75 million and GBP3 million repayable in August 2017 and August
2018, respectively. As in previous years, all loans and debentures are secured
on core property and cash deposits and are covenant compliant.
LAP's five year GBP35 million non-recourse loan from Santander, as senior lender,
is supported by a GBP10 million loan from Europa Capital Mezzanine Limited, as
mezzanine lender. The senior loan facility is fully hedged and at the year end,
50% of the loan was swapped at a rate of 2.25% and the remaining 50% was
covered by an interest cap at 2.25%. This gives a blended current interest rate
of 4.71% for the total GBP45 million debt. In February 2016, an interest cap
swaption was replaced by an interest cap at 2.25%.
Cash flow
The operating cash flow and net cash balances at the year-end were as follows:
CASH FLOW FROM OPERATIONS 2016 2015
GBP'000 GBP'000
LAP 2,623 2,380
Bisichi 2,879 1,931
Dragon 84 64
Group total 5,586 4,375
Note: The figures exclude inter-company transactions.
NET CASH BALANCES 2016 2015
GBP'000 GBP'000
LAP 3,706 3,192
Bisichi (890) (626)
Dragon 115 9
Group total 2,931 2,575
Our investment with Oaktree Capital Management (HRGT Shopping Centres LP),
remains profitable and generates management fees (2016: GBP0.46 million and 2015:
GBP0.46 million) for our wholly owned subsidiary (London & Associated Management
Services Limited). We also received GBP0.1 million (2015: GBP0.2 million) as a
partial repayment of our loan.
During the year, LAP and Bisichi sold their entire investment (of 12.5% each)
in Langney Shopping Centre Unit Trust for GBP2.28 million in cash. Additionally GBP
0.2 million was received for dividends and loan repayment.
Income statement
The segmental analysis in note 1 to the financial statements gives more detail
but the tables below give a clearer summary of the Group results.
RESULTS BEFORE REVALUATIONS AND 2016 2015
NON-CASH MOVEMENTS GBP'000 GBP'000
LAP (1,070) (1,900)
Bisichi (241) (431)
Dragon 9 69
Group total (1,302) (2,262)
Note: The figures exclude inter-company transactions.
Strenuous efforts to cut costs at LAP are reflected in lower overheads and
property expenses, resulting in an improvement of GBP0.8 million in the operating
result before revaluations of the core property business.
Our property portfolio (including Bisichi) of GBP105.1 million increased on
revaluation by GBP0.5 million, a 0.5% increase.
As shown below the stable property revenues, reductions in running costs and
increased property valuations, have resulted in the property business showing a
reduction of GBP0.74 million in the LAP loss before taxation to GBP1.15 million
(2015: GBP1.89 million).
(Loss)/profit before taxation 2016 2015
GBP'000 GBP'000
LAP (1,150) (1,886)
Bisichi 216 (217)
Dragon (40) 10
Group loss before taxation (974) (2,093)
Note: The figures exclude inter-company transactions.
The LAP Group taxation charge of GBP1.17 million (2015: credit GBP0.05 million) is
mainly due to writing off part of the deferred tax asset, because the current
estimate of the amount of foreseeable taxable profit is insufficient to offset
all of the carrying value.
Balance sheet
Taking account of the changes required by IFRS 10 (see table below) LAP has
group net assets of GBP48.6 million (2015: GBP49.7 million). This reduction of GBP1.1
million in net assets arises from the loss after taxation of GBP2.1 million
offset by exchange differences on translation of Bisichi Mining PLC's foreign
operations (GBP1.1 million). (see page 59).
Net assets attributable to equity shareholders at the year-end were 44.83p per
share (2015: 47.26p per share).
2016 Bisichi
LAP Mining Dragon LAP
Original PLC Retail Consolidation Net
Group Group Properties adjustments assets
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment properties 93,791 13,426 2,630 - 109,847
Other fixed assets 112 8,520 21 - 8,653
Investments in Bisichi Mining PLC 6,918 - - (6,918) -
Investments and loans in joint ventures 866 2,671 - (1,732) 1,805
Other non current assets 3,008 32 - - 3,040
Current assets 5,559 12,224 2,447 (4,347) 15,883
Current liabilities (9,014) (10,326) (2,078) 4,347 (17,071)
Non-current liabilities (62,697) (9,541) (1,288) - (73,526)
Net assets 38,543 17,006 1,732 (8,650) 48,631
2015
Investment properties 93,510 12,994 2,668 - 109,172
Other fixed assets 148 5,374 30 - 5,552
Investments in Bisichi Mining PLC 6,357 - - (6,357) -
Investments and loans in joint ventures 2,041 3,266 - (1,747) 3,560
and assets held for sale
Other non current assets 4,385 14 - - 4,399
Current assets 5,534 9,467 2,548 (4,531) 13,018
Current liabilities (8,605) (6,501) (2,199) 4,531 (12,774)
Non-current liabilities (62,992) (8,983) (1,300) - (73,275)
Net assets 40,378 15,631 1,747 (8,104) 49,652
Bisichi mining plc
Although the results of Bisichi Mining PLC have been consolidated in these
financial statements, the Board of LAP has no direct influence over the
management of Bisichi. The comments below are based on the published accounts
of Bisichi.
The Bisichi group results are stated in full in its published 2016 financial
statements which are available on its website: www.bisichi.co.uk.
The Bisichi group increased its EBITDA to GBP2.4 million (2015: GBP1.4 million),
mainly due to revaluation movements on UK investment property of GBP0.6 million
(2015: GBP0.2 million) and exchange rate gains of GBP0.4 million (2015: loss GBP0.5
million). Profit for the year after tax was GBP0.3 million (2015: loss GBP0.1
million). Bisichi has two core revenue streams - investment in retail property
in the UK and coal mining in South Africa.
The volatility in South African Rand against UK Sterling, continued to impact
on the earnings during the year. The results of the year were positively
impacted by an exchange rate gain of GBP0.4 million against an exchange rate loss
of GBP0.5 million during the prior year. These exchange movements are mainly due
to retranslation of Rand denominated inter-company trade receivable balances
with the group's South African mining operations that are held within the UK.
Before taking into account of the impact of the above exchange movements, The
Bisichi group's operating activities achieved an adjusted EBITDA (Operating
profit before depreciation, fair value adjustments and exchange movements) of GBP
1.5 million (2015: GBP1.7 million). This decrease is mainly due to lower Run of
Mine production at Black Wattle offsetting the impact of the higher coal prices
in the last quarter.
The UK retail property portfolio was valued at the year end at GBP13.25 million
(2015: GBP12.8 million). The increase is mainly due to higher valuation of a
retail property in Northampton. The property portfolio is actively managed by
LAP and generates rental income of GBP1.0 million (2015: GBP1.0 million).
In South Africa, a subsidiary of Bisichi signed an increase in the structured
trade finance facility from R60 million to R80 million (South African Rand) in
October 2013 with Absa Bank Limited. This facility is renewable annually at
30 June and is secured against inventory, debtors and cash that are held in the
Bisichi group's South African operations.
In the UK, the Bisichi group signed a GBP6 million five-year term loan with
Santander in December 2014. GBP123,300 of this loan was repaid in the year. This
loan is secured against UK investment property.
Overall the Bisichi group achieved a net increase in cash and cash equivalents
of GBP0.4 million (2015: decrease of GBP1.7 million). This increase was mainly
attributable to a one off cash receipt from the sale of its interest in Langney
Shopping Centre Unit Trust for GBP1.14 million. After taking into account an
exchange loss of GBP0.7 million on the translation of the Bisichi group's year
end net cash borrowings that were held in South African Rand, the group's net
balance owing of cash and cash equivalents (including bank overdrafts) at year
end was GBP0.9 million (2015: GBP0.6 million). The Bisichi group's cash and cash
equivalents (excluding bank overdrafts) at the year-end were GBP2.4 million
(2015: GBP1.6 million).
The Bisichi group's financial position remains strong. Its net assets at 31
December 2016 were GBP17 million (2015: GBP15.6 million).The group expect to
continue to achieve significant value from its existing mining operation. In
addition, Bisichi seeks to expand its operations in South Africa through the
acquisition of additional coal reserves.
DRAGON RETAIL PROPERTIES LIMITED
Dragon is a UK property investment company. The company has a Santander bank
loan of GBP1.25 million secured against its investment property and is covenant
compliant. It paid management fees of GBP72,000 (2015: GBP84,000) split equally to
the two joint venture partners. Its results continue to be near breakeven after
taxation. Dragon has net assets of
GBP1.7 million (2015: GBP1.7 million).
Accounting judgements and going concern
The most significant judgements made in preparing these accounts relate to the
carrying value of the properties, investments and interest rate hedges. The
hedges have been valued by the hedge provider. The Group uses external property
valuers to determine the fair value of its properties.
Under IFRS10 the Group has included Bisichi Mining PLC in the consolidated
accounts, as it is deemed to be under the effective control of LAP and has
therefore been treated as a subsidiary.
The Directors exercise their commercial judgement when reviewing the Group's
cash flow forecasts and the underlying assumptions on which the forecasts are
based. The Group's business activities, together with the factors likely to
affect its future development, are set out in the Chairman and Chief
Executive's Statement and in this review. In addition, the Directors consider
that note 23 to the financial statements sets out the Group's objectives,
policies and processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities; and
its exposure to credit risk, liquidity risk and other risks.
With a quality property portfolio comprising a majority of tenants with long
leases supported by suitable financial arrangements, the Directors believe the
company is well placed to manage its business risks successfully, despite the
continuing uncertain economic climate. The Directors therefore have a
reasonable expectation that the company has adequate resources to continue in
operational existence for the foreseeable future. Thus, they continue to adopt
the going concern basis of accounting in preparing the annual financial
statements.
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 GBP10.18 million of which only GBP4.73 million
has been recognised in the 2016 financial statements. As LAP returns to profit,
these tax losses and deductions should be utilised.
Dividends and future prospects
The directors are proposing a final dividend of 0.165p
per ordinary share payable in September 2017. This is an increase of 3%
compared to the 2015 dividend of 0.16p per ordinary share.
The Group remains confident about its trading and future outlook and is looking
to further reduce its overhead costs and interest payable; while it stabilises
its property income together with seeking out growth opportunities.
Principal activities, strategy & business model
The Group's principal business model is the investment in and management of
town centre retail property through direct investment and joint ventures, where
we manage the property ourselves and on behalf of our partners.
The principal activity of Bisichi Mining PLC is coal mining in South Africa.
Further information is available in its 2016 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
shopping experience we can increase footfall
through the centres, hence increase tenant
demand for space and enhance income.
CREATING QUALITY PROPERTY We look to improve the consumer experience at
all our centres by achieving an appropriate
tenant mix and a vibrant trading environment
through investment activity, enhancement,
refurbishment and development.
CAPITAL STRENGTH We operate within a prudent and flexible
financial structure. Our gearing, which has
been substantially reduced, provides
financial stability whilst giving capacity
and flexibility to look for further
investments.
MAINTAIN THE VALUE OF By encouraging the Bisichi management to
INVESTMENT IN BISICHI maximise sustainable profits and cash
distributions.
Risks and uncertainties
DESCRIPTION DESCRIPTION MITIGATION
OF RISK OF IMPACT
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 in house teams with strong
tenant and market knowledge who manage
appropriate tenant mix.
ASSET LIQUIDITY Assets may be illiquid and Regular reporting of current and
(SIZE AND affect flexing of balance projected position to the Board with
GEOGRAPHICAL sheet. efficient treasury management.
LOCATION)
PEOPLE:
RETENTION AND Unable to retain and Nomination Committee and senior staff
RECRUITMENT OF STAFF attract the best people for review skills gaps and succession
the key roles. planning. Training and development
offered.
REPUTATION:
BUSINESS Loss in revenue. Documented Recovery Plan in place.
INTERRUPTION Impact on footfall. General and terrorism insurance
Adverse publicity. policies in place and risks
Potential for criminal/ monitored by trained security staff.
civil proceedings. Health and Safety policies in place.
CCTV in centres.
FINANCING:
FLUCTUATION IN Impact on covenants and Secure income flows.
PROPERTY VALUES other loan agreement Regular monitoring of LTV and IC
obligations. covenants and other obligations.
Focus on quality assets.
REDUCED AVAILABILITY Insufficient funds to meet Efficient treasury management.
OF existing debts/interest Loan facilities extended where
BORROWING FACILITIES payments and operational possible.
payments. Regular reporting of current and
projected position to the Board.
LOSS OF CASH AND Financial loss. Only use a spread of banks and
DEPOSITS financial institutions which have a
strong credit rating.
FLUCTUATION OF Uncertainty of interest Manage derivative contracts to achieve
INTEREST RATES rate costs. a balance between hedging interest
rate exposure and minimising potential
cash calls.
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 Affects sales value and Forward sales contracts
MATERIALLY BY MARKET AND CURRENCY therefore margins. are used to manage value
VARIATIONS expectations.
MINING OPERATIONS ARE INHERENTLY Loss of production causing Use of geology experts,
RISKY. MINERAL RESERVES, loss of revenue. careful attention to
REGULATIONS, LICENSING, POWER regulations, health and
AVAILABILITY, HEALTH AND SAFETY safety training, employee
CAN ALL DAMAGE OPERATIONS dialogue to minimise
controllable risks.
CURRENCY RISK Affects realised sales Regular monitoring and
value and therefore review of forward currency
margins. situation.
CASHFLOW VARIATION BECAUSE OF Variations can deliver UK property investments
MINING RISKS, COMMODITY PRICE OR significant shifts in cash used to offset high risk
CURRENCY VARIATIONS flow. mining operations.
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 Like-for-like rental income as The like-for-like rental
income from the property year a percentage of the prior year income has increased
on year. rental. by GBP0.18m.
MAXIMISING INCOME - OCCUPANCY
We aim to maximise the total The ERV of the empty units as Void levels have
income in our properties by a percentage of our total stabilised.
achieving full occupancy. income.
CAPITAL STRENGTH - GROWTH IN NET ASSET VALUE PER SHARE
The net assets per share is Movement in the net assets The net assets per share
the principal measure used by per share. fell by 2.43 pence per share
the or 5.1%.
group for monitoring its The small reduction in NAV
performance and is an was to be expected as the
indicator of the level of assets and liabilities are
reserves available for re-organised and positioned
distribution by way of for growth.
dividend.
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 in 2016:
* Black Wattle Colliery recorded one Lost Time Injury during 2016 (2015: Two).
* No cases of Occupational Diseases were recorded.
* Zero claims for the Compensation for Occupational Diseases were submitted.
They continue to adhere and make progress in terms of their Social and Labour
Plan and their various BEE initiatives. A fuller explanation of these can be
found in Bisichi's 2016 Financial Statements which are available on their web
site: www.bisichi.co.uk
Greenhouse gas reporting
We have reported on all of the emission sources required under the Companies
Act 2006 (Strategic Report and Directors' Reports) Regulations 2013 for the
reporting period 1st January 2016 to 31st December 2016. The emissions are
detailed in tables 1, 2, 3 and 4 below.
We have employed the Financial Control definition to outline our carbon
footprint boundary reporting Scope 1 & 2 emissions only. Emissions from both
landlord & tenant controlled areas of LAP owned shopping centres and facilities
that fall within the footprint boundary. LAP has landlord controlled areas in
Kings Square, Orchard Square, Brewery Street, Shipley and Bridgend. Excluded
from our footprint boundary are: properties that we manage on behalf of others
or are not wholly owned by LAP and emissions considered non material by the
business.
Emissions for landlord controlled areas have been calculated based on actual
consumption information collected from each shopping centre. Emissions from
tenant controlled areas have been calculated based on floor area and energy
consumption benchmarks for general retail services in the UK.
The Bisichi Group has employed the Operational Control boundary definition to
outline the carbon footprint boundary. Included within that boundary are Scope
1 & 2 emissions from coal extraction and onsite mining processes for Black
Wattle Colliery. Excluded from the footprint boundary are emission sources
considered non material by Bisichi Group, including refrigerant use onsite.
We have used the GHG Protocol Corporate Accounting and Reporting Standard
(revised edition) and guidance provided by UK's Department of Environment and
Rural Affairs (DEFRA) on voluntary and mandatory carbon reporting. Emission
factors were used from UK Government's GHG Conversion Factors for Company
Reporting 2016.
As well as reporting Scope 1 and Scope 2 emissions, legislation requires that
at least one intensity ratio is reported for the given reporting period. The
intensity figure represented below shows the emissions in tCO2e per thousand
pounds revenue.
Table1. landlord & tenant controlled areas
Emissions Source 2016 2015
Scope 1 emissions Natural gas (tCO2e) 234 245
Refrigerants (tCO2e) 5 -
Scope 2 emissions Electricity (tCO2e) 3,491 3,948
Total tCO2e 3,730 4,193
Intensity ratio (tCO2e/GBPthousand) 0.076 0.089
Table 2. LAP controlled areas
Emissions Source 2016 2015
Scope 1 emissions Natural gas (tCO2e) 234 245
Refrigerants (tCO2e) 5 -
Scope 2 emissions Electricity (tCO2e) 236 297
Total tCO2e 475 542
Table 3. Tenant controlled areas
Emissions Source 2016 2015
Scope 1 emissions Natural gas (tCO2e) - -
Refrigerants (tCO2e) - -
Scope 2 emissions Electricity (tCO2e) 3,255 3,651
Total tCO2e 3,255 3,651
1. 2015 and 2016 Guidelines to DEFRA/DECC's GHG Conversion Factors for Company
Reporting, Department for environment,
Food and Rural Affairs (DEFRA) and Department for Energy and Climate Change
(DECC)
2. 2015 electricity and natural gas consumption figures have been restated due
to an increase of data accuracy.
Table 4. Coal mining carbon footprint
2016 2015
CO2e CO2e
Tonnes Tonnes
Emissions source:
Scope 1 Combustion of fuel & operation of facilities 11,860 10,571
Scope 1 Emissions from coal mining activities 22,171 27,789
Scope 2 Electricity, heat, steam and cooling purchased 8,530 7,571
for own use
Total 42,561 45,931
Intensity:
Intensity 1 Tonnes of CO2 per pound sterling of revenue 0.0019 0.00179
Intensity 2 Tonnes of CO2 per pound of coal produced 0.034 0.0291
Environment
United Kingdom
The Group's principal UK activity is property investment, which involves
renting premises to retail businesses. We seek to provide those tenants with
good quality premises from which they can operate in an efficient and
environmentally friendly manner. Where possible, improvements, repairs and
replacements are made in an environmentally efficient manner and waste
re-cycling arrangements are in place at all of the Company's locations.
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.
Director, employees and gender representation
At the year end the company had 6 directors
(6 male, 0 female), 2 senior managers (2 male,
0 female) and 26 employees (13 male, 13 female).
Bisichi Mining PLC
Bisichi Mining PLC's group at the year end had
6 directors (6 male, 0 female), 7 senior managers (6 male, 1 female) and 187
employees (143 male, 44 female).
Detailed information relating to Bisichi Strategic Report is available in its
2016 financial statements.
Approved on behalf of the board of directors
Anil Thapar,
Finance Director
27 April 2017
GOVERNANCE
Directors & advisors
EXECUTIVE DIRECTORS
Sir Michael Heller MA FCA*
(Chairman)
John A Heller LLB MBA
(Chief Executive)
Anil K Thapar FCCA
(Finance Director)
NON-EXECUTIVE DIRECTORS
Howard D Goldring BSC (ECON) ACA?
Howard Goldring is Executive Chairman of Delmore Asset Management Limited which
specialises in the discretionary management of investment portfolios for
pension funds, charities, family trusts and private clients. He also acts as an
advisor providing high level asset allocation advice to family offices and
pension schemes, including Tesco Pension Investment Ltd. He has been a member
of the LAP Board since July 1992, and has over 30 years' experience of the real
estate market. From 1997-2003 he was consultant director on global asset
allocation to Liverpool Victoria Asset Management Limited and was a director of
Living Bridge VCT 2 from 2010-2016. Howard is a regular guest host for
CNBC 'Squawk Box'.
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 Chairman of BG Training Limited and a
director of Jupiter US Smaller Companies plc. 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
Remuneration Committees.
Robin Priest MA
Robin Priest joined the board on 31 July 2013. He is chairman of private real
estate company Property Alliance Group and a senior advisor to Alvarez & Marsal
LLP ("A&M") and to a German real estate investment fund manager. He has more
than 35 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
# Senior independent director
? Member of the audit, remuneration and nomination committees
SECRETARY & REGISTERED OFFICE
Anil K Thapar FCCA
24 Bruton Place
London W1J 6NE
AUDITOR
RSM UK Audit LLP
PRINCIPAL BANKERS
Santander UK plc
Abbey National Treasury Services plc
Europa Capital Mezzanine Ltd
SOLICITORS
Olswang LLP
Pinsent Masons LLP
STOCKBROKER
Stockdale Securities Limited
REGISTRARS & TRANSFER OFFICE
Capita Asset Services
Shareholder Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
UK telephone: 0871 664 0300
International telephone: +44 (0) 20 8639 3399
(Calls cost 12p per minute plus your phone company's access charge.
Calls outside the United Kingdom will be charged at the applicable
international rate).
Lines are open between 9.00am to 5.30pm, Monday to Friday, excluding public
holidays in England and Wales.
Website: www.capitaregistrars.com
Email: shareholderenquiries@capita.co.uk
Company registration number
341829 (England and Wales)
WEBSITE
www.lap.co.uk
E-MAIL
admin@lap.co.uk
Directors' report
The Directors submit their report and the audited financial statements for the
year ended 31 December 2016.
Strategic report
A comprehensive review and assessment of the Group's activities during the year
as well as its position at the year end and prospects for the forthcoming year
are included in the Chairman and Chief Executive's Statement and the Strategic
Report. These reports can be found on pages 5 to 31 and should be read in
conjunction with this report.
