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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% | 9.50 | 8.00 | 11.00 | 9.50 | 9.50 | 9.50 | 26,783 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Agents & Mgrs | 100.24M | 2.7M | 0.0317 | 3.00 | 8.11M |
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TIDMLAS
FOR IMMEDIATE RELEASE
30 April 2019
LONDON & ASSOCIATES PROPERTIES PLC ("LAP"):
ANNUAL RESULTS FOR 12 MONTHS TO 31 DECEMBER 2018
HIGHIGHTS
· GBP37.25 million sale of Brixton Markets, completed in April 2018,
generating GBP20.5 million in cash net of debt
· Implementation of new strategy focused on non-retail investments and
development opportunities:
GBP6.2 million acquisition of fully let Runcorn industrial portfolio,
before costs, with significant asset management potential
GBP5.7 million acquisition in joint venture with Bisichi and Metroprop
Limited of a redevelopment site in West Ealing, London, with planning for 55
apartments being sought
· Impact of severe retail sector downturn partly cushioned by value
retailing nature of portfolio but NAV per ordinary share down from 53.74 to
50.83p
· Group profit for the year before taxation was GBP1.27 million, including a
GBP2.57 million property valuation decrease (2017: GBP11.28 million including a GBP
9.37 million property valuation increase)
· Asset management initiatives underway to improve marketability of Orchard
Square, Sheffield which had strong lease renewals during 2018 with rental
levels proving relatively resilient
· Repayment of bank loans and debentures of GBP19.4 million
· New LAP term loan of GBP3.9 million secured
· Refinancing process underway of GBP28.3 million of non-recourse loans
expiring in June 2019
· Bisichi had an excellent year with an EBITDA of GBP8.6 million - an
increase of almost GBP5.0 million
· Recommended final dividend up 2.9% to 0.18p per share
"The increasingly difficult retail environment endorses our 2017 decision to
sell Brixton Markets for GBP37.25 million. We received GBP20.5 million in cash net
of debt in May 2018. This cash has all been allocated or deployed away from
the retail property sector and into non-retail property with greater potential
for future growth through asset management or development opportunities." Sir
Michael Heller, Chairman, and John Heller, Chief Executive.
Contact:
London & Associated Properties PLC
Tel: 020 7415 5000
John Heller, CEO or Jonathan Mintz, Finance Director
Baron Phillips Associates
Tel: 07767 444193
Baron Phillips
Chairman's statement and Chief Executive's review 2018
I am pleased to present our accounts for the 12 months to 31st December 2018.
As shareholders will be aware, 2018 has been a year in which retailing and the
retail property markets have faced unprecedented change and challenge. The UK's
macroeconomic environment has affected consumer spending adversely,
particularly for higher value or discretionary goods. At the same time,
pressures such as high business rates and greater online sales, have impacted
on the type and number of stores retailers require.
The proliferation of retail insolvencies witnessed in 2018, which has continued
unabated into 2019, has led to significant numbers of vacant units and has
impacted negatively on rental levels and increased incentives required by
retailers. In turn this has led, inevitably, to a decline in retail property
values across the board.
The increasingly difficult retail environment endorses our 2017 decision to
sell Brixton Markets for GBP37.25 million. We received GBP20.5 million in cash net
of debt in April 2018. This cash has all been allocated or deployed away from
the retail property sector and into non-retail property with greater potential
for future growth through asset management or development opportunities.
CONSOLIDATED RESULTS
Group (including Bisichi and Dragon) net assets at the year-end were GBP55.7
million (2017: GBP56.7 million).
As stated above market sentiment towards retail property is very negative. Our
portfolio, while still generating good returns, has been marked down further by
valuers. This has meant that the total net assets of LAP Group (including our
net interest in Bisichi) have moved downwards, resulting in the net asset value
per share declining to 50.83p from 53.74p last year.
Total property assets owned by LAP, Bisichi and other companies in which LAP
has a financial interest amounted to GBP196 million (2017: GBP222 million).
Group profit after valuation movements and before taxation for the year was GBP
1.27 million (2017: GBP11.28 million). Figures for the previous year benefited
materially from a GBP9.37 million uplift in property values due almost entirely
to the Brixton sale and therefore are not directly comparable. A full breakdown
of group income, cash flow and result by sector is included in the financial
review and in the segmental analysis in Note 1 to the financial statements.
DEBT MANAGEMENT
On 30th June 2019, our five-year facilities with Santander and Europa Mezzanine
expire. The total outstanding is GBP28.3 million, secured against Orchard Square
in Sheffield and the Tanyard Shopping Centre in Wickersley, South Yorkshire.
Shareholders will appreciate that this is a difficult time to borrow against
retail property. However, we have engaged actively with both lenders who have
indicated that they will work with us, either to refinance the loans or to
facilitate a handover to a new lender. We have started marketing the loans and
feedback to date is reasonably positive. However, there are no guarantees that
we will be able to refinance on terms that enable us to maintain the current
level of net cash flow or at all.
Importantly, both the Santander and Europa loans are non-recourse to the
balance sheet of LAP PLC. These two properties are included in our balance
sheet at an aggregate value of GBP36.65 million.
We refinanced the remaining GBP3 million of the Prudential debenture which
expired in August 2018 with a GBP3.93 million 10-year loan facility (with a
5-year mutual break option) from Metro Bank, a new lender to the Group.
The loan to value covenant for Metro Bank is 65%, with amortisation based on a
20-year repayment profile. No hedging was required, and the new loan will
deliver debt service savings of GBP0.2 million per annum.
LAP PROPERTY ACTIVITIES
Runcorn
The most significant purchase was the Manor Portfolio in Runcorn, Cheshire,
which was acquired in October 2018 for GBP6.5 million in cash, including costs.
This portfolio comprises nine industrial/warehousing units, fully let to eight
tenants producing GBP0.6 million per annum, located in the heart of Runcorn's
logistics/warehousing area.
We believe our existing skill-set, built up over many years of managing
multi-let retail assets, is just as relevant to multi-let industrial assets. We
were particularly attracted to this property by the relatively low rents of
just over GBP4 per sq. ft, and I am pleased to say we have engaged actively with
the tenants and remain confident that we can drive this level upward over the
medium term. It remains fully let with the exception of one third of one unit
on which we negotiated a surrender from the incumbent tenant and is now under
offer at a higher rent.
Ealing
In October 2018 we completed the GBP5.7 million acquisition of a mixed-use
development site in West Ealing, London, before acquisition and subsequent
development costs. This acquisition has been undertaken in a joint venture with
Bisichi Mining Plc and Metroprop Ltd, an established property developer.
LAP and Bisichi have each contributed an initial equity investment of GBP1.0
million for a combined 90% stake in the joint venture. The balance of GBP3.5
million was provided by Paragon via a short-term investment loan. The interest
rate is 7.0% per annum and currently the interest is being rolled up. This loan
will be refinanced with a development loan when we are in a position to develop
the site. We do not anticipate that we will need to invest further equity into
the transaction.
The site currently comprises five shops, of which one is vacant, and a service
yard. The four let shops provide GBP0.14 million per annum which is sufficient to
cover our operating costs as we prepare our planning application. We are
looking to develop 55 flats. Initial responses from the Local Authority have
been positive and we look forward to updating shareholders in due course.
Orchard Square, Sheffield
In view of market sentiment towards shopping centres and the size of this asset
in relation to our portfolio, we have decided that it no longer fits our
longer-term criteria for an investment property held to generate capital
growth. Accordingly, we have decided to treat it as realisable inventory in our
property dealing division. We are underway on a series of asset management
initiatives and developments, more fully described below, and it is our
intention to dovetail the sale of this asset with completion of those projects.
We remain convinced of the enduring strength of Orchard Square. This has been
evidenced by the strong lease renewals we have achieved over the last 12
months, where rents have proven to be relatively resilient. Despite market
sentiment we are renewing units let at a previous combined total rent of GBP0.37
million at new annual rents of GBP0.31 million.
We are exploring the opportunities for creating experiential alternative uses
for some units, including restaurants and bars. We believe that this will
increase the marketability of Orchard Square, by helping to reposition the
Centre and make it more attractive to younger shoppers as well as increasing
the amount of time customers spend there.
During the course of the year River Island, which pays an annual rent of GBP0.5
million, exercised a break clause on its lease. At the time negotiations were
already underway with a third party to take a lease on the entire store.
We have agreed lease documentation with the new occupier, but have not yet
exchanged contracts. There remains, therefore, a risk that this unit might
become vacant. However, we are confident that it is one of the best units in
the city and will not remain empty for long even if the current potential
occupier were to pull out for any reason.
Kings Square, West Bromwich
Kings Square achieved full occupancy during the year and continues to trade
strongly for the discount retailers of the town. We let two units to an
independent coffee shop and a restaurant thus considerably improving the
leisure offer. Additionally, lease renewals at the Centre demonstrate that
tenants trade well there. We believe that this sort of value-orientated
shopping centre is cushioned to a certain extent from the general problems
affecting retailing in the UK.
Other
The rest of our portfolio, which is focused on community and value retailing,
trades well. The LAP Group Portfolio has a void level of 7.24% (2017: 2.06%).
This increase is almost entirely accounted for by the two properties where
tenants did not renew at lease expiry.
We have bid for a number of properties during the year to diversify further
away from retail. Although we were not successful on those occasions, we remain
determined not to overpay.
Currently, we are in the process of selling a further small retail asset from
our portfolio, and we will report to shareholders once the deal has completed.
HARROGATE JOINT VENTURE
Our Harrogate joint venture with Oaktree Capital Management, which owns three
shopping centres in Dunfermline, Kings Lynn and Loughborough, continues to
trade satisfactorily. We have been able to negotiate a number of new leases and
lease renewals across all three centres and are coming to the completion of a
development of a new 15,000 sq. ft. store for H&M at Kings Lynn.
DRAGON RETAIL PROPERTIES LTD
Dragon, a 50:50 joint venture with Bisichi Mining, completed a lease renewal
with Boots, the principal tenant at its shop in Clifton, Bristol, on a new 10
year lease with a five-year break clause at GBP93,000, an increase of 1.1%.
BISICHI MINING PLC
For the year ended 31st December 2018, Bisichi achieved earnings before
interest, tax, depreciation and amortisation (EBITDA) of GBP8.6million (2017: GBP
3.7 million) and operating profit before depreciation, fair value adjustments
and exchange movements (Adjusted EBITDA) of GBP9.1 million (2017: GBP5.8 million).
These results are attributable mainly to the strong performance from Black
Wattle, Bisichi's South African coal mining operation, which continued to
benefit from the infrastructure improvements to the coal washing plant that
were reported in 2017. These improvements have enabled the group to wash at
consistent levels of production and achieve an increased overall yield compared
to prior years. In addition, the mine was able to benefit from significantly
improved coal prices achievable for its coal during the year.
Looking forward, although global economic factors have impacted coal demand in
some international markets, the demand for South African coal has continued to
remain strong and Bisichi expects overall levels of future production from
Black Wattle to remain consistent with 2018. Accordingly, it remains confident
about the ability of its South African coal mining operations to contribute
strongly to Group earnings and cash generation for the foreseeable future.
At the end of 2018 Black Wattle completed an agreement to acquire additional
coal reserves. The new reserves have an expected run of mine tonnage of 1.9
million metric tonnes and are contiguous to Black Wattle's operations. The
acquisition is subject to local regulatory approval and is in line with the
group's strategy of actively seeking new opportunities to extend the life of
mines within its existing mining operations.
Bisichi's UK retail property portfolio, which is managed by London & Associated
Properties PLC for a fee, continues to perform well, with average rental yields
for the portfolio remaining stable during the year.
DIVID
We are pleased to recommend a final dividend of 0.18p, an increase of over 2.9%
on the 2017 dividend of 0.175p.
Finally, we would like to thank all of our directors, staff and advisers for
their hard work during the year. The retail property world is very challenging
and is likely to remain so for the foreseeable future. However, we believe LAP
is well placed to meet these challenges and we therefore remain cautiously
optimistic for the year ahead.
Sir Michael Heller, John Heller,
Chairman Chief Executive
30 April 2019
STRATEGIC REPORT
Financial and performance review
The financial statements for 2018 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") and West Ealing Projects Limited
(West Ealing), are both 50:50 joint ventures with Bisichi and are 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 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.
Revenue recognition restatement - presentation of revenue & costs
During the review of revenue recognition in South Africa a revenue recognition
error was identified in respect of the treatment of transport and loading costs
to deliver export coal under certain export agreements. The costs in prior
periods, have been recorded as a deduction against revenue rather than being
shown as an operating cost.
Although this impact has been correctly accounted for in the current year, the
equivalent restatement in the prior year is to increase both revenue and
operating costs by GBP2,891,000. There is no profit or net assets impact as a
result of the prior year restatement. In prior year figures within the report
where there has been an impact from the restatement, the column is reflected
with the word "Restated".
LOANS
LAP's debt (excluding Bisichi, Dragon and West Ealing which are detailed
separately below), consists of a GBP28.3 million facility expiring in July 2019,
a debenture of GBP10 million repayable in August 2022 and a GBP3.9 million facility
expiring in 2028. A debenture of GBP3 million was repaid in April 2018. As in
previous years, all loans and debentures are secured on core property and cash
deposits and are covenant compliant.
LAP's five year GBP21.5 million non-recourse loan from Santander, as senior
lender, is supported by a GBP6.8 million loan from Europa Capital Mezzanine
Limited, as mezzanine lender. The senior loan facility is fully hedged and at
the year end, 81% of the loan was swapped at a rate of 2.25% and the remaining
19% was covered by an interest cap at 2.25%. This gives a blended current
interest rate of 5.33% for the total GBP28.3 million debt.
Cash flow
The operating cash flow and net cash balances at the year-end were as follows:
CASH FLOW FROM OPERATIONS 2018 2017
GBP'000 GBP'000
LAP (5,675) 2,708
Bisichi 7,520 7,593
Dragon 76 (14)
Group total 1,921 10,287
Note: The figures exclude inter-company transactions.
NET CASH BALANCES 2018 2017
GBP'000 GBP'000
LAP 11,345 2,109
Bisichi 5,686 4,065
Dragon 89 92
Group total 17,120 6,266
Our investment with Oaktree Capital Management (HRGT Shopping Centres LP),
remains profitable and generates management fees (2018: GBP0.46 million and 2017:
GBP0.46 million) for our wholly owned subsidiary (London & Associated Management
Services Limited). We also received GBPnil (2017: GBP0.1 million) as a partial
repayment of our loan.
Significant cash income and expenditure for LAP in the year includes:
* The sale of Brixton Markets for GBP37.25 million, before costs, in April 2018
* The repayment of GBP15.9 million of bank debt
* The replacement of a GBP3 million 11.6 % fixed interest debenture with a GBP3.9
million 10 year term loan at 2.95% above base rate
* The acquisition of an industrial portfolio for GBP6.5 million
Cash balances at 31 December 2018 have been allocated towards future profit
generating activities, including the Group's continued sector diversification.
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 NON-CASH MOVEMENTS 2018 2017
GBP'000 GBP'000
LAP (2,818) (130)
Bisichi 6,526 3,536
Dragon 29 (29)
Group total 3,737 3,377
Note: The figures exclude inter-company transactions.
Bisichi's improvement of GBP3.0 million is explained under Bisichi Mining PLC, in
this review.
The Group property portfolio, including assets held for sale and inventory,
decreased from GBP114.46 million to GBP88.27 million.
During the year the Group sold Brixton Markets held at a value of GBP36.44
million, acquired an industrial property in Runcorn at a cost of GBP6.54 million
and acquired and commenced a residential development, through its West Ealing
joint venture, at a cost of GBP6.26 million.
The Group's property portfolio decreased on revaluation by GBP2.57 million a 2.8%
decrease.
profit/(Loss) before taxation 2018 2017
GBP'000 GBP'000
LAP (4,723) 9,614
Bisichi 6,142 1,696
Dragon (151) (32)
Group profit before taxation 1,268 11,278
Note: The figures exclude inter-company transactions.
Balance sheet
LAP has group net assets of GBP55.7 million (2017: GBP56.7 million) (see table
below).
Net assets attributable to equity shareholders of the Company at the year-end
were 50.83p per share (2017: 53.74p per share).
2018 LAP Bisichi Dragon LAP
Original Mining Retail Net
Group PLC Properties assets
GBP'000 Group GBP'000 GBP'000
GBP'000
Investment properties 35,011 13,230 2,450 50,691
Other fixed assets 106 8,531 22 8,659
Other non current assets 1,748 35 - 1,783
Inventory-property 38,556 - - 38,556
Assets held for sale 2,285 - - 2,285
Other current assets 13,292 17,511 272 31,075
Current liabilities (38,180) (16,718) (73) (54,971)
Non-current liabilities (16,666) (4,529) (1,197) (22,392)
Net assets 36,152 18,060 1,474 55,686
2017
Investment properties 65,231 13,397 2,630 81,258
Other fixed assets 116 8,613 6 8,735
Other non current assets 1,748 51 - 1,799
Assets held for sale 36,441 - - 36,441
Other current assets 4,824 11,612 122 16,558
Current liabilities (8,588) (8,844) (123) (17,555)
Non-current liabilities (59,377) (9,858) (1,291) (70,526)
Net assets 40,395 14,971 1,344 56,710
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 2018 financial
statements which are available on its website: www.bisichi.co.uk.
The Bisichi group increased its EBITDA to GBP8.6 million (2017: GBP3.7 million)
mainly due to increased operating profits before depreciation from the mining
activities of GBP8.2 million (2017: GBP4.9 million). Depreciation in the year
relating to mining activities increased to GBP2.1 million (2017: GBP1.8 million).
Profit for the year after tax was
GBP6.0 million (2017: GBP1.5 million). Bisichi has two core revenue streams -
investment in retail property in the UK and coal mining in South Africa.
The increase in operating profit was mainly attributable to the higher prices
achieved for coal and increased mining production at Black Wattle offsetting
the impact of the higher mining and washing costs.
The UK retail property portfolio was valued at the year end at GBP13.05 million
(2017: GBP13.25 million). The property portfolio is actively managed by LAP and
generated rental income of GBP1.1 million in the year (2017: GBP1.1 million).
A R100million bank overdraft facility, held by a subsidiary of Bisichi with
Absa Bank Limited at the year end, was replaced in January 2019 by a new
structured trade finance facility for R100million. The new trade facility is
renewable annually at 25 January and is secured against inventory, debtors and
cash that are held in the group's South African operations.
In the UK, the Bisichi group signed a GBP6 million five-year term loan with
Santander in December 2014. This loan is secured against UK investment
property. No covenants were breached during the year.
Cash flow generated from operating activities decreased compared to the prior
year to GBP4.8 million (2017: GBP7.3 million). The improved operating profit during
the year of GBP6.5 million (2017: GBP3.8 million) was offset by an increase in
income tax paid of GBP2.28 million (2017: GBP0.01 million) both as a result of the
high profitability of Bisichi's South African mining operations. In addition,
cashflow generation from operating activities was impacted by a cashflow
outflow from trade receivables of GBP0.9 million (2017: inflow of GBP0.9 million),
as a result of an increase in the trade receivables balances of South African
domestic coal customers, and a cashflow decrease from inventories of GBP0.8
million (2017: increase of GBP0.9 million), mainly as a result of reduced export
coal sales from our South African mining operations in the last quarter of 2018
due to temporary weather related issues at Richards Bay Coal Terminal.
The Bisichi group's financial position remains strong. Its net assets at 31st
December 2018 were GBP20.1 million (2017: GBP17.7 million). The group expects to
continue achieving significant value in 2019 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 GBP1.16 million secured against its investment property and is covenant
compliant. It paid management fees of GBP72,000 (2017: GBP84,000) split equally to
the two joint venture partners. Its results continue to be near breakeven after
taxation. Dragon has net assets of GBP1.5 million (2017: GBP1.4 million).
WEST EALING PROJECTS LIMITED
West Ealing is a 50:50 joint venture between LAP and Bisichi created with the
purpose of delivering a residential development, through its 90% owned
subsidiary. West Ealing is included within the LAP segment as it is not
intended to be a long term activity.
During the year West Ealing's subsidiary acquired a property and has commenced
development activities. Costs incurred to 31 December 2018 are GBP6.26 million
and there is a development loan of GBP3.46 million, described further in note 18.
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 most 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 20 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
group is well placed to manage its business risks successfully, despite the
continuing uncertain economic climate. The Directors therefore have a
reasonable expectation that the Group and the Company have adequate resources
to continue in operational existence for the foreseeable future. Thus, they
continue to adopt the going concern basis of accounting in preparing the annual
financial statements.
TAXATION
The LAP Group tax strategy is to account for tax on an accurate and timely
basis. We only structure our affairs based on sound commercial principles and
wish to maintain a low tax risk position. We do not engage in aggressive tax
planning.
The LAP Group (excluding Bisichi and Dragon) has unused tax losses and
deductions with a potential value of GBP7.2 million (2017: GBP10.2 million) of
which only GBP0.9 million (2017: GBP4.7 million) has been recognised in the 2018
financial statements. As LAP returns to profit, these tax losses and deductions
should be utilised.
DIVIDS AND FUTURE PROSPECTS
The directors are proposing a final dividend of 0.18p per ordinary share
payable in September 2019.
The Group remains cautiously confident about its trading and future outlook and
it continues to look at ways in which it can further reduce its overhead costs
and interest payable, while it stabilises its property income together with
seeking suitable growth opportunities.
Principal activities, strategy & business model
The LAP Group's principal business model is the investment in and management
and development of industrial and retail property through direct investment and
joint ventures, 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 2018 Financial Statements which are
available on their web site: www.bisichi.co.uk
STRATEGIC OUR STRATEGY IS
PRIORITIES ARE
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 We look to improve the consumer experience at all our centres by
PROPERTY achieving an appropriate tenant mix and a vibrant trading
environment through investment activity, enhancement, refurbishment
and development.
CAPITAL STRENGTH We operate within a prudent and flexible financial structure. Our
gearing policy provides financial stability whilst giving capacity
and flexibility to look for further investments.
MAINTAIN THE VALUE By encouraging the Bisichi management to maximise sustainable
OF INVESTMENT IN profits and cash distributions.
BISICHI
Risks and uncertainties
DESCRIPTION OF DESCRIPTION OF IMPACT MITIGATION
RISK
ASSET
MANAGEMENT:
TENANT FAILURE Financial loss. Initial and subsequent assessment of
tenant covenant strength combined with
an active credit control function.
LEASES NOT Financial loss. Lease expiries regularly reviewed.
RENEWED Experienced 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 attract Nomination Committee and senior staff
RECRUITMENT OF the best people for the key review skills gaps and succession
STAFF roles. planning. Training and development
offered.
REPUTATION:
BUSINESS Loss in revenue. Documented Recovery Plan in place.
INTERRUPTION Impact on footfall. General and terrorism insurance policies
Adverse publicity. in place and risks monitored by trained
Potential for criminal/ security staff.
civil proceedings. Health and Safety policies in place.
CCTV in centres.
FINANCING:
FLUCTUATION IN Impact on covenants and other Secure income flows.
PROPERTY loan agreement obligations. Regular monitoring of LTV and IC
VALUES covenants and other obligations.
Focus on quality assets.
REDUCED Insufficient funds to meet Efficient treasury management.
AVAILABILITY OF existing debts/interest Loan facilities extended where possible.
BORROWING payments and operational Regular reporting of current and
FACILITIES payments. projected position to the Board.
LOSS OF CASH AND Financial loss. Only use a spread of banks and financial
DEPOSITS institutions which have a strong credit
rating.
FLUCTUATION OF Uncertainty of interest rate Manage derivative contracts to achieve a
INTEREST RATES costs. 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 MITIGATION
OF IMPACT
COAL PRICES CAN BE IMPACTED Affects sales Forward sales contracts are used
MATERIALLY BY MARKET AND CURRENCY value and to manage value expectations.
VARIATIONS therefore
margins.
MINING OPERATIONS ARE INHERENTLY Loss of Use of geology experts, careful
RISKY. MINERAL RESERVES, production attention to regulations, health
REGULATIONS, LICENSING, POWER causing loss of and safety training, employee
AVAILABILITY, HEALTH AND SAFETY revenue. dialogue to minimise controllable
CAN ALL DAMAGE OPERATIONS risks.
CURRENCY RISK Affects Regular monitoring and review of
realised sales forward currency situation.
value and
therefore
margins.
CASHFLOW VARIATION BECAUSE OF MINING Variations can UK property investments used to
RISKS, COMMODITY PRICE OR CURRENCY deliver offset high risk mining
VARIATIONS significant operations.
shifts in cash
flow.
Key performance indicators
The Group's Key Performance Indicators are selected to ensure clear alignment
between its strategy and shareholder interests.
The KPIs are calculated using data from management reporting systems.
Strategic priority KPI Performance
MAXIMISING INCOME - LIKE FOR LIKE PROPERTY INCOME
To increase the like-for-like income Like-for-like The like-for-like rental
from each property year on year. rental income as income by property has
a percentage of remained broadly unchanged.
the prior year In the continuing difficult
rental. trading environment, this is
considered satisfactory.
*Excluding service charges
MAXIMISING INCOME - OCCUPANCY
We aim to maximise the total The ERV of the Void levels increased to
income in our properties by empty units as a 7.24%, in the main due to
achieving full occupancy. percentage of our development activity in
total income. Sheffield, on units that
have become vacant.
CAPITAL STRENGTH - GROWTH IN NET ASSET VALUE PER SHARE
The net assets per share is the Movement in the The net assets per share
principal measure used by the group net assets reduced by 2.91 pence per
for monitoring its performance and is per share. share (5.4%) to 50.83p.
an indicator of the level of reserves
available for distribution by way of
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 2018:
* Black Wattle Colliery recorded one Lost Time Injury during 2018.
* No cases of Occupational Diseases were recorded.
* Zero claims for the Compensation for Occupational Diseases were submitted.
They continue to be compliant 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 2018 Financial Statements which are available on
their web site:
www.bisichi.co.uk
Greenhouse gas reporting
We have reported on all emission sources required under the Companies Act 2006
(Strategic Report and Directors' Reports) Regulations 2013 for the reporting
period 1st January 2018 to 31st December 2018. The emissions are detailed in
Tables 1, 2
and 3 below.
We have employed the Financial Control definition to outline our carbon
footprint boundary, reporting Scope 1 & 2 emissions only. Emissions from both
landlord & tenant-controlled areas of LAP owned shopping centres and facilities
fall within the footprint boundary. LAP has landlord-controlled areas in Kings
Square, Orchard Square, Brewery Street, Shipley and Bridgend. Properties that
we manage on behalf of others or are not wholly owned by LAP are excluded from
our footprint boundary.
Emissions for landlord-controlled areas have been calculated based on actual
consumption data 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.
We have used the ISO14046-1 Standard (2006) 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 20181.
As well as reporting Scope 1 and Scope 2 emissions, the regulations require
that at least one intensity ratio is reported for the given reporting period.
The intensity figure below shows the emissions in tCO2e per thousand pounds
revenue.
Table 1. Landlord & tenant controlled areas
Emissions Source 2018 2017
Scope 1 emissions Natural gas (tCO2e) 169 71
Refrigerants (tCO2e) 0 0
Scope 2 emissions Electricity (tCO2e) 2,519 2,938
Total tCO2e 2,688 3,009
Intensity ratio (tCO2e/GBPthousand) 0.514 0.467
Table 2. LAP controlled areas
Emissions Source 2018 2017
Scope 1 emissions Natural gas (tCO2e) 169 71
Refrigerants (tCO2e) 0 0
Scope 2 emissions Electricity (tCO2e) 134 176
Total tCO2e 303 247
Table 3. Tenant controlled areas
Emissions Source 2018 2017
Scope 1 emissions Natural gas (tCO2e) 0 0
Refrigerants (tCO2e) 0 0
Scope 2 emissions Electricity (tCO2e) 2,385 2,762
Total tCO2e 2,385 2,762
1. 2018 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).
Table 4. Coal mining carbon footprint
2018 2017
CO2e CO2e
Tonnes Tonnes
Emissions source:
Scope 1 Combustion of fuel & operation of facilities 21,348 15,575
Scope 1 Emissions from coal mining activities 27,428 27,004
Scope 2 Electricity, heat, steam and cooling purchased 12,177 11,210
for own use
Total 60,953 53,778
Intensity:
Intensity 1 Tonnes of CO2 per pound sterling of revenue 0.0013 0.0014
Intensity 2 Tonnes of CO2 per pound of coal produced 0.0462 0.0415
Note: Bisichi has recalculated emissions from coal mining activities using a
more up to date methane conversion factor; because of this, 2017 emissions from
coal mining activities have been restated.
Environment
United Kingdom
The Group's principal UK activity is property investment, which involves
renting premises to commercial businesses. We seek to provide those tenants
with good quality premises from which they can operate in an efficient and
environmentally friendly manner. Where possible, improvements, repairs and
replacements are made in an environmentally efficient manner and waste
re-cycling arrangements are in place at all the Company's locations.
South Africa
The Bisichi group's principal activity in South Africa is coal mining. Under
the terms of the mine's Environmental Management Programme approved by the
Department of Mineral Resource ("DMR"), Black Wattle undertakes a host of
environmental protection activities to ensure that the approved Environmental
Management Plan is fully implemented. A performance assessment audit was
conducted to verify compliance to their Environmental Management Programme and
no significant deviations were found.
EMPLOYEE, SOCIAL, COMMUNITY AND HUMAN RIGHTS
The Group's policy is to attract staff and motivate employees by offering
competitive terms of employment. The Group provides equal opportunities to all
employees and prospective employees including those who are disabled and
operates in compliance with all relevant national legislation.
The Group believes that it is in the interest of shareholders to consider
social and human rights issues when conducting business. Various policies and
initiatives implemented by the Group that fall within these areas are discussed
within this report.
ANTI-SLAVERY AND HUMAN TRAFFICKING
The Group is committed to the prevention of the use of forced labour and has a
zero tolerance policy for human trafficking and slavery. The Group's policies
and initiatives in this area can be found within the Group's Anti-slavery and
human trafficking statement found on the Group's website at www.lap.co.uk.
DIVERSITY AND EQUALITY
The Board recognises the importance of diversity, both in its membership, and
in the Group's employees. It has a clear policy to promote diversity across the
business. The Board considers that quotas are not appropriate in determining
its composition and has therefore chosen not to set targets. All aspects of
diversity, including but not limited to gender, are considered at every level
of recruitment. Gender diversity of the Board and the Group is set out below.
DIRECTORS, EMPLOYEES AND GER REPRESENTATION
At the year end the LAP Group (excluding Bisichi and Dragon), had 6 directors
(6 male, 0 female), 2 senior managers (2 male, 0 female) and 23 employees (12
male, 11 female).
BISICHI MINING PLC
Bisichi Mining PLC's Group at the year end had 7 directors (6 male, 1 female),
7 senior managers (6 male, 1 female) and 246 employees (175 male, 71 female).
Detailed information relating to the Bisichi Strategic Report is available in
its 2018 financial statements.
Approved on behalf of the board of directors
Jonathan Mintz
Finance Director
30 April 2019
Governance
Directors & advisors
EXECUTIVE DIRECTORS
Sir Michael Heller MA FCA*
(Chairman)
John A Heller LLB MBA
(Chief Executive)
Anil K Thapar FCCA
(Finance Director) resigned 31 December 2018
Jonathan Mintz FCA
(Finance Director) Appointed 11 February 2019
NON-EXECUTIVE DIRECTORS
Howard D Goldring BSC (ECON) ACA?
Howard Goldring is Executive Chairman of Delmore Holdings 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. He has been a member of the LAP Board since July 1992, and has
almost 40 years' experience of the real estate market. He was a director of
Baronsmead VCT 2 PLC from 2010-2016, and has specialised in providing many
companies with investor relations support.
Clive A Parritt FCA CF FIIA #?
Clive Parritt joined the board on 1 January 2006. He is a chartered accountant
with over 40 years' experience of providing strategic, financial and commercial
advice to businesses of all sizes. He is a director of Jupiter US Smaller
Companies plc, chairman of BG Training Limited and a member of the Performance,
Audit and Risk Committee of Arts Council England. Until April 2016 he was Group
Finance Director of Audiotonix Limited (an international manufacturer of audio
mixing consoles). He has chaired and been a director of a number of other
public and private companies. Clive Parritt was President of the Institute of
Chartered Accountants in England and Wales in 2011-12. He is Chairman of the
Audit Committee and as Senior Independent Director he chairs the Nomination and
Remuneration Committees.
Robin Priest MA
Robin Priest joined the board on 31 July 2013. He is a senior advisor to
Alvarez & Marsal LLP ("A&M") and to a major listed German real estate
investment fund manager. He has more than 38 years' experience in real estate
and structured finance. He was formerly Managing Director of A&M's real estate
practice, advising private sector and public sector clients on both operational
and financial real estate matters. Prior to joining A&M, Robin was lead partner for Real Estate Corporate Finance in London with Deloitte LLP and before this he founded and ran a property company backed by private equity. He is also a trustee of London's Oval House Theatre. * Member of the nomination committee ? Member of the audit, remuneration and nomination committees # Senior independent director SECRETARY & REGISTERED OFFICE Jonathan Mintz FCA 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 Link Asset Services Shareholder Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU UK telephone: 0871 664 0300 International telephone: +44 371 664 0300 (Calls cost 12p per minute plus your phone company's access charge. Calls outside the United Kingdom will be charged at the applicable international rate). Lines are open between 9.00am to 5.30pm, Monday to Friday, excluding public holidays in England and Wales. Website: www.linkassetservices.com Email: enquiries@linkgroup.co.uk Company registration number 341829 (England and Wales) WEBSITE www.lap.co.uk E-MAIL admin@lap.co.uk Directors' report The Directors submit their report and the audited financial statements for the year ended 31 December 2018. 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 2 to 11 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 41.52 % interest. Bisichi is listed on the main market of the London Stock Exchange and operates in England and South Africa with subsidiaries which are involved in overseas mining and mining investment. The results, together with the assets and liabilities, of Bisichi are consolidated with those of LAP in accordance with the terms of IFRS 10 even though the Group only has a minority interest - under IFRS 10 the 58.48% majority interest is disclosed as a "non-controlling interest". Business review AND POST BALANCE SHEET EVENTS Review of the Group's development and performance A review of the Group's development and performance can be found below and should be read in conjunction with the Strategic Report on pages 4 to 11. Details of any post balance sheet events are disclosed in Note 29 to the financial statements. Future developments The Group continues to look for new opportunities to acquire real estate assets where it feels it can increase value by applying its intensive management skills. At the same time, it seeks to reduce its interest payments on its loans as they expire or where opportunities arise to refinance on better terms. We also seek to improve our existing estate through the continued pursuit of asset management initiatives. Property activities The Group is a long-term investor in property. It acquires properties, actively manages those assets to improve rental income, and thus seeks to enhance the value of its properties over time. In reviewing performance, the principal areas regularly monitored by the Group include: * Rental income - the aim of the Group is to maximise the maintainable income from each property by careful tenant management supported by sympathetic and revenue enhancing development. Income may be affected adversely by the inability of tenants to pay their rent, but careful monitoring of rent collection and tenant quality helps to mitigate this risk. Risk is also minimised by a diversified tenant base, which should limit the impact of the failure of any individual tenant. * 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 20 for full details of the contracts in place) and also by using loans with fixed terms and interest rates. These arrangements are designed to ensure that our interest costs are known in advance and are always covered by anticipated rental income. * Property valuations - market sentiment and economic conditions have a direct effect on property valuations, which can vary significantly (upwards or downwards) over time. Bearing in mind the long term nature of the Group's business, valuation changes have little direct effect on the ongoing activities or the income and expenditure of the Group. Tenants generally have long term leases, so rents are unaffected by short term valuation changes. Borrowings are secured against property values and if those values fall very significantly, this could limit the ability of the Group to develop the business using external borrowings. The risk is minimised by trying to ensure that there is adequate cover to allow for fluctuations in value on a short term basis. It continues to be the policy of the Group to realise property assets when the valuation of those assets reaches a level at which the directors consider that the long-term rental yield has been reached. The Group also seeks to acquire additional property investments on an opportunistic basis when the potential rental yields offer scope for future growth. Investment activities The investments in joint ventures and Bisichi are for the long term. LAP manages the UK property assets of Bisichi. However, the principal activity of Bisichi is overseas mining investment (in South Africa). While IFRS 10 requires the consolidation of Bisichi, the investment is held to generate income and capital growth over the longer term. It is managed independently of LAP and should be viewed by shareholders as an investment and not a subsidiary. The other listed investments are held as current assets to provide the liquidity needed to support the property activities while generating income and capital growth. Investments in property are made through joint ventures when the financing alternatives and spreading of risk make such an approach desirable. Dividend The directors are recommending payment of a final dividend for 2018 of 0.18p per share (2017: 0.175p per share). Subject to shareholder approval, the ordinary final dividend will be payable on Friday 13 September 2019 to shareholders registered at the close of business on Friday 16 August 2019. The company's ordinary shares held in treasury At 31 December 2018, 218,197 (2017: 221,061) ordinary shares were held in Treasury with a market value of GBP56,731 (2017: GBP54,160). At the Annual General Meeting (AGM) in June 2018 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 Wednesday 12 June 2019. Treasury shares held at 1 January 2018 221,061 at 31 December 2018 218,197 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 2018 by independent professional firms of chartered surveyors - Allsop LLP, London (69.13 per cent of the portfolio), Carter Towler, Leeds (27.5 per cent) - and by the Directors (3.37 per cent). The valuations, which are reflected in the financial statements, amount to GBP 47.4 million (2017: GBP78 million). Property of GBP2.3 million (2017: GBP36.4 million) is included under current assets, as assets held for sale. Property of GBP38.6 million (2017: GBPnil) is included under current assets, as inventory. Taking account of prevailing market conditions, the valuation of the properties at 31 December 2018 resulted in a decrease of GBP2.6 million (2017: increase of GBP 9.37 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 20 to the financial statements sets out the risks in respect of financial instruments. The board reviews and agrees overall treasury policies, delegating appropriate authority for applying these policies to the Chief Executive and Finance Director. Financial instruments are used to manage the financial risks facing the Group and speculative transactions are prohibited. Treasury operations are reported at each board meeting and are subject to weekly internal reporting. Hedging arrangements are in place for the Company, its subsidiaries and joint ventures in order to limit the effect of higher interest rates upon the Group. Where appropriate, hedging arrangements are covered in the Chairman and Chief Executive's Statement and the Financial Review. Directors Sir Michael Heller, J A Heller, A K Thapar, H D Goldring, C A Parritt and R Priest were Directors of the company for the whole of 2018. A K Thapar retired as a Director on 31 December 2018. Sir Michael Heller and H D Goldring are retiring by rotation at the Annual General Meeting in 2019 and offer themselves for re-election.