Activities
The principal activities of the Group during the year were property investment
and development, as well as investment in joint ventures and an associated
company. The associated company is Bisichi Mining PLC (Bisichi) in which the
Company holds a 42 per cent interest. Bisichi is listed on the main market of
the London Stock Exchange and operates in England and South Africa with
subsidiaries which are involved in overseas mining and mining investment. The
results, together with the assets and liabilities, of Bisichi are consolidated
with those of LAP in accordance with the terms of IFRS 10 even though the Group
only has a minority interest - under IFRS 10 the 58% majority interest is
disclosed as a "non-controlling interest".
Business review
Review of the Group's development and performance
A review of the Group's development and performance can be found below and
should be read in conjunction with the Strategic Report on pages 14 to 31.
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 retail properties,
actively manages those assets to improve rental income, and thus seeks to
enhance the value of its properties over time. In reviewing performance,
the principal areas regularly monitored by the Group include:
* Rental income - the aim of the Group is to maximise the maintainable income
from each property by careful tenant management supported by sympathetic and
revenue enhancing development. 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.
* 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
23 on page 84 for full details of the contracts in place) and also by using
loans with fixed terms and interest rates. These arrangements are designed to
ensure that our interest costs are known in advance and are always covered by
anticipated rental income. Details of key estimates that have been adopted are
contained in the accounting policies note on page 63.
* Property valuations - market sentiment and economic conditions have a direct
effect on property valuations, which can vary significantly (upwards or
downwards) over time. Bearing in mind the long term nature of the Group's
business, valuation changes have little direct effect on the ongoing activities
or the income and expenditure of the Group. Tenants generally have long term
leases, so rents are unaffected by short term valuation changes. Borrowings are
secured against property values and if those values fall very significantly,
this could limit the ability of the Group to develop the business using
external borrowings. The risk is minimised by trying to ensure that there is
adequate cover to allow for fluctuations in value on a short term basis.
It continues to be the policy of the Group to realise property assets when the
valuation of those assets reaches a level at which the directors consider that
the long-term rental yield has been reached. The Group also seeks to acquire
additional property investments on an opportunistic basis when the potential
rental yields offer scope for future growth.
Investment activities
The investments in joint ventures and Bisichi are for the long term.
LAP manages the UK property assets of Bisichi. However, the principal activity
of Bisichi is overseas mining investment (principally in South Africa). While
IFRS 10 requires the consolidation of Bisichi, the investment is held to
generate income and capital growth over the longer term. It is managed
independently of LAP and should be viewed by shareholders as an investment 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 policy
The directors are recommending payment of a final dividend for 2016 of 0.165p
per share (2015 0.16p per share).
Subject to shareholder approval, the ordinary final dividend will be payable on
Friday 15 September 2017 to shareholders registered at the close of business on
Friday 18 August 2017.
The company's ordinary shares held in treasury
At 31 December 2016, 221,061 (2015: 734,816) ordinary shares were held in
Treasury with a market value of GBP46,422 (2015: GBP181,867). At the Annual General
Meeting (AGM) in June 2016 members renewed the authority for the Company to
purchase up to 10 per cent of its issued ordinary shares. The Company will be
asking members to renew this authority at the next AGM to be held on Tuesday
6 June 2017.
Movements in Treasury shares during the year: Number of
shares
Treasury shares held at 1 January 2016 734,816
Issued for directors' bonuses (69,225 shares at 24.50p) (69,225)
Issued for staff bonuses (154,073 shares at 24.50p) (154,073)
Issued for Share Incentive Plan (Directors 24,488 shares at 24.50p) (24,488)
Issued for Share Incentive Plan (Staff 36,732 shares at 24.50p) (36,732)
Issued for Share Incentive Plan (1,936 shares at 25p) (1,936)
Issued for directors' bonuses (224,470 shares at 21.25p) (224,470)
Issued for Share Incentive Plan (2,831 shares at 21.25p) (2,831)
Treasury shares held at 31 December 2016 221,061
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 and
Bisichi were revalued as at 31 December 2016 by independent professional firms
of chartered surveyors - Allsop LLP, London (85.66 per cent of the portfolio),
Carter Towler, Leeds (12.60 per cent) - and by the Directors (1.74 per cent).
The valuations, which are reflected in the financial statements, amount to GBP
105.08 million (2015: GBP104.39 million).
Taking account of prevailing market conditions, the valuation of the properties
at 31 December 2016 resulted in an increase of GBP0.53 million (2015: decrease of
GBP0.18 million). The proportion of this revaluation attributable to the Group
(net of taxation) is reflected in the consolidated income statement and the
consolidated balance sheet.
Financial instruments
Note 23 to the financial statements sets out the risks in respect of financial
instruments. The board reviews and agrees overall treasury policies, delegating
appropriate authority for applying these policies to the Chief Executive and
Finance Director. Financial instruments are used to manage the financial risks
facing the Group and speculative transactions are prohibited. Treasury
operations are reported at each board meeting and are subject to weekly
internal reporting. Hedging arrangements are in place for the Company, its
subsidiaries and joint ventures in order to limit the effect of higher interest
rates upon the Group. Where appropriate, hedging arrangements are covered in
the Chairman and Chief Executive's Statement and the Financial Review.
Directors
Sir Michael Heller, J A Heller, A K Thapar, H D Goldring, C A Parritt andR Priest were Directors of the company for the whole of 2016.
R Priest is retiring by rotation at the Annual General Meeting in 2017 and
offers himself for re-election.
Robin Priest is chairman of private real estate company Property Alliance Group
and a senior advisor to Alvarez & Marsal LLP ("A&M") and to a German real
estate investment fund manager. He has more than 35 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.
Robin Priest has a contract of service with the Company determinable upon three
months notice. The board has considered the appointment of Robin Priest and
recommends his re-election as Director. His knowledge of structured finance and
experience of dealing with challenging and complex assets and portfolios is of
significant benefit to the business.
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 44 of the
Annual Remuneration Report.
Substantial shareholdings
At 31 December 2016, Sir Michael Heller and his family had an interest in 48.08
million shares of the Company, representing 56.35 per cent of the issued share
capital net of treasury shares (2015: 47.8 million shares representing 56.4 per
cent). Cavendish Asset Management Limited had an interest in 8,173,875 shares
representing 9.58 per cent of the issued share capital of the Company (2015:
8,280,434 shares representing 9.76 per cent). James Hyslop had an interest in
4,456,258 shares representing 5.22 per cent of the issued share capital of the
Company (2015: 3,856,258 shares representing 4.55 per cent).
The Company does not consider that the Heller family have a controlling share
interest irrespective of the number of shares held as no individual party holds
a majority and there is no legal obligation for shareholders to act in concert.
The Directors do not consider that any party has control.
The Company is not aware of any other holdings exceeding 3 per cent of the
issued share capital.
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 re-elected at least
every three years. The Company has requested authority from shareholders to buy
back its own ordinary shares and there will be a resolution to renew the
authority at this year's AGM (Resolution 10).
The Company is not party to any significant agreements that take effect, alter
or terminate upon a change of control of the Company following a takeover bid.
The Company is not aware of any agreements between holders of its ordinary
shares that may result in restrictions on the transfer of its ordinary shares
or on voting rights.
There are no agreements between the Company and its Directors or employees
providing for compensation for loss of office or employment that occurs because
of a takeover bid.
Statement as to disclosure of information to the auditor
The Directors in office at the date of approval of the financial statements
have confirmed that, so far as they are aware, there is no relevant audit
information of which the auditor is unaware. Each of the Directors has
confirmed that they have taken all the steps that they ought to have taken as a
Director in order to make them aware of any relevant audit information and to
establish that it has been communicated to the auditor.
Directors and officers liability insurance
The Group maintains Directors and officers insurance, which is reviewed
annually and is considered to be adequate by the Company and its insurance
advisers.
Donations
No political donations were made during the year (2015: GBPNil). No donations
for charitable purposes were made during the year (2015: GBPNil).
CORPORATE RESPONSIBILITY
Environment
The environmental considerations of the group's South African coal mining
operations are covered in the Bisichi Mining PLC Strategic Report.
The group's UK activities are principally property investment whereby premises
are provided for rent to retail 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
2016 can be found on pages 28 and 29 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 Mining PLC Strategic Report gives details of the group's activities and
policies concerning the employment, training, health and safety and community
support and social development concerning the 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 and Chief Executive's Statement and Financial
Review. In addition, note 23 to the financial statements sets out the Group's
objectives, policies and processes for managing its capital; its financial risk
management objectives; details of its financial instruments and hedging
activities; and its exposure to credit risk and liquidity risk.
With secured long term banking facilities, sound financial resources and long
term leases in place the Directors believe it remains appropriate to adopt the
going concern basis of accounting in preparing the annual financial statements.
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 39 and 40 of the
annual report and accounts.
Annual General Meeting
The Annual General Meeting will be held at 24 Bruton Place, London W1J 6NE
on Tuesday 6 June 2017 at 11.00 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. Items 9 to 11
will be proposed as special resolutions. At least 75 per cent. of shareholders'
votes cast at the meeting must be in favour for those special resolutions to be
passed. The Directors consider that all of the resolutions to be put to the
meeting are in the best interests of the Company and its shareholders as a
whole and accordingly the board unanimously recommends that shareholders vote
in favour of all of the resolutions, as the Directors intend to do in respect
of their own beneficial holdings of ordinary shares. Please note that the
following paragraphs are only summaries of certain of the resolutions to be
proposed at the Annual General Meeting and do not represent the full text of
the resolutions. You should therefore read this section in conjunction with the
full text of the resolutions contained in the notice of Annual General Meeting
which accompanies this Directors' Report.
Ordinary resolutions
Resolution 3 - Remuneration Policy
Resolution 3 is to approve the remuneration policy of the Company for the three
year period from the date of this Annual General Meeting in compliance with
section 439A of the Companies Act 2006. The vote on the remuneration policy is
binding and the company may not 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. If Resolution 3 is passed,
the remuneration policy will take effect from the conclusion of the Annual
General Meeting. The remuneration policy will be put to shareholders again no
later than the Company's Annual General Meeting in 2020.
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 GBP2,836,478. This
represents approximately 1/3 (one third) of the ordinary share capital of the
Company in issue (excluding treasury shares) as at 21 April 2017 (being the
last practicable date prior to the publication of this Directors' Report).
In line with guidance issued by the Investment Association ('IA'), paragraph
8.1.2 of Resolution 8 would give the directors the authority to allot shares in
the Company and grant rights to subscribe for or convert any security into
shares in the Company up to a further aggregate nominal value of GBP2,836,478, in
connection with an offer by way of a rights issue. This amount represents
approximately 1/3 (one third) of the ordinary share capital of the Company in
issue (excluding treasury shares) as at 21 April 2017 (being the last
practicable date prior to the publication of this Directors' Report).
The Directors' authority will expire on the earlier of 31 August 2018 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 IA regarding its use (including as regards the
Directors standing for re-election in certain cases).
Special resolutions
The following special resolutions will be proposed at the Annual General
Meeting:
Resolution 9 - Disapplication of pre-emption rights
Under English company law, when new shares are allotted or treasury shares are
sold for cash (otherwise than pursuant to an employee share scheme) they must
first be offered at the same price to existing shareholders in proportion to
their existing shareholdings. This special resolution gives the Directors
authority, for the period ending on the date of the next annual general meeting
to be held in 2017, to: (a) allot shares of the Company and sell treasury
shares for cash in connection with a rights issue or other pre-emptive offer;
and (b) otherwise allot shares of the Company, or sell treasury shares, for
cash up to an aggregate nominal value of GBP425,472 representing, in accordance
with institutional investor guidelines, approximately 5 per cent. of the total
ordinary share capital in issue as at 21 April 2017 (being the last practicable
date prior to the publication of this Directors' Report) in each case as if the
pre-emption rights in English company law did not apply.
Save in respect of issues of shares in respect of employee share schemes and
share dividend alternatives, the Directors do not currently intend to make use
of these authorities. The board intends to adhere to the provisions in the
Pre-emption Group's Statement of Principles not to allot shares for cash on a
non-pre-emptive basis in excess of an amount equal to 7.5 per cent. of the
Company's ordinary share capital within a rolling three-year period without
prior consultation with shareholders. The Directors' authority will expire on
the earlier of 31 August 2018 or the date of next AGM.
Resolution 10 - Purchase of own ordinary shares
The effect of Resolution 10 would be to renew the Directors' current authority
to make limited market purchases of the Company's ordinary shares of 10 pence
each. The power is limited to a maximum aggregate number of 8,509,435 ordinary
shares (representing approximately 10 per cent. of the Company's issued share
capital as at 21 April 2017 (being the latest practicable date prior to
publication of this Directors' Report)). The minimum price (exclusive of
expenses) which the Company would be authorised to pay for each ordinary share
would be 10 pence (the nominal value of each ordinary share). The maximum price
(again exclusive of expenses) which the Company would be authorised to pay for
an ordinary share is an amount equal to 105 per cent. of the average market
price for an ordinary share for the five business days preceding any such
purchase. The authority conferred by Resolution 10 will expire at the
conclusion of the Company's next annual general meeting to be held in 2018 or
15 months from the passing of the resolution, whichever is the earlier. Any
purchases of ordinary shares would be made by means of market purchases through
the London Stock Exchange.
If granted, the authority would only be exercised if, in the opinion of the
Directors, to do so would result in an increase in earnings per share or asset
values per share and would be in the best interests of shareholders generally.
In exercising the authority to purchase ordinary shares, the Directors may
treat the shares that have been bought back as either cancelled or held as
treasury shares (shares held by the Company itself). No dividends may be paid
on shares which are held as treasury shares and no voting rights are attached
to them.
Resolution 11 - Notice of General Meetings
Resolution 11 shall be proposed to allow the Company to call general meetings
(other than an Annual General Meeting) on 14 clear days' notice. A resolution
in the same terms was passed at the Annual General Meeting in 2016. The notice
period required by the Companies Act 2006 for general meetings of the Company
is 21 days, unless shareholders approve a shorter notice period, which cannot
however be less than 14 clear days. Annual General Meetings must always be held
on at least 21 clear days' notice. It is intended that the flexibility offered
by this resolution will only be used for time-sensitive, non-routine business
and where merited in the interests of shareholders as a whole. The approval
will be effective until the Company's next Annual General Meeting, when it is
intended that a similar resolution will be proposed.
Other matters
RSM UK Audit LLP has expressed its willingness to continue in office as
auditor. A proposal will be made at the Annual General Meeting for its
reappointment.
By order of the board
Anil Thapar
Secretary
27 April 2017
24 Bruton Place
London
W1J 6NE
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 34. 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 52. 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 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 42 to 45.
* 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 51. The Chief Executive and Finance Director are normally invited to
attend.
Board and board committee meetings held in 2016
The number of regular meetings during the year and attendance was as follows:
Meetings Meetings
held attended
Sir Michael Heller Board 10 10
Nomination committee 1 1
Remuneration committee 1 1
J A Heller Board 10 10
Audit committee 2 2
A K Thapar Board 10 10
Audit committee 2 2
C A Parritt Board 10 10
Audit committee 2 1
Nomination committee 1 1
Remuneration committee 1 1
H D Goldring Board 10 10
Audit committee 2 2
Nomination committee 1 1
Remuneration committee 1 1
R Priest Board 10 9
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 non-executive independent Director. Their recommendations are
discussed at the nomination committee prior to proposals for re-election being
recommended to the board. The performance of executive Directors is discussed
and assessed by the remuneration committee. The senior independent Director
meets regularly with the Chairman, executive and non-executive Directors
individually outside of formal meetings. The Directors will take outside advice
in reviewing performance but have not found this to be necessary to date.
Independent directors
The senior independent non-executive Director is C A Parritt. The other
independent non-executive Directors are H D Goldring and R Priest. Delmore
Asset Management Limited (Delmore) is a Company in which H D Goldring is the
majority shareholder and the Executive Chairman. Delmore provides consultancy
services to the Company on a fee paying basis. Alvarez and Marsal Real Estate
Advisory Services (A&M) is a Company in which R Priest is a senior advisor. A&M
provides consultancy and advisory services to the Company on a fee paying
basis. C A Parritt also provides some advisory services as part of his
accounting practice.
The board encourages all three non-executive Directors to act independently and
does not consider that length of service of any individual non-executive
Director, nor any connection with the above mentioned consultancy and advisory
companies has resulted in the inability or failure to act independently. In the
opinion of the board the three non-executive Directors continue to fulfil their
roles as independent non-executive Directors.
The independent Directors exchange views regularly between board meetings and
meet when required to discuss corporate governance and other issues concerning
the Group.
Internal control
The Directors are responsible for the Group's system of internal control and
for reviewing its effectiveness at least annually, and for the preparation and
review of its financial statements. The board has designed the Group's system
of internal control in order to provide the Directors with reasonable assurance
that assets are safeguarded, that transactions are authorised and properly
recorded and that material errors and irregularities are either prevented or
would be detected within a timely period. However, no system of internal
control can eliminate the risk of failure to achieve business objectives or
provide absolute assurance against material misstatement or loss. The key
elements of the control system in operation are:
* The board meets regularly on full notice with a formal schedule of matters
reserved for its decision and has put in place an organisational structure with
clearly defined lines of responsibility and with appropriate delegation of
authority;
* There are established procedures for planning, approval and monitoring of
capital expenditure and information systems for monitoring the Group's
financial performance against approved budgets and forecasts;
* The departmental heads are required annually to undertake a full assessment
process to identify and quantify the risks that face their departments and
functions, and assess the adequacy of the prevention, monitoring and
modification practices in place for those risks. In addition, regular reports
about significant risks and associated control and monitoring procedures are
made to the executive Directors. The process adopted by the Group accords with
the guidance contained in the document "Internal Control Guidance for Directors
on the Combined Code" issued by the Institute of Chartered Accountants in
England and Wales. The audit committee receives reports from external auditors
and from executive Directors of the Group. During the period the audit
committee has reviewed the effectiveness of the system of internal control as
described above. The board receives periodic reports from all committees.
* There are established procedures for the presentation and
review of the financial statements and the Group has in place an organisational
structure with clearly defined lines of responsibility and with appropriate
delegation of authority.
There are no internal control issues to report in the annual report and
financial statements for the year ended 31 December 2016. Up to the date of
approval of this report and the financial statements, the board has not been
required to deal with any related material internal control issues. The
Directors confirm that the board has reviewed the effectiveness of the system
of internal control as described during the period.
Communication with shareholders
Prompt communication with shareholders is given high priority. Extensive
information about the Group and its activities is provided in the Annual
Report. In addition, a half-year report is produced for each financial year and
published on the Company's website. The Company's website www.lap.co.uk is
updated promptly with announcements and Annual Reports upon publication. Copies
from previous years are also available on the website.
The Company's share price is published daily in the Financial Times.
The share price history and market information can be found at http://
www.londonstockexchange.com/prices-and-markets/markets/prices.htm. The company
code is LAS.
There is a regular dialogue with the Company's stockbrokers and institutional
investors. Enquiries from individuals on matters relating to their
shareholdings and the business of the Group are dealt with promptly and
informatively.
The Company's website is under continuous development to enable better
communication with both existing and potential new shareholders.
The Bribery Act 2010
The Company is committed to acting ethically, fairly and with integrity in all
its endeavours and compliance with the code is monitored closely.
Governance Statement by the Chairman of The Remuneration Committee
The remuneration committee is pleased to present its report for the year ended
31 December 2016. The report is presented in two parts in accordance with the
regulations.
The first part is the Annual Remuneration Report which details remuneration
awarded to Directors and non-executive Directors during the year. The
shareholders will be asked to approve the Annual Remuneration Report as an
ordinary resolution (as in previous years) at the AGM in June 2017.
The current 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 June
2014. The approval will continue to apply for a 3 year period up to the AGM on
6 June 2017.
The second part details the Remuneration Policy for Directors. This policy is
subject to a binding vote which will be proposed to shareholders at the AGM in
2017 and if approved will apply for a 3 year period commencing from the
conclusion of the AGM.
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, RSM UK Audit LLP is required by law to audit certain
disclosures and where disclosures have been audited that is indicated.
C A Parritt
Chairman, Remuneration Committee
27 April 2017
Annual remuneration report
The following information has been audited
Single total figure of remuneration for the year ended 31 December 2016
Salary BONUSES BENEFITS PENSIONS TOTAL SHARE TOTAL
and GBP'000 GBP'000 GBP'000 BEFORE OPTIONS 2016
fees SHARE GBP'000 GBP'000
GBP'000 OPTIONS
GBP'000
Executive Directors
Sir Michael Heller* 7 - 43 - 50 n/a 50
Sir Michael Heller - 75 - - - 75 n/a 75
Bisichi
J A Heller 333 166 40 30 569 n/a 569
A K Thapar 152 35 11 15 213 n/a 213
567 201 94 45 907 - 907
Non-executive Directors
H D Goldring*+ 32 - 5 - 37 n/a 37
C A Parritt*+ 38 - - - 38 n/a 38
R Priest* 51 - - - 51 n/a 51
121 - 5 - 126 - 126
Total 688 201 99 45 1,033 - 1,033
Single total figure of remuneration for the year ended 31 December 2015
Salary BONUSES BENEFITS PENSIONS TOTAL SHARE TOTAL
and GBP'000 GBP'000 GBP'000 BEFORE OPTIONS 2015
fees SHARE GBP'000 GBP'000
GBP'000 OPTIONS
GBP'000
Executive Directors
Sir Michael Heller* 7 - 42 - 49 n/a 49
Sir Michael Heller - 75 - - - 75 n/a 75
Bisichi
J A Heller 333 366 30 33 762 n/a 762
A K Thapar 130 55 8 40 233 n/a 233
545 421 80 73 1,119 - 1,119
Non-executive Directors
H D Goldring*+ 47 - 5 - 52 n/a 52
C A Parritt*+ 38 - - - 38 n/a 38
R Priest* 63 - - - 63 n/a 63
148 - 5 - 153 - 153
Total 693 421 85 73 1,272 - 1,272
* Note 28 "Related party transactions"
+ Members of the remuneration committee for years ended 31 December 2015 and 31
December 2016
Benefits include the provision of car, health and other insurance and
subscriptions
Sir Michael Heller is a director of Bisichi Mining PLC, (a subsidiary for IFRS
10 purposes) and received a salary from that company of GBP75,000 (2015: GBP75,000)
for services.