J Mintz was appointed as an executive Director on 11 February 2019 and will
offer himself for election at the Annual General Meeting in 2019.
Brief details of the Directors offering themselves for re-election, are as
follows:
Sir Michael Heller is Executive Chairman and has been a Director since 1971. He
has a contract of service determinable upon six months' notice. Sir Michael
Heller is a chartered accountant and a member of the nomination committee. He
is Executive Chairman of Bisichi Mining PLC, our associate company. The board
has considered the re-appointment of Sir Michael Heller and recommends his
re-election as a Director.
Howard Goldring has been a Director since 1992 and has a contract of service
determinable upon three months' notice. He is an Independent Director and a
member of the audit, nomination and remuneration committees. Howard Goldring is
a chartered accountant and global asset allocation specialist. He is Executive
Chairman of Delmore Holdings Limited. His specialized economic knowledge and
broad commercial experience are of significant benefit to the business. The
board has considered the re-appointment of Howard Goldring and recommends his
re-election as a Director.
Jonathan Mintz was appointed a Director on 11 February 2019 and is also the
Company Secretary. He has a contract of employment determinable upon three
months' notice. Jonathan Mintz is an ACA qualified Finance Director experienced
in real estate, consultancy, and construction in the UK and internationally. He
has worked in the property and infrastructure sector for the majority of his
career, holding senior positions with listed and private property and
construction businesses. The board has considered the appointment of Jonathan
Mintz and recommends his election as a Director.
Directors' interests
The interests of the Directors in the ordinary shares of the Company, including
family and trustee holdings, where appropriate, can be found on page 22 of the
Annual Remuneration Report.
Substantial shareholdings
31 Dec 2018 31 Dec 2017
no. % no. %
Sir Michael Heller 48,080,511 56.35 48,080,063 56.35
and family
Cavendish Asset Management Limited 8,061,044 9.45 7,909,464 9.27
James Hyslop 4,886,258 5.73 4,846,258 5.68
Maland Pension Fund 2,931,198 3.44 - 0.00
The Company does not consider that the Heller family has a controlling share
interest irrespective of the number of shares held as no individual party holds
a majority and there is no legal obligation for shareholders to act in concert.
The Directors do not consider that any single party has control.
The Company is not aware of any other holdings exceeding 3 per cent of the
issued share capital.
share capital and Takeover directive
The Company has one class of share capital, namely ordinary shares. Each
ordinary share carries one vote. All the ordinary shares rank pari passu. There
are no securities issued by the Company which carry special rights with regard
to control of the Company.
The identity of all significant direct or indirect holders of securities in the
Company and the size and nature of their holdings is shown in "Substantial
Shareholdings" above.
The rights of the ordinary shares to which the HMRC approved Share Incentive
Plan relates are exercisable by the trustees on behalf of the employees.
There are no restrictions on voting rights or on the transfer of ordinary
shares in the Company, save in respect of treasury shares. The rules governing
the appointment and replacement of Directors, alteration of the articles of
association of the Company and the powers of the Company's Directors accord
with usual English company law provisions. Each Director is subject to
re-election at least every three years. The Company 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 11).
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.
indemnities and insurance
The Articles of Association of the company provide for it to indemnify, to the
extent permitted by law, directors and officers (excluding the Auditor) of the
company, including officers of subsidiaries and associated companies, against
liabilities arising from the conduct of the Group's business. The indemnities
are qualifying third party indemnity provisions of the Companies Act 2006 and
each of these qualifying third party indemnities was in force during the course
of the financial year ended 31 December 2018 and as at the date of this
Directors' report. No amount has been paid under any of these indemnities
during the year.
The Group maintains Directors and officers insurance, which is reviewed
annually and is considered to be adequate by the Company and its insurance
advisers.
Donations
No political donations were made during the year (2017: GBPNil). GBP2,800 of
donations for charitable purposes were made during the year (2017: GBP1,000).
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 commercial businesses. The group seeks to provide
those tenants with good quality premises from which they can operate in an
efficient and environmentally efficient manner and waste re-cycling
arrangements are in place at all the company's locations.
Greenhouse gas emissions
Details of the group's greenhouse gas emissions for the year ended 31 December
2018 can be found on pages 10 and 11 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 Bisichi group's
activities and policies concerning the employment, training, health and safety
and community support and social development concerning the Bisichi group's
employees in South Africa.
Going concern
The directors have reviewed the cash flow forecasts of the Group and the
underlying assumptions on which they are based. The Group's business
activities, together with the factors likely to affect its future development,
are set out in the Chairman's and Chief Executive's Statement and Financial
Review. In addition, Note 20 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 17 and 18 of the annual
report and accounts.
Annual General Meeting
The Annual General Meeting will be held at 24 Bruton Place, London, W1J 6NE on
Wednesday 12 June 2019 at 10.00 a.m. Items 1 to 9 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 10 to 12
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 9 - Authority to allot securities
Paragraph 9.1.1 of Resolution 9 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 26 April 2019 (being the
last practicable date prior to the publication of this Directors' Report).
In line with guidance issued by the Institutional Voting Information Service
(IVIS), paragraph 9.1.2 of Resolution 9 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 another 1/3 (one third) of the ordinary share capital
of the Company in issue (excluding treasury shares) as at 26 April 2019 (being
the last practicable date prior to the publication of this Directors' Report).
The Directors' authority will expire on the earlier of 31 August 2020 or the
next AGM. The Directors do not currently intend to make use of this authority.
However, if they do exercise the authority, the Directors intend to follow best
practice as recommended by the IVIS regarding its use (including as regards the
Directors standing for re-election in certain cases).
SPECIAL RESOLUTIONS
The following special resolutions will be proposed at the Annual General
Meeting:
Resolution 10 - 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 2020, 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 IVIS guidelines, approximately 5 per cent. of the total ordinary share
capital in issue as at 26 April 2019 (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 2020 or the date of next AGM.
Resolution 11 - Purchase of own ordinary shares
The effect of Resolution 11 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 26 April 2019 (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 11 will expire at the
conclusion of the Company's next annual general meeting to be held in 2020 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 12 - Notice of General Meetings
Resolution 12 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 2018. 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
Jonathan Mintz
Secretary
30 April 2019
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 12 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 27. The non-executive Directors have a particular responsibility to
ensure that the strategies proposed by the executive Directors are fully
considered. To enable the board to discharge its duties, all Directors have
full and timely access to all relevant information and there is a procedure for
all Directors, in furtherance of their duties, to take independent professional
advice, if necessary, at the expense of the Group. The board has a formal
schedule of matters reserved to it and normally has eleven regular meetings
scheduled each year. Additional meetings are held for special business when
required.
The board is responsible for overall Group strategy, approval of major capital
expenditure and consideration of significant financial and operational matters.
The board committees, which have written terms of reference, deal with specific
aspects of the Group's affairs:
* The nomination committee is chaired by C A Parritt and comprises one other
non-executive Director and the executive Chairman. The committee is responsible
for proposing candidates for appointment to the board, having regard to the
balance and structure of the board. In appropriate cases recruitment
consultants may be used to assist the process. All Directors are subject to
re-election at a maximum of every three years.
* The remuneration committee is responsible for making recommendations to the
board on the Company's framework of executive remuneration and its cost. The
committee determines the contract terms, remuneration and other benefits for
each of the executive directors, including performance related bonus schemes,
pension rights, option grants and compensation payments. The board itself
determines the remuneration of the non-executive Directors. The committee
comprises two non-executive Directors and it is chaired by C A Parritt. The
executive Chairman of the board is normally invited to attend. The Annual
Remuneration Report is set out on pages 20 to 23.
* 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 26 The Chief Executive and Finance Director are normally invited to
attend.
Board and board committee meetings held in 2018
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 3 3
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 2
Nomination committee 1 1
Remuneration committee 3 3
H D Goldring Board 10 10
Audit committee 2 2
Nomination committee 1 1
Remuneration committee 3 3
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 independent non-executive Director. Their recommendations are
discussed at the nomination committee prior to proposals for re-election being
recommended to the board. The performance of executive Directors is discussed
and assessed by the remuneration committee. The senior independent Director
meets regularly with the Chairman, executive and non-executive Directors
individually outside of formal meetings. The Directors will take outside advice
in reviewing performance but have not found this to be necessary to date.
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
Holdings 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. R Priest provides services to the Company
on a fee paying basis. C A Parritt also provides some advisory services as part
of his accounting practice.
The board encourages all three non-executive Directors to act independently and
does not consider that length of service of any individual non-executive
Director, 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 2018. 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 Company's anti-bribery 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 2018. The report is presented in two parts in accordance with the
remuneration regulations.
The first part is the Annual Remuneration Report which details remuneration
awarded to Directors and non-executive Directors during the year. The
shareholders will be asked to approve the Annual Remuneration Report as an
ordinary resolution (as in previous years) at the AGM in June 2019.
The second part is the Remuneration Policy which details the remuneration
policy for Directors. This policy was subject to a binding vote by shareholders
at the AGM in 2017 and was approved for a 3 year period commencing from then.
The committee reviewed the existing policy and deemed that no changes were
necessary to the current arrangements.
Both of the 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
30 April 2019
Annual remuneration report
The following information has been audited
Single total figure of remuneration for the year ended 31 December 2018
Salary BONUSES BENEFITS PENSIONS TOTAL SHARE TOTAL
and GBP'000 GBP'000 GBP'000 BEFORE OPTIONS 2018
fees SHARE GBP'000 GBP'000
GBP'000 OPTIONS
GBP'000
Executive Directors
Sir Michael Heller* 7 350 55 - 412 n/a 412
Sir Michael Heller - Bisichi 82 200 2 - 284 n/a 284
J A Heller 533 300 37 - 870 n/a 870
A K Thapar 161 60 11 10 242 n/a 242
783 910 105 10 1,808 - 1,808
Non-executive Directors
H D Goldring*+ 18 - 8 - 26 n/a 26
C A Parritt*+ 40 - - - 40 n/a 40
R Priest* 35 - - - 35 n/a 35
93 - 8 - 101 - 101
Total 876 910 113 10 1,909 - 1,909
Single total figure of remuneration for the year ended 31 December 2017
Salary BONUSES BENEFITS PENSIONS TOTAL SHARE TOTAL
and GBP'000 GBP'000 GBP'000 BEFORE OPTIONS 2017
fees SHARE GBP'000 GBP'000
GBP'000 OPTIONS
GBP'000
Executive Directors
Sir Michael Heller* 7 - 49 - 56 n/a 56
Sir Michael Heller - Bisichi 75 - - - 75 n/a 75
J A Heller 333 100 37 17 487 n/a 487
A K Thapar 157 30 9 10 206 n/a 206
572 130 95 27 824 - 824
Non-executive Directors
H D Goldring*+ 17 - 7 - 24 n/a 24
C A Parritt*+ 38 - - - 38 n/a 38
R Priest* 35 - - - 35 n/a 35
90 - 7 - 97 - 97
Total 662 130 102 27 921 - 921
* Note 25 "Related party transactions"
+ Members of the remuneration committee for years ended 31 December 2017 and 31
December 2018
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 GBP82,500 (2017: 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 (2017: GBP300,000). Further details of these services are set out
in Note 25 to the financial statements "Related party transactions".
J A Heller is a director of Dragon Retail Properties Limited, (a subsidiary for
IFRS 10 purposes) and received benefits from that company of GBP6,500 (2017: GBP
10,698) 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 25 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 25 to the financial statements.
R Priest provides consultancy services to the Group. This is detailed in Note
25 to the financial statements.
Summary of directors' terms
Date of Unexpired Notice
contract term period
Executive Directors
Sir Michael Heller 1 Continuous 6
January months
1971
John Heller 1 May Continuous 12
2003 months
Anil Thapar 1 Continuous 3
January months
2015
Non-executive Directors
H D Goldring 1 July Continuous 3
1992 months
C A Parritt 1 Continuous 3
January months
2006
R Priest 31 July Continuous 3
2013 months
Total pension entitlements
One director had benefits under money purchase schemes. Under his contract of
employment, he was entitled to a regular employer contribution (currently GBP
10,000 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 2018 bonuses or for 2017
bonuses.
2. Partnership shares: No partnership shares were issued between November 2017
and October 2018.
3. Matching shares: The partnership share agreements for the year to 31 October
2018 provide for two matching shares to be awarded free of charge for each
partnership share acquired. No partnership shares were acquired in 2018 (2017:
nil). Matching shares will usually be forfeited if a member leaves employment
in the Group within five years of their grant.
4. Dividend shares: Dividends on shares acquired under the SIP will be utilised
to acquire additional shares. Accumulated dividends received on shares in the
SIP to 31 December 2018 amounted to GBPNil (2017: Nil).
Dividend shares issued:
Number of Number of Value of shares
members shares
2018 2017 2018 2017 2018 2017
GBP GBP
Directors: 1 - 448 - 125 -
J A Heller
A K Thapar 1 - 579 - 161 -
Staff - - - - - -
Total at 31 December 2 - 1,027 - 286 -
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 2018.
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 2018 there were no options to subscribe for ordinary shares
outstanding. The exercise of options under the Unapproved Scheme is subject to
the satisfaction of objective performance conditions specified by the
remuneration committee which conforms to institutional shareholder guidelines
and best practice provisions. Further details of this scheme are set out in
Note 23 "Share Capital" to the financial statements.
Payments to past directors
No payments were made to past Directors in the year ended 31 December 2018.
Payments for loss of office
No payments for loss of office were made in the year ended 31 December 2018.
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 Non-beneficial
interests interests
31 Dec 18 1 Jan 18 31 Dec 18 1 Jan 18
Sir Michael Heller 5,753,541 5,753,541 19,277,931 19,277,931
H D Goldring 19,819 19,819 - -
J A Heller 1,867,841 1,867,393 ? ?
14,073,485 14,073,485
C A Parritt 36,168 36,168 - -
R Priest - - - -
A K Thapar 121,074 120,495 - -
?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 2018 was 26p (2017: 24.50p). During the year the share middle
market price ranged between 22p and 31p.
Total Shareholder Return
Remuneration of the Chief Executive over the last ten years
Year CEO Chief Executive Annual bonus payment Long-term incentive vesting
Single against maximum rates
total figure of opportunity* against maximum opportunity*
remuneration % %
GBP'000
2018 J A 870 20% n/a
Heller
2017 J A 487 11% n/a
Heller
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
*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 2017
and 2018 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
2018 2017 % 2018 2017 %
change change
Base salary and allowances 533 333 60.1% 675 643 5%
Taxable benefits 37 37 0% 93 81 14.8%
Annual bonus 300 100 200% 460 80 475%
Total 870 470 85.1% 1,228 804 52.7%
Relative importance of spend on pay
The total expenditure of the Group on remuneration to all employees (Note 26
refers) is shown below:
2018 2017
GBP'000 GBP'000
Employee Remuneration 9,889 8,113
Distributions to shareholders 256 141
Statement of implementation of remuneration policy
The policy was approved at the AGM in June 2017 and was effective from 6 June
2017. 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
2020 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 2018. The balance between bonuses and basic remuneration
payable to the Chief Executive was varied to better reflect market conditions.