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 GBP300,000 (2015: GBP300,000). Further details of these services are set out
in Note 28 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 GBP11,336 (2015: GBP
7,250) for services. This is included in the remuneration figures disclosed
above.
The remuneration figures disclosed for H D Goldring include fees paid to his
company, Delmore Holdings Limited for consultancy services provided to the
Group. This is detailed in Note 28 to the financial statements.
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 28 to the financial statements.
Until 31 July 2016 R Priest was a managing director of Alvarez & Marsal Real
Estate Advisory Services who provide consultancy services to the Group. The
figure of disclosed remuneration for Mr Priest includes the value of these
services up to 31 July 2016. This is detailed in Note 28 to the financial
statements.
Summary of directors' terms
Date of Unexpired Notice
contract term period
Executive Directors
Sir Michael Heller 1 January Continuous 6
1971 months
John Heller 1 May 2003 Continuous 12
months
Anil Thapar 1 January Continuous 6
2015 months
Non-executive Directors
H D Goldring 1 July 1992 Continuous 3
months
C A Parritt 1 January Continuous 3
2006 months
R Priest 31 July 2013 Continuous 3
months
Total pension entitlements
Two directors had benefits under money purchase schemes. Under their contracts
of employment, they were entitled to a regular employer contribution (currently
GBP30,000 and GBP15,000 a year). There are no final salary schemes in operation. No
pension costs are incurred on behalf of non-executive Directors.
Share Incentive Plan (SIP)
In 2006 the Directors set up an HMRC approved share incentive plan (SIP). The
purpose of the plan, which is open to all eligible LAP executive Directors and
head office based staff, is to enable them to acquire shares in the Company and
give them a continuing stake in the Group. The SIP comprises four types of
share - (1) free shares under which the Company may award shares of up to the
value of GBP3,000 each year, (2) partnership shares, under which members may save
up to GBP1,500 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 for 2016 bonuses. 61,220 shares were
awarded in January 2016 relating to 2015 bonuses and these are shown below as
2015.
Free shares awarded:
Number of Number of shares Value of shares
members
2016 2015 2016 2015 2016 2015
GBP GBP
Directors: - 1 - 12,244 - 3,000
J A Heller
A K Thapar - 1 - 12,244 - 3,000
Staff - 3 - 36,732 - 9,000
Total at 31 December - 5 - 61,220 - 15,000
2. Partnership shares: No partnership shares were issued between November 2015
and October 2016.
3. Matching shares: The partnership share agreements for the year to 31 October
2016 provide for two matching shares to be awarded free of charge for each
partnership share acquired. No partnership shares were acquired in 2016 (2015:
nil). Matching shares will usually be forfeited if a member leaves employment
in the Group within 5 years of their grant.
4. Dividend shares: Dividends on shares acquired under the SIP will be utilised
to acquire additional shares. Accumulated dividends received on shares in the
SIP to 31 December 2016 amounted to GBP602 (2015: GBP484).
Dividend shares issued:
Number of Number of shares Value of shares
members
2016 2015 2016 2015 2016 2015
GBP GBP
Directors: 1 1 402 255 85 64
J A Heller
A K Thapar 1 1 495 331 105 83
Staff 6 8 1,934 1,350 412 337
Total at 31 December 8 10 2,831 1,936 602 484
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 2016.
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 2016 there were no options to subscribe for ordinary shares
outstanding. The exercise of options under the Unapproved Scheme is subject to
the satisfaction of objective performance conditions specified by the
remuneration committee which conforms to institutional shareholder guidelines
and best practice provisions. Further details of this scheme are set out in
Note 26 "Share Capital" to the financial statements.
Payments to past directors
No payments were made to past Directors in the year ended 31 December 2016.
Payments for loss of office
No payments for loss of office were made in the year ended 31 December 2016.
Statement of directors' shareholding and share interest
Directors' interests
The interests of the Directors in the ordinary shares of the Company, including
family and trustee holdings, where appropriate, were as follows:
Beneficial interests Non-beneficial
interests
31 Dec 16 1 Jan 16 31 Dec 16 1 Jan 16
Sir Michael Heller 6,053,541 6,353,541 19,277,931 19,277,931
H D Goldring 19,819 19,819 - -
J A Heller 1,867,393 1,630,022 ? ?
14,073,485 14,073,485
C A Parritt 36,168 36,168 - -
R Priest - - - -
A K Thapar 120,495 150,047 - -
?These non-beneficial holdings are duplicated with those of Sir Michael Heller.
The beneficial holdings of Directors shown above include their interests in the
Share Incentive Plan.
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 2016 was 21p (2015: 25p). During the year the share middle
market price ranged between 19p and 28.38p.
Remuneration of the Chief Executive over the last ten years
Year CEO Chief Executive Single total Annual bonus Long-term incentive
figure of remuneration payment vesting rates
GBP'000 against maximum against maximum
opportunity* opportunity*
% %
2016 J A 569 18 % n/a
Heller
2015 J A 762 41 % n/a
Heller
2014 J A 835 49 % n/a
Heller
2013 J A 716 n/a n/a
Heller
2012 J A 417 n/a n/a
Heller
2011 J A 671 n/a n/a
Heller
2010 J A 577 n/a n/a
Heller
2009 J A 982 n/a n/a
Heller
2008 J A 688 n/a n/a
Heller
2007 J A 1,032 n/a n/a
Heller
*There were no formal criteria or conditions to apply in determining the amount
of bonus payable or the number of shares to be issued prior to 2014.
Percentage change in Chief Executive's Remuneration (audited)
The table below shows the percentage change in Chief Executive remuneration for
the prior year compared to the average percentage change for all other Head
Office based employees. To provide a meaningful comparison, the same group of
employees (although not necessarily the same individuals) appears in the 2015
and 2016 group. The remuneration committee chose Head Office based employees as
the comparator group as this group forms the closest comparator group.
Chief Executive Head Office Employees
GBP'000 GBP'000
2016 2015 % 2016 2015 %
change change
Base salary and allowances 333 333 0% 692 691 0%
Taxable benefits 40 30 33% 77 67 15%
Annual bonus 166 366 (55%) 97 126 (23%)
Total 539 729 (26%) 866 884 (2%)
Relative importance of spend on pay
The total expenditure of the Group on remuneration to all employees (Note 29
refers) is shown below:
2016 2015
GBP'000 GBP'000
Employee Remuneration 7,173 7,219
Distributions to shareholders 136 133
Statement of implementation of remuneration policy
The policy was approved at the AGM in June 2014 and was effective from 10 June
2014. The vote on the remuneration policy is binding in nature. The Company may
not then make a remuneration payment or payment for loss of office to a person
who is, is to be, or has been a director of the Company unless that payment is
consistent with the approved remuneration policy, or has otherwise been
approved by a resolution of members. It is to be presented for approval at the
forthcoming AGM.
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 2016. No increases were awarded and no external advice was
taken in reaching this decision.
Shareholder voting
At the Annual General Meeting on 9 June 2016, there was an advisory vote on the
resolution to approve the Remuneration Report, other than the part containing
the remuneration policy.
In addition, on 10 June 2014, there was a binding vote on the resolution to
approve the Remuneration Policy. The results are detailed below:
% of % of Number of
votes votes votes
for against withheld
Resolution to approve the Remuneration Report (9 83.78 1.27 8,541,374
June 2016)
Resolution to approve the Remuneration Policy (10 99.12 0.67 66,918
June 2014)
Remuneration policy summary
The remuneration policy summary below is an extract of the group's current
remuneration policy on directors' remuneration, which was approved by a binding
vote at the 2014 AGM. The approved policy took effect from 10 June 2014.
A copy of the full policy can be found at www.lap.co.uk.
Element Purpose Policy Operation Opportunity and
performance
conditions
EXECUTIVE DIRECTORS
Base To recognise: Considered by Reviewed There is no
salary Skills remuneration annually prescribed maximum
Responsibility committee on whenever there salary or maximum
Accountability appointment is a change of rate of increase
Experience Set at a level role or No specific
Value considered operational performance
appropriate to responsibility conditions are
attract, retain, Paid monthly in attached to base
motivate and cash salaries
reward the right
individuals
Pension To provide Company The contribution Company contribution
competitive contribution payable by the offered at up to 10%
retirement offered at up to Company is of base salary as
benefits 10% of base salary included in the part of overall
as part of overall Director's remuneration package
remuneration contract of No specific
package employment performance
Paid into money conditions are
purchase schemes attached to pension
contributions
Benefits To provide a Contractual The committee The costs associated
competitive benefits include: retains the with benefits
benefits Car or car discretion to offered are closely
package allowance approve changes controlled and
Group health cover in contractual reviewed on an
Death in service benefits in annual basis
cover exceptional No specific
Permanent health circumstances or performance
insurance where factors conditions are
outside the attached to
control of the contractual benefits
Group lead to The value of
increased costs benefits for each
(e.g. medical Director for the
inflation) year ended 31
December 2016 is
shown in the table
on page 42
Annual To reward and In assessing the The remuneration The current maximum
Bonus incentivise performance of the committee bonus will not
executive team, determines the exceed 200% of base
and in particular level of bonus salary in any one
to determine on an annual year but the
whether bonuses basis applying remuneration
are merited the such performance committee reserves
remuneration conditions the power to award
committee takes and performance up to 300% in an
into account the measures as it exceptional year
overall considers Performance
performance of the appropriate conditions will be
business, as well assessed on an
as individual annual basis
contribution to The performance
the business in measures applied may
the period be financial,
Bonuses are non-financial,
generally offered corporate,
in cash or shares divisional or
individual and in
such proportion as
the remuneration
committee considers
appropriate
Share To provide Granted under Offered at Entitlement to share
Options executive existing schemes appropriate options granted
Directors with (see page 44) times by the under the Approved
a remuneration Option scheme are
long-term committee not subject to
interest in performance
the Company criteria. Share
Options granted
under the Unapproved
Scheme are subject
to the performance
criteria specified
in the Scheme rules
Share options will
be offered by the
remuneration
committee as
appropriate
There are no maximum
levels for share
options offered
Share To offer a Offered to Maximum Of any bonus
Incentive shorter term executive participation awarded, Directors
Plan incentive in Directors and head levels are set may opt to have
(SIP) the Company office staff by HMRC maximum of GBP3,000 of
and to give per year paid
Directors a in 'Free Shares'
stake in the under the SIP scheme
Group rules
Full detail of the
SIP can be found on
page 43
NON-EXECUTIVE DIRECTORS
Base To recognise: Considered by the Reviewed There is no
salary Skills board on annually prescribed maximum
Experience appointment salary or maximum
Value Set at a level rate of increase
considered No performance
appropriate to conditions are
attract, retain attached to base
and motivate the salaries
individual
Experience and
time required for
the role are
considered on
appointment
Pension No pension offered
Benefits No benefits The committee The costs associated
offered except to retains the with benefits
one non-executive discretion to offered are closely
Director who is approve changes controlled and
eligible for in contractual reviewed on an
health cover (see benefits in annual basis
annual exceptional No specific
remuneration circumstances or performance
report page 42) where factors conditions are
outside the attached to
control of the contractual benefits
Group lead to
increased costs
(e.g. medical
inflation)
Share Non-executive
Options Directors do not
participate in the
share option
schemes
The remuneration committee consider the performance measures outlined in the
table above to be appropriate measures of performance
and that the KPI's chosen align the interests of the directors and
shareholders.
Remuneration policy
Introduction
Set out below is the LAP Group policy on directors' remuneration (excluding
Bisichi). This will be proposed for a binding vote at the 2017 AGM. If approved
the policy will take effect from 6 June 2017.
In setting the policy, the Remuneration Committee has taken the following into
account:
* The need to attract, retain and motivate individuals of a calibre who will
ensure successful leadership and management of the company
* The LAP Group's general aim of seeking to reward all employees fairly
according to the nature of their role and their performance
Future policy table
Element Purpose Policy Operation Opportunity and
performance
conditions
Executive directors
Base To recognise: Considered by Reviewed annually There is no
salary Skills remuneration whenever there is prescribed maximum
Responsibility committee on a change salary or maximum
Accountability appointment of role or rate of increase
Experience Set at a level operational No individual
Value considered responsibility director will be
appropriate to Paid monthly in awarded a base
attract, retain, cash salary in excess of
motivate and GBP700,000 a year
reward the right No specific
individuals performance
conditions are
attached to base
salaries
Pension To provide Company The contribution Company contribution
competitive contribution payable by the offered at up to 10%
retirement offered at up to Company is of base salary as
benefits 10% of base included in the part of overall
salary as part director's remuneration package
of overall contract of No specific
remuneration employment performance
package Paid into money conditions are
purchase schemes attached to pension
contributions
Benefits To provide a Contractual The committee The costs associated
competitive benefits retains the with benefits
benefits include: discretion to offered are closely
package Car or car approve changes in controlled and
allowance contractual reviewed on an
Group health benefits in annual basis
cover exceptional No director will
Death in service circumstances or receive benefits of
cover where factors a value in excess of
Permanent health outside the 30% of their base
insurance control of the salary
Group lead to No specific
increased costs performance
(e.g. medical conditions are
inflation) attached to
contractual benefits
Annual To reward and In assessing the The remuneration The current maximum
bonus incentivise performance of committee bonus will not
the executive determines the exceed 200% of base
team, and in level of bonus on salary in any one
particular to an annual basis. year but the
determine In assessing remuneration
whether bonuses performance committee reserves
are merited the consideration is the power to award
remuneration given to the level up to 300% in an
committee takes of net rental exceptional year
into account the income, cash flow, Performance
overall voids, realised conditions will be
performance of development gains assessed on an
the business, as and income from annual basis
well as managing joint The performance
individual ventures. Achieved measures applied may
contribution to results are then be financial,
the business in compared with non-financial,
the period expectation taking corporate,
account of market divisional or
conditions individual and in
Bonuses are such proportion as
generally offered the remuneration
in cash or shares committee considers
appropriate
Share To provide Share options Offered at Entitlements to
options executive may be granted appropriate times share options
directors with under existing by the granted under the
a long-term schemes (see remuneration Approved Option
interest in page 44) committee scheme are not
the company Where it is subject to
necessary to performance
attract, retain, criteria. Share
motivate and Options granted
reward the right under the Unapproved
individuals, the Scheme are subject
directors may to the performance
establish new criteria specified
schemes to in the Scheme rules.
replace any The aggregate number
expired schemes 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 as
appropriate
Share To offer a Offered to Maximum Of any bonus
incentive shorter term executive participation awarded, Directors
plan incentive in directors and levels are set by may opt to have
(SIP) the company head office HMRC maximum of GBP3,000
and to give staff per year paid in
directors a 'Free Shares' under
stake in the the SIP scheme rules
group
Non-executive directors
Base To recognise: Considered by Reviewed annually No individual
salary Skills the board on non-executive
Responsibility appointment director will be
Experience Set at a level awarded a base
Risk considered salary in excess of
Value appropriate to GBP40,000 a year
attract, retain No performance
and motivate the conditions are
individual attached to base
Experience and salaries
time required
for the role are
considered on
appointment
Pension No pension
offered
Benefits No benefits The committee The costs associated
offered except retains the with benefits
to one discretion to offered are closely
non-executive approve changes in controlled and
director who is contractual reviewed on an
eligible for benefits in annual basis.
health cover exceptional No non-executive
(see annual circumstances or director will
remuneration where factors receive benefits in
report page 42) outside the excess of GBP10,000 a
control of the year
Group lead to No specific
increased costs performance
(e.g. medical conditions are
inflation) attached to
contractual benefits
Share Non-executive
options directors do not
participate in
the share option
schemes
Notes to the Remuneration Policy
In order to ensure that shareholders have sufficient clarity over director
remuneration levels, the company has, where possible, specified a maximum that
may be paid to a director in respect of each component of remuneration. There
have been no other significant changes made to the future remuneration policy
from the previous remuneration policy.
* 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.
The remuneration committee considers the performance measures outlined in the
table above to be appropriate measures of performance and that the KPI's chosen
align the interests of the directors and shareholders.
For details of remuneration of other company employees please see page 45.
Remuneration scenarios
An indication of the possible level of remuneration that would be received by
each Executive director in the 12 months commencing 6 June 2017 in accordance
with the director's remuneration policy is shown below.
The base salary level for Sir Michael Heller for the purpose of these graphs
(and bonus calculations) is GBP300k as per note on page 42.
Assumptions
Minimum
Consists of base salary, benefits and pension. Base salary, benefits and
pension for 2017 are assumed at the levels included in the single total figure
remuneration table for the year ended 31 December 2016.
On target
Based on the minimum, enhanced by a bonus calculated as the average percentage
bonus awarded to the individual in the three years ending on 31 December 2016.
As outlined in the policy summary above, the remuneration committee has
discretion to award bonuses of up to 200% of base salary in any one year (up to
300% in an exceptional year). Base salary, benefits and pension for 2017 are
assumed at the levels included in the single total figure remuneration table
for the year ended 31 December 2016.
Maximum
Based on the minimum, enhanced by the maximum bonus available in an exceptional
year (300% of base salary). Base salary, benefits and pension for 2017 are
assumed at the levels included in the single total figure remuneration table
for the year ended 31 December 2016.
Approach to recruitment remuneration
All appointments to the board are made on merit. The components of the
remuneration package (for a new director who is recruited within the life of
the approved remuneration policy) would comprise base salary, pension, benefits
and an opportunity to earn an annual bonus and be granted share options as
outlined above. The approach to such appointments is detailed within the policy
summary above. The company will pay remuneration to new directors at a level
that will enable it to attract appropriately skilled and experienced
individuals but which is not, in the opinion of the remuneration committee
excessive.
Service contracts
All executive directors have full-time contracts of employment with the
Company. Non-executive directors have contracts of service. No director has a
contract of employment or contract of service with the company, its joint
venture or associated companies with a fixed term which exceeds twelve months.
Directors notice periods (see the annual remuneration report) are set in line
with market practice and are of a length considered sufficient to ensure an
effective handover of duties should a director leave the Company.
All directors' contracts as amended from time to time, have run from the date
of appointment. Service contracts are kept at the registered office.
Policy on payment for loss of office
There are no contractual provisions that could impact on a termination payment.
Termination payments will be calculated in accordance with the existing
contract of employment or service contract. It is the policy of the
remuneration committee to issue employment contracts to executive directors
with normal commercial terms and without extended terms of notice which could
give rise to extraordinary termination payments.
Consideration of employment conditions elsewhere in the company
In setting this policy for directors' remuneration the remuneration committee
has been mindful of the Company's objective to reward all employees fairly
according to their role, performance and market forces. In setting the policy
for Directors' remuneration the committee has considered the pay and employment
conditions of the other employees within the Group, but no formal consultation
has been undertaken with employees in drawing up the policy. The committee has
not used formal comparison measures.
Consideration of shareholder views
No shareholder views have been taken into account when formulating this policy.
In accordance with the new regulations, an ordinary resolution for approval of
this policy will be put to shareholders at the AGM in June 2017.
Audit committee report
The committee's terms of reference have been approved by the board and follow
published guidelines, which are available on request from the company
secretary.
At the year end the audit committee comprised two of the non-executive
directors - H D Goldring and C A Parritt, both of whom are Chartered
Accountants.
The audit committee's primary tasks are to:
* review the scope of external audit, to receive regular reports from RSM UK
Audit LLP and to review the half-yearly and annual accounts before they are
presented to the board, focusing in particular on accounting policies and areas
of management judgement and estimation;
* monitor the controls which are in force to ensure the integrity of the
information reported to the shareholders;
* 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 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;
* agreed the independence of the auditors and approved their fees for both
audit and non-audit services as set out in note 2 to the financial statements;
and
* the chairman of the audit committee has also had separate meetings and
discussions with the external audit partner.
External Auditor
RSM UK Audit LLP held office throughout the period under review. In the United
Kingdom London & Associated Properties PLC provides extensive administration
and accounting services to Bisichi Mining PLC, which has its own audit
committee and employs BDO LLP, a separate and independent firm of registered
auditor.
C A Parritt
Chairman - Audit Committee
27 April 2017
Directors' responsibilities statement
The Directors are responsible for preparing the Strategic Report and the
Directors' Report, the Directors' Remuneration Report and the financial
statements in accordance with applicable law and regulations.
English company law requires the Directors to prepare Group and Company
financial statements for each financial year. The Directors are required under
the Listing Rules of the Financial Conduct Authority to prepare Group financial
statements in accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union ("EU") and have elected under English
company law to prepare the Company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law) including FRS101 'Reduced
Disclosure Framework'.
The Group financial statements are required by law and IFRS adopted by the EU
to present fairly the financial position and performance of the Group; the
Companies Act 2006 provides in relation to such financial statements that
references in the relevant part of that Act to financial statements giving a
true and fair view are references to their achieving a fair presentation.
Under English company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of the
state of affairs of the Group and the Company and of the profit or loss of the
Group for that period.
In preparing each of the Group and Company financial statements, the Directors
are required to:
a. select suitable accounting policies and then apply them consistently;
b. make judgements and accounting estimates that are reasonable and prudent;
c. for the Group financial statements, state whether they have been prepared
in accordance with IFRS adopted by the EU and for the company financial
statements state whether applicable UK accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements; and
d. prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group and the Company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's and the Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Group and the Company and enable them to ensure that the financial statements
and the Directors' Remuneration Report comply with the Companies Act 2006 and,
as regards the Group financial statements, Article 4 of the IAS Regulations.
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 and Transparency Rules
Each of the directors, whose names and functions are listed on page 34,
confirms that to the best of each person's knowledge:
a. the financial statements, prepared in accordance with the applicable set
of accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit of the Company and the undertakings included in
the consolidation taken as a whole; and
b. the Strategic Report contained in the Annual Report includes a fair review
of the development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they
face.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the London & Associated
Properties PLC website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
Independent auditor's report
OPINION ON FINANCIAL STATEMENTS
We have audited the Group and parent Company financial statements ("the
financial statements") on pages 55 to 99. The financial reporting framework
that has been applied in the preparation of the group financial statements is
applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union. The financial reporting framework that has been
applied in the preparation of the parent company financial statements is
applicable law and United Kingdom Accounting Standards (United Kingdom
Generally Accepted Accounting Practice) including FRS 101 'Reduced Disclosure
Framework'.
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 2016 and of the
group's loss for the year then ended;
* the group financial statements have been properly prepared in accordance with
IFRSs as adopted by the European Union;
* the parent company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting Practice; and
* the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006 and, as regards the group financial
statements, Article 4 of the IAS Regulation.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on
the Financial Reporting Council's website at
http://www.frc.org.uk/auditscopeukprivate
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
* the part of the Directors' Remuneration Report to be audited has been
properly prepared in accordance with the Companies Act 2006; and
* 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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and parent company
and its environment obtained in the course of the audit, we have not identified
any material misstatements in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our
opinion:
* adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not visited
by us; or
* the parent company financial statements and the part of the Directors'
Remuneration Report to be audited are not in agreement with the accounting
records and returns; or
* certain disclosures of Directors' remuneration specified by law are not made;
or
* we have not received all the information and explanations we require for our
audit.
Respective responsibilities of directors and auditor
As more fully explained in the Directors' Responsibilities Statement set out on
page 52 the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements
in accordance with applicable law and International Standards on Auditing (UK
and Ireland). Those standards require us to comply with the Auditing Practices
Board's (APB's) Ethical Standards for Auditors.
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we are
required to state to them in an auditor's report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Geoff Wightwick BA FCA (Senior Statutory Auditor)
For and on behalf of
RSM UK AUDIT LLP
Statutory Auditor
Chartered Accountants
25 Farringdon Street
London EC4A 4AB
28 April 2017
FINANCIAL STATEMENTS
Consolidated income statement
for the year ended 31 December 2016
Notes 2016 2015
GBP'000 GBP'000
Group revenue 1 29,704 32,666
Operating costs (26,860) (30,675)
Income from listed investments held for trading 3 2 3
Operating profit 2,846 1,994
Finance income 5 144 123
Finance expenses 5 (4,292) (4,221)
Debenture break cost 23 - (158)
Result before revaluation and other movements (1,302) (2,262)
Non-cash changes in valuation of assets and liabilities and
other movements
Increase/(decrease) in value of investment properties 532 (185)
Loss on disposal of investment properties - (32)
Increase/(decrease) in trading investments 1 (1)
Increase/(decrease) in value of other investments 12 (11)
Adjustment to interest rate derivative 23 (217) 84
Share of profit of joint ventures, net of tax 12 - 71
Loss on reclassification of asset as held for sale 12 - (276)
Result including revaluation and other movements (974) (2,612)
Profit from discontinued operations 7 - 519
Loss for the year before taxation 2 (974) (2,093)
Income tax (charge)/credit 6 (1,175) 47
Loss for the year (2,149) (2,046)
Attributable to:
Equity holders of the Company (2,357) (1,899)
Non-controlling interest 27 208 (147)
Loss for the year (2,149) (2,046)
Earnings per share
Loss per share - basic and diluted - continuing operations 9 (2.77)p (2.85)p
Profit per share - basic and diluted - discontinued 9 - 0.61p
operations
Total 9 (2.77)p (2.24)p
Consolidated statement of comprehensive income
for the year ended 31 December 2016
2016 2015
GBP'000 GBP'000
Loss for the year (2,149) (2,046)
Other comprehensive income/(expense):
Items that may be subsequently recycled to the income statement:
Exchange differences on translation of Bisichi Mining PLC foreign 1,106 (1,167)
operations
Transfer of gain/(loss) on available for sale investments 193 (201)
Taxation (13) 41
Other comprehensive income/(expense) for the year net of tax 1,286 (1,327)
Total comprehensive expense for the year net of tax (863) (3,373)
Attributable to:
Equity shareholders (1,864) (2,414)
Non-controlling interest 1,001 (959)
(863) (3,373)
Consolidated balance sheet
at 31 December 2016
Notes 2016 2015
GBP'000 GBP'000
Non-current assets
Market value of properties attributable to Group 10 105,080 104,388
Present value of head leases 31 4,767 4,784
Property 109,847 109,172
Mining reserves, plant and equipment 11 8,653 5,552
Investments in joint ventures 12 455 325
Loan to joint venture 13 1,350 900
Held to maturity investments 17 1,874 1,995
Other investments 17 32 14
Deferred tax 24 1,134 2,390
123,345 120,348
Current assets
Inventories 16 1,721 1,049
Assets held for sale 14 - 2,335
Trade and other receivables 18 7,061 6,502
Interest rate derivatives 23 4 15
Corporation tax recoverable 32 29
Available for sale investments 19 781 594
Investments held for trading 19 19 20
Cash and cash equivalents 6,265 4,809
15,883 15,353
Total assets 139,228 135,701
Current liabilities
Trade and other payables 20 (12,942) (10,497)
Borrowings 21 (4,108) (2,267)
Current tax liabilities (21) (10)
(17,071) (12,774)
Non-current liabilities
Borrowings 21 (64,401) (64,951)
Interest rate derivatives 23 (793) (587)
Present value of head leases on properties 31 (4,767) (4,784)
Provisions 22 (1,236) (847)
Deferred tax liabilities 25 (2,329) (2,106)
(73,526) (73,275)
Total liabilities (90,597) (86,049)
Net assets 48,631 49,652
Equity attributable to the owners of the parent
Share capital 26 8,554 8,554
Share premium account 4,866 4,866
Translation reserve (Bisichi Mining PLC) (728) (1,145)
Capital redemption reserve 47 47
Retained earnings (excluding treasury shares) 25,648 28,238
Treasury shares 26 (145) (482)
Retained earnings 25,503 27,756
Total equity attributable to equity shareholders 38,242 40,078
Non-controlling interest 27 10,389 9,574
Total equity 48,631 49,652
Net assets per share 9 44.83p 47.26p
Diluted net assets per share 9 44.83p 47.26p
These financial statements were approved by the board of directors and
authorised for issue on 27 April 2017 and signed on its behalf by:
Sir Michael Heller Anil Thapar Company
Registration No. 341829
Director Director
Consolidated statement of changes in shareholders' equity
for the year ended 31 December 2016
Share Share Translation Capital Treasury Retained Total Non- Total
capital premium reserves redemption shares earnings excluding controlling equity
GBP'000 GBP'000 GBP'000 reserve GBP'000 excluding Non- Interests GBP'000
GBP'000 treasury Controlling GBP'000
shares Interests
GBP'000 GBP'000
Balance at 1 8,554 4,866 (696) 47 (883) 30,659 42,547 10,826 53,373
January 2015
Loss for year - - - - - (1,899) (1,899) (147) (2,046)
Other
comprehensive
expense:
Currency - - (449) - - - (449) (718) (1,167)
translation
Loss on - - - - - (66) (66) (94) (160)
available for
sale
investments
(net of tax)
Total other - - (449) - - (66) (515) (812) (1,327)
comprehensive
expense
Total - - (449) - - (1,965) (2,414) (959) (3,373)
comprehensive
expense
Transactions
with owners:
Share options - - - - - 13 13 18 31
charge
Share options - - - - - (45) (45) (64) (109)
cancelled
Dividends - - - - - - (133) (133) - (133)
equity holders
Dividends - - - - - - - - (250) (250)
non-controlling
interests
Change in - - - - - (5) (5) 3 (2)
equity held by
LAP
Acquisition of - - - - (111) - (111) - (111)
own shares
Disposal of own - - - - 226 - 226 - 226
shares
Loss on - - - - 286 (286) - - -
transfer of own
shares
Transactions - - - - 401 (456) (55) (293) (348)
with owners
Balance at 31 8,554 4,866 (1,145) 47 (482) 28,238 40,078 9,574 49,652
December 2015
(Loss)/profit - - - - - (2,357) (2,357) 208 (2,149)
for year
Other
comprehensive
income:
Currency - - 417 - - - 417 689 1,106
translation
Gain on - - - - - 76 76 104 180
available for
sale
investments
(net of tax)
Total other - - 417 - - 76 493 793 1,286
comprehensive
income
Total - - 417 - - (2,281) (1,864) 1,001 (863)
comprehensive
income/
(expense)
Transactions
with owners:
Share options - - - - - 45 45 64 109
charge
Dividends - - - - - - (136) (136) - (136)
equity holders
Dividends - - - - - - - - (250) (250)
non-controlling
interests
Disposal of own - - - - 119 - 119 - 119
shares
Loss on - - - - 218 (218) - - -
transfer of own
shares
Transactions - - - - 337 (309) 28 (186) (158)
with owners
Balance at 31 8,554 4,866 (728) 47 (145) 25,648 38,242 10,389 48,631
December 2016
Consolidated cash flow statement
for the year ended 31 December 2016
2016 2015
GBP'000 GBP'000
Operating activities
Loss for the year before taxation (974) (2,093)
Finance income (144) (123)
Finance expense 4,292 4,221
Debenture break cost - 158
(Increase)/decrease in value of investment properties (532) 185
Loss on disposal of investment properties - 32
(Increase)/decrease in trading investments (1) 1
(Increase)/decrease in value of other investments (12) 11
Adjustment to interest rate derivative 217 (84)
Share of profit of joint ventures, net of tax - (71)
Loss on reclassification of asset as held for sale - 276
Profit from discontinued operations - (511)
Depreciation 1,818 1,329
Profit on disposal of non-current assets (32) -
Share based payment expense 109 31
Gain on investment held for trading 4 122
Exchange adjustments (449) 497
Change in inventories (258) 393
Change in receivables - continuing operations 468 581
Change in receivables - discontinued operations - (424)
Change in payables 1,080 (156)
Cash generated from operations 5,586 4,375
Income tax paid (57) (1)
Cash inflows from operating activities 5,529 4,374
Investing activities
Disposal of shares and loans held to maturity 121 201
Disposal of assets held for sale 2,275 -
Share of profit in joint ventures (assets held for sale) 60 210
Acquisition of investment properties, mining reserves, plant and (3,022) (3,339)
equipment
Sale of investment properties, plant and equipment - continuing 32 368
operations
Residual receipt from Windsor Shopping Centre disposal - discontinued 414 -
operations
Interest received - continuing operations 133 88
- discontinued operations - 87
Cash inflows/(outflows) from investing activities 13 (2,385)
2016 2015
GBP'000 GBP'000
Financing activities
Purchase of treasury shares - (111)
Sale of treasury shares 119 226
Interest paid (3,943) (3,996)
Interest obligation under finance leases (216) (247)
Debenture stock break costs paid - (158)
Receipt of bank loan - Bisichi Mining PLC 37 18
Repayment of bank loan - Bisichi Mining PLC (131) (66)
Receipt of bank loan - Dragon Retail Properties Ltd - 1,250
Repayment of bank loan - Dragon Retail Properties Ltd - (1,900)
Repayment of bank loan - (201)
Repayment of debenture stocks - (1,250)
Equity dividends paid (136) (133)
Equity dividends paid - non-controlling interests (250) (250)
Cancelled share options - Bisichi Mining PLC - (109)
Cash outflows from financing activities (4,520) (6,927)
Net increase/(decrease) in cash and cash equivalents 1,022 (4,938)
Cash and cash equivalents at beginning of year 2,575 7,118
Exchange adjustment (666) 395
Cash and cash equivalents at end of year 2,931 2,575
The cash flows above relate to continuing and discontinued operations. See Note
7 for information on discontinued operations.
Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise
the following balance sheet amounts:
2016 2015
GBP'000 GBP'000
Cash and cash equivalents (before bank overdrafts) 6,265 4,809
Bank overdrafts (3,334) (2,234)
Cash and cash equivalents at end of year 2,931 2,575
GBP530,000 of cash deposits at 31 December 2016 were charged as security to
debenture stocks.
Group accounting policies
The following are the principal Group accounting policies:
Basis of accounting
The Group financial statements are prepared in accordance with International
Financial Reporting Standards (IFRS), as adopted by the European Union and with
those parts of the Companies Act 2006 applicable to companies reporting under
IFRS.
The Company has elected to prepare the parent company's financial statements in
accordance with Financial Reporting Standard 101 'Reduced Disclosure Framework'
(FRS 101) and Companies Act 2006 and these are presented in Note 33. The
financial statements are prepared under the historical cost convention, except
for the revaluation of freehold and leasehold properties and financial assets
held for trading as well as fair value of interest derivatives.
The Group financial statements are presented in Pounds Sterling and all values
are rounded to the nearest thousand pounds (GBP'000) except when otherwise
stated.
The functional currency for each entity in the Group, and for joint
arrangements, is the currency of the country in which the entity has been
incorporated. Details of which country each entity has been incorporated in can
be found in note 15 for subsidiaries and Note 12 for joint arrangements.
The exchange rates used in the accounts were as follows:
GBP1 Sterling: GBP1 Sterling:
Rand Dollar
2016 2015 2016 2015
Year-end rate 16.9472 22.9067 1.23321 1.47634
Annual average 19.9269 19.5017 1.35477 1.51750
London & Associated Properties PLC, the parent company, is a listed public
company incorporated and domiciled in England and quoted on the London Stock
Exchange. The Company registration number is 341829.
Going concern
In reviewing going concern it is necessary to consider separately the position
of LAP 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 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. 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 23 to the financial statements sets out the Group's
objectives, policies and processes for managing its capital; its financial risk
management objectives; details of its financial instruments and hedging
activities; and its exposure to credit risk and liquidity risk.
The directors believe that the 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 Accounting Standards (IAS/IFRS)
The financial statements are prepared in accordance with International
Financial Reporting Standards and Interpretations in force at the reporting
date. These are prepared under the historic cost basis as modified by the
revaluation of investment properties and held for trading and available for
sale investments and interest rate derivatives.
The following Amendments were mandatory for the accounting period:
* Amendments to IAS 1, Presentation of Financial Statements ("IAS 1")
* Amendments to IAS 16 and IAS 38, Clarification of Acceptable Methods of
Depreciation and Amortisation
* Amendments to IFRS 10, IFRS 12 and IAS 28, Investment Entities: Applying the
Consolidation Exception
* Amendments to IFRS 11, Accounting for Acquisition of Interest in Joint
Operations
* Amendments to IAS 27, Separate financial statements
* Annual Improvements to IFRSs 2012-2014 Cycle
The application of these amendments has had no effect on the Group's financial
statements.
The Group has not adopted any standards or interpretations in advance of the
required implementation dates. The following new or revised standards that are
applicable to the Group were issued but not yet effective:
* Annual Improvements to IFRS Standards 2014-2016 Cycle
* IFRIC Interpretation 22 Foreign Currency Transactions and Advance
Consideration
* Amendments to IAS 7 - Statement of Cash Flows
* Amendments to IAS 12 - Recognition of Deferred Tax Assets for Unrealized
Losses
* Amendments to IFRS 2 - Classification and Measurement of Share-based Payment
Transactions
* Amendments to IAS 40: Transfers of Investment Property
It is not expected that adoption of any standards or interpretations above,
which have been issued by the International Accounting Standards Board but have
not been adopted will have a material impact on the financial statements.
The directors are currently evaluating the financial and operational impact of
the following new or revised standards and the impact of adopting these
standards cannot be reliably measured until this work is substantially
complete.
* IFRS 15 'Revenue from Contracts with Customers' was issued by the IASB in May
2014. It is effective for accounting periods beginning on or after 1 January
2018. The new standard will replace existing accounting standards, and provides
enhanced detail on the principle of recognising revenue to reflect the transfer
of goods and services to customers at a value which the company expects to be
entitled to receive. The standard also updates revenue disclosure requirements.
The standard was endorsed by the EU on 22 September 2016.
* IFRS 9 was published in July 2014 and will be effective for the Group from 1
January 2018. The standard was endorsed by the EU on 22 November 2016 It is
applicable to financial assets and financial liabilities, and covers the
classification, measurement, impairment and de-recognition of financial assets
and financial liabilities together with a new hedge accounting model.
* IFRS 16 'Leases' - IFRS 16 'Leases' was issued by the IASB in January 2016
and is effective for accounting periods beginning on or after 1 January 2019.
The new standard will replace IAS 17 'Leases' and will eliminate the
classification of leases as either operating leases or finance leases and,
instead, introduce a single lessee accounting model. The standard provides a
single lessee accounting model, specifying how leases are recognised, measured,
presented and disclosed. The standard has yet to be endorsed by the EU.
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.
Property operations
Fair value measurements of investment properties and investments
An assessment of the fair value of certain assets and liabilities, in
particular investment properties, is required to be performed. In such
instances, fair value measurements are estimated based on the amounts for which
the assets and liabilities could be exchanged between market participants. To
the extent possible, the assumptions and inputs used take into account
externally verifiable inputs. However, such information is by nature subject to
uncertainty. The directors note that the fair value measurement of the
investment properties may be considered to be less judgemental where external
valuers have been used and as a result of the nature of the underlying assets.
Mining operations
Life of mine and reserves
The directors consider the judgements and estimates surrounding the life of the
mine and its reserves have the most significant effect on the amounts
recognised in the financial statements and to be the area where the financial
statements are at most risk of a material adjustment due to estimation
uncertainty. The remaining life of the mine is currently estimated at 5 years.
This life of mine is based on the group's existing coal reserves and excludes
future run of mine coal purchases and coal reserve acquisitions. The Group's
coal reserves are subject to assessment by an independent Competent Person and
impact assessments are made 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 factors such as commodity prices,
production costs and yield.
Depreciation, amortisation of mineral rights, mining development costs and
plant & equipment
The annual depreciation/amortisation charge is dependent on estimates,
including coal reserves and the related life of the mine, expected development
expenditure for probable reserves, the allocation of certain assets to relevant
ore reserves and estimates of residual values of the processing plant. The
charge can fluctuate when there are significant changes in any of the factors
or assumptions used, such as estimating mineral reserves which in turn affects
the life of mine or the expected life of reserves. Estimates of proven and
probable reserves are prepared by an independent Competent Person. Assessments
of depreciation/amortisation rates against the estimated reserve base are
performed regularly. Details of the depreciation/amortisation charge can be
found in note 11.
Provision for mining rehabilitation including restoration and de-commissioning
costs
A provision for future rehabilitation including restoration and decommissioning
costs requires estimates and assumptions to be made around the relevant
regulatory framework, the timing, extent and costs of the rehabilitation
activities and of the risk free rates used to determine the present value of
the future cash outflows. The provisions, including the estimates and
assumptions contained therein, are reviewed regularly by management. The Group
engages an independent expert to assess the cost of restoration and
decommissioning annually as part of management's assessment of the provision.
Details of the provision for mining rehabilitation can be found in note 22.
Mining impairment
Property, plant and equipment representing the Group's mining assets in South
Africa are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying value may not be fully recoverable. The impairment
test is performed using the approved Life of Mine plan and those future cash
flow estimates are discounted using asset specific discount rates and are based
on expectations about future operations. The impairment test requires estimates
about production and sales volumes, commodity prices, proven and probable
reserves (as assessed by the Competent Person), operating costs and capital
expenditures necessary to extract reserves in the approved Life of Mine plan.
Changes in such estimates could impact recoverable values of these assets.
Details of the carrying value of property, plant and equipment can be found in
note 11.
The impairment test indicated significant headroom as at 31 December 2016 and
therefore no impairment is considered appropriate. The key assumptions include:
coal prices, including domestic coal prices based on recent pricing and
assessment of market forecasts for export coal; production based on proven and
probable reserves assessed by the independent Competent Person and an increase
in yield of 8% associated with new mining areas based on assessments by the
Competent Person and empirical data. If export coal prices reduce by 10% a
5.25% decrease in yield below expectation would be required to create breakeven
scenario. However, the Bisichi directors consider the forecasted yield levels
to be achievable.
Carrying value of Ezimbokodweni joint venture
The Group holds a GBP1.8 million (2015: GBP1.2 million) net investment in
Ezimbokodweni Mining (Pty) Limited ("Ezimbokodweni"), made up of a GBP1.35
million loan (2015: GBP0.9 million) and a GBP0.45 million (2015: GBP0.3 million)
joint venture investment, as in note 12 and 13. The carrying value of the
investment is dependent upon the completion of the acquisition of the Pegasus
coal project ("the project") in South Africa.
Although the South African Department of Mineral Resources ("DMR") has
previously approved the transfer of legal title for the reserve to
Ezimbokodweni, a proposed sale and purchase agreement negotiated and a deposit
paid for the project, the conclusion of the transaction has been delayed
pending the commercial transfer of the prospecting right from the current
owners of the project to Ezimbokodweni. Previous negotiations to complete the
commercial acquisition of the project have been beset by various delays outside
the control of the Bisichi Group. More recently, Ezimbokodweni has indicated to
the current owners of the project their ability to fund and complete the
transaction via a consortium of newly proposed shareholders of Ezimbokodweni.
The proposed consortium includes Anglo American PLC, Butsunani Energy
Investment Holdings, Vunani Limited, our BEE partner in Black Wattle, and
Bisichi Mining PLC. The consortium meets the Black Economic Empowerment
requirements as required for the transaction as per the DMR. The current owners
of the project have very recently notified Ezimbokodweni that they do not wish
to divest the project at this stage and, accordingly, the Bisichi Board have
considered the likelihood of the acquisition ultimately completing in due
course as part of its assessment of the carrying value of the investment in
Ezimbokodweni. The Bisichi Board remain committed to engaging with the current
owners, the DMR and relevant stakeholders in order to conclude the transaction
and plan further discussions with these parties in the near future.