Shareholder voting
At the Annual General Meeting on 19 June 2018, there was an advisory vote on
the resolution to approve the Remuneration Report, other than the part
containing the remuneration policy.
In addition, on 6 June 2017, 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 (19 73.95 26.05 2,173,594
June 2018)
Resolution to approve the Remuneration Policy (6 June 83.14 16.69 89,602
2017)
Remuneration policy
INTRODUCTION
Set out below is the LAP Group policy on directors' remuneration (excluding
Bisichi). This policy was approved at the 2017 AGM and it is effective from 6
June 2017. Unless changed it will be presented next for approval at the AGM in
2020.
A copy of the full policy can be found at www.lap.co.uk.
In setting the policy, the Remuneration Committee has taken the following into
account:
* The need to attract, retain and motivate individuals of a calibre who will
ensure successful leadership and management of the company
* The LAP Group's general aim of seeking to reward all employees fairly
according to the nature of their role and their performance
* Remuneration packages offered to similar companies within the same sector
* The need to align the interests of shareholders as a whole with the long-term
growth of the Group; and
* The need to be flexible and adjust with operational changes throughout the
term of this policy
The remuneration of non-executive directors is determined by the board, and
takes into account additional remuneration for services outside the scope of
the ordinary duties of non-executive directors.
Future policy table
Element Purpose Policy Operation Opportunity and
performance conditions
Executive directors
Base To recognise: Considered by Reviewed annually There is no prescribed
salary Skills remuneration whenever there is a maximum salary or
Responsibility committee on change maximum rate of
Accountability appointment of role or increase
Experience Set at a level operational No individual director
Value considered responsibility will be awarded a base
appropriate to Paid monthly in salary in excess of GBP
attract, retain, cash 700,000 a year
motivate and No specific
reward the right performance conditions
individuals 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 included of base salary as part
benefits 10% of base salary in the director's of overall
as part of overall contract of remuneration package
remuneration employment No specific
package Paid into money performance conditions
purchase schemes are attached to
pension contributions
Benefits To provide a Contractual The committee The costs associated
competitive benefits include: retains the with benefits offered
benefits Car or car discretion to are closely controlled
package allowance approve changes in and reviewed on an
Group health cover contractual annual basis
Death in service benefits in No director will
cover exceptional receive benefits of a
Permanent health circumstances or value in excess of 30%
insurance where factors of their base salary
outside the control No specific
of the Group lead performance conditions
to increased costs are attached to
(e.g. medical contractual benefits
inflation)
Annual To reward and In assessing the The remuneration The current maximum
bonus incentivise performance of the committee bonus will not exceed
executive team, determines the 200% of base salary in
and in particular level of bonus on any one year but the
to determine an annual basis remuneration committee
whether bonuses In assessing reserves the power to
are merited the performance award up to 300% in an
remuneration consideration is exceptional year
committee takes given to the level Performance conditions
into account the of net rental will be assessed on an
overall income, cash flow, annual basis
performance of the voids, realised The performance
business, as well development gains measures applied may
as and income from be financial,
individual managing joint non-financial,
contribution to ventures. Achieved corporate, divisional
the business in results are then or individual and in
the period compared with such proportion as the
expectation taking remuneration committee
account of market considers appropriate
conditions
Bonuses are
generally offered
in cash or shares
Share To provide Share options may Offered at Entitlements to share
options executive be granted under appropriate times options granted under
directors with existing schemes by the the Approved Option
a long-term (see page 21) remuneration scheme are not subject
interest in Where it is committee to performance
the company necessary to criteria. Share
attract, retain, Options granted under
motivate and the Unapproved Scheme
reward the right are subject to the
individuals, the performance criteria
directors may specified in the
establish new Scheme rules
schemes to replace The aggregate number
any expired of shares over which
schemes 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 awarded,
incentive shorter term executive participation Directors may opt to
plan incentive in directors and head levels are set by have maximum of GBP3,000
(SIP) the company office staff HMRC per year paid in 'Free
and to give Shares' under the SIP
directors a scheme rules
stake
in the group
Non-executive directors
Base To recognise: Considered by the Reviewed annually No individual
salary Skills board on non-executive director
Responsibility appointment will be awarded a base
Experience Set at a level salary in excess of GBP
Risk considered 40,000 a year
Value appropriate to No performance
attract, retain conditions are
and motivate the attached to base
individual salaries
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 offered
one non-executive discretion to are closely controlled
director who is approve changes in and reviewed on an
eligible for contractual annual basis
health cover (see benefits in No non-executive
annual exceptional director will receive
remuneration circumstances or benefits in excess of
report page 20) where factors GBP10,000 a year
outside the No specific
control of the performance conditions
Group lead to are attached to
increased costs contractual benefits
(e.g. medical
inflation)
Share Non-executive
options directors do not
participate in the
share option
schemes
Notes to the Remuneration Policy
The remuneration committee considers the performance measures outlined in the
table above to be appropriate measures of performance and that the KPIs chosen
align the interests of the directors and shareholders.
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.
FINANCIAL REPORTING
As part of its role, the Audit Committee assessed the audit findings that were
considered most significant to the financial statements, including those areas
requiring significant judgement and/or estimation. When assessing the
identified financial reporting matters, the committee assessed quantitative
materiality primarily by reference to the carrying value of the group's total
assets, given
that the group operates a principally asset based business. When determining
quantitative materiality, the Board also gave consideration to the value of
revenues generated by the group and net asset value, given that they are key
trading and business KPIs. The qualitative aspects of any financial reporting
matters identified during the audit process were also considered when assessing
their materiality. Based on the considerations set out above we have considered
quantitative errors individually or in aggregate in excess of approximately GBP
1.5 million in relation to the consolidated balance sheet and GBP0.4 million for
underlying profitability and GBP0.3 million for the Bisichi group to be material.
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
30 April 2019
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 GUIDANCE and Transparency Rules
Each of the directors, whose names and functions are listed on page 12,
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 and regulations in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation and
regulations in other jurisdictions.
Independent auditor's report
TO THE MEMBERS OF LONDON & ASSOCIATED PROPERTIES PLC
Opinion
We have audited the financial statements of London & Associated Properties Plc
(the 'parent company') and its subsidiaries (the 'group') for the year ended 31
December 2018 which comprise the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated balance sheet,
the consolidated statement of changes in shareholders' equity, the consolidated
cash flow statement, the company balance sheet, the company statement of
changes in equity and notes to the financial statements, including a summary of
significant accounting policies. 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 including FRS 101 "Reduced Disclosure
Framework (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
* the financial statements give a true and fair view of the state of the
group's and of the parent company's affairs as at 31 December 2018 and of the
group's profit 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards
are further described in the Auditor's responsibilities for the audit of the
financial statements section of our report. We are independent of the group and
parent company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to
which the ISAs (UK) require us to report to you where:
* the directors' use of the going concern basis of accounting in the
preparation of the financial statements is not appropriate; or
* the directors have not disclosed in the financial statements any identified
material uncertainties that may cast significant doubt about the group's or the
parent company's ability to continue to adopt the going concern basis of
accounting for a period of at least twelve months from the date when the
financial statements are authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of
most significance in our audit of the group and parent company financial
statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) that we
identified. These matters included those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters were addressed in the context of our audit of the group and parent company financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The valuation and presentation of properties The group's properties are accounted for in the financial statements as investment properties under IAS 40 and held at fair value, or as inventory where appropriate and held at the lower of cost and net realisable value. The majority of investment properties are valued by two firms of independent external valuers and these valuations are adopted in the financial statements. At 31 December 2018 investment property valued at GBP47.4 million (note 8) was disclosed within non-current assets in the financial statements. Separately, investment property valued at GBP2.3 million (note 10) was disclosed as assets held for sale, within current assets, and property inventory was carried at GBP 38.6 million (note 12). The directors' assessment of the value and presentation of properties is considered a key audit matter due to the relative importance of these assets to the group's financial statements, the potential impact of movements in the fair values of the assets, and the subjectivity and complexity of the valuation process, which involves significant judgements and estimates as disclosed on page 37 of the financial statements. The valuations are carried out by two firms of professional external valuers, together with, in respect of one property, an internal valuer in accordance with the methodology described in note 8. Our response to the key audit matter included: * agreeing the valuations of all properties recorded in the financial statements and subject to the external valuation process to the valuation reports prepared by the valuers. These reports covered all of the value of investment properties, except one property valued at GBP1.6 million which was subject to internal valuation; * agreeing the carrying value (sales price less estimated costs to sell) of the property included as assets held for sale, to the draft agreement for sale; * discussing with management and reviewing the documentation on the development activities undertaken which resulted in the transfer of the Sheffield property from investment property to inventory: * agreeing the cost of properties held as inventory to underlying records including, for the Sheffield property held at a value of GBP32.3 million, to the valuation report prepared by third party valuers and used as the basis of cost for the transfer of that property from investment property to inventory; * assessing the qualifications and expertise of the valuers, and considering their objectivity and any threats to their independence. We concluded that there was no threat which might impair the valuers' independence and objectivity; * meeting the valuers, both external and internal, to discuss and challenge the assumptions used and the movements in valuations observed in the year; and * comparing the key inputs to the valuation model to the underlying records of the leases and records of rents received and against our knowledge of market yields. Key observations * The carrying values of the properties are consistent with the valuation reports provided for investment properties. Properties held in inventory are carried at the lower of cost and net realisable value and, in the case of the asset held for sale, with the agreed selling price less estimated costs to sell. The presentation of the properties is consistent with management's intent Revenue recognition As disclosed in note 1, the Group generated revenues from coal sales, rental income and service charge income. It was considered appropriate, as this is the first year of application of IFRS 15, to assess the appropriateness of management's revenue recognition policies and their application for compliance with IFRS. In addition, it was considered that there was a risk of coal sales revenue being recorded in the incorrect period. As reported under the group accounting policies, during the course of the audit a material error was identified in respect of the Bisichi sub group's accounting treatment of transport costs to deliver export coal to the export terminal under a specific agreement. Such transport costs were previously incorrectly recorded as a deduction from revenue. Management has revised the accounting treatment in 2018 and restated the prior year revenue and operating costs accordingly. The impact is to increase revenue and operating costs by GBP3.1m for the year ended 31 December 2018. The impact of the prior year restatement was to increase revenue and operating costs by GBP2.9m. There is no profit or net assets effect of the restatement. The responses to the key audit matter included: * management's revenue recognition policy for domestic and export coal sales was assessed for compliance with the relevant accounting standard. In doing so, sales contracts and terms with material customers were reviewed; * controls over domestic coal sales were tested, focused on the authorisation and recording of revenue. Tests of detail, verifying a sample of domestic revenue to supporting documentation, were performed; * third party confirmations were obtained which were agreed to amounts recorded in the ledgers for export sales and a sample of sales was confirmed to contract terms; * the recording of revenue around the year end was tested and the revenue recognition point was assessed for consistency with the group's revenue recognition policy, customer terms and supporting documents regarding despatch/ delivery as applicable; * credit notes around the year end were reviewed for indications that revenue had been inappropriately recorded; * in respect of the change in accounting treatment for transport costs and associated restatement of the prior year revenues and operating costs, the relevant contract was reviewed and the appropriateness of the accounting treatment under relevant accounting standards for the current and prior period was assessed. In doing so, financial reporting technical experts were consulted; * a sample of the costs was agreed to supporting documentation and the general ledgers were reviewed in detail to check the completeness and accuracy of the adjustments in the current and prior period. Key observations The Group's revenue recognition policies were found to be compliant with IFRS and, subsequent to the restatement and adjustment, revenue is recorded in line with the group's stated policies. Service charge income of GBP0.9 million is now included gross in revenue, whereas in prior years such income had been netted off expenses, as disclosed in note 1. There are no key audit matters in relation to the parent company. Our application of materiality When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of our audit procedures. When evaluating whether the effects of misstatements, both individually and on the financial statements as a whole, could reasonably influence the economic decisions of the users we take into account the qualitative nature and the size of the misstatements. During planning materiality for the group statements as a whole was calculated as GBP1.5 million, which was not significantly changed during the course of our audit. Materiality for the parent company financial statements as a whole was calculated as GBP0.4 million, which was revised to GBP0.65 million as the audit progressed. The London & Associated Properties plc group consists of two distinct components: a UK based property investment group, and a fully listed mining group carrying out mining operations in South Africa with a relatively small investment property portfolio. Our materiality levels in respect of these components were determined at: * for the London & Associated Properties plc property investment sub group balance sheet, GBP1.2 million and to underlying profitability GBP0.4 million; and * for the Bisichi Mining plc coal mining and property investment sub group, GBP 0.3 million. We agreed with the audit committee that we would report to them all unadjusted differences in excess of GBP15,000 for both components of the group. We also agreed to report other differences below that threshold which, in our view, warranted reporting on qualitative grounds. An overview of the scope of our audit The group comprises 30 trading, or active holding, companies and 12 dormant companies. Full scope audits, using component materiality, were performed on 25 of the active entities with the other five entities subjected to desktop review. Six of the full scope audits and four of the desktop reviews were performed by component auditors whose work we evaluated and reviewed for the purpose of the group audit. This resulted in coverage of 100% of total revenues and profit before tax of the group, and 100% of total gross assets of the group. Other information The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in the financial
statements or a material misstatement of the other information. If, based on
the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions 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.
In our opinion, based on the work undertaken in the course of the audit:
* the information given in the strategic report and the directors' report for
the financial year for which the financial statements are prepared is
consistent with the financial statements; and
* the strategic report and the directors' report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent
company and their environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
* adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not visited
by us; or
* the parent company financial statements and the part of the directors'
remuneration report required 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.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out on
page 27, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for
such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the group's and the parent company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As part of our audit, we will consider the susceptibility of the group and
parent company to fraud and other irregularities, taking account of the
business and control environment established and maintained by the directors,
as well as the nature of transactions, assets and liabilities recorded in the
accounting records. Owing to the inherent limitations of an audit, there is an
unavoidable risk that some material misstatements of the financial statements
may not be detected, even though the audit is properly planned and performed in
accordance with the ISAs. However, the principal responsibility for ensuring
that the financial statements are free from material misstatement, whether
caused by fraud or error, rests with management who should not rely on the
audit to discharge those functions.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at: http://
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor's report.
Other matters which we are required to address
Following the recommendation of the audit committee, we were appointed by the
Board of Directors on 27 July 1987 to audit the financial statements for the
year ended 31 December 1987 and subsequent financial periods. The period of
total uninterrupted engagement is 32 years, covering the years ending 31
December 1987 to 31 December 2018.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the group or the parent company and we remain independent of the
group and the parent company in conducting our audit.
During the period under review agreed upon procedures were completed in respect
of a number of the group's service charge accounts.
Our audit opinion is consistent with the additional report to the
audit committee.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we are
required to state to them in an auditor'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 (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
30 April 2019
FINANCIAL STATEMENTS
Consolidated income statement
for the year ended 31 December 2018
Notes 2018 2017
GBP'000 GBP'000
Restated
Group revenue 1 56,651 47,870
Operating costs (49,293) (40,319)
Gain on disposal of other investments - 3
Operating profit 7,358 7,554
Finance income 4 61 105
Finance expenses 4 (3,682) (4,268)
Debenture break cost 20 - (14)
Result before revaluation and other movements 3,737 3,377
Non-cash changes in valuation of assets and liabilities and
other movements
(Decrease)/increase in value of investment properties 8 (2,565) 9,373
Write off investment in joint venture - (1,827)
Decrease in value of trading investments (169) -
Adjustment to interest rate derivative 20 265 355
Profit for the year before taxation 2 1,268 11,278
Income tax charge 5 (675) (2,982)
Profit for the year 593 8,296
Attributable to:
Equity holders of the Company (2,082) 7,686
Non-controlling interest 24 2,675 610
Profit for the year 593 8,296
Earnings per share
Profit/(loss) per share - basic and diluted 7 (2.44)p 9.01p
A revenue recognition error was identified in respect of Bisichi's prior year.
An amount of GBP2,891,000 had been incorrectly recorded as a deduction against
revenue rather than shown as an operating cost. The above comparatives have
been restated accordingly.
Consolidated statement of comprehensive income
for the year ended 31 December 2018
2018 2017
GBP'000 GBP'000
Profit for the year 593 8,296
Other comprehensive income/(expense):
Items that may be subsequently recycled to the income statement:
Exchange differences on translation of Bisichi Mining PLC foreign (430) 91
operations
Transfer of gain on available for sale investments - 103
Taxation - (20)
Other comprehensive (expense)/income for the year net of tax (430) 174
Total comprehensive (expense)/income for the year net of tax 163 8,470
Attributable to:
Equity shareholders (2,239) 7,753
Non-controlling interest 2,402 717
163 8,470
Consolidated balance sheet
at 31 December 2018
Notes 2018 2017
GBP'000 GBP'000
Non-current assets
Market value of properties attributable to Group 8 47,430 78,025
Present value of head leases 28 3,261 3,233
Property 50,691 81,258
Mining reserves, plant and equipment 9 8,659 8,735
Investments 14 1,783 1,799
Deferred tax 21 - -
61,133 91,792
Current assets
Inventories-property 12 38,556 -
Inventories-mining 13 1,511 828
Assets held for sale 10 2,285 36,441
Trade and other receivables 15 8,022 7,132
Interest rate derivatives 20 - 1
Investments 16 887 1,069
Cash and cash equivalents 20,655 7,528
71,916 52,999
Total assets 133,049 144,791
Current liabilities
Trade and other payables 17 (13,341) (12,909)
Borrowings 18 (41,388) (4,288)
Interest rate derivatives (169) -
Current tax liabilities (73) (358)
(54,971) (17,555)
Non-current liabilities
Borrowings 18 (15,255) (61,661)
Interest rate derivatives 20 - (435)
Present value of head leases on properties 29 (3,261) (3,233)
Provisions 19 (1,571) (1,349)
Deferred tax liabilities 22 (2,305) (3,848)
(22,392) (70,526)
Total liabilities (77,363) (88,081)
Net assets 55,686 56,710
Equity attributable to the owners of the parent
Share capital 23 8,554 8,554
Share premium account 4,866 4,866
Translation reserve (Bisichi Mining PLC) (852) (695)
Capital redemption reserve 47 47
Retained earnings (excluding treasury shares) 30,906 33,227
Treasury shares 23 (144) (145)
Retained earnings 30,762 33,082
Total equity attributable to equity shareholders 43,377 45,854
Non-controlling interest 24 12,309 10,856
Total equity 55,686 56,710
Net assets per share 7 50.83p 53.74p
Diluted net assets per share 7 50.83p 53.74p
These financial statements were approved by the board of directors and
authorised for issue on 30 April 2019 and signed on its behalf by:
Sir Michael Heller Jonathan
Mintz
Company Registration No. 341829
Director
Director
Consolidated statement of changes in shareholders' equity
for the year ended 31 December 2018
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 (728) 47 (145) 25,648 38,242 10,389 48,631
January 2017
Profit for year - - - - - 7,686 7,686 610 8,296
Other
comprehensive
income:
Currency - - 33 - - - 33 58 91
translation
Gain on - - - - - 34 34 49 83
available for
sale
investments
(net of tax)
Total other - - 33 - - 34 67 107 174
comprehensive
income
Total - - 33 - - 7,720 7,753 717 8,470
comprehensive
income
Transactions
with owners:
Dividends - - - - - - (141) (141) - (141)
equity holders
Dividends - - - - - - - - (250) (250)
non-controlling
interests
Transactions - - - - - (141) (141) (250) (391)
with owners
Balance at 31 8,554 4,866 (695) 47 (145) 33,227 45,854 10,856 56,710
December 2017
Profit for year - - - - - (2,082) (2,082) 2,675 593
Other
comprehensive
expense:
Currency - - (157) - - - (157) (273) (430)
translation
Total other - - (157) - - - (157) (273) (430)
comprehensive
expense
Total - - (157) - - (2,082) (2,239) 2,402 163
comprehensive
income/
(expense)
Transactions
with owners:
Share options - - - - - 17 17 7 24
charge
Dividends - - - - - - (256) (256) - (256)
equity holders
Dividends - - - - - - - - (956) (956)
non-controlling
interests
Disposal of own - - - - 1 - 1 - 1
shares
Transactions - - - - 1 (240) (239) (948) (1,187)
with owners
Balance at 31 8,554 4,866 (852) 47 (144) 30,906 43,377 12,309 55,686
December 2018
Consolidated cash flow statement
for the year ended 31 December 2018
2018 2017
GBP'000 GBP'000
Operating activities
Profit for the year before taxation 1,268 11,278
Finance income (61) (105)
Finance expense 3,682 4,268
Debenture break cost - 14
Realised gain on disposal of other investments - (3)
(Increase)/decrease in value of investment properties 2,565 (9,373)
Write off investment in joint venture - 1,827
Increase in trading investments 169 -
Adjustment to interest rate derivative (265) (355)
Depreciation 2,122 1,804
Profit on disposal of non-current assets - (3)
Share based payment expense 18 -
Exchange adjustments 65 258
Development expenditure on inventories (6,256) -
Change in inventories (797) 896
Change in receivables (235) 196
Change in payables (354) (415)
Cash generated from operations 1,921 10,287
Income tax paid (2,281) (14)
Cash inflows from operating activities (360) 10,273
Investing activities
Disposal of assets held for sale 36,474 (56)
Acquisition of investment properties, mining reserves, plant and (9,438) (1,771)
equipment
Sale of plant and equipment 1 29
Interest received 199 137
Cash (outflows)/inflows from investing activities 27,236 (1,661)
Financing activities
Interest paid (3,711) (3,963)
Interest obligation under finance leases (178) (178)
Debenture stock break costs paid - (14)
Receipt of bank loan - Bisichi Mining PLC 753 23
Repayment of bank loan - Bisichi Mining PLC (19) (25)
Repayment of bank loan - Dragon Retail Properties Ltd (65) -
Receipt of bank loan 7,202 -
Repayment of bank loan (16,438) -
Short term loan from joint ventures and related parties (30) (30)
Repayment of debenture stocks (3,000) (750)
Equity dividends paid (255) (141)
Equity dividends paid - non-controlling interests (309) (250)
Cash outflows from financing activities (16,050) (5,328)
Net increase in cash and cash equivalents 10,826 3,284
Cash and cash equivalents at beginning of year 6,266 2,931
Exchange adjustment 28 51
Cash and cash equivalents at end of year 17,120 6,266
Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise
the following balance sheet amounts:
2018 2017
GBP'000 GBP'000
Cash and cash equivalents (before bank overdrafts) 20,655 7,528
Bank overdrafts (3,535) (1,262)
Cash and cash equivalents at end of year 17,120 6,266
GBP340,000 of cash deposits at 31 December 2018 were charged as security to
debenture stocks (2017: GBP120,000).
GBP500,000 of cash deposits at 31 December 2018 were charged as security to bank
loans (2017: nil).
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 30. The
financial statements are prepared under the historical cost convention, except
for the revaluation of freehold and leasehold properties and financial assets
at fair value through profit and loss as well as fair value of interest
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 is the currency of the
country in which the entity has been incorporated. Details of the country in
which each entity has been incorporated can be found in note 11.
The exchange rates used in the accounts were as follows:
GBP1 Sterling: GBP1 Sterling:
Rand Dollar
2018 2017 2018 2017
Year-end rate 18.3723 16.6686 1.2690 1.35028
Annual average 17.5205 17.1540 1.3096 1.29174
London & Associated Properties PLC ("LAP"), 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. LAP and its
subsidiaries ("the Group") consists of LAP, all of its subsidiary undertakings,
including Bisichi Mining PLC ("Bisichi") and Dragon Retail Properties Limited
("Dragon"). The Group without Bisichi and Dragon is referred to as LAP Group.
Revenue recognition restatement
During the review of revenue recognition in South Africa a revenue recognition
error was identified in respect of the treatment of transport and loading costs
to deliver export coal under certain export agreements. The costs in prior
periods, had been incorrectly recorded as a deduction against revenue rather
than shown as an operating cost. In the current year such costs have been
recorded in operating costs and the comparatives restated accordingly.
The impact on the current year is to increase both revenue and operating costs
by GBP3,101,000 and the prior year requires an equivalent restatement totalling GBP
2,891,000. There is no profit or net assets impact as a result of the prior
year restatement.
Going concern
In reviewing going concern it is necessary to consider separately the position
of LAP Group and Bisichi. Although both are consolidated into group accounts
(as required by IFRS 10), they are managed independently and in the unlikely
event that Bisichi was unable to continue trading this would not affect the
ability of LAP Group to continue operating as a going concern. The same would
be true for Bisichi in reverse.
The directors have reviewed the cash flow forecasts of the LAP Group and the
underlying assumptions on which they are based. 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 20 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 Financial Reporting Standards (IFRS)
The Group has adopted all of the new and revised Standards and Interpretations
issued by the International Accounting Standards Board ("IASB") that are
relevant to its operations and effective for accounting periods beginning 1
January 2018.
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 replaces the 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 2017. The new standard has
not caused any material impacts on the financial statements for the year ended
31 December 2018.
IFRS 9 was published in July 2014 and is effective for the group from 1 January
2018. The standard was endorsed by the EU on 22 November 2017. IFRS 9
supersedes IAS 39 "Financial Instruments: Recognition and Measurement" and 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. The
adoption of IFRS 9 has resulted in changes in the Group's accounting policies
for the recognition, classification and measurement of financial assets and
financial liabilities and impairment of financial assets. IFRS 9 modifies the
classification and measurement of certain classes of financial assets and
liabilities and required the Group to reassess classification of financial
assets into three primary categories (amortised cost, fair value through profit
and loss, fair value through other comprehensive income), reflecting the
business model in which assets are managed and their cash flow characteristics.
Financial liabilities continue to be measured at either fair value through
profit and loss or amortised cost. In addition, IFRS 9 introduced an expected
credit loss ("ECL") impairment model, which means that anticipated as opposed
to incurred credit losses are recognised which may result in earlier
recognition of impairments. Application of IFRS 9 has not had a significant
impact on the Group's reported results or its credit risk management policies.
The Group has not adopted any Standards or Interpretations in advance of the
required implementation dates. The following new and revised IFRS standards,
which are applicable to the group, were issued but are not yet effective:
IFRS 16 'Leases' - IFRS 16 'Leases' was issued by the IASB in January 2017 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, which has been endorsed by the
EU, provides a single lessee accounting model, specifying how leases are
recognised, measured, presented and disclosed. The Directors are currently
evaluating the financial and operational impact of this standard including the
application to the Bisichi group's service contracts at the mine containing
leases. The review of the impact of IFRS 16 will require an assessment of all
leases and the impact of adopting this standard cannot be reliably estimated
until this work is substantially complete.
The Directors do not anticipate that the adoption of the other standards and
interpretations not listed above will have a material impact on the accounts.
Certain of these standards and interpretations will, when adopted, require
addition to or amendment of disclosures in the accounts.
We are committed to improving disclosure and transparency and will continue to
work with our different stakeholders to ensure they understand the detail of
these accounting changes. We continue to remain committed to a robust financial
policy.
Key judgements and estimates
The preparation of the financial statements requires management to make
assumptions and estimates that may affect the reported amounts of assets and
liabilities and the reported income and expenses, further details of which are
set out below. Although management believes that the assumptions and estimates
used are reasonable, the actual results may differ from those estimates.
Further details of the estimates and judgements which may have a material
impact on next year's financial statements are contained in the Directors'
Report.
Property operations
Fair value measurements of investment properties 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.
Inventory
When the Group begins to redevelop an existing investment property with a view
to sell, the property is transferred to inventory and held as a current asset.
The property is re-measured to fair value as at the date of the transfer with
any gain or loss being taken to the income statement. The re-measured amount
becomes the deemed cost at which the property is then carried in trading
properties. The Board have decided that Orchard Square, Sheffield no longer
fits our longer-term criteria for an investment property held to generate
capital growth. Accordingly, it has been transferred to inventory. A series of
asset management initiatives and developments are underway, and it is our
intention to sell this asset on completion of those projects.
Mining operations
Life of mine and reserves
The directors consider their judgements and estimates surrounding the life of
the mine and its reserves to have significant effect on the amounts recognised
in the financial statements and to be an area where the financial statements
are at most risk of a significant estimation uncertainty. The life of the mine
remaining is currently estimated at 4 years. This life of mine is based on the
Groups existing coal reserves and excludes future coal purchases and coal
reserve acquisitions. The Group's estimates of proven and probable reserves are
prepared and subject to assessment by an independent Competent Person
experienced in the field of coal geology and specifically opencast and pillar
coal extraction. Estimates of coal reserves impact assessments of the carrying
value of property, plant and equipment, depreciation calculations and
rehabilitation and decommissioning provisions. There are numerous uncertainties
inherent in estimating coal reserves and changes to these assumptions may
result in restatement of reserves. These assumptions include geotechnical
factors as well as economic factors such as commodity prices, production costs
and yield.
Depreciation, amortisation of mineral rights, mining development costs and
plant & equipment
The annual depreciation/amortisation charge is dependent on estimates,
including coal reserves and the related life of the mine, expected development
expenditure for probable reserves, the allocation of certain assets to relevant
ore reserves and estimates of residual values of the processing plant. The
charge can fluctuate when there are significant changes in any of the factors
or assumptions used, such as estimating mineral reserves which in turn affects
the life of mine or the expected life of reserves. Estimates of proven and
probable reserves are prepared by an independent Competent Person. Assessments
of depreciation/amortisation rates against the estimated reserve base are
performed regularly. Details of the depreciation/amortisation charge can be
found in note 9.
Provision for mining rehabilitation including restoration and de-commissioning
costs
A provision for future rehabilitation including restoration and decommissioning
costs requires estimates and assumptions to be made around the relevant
regulatory framework, the timing, extent and costs of the rehabilitation
activities and of the risk free rates used to determine the present value of
the future cash outflows. The provisions, including the estimates and
assumptions contained therein, are reviewed regularly by management. The Group
engages an independent expert to assess the cost of restoration and
decommissioning annually as part of management's assessment of the provision.
Details of the provision for mining rehabilitation can be found in note 19.
Mining impairment
Property, plant and equipment representing the Group's mining assets in South
Africa are reviewed for impairment at each reporting date. The impairment test
is performed using the approved Life of Mine plan and those future cash flow
estimates are discounted using asset specific discount rates and are based on
expectations about future operations. The impairment test requires estimates
about production and sales volumes, commodity prices, proven and probable
reserves (as assessed by the Competent Person), operating costs and capital
expenditures necessary to extract reserves in the approved Life of Mine plan.
Changes in such estimates could impact recoverable values of these assets.
Details of the carrying value of property, plant and equipment can be found in
note 9.
The impairment test indicated significant headroom as at 31 December 2018 and
therefore no impairment is considered appropriate. The key assumptions include:
coal prices, including domestic coal prices based on recent pricing and
assessment of market forecasts for export coal; production based on proven and
probable reserves assessed by the independent Competent Person and yields
associated with mining areas based on assessments by the Competent Person and
empirical data. A 15% reduction in average forecast coal prices or a 17%
reduction in yield would give rise to a breakeven scenario. However, the
Bisichi directors consider the forecasted yield levels and pricing to be
achievable.
Basis of consolidation
The Group accounts incorporate the accounts of LAP and all of its subsidiary
undertakings, together with the Group's share of the results and net assets of
its joint ventures.
Non-controlling interests in subsidiaries are presented separately from the
equity attributable to equity owners of the parent company. When changes in
ownership in a subsidiary do not result in a loss of control, the
non-controlling shareholders' interests are initially measured at the
non-controlling interests' proportionate share of the subsidiaries' net assets.
Subsequent to this, the carrying amount of non-controlling interests is the
amount of those interests at initial recognition plus the non-controlling
interests' share of subsequent changes in equity. Total comprehensive income is
attributed to non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity
when it is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power
over the entity. Subsidiaries acquired during the year are consolidated using
the acquisition method. Their results are incorporated from the date that
control passes.
All intra Group transactions, balances, income and expenses are eliminated on
consolidation. Details of the Group's trading subsidiary companies are set out
in Note 11.
The directors are required to consider the implications of IFRS 10 on the LAP
investment in Bisichi 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 and West Ealing Properties Limited are also subsidiaries for accounting
purposes, as LAP and Bisichi each own 50% of these joint venture businesses.
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.
Service charge income
Service charge income and management fees are recorded as income in the period
in which they are earned.
Reverse surrender premiums
Payments received from tenants to surrender their lease obligations are
recognised immediately in the income statement.
Dilapidations
Dilapidations monies received from tenants in respect of their lease
obligations are recognised immediately in the income statement.
Other revenue
Revenue in respect of listed investments held for trading represents investment
dividends received and profit or loss recognised on realisation. Dividends are
recognised in the income statement when the dividend is received.
Property operating expenses
Operating expenses are expensed as incurred and any property operating
expenditure not recovered from tenants through service charges is charged to
the income statement.
Employee benefits
Share based remuneration
The 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
Financial assets and financial liabilities are recognised in the Group's
consolidated statement of financial position when the group becomes a party to
the contractual provisions of the instrument.
Financial assets
Financial assets are classified as either financial assets at amortised cost,
at fair value through other comprehensive income ("FVTOCI") or at fair value
through profit or loss ("FVPL") depending upon the business model for managing
the financial assets and the nature of the contractual cash flow
characteristics of the financial asset.
A loss allowance for expected credit losses is determined for all financial
assets, other than those at FVPL, at the end of each reporting period. The
Group applies a simplified approach to measure the credit loss allowance for
trade receivables using the lifetime expected credit loss provision. The
lifetime expected credit loss is evaluated for each trade receivable taking
into account payment history, payments made subsequent to year end and prior to
reporting, past default experience and the impact of any other relevant and
current observable data. The group applies a general approach on all other
receivables classified as financial assets. The general approach recognises
lifetime expected credit losses when there has been a significant increase in
credit risk since initial recognition.
The Group derecognises a financial asset when the contractual rights to the
cash flows from the asset expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership of the asset to another
party. The Group derecognises financial liabilities when the Group's
obligations are discharged, cancelled or have expired.
Investments
Investments comprise of (a) a loan to a limited property partnership, included
in non-current investments, and (b) investments in shares of listed companies.
Current and non-current Investments are initially measured at fair value and
are subsequently measured at fair value through profit and loss, based on both
the business model within which such assets are held and the contractual cash
flow characteristics of the financial asset. Fair value movements are
recognised in profit or loss.
Financial assets are derecognised when the rights to receive cash flows have
expired or have been transferred and the Group has transferred substantially
all the risks and rewards of ownership. When there is no reasonable expectation
of recovering part or all of a financial asset, its carrying value is written
off.
Trade and other receivables
Trade receivables are accounted for at amortised cost. Trade receivables do not
carry any interest and are stated at their nominal value as reduced by
appropriate expected credit loss allowances for estimated recoverable amounts
as the interest that would be recognised from discounting future cash payments
over the short payment 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 loan is included as a financial liability on the balance sheet
net of the unamortised costs on issue. The cost of issue is recognised in the
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 for future use as an investment property. They are reported on
the Group balance sheet at fair value, being the amount for which an investment
property could be exchanged between knowledgeable and willing parties in an
arm's length transaction. The directors' property valuation is at fair value.