In light of the previously approved legal transfer from the DMR, our
understanding of the potential concerns the DMR may have if current owners do
not ultimately divest of the asset and the support expressed for the
transaction by the DMR as an important stakeholder, the Bisichi Board remain
confident of the transaction completing in due course. The Bisichi Board has
exercised significant judgement in forming its assessment that the transaction
will ultimately complete. We will continue to evaluate the status of our
investment on an ongoing basis as the planned engagement with the relevant
stakeholders is undertaken. However, at present, we believe the Bisichi Group
is still able to achieve significant value from the project in excess of its
carrying value.
The carrying value of the net investment in the joint venture was tested for
impairment based on the economic model for the project and no impairment
indicators were considered to exist in terms of the underlying value of the
asset. The carrying value of the underlying project is supported by its coal
reserves and life of mine plan and is considered appropriate given the
underlying economic value of the project.
Deferred tax
The calculation of deferred tax involves the exercise of judgement in relation
to the amount of income and gains which will be realised in future to support
the recognition of a deferred tax asset in respect of unrelieved losses.
Interest rate hedges
All interest rate hedges are held at fair value as valued by the
hedge provider.
Further detail is provided in notes 21 and 23.
Basis of consolidation
The Group accounts incorporate the accounts of London & Associated Properties
PLC and all of its subsidiary undertakings, together with the Group's share of
the results and net assets of its joint ventures.
Non-controlling interests in subsidiaries are presented separately from the
equity attributable to equity owners of the parent company. When changes in
ownership in a subsidiary do not result in a loss of control, the
non-controlling shareholders' interests are initially measured at the
non-controlling interests' proportionate share of the subsidiaries' net assets.
Subsequent to this, the carrying amount of non-controlling interests is the
amount of those interests at initial recognition plus the non-controlling
interests' share of subsequent changes in equity. Total comprehensive income is
attributed to non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
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 trading subsidiary companies are set out
in Note 15.
The directors are required to consider the implications of IFRS 10 on the LAP
investment in Bisichi Mining PLC ("Bisichi"). Related parties also have
shareholdings in Bisichi. When combined with the 42% held by LAP and, taking
account of the wide disposition of other shareholders, there is potential for
LAP and these related parties to exercise voting control over Bisichi. IFRS 10
makes it clear that possible voting control is of more significance than actual
management control.
For this reason the directors have concluded that there is a requirement to
consolidate Bisichi with LAP. While, in theory, they could achieve control, in
practice they do not get involved in the day to day operations of Bisichi. The
directors have presented consolidated accounts using the published accounts of
Bisichi but it is important to note that any figures, risks and assumptions
attributable to that company are the responsibility of the Bisichi Board of
directors who are independent from LAP.
As a result of treating Bisichi as a subsidiary, Dragon Retail Properties
Limited is also a subsidiary for accounting purposes, as LAP and Bisichi each
own 50% of that joint venture business.
Joint ventures
Investments in joint ventures, being those entities over whose activities the
Group has joint control, as established by contractual agreement, include the
appropriate share of the results and net assets of those undertakings.
Loans to joint ventures are classified as non-current assets when they are not
expected to be received in the normal working capital cycle. The loan to
Ezimbokodweni is included in joint ventures as a part of net investment in
joint venture as it is not expected to be repaid in the foreseeable future, as
the recoverability is dependent upon the acquisition of the Pegasus coal
project in South Africa and development over the life of mine. Trading
receivables and payables to joint ventures are classified as current assets and
liabilities.
Goodwill
Goodwill arising on acquisition is recognised as an intangible asset and
initially measured at cost, being the excess of the cost of the acquired entity
over the Group's interest in the fair value of the assets and liabilities
acquired. Goodwill is carried at cost less accumulated impairment losses.
Goodwill arising from the difference in the calculation of deferred tax for
accounting purposes and fair value in negotiations is judged not to be an asset
and is accordingly impaired on completion of the relevant acquisition.
Revenue
Revenue comprises sales of coal, property rental income and property management
fees.
Rental income
Rental income arises from operating leases granted to tenants. An operating
lease is a lease other than a finance lease. A finance lease is one whereby
substantially all the risks and rewards of ownership are passed to the lessee.
Rental income is recognised in the Group income statement on a straight-line
basis over the term of the lease. This includes the effect of lease incentives
to tenants, which are normally in the form of rent free periods. Contingent
rents, being the difference between the rent currently receivable and the
minimum lease payments, are recognised in property income in the periods in
which they are receivable. Rent reviews are recognised when such reviews have
been agreed with tenants.
Reverse surrender premiums
Payments received from tenants to surrender their lease obligations are
recognised immediately in the income statement.
Dilapidations
Dilapidations monies received from tenants in respect of their lease
obligations are recognised immediately in the income statement.
Other revenue
Revenue in respect of listed investments held for trading represents investment
dividends received and profit or loss recognised on realisation. Dividends are
recognised in the income statement when the dividend is received.
Property operating expenses
Operating expenses are expensed as incurred and any property operating
expenditure not recovered from tenants through service charges is charged to
the income statement.
Employee benefits
Share based remuneration
The Company operates a long-term incentive plan and two share option schemes.
The fair value of the conditional awards on shares granted under the long-term
incentive plan and the options granted under the share option scheme is
determined at the date of grant. This fair value is then expensed on a
straight-line basis over the vesting period, based on an estimate of the number
of shares that will eventually vest. At each reporting date, the fair value of
the non-market based performance criteria of the long-term incentive plan is
recalculated and the expense is revised. In respect of the share option scheme,
the fair value of options granted is calculated using a binomial method.
Pensions
The Company operates a defined contribution pension scheme. The contributions
payable to the scheme are expensed in the period to which they relate.
Foreign currencies
Monetary assets and liabilities are translated at year end exchange rates and
the resulting exchange rate differences are included in the consolidated income
statement within the results of operating activities if arising from trading
activities, 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
Investments
Held to maturity investments are stated at amortised cost using the effective
interest rate method.
Investments held for trading are included in current assets at fair value. For
listed investments, fair value is the bid market listed value at the balance
sheet date. Realised and unrealised gains or losses arising from changes in
fair value are included in the income statement of the period in which they
arise.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. A provision
for impairment of trade receivables is made when there is evidence that the
Group will not be able to collect all amounts due. Trade receivables do not
carry any interest, as any interest that would be recognised from discounting
future cash payments over the short period is not considered to be material.
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 discount and costs of issue. The cost of
issue is recognised in the Group income Statement over the life of the bank
loan. Interest payable on those facilities is expensed as a finance cost in the
period to which it relates.
Debenture loans
The debenture loans are included as a financial liability on the balance sheet
net of the unamortised costs on issue. The cost of issue is recognised in the
Group income statement over the life of the debenture. Interest payable to
debenture holders is expensed in the period to which it relates.
Finance lease liabilities
Finance lease liabilities arise for those investment properties held under a
leasehold interest and accounted for as investment property. The liability is
calculated as the present value of the minimum lease payments, reducing in
subsequent reporting periods by the apportionment of payments to the lessor.
Lease payments are allocated between the liability and finance charges so as to
achieve a constant financing rate. Contingent rents payable, such as rent
reviews or those related to rental income, are charged as an expense in the
period in which they are incurred.
Interest rate derivatives
The Group uses derivative financial instruments to hedge the interest rate risk
associated with the financing of the Group's business. No trading in such
financial instruments is undertaken. At each reporting date, these interest
rate derivatives are recognised at their fair value to the business, being the
Net Present Value of the difference between the hedged rate of interest and the market rate of interest for the remaining period of the hedge. Ordinary shares Shares are classified as equity when there is no obligation to transfer cash or other assets. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Treasury shares When the Group's own equity instruments are repurchased, consideration paid is deducted from equity as treasury shares until they are cancelled. When such shares are subsequently sold or reissued, any consideration received is included in equity. Investment properties Valuation Investment properties are those that are held either to earn rental income or for capital appreciation or both, including those that are undergoing redevelopment. They are reported on the Group balance sheet at fair value, being the amount for which an investment property could be exchanged between knowledgeable and willing parties in an arm's length transaction. The directors' property valuation is at fair value. The external valuation of properties is undertaken by independent valuers who hold recognised and relevant professional qualifications and have recent experience in the locations and categories of properties being valued. Surpluses or deficits resulting from changes in the fair value of investment property are reported in the Group income statement in the period in which they arise. Capital expenditure Investment properties are measured initially at cost, including related transaction costs. Additions to capital expenditure, being costs of a capital nature, directly attributable to the redevelopment or refurbishment of an investment property, up to the point of it being completed for its intended use, are capitalised in the carrying value of that property. The redevelopment of an existing investment property will remain an investment property measured at fair value and is not reclassified. Capitalised interest is calculated with reference to the actual rate payable on borrowings for development purposes, or for that part of the development costs financed out of borrowings the capitalised interest is calculated on the basis of the average rate of interest paid on the relevant debt outstanding. Disposal The disposal of investment properties is recorded on completion of the contract. On disposal, any gain or loss is calculated as the difference between the net disposal proceeds and the valuation at the last year end plus subsequent capitalised expenditure in the period. Depreciation and amortisation In applying the fair value model to the measurement of investment properties, depreciation and amortisation are not provided in respect of investment properties. Other assets and depreciation The cost, less estimated residual value, of other property, plant and equipment is written off on a straight-line basis over the asset's expected useful life. Residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Changes to the estimated residual values or useful lives are accounted for prospectively. The depreciation rates generally applied are: Motor vehicles 25-33 per cent per annum Office equipment 10-33 per cent per annum Assets held for sale Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly probable that they will be recovered primarily through sale rather through continuing use. Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs of sale. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets, investment property which continue to be measured in accordance with the Group's other accounting policies. Impairment losses on initial classification as held-for-sale and subsequent gains and losses on remeasurement are recognised in profit or loss. Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortised or depreciated, and any equity-accounted investment is no longer equity accounted. Available for sale assets Financial assets available for sale are measured at fair value. Any changes in fair value above cost are recognised in other comprehensive income and accumulated in the available-for-sale reserve. For any changes in fair value below cost a provision for impairment is recognised in the profit or loss account. Other investments classified as non-current available for sale investments comprise shares in listed companies and are carried at fair value. 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, net of bank overdrafts. Cash equivalents comprise short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and original maturities of three months or less. Bisichi mining PLC Mining revenue Revenue is recognised when the customer has a legally binding obligation to settle under the terms of the contract and has assumed all significant risks and rewards of ownership. Revenue is only recognised on individual sales of coal when all of the significant risks and rewards of ownership have been transferred to a third party. Export revenue is generally recognised when the product is delivered to the export terminal location specified by the customer, at which point the customer assumes risks and rewards under the contract. Domestic coal revenues are generally recognised on collection by the customer from the mine when loaded into transport, where the customer pays the transportation costs. Mining 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. 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. A review
involves determining whether the carrying amounts are in excess of the
recoverable amounts.
An asset's recoverable amount is determined as the higher of its fair value
less costs of disposal and its value in use. Such reviews are undertaken on an
asset-by-asset basis, except where assets do not generate cash flows
independent of other assets, in which case the review is undertaken on a
company or group level.
If the carrying amount of an asset exceeds its recoverable amount an asset's
carrying value is written down to its estimated recoverable amount (being the
higher of the fair value less cost to sell and value in use). Any change in
carrying value is recognised in the comprehensive income statement.
Mine reserves and development cost
The purpose of mine development is to establish secure working conditions and
infrastructure to allow the safe and efficient extraction of recoverable
reserves. Depreciation on mine development is not charged until production
commences or the assets are put to use. On commencement of full commercial
production, depreciation is charged over the life of the associated mine
reserves extractable using the asset on a unit of production basis. The unit of
production calculation is based on tonnes mined as a ratio to proven and
probable reserves and also includes future forecast capital expenditure. 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 componentises its mine into geographically distinct
sections or phases to which the stripping activities being undertaken within
that component are allocated. Such phases are determined based on assessment of
factors such as geology and mine planning.
The Group depreciates deferred costs capitalised as stripping assets on a unit
of production method, with reference the tons mined and reserve of the relevant
ore body component or phase.
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.
Notes to the financial statements
for the year ended 31 December 2016
1. Results for the year and segmental analysis
Operating Segments are based on the internal reporting and operational
management of the Group. LAP is focused primarily on property activities (which
generate trading income), but it also holds and manages investments. IFRS 10
requires the Group to treat Bisichi as a subsidiary and therefore it is
consolidated, rather than being included in the accounts as an associate using
the equity method. The Group has also consolidated Dragon, a company which the
Company jointly controls with Bisichi; Bisichi is a coal mining company with
operations in South Africa and also holds investment property in the United
Kingdom and derives income from property rentals. Dragon is a property
investment company and derives its income from property rentals. These
operating segments (LAP, Bisichi and Dragon) are each viewed separately and
have been so reported below.
Business segments
LAP Bisichi Dragon 2016
BUSINESS ANALYSIS GBP000 GBP000 GBP000 Total
GBP000
Rental income 6,241 1,060 171 7,472
Management income from third party properties 501 - - 501
Mining - 21,731 - 21,731
Group Revenue 6,742 22,791 171 29,704
Direct property costs (1,168) (187) 5 (1,350)
Direct mining costs - (16,184) - (16,184)
Overheads (2,926) (4,903) (128) (7,957)
Exchange gains - 449 - 449
Depreciation (25) (1,785) (8) (1,818)
Operating profit before listed investments held for 2,623 181 40 2,844
trading
Listed investments held for trading 2 - - 2
Operating profit 2,625 181 40 2,846
Finance income 11 132 1 144
Finance expenses (3,706) (554) (32) (4,292)
Result before valuation movements (1,070) (241) 9 (1,302)
Other segment items
Net increase/(decrease) on revaluation of investment 125 445 (38) 532
properties
Increase in value of other investments - 12 - 12
Net increase on revaluation of investments held for 1 - - 1
trading
Adjustment to interest rate derivative (206) - (11) (217)
Revaluation and other movements (80) 457 (49) 328
(Loss)/profit for the year before taxation (1,150) 216 (40) (974)
Segment assets
- Non-current assets - property 93,791 13,426 2,630 109,847
- Non-current assets - plant & equipment 112 8,520 21 8,653
- Cash & cash equivalents 3,706 2,444 115 6,265
- Non-current assets - other 1,874 32 - 1,906
- Non-current assets - deferred tax asset 1,134 - - 1,134
- Current assets - others 1,853 7,745 20 9,618
Total assets excluding investment in joint ventures 102,470 32,167 2,786 137,423
and assets held for sale
Segment liabilities
Borrowings (58,068) (9,234) (1,207) (68,509)
Current liabilities (6,074) (6,811) (78) (12,963)
Non-current liabilities (5,379) (3,665) (81) (9,125)
Total liabilities (69,521) (19,710) (1,366) (90,597)
Net assets 32,949 12,457 1,420 46,826
Investment in joint ventures non segmental 1,805
Net assets as per balance sheet 48,631
Major customers: Customer A - 14,543 - 14,543
This customer is for mining revenue in South Africa.
United South 2016
Kingdom Africa Total
Geographic analysis GBP'000 GBP'000 GBP'000
Revenue 8,025 21,679 29,704
Operating profit/(loss) 3,441 (595) 2,846
Non-current assets excluding investments 111,117 8,517 119,634
Total net assets 43,916 4,715 48,631
Capital expenditure 164 2,858 3,022
BUSINESS ANALYSIS LAP BISICHI DRAGON 2015
GBP000 GBP000 GBP000 TOTAL
GBP000
Rental income 6,129 1,014 187 7,330
Management income from third party properties 696 - - 696
Mining - 24,640 - 24,640
Group Revenue 6,825 25,654 187 32,666
Direct property costs (1,530) (110) (13) (1,653)
Direct mining costs - (19,177) - (19,177)
Overheads (3,301) (4,651) (67) (8,019)
Exchange losses - (497) - (497)
Depreciation (39) (1,284) (6) (1,329)
Operating profit/(loss) before listed investments 1,955 (65) 101 1,991
held for trading
Listed investments held for trading 1 - 2 3
Operating profit/(loss) 1,956 (65) 103 1,994
Finance income 16 107 - 123
Finance expenses (3,714) (473) (34) (4,221)
Debenture break costs (158) - - (158)
Result before valuation movements (1,900) (431) 69 (2,262)
Other segment items
Net (decrease)/increase on revaluation of investment (368) 225 (42) (185)
properties
Decrease in value of other investments - (11) - (11)
Net decrease on revaluation of investments held for (1) - - (1)
trading
Loss on sale of investment property - - (32) (32)
Adjustment to interest rate derivative 69 - 15 84
Share of (loss)/profit of joint ventures, net of tax (67) 138 - 71
Loss on reclassification of asset as held for sale (138) (138) - (276)
Revaluation and other movements (505) 214 (59) (350)
Profit from discontinued operations 519 - - 519
(Loss)/profit for the year before taxation (1,886) (217) 10 (2,093)
Segment assets
- Non - current assets - property 93,510 12,994 2,668 109,172
- Non - current assets - plant and equipment 148 5,374 30 5,552
- Cash and cash equivalents 3,192 1,608 9 4,809
- Non - current assets - other 1,995 14 - 2,009
- Non - current assets - deferred tax asset 2,390 - - 2,390
- Current assets - others 2,355 5,794 60 8,209
Total assets excluding investment in joint ventures 103,590 25,784 2,767 132,141
and assets held for sale
Segment liabilities
Borrowings (57,815) (8,207) (1,196) (67,218)
Current liabilities (6,390) (3,918) (199) (10,507)
Non-current liabilities (5,177) (3,043) (104) (8,324)
Total liabilities (69,382) (15,168) (1,499) (86,049)
Net assets 34,208 10,616 1,268 46,092
Investment in joint ventures non segmental - - - 1,225
Assets held for sale - - - 2,335
Net assets as per balance sheet - - - 49,652
Major customers: Customer A - 14,126 - 14,126
This customer is for mining revenue in South Africa.
Geographic analysis United South 2015
Kingdom Africa Total
GBP'000 GBP'000 GBP'000
Revenue 8,058 24,608 32,666
Operating profit/(loss) 2,779 (785) 1,994
Non-current assets excluding investments 111,759 5,355 117,114
Total net assets 46,293 3,359 49,652
Capital expenditure 1,349 1,990 3,339
Group revenue is external to the Group and the directors consider that inter
segmental revenues are not material. Revenue includes contingent rents of GBP0.2
million (2015: GBP0.3 million).
2. Loss before taxation
2016 2015
GBP'000 GBP'000
Loss before taxation is stated after charging/(crediting):
Staff costs (see note 29) 7,173 7,219
Depreciation on tangible fixed assets - owned assets 1,818 1,329
Operating lease rentals - land and buildings 442 422
Exchange (gain)/loss (449) 497
Profit on disposal of motor vehicles and office equipment (32) -
Amounts payable to the auditor in respect of both audit and non-audit
services
Audit services
Statutory - Company and consolidation 88 115
Subsidiaries - audited by RSM 20 22
Subsidiaries - audited by other auditors 50 39
Further assurance services 4 13
Other services 32 2
194 191
Staff costs are included in overheads.
Gain on revaluation of investment properties
2016 2015
GBP'000 GBP'000
Investment surplus/(deficit) 549 (181)
Loss on valuation movement in respect of head lease payments (17) (4)
532 (185)
3. Listed investments held for trading
2016 2015
GBP'000 GBP'000
Dealing loss - (6)
Dividends receivable 2 9
Net profit from listed investments 2 3
4. Directors' emoluments
2016 2015
GBP'000 GBP'000
Emoluments 988 1,199
Defined contribution pension scheme contributions 45 73
1,033 1,272
Sir Michael Heller received GBP75,000 (2015: GBP75,000) as a Director of Bisichi
Mining PLC.
Details of directors' emoluments and share options are set out in the
remuneration report.
5. Finance income and expenses
2016 2015
GBP'000 GBP'000
Finance income 144 123
Finance expenses
Interest on bank loans and overdrafts (2,243) (2,258)
Unwinding of discount (Bisichi) (78) (79)
Other loans (1,420) (1,359)
Interest on derivatives (302) (295)
Interest on obligations under finance leases (249) (230)
Total finance expenses (4,292) (4,221)
(4,148) (4,098)
6. Income tax
2016 2015
GBP'000 GBP'000
Current tax
Corporation tax on profit of the period 73 10
Corporation tax on profit of previous periods - (20)
Total current tax 73 (10)
Deferred tax
Origination of timing differences 874 864
Revaluation of investment properties 472 (1,035)
Accelerated capital allowances (48) (97)
Fair value of interest derivatives (40) 22
Adjustment in respect of prior years (156) 209
Total deferred tax (notes 24 and 25) 1,102 (37)
Tax on profit on ordinary activities 1,175 (47)
The 2016 deferred tax recognised in income of GBP1,102,000 includes a credit of GBP
168,000 arising in the Bisichi Group on the correction of an error in the
calculation of deferred tax in 2015 related to the accounting of a deferred tax
liability incorrectly recognised in respect of management fees. The Group has
adjusted the effect of this error in its 2016 financial statements by reducing
the tax charge for the year by GBP168,000 and reducing the associated deferred
tax liability as it is not considered to be material to the current or prior
year financial statements.
Factors affecting tax charge/(credit) for the year
The corporation tax assessed for the year is different from that at the
effective rate of corporation tax in the United Kingdom of 20 per cent
(2015: 20.25 per cent). The differences are explained below:
2016 2015
GBP'000 GBP'000
Loss for the year before taxation (974) (2,093)
Taxation at 20 per cent (2015: 20.25 per cent) (195) (424)
Effects of:
Other differences 1,306 (607)
Adjustment in respect of prior years (157) 189
Deferred tax rate adjustment 221 795
Income tax charge/(credit) for the year 1,175 (47)
The main component of other differences in the reconciliation relates to
capital gains of GBP0.8 million (2015: losses GBP1.1 million) and indexation
allowances of GBPnil (2015: (GBP0.1 million)), and others GBP0.5 million (2015: GBP0.3
million).