The external valuation of properties is undertaken by independent valuers who
hold recognised and relevant professional qualifications and have recent
experience in the locations and categories of properties being valued. Surpluses or deficits resulting from changes in the fair value of investment 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 held for future use as an investment property, up to the point of it being completed for its intended use, are capitalised in the carrying value of that property. Where there is a change of use, such as commencement of development with a view to sell, the property is transferred to inventory at deemed cost, which is its fair value on the date of the change in use. Capitalised interest is calculated with reference to the actual rate payable on borrowings for development purposes, or for that part of the development costs financed out of borrowings the capitalised interest is calculated on the basis of the average rate of interest paid on the relevant debt outstanding. Disposal The disposal of investment properties is recorded on completion of the contract. On disposal, any gain or loss is calculated as the difference between the net disposal proceeds and the valuation at the last year end plus subsequent capitalised expenditure in the period. Depreciation and amortisation In applying the fair value model to the measurement of investment properties, depreciation and amortisation are not provided 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, or investment property which continues to be measured in accordance with the Group's other accounting policies. Impairment losses on initial classification as assets held-for-sale and subsequent gains and losses on remeasurement are recognised in profit or loss. Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortised or depreciated, and any equity-accounted investment is no longer equity accounted. Inventories-property Those properties held as trading inventory which are being developed with a view to sell. Inventories are recorded at the lower of cost and net realisable value. The net realisable value of inventory is determined by a professional external valuer at each reporting date. If the net realisable value of inventory is lower than its carrying value, an impairment loss is recorded in the income statement. If, in subsequent periods, the net realisable value of inventory that was previously impaired increases above its carrying value, the impairment is reversed to align the carrying value of the property with the net realisable value. Inventory are presented on the balance sheet within current assets. Income taxes The charge for current taxation is based on the results for the year as adjusted for disallowed or non-assessable items. Tax payable upon realisation of revaluation gains recognised in prior periods is recorded as a current tax charge with a release of the associated deferred tax. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the tax computations and is recorded using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. In respect of the deferred tax on the revaluation surplus, this is calculated on the basis of the chargeable gains that would crystallise on the sale of the investment portfolio as at the reporting date. The calculation takes account of indexation on the historic cost of properties and any available capital losses. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the Group income statement, except when it relates to items charged or credited directly to equity, in which case it is also dealt with in equity. Dividends Dividends payable on the ordinary share capital are recognised as a liability in the period in which they are approved. Cash and cash equivalents Cash comprises cash in hand and on-demand deposits. Cash and cash equivalents comprises short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and original maturities of three months or less. The cash and cash equivalents shown in the cashflow statement are stated net of bank overdrafts that are repayable on demand as per IAS 7. This includes the structured trade finance facility held in South Africa as detailed in note 20. These facilities are considered to form an integral part of the treasury management of the Group and can fluctuate from positive to negative balances during the period. Bisichi Mining PLC Mining revenue Revenue is recognised when the customer has a legally binding obligation to settle under the terms of the contract when the performance obligations has been satisfied, which is once control of the goods and/or services have transferred to the buyer. Revenue is measured based on consideration specified in the contract with a customer on a per metric tonne basis. 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. This includes mining reserves, plant and equipment and net investments in joint ventures. A review involves determining whether the carrying amounts are in excess of the recoverable amounts. An asset's recoverable amount is determined as the higher of its fair value less costs of disposal and its value in use. Such reviews are undertaken on an
asset-by-asset basis, except where assets do not generate cash flows
independent of other assets, in which case the review is undertaken on a
company or Group level.
If the carrying amount of an asset exceeds its recoverable amount 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 to the tons mined and reserve of the
relevant ore body component or phase.
Segmental reporting
For management reporting purposes, the Group is organised into business
segments distinguishable by economic activity. The Group's business segments
are LAP operations, Bisichi operations and Dragon operations. These business
segments are subject to risks and returns that are different from those of
other business segments and are the primary basis on which the Group reports
its segmental information. This is consistent with the way the Group is managed
and with the format of the Group's internal financial reporting. Significant
revenue from transactions with any individual customer, which makes up 10 per
cent or more of the total revenue of the Group, is separately disclosed within
each segment. All coal exports are sales to coal traders at Richard Bay's
terminal in South Africa with the risks and rewards passing to the coal trader
at the terminal. Whilst the coal traders will ultimately sell the coal on the
international markets the Group has no visibility over the ultimate destination
of the coal. Accordingly, the export sales are recorded as South Africa
revenue.
Notes to the financial statements
for the year ended 31 December 2018
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
2018
LAP BISICHI DRAGON TOTAL
BUSINESS ANALYSIS GBP'000 GBP'000 GBP'000 GBP'000
Rental income 5,049 1,065 167 6,281
Service charge income 802 137 - 939
Management income from third party properties 718 - - 718
Mining - 48,713 - 48,713
Group Revenue 6,569 49,915 167 56,651
Direct property costs (2,269) (340) - (2,609)
Direct mining costs - (34,309) - (34,309)
Overheads (4,035) (6,050) (105) (10,190)
Exchange losses - (63) - (63)
Depreciation (9) (2,113) - (2,122)
Operating profit 256 7,040 62 7,358
Finance income 37 24 - 61
Finance expenses (3,111) (538) (33) (3,682)
Result before valuation movements (2,818) 6,526 29 3,737
Other segment items
Net decrease on revaluation of investment properties (2,170) (215) (180) (2,565)
Net decrease on revaluation of investments held for - (169) - (169)
trading
Adjustment to interest rate derivative 265 - - 265
Revaluation and other movements (1,905) (384) (180) (2,469)
(Loss)/profit for the year before taxation (4,723) 6,142 (151) 1,268
Segment assets
- Non-current assets - property 35,011 13,230 2,450 50,691
- Non-current assets - plant & equipment 106 8,531 22 8,659
- Cash & cash equivalents 11,345 9,221 89 20,655
- Non-current assets - other 1,748 35 - 1,783
- Current assets - others 1,947 8,290 183 10,420
Total assets excluding investment in joint ventures, 50,157 39,307 2,744 92,208
assets held for sale and property inventories
Segment liabilities
Borrowings (45,352) (10,127) (1,164) (56,643)
Current liabilities (6,372) (7,158) (73) (13,603)
Non-current liabilities (3,122) (3,962) (33) (7,117)
Total liabilities (54,846) (21,247) (1,270) (77,363)
Net (liabilities)/assets (4,689) 18,060 1,474 14,845
Assets held for sale 2,285 - - 2,285
Inventories-property 38,556 - - 38,556
Net assets as per balance sheet 55,686
Major customers
Customer A - 34,112 - 34,112
Customer B - 11,557 - 11,557
These customers are for mining revenue in South Africa.
United South 2018
Kingdom Africa Total
Geographic analysis GBP'000 GBP'000 GBP'000
Revenue 8,015 48,636 56,651
Operating profit 1,274 6,084 7,358
Non-current assets excluding investments 50,820 8,530 59,350
Total net assets 51,118 4,568 55,686
Capital expenditure 6,574 2,864 9,438
BUSINESS ANALYSIS LAP BISICHI DRAGON 2017
GBP'000 GBP'000 GBP'000 TOTAL
Restated GBP'000
Restated
Rental income 6,825 1,112 166 8,103
Management income from third party properties 542 - - 542
Mining - 39,225 - 39,225
Group Revenue 7,367 40,337 166 47,870
Direct property costs (926) (152) (1) (1,079)
Direct mining costs - (28,555) - (28,555)
Overheads (2,869) (5,589) (164) (8,622)
Exchange gains - (256) - (256)
Depreciation (13) (1,790) (1) (1,804)
Operating profit 3,559 3,995 - 7,554
Finance income 38 67 - 105
Finance expenses (3,706) (526) (29) (4,268)
Debenture break costs (14) - - (14)
Result before valuation movements (130) 3,536 (29) 3,377
Other segment items
Net increase/(decrease) on revaluation of investment 9,386 (13) - 9,373
properties
Write off investment in joint venture - (1,827) - (1,827)
Adjustment to interest rate derivative 358 - (3) 355
Revaluation and other movements 9,744 (1,840) (3) 7,901
Profit/(loss) for the year before taxation 9,614 1,696 (32) 11,278
Segment assets
- Non-current assets - property 65,231 13,397 2,630 81,258
- Non-current assets - plant & equipment 116 8,613 6 8,735
- Cash & cash equivalents 2,109 5,327 92 7,528
- Non-current assets - other 1,748 51 - 1,799
- Current assets - others 2,715 6,285 30 9,030
Total assets excluding investment in joint ventures 71,919 33,673 2,758 108,350
and assets held for sale
Segment liabilities
Borrowings (57,571) (7,160) (1,218) (65,949)
Current liabilities (5,588) (7,556) (123) (13,267)
Non-current liabilities (4,806) (3,986) (73) (8,865)
Total liabilities (67,965) (18,702) (1,414) (88,081)
Net assets 3,954 14,971 1,344 20,269
Assets held for sale 36,441 - - 36,441
Net assets as per balance sheet 56,710
Major customers
Customer A - 27,528 - 27,528
Customer B - 7,226 - 7,226
These customers are for mining revenue in South
Africa.
United South 2017
Kingdom Africa Total
Geographic analysis GBP'000 GBP'000 GBP'000
Revenue 8,692 39,178 47,870
Operating profit 4,645 2,909 7,554
Non-current assets excluding investments 81,383 8,610 89,993
Total net assets 52,452 4,258 56,710
Capital expenditure 30 1,741 1,771
Group revenue is external to the Group and the directors consider that inter
segmental revenues are not material. Revenue includes the reversal of
contingent rents of GBP0.1 million (2017: contingent rents of GBP0.7 million).
The directors have disclosed service charge income separately as a component of
revenue in 2018, with a corresponding grossing up of direct property costs. In
2017 and prior years, service charges were shown netted against direct property
costs. Management considers the approach adopted in 2018 is more informative
and intends to continue with this approach in future years. The revised
disclosure does not change operating profit. For 2017 the amount of service
charge income received by the Group was GBP836,000. Accordingly, the change in
presentation is not considered to be sufficiently material to warrant amending
prior periods' disclosures.
Segmental property revenue is derived from rental income and service charges
recoverable from tenants. This is consistent with the revenue information
disclosed for each reportable segment (see note 1). Rental income is recognised
on a straight-line basis over the term of the lease. Service charges
recoverable from tenants are recognised over time as the service is rendered.
Segmental mining revenue is derived principally from coal sales and is
recognised once the control of the goods has transferred from the group to the
buyer. Revenue is measured based on the consideration specified in the contract
with the customer or tenant.
2. Profit before taxation
2018 2017
GBP'000 GBP'000
Profit before taxation is stated after charging/(crediting):
Staff costs (see note 26) 9,889 8,113
Depreciation on tangible fixed assets - owned assets 2,123 1,804
Operating lease rentals - land and buildings 454 411
Exchange loss 63 256
Profit on disposal of motor vehicles and office equipment 6 (3)
Amounts payable to the auditor in respect of both audit and non-audit
services
Audit services
Statutory - Company and consolidation 83 83
Subsidiaries - audited by RSM 17 17
Subsidiaries - audited by other auditors 78 51
Further assurance services 4 4
Other services 9 5
191 160
Staff costs are included in overheads.
3. Directors' emoluments
2018 2017
GBP'000 GBP'000
Emoluments 1,899 894
Defined contribution pension scheme contributions 10 27
1,909 921
Sir Michael Heller received GBP284,000 (2017: GBP75,000) as a Director of Bisichi
Mining PLC.
Details of directors' emoluments and share options are set out in the
remuneration report.
4. Finance income and expenses
2018 2017
GBP'000 GBP'000
Finance income 61 105
Finance expenses
Interest on bank loans and overdrafts (2,034) (2,223)
Unwinding of discount (Bisichi) (43) (92)
Other loans (1,169) (1,414)
Interest on derivatives (269) (337)
Interest on obligations under finance leases (167) (202)
Total finance expenses (3,682) (4,268)
5. Income tax
2018 2017
GBP'000 GBP'000
Current tax
Corporation tax on profit of the period 2,017 369
Corporation tax on profit of previous periods 33 (5)
Total current tax 2,050 364
Deferred tax
Loss utilised 3,740 -
Origination of timing differences (57) (35)
Revaluation of investment properties (5,056) 2,348
Accelerated capital allowances (120) 235
Fair value of interest derivatives 51 68
Adjustment in respect of prior years 67 2
Total deferred tax (notes 21 and 22) (1,375) 2,618
Tax on profit on ordinary activities 675 2,982
Factors affecting tax charge for the year
The corporation tax assessed for the year is different from that at the
effective rate of corporation tax in the United Kingdom of 19.00 per cent
(2017: 19.25 per cent). The differences are explained below:
2018 2017
GBP'000 GBP'000
Profit for the year before taxation 1,268 11,278
Taxation at 19 per cent (2017: 19.25 per cent) 241 2,171
Effects of:
Capital gains / (losses) on disposal (1,799) 1,792
Other differences 2,058 (785)
Adjustment in respect of prior years (33) (3)
Deferred tax rate adjustment 208 (193)
Income tax charge for the year 675 2,982
Other differences include foreign tax GBP618,000 (2017: GBP175,000), deferred tax
not recognised on losses GBP421,000 (2017: nil).
Analysis of United Kingdom and overseas tax:
United Kingdom tax included in above:
2018 2017
GBP'000 GBP'000
Corporation tax (10) 233
Adjustment in respect of prior years 33 (5)
Current tax 23 228
Deferred tax (1,458) 2,219
(1,435) 2,447
Overseas tax included above:
2018 2017
GBP'000 GBP'000
Corporation tax 2,026 136
Current tax 2,026 136
Deferred tax 84 397
Adjustment in respect of prior years - 2
Deferred tax 84 399
2,110 535
Factors that may affect future tax charges:
Based on current capital expenditure plans, the Group expects to continue to be
able to claim capital allowances in excess of depreciation in future years, but
at a slightly lower level than in the current year.
A deferred tax provision has been made for gains on revaluing investment
properties.
The Finance Bill 2016 was substantively enacted on 7 September 2016. This
includes a reduction in the rate of Corporation tax from 19% effective from 1
April 2017 to 17% from 1 April 2020.
The Finance (no. 2) Act 2017 was substantively enacted on 16 November 2017.
This includes a restriction on the utilisation of brought forward tax losses
and corporate interest in certain circumstances effective from 1 April 2017.
6. Dividend
2018 2017
Per GBP'000 Per GBP'000
share share
Dividends paid during the year relating to the prior 0.300p 256 0.165p 141
period
Dividends to be paid:
Proposed final dividend for the year 0.180p 154 0.175p 149
Proposed special dividend for the year - - 0.125p 107
7. (Loss)/profit per share and net assets per share
(Loss)/profit per share has been calculated as follows:
2018 2017
(Loss)/profit for the year for the purposes of basic and diluted profit (2,082) 7,686
/(loss) per share (GBP'000)
Weighted average number of ordinary shares in issue for the purpose of 85,325 85,322
basic (loss)/profit per share ('000)
Basic (loss)/profit per share (2.44)p 9.01p
Weighted average number of ordinary shares in issue for the purpose of 85,325 85,322
diluted (loss)/profit per share ('000)
Fully diluted (loss)/profit per share (2.44)p 9.01p
Weighted average number of shares in issue is calculated after excluding
treasury shares of 218,197 (2017: 221,061).
Net assets per share have been calculated as follows:
2018 2017
Net assets (GBP'000) 43,377 45,854
Shares in issue ('000) 85,322 85,322
Basic net assets per share 50.83p 53.74p
Net assets diluted (GBP'000) 43,377 45,854
Shares in issue ('000) 85,322 85,322
Diluted net assets per share 50.83p 53.74p
8. Investment properties
Total Freehold Leasehold Leasehold
GBP'000 GBP'000 over 50 under 50
years years
GBP'000 GBP'000
Cost or valuation at 1 January 2018 81,258 62,425 16,856 1,977
(Decrease)/increase on revaluation (2,565) (2,075) (575) 85
Transfer to assets held for sale (note 10) (2,285) (2,285) - -
Transfer to inventory (note 12) (32,300) (32,300) - -
Acquisition of property 6,553 6,553 - -
Increase/(decrease) in present value of head 30 - 33 (3)
leases
At 31 December 2018 50,691 32,318 16,314 2,059
Representing assets stated at:
Valuation 47,430 32,318 13,996 1,116
Present value of head leases 3,261 - 2,318 943
50,691 32,318 16,314 2,059
Total Freehold Leasehold Leasehold
GBP'000 GBP'000 over under
50 years 50 years
GBP'000 GBP'000
Cost or valuation at 1 January 2017 109,847 88,585 19,620 1,642
Transfer to assets held for sale (note 10) (36,441) (36,441) - -
Additions in year 13 13 - -
(Decrease)/increase in present value of head (1,534) - (1,839) 305
leases
Increase/(decrease) on revaluation 9,373 10,268 (925) 30
At 31 December 2017 81,258 62,425 16,856 1,977
Representing assets stated at:
Valuation 78,025 62,425 14,570 1,030
Present value of head leases 3,233 - 2,286 947
81,258 62,425 16,856 1,977
The leasehold and freehold properties, excluding the present value of head
leases and directors' valuations, were valued as at 31 December 2018 by
professional firms of chartered surveyors. The valuations were made at fair
value. The directors' property valuations were made at fair value.