Analysis of United Kingdom and overseas tax:
United Kingdom tax included in above:
2016 2015
GBP'000 GBP'000
Corporation tax 13 10
Adjustment in respect of prior years - (23)
Current tax 13 (13)
Deferred tax 1,241 (153)
1,254 (166)
Overseas tax included above:
2016 2015
GBP'000 GBP'000
Corporation tax 60 -
Adjustment in respect of prior years - 3
Current tax 60 3
Deferred tax (139) 116
(79) 119
Factors that may affect future tax charges:
Based on current capital expenditure plans, the Group expects to continue to be
able to claim capital allowances in excess of depreciation in future years, but
at a slightly lower level than in the current year.
A deferred tax provision has been made for gains on revaluing investment
properties. At present it is not envisaged that any tax will become payable in
the foreseeable future.
The Finance Bill 2016 was substantively enacted on 7 September 2016. This
includes a reduction in the rate of Corporation tax from 19% effective 1 April
2017 to 17% from 1 April 2020.
7. Discontinued operations
As part of the Group's strategy to focus on core assets, the Group disposed of
King Edward Court, Windsor in 2013. The profits and losses arising from this
disposal were classified as discontinued operations. Contracts for the sale of
King Edward Court had been exchanged in 2013 and completion took place in
January 2014. Following the settlement of a dispute additional proceeds of GBP
414,000 were received by the Group in 2016.
8. Dividend
2016 GBP'000 2015 GBP'000
Per Per
share share
Dividends paid during the year relating to the prior 0.16p 136 0.156p 133
period
Dividends to be paid:
Proposed final dividend for the year 0.165p 141 0.16p 136
9. (Loss)/profit per share and net assets per share
(Loss)/profit per share has been calculated as follows:
2016 2015
Loss for the year for the purposes of basic and diluted profit per (2,357) (1,899)
share (GBP'000)
Weighted average number of ordinary shares in issue for the purpose of 85,107 84,951
basic profit per share ('000)
Basic loss per share (2.77)p (2.24)p
Weighted average number of ordinary shares in issue for the purpose of 85,107 84,951
diluted profit per share ('000)
Fully diluted loss per share (2.77)p (2.24)p
Weighted average number of shares in issue is calculated after excluding
treasury shares of 221,061 (2015: 734,816).
The loss for continuing operations was GBP2,357,000 (2015: GBP2,418,000) and the
profit for discontinued operations was GBPnil (2015: GBP519,000).
Net assets per share have been calculated as follows:
2016 2015
Net assets (GBP'000) 38,242 40,078
Shares in issue ('000) 85,322 84,808
Basic net assets per share 44.83p 47.26p
Net assets diluted (GBP'000) 38,242 40,078
Shares in issue ('000) 85,322 84,808
Diluted net assets per share 44.83p 47.26p
10. Investment properties
Leasehold Leasehold
Total Freehold over 50 under 50
GBP000 GBP000 years years
GBP000 GBP000
Cost or valuation at 1 January 2016 109,172 86,468 21,060 1,644
Additions in year 160 160 - -
Decrease in present value of head leases (17) - (15) (2)
Increase/(decrease) on revaluation 532 1,957 (1,425) -
At 31 December 2016 109,847 88,585 19,620 1,642
Representing assets stated at:
Valuation 105,080 88,585 15,495 1,000
Present value of head leases 4,767 - 4,125 642
109,847 88,585 19,620 1,642
At 31 December 2016 109,847 88,585 19,620 1,642
At 31 December 2015 109,172 86,468 21,060 1,644
Total Freehold Leasehold Leasehold
GBP'000 GBP'000 over under
50 years 50 years
GBP'000 GBP'000
Cost or valuation at 1 January 2015 108,443 85,080 21,591 1,772
Acquisition of property 960 960 - -
Additions in year 357 210 147 -
Disposals (400) (400) - -
Decrease in present value of head leases (3) - - (3)
Increase/(decrease) on revaluation (185) 618 (678) (125)
At 31 December 2015 109,172 86,468 21,060 1,644
Representing assets stated at:
Valuation 104,388 86,468 16,920 1,000
Present value of head leases 4,784 - 4,140 644
109,172 86,468 21,060 1,644
At 31 December 2015 109,172 86,468 21,060 1,644
At 31 December 2014 108,443 85,080 21,591 1,772
The leasehold and freehold properties, excluding the present value of head
leases and directors' valuations, were valued as at 31 December 2016 by
professional firms of chartered surveyors. The valuations were made at fair
value. The directors' property valuations were made at fair value.
2016 2015
GBP'000 GBP'000
Allsop LLP 90,010 87,095
Carter Towler 13,245 12,800
Directors' valuations 1,825 4,493
105,080 104,388
Add: present value of headleases 4,767 4,784
109,847 109,172
The historical cost of investment properties, including total capitalised
interest of GBP1,161,000 (2015: GBP1,161,000) was as follows:
2016 2015
Leasehold Leasehold Leasehold Leasehold
Over 50 under 50 Over 50 under 50
Freehold years years Freehold years years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost at 1 January 72,551 17,653 1,939 71,601 17,506 1,939
Acquisition of property - - - 960 - -
Additions 160 - - 210 147 -
Disposals - - - (220) - -
Cost at 31 December 72,711 17,653 1,939 72,551 17,653 1,939
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 inputs to valuations are not based on observable
market data.
Class of property Carrying Carrying Valuation Key Range Range
Level 3 / / Fair technique unobservable (weighted (weighted
Fair value inputs average) average)
value 2015 2016 2015
2016 GBP'000
GBP'000
Freehold - external 86,760 81,975 Income Estimated GBP5 - GBP37 GBP5 - GBP37
valuation capitalisation Rental Value (GBP19) (GBP18)
Per sq ft 5% - 14% 5% - 15%
p.a (8%) (8%)
Equivalent
Yield
Leasehold over 50 15,495 16,920 Income Estimated GBP5 - GBP11 GBP5 - GBP11
years - capitalisation Rental Value (GBP9) (GBP10)
external valuation Per sq ft 7% - 18% 7% -18%
p.a (11%) (11%)
Equivalent
Yield
Leasehold under 50 1,000 1,000 Income Estimated GBP3 - GBP5 GBP4 - GBP5
years - external capitalisation Rental Value (GBP4) (GBP4)
valuation Per sq ft 18% - 23% 23% - 26%
p.a (19%) (25%)
Equivalent
Yield
Freehold - Directors' 1,825 4,493 Income Estimated GBP5 - GBP5 GBP5 - GBP24
valuation capitalisation Rental Value (GBP5) (GBP16)
Per sq ft 6% - 6% 6% - 6%
p.a (6%) (6%)
Equivalent
Yield
At 31 December 105,080 104,388
There are interrelationships between all these inputs as they are determined by
market conditions. The existence of an increase in more than one input would be
to magnify the input on the valuation. The impact on the valuation will be
mitigated by the interrelationship of two inputs in opposite directions, for
example, an increase in rent may be offset by an increase in yield.
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 Equivalent yield
10% increase or 25 basis point
(decrease) contraction
or (expansion)
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Freehold - 8,671/ 8,064/ 3,585/ 3,288/
external (8,671) (8,064) (3,298) (3,027)
valuation
Leasehold over 50 1,545/ 1,692/ 394/(375) 440/(418)
years - external (1,545) (1,692)
valuation
Leasehold under 100/(100) 100/(100) 13/(13) 10/(10)
50 years -
external
valuation
Freehold - 183/(183) 443/(443) 78/(72) 183/(169)
Directors'
valuation
11. Mining reserves, plant and equipment
Office
equipment
Mining Mining and motor
Total reserves equipment vehicles
GBP'000 GBP'000 GBP'000 GBP'000
Cost at 1 January 2016 17,188 995 15,453 740
Exchange adjustment 6,273 349 5,858 66
Additions 2,862 - 2,814 48
Disposals (506) - (401) (105)
At 31 December 2016 25,817 1,344 23,724 749
Accumulated depreciation at 1 January 2016 11,636 949 10,201 486
Exchange adjustment 4,202 336 3,824 42
Charge for the year 1,818 2 1,746 70
Disposals in year (492) - (401) (91)
Accumulated depreciation at 31 December 2016 17,164 1,287 15,370 507
Net book value at 31 December 2016 8,653 57 8,354 242
Cost at 1 January 2015 19,536 1,266 17,539 731
Exchange adjustment (4,361) (271) (4,048) (42)
Additions 2,022 - 1,964 58
Disposals (9) - (2) (7)
Cost at 31 December 2015 17,188 995 15,453 740
Accumulated depreciation at 1 January 2015 13,279 1,149 11,705 425
Exchange adjustment (2,963) (256) (2,679) (28)
Charge for the year 1,329 56 1,177 96
Disposals (9) - (2) (7)
Accumulated depreciation at 31 December 2015 11,636 949 10,201 486
Net book value at 31 December 2015 5,552 46 5,252 254
12. Investment in joint venture
Shares in joint venture:
2016 2015
GBP'000 GBP'000
At 1 January 325 3,434
Share of profit after tax (Langney) - 71
Dividends received (Langney) - (210)
Loss on reclassification of asset held for sale (Langney) - (276)
Exchange adjustment 130 (359)
Transfer to assets held for sale (Langney) (note 14) - (2,335)
At 31 December 455 325
Results of joint venture:
Ezimbokodweni
49% 2016 2015
GBP'000 GBP'000 GBP'000
Turnover - - 344
Loss before tax - - (204)
Loss after taxation - - (204)
Balance sheet
Non-current assets 1,346 1,346 5,467
Current assets 3 3 206
Current liabilities (1,349) (1,349) (989)
Non-current liabilities - - (2,349)
Share of net assets at 31 December - - 2,335
Reconciliation to amounts included in the financial statements:
Ezimbokodweni Total Total
49.00% 2016 2015
Group share of: GBP'000 GBP'000 GBP'000
Amount invested in excess of net assets 455 455 325
Shares in joint venture 455 455 325
Ezimbokodweni Mining (Pty) Limited (Ezimbokodweni) - unlisted coal production
company. The Group owns, via Bisichi Mining PLC, 49% of the issued share
capital. The company is incorporated in South Africa and its registered address
is Samora Machel Street, Bethal Road, Middelburg, Mpumalanga, 1050. It has
issued share capital of 100 (2015: 100) ordinary shares of ZAR1 each. No
dividends were received during the period. Included in the carrying value of
the net investment in the joint venture assets in note 13 is a loan to
Ezimbokodweni of GBP1,350,000 (2015: GBP900,000) and an equity investment of GBP
455,000 (2015: GBP325,000). The loan bears interest at the South African prime
overdraft rate plus 1.5%. The loan is unsecured and repayable on demand.
Langney Shopping Centre Unit Trust (Langney) - Prior to 11 March 2016, the
Group owned 25% of the units of Langney Shopping Centre Unit Trust, an unlisted
property unit trust incorporated in Jersey. 25% of the units in the trust were
held by London & Associated Properties PLC and Bisichi Mining PLC equally and
75% were held by Columbus UK GP limited, a partner acting on behalf of Columbus
UK Real Estate Fund. On the 11 March 2016, the Group disposed of its investment
in Langney Shopping Centre Unit Trust. The net proceeds from the sale were GBP
2,335,000 which includes GBP60,000 dividends repaid post year end. At 31 December
2015, the investment was transferred from investment in joint ventures to
assets held for sale in the balance sheet. At year end, the share of the net
assets of the trust held by the Group were GBPnil (2015: GBP2,335,000) which
includes a loss on the reclassification of the asset to held for sale in the
amount of GBPnil (2015: GBP276,000).
13. Loan to joint venture
2016 2015
Joint Joint
ventures ventures
assets assets
GBP'000 GBP'000
Loan to Ezimbokodweni Mining (Pty) Limited
At 1 January 900 1,040
Exchange adjustment 336 (235)
Additions - interest 114 95
At 31 December 1,350 900
14. ASSETS HELD FOR SALE
2016 2015
GBP'000 GBP'000
Investment in Langney Shopping Centre Unit Trust
At 1 January 2,335 -
Transfer from investment in joint venture (note 12) - 2,335
Disposal (2,335) -
At 31 December - 2,335
On the 11 March 2016, the Group disposed of its investment in Langney Shopping
Centre Unit Trust, an unlisted property unit trust incorporated in Jersey. The
Group owned 25% of the units of the trust. The net proceeds from the sale were
GBP2,335,000 (including dividend). At year end, the Group's share of the net
assets of the trust was GBPnil (2015: GBP2,335,000).
15. Subsidiary companies
In accordance with Section 409 of the Companies Act 2006 a full list of
subsidiaries, the principal activity, the country of incorporation and the
percentage of equity owned, as at 31 December 2016 is disclosed below:
Entity Activity Percentage Registered address Country of
of share incorporation
capital
Analytical Investments Dormant 100% 24 Bruton Place, England and
Limited London, W1J 6NE Wales
Analytical Portfolios Dormant 100% 24 Bruton Place, England and
Limited London, W1J 6NE Wales
Analytical Properties Property 100% 24 Bruton Place, England and
Holdings Limited London, W1J 6NE Wales
Analytical Properties Property 100% 24 Bruton Place, England and
Limited London, W1J 6NE Wales
Analytical Ventures Limited Property 100% 24 Bruton Place, England and
London, W1J 6NE Wales
24 Bruton Place Limited Dormant 100% 24 Bruton Place, England and
London, W1J 6NE Wales
24 BPL (Harrogate) Limited Investment 88% 24 Bruton Place, England and
London, W1J 6NE Wales
24 BPL (Harrogate ) Two Investment 100% 24 Bruton Place, England and
Limited London, W1J 6NE Wales
Brixton Village Limited Property 100% 24 Bruton Place, England and
London, W1J 6NE Wales
Market Row Limited Property 100% 24 Bruton Place, England and
London, W1J 6NE Wales
Newincco 1243 Limited Property 100% 24 Bruton Place, England and
London, W1J 6NE Wales
Newincco 1244 Limited Property 100% 24 Bruton Place, England and
London, W1J 6NE Wales
Newincco 1245 Limited Property 100% 24 Bruton Place, England and
Management London, W1J 6NE Wales
Services
Newincco 1299 Limited Property 100% 24 Bruton Place, England and
London, W1J 6NE Wales
Newincco 1300 Limited Property 100% 24 Bruton Place, England and
London, W1J 6NE Wales
LAP Ocean Holdings Limited Property 100% 24 Bruton Place, England and
London, W1J 6NE Wales
LAP Ocean Two Limited Property 100% 24 Bruton Place, England and
London, W1J 6NE Wales
London & Associated Limited Dormant 100% 24 Bruton Place, England and
London, W1J 6NE Wales
London & Associated Dormant 100% 24 Bruton Place, England and
(Rugeley) Limited London, W1J 6NE Wales
London & Associated Dormant 100% 24 Bruton Place, England and
Securities Limited London, W1J 6NE Wales
London & Associated Property 100% 24 Bruton Place, England and
Management Services Limited Management London, W1J 6NE Wales
Services
London & African Dormant 100% 24 Bruton Place, England and
Investments Limited London, W1J 6NE Wales
Orchard Chambers Dormant 100% 24 Bruton Place, England and
Residential Limited London, W1J 6NE Wales
Bisichi Mining PLC (note D) Coal 41.52% 24 Bruton Place, England and
mining London, W1J 6NE Wales
Mineral Products Limited Share 100% 24 Bruton Place, England and
(note A)(note D) dealing London, W1J 6NE Wales
Bisichi (Properties) Property 100% 24 Bruton Place, England and
Limited (note A)(note D) London, W1J 6NE Wales
Bisichi Mining Holding 100% 24 Bruton Place, England and
(Exploration) Limited (note company London, W1J 6NE Wales
A)(note D)
Black Wattle Colliery (Pty) Coal 62.5% Samora Machel Street, South Africa
Limited (note A)(note D) mining Bethal Road,
Middelburg, Mpumalanga,
1050
Bisichi Coal Mining (Pty) Coal 100% Samora Machel Street, South Africa
Limited (note A)(note D) mining Bethal Road,
Middelburg, Mpumalanga,
1050
Urban First (Northampton) Dormant 100% 24 Bruton Place, England and
Limited (note A)(note D) London, W1J 6NE Wales
Bisichi Trustee Limited Property 100% 24 Bruton Place, England and
(note A)(note D) London, W1J 6NE Wales
Bisichi Mining Management Dormant 100% 24 Bruton Place, England and
Services Limited (note A) London, W1J 6NE Wales
(note D)
Ninghi Marketing Limited Dormant 90.1% 24 Bruton Place, England and
(note A)(note D) London, W1J 6NE Wales
Bisichi Northampton Limited Property 100% 24 Bruton Place, England and
(note A)(note D) London, W1J 6NE Wales
Amandla Ehtu Mineral Dormant 70% Samora Machel Street, South Africa
Resource Development (Pty) Bethal Road,
Limited (note A)(note D) Middelburg, Mpumalanga,
1050
Ezimbokodweni Mining (Pty) Dormant 49% Samora Machel Street, South Africa
Limited (note A)(note D) Bethal Road,
Middelburg, Mpumalanga,
1050
Black Wattle Klipfontein Coal 62.5% Samora Machel Street, South Africa
(Pty) Limited (note A)(note mining Bethal Road,
D) Middelburg, Mpumalanga,
1050
Dragon Retail Properties Property 50% 24 Bruton Place, England and
Limited (note B)(note D) London, W1J 6NE Wales
Newincco 1338 Limited (note Property 100% 24 Bruton Place, England and
C) London, W1J 6NE Wales
Details on the non-controlling interest in subsidiaries are shown under note
27.
Note A: these companies are owned by Bisichi and the equity shareholdings
disclosed relate to that company.
Note B: this entity is a joint venture owned 50% by LAP and 50% by Bisichi.
Note C: this company is owned by Dragon and the equity shareholdings disclosed
relate to that company.
Note D: Bisichi and Dragon and their subsidiaries are included in the
consolidated financial statements in accordance with IFRS 10.
16. Inventories
2016 2015
GBP'000 GBP'000
Coal
Washed 1,139 778
Run of mine 83 110
Work in progress 458 122
Other 41 39
1,721 1,049
17. Held to maturity investments AND OTHER INVESTMENTS
Held to maturity investments:
2016 Unlisted Loan 2015 Unlisted Loan
Total shares stock Total shares stock
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 1,995 1 1,994 2,196 1 2,195
Repayments (121) - (121) (201) - (201)
At 31 December 1,874 1 1,873 1,995 1 1,994
The Group owns a 6.95% interest in the equity and loans of HRGT Shopping
Centres LP (HRGT), a limited partnership set up in England to acquire and own 3
shopping centres in Dunfermline, Kings Lynn and Loughborough. 92.10% of the
equity and loans are owned by Oaktree Capital Management and 0.95% by Gooch
Cunliffe Whale LLP. London & Associated Management Services Limited has a
management contract to manage the properties on behalf of HRGT.
Other investments:
2016 2015
GBP'000 GBP'000
Net book and market value of investments listed on overseas stock 32 14
exchange
32 14
18. Trade and other receivables
2016 2015
GBP'000 GBP'000
Trade receivables 4,701 4,129
Other receivables 1,010 1,385
Prepayments and accrued income 1,350 988
7,061 6,502
The directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
19. Investments available for sale and held for trading
2016 2015
GBP'000 GBP'000
Market bid value of the listed investment portfolio - available for 781 594
sale
Market bid value of the listed investment portfolio - held for trading 19 20
Unrealised gain/(loss) of market value over cost 45 (146)
Listed investment portfolio at cost 755 760
Investments are listed on the London Stock Exchange with the exception of GBP
60,000 (2015: GBP26,000) listed outside Great Britain.
The directors have reviewed the individual investments for impairment and do
not consider the investments which are below cost to be impaired.
20 Trade and other payables
2016 2015
GBP'000 GBP'000
Trade payables 3,618 2,289
Other taxation and social security costs 739 661
Other payables 2,815 2,687
Accruals and deferred income 5,770 4,860
12,942 10,497
The directors consider that the carrying amount of trade and other payables
approximates to their fair value.
21. Borrowings
2016 2016 2015 2015
GBP'000 GBP'000 GBP'000 GBP'000
Current Non-current Current Non-current
Other loans (Bisichi) 24 - 33 -
GBP1.25 million term bank loan (secured) - 1,207 - 1,196
repayable by 2020 (Dragon)*
GBP3.75 million first mortgage debenture stock 750 3,000 - 3,750
2018 at 11.6 per cent
Bank overdrafts (secured) (Bisichi) 3,334 - 2,234 -
Bank loan (secured)(Bisichi) - 66 - 13
GBP10 million first mortgage debenture stock 2022 - 9,905 - 9,888
at 8.109 per cent*
GBP5.876 million term bank loan (secured) - 5,810 - 5,927
repayable by 2019 (Bisichi)*
GBP34.897 million term bank loan (secured) - 34,468 - 34,296
repayable by 2019*
GBP10.105 million term bank loan (secured) - 9,945 - 9,881
repayable by 2019 at 9.5 per cent*
4,108 64,401 2,267 64,951
Borrowings analysis by origin:
2016 2015
GBP'000 GBP'000
United Kingdom 65,085 64,938
South Africa 3,424 2,280
68,509 67,218
* The GBP10 million debenture and bank loans are shown after deduction of
un-amortised issue costs.
Interest payable on the term bank loans is variable being based upon the London
inter-bank offered rate (LIBOR) plus margin.
In 2015, the Group repaid early GBP1.25 million of the GBP5 million first mortgage
debenture stock 2018, at an additional cost of GBP158,000.
First Mortgage Debenture Stocks August 2018 and 2022 and the GBP34.897 million
and GBP10.105 million term bank loans repayable in July 2019 are secured by way
of a charge on specific freehold and leasehold properties which are included in
the financial statements at a value of GBP87.38 million. In addition, GBP0.53
million of cash deposits are charged as security to debenture stocks. The GBP
34.897 million bank loan has an interest cost of 2 per cent above LIBOR. An
interest rate swap and cap agreements have been entered into as detailed in
note 23.
The Bisichi United Kingdom bank loans and overdraft are secured by way of a
first charge over the investment properties in the UK which are included in the
financial statements at a value of GBP13.2 million. During the year, Bisichi
breached a loan to value covenant on the bank loan. Bisichi made a GBP123,300
payment against the loan and remedied the covenant breach, leaving a loan due
of GBP5.876 million. The interest cost of the bank loan is 2.35 per cent above
LIBOR.
The Bisichi South African bank loans are secured by way of a first charge over
specific pieces of mining equipment, inventory and the debtors of the relevant
company which holds the loan which are included in the financial statements at
a value of GBP6.057 million.
The bank loan of GBP1.25 million (Dragon) which is repayable in November 2020 is
secured by way of a first charge on specific freehold property and which is
included in the financial statements at a value of GBP2.58 million. The interest
cost of the loan is 2 per cent above LIBOR.
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.
22. Provisions
2016 2015
GBP'000 GBP'000
At 1 January 847 930
Exchange adjustment 311 (162)
Unwinding of discount 78 79
At 31 December 1,236 847
The above provision relates to mine rehabilitation costs in Bisichi.
23. Financial instruments
Total financial assets and liabilities
The Group's financial assets and liabilities and their fair values are as
follows:
Fair 2016 Fair 2015
value Carrying value Carrying
GBP'000 value GBP'000 value
GBP'000 GBP'000
Cash and cash equivalents 6,265 6,265 4,809 4,809
Assets held for sale - - 2,335 2,335
Investments held to maturity 1,874 1,874 1,995 1,995
Loan to joint venture 1,350 1,350 900 900
Other investments 32 32 14 14
Investments held for trading 19 19 20 20
Available for sale investments 781 781 594 594
Derivative assets 4 4 15 15
Other assets 5,711 5,711 5,514 5,514
Derivative liabilities (793) (793) (587) (587)
Bank overdrafts (3,334) (3,334) (2,234) (2,234)
Bank loans (52,218) (51,520) (52,298) (51,346)
Present value of head leases on properties (4,767) (4,767) (4,784) (4,784)
Other liabilities (12,942) (12,942) (10,497) (10,497)
Total financial liabilities before debentures (58,018) (57,320) (54,204) (53,252)
Fair value of debenture stocks
Fair value of the Group's debenture liabilities:
2016 2015
Book Fair Fair value Fair value
value value adjustment adjustment
GBP'000 GBP'000 GBP'000 GBP'000
Debenture stocks (13,750) (17,276) (3,526) (3,575)
Tax at 20 per cent (2015: 20 per cent) - - 705 715
Post tax fair value adjustment - - (2,821) (2,860)
Post tax fair value adjustment - basic pence - - (3.3)p (3.3)p
per share
There is no material difference in respect of other financial liabilities or
any financial assets.
The fair values were calculated by the directors as at 31 December 2016 and
reflect the replacement value of the financial instruments used to manage the
Group's exposure to adverse rate movements.
The fair values of the debentures are based on the net present value at the
relevant gilt interest rate of the future payments of interest on the
debentures. The bank loans and overdrafts are at variable rates and there is no
material difference between book values and fair values.
Investments held for trading and available for sale fall under level 1 of the
fair value hierarchy into which fair value measurements are recognised in
accordance with the levels set out in IFRS 7. Held to maturity investments are
held at cost and other investments are held at fair value. The directors are of
the opinion that the difference in value between cost and fair value of other
investments is not significant or material. The comparative figures for 2015
fall under the same category of financial instrument as 2016.
The carrying amount of short term (less than 12 months) trade receivable and
other liabilities approximates its fair values. The fair value of non-current
borrowings in note 21 approximates its carrying value and was determined under
level 2 of the fair value hierarchy and is estimated by discounting the future
contractual cash flows at the current market interest rates for UK borrowings
and for the South African overdraft facility. The fair value of the finance
lease liabilities in note 31 approximates its carrying value was determined
under level 2 of the fair value hierarchy and is estimated by discounting the
future contractual cash flows at the current market interest rates.
Treasury policy
The Group enters into derivative transactions such as interest rate swaps and
forward exchange contracts in order to help manage the financial risks arising
from the Group's activities. The main risks arising from the Group's financing
structure are interest rate risk, liquidity risk and market price risk, credit
risk, commodity price risk and foreign exchange risk. The policies for managing
each of these risks and the principal effects of these policies on the results
are summarised below.
Sensitivity analysis
LAP and Dragon have variable interest term debts which are covered by
derivatives. Additionally, LAP has variable interest term debt covered by
interest caps. At 31 December 2016, with other variables unchanged, a 1%
increase in interest rates would change the profit/loss for the year by GBP
173,000 (2015: GBP173,000). Bisichi has variable loans and a 1% increase in
interest rates would change the profit/loss for the year by GBP56,000 (2015: GBP
67,000).
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 GBP
34.897 million bank loan and Bisichi United Kingdom bank loans and overdraft
are secured by way of a first charge on certain fixed assets. The rates of
interest vary based on LIBOR in the UK.
The GBP10.105 million term bank loan is secured by way of a second charge on
certain fixed assets. This loan is based on a fixed interest rate.
The Bisichi South African bank loans are secured by way of a first charge over
specific pieces of mining equipment, inventory and the debtors of the relevant
company which holds the loan. The rates of interest vary based on PRIME in
South Africa.
The GBP1.25 million bank loan (Dragon) is secured by way of a first charge on
specific freehold property. The rate of interest varies based on LIBOR in the
UK.
Liquidity risk
The Group's policy is to minimise refinancing risk by balancing its exposure to
interest risk and to refinancing risk. In effect the Group seeks to borrow for
as long as possible at the lowest acceptable cost. Efficient treasury
management and strict credit control minimise the costs and risks associated
with this policy which ensures that funds are available to meet commitments as
they fall due. Cash and cash equivalents earn interest at rates based on LIBOR
in the UK. These facilities are considered adequate to meet the Group's
anticipated cash flow requirements for the foreseeable future.
In South Africa, an increase in the structured trade facility from R60 million
(South African Rand) to R80 million was signed by Black Wattle Colliery (Pty)
Limited with Absa Bank Limited, a South African subsidiary of Barclays Bank
PLC. The facility is renewable annually at 30 June and is secured against
inventory, debtors and cash that are held by Black Wattle Colliery (Pty)
Limited.
The table below analyses the Group's financial liabilities (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.
2016 Less 2-5 Over
Total than years 5 years
GBP'000 1 year GBP'000
GBP'000 GBP'000
Bank overdrafts (floating) 3,334 3,334 - -
Debentures (fixed) 13,655 750 3,000 9,905
Bank loans (fixed) 9,945 - 9,945 -
Bank loans (floating)* 41,575 24 41,551 -
Trade and other payables (non-interest) 12,942 12,942 - -
81,451 17,050 54,496 9,905
2015 Less 2-5 Over
Total than years 5 years
GBP'000 1 year GBP'000
GBP'000 GBP'000
Bank overdrafts (floating) 2,234 2,234 - -
Debentures (fixed) 13,638 - 3,750 9,888
Bank loans (fixed) 9,881 - 9,881 -
Bank loans (floating)* 41,465 33 41,432 -
Trade and other payables (non-interest) 11,506 10,636 737 133
78,724 12,903 55,800 10,021
The Group would normally expect that sufficient cash is generated in the
operating cycle to meet the contractual cash flows as disclosed above through
effective cash management.
*Certain bank loans are fully hedged with appropriate interest derivatives.
Details of all hedges are shown below.
Market price risk
The Group is exposed to market price risk through interest rate and currency
fluctuations.
Credit risk
At the balance sheet date there were no significant concentrations of credit
risk. The maximum exposure to credit risk is represented by the carrying amount
of each financial asset in the balance sheet. The Group only deposits surplus
cash with well-established financial institutions of high quality credit
standing.
Foreign exchange risk
Only Bisichi is subject to this risk. All trading is undertaken in the local
currencies except for certain export sales that commenced during 2016 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 2016 and 2015 the Bisichi Group did not hedge its
exposure of foreign investments held in foreign currencies.
The Bisichi directors consider there to be no significant risk from exchange
rate movements of foreign currencies against the functional currencies of the
reporting companies within the Bisichi Group, excluding inter-company balances.
The principle 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 as at 31
December 2016, 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 GBP435,000 (2015: GBP344,000). 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 GBP725,000 (2015: GBP
573,000).
The 25% sensitivity has been determined based on the average historic
volatility of the exchange rate for 2015 and 2016.
The table below shows the Bisichi currency profiles of cash and cash
equivalents:
2016 2015
GBP'000 GBP'000
Sterling 1,717 1,135
South African Rand 725 470
US Dollar 2 3
2,444 1,608
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:
2016: UK South
GBP'000 Africa
GBP'000
Sterling (2,522) -
South African Rand 36 (2,262)
US Dollar 35 -
(2,451) (2,262)
2015: UK South
GBP'000 Africa
GBP'000
Sterling (3,221) -
South African Rand 89 (136)
US Dollar 13 -
(3,119) (136)
Borrowing facilities
At 31 December 2016 the Group was within its bank borrowing facilities and was
not in breach of any of the covenants. Term loan repayments are as set out
below. Details of other financial liabilities are shown in Notes 20 and 21.
Interest rate and hedge profile
2016 2015
GBP'000 GBP'000
Fixed rate borrowings 23,855 23,855
Floating rate borrowings
- Subject to interest rate swap 36,147 36,148
- Other borrowings 9,300 8,280
69,302 68,283
Average fixed interest rate 9.24% 9.24%
Weighted average swapped interest rate 3.3% 3.41%
Weighted average cost of debt on overdrafts, bank loans and debentures 5.8% 5.71%
Average period for which borrowing rate is fixed 3.8 4.8
years years
Average period for which borrowing rate is swapped 2.5 3.5
years years
The Group's floating rate debt bears interest based on LIBOR for the term bank
loans and bank base rate for the overdraft.
At 31 December 2016 the Group had hedges totaling GBP34.897 million to cover the
GBP34.9 million bank loan. These consisted of a 5 year swap for GBP17.5 million,
taken out in July 2014 at 2.25% and a GBP17.5 million cap agreement taken out in
July 2014 at 2.25% until 29 January 2016 and a swaption at 2.25% on the capped
portion from 29 January 2016 to 1 July 2019. During the year the swaption was
not exercised and was replaced in January 2016 with a GBP17.397 million cap
agreement to 1 July 2019.
At the year end the fair value liability in the accounts was GBP793,000 (2015: GBP
587,000) as valued by the hedge provider.
At 31 December 2016, Dragon had hedges of GBP1.25 million to cover the GBP1.25
million bank loan. This consists of a 5 year GBP1.25 million cap agreement taken
out in November 2015 at 2.5%. At the year end, the fair value asset in the
accounts was GBP4,000, as valued by the hedge provider.
Fair value of financial instruments
Fair value estimation
The Group has adopted the amendment to IFRS 7 for financial instruments that
are measured in the balance sheet at fair value. This requires the methods of
fair value measurement to be classified into a hierarchy based on the
reliability of the information used to determine the valuation, as follows:
- Quoted prices (unadjusted) in active markets for identical assets or
liabilities (level 1).
- Inputs other than quoted prices included within level 1 that are observable
for the asset or liability, either directly (that is, as prices) or indirectly
(that is, derived from prices) (level 2).
- Inputs for the asset or liability that are not based on observable market
data (that is unobservable inputs) (level 3).
Level 1 Level 2 Level 3 Total 2016
GBP'000 GBP'000 GBP'000 GBP'000 Gain/
(loss)
to income
statement
GBP'000
Financial assets
Other financial assets held for trading and
available for sale
Quoted equities 832 - - 832 13
Derivative financial instruments
Interest rate swaps - 4 - 4 (11)
Financial liabilities
Derivative financial instruments
Interest rate swaps - 793 - 793 (206)
Level 1 Level 2 Level 3 Total 2015
GBP'000 GBP'000 GBP'000 GBP'000 Gain/
(loss)
to income
statement
GBP'000
Financial assets
Other financial assets held for trading and
available for sale
Quoted equities 614 - - 614 (12)
Derivative financial instruments
Interest rate swaps - 15 - 15 -
Financial liabilities
Derivative financial instruments
Interest rate swaps - 587 - 587 84
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:
2016 2015
GBP'000 GBP'000
Total debt 68,509 67,218
Less cash and cash equivalents (6,265) (4,809)
Net debt 62,244 62,409
Total equity 48,631 49,652
128.0% 125.7%
The Group does not have any externally imposed capital requirements.
Financial assets
The Group's principal financial assets are bank balances and cash, trade and
other receivables and investments. The Group has no significant concentration
of credit risk as exposure is spread over a large number of counterparties and
customers. The credit risk in liquid funds and derivative financial instruments
is limited because the counterparties are banks with high credit ratings
assigned by international credit-rating agencies. The Group's credit risk is
primarily attributable to its trade receivables. The amounts presented in the
balance sheet are net of allowances for doubtful receivables, estimated by the
Group's management based on prior experience and the current economic
environment.
Financial assets maturity
Cash and cash equivalents all have a maturity of less than three months.
2016 2015
GBP'000 GBP'000
Cash at bank and in hand 6,265 4,809
These funds are primarily invested in short term bank deposits maturing within
one year bearing interest at the bank's variable rates.
Financial liabilities maturity
Repayment of borrowings
2016 2015
GBP'000 GBP'000
Bank loans and overdrafts:
Repayable on demand or within one year 3,358 2,267
Repayable between two and five years 51,496 51,313
54,854 53,580
Debentures:
Repayable within one year 750 -
Repayable between two and five years 3,000 3,750
Repayable in more than five years 9,905 9,888
68,509 67,218
Certain borrowing agreements contain financial and other conditions that if
contravened by the Group, could alter the repayment profile.
24. Deferred tax asset
2016 2015
GBP'000 GBP'000
Balance at 1 January 2,390 2,324
Transferred to consolidated income statement (1,256) 66
Balance at 31 December 1,134 2,390
The deferred tax balance comprises the following:
Revaluation of properties (2,719) (2,226)
Accelerated capital allowances (904) (952)
Fair value of interest derivatives 151 111
Short-term timing differences (124) (131)
Loss relief 4,730 5,588
Deferred tax asset at end of year: 1,134 2,390
The directors consider the temporary differences arising in connection with the
interests in joint ventures are insignificant. There is no time limit in
respect of the Group tax loss relief.
Included within short term timing differences recognised in income during the
year is an adjustment of GBP168,000 related to an over provision of short term
timing differences in the prior year.
In addition, the Group has unused losses and reliefs with a potential value of
GBP5,455,000 (2015: GBP4,945,000), which have not been recognised as a deferred tax
asset. As the Group returns to profit, these losses and reliefs can be
utilised.
25. Deferred tax liabilitIES
2016 2015
GBP'000 GBP'000
Balance at 1 January 2,106 2,410
Transferred to consolidated income statement (154) 29
Transferred to other comprehensive income 13 (41)
Exchange adjustment 364 (292)
Balance at 31 December 2,329 2,106
The deferred tax balance comprises the following:
Revaluation of properties 793 724
Accelerated capital allowances 1,347 1,490
Short-term timing differences 191 (111)
Fair value of interest derivatives - 3
Unredeemed capital deductions (642) -
Losses and other deductions 640 -
Deferred tax liability provision at end of year: 2,329 2,106
26. Share capital
The Company has one class of ordinary shares which carry no right to fixed
income.
Number of Number of
ordinary ordinary
10p 10p 2016 2015
shares shares GBP'000 GBP'000
2016 2015
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
Less: held in Treasury (see below) (221,061) (734,816) (22) (73)
"Issued share capital" for reporting purposes 85,321,650 84,807,895 8,532 8,481
Treasury shares
Number of ordinary Cost/issue
10p shares value
2016 2015 2016 2015
GBP'000 GBP'000
Shares held in Treasury at 1 January 734,816 1,032,991 482 883
Issued for share incentive plan -dividends (1,936) - (1) -
investment (Jan 2016 - 25p)
Issued to meet directors bonuses (Jan 2016 - (69,225) (431,476) (45) (369)
24.50p) (Jan 2015 - 37.75p)
Issued to meet staff bonuses (Jan 2016 - 24.50p) (154,073) (111,678) (101) (95)
(Jan 2015 - 37.75p)
Issued for new directors share incentive plan (Jan (24,488) (7,947) (16) (7)
2016 - 24.50p) (Jan 2015 - 37.75p)
Issued for new staff share incentive plan (Jan 2016 (36,732) (47,271) (24) (40)
- 24.50p) (Jan 2015 - 37.75p)
Purchase of shares (Jun 2015 - 37.69p) - 133,333 - 50
Purchase of shares (Oct 2015 - 36.18p) - 166,864 - 60
Issued for share incentive plan -dividends (2,831) - (2) -
investment (Nov 2016 - 21.25p)
Issue for new staff share incentive plan (Nov 2016 (224,470) - (148) -
- 21.25p)
Shares held in Treasury at 31 December 221,061 734,816 145 482
Share Option Schemes
Employees' share option scheme (Approved scheme)
At 31 December 2016 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 2016 is as follows:
Changes during the year
At 1 At 31
January Options Options Options December
2016 Exercised granted lapsed 2016
Shares issued to date 2,367,604 - - - 2,367,604
Shares allocated over which options have 1,549,955 - - - 1,549,955
not been granted
Total shares allocated for issue to 3,917,559 - - - 3,917,559
employees under the scheme
Non-approved Executive Share Option Scheme (Unapproved scheme)
A share option scheme known as the "Non-approved Executive Share Option Scheme"
which does not have HMRC approval was set up during 2000. At 31 December 2016
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 2016 is as follows:
Changes during the year
At 1 At 31
January Options Options Options December
2016 Exercised granted lapsed 2016
Shares issued to date 450,000 - - - 450,000
Shares allocated over which options have 550,000 - - - 550,000
not yet been granted
Total shares allocated for issue to 1,000,000 - - - 1,000,000
employees under the scheme
The Bisichi Mining PLC Unapproved Option Schemes
Details of the share option schemes in Bisichi are as follows:
Subscription Period Number of Number of Number of
price per within shares share shares
Year of grant share which for which options for which
options options issued/ options
exercisable outstanding exercised/ outstanding
at (cancelled) at
31 December during year 31 December
2015 2016
2006 237.5p Oct 2009 - 325,000 (325,000) -
Oct 2016
2010 202.5p Aug 2013 - 80,000 - 80,000
Aug 2020
2015 87.0p Sep 2015 - 300,000 - 300,000
Sep 2025
The exercise of options under the Unapproved Share Option Schemes, for certain
option issues, is subject to the satisfaction of objective performance
conditions specified by the remuneration committee, which will conform to
institutional shareholder guidelines and best practice provisions in force from
time to time. The performance conditions for the 2010 scheme, agreed by members
on 31 August 2010 respectively, requires growth in net assets over a three year
period to exceed the growth of the retail prices index by a scale of
percentages. There are no performance or service conditions attached to 2015
options which are outstanding at 31 December 2016 which vested in 2015.
2016 2015
Weighted Weighted
2016 average 2015 average
Number exercise Number exercise
price price
Outstanding at 1 January 705,000 133.1p 598,000 167.1p
Granted during year - - 300,000 87.0p
Lapsed during the year (325,000) 237.5p (193,000) 34.0p
Outstanding at 31 December 380,000 111.5p 705,000 133.1p
Exercisable at 31 December 380,000 111.5p 705,000 133.1p
The 2016 share based payment charge of GBP109,000 relates to the remaining grant
date fair value in respect of the 300,000 share options granted to A R Heller
and G J Casey in 2015, with a corresponding entry to the share based payment
reserve. There were no vesting conditions attached to these share options and
therefore they should have been fully expensed in 2015, rather than spread over
the estimated life of the options. As the error is not considered to be
material to the current or prior year financial statements it has been
corrected in the current period.
27. Non-controlling interest ("NCI")
2016 2015
GBP'000 GBP'000
As at 1 January 9,574 10,826
Share of profit/(loss) for the year 208 (147)
Share of gain/(loss) on available for sale investments 104 (94)
Dividends received (250) (250)
Shares issued 64 18
Shares cancelled - (64)
Exchange movement 689 (718)
Other changes in equity - 3
As at 31 December 10,389 9,574
The following subsidiaries had material NCI:
Bisichi Mining 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 MINING PLC 2016 2015
GBP'000 GBP'000
Revenue 22,791 25,654
Profit/(loss) for the year attributable to owners of the parent 479 (259)
(Loss)/profit for the year attributable to NCI (72) 4
Profit/(loss) for the year 407 (255)
Other comprehensive income/(expense) attributable to owners of the 1,186 (1,241)
parent
Other comprehensive income/(expense) attributable to NCI 100 (87)
Other comprehensive income/(expense) for the year 1,286 (1,328)
Balance sheet
Non-current assets 24,649 20,480
Current assets 12,224 10,635
Total assets 36,873 31,115
Current liabilities (10,326) (6,501)
Non-current liabilities (9,541) (8,983)
Total liabilities (19,867) (15,484)
Net current assets at 31 December 17,006 15,631
Cash flows
From operating activities 2,941 1,979
From investing activities (1,570) (2,773)
From financing activities (969) (947)
Net cash flows 402 (1,741)
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") 2016 2015
GBP'000 GBP'000
Revenue 21,703 24,608
Expenses (22,185) (24,582)
(Loss)/profit for the year (482) 26
Total comprehensive (expense)/income for the year (482) 26
Balance sheet
Non-current assets 8,516 5,355
Current assets 8,600 5,932
Current liabilities (12,151) (7,156)
Non-current liabilities (2,635) (1,988)
Net assets at 31 December 2,330 2,143
The non-controlling interest relates to the disposal of a 37.5% shareholding in
Black Wattle in 2010. The total issued share capital in Black Wattle Colliery
(Pty) Ltd was increased from 136 shares to 1,000 shares at par of ZAR1 (South
African Rand) through the following shares issue:
- a subscription for 489 ordinary shares at par by Bisichi Mining (Exploration)
Limited increasing the number of shares held from 136 ordinary shares to a
total of 675 ordinary shares;
- a subscription for 110 ordinary shares at par by Vunani Mining (Pty) Ltd;
- a subscription for 265 "A" shares at par by Vunani Mining (Pty) Ltd
Bisichi Mining (Exploration) Limited is a wholly owned subsidiary of Bisichi
Mining PLC incorporated in England and Wales.