2018 2017
GBP'000 GBP'000
Allsop LLP 32,785 62,955
Carter Towler 13,045 13,245
Directors' valuations 1,600 1,825
47,430 78,025
Add: present value of headleases 3,261 3,233
50,691 81,258
The historical cost of investment properties, including total capitalised
interest of GBP1,161,000 (2017: GBP1,161,000) was as follows:
2018 2017
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 67,702 17,653 1,939 72,711 17,653 1,939
Transfer to assets held for (202) - - (5,022) - -
sale (note 10)
Transfer to inventory (note (38,902) - - - - -
12)
Additions 6,553 - - 13 - -
Cost at 31 December 35,151 17,653 1,939 67,702 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 significant 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 2017 2018 2017
2018 GBP'000
GBP'000
Freehold - external 30,720 60,600 Income Estimated GBP4 - GBP39 GBP5 - GBP39
valuation capitalisation Rental Value (GBP16) (GBP19)
Per sq ft 5.3% - 4.9% -
p.a 12.9% 12.9%
Equivalent (9.7%) (8.4%)
Yield
Leasehold over 50 13,995 14,570 Income Estimated GBP5 - GBP10 GBP5 - GBP10
years - capitalisation Rental Value (GBP9) (GBP9)
external valuation Per sq ft 5.8% - 5.8% -
p.a 19.9% 17.6%
Equivalent (12.9%) (9%)
Yield
Leasehold under 50 1,115 1,030 Income Estimated GBP4 - GBP5 GBP4 - GBP5
years - external capitalisation Rental Value (GBP5) (GBP5)
valuation Per sq ft 22.9% - 25.4% -
p.a 25.8% 25.8%
Equivalent (23.5%) (25.5%)
Yield
Freehold - Directors' 1,600 1,825 Income Estimated GBP5 - GBP5 GBP5 - GBP5
valuation capitalisation Rental Value (GBP5) (GBP5)
Per sq ft 7.0% - 6.1% -
p.a 7.0% 6.1%
Equivalent (7.0%) (6.1%)
Yield
At 31 December 47,430 78,025
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 Equivalent
rental value yield
10% increase or 25 basis point
(decrease) contraction
or (expansion)
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
Freehold - external valuation 3,067/ 6,055/ 948/ 2,095/
(3,067) (6,055) (891) (1,956)
Leasehold over 50 years - external valuation 1,400/ 1,457/ 337/ 355/
(1,400) (1,457) (320) (338)
Leasehold under 50 years - external valuation 112/ 103/ 12/(12) 10/(10)
(112) (103)
Freehold - Directors' valuation 160/ 183/ 59/(55) 78/(71)
(160) (183)
9. 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 2018 27,996 1,366 25,902 728
Exchange adjustment (2,688) (126) (2,531) (31)
Additions 2,883 - 2,777 106
Disposals (18) - - (18)
At 31 December 2018 28,173 1,240 26,148 785
Accumulated depreciation at 1 January 2018 19,261 1,308 17,441 512
Exchange adjustment (1,853) (121) (1,712) (20)
Charge for the year 2,123 26 2,048 49
Disposals in year (17) - - (17)
Accumulated depreciation at 31 December 2018 19,514 1,213 17,777 524
Net book value at 31 December 2018 8,659 27 8,371 261
Cost at 1 January 2017 25,817 1,344 23,724 749
Exchange adjustment 474 22 447 5
Additions 1,758 - 1,731 27
Disposals (53) - - (53)
Cost at 31 December 2017 27,996 1,366 25,902 728
Accumulated depreciation at 1 January 2017 17,164 1,287 15,370 507
Exchange adjustment 332 21 308 3
Charge for the year 1,804 1 1,763 40
Disposals (39) (1) - (38)
Accumulated depreciation at 31 December 2017 19,261 1,308 17,441 512
Net book value at 31 December 2017 8,735 58 8,461 216
10. ASSETS HELD FOR SALE
2018 2017
GBP'000 GBP'000
At 1 January 36,441 -
Transfer from investment properties (note 8) 2,285 36,441
Disposal (36,441) -
At 31 December 2,285 36,441
In April 2018 the sale of both Brixton markets was completed for a combined
price of GBP37.25 million. The properties were held at a valuation of GBP36.441
million. This value equated to the net sale proceeds and there was no profit on
sale.
At December 2018 the Group's remaining property in Brixton is under offer and
it is anticipated that the sale will complete in May 2019. The property is held
at a valuation of GBP2.285 million, equating to the expected net sales proceeds.
The revaluation gain of GBP1.035 million is recognised in these accounts. The
property was held at a valuation of GBP1.25 million at 31 December 2017.
11. Subsidiary companies
In accordance with Section 409 of the Companies Act 2006 a full list of
subsidiaries, the principal activity, the country of incorporation and the
percentage of equity owned, as at 31 December 2018 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)
Sisonke Coal Processing Coal 62.5% Samora Machel Street, South Africa
(Pty) Limited processing Bethal Road,
Middelburg, Mpumalanga,
1050
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
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
West Ealing Projects Property 50% 24 Bruton Place, England and
Limited (note B)(note D) London, W1J 6NE Wales
Broadway Regen Limited Property 90% 73 Cornhill, London, England and
(note E) EC3V 3QQ Wales
Details on the non-controlling interest in subsidiaries are shown under note
24.
Note A: these companies are owned by Bisichi and the equity shareholdings
disclosed relate to that company.
Note B: this entity is a joint venture owned 50% by LAP and 50% by Bisichi.
Note C: this company is owned by Dragon and the equity shareholdings
disclosed relate to that company.
Note D: Bisichi, Dragon and West Ealing Projects and their subsidiaries are
included in the consolidated financial statements in accordance with IFRS 10.
Note E: This company is 90% owned by West Ealing Projects and the equity
shareholdings disclosed relate to that company.
12. inventories-property
Development land and buildings:
2018 2017
GBP'000 GBP'000
At 1 January - -
Development expenditure 6,196 -
Interest on development expenditure 60 -
Transfer from investment property (note 8) 32,300 -
At 31 December 38,556 -
During the year the Group acquired a development property through West Ealing
Projects Limited, a 50:50 joint venture with Bisichi. This property is held at
cost of GBP6.256 million and is currently being developed for sale.
During the year the Group decided that Orchard Square, Sheffield no longer
fitted our long-term criteria for investment property held to generate growth.
It was therefore transferred at market value of GBP32.3 million into the property
dealing division and is now held as inventory.
13. Inventories-mining
2018 2017
GBP'000 GBP'000
Coal
Washed 777 301
Mining production 316 286
Work in progress 378 227
Other 40 14
1,511 828
14. NON-CURRENT ASSET INVESTMENTS
2018 2017
GBP'000 GBP'000
Unlisted equity and debt investments 1,748 1,748
Overseas listed equity securities 35 51
1,783 1,799
The Group owns a 3.17% (2017: 3.17%) 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. 96.40%
(2017: 96.40%) of the equity and loans are owned by Oaktree Capital Management
and 0.43% (2017: 0.43%) by Gooch Cunliffe Whale LLP. London & Associated
Management Services Limited has a management contract to manage the properties
on behalf of HRGT.
No fair value gain or loss was recognised in the year on the unlisted equity
and debt investments.
A fair value loss of GBP15,000 was recognised on the overseas listed equity
securities, and an exchange adjustment of GBP1,000 was also recognised.
The adoption of IFRS 9 has resulted in the reclassification of the Group's
non-current investments. In the prior year the non-current investments were
treated as held to maturity and movements were recognised as fair value gains
or losses thorough other comprehensive income. In the current year these have
been reclassified to investments held at fair value with gains or losses taken
through profit and loss. No restatement of prior periods has been made, as
permitted by IFRS 9.
15. Trade and other receivables
2018 2017
GBP'000 GBP'000
Trade receivables 6,055 4,920
Other receivables 949 736
Prepayments and accrued income 1,018 1,476
8,022 7,132
Financial assets falling due within one year are held at amortised cost. The
fair value of trade and other receivables approximates their carrying amounts.
The Group applies a simplified approach to measure the credit loss allowance
for trade receivables using the lifetime expected credit loss provision. The
lifetime expected credit loss is evaluated for each trade receivable taking
into account payment history, payments made subsequent to year end and prior to
reporting, past default experience and the impact of any other relevant and
current observable data. The group applies a general approach on all other
receivables classified as financial assets. At year end, the group allowance
for doubtful debts provided against trade receivables was GBP277,000 (2017: GBP
284,000). There was no additional loss allowance or impairment required during
the year as a result of the implementation of IFRS 9.
16. Current asset Investments (PREVIOUSLY CLASSIFIED AS available for
sale INVESTMENTS)
2018 2017
Listed equity securities GBP'000 GBP'000
At 1 January 1,069 800
Additions - 186
Disposals (25) -
Fair value (loss)/gain (157) 83
887 1,069
Investments are listed on the London Stock Exchange with the exception of GBP
40,000 (2017: GBP47,000) listed outside Great Britain.
The adoption of IFRS 9 has resulted in the reclassification of the groups
Investments in listed securities. In the prior year the investments were
classified as available for sale investments measured at fair value with
movements taken through other comprehensive income and available for sale
reserves. In the current year the investments were reclassified as Investments
in Listed securities held at fair value with movements taken through profit and
loss and retained earnings. The Group has not restated prior periods as allowed
by the transition provisions of IFRS 9.
17. Trade and other payables
2018 2017
GBP'000 GBP'000
Trade payables 4,637 3,937
Other taxation and social security costs 411 629
Other payables 3,372 2,842
Accruals and deferred income 4,921 5,501
13,341 12,909
The directors consider that the carrying amount of trade and other payables
approximates to their fair value.
18. Borrowings
Other loans (Bisichi) 2018 2018 2017 2017
GBP'000 GBP'000 GBP'000 GBP'000
Current Non-current Current Non-current
Other loans (Bisichi) 205 547 26 -
GBP1.25 million term bank loan (secured) - 1,164 - 1,218
repayable by 2020 (Dragon)*
GBP3.75 million first mortgage debenture stock - - 3,000 -
2018 at 11.6 per cent
Bank overdrafts (secured) (Bisichi) 3,535 - 1,262 -
GBP10 million first mortgage debenture stock 2022 - 9,939 - 9,922
at 8.109 per cent*
GBP5.876 million term bank loan (secured) 5,840 - - 5,872
repayable by 2019 (Bisichi)*
GBP3.584 million term loan (secured) - repayable 3,461 - - -
by 2019 (Broadway Regen)
GBP34.897 million term bank loan (secured) 21,403 - - 34,640
repayable by 2019*
GBP10.105 million term bank loan (secured) 6,808 - - 10,009
repayable by 2019 at 9.5 per cent*
GBP3.932 million term loan (secured) repayable by 136 3,605 - -
2028
41,388 15,255 4,288 61,661
Borrowings analysis by origin:
2018 2017
GBP'000 GBP'000
United Kingdom 52,356 64,621
South Africa 4,287 1,328
56,643 65,949
* 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 July 2018, the Group repaid the remaining GBP3.0 million of the GBP3.75 million
first mortgage debenture stock 2018.
Following the sale of Brixton Markets in April 2018, GBP12.8 million of the GBP
34.897 million Santander bank loan was repaid and GBP3.1 million of the GBP10.105
million Europa bank loan was repaid.
The First Mortgage Debenture Stock August 2022 and the Santander and Europa
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 GBP51.32 million. In addition, GBP0.34 million of cash
deposits are charged as security to debenture stocks and GBP0.5 million to
Santander and Europa bank loans. The Santander bank loan has an interest cost
of 2 per cent above LIBOR. An interest rate swap and cap agreements are in
place as detailed in note 20.
In September 2018 a new 10 year term, loan of GBP3.932 million was taken out with
Metro Bank secured by way of a charge on freehold and leasehold properties
which are included in the financial statements at a value of GBP7.15 million. The
interest cost of the loan is 2.95 per cent above the bank's base rate and the
loan is amortised over 20 years.
In South Africa, as part of a restructuring and sale of the washing plant
facilities from Black Wattle Colliery (Pty) Limited ("Black Wattle") to its
wholly owned subsidiary Sisonke Coal Processing (Pty) Limited ("Sisonke Coal
Processing"), the R100million bank overdraft facility held by Black Wattle with
Absa Bank Limited at the year end ("old trade facility") was replaced in
January 2019 by a new structured trade finance facility for R100million held by
Sisonke Coal Processing ("new trade facility"). The 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 GBP8,640,000.
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 GBP13,045,000. During the year the group
reduced its UK loan by GBP14,000 in order to rectify a breach of one of its UK
loan banking covenants. No other banking covenants were breached by the group
during the year.
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 which is
included in the financial statements at a value of GBP2.45 million. The interest
cost of the loan is 2 per cent above LIBOR.
The bank loan of GBP3.584 million (Broadway Regen) which is repayable in July
2019 is secured by way of a first charge on a specific freehold development
property, which is included in the financial statements at GBP6.256 million. The
interest cost of the loan is fixed at 7.0% per annum.
The Group's objectives when managing capital are:
- To safeguard the Group's ability to continue as a going concern, so that
it may provide returns for shareholders and benefits for other stakeholders;
and
- To provide adequate returns to shareholders by ensuring returns are
commensurate with the risk.
Analysis of the changes in liabilities arising from financing activities:
2018 2018 2017 2017
GBP'000 GBP'000 GBP'000 GBP'000
Bank Finance Bank Finance
borrowings leases borrowings leases
Balance at 1 January 65,949 3,233 68,509 4,767
Exchange adjustments (273) - (4) -
Cash movements excluding exchange adjustments (9,044) - (2,820) -
Valuation movements 11 28 264 (1,534)
Balance at 31 December 56,643 3,261 65,949 3,233
19. Provisions
2018 2017
GBP'000 GBP'000
At 1 January 1,349 1,236
Exchange adjustment (150) 21
Increase in provision 329 -
Unwinding of discount 43 92
At 31 December 1,571 1,349
The above provision relates to mine rehabilitation costs in Bisichi.
20. Financial instruments
Total financial assets and liabilities
The Group's financial assets and liabilities and their fair values are as
follows:
2018 2017
Fair Carrying Fair Carrying
value value value value
GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 20,655 20,655 7,528 7,528
Investments-non-current assets 1,783 1,783 1,799 1,799
Investments-current assets 887 887 1,069 1,069
Derivative assets - - 1 1
Other assets 7,004 7,004 5,656 5,656
Derivative liabilities (169) (169) (435) (435)
Bank overdrafts (3,535) (3,535) (1,262) (1,262)
Bank loans (43,521) (43,169) (52,218) (51,765)
Present value of head leases on properties (3,261) (3,261) (3,233) (3,233)
Other liabilities (8,008) (8,008) (6,779) (6,779)
Total financial assets/(liabilities) before (28,165) (27,813) (47,874) (47,421)
debentures
Fair value of debenture stocks
Fair value of the Group's debenture liabilities:
2018 2018 2017
Book Fair Fair value Fair value
value value adjustment adjustment
GBP'000 GBP'000 GBP'000 GBP'000
Debenture stocks (10,000) (11,977) (1,977) (2,686)
Tax at 19 per cent (2017: 19.25 per cent) - - 376 517
Post tax fair value adjustment - - (1,601) (2,169)
Post tax fair value adjustment - basic pence - - (1.88)p (2.54)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 2018 and
reflect the replacement value of the financial instruments used to manage the
Group's exposure to adverse interest 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 in listed securities held at fair value through profit and loss
(previously classified as Available for sale investments) 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. The comparative figures for 2017
fall under the same category of financial instrument as 2018.
The carrying amount of short term (less than 12 months) trade receivables and
other liabilities approximates their fair values. The fair value of non-current
borrowings in note 18 approximates to 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 28 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.
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 2018, with other variables unchanged, a 1%
increase in interest rates would change the profit/loss for the year by GBP91,000
(2017: GBP175,000). Bisichi has variable loans and a 1% increase in interest
rates would change the profit/loss for the year by GBP101,000 (2017: GBP82,000).
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 overdrafts
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 GBP3.932 million bank loan is secured by way of a first charge on specific
freehold and leasehold property. The rate of interest varies based on the banks
base 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.
The GBP3.584 million bank loan (Broadway Regen) is secured by way of first charge
on a specific freehold development property. This loan is based on a fixed
interest rate.
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, as part of the restructuring and sale of the washing plant
facilities from Black Wattle Colliery (Pty) Limited ("Black Wattle") to its
wholly owned subsidiary Sisonke Coal Processing (Pty) Limited ("Sisonke Coal
Processing"), the R100million facility held by Black Wattle with Absa Bank
Limited at the year end ("old trade facility") was replaced in January 2019 by
a new structured trade finance facility for R100million held by Sisonke Coal
Processing ("new trade facility").
The new trade facility comprises of a R100million revolving facility to cover
the working capital requirements of the group's South African operations. The
interest cost of the loan is at the South African prime lending rate. The new
trade facility is renewable annually each January, is repayable on demand and
is secured against inventory, debtors and cash that are held by Sisonke Coal
Processing (Pty)
The old trade facility, which was also repayable on demand, is included in cash
and cash equivalents within the cashflow statement.
In December 2014, Bisichi signed a GBP6 million term loan facility with
Santander. The loan is secured against the group's UK retail property
portfolio. The debt package has a five year term and is repayable at the end of
the term in December 2019. The interest cost of the loan is 2.35% above LIBOR.
Bisichi's intention is to enter into a new facility agreement prior to the
termination of the existing facility agreement. Nonetheless there are adequate
financial resources to repay the existing facility should a new facility not be
finalised prior to December 2019.
The LAP Group's GBP34.897 million term bank loan and the GBP10.105 million bank
loan are repayable in July 2019. In April 2018 GBP12.8 million and GBP3.1 million
of these loans were repaid respectively. The loans are non-recourse and the
remaining loans of GBP21.403 million and GBP6.808 million are secured by way of a
first and second charge on freehold properties, which are included in the
financial statements at GBP36.65 million. The Group's intention is to enter into
a new facility agreement prior to the termination of the existing facility. The
lenders have indicated that they will work with us, either to refinance the
loans or to facilitate a handover to a new lender.
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.
2018 Less 2-5 Over
Total than years 5 years
GBP'000 1 year GBP'000
GBP'000 GBP'000
Bank overdrafts (floating) 3,535 3,535 - -
Debentures (fixed) 9,939 - 9,939 -
Bank loans (fixed) 11,433 10,269 1,164 -
Bank loans (floating)* 31,736 27,584 1,156 2,996
Trade and other payables (non-interest) 12,930 12,930 - -
69,573 54,318 12,259 2,996
2017 Less 2-5 Over
Total than years 5 years
GBP'000 1 year GBP'000
GBP'000 GBP'000
Bank overdrafts (floating) 1,262 1,262 - -
Debentures (fixed) 12,922 3,000 9,922 -
Bank loans (fixed) 10,009 - 10,009 -
Bank loans (floating)* 41,756 26 41,730 -
Trade and other payables (non-interest) 12,280 12,280 - -
78,229 16,568 61,661 -
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
The group is mainly exposed to credit risk on its cash and cash equivalents,
trade and other receivables and amounts owed by joint ventures as per the
balance sheet. The maximum exposure to credit risk is represented by the
carrying amount of each financial asset in the balance sheet which at year end
amounted to GBP30,329,000 (2017: GBP16,053,000).
To mitigate risk on its cash and cash equivalents, the group only deposits
surplus cash with well-established financial institutions of high quality
credit standing.
The group's credit risk is primarily attributable to its trade receivables.