Vunani Mining (Pty) Ltd is a South African Black Economic Empowerment company
and minority shareholder in Black Wattle.
The "A" shares rank pari passu with the ordinary shares save that they will
have no dividend rights until such time as the dividends paid by Black Wattle
Colliery (Pty) Ltd on the ordinary shares subsequent to 30 October 2008 will
equate to ZAR832,075,000.
A non-controlling interest of 15% in Black Wattle is recognised for all profits
distributable to the 110 ordinary shares held by Vunani Mining (Pty) Ltd from
the date of issue of the shares (18 October 2010). An additional
non-controlling interest will be recognised for all profits distributable to
the 265 "A" shares held by Vunani Mining (Pty) Ltd after such time as the
profits available for distribution, in Black Wattle Colliery (Pty) Ltd, before
any payment of dividends after 30 October 2008, exceeds ZAR832,075,000.
28. Related party transactions
Cost Amounts Advanced
recharged owed to
to (by) by (to) (by)
related related related
party party party
GBP'000 GBP'000 GBP'000
Related party:
Langney Shopping Centre Unit Trust
Current account 19 (i) - -
Loan account - - (128)
Simon Heller Charitable Trust
Current account (63) - -
Loan account - (700) -
Directors and key management
M A Heller and J A Heller 6 (i) 6 -
H D Goldring (Delmore Asset (30) (ii) (15) -
Management Limited)
C A Parritt (19) (ii) (18) -
R Priest (A & M Europe LLP) (34) (ii) (34) -
Ezimbokodweni Mining (pty) Limited 114 1,350 -
Totals at 31 December 2016 (7) 589 (128)
Totals at 31 December 2015 53 340 (208)
Nature of costs recharged - (i) Property management fees (ii) Consultancy fees.
Langney Shopping Centre Unit Trust (joint venture)
Langney Shopping Centre Unit Trust (Langney) was owned 12.5 per cent by the
Company and 12.5 per cent by Bisichi Mining PLC. The remaining 75 per cent is
owned by Columbus Capital Management LLP. This investment was sold in March
2016.
The Company provided property management services to Langney.
Ezimbokodweni Mining (PTY) Limited (Joint Venture)
Ezimbokodweni Mining is a Bisichi joint venture and is treated as a non-current
asset investment. It is a prospective coal production company based in South
Africa. Ezimbokodweni Mining (Pty) Limited is a joint venture and a loan to the
joint venture is treated as part of the net investment in the joint venture.
Further details on the net investment in Ezimbokodweni can be found in note 12.
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 GBP300,000 for the year (2015: GBP300,000).
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 GBP10,000 (2015: GBP10,000) 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 GBP700,000 at an interest
rate of 9% which is refundable on demand.
Delmore Holdings Limited (Delmore) is a Company in which H D Goldring is a
majority shareholder and director. Delmore provides consultancy services to the
Company on an invoiced fee basis.
Alvarez & Marsal Real Estate Advisory Services LLP (A&M) is a company in which
R Priest was a director. A&M provided consultancy services to the Company on an
invoiced fee basis.
In 2012 a loan of GBP116,000 was made by Bisichi to one of the Bisichi directors
- A R Heller. The loan amount outstanding at the year end was GBP71,000 (2015: GBP
86,000) and a repayment of GBP15,000 (2015: GBP15,000) was made during the year.
Interest is payable on the loan at a rate of 6.14 percent. There is no fixed
repayment date for the loan.
The directors are considered to be the only key management personnel and their
remuneration including employer's national insurance for the year were GBP
1,103,000 (2015: GBP1,341,000). All other disclosures required including interest
in share options in respect of those directors are included within the
remuneration report.
29. Employees
The average number of employees, including directors, of the Group during the
year was as follows:
2016 2015
Production 185 191
Administration 46 44
231 235
Staff costs during the year were as follows:
2016 2015
GBP'000 GBP'000
Salaries and other costs 6,396 6,459
Social security costs 332 361
Pension costs 335 368
Share based payments 110 31
7,173 7,219
30. Capital Commitments
2016 2015
GBP'000 GBP'000
Commitments for capital expenditure approved but for which contracts - 306
have not been placed at the year end
Commitments for capital expenditure approved and contracted for at the 762 -
year end
Share of commitment of capital expenditure in joint venture 1,489 1,102
All the above relates to Bisichi Mining PLC.
31. Operating and finance leases
Operating leases on land and buildings
At 31 December 2016 the Group had commitments under non-cancellable operating
leases on land and buildings expiring as follows:
2016 2015
GBP'000 GBP'000
After five years 1,680 1,920
Operating lease payments represent rentals payable by the Group for its office
premises.
The leases are for an average term of ten years and rentals are fixed for an
average of five years.
Present value of head leases on properties
Minimum lease Present value
payments of minimum
lease payments
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Within one year 305 306 305 306
Second to fifth year 1,222 1,225 1,130 1,139
After five years 29,734 30,142 3,332 3,339
31,261 31,673 4,767 4,784
Future finance charges on finance leases (26,494) (26,889) - -
Present value of finance lease liabilities 4,767 4,784 4,767 4,784
Finance lease liabilities are in respect of leased investment property. Many
leases provide for contingent rent in addition to the rents above, usually a
proportion of rental income.
Finance lease liabilities are effectively secured as the rights to the leased
asset revert to the lessor in the event of default.
Future aggregate minimum rentals receivable
The Group leases out its investment properties to tenants under operating
leases. The future aggregate minimum rentals receivable under non-cancellable
operating leases are as follows:
2016 2015
GBP'000 GBP'000
Within one year 6,684 6,491
Second to fifth year 20,104 20,207
After five years 36,736 35,622
63,524 62,320
32. Contingent liabilities and events after the reporting period
There were no contingent liabilities at 31 December 2016 (2015: GBPNil), except
as disclosed in Note 23.
Bank guarantees have been issued by the bankers of Black Wattle Colliery (Pty)
Limited on behalf of the Company to third parties. The guarantees are secured
against the assets of the Company and have been issued in respect of the
following:
2016 2015
GBP'000 GBP'000
Rail siding & 63 47
transportation
Rehabilitation of mining 1,364 1,009
land
Water & electricity 57 42
1,484 1,098
33. Company financial statements
Company balance sheet at 31 December 2016
Notes 2016 2015
GBP'000 GBP'000
Fixed assets
Tangible assets 33.3 27,383 28,468
Other investments:
Associated company - Bisichi Mining PLC 33.4 489 489
Subsidiaries and others including Dragon Retail Properties 33.4 42,492 57,472
Limited
42,981 57,961
70,364 86,429
Current assets
Assets held for sale 33.5 - 964
Debtors 33.6 1,130 1,084
Deferred tax due after more than one year 33.10 2,082 3,055
Investments 33.7 19 20
Bank balances 2,625 2,233
5,856 7,356
Creditors
Amounts falling due within one year 33.8 (34,790) (53,769)
Borrowings 33.9 (750) -
Net current liabilities (29,684) (46,413)
Total assets less current liabilities 40,680 40,016
Creditors
Amounts falling due after more than one year 33.9 (17,491) (18,228)
Net assets 23,189 21,788
Capital and reserves
Share capital 33.11 8,554 8,554
Share premium account 4,866 4,866
Capital redemption reserve 47 47
Treasury shares 33.11 (145) (482)
Retained earnings 9,867 8,803
Shareholders' funds 23,189 21,788
These financial statements were approved by the board of directors and
authorised for issue on 27 April 2017 and signed on its behalf by:
Sir Michael Heller Anil Thapar Company
Registration No. 341829
Director Director
Company statement of changes in equity for the year ended 31 December 2016
Retained
earnings
Capital excluding
Share Share redemption Treasury treasury Total
capital premium reserve shares shares equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January 2015 8,554 4,866 47 (883) 13,366 25,950
Loss for year - - - - (4,144) (4,144)
Total comprehensive income - - - - (4,144) (4,144)
Transactions with owners:
Dividends - equity holders - - - - (133) (133)
Acquisition of own shares - - - (111) - (111)
Disposal of own shares - - - 226 - 226
Loss on transfer of own shares - - - 286 (286) -
Transactions with owners - - - 401 (419) (18)
Balance at 31 December 2015 8,554 4,866 47 (482) 8,803 21,788
Profit for year - - - - 1,418 1,418
Total comprehensive income - - - - 1,418 1,418
Transaction with owners:
Dividends - equity holders - - - - (136) (136)
Disposal of own shares - - - 119 - 119
Loss on transfer of own shares - - - 218 (218) -
Transactions with owners - - - 337 (354) (17)
Balance at 31 December 2016 8,554 4,866 47 (145) 9,867 23,189
GBP7.9 million (2015: GBP5.7 million) of retained earnings (excluding treasury
shares) is distributable.
33.1. COMPANY
Accounting policies
The following are the main accounting policies of the Company:
Basis of preparation
The financial statements have been prepared on a going concern basis and in
accordance with Financial Reporting Standard 101 'Reduced Disclosure Framework'
(FRS 101) and Companies Act 2006. The financial statements are prepared under
the historical cost convention as modified to include the revaluation of
freehold and leasehold properties and fair value adjustments in respect of
current asset investments and interest rate hedges.
The results of the Company are included in the consolidated financial
statements. No profit or loss is presented by the Company as permitted by
Section 408 of the Companies Act 2006.
In these financial statements, the company has applied the exemptions available
under FRS 101 in respect of the following disclosures:
* Cash Flow Statement and related notes;
* Comparative period reconciliations for share capital, tangible fixed assets
and intangible assets;
* Disclosures in respect of transactions with wholly owned subsidiaries;
* Disclosures in respect of capital management;
* The effects of new but not yet effective IFRSs;
* Disclosures in respect of the compensation of Key Management Personnel.
As the consolidated financial statements include the equivalent disclosures,
the Company has also taken the exemptions under FRS 101 available in respect of
the following disclosures:
* IFRS 2 Share Based Payments in respect of group settled share based payments;
* The disclosures required by IFRS 7 and IFRS 13 regarding financial instrument
disclosures have not been provided apart from those which are relevant for the
financial instruments which are held at fair value and are not either held as
part of trading portfolio or derivatives.
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.
Fair value measurements of investment properties and investments
An assessment of the fair value of certain assets and liabilities, in
particular investment properties, is required to be performed. In such
instances, fair value measurements are estimated based on the amounts for which
the assets and liabilities could be exchanged between market participants. To
the extent possible, the assumptions and inputs used take into account
externally verifiable inputs. However, such information is by nature subject to
uncertainty. The directors note that the fair value measurement of the
investment properties may be considered to be less judgemental where external
valuers have been used and as a result of the nature of the underlying assets.
The following accounting policies are consistent with those of the Group and
are disclosed on page 62 to 68 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
33.2. RESULT FOR THE FINANCIAL YEAR
The Company's result for the year was a profit of GBP1,418,000 (2015 loss: GBP
4,144,000). In accordance with the exemption conferred by Section 408 of the
Companies Act 2006, the Company has not presented its own profit and loss
account.
33.3. Tangible assets
Investment Properties Office
Leasehold equipment
Leasehold under 50 and motor
Total Freehold over 50 years vehicles
GBP'000 GBP'000 years GBP'000 GBP'000
GBP'000
Cost or valuation at 1 January 2016 28,769 8,460 18,216 1,644 449
Additions 31 28 - - 3
Disposals (105) - - - (105)
Decrease in present value of head (4) - (2) (2) -
leases
(Decrease)/increase on revaluation (1,073) 397 (1,470) - -
Cost or valuation at 31 December 2016 27,618 8,885 16,744 1,642 347
Representing assets stated at:
Valuation 27,271 8,885 16,744 1,642 -
Cost 347 - - - 347
27,618 8,885 16,744 1,642 347
Depreciation at 1 January 2016 301 - - - 301
Charge for the year 25 - - - 25
Disposals (91) - - - (91)
Depreciation at 31 December 2016 235 - - - 235
Net book value at 1 January 2016 28,468 8,460 18,216 1,644 148
Net book value at 31 December 2016 27,383 8,885 16,744 1,642 112
The freehold and leasehold properties, excluding the present value of head
leases and directors' valuations, were valued as at 31 December 2016 by
professional firms of chartered surveyors. The valuations were made at fair
value. The directors' property valuations were made at fair value.
2016 2015
GBP'000 GBP'000
Allsop LLP 20,860 21,905
Directors' valuation 1,825 1,825
22,685 23,730
Add: Present value of headleases 4,586 4,590
27,271 28,320
The historical cost of investment properties was as follows:
Freehold Leasehold Leasehold
GBP'000 over 50 under 50
years years
GBP'000 GBP'000
Cost at 1 January 2016 4,861 13,966 1,939
Additions 28 - -
Cost at 31 December 2016 4,889 13,966 1,939
Long leasehold properties are held on leases with an unexpired term of more
than fifty years at the balance sheet date.
33.4. Other investments
Cost Shares in Shares
subsidiary in Shares in
Total companies joint associate
GBP'000 GBP'000 ventures GBP'000
GBP'000
At 1 January 2016 57,961 57,308 164 489
Impairment provision (14,980) (14,980) - -
At 31 December 2016 42,981 42,328 164 489
Subsidiary companies
Details of the Company's subsidiaries are set out in Note 15. As stated on page
78, under IFRS 10 Bisichi Mining Plc and its subsidiaries and Dragon Retail
Properties Limited are accounted for as subsidiaries of the Company.
Impairment reflects reduction in value of investment due to receipt of dividend
of GBP15 million from a subsidiary.
In the opinion of the directors the value of the investment in subsidiaries is
not less than the amount shown in these financial statements.
Details of the joint ventures are set out in Notes 12 and 13.
33.5. ASSETS HELD FOR SALE
2016 2015
GBP'000 GBP'000
Investment in Langney Shopping Centre Unit Trust
At 1 January 964 -
Transfer from investment in joint venture (note 12) - 964
Disposal (964) -
At 31 December - 964
On 11 March 2016, the Company disposed of its investment in Langney Shopping
Centre Unit Trust, an unlisted property unit trust incorporated in Jersey. The
company owned 12.5% of the units of the trust. The net proceeds from the sale
were GBP1,168,000 (including dividend).
33.6. Debtors
2016 2015
GBP'000 GBP'000
Trade debtors 343 315
Amounts due from associate and joint ventures 35 123
Amounts due from associate and joint ventures 150 -
Other debtors 173 159
Prepayments and accrued income 429 487
1,130 1,084
33.7. Investments
2016 2015
GBP'000 GBP'000
Market value of the listed investment portfolio 19 20
Unrealised gain/(deficit) of market value over cost 1 (3)
Listed investment portfolio at cost 18 23
All investments are listed on the London Stock Exchange.
33.8. Creditors: amounts falling due within one year
2016 2015
GBP'000 GBP'000
Amounts owed to subsidiary companies 28,750 47,511
Amounts owed to joint ventures 2,190 2,215
Other taxation and social security costs 388 314
Other creditors 1,323 1,364
Accruals and deferred income 2,139 2,365
34,790 53,769
33.9. Creditors: amounts falling due after more than one year
2016 2015
GBP'000 GBP'000
Present value of head leases on properties 4,586 4,590
Term Debenture stocks:
GBP3.75 million First Mortgage Debenture Stock 2018 at 11.6 per cent 3,000 3,750
GBP10 million First Mortgage Debenture Stock 2022 at 8.109 per cent* 9,905 9,888
12,905 13,638
17,491 18,228
*The GBP10 million debenture is shown after deduction of un-amortised issue
costs.
Details of terms and security of overdrafts, loans and loan renewal and
debentures are set out in note 21.
Repayment of borrowings:
Debentures:
Repayable within one year 750 -
Repayable between two and five years 3,000 3,750
Repayable in more than five years 9,905 9,888
13,655 13,638
33.10. deferred tax ASSET
2016 2015
GBP'000 GBP'000
Deferred Taxation
Balance at 1 January 3,055 4,699
Transfer to profit and loss account (973) (1,644)
Balance at 31 December 2,082 3,055
The deferred tax balance comprises the following:
Accelerated capital allowances (823) (868)
Short-term timing differences (124) (131)
Revaluation of investment properties 100 217
Loss relief 2,929 3,837
Deferred tax asset provision at end of period 2,082 3,055
33.11. Share capital
Details of share capital, treasury shares and share options are set out in Note
26.
33.12. Related party transactions
Cost Amounts Advanced
recharged owed to
to (by) by (to) (by)
related related related
party party party
GBP'000 GBP'000 GBP'000
Related party:
Dragon Retail Properties Limited
Current account (101) (i) (190) 30
Loan account - (2,000) -
Langney Shopping Centre Unit Trust
Current account 19 - -
Loan account - - (64)
Bisichi Mining PLC
Current account 138 (ii) 35 -
Simon Heller Charitable Trust
Current account (63) - -
Loan account - (700) -
Directors and key management
M A Heller and J A Heller 6 (i) 6 -
H D Goldring (Delmore Asset (30) (iii) (15) -
Management Limited)
C A Parritt (19) (iii) (18) -
R Priest (A & M Europe LLP) (34) (iii) (34) -
Totals at 31 December 2016 (84) (2,916) (34)
Totals at 31 December 2015 (97) (2,788) (22)
Nature of costs recharged - (i) Management fees (ii) Property management fees
(iii) Consultancy fees
During the period, the Company entered into transactions, in the ordinary
course of business, with other related parties. The company has taken advantage
of the exemption under paragraph 8(k) of FRS101 not to disclose transactions
with wholly owned subsidiaries.
Dragon Retail Properties Limited - 'Dragon' is owned equally by the Company and
Bisichi Mining PLC. During 2012 Dragon lent the company GBP2 million at 6.875 per
cent annual interest.
Langney Shopping Centre Unit Trust - 'Langney' is an unlisted property unit
trust incorporated in Jersey. It was owned 12.5 per cent by the Company and
12.5 per cent by Bisichi Mining PLC until March 2016.
Bisichi Mining PLC - The company has 41.52 per cent ownership of 'Bisichi'.
Other details of related party transactions are given in note 28.
33.13. Capital commitments
There were no capital commitments at 31 December 2016 (2015: GBPNil).
33.14. OPERATING AND FINANCE LEASES
At 31 December 2015 the Company had commitments under non-cancellable operating
leases on land and buildings as follows:
2016 2015
GBP'000 GBP'000
Expiring in more than five years 1,680 1,920
In addition, the Company has an annual commitment to pay ground rents on its
leasehold investment properties which amount to GBP246,000 (2015: GBP246,000).
Present value of head leases on properties
Minimum lease Present value
payments of minimum
lease payments
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Within one year 294 294 294 294
Second to fifth year 1,177 1,177 1,094 1,094
After five years 28,298 28,593 3,198 3,202
29,769 30,064 4,586 4,590
Future finance charges on finance leases (25,183) (25,474) - -
Present value of finance lease liabilities 4,586 4,590 4,586 4,590
Finance lease liabilities are in respect of leased investment property. A few
leases provide for contingent rent in addition to the rents above, usually a
proportion of rental income.
Finance lease liabilities are effectively secured as the rights to the leased
asset revert to the lessor in the event of default.
Future aggregate minimum rentals receivable
The Company leases out its investment properties to tenants under operating
leases. The future aggregate minimum rentals receivable under non-cancellable
operating leases are as follows:
2016 2015
GBP'000 GBP'000
Within one year 1,661 1,603
Second to fifth year 4,446 3,961
After five years 2,393 2,316
8,500 7,880
33.15. Contingent liabilities and post balance sheet events
There were no contingent liabilities at 31 December 2016 (2015: GBPNil).
Five year financial summary
2016 2015 2014 2013 2012*
GBPm GBPm GBPm GBPm GBPm
Portfolio size
Investment properties-LAP^ 89 89 89 87 205
Investment properties-joint ventures - 19 20 16 27
Investment properties-Dragon Retail Properties 3 3 3 3 -
Investment properties-Bisichi Mining^ 13 13 12 12 12
105 124 124 118 244
Portfolio activity GBPM GBPM GBPM GBPM GBPM
Acquisitions - 1.00 0.68 - -
Disposals - (0.40) - (9.47) -
Capital Expenditure 0.16 0.36 - - 0.97
0.16 0.96 0.68 (9.47) 0.97
Consolidated income statement GBPm GBPm GBPm GBPm GBPm
Group income 29.70 32.67 33.53 43.29 15.17
(Loss)/profit before tax (0.97) (2.09) (2.69) 1.14 7.62
Taxation (1.18) 0.04 (3.70) 2.55 (0.35)
(Loss)/profit attributable to shareholders (2.36) (1.90) (7.14) 3.47 7.27
Earnings/(loss) per share - basic and diluted (2.77)p (2.24)p (8.45)p 4.12p 8.65p
Dividend per share 0.165p 0.160p 0.156p 0.125p -
Consolidated balance sheet GBPm GBPm GBPm GBPm GBPm
Shareholders' funds attributable to equity 38.24 40.08 42.55 49.73 46.46
shareholders
Net borrowings 62.22 62.39 59.71 53.96 131.27
Net assets per share - basic 44.83p 47.26p 50.35p 59.00p 55.30p
- fully diluted 44.83p 47.26p 50.35p 59.00p 55.29p
Consolidated cash flow statement GBPm GBPm GBPm GBPm GBPm
Cash generated from operations 5.59 4.37 2.96 12.23 12.72
Capital investment and financial investment (0.18) (2.77) 100.42 4.35 (0.87)
Notes:
* Original LAP group - pre IFRS 10 amendments
^ Excluding the present value of head leases
END
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