Trade debtor's credit ratings are reviewed regularly. The Group's review
includes measures such as the use of external ratings and establishing purchase
limits for each customer. The Group's approach to measure the credit loss
allowance for trade receivables is outlined in note 15. At year end, the group
allowance for doubtful debts provided against trade receivables was GBP277,000
(2017: GBP284,000).
The Group exposure to credit risk on its loans to joint ventures and other
receivables is mitigated through ongoing review of the underlying performance
and resources of the counterparty including evaluation of different scenarios
of probability of default and expected loss applicable to each of the
underlying balances
Foreign exchange risk
Only Bisichi is subject to this risk. All trading is undertaken in the local
currencies except for certain export sales which are invoiced in US Dollars. It
is not the Bisichi Group's policy to obtain forward contracts to mitigate
foreign exchange risk on these contracts as payment terms are within 15 days of
invoice or earlier. Funding is also in local currencies other than
inter-company investments and loans and it is also not the Bisichi Group's
policy to obtain forward contracts to mitigate foreign exchange risk on these
amounts. During 2018 and 2017 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 principal currency risk to which the Bisichi Group is exposed in regard to
inter-company balances is the exchange rate between Pounds Sterling and South
African Rand. It arises as a result of the retranslation of Rand denominated
inter-company trade receivable balances held within the UK which are payable by
South African Rand functional currency subsidiaries.
Based on the Bisichi Group's net financial assets and liabilities as at 31
December 2018, 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 GBP130,000 (2017: GBP34,000). 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 GBP216,000 (2017: GBP56,000).
The 25% sensitivity has been determined based on the average historic
volatility of the exchange rate for 2017 and 2018.
The table below shows the Bisichi currency profiles of cash and cash
equivalents:
2018 2017
GBP'000 GBP'000
Sterling 6,897 3,402
South African Rand 2,322 1,923
US Dollar 2 2
9,221 5,327
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:
2018: UK South
GBP'000 Africa
GBP'000
Sterling 1,042 -
South African Rand 37 (1,974)
US Dollar 13 -
1,092 (1,974)
2017: UK South
GBP'000 Africa
GBP'000
Sterling (832) -
South African Rand 54 (1,304)
US Dollar 13 -
(765) (1,304)
Borrowing facilities
At 31 December 2018 the Group was within its bank borrowing facilities and was
not in breach of any of the covenants. Term loan repayments are as set out at
the end of this note. Details of other financial liabilities are shown in Notes
17 and 18.
Interest rate and hedge profile
2018 2017
GBP'000 GBP'000
Fixed rate borrowings 20,224 23,105
Floating rate borrowings
- Subject to interest rate swap 18,685 36,147
- Other borrowings 18,048 7,160
56,957 66,412
Average fixed interest rate 8.39% 9.17%
Weighted average swapped interest rate 4.16% 3.32%
Weighted average cost of debt on overdrafts, bank loans and debentures 5.92% 5.45%
Average period for which borrowing rate is fixed 2.1 2.9
years years
Average period for which borrowing rate is swapped 0.6 1.5
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 2018 the Group had hedges totalling GBP21.489 million to cover the
GBP21.5 million bank loan. These consisted of a 5 year swap for GBP17.5 million, at
2.25% and a GBP3.989 million cap agreement at 2.25% to July 2019.
At the year end the fair value liability in the accounts was GBP169,000 (2017: GBP
435,000) as valued by the hedge provider.
At 31 December 2018, 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 2016 at 2.5%. At the year end, the fair value asset in the
accounts was nil (2017: GBP1,000), 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 2018
GBP'000 GBP'000 GBP'000 GBP'000 Gain/
(loss)
to income
statement
GBP'000
Financial assets
Quoted equities 887 - - 887 -
Interest rate swaps - - - - (1)
Financial liabilities
Interest rate swaps - 169 - 169 266
Level 1 Level 2 Level 3 Total 2017
GBP'000 GBP'000 GBP'000 GBP'000 Gain/
(loss)
to income
statement
GBP'000
Financial assets
Quoted equities 1,069 - - 1,069 -
Interest rate swaps - 1 - 1 (3)
Financial liabilities
Interest rate swaps - 435 - 435 358
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:
2018 2017
GBP'000 GBP'000
Total debt 56,643 65,949
Less cash and cash equivalents (20,655) (7,528)
Net debt 35,988 58,421
Total equity 55,487 56,710
64.9% 103.0%
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, investments and assets held for sale. The Group has no
significant concentration of credit risk as exposure is spread over a large
number of counterparties and customers. The credit risk in liquid funds and
derivative financial instruments is limited because the counterparties are
banks with high credit ratings assigned by international credit-rating
agencies. The Group's credit risk is primarily attributable to its trade
receivables. The amounts presented in the balance sheet are net of allowances
for doubtful receivables, estimated by the Group's management based on prior
experience and the current economic environment.
Financial assets maturity
Cash and cash equivalents all have a maturity of less than three months.
2018 2017
GBP'000 GBP'000
Cash at bank and in hand 20,655 7,528
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
The following table sets out the maturity profile of contractual undiscounted
cashflows of financial liabilities as at 31 December:
Repayment of borrowings
2018 2017
GBP'000 GBP'000
Bank loans and overdrafts:
Repayable on demand or within one year 41,388 1,288
Repayable between two and five years 2,320 51,739
Repayable after five years 2,996 -
46,704 53,027
Debentures:
Repayable within one year - 3,000
Repayable between two and five years 9,939 9,922
56,643 65,949
Certain borrowing agreements contain financial and other conditions that if
contravened by the Group, could alter the repayment profile.
21. Deferred tax asset
2018 2017
GBP'000 GBP'000
Balance at 1 January - 1,134
Transferred to consolidated income statement - (1,134)
Balance at 31 December - -
22. Deferred tax liabilitIES
2018 2017
GBP'000 GBP'000
Balance at 1 January 3,848 2,329
Transferred (to)/from consolidated income statement (1,375) 1,484
Exchange adjustment (168) 35
Balance at 31 December 2,305 3,848
The deferred tax balance comprises the following:
Revaluation of properties 726 5,836
Accelerated capital allowances 2,166 2,522
Short-term timing differences 139 144
Unredeemed capital deductions (32) (83)
Losses and other deductions (694) (4,571)
Deferred tax liability provision at end of year: 2,305 3,848
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.
In addition, the Group has unused losses and reliefs with a potential value of
GBP6,310,000 (2017: GBP5,427,000), which have not been recognised as a deferred tax
asset. As the Group returns to profit, these losses and reliefs can be
utilised.
23. Share capital
The Company has one class of ordinary shares which carry no right to fixed
income.
Number of Number of 2018 2017
ordinary ordinary GBP'000 GBP'000
10p shares 10p shares
2018 2017
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) (218,197) (221,061) (22) (22)
"Issued share capital" for reporting purposes 85,324,514 85,321,650 8,532 8,532
Treasury shares
Number of Cost /issue
ordinary value
10p shares
2018 2017
2018 2017 GBP'000 GBP'000
Shares held in Treasury at 1 January 221,061 221,061 145 145
Issued for share incentive plan -dividends investment (2,864) - (1) -
(Jan 2016 - 25p)
Shares held in Treasury at 31 December 218,197 221,061 144 145
Share Option Schemes
Employees' share option scheme (Approved scheme)
At 31 December 2018 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 2018 is as follows:
Changes during the year
At 1 At 31
January Options Options Options December
2018 Exercised granted lapsed 2018
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 2018
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 2018 is as follows:
Changes during the year
At 1 At 31
January Options Options Options December
2018 Exercised granted lapsed 2018
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:
Number of Number of
shares shares
for which for which
Year of grant options options
Period outstanding Number of outstanding
within at share at
Subscription which 31 December options 31 December
price per options 2017 issued/ 2018
share exercisable exercised/
(cancelled)
during year
2010 202.5p Aug 2013 - 80,000 (80,000) -
Aug 2020
2015 87.0p Sep 2015 - 300,000 - 300,000
Sep 2025
2018 73.5p Feb 2018 - - 380,000 380,000
Feb 2028
The exercise of options under the Unapproved Share Option Schemes, for certain
option issues, is subject to the satisfaction of the objective performance
conditions specified by the remuneration committee, which will conform to
institutional shareholder guidelines and best practice provisions in force from
time to time.
On the 5 February 2018 Bisichi entered into an agreement with G.Casey to
surrender the 80,000 options which were granted in 2010. The aggregate
consideration paid by the Group to effect the cancellation was GBP1. There are no
performance or service conditions attached to 2015 options which are
outstanding at 31 December 2018 which vested in 2015.
On 6 February 2018 Bisichi granted additional options to the following
directors:
* A.Heller 150,000 options at an exercise price of 73.50p per share.
* G.Casey 230,000 options at an exercise price of 73.50p per share.
The above options vest on date of grant and are exercisable within a period of
10 years from date of grant. There are no performance or service conditions
attached to the options. The options were valued at GBP24,000 at date of grant
using the Black-Scholes-Merton model with the following assumptions:
Expected volatility 23.90%
Expected life 4 years
Risk free rate 0.785%
Expected dividends 6.71%
Expected volatility was determined by reference to the historical volatility of
the share price over a period commensurate with the option's expected life. The
expected life used in the model is used on the risk-averse balance likely to be
required by the option holders.
2018 2017
Weighted Weighted
2018 average 2017 average
Number exercise Number exercise
price price
Outstanding at 1 January 380,000 111.3p 380,000 111.3p
Issued during year 380,000 73.5p - -
Lapsed/surrended during year (80,000) 202.5p - -
Outstanding at 31 December 680,000 79.5p 380,000 111.3p
Exercisable at 31 December 680,000 79.5p 380,000 111.3p
24. Non-controlling interest ("NCI")
2018 2017
GBP'000 GBP'000
As at 1 January 10,856 10,389
Share of profit for the year 2,675 610
Share of gain on available for sale investments - 49
Dividends received (957) (250)
Shares issued 8 -
Exchange movement (273) 58
As at 31 December 12,309 10,856
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.
2018 2017
BISICHI MINING PLC GBP'000 GBP'000
Revenue 49,945 40,350
Profit for the year attributable to owners of the parent 3,314 749
Profit/(loss) for the year attributable to NCI 729 172
Profit for the year 4,043 921
Other comprehensive income attributable to owners of the parent (377) 163
Other comprehensive income attributable to NCI (53) 11
Other comprehensive income for the year (430) 174
Balance sheet
Non-current assets 23,118 22,935
Current assets 18,475 13,622
Total assets 41,593 36,557
Current liabilities (16,929) (9,025)
Non-current liabilities (4,529) (9,858)
Total liabilities (21,458) (18,883)
Net current assets at 31 December 20,135 17,674
Cash flows
From operating activities 4,767 7,270
From investing activities (3,373) (1,936)
From financing activities 200 (429)
Net cash flows 1,594 4,905
The non-controlling interest comprises 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.
2018 2017
Black Wattle Colliery (Pty) Limited ("Black Wattle") GBP'000 GBP'000
restated
Revenue 48,666 39,191
Expenses (43,801) (38,041)
Profit for the year 4,865 1,150
Total comprehensive income for the year 4,865 1,150
Balance sheet
Non-current assets 8,532 8,613
Current assets 9,587 6,747
Current liabilities (10,540) (8,652)
Non-current liabilities (3,800) (3,155)
Net assets at 31 December 3,779 3,553
The non-controlling interest relates to the disposal of a 37.5% shareholding in
Black Wattle in 2010. The total issued share capital in Black Wattle Colliery
(Pty) Ltd was increased from 136 shares to 1,000 shares at par of ZAR1 (South
African Rand) through the following shares issue:
- a subscription for 489 ordinary shares at par by Bisichi Mining
(Exploration) Limited increasing the number of shares held from 136 ordinary
shares to a total of 625 ordinary shares;
- a subscription for 110 ordinary shares at par by Vunani Mining (Pty) Ltd;
- a subscription for 265 "A" shares at par by Vunani Mining (Pty) Ltd
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.
25. 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:
Simon Heller Charitable Trust
Current account (63) - -
Loan account - (700) -
Directors and key management
M A Heller and J A Heller 18 (i) 1 -
H D Goldring (Delmore Holdings Limited) (15) (ii) - -
C A Parritt (20) (ii) - -
R Priest (35) (ii) (8) -
Totals at 31 December 2018 (115) (707) -
Totals at 31 December 2017 (71) (679) (84)
Nature of costs recharged - (i) Property management fees (ii) Consultancy fees.
Directors
London & Associated Properties PLC provides office premises, property
management, general management, accounting and administration services for a
number of private property companies in which Sir Michael Heller and J A Heller
have an interest. Under an agreement with Sir Michael Heller no charge is made
for these services on the basis that he reduces by an equivalent amount the
charge for his services to London & Associated Properties PLC. The board
estimates that the value of these services, if supplied to a third party, would
have been GBP300,000 for the year (2017: 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 (2017: 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.
R Priest 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 GBP41,000 (2017: GBP
56,000) and a repayment of GBP15,000 (2017: 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 was GBP
1,838,000 (2017: GBP949,000). All other disclosures required, including interest
in share options in respect of those directors, are included within the
remuneration report.
26. Employees
The average number of employees, including directors, of the Group during the
year was as follows:
2018 2017
Production 231 192
Administration 46 45
277 237
Staff costs during the year were as follows:
2018 2017
GBP'000 GBP'000
Salaries and other costs 8,994 7,426
Social security costs 494 327
Pension costs 377 360
Share based payments 24 0
9,889 8,113
27. Capital Commitments
2018 2017
GBP'000 GBP'000
Commitments for capital expenditure approved and contracted for at the 751 -
year end
Share of commitment of capital expenditure in joint venture - -
All the above relates to Bisichi Mining PLC.
28. Operating and finance leases
Operating leases on land and buildings
At 31 December 2018 the Group had commitments under non-cancellable operating
leases on land and buildings expiring as follows:
2018 2017
GBP'000 GBP'000
Within one year 240 240
Second to fifth year 960 960
After five years - 240
Operating lease payments represent rentals payable by the Group for its office
premises.
The leases are for an average term of ten years at inception 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
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
Within one year 213 211 213 211
Second to fifth year 849 841 783 776
After five years 16,725 16,682 2,265 2,246
17,787 17,734 3,261 3,233
Future finance charges on finance leases (14,526) (14,501) - -
Present value of finance lease liabilities 3,261 3,233 3,261 3,233
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:
2018 2017
GBP'000 GBP'000
Within one year 5,379 5,088
Second to fifth year 16,002 14,597
After five years 19,531 18,519
40,912 38,204
29. Contingent liabilities and events AFTER THE REPORTING PERIOD
There were no contingent liabilities at 31 December 2018 (2017: GBPNil), except
as disclosed in Note 20.
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:
2018 2017
GBP'000 GBP'000
Rail siding & 54 64
transportation
Rehabilitation of mining 1,259 1,387
land
Water & electricity 52 58
1,365 1,509
30. Company financial statements
Company balance sheet at 31 December 2018
2018 2017
Notes GBP'000 GBP'000
Fixed assets
Tangible assets 30.3 23,872 25,397
Other investments:
Associated company - Bisichi Mining PLC 30.4 489 489
Subsidiaries and others including Dragon Retail Properties 30.4 42,598 42,598
Limited
43,087 43,087
66,959 68,484
Current assets
Debtors 30.5 3,764 1,025
Deferred tax due after more than one year 30.9 - 2,059
Investments 30.6 - 19
Bank balances 9,887 1,233
13,651 4,336
Creditors
Amounts falling due within one year 30.7 (54,664) (35,540)
Deferred tax falling due after more than one year 30.9 (744) -
Borrowings 30.8 - (3,000)
Net current liabilities (41,757) (34,204)
Total assets less current liabilities 25,202 34,280
Creditors
Amounts falling due after more than one year 30.8 (10,985) (13,003)
Net assets 14,217 21,277
Capital and reserves
Share capital 30.10 8,554 8,554
Share premium account 4,866 4,866
Capital redemption reserve 47 47
Treasury shares 30.10 (144) (145)
Retained earnings 894 7,955
Shareholders' funds 14,217 21,277
The loss for the financial year, before dividends was GBP6,805,000 (2017: profit
of GBP1,771,000).
These financial statements were approved by the board of directors and
authorised for issue on 30 April 2019 and signed on its behalf by:
Sir Michael Heller Jonathan Mintz Company
Registration No. 341829
Director Director
Company statement of changes in equity for the year ended 31 December 2018
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 2017 8,554 4,866 47 (145) 9,867 23,189
Profit for the year - - - - (1,771) (1,771)
Total comprehensive income - - - - (1,771) (1,771)
Transactions with owners:
Dividends - equity holders - - - - (141) (141)
Transactions with owners - - - - (141) (141)
Balance at 31 December 2017 8,554 4,866 47 (145) 7,955 21,277
Loss for the year - - - - (6,805) (6,805)
Total comprehensive expense - - - - (6,805) (6,805)
Transaction with owners:
Dividends - equity holders - - - - (256) (256)
Disposal of own shares - - - 1 - 1
Transactions with owners - - - 1 (256) (255)
Balance at 31 December 2018 8,554 4,866 47 (144) 894 14,217
GBP0.2 million (2017: GBP6.5 million) of retained earnings (excluding treasury
shares) is distributable.
30.1. COMPANY
Accounting policies
The following are the main accounting policies of the Company:
Basis of preparation
The financial statements have been prepared on a going concern basis and in
accordance with Financial Reporting Standard 101 'Reduced Disclosure Framework'
(FRS 101) and Companies Act 2006. The financial statements are prepared under
the historical cost convention as modified to include the revaluation of
freehold and leasehold properties and fair value adjustments in respect of
current asset investments and interest rate hedges.
The results of the Company are included in the consolidated financial
statements. No profit or loss is presented by the Company as permitted by
Section 408 of the Companies Act 2006.
In these financial statements, the company has applied the exemptions available
under FRS 101 in respect of the following disclosures:
* Cash Flow Statement and related notes;
* Comparative period reconciliations for share capital, tangible fixed
assets and intangible assets;
* Disclosures in respect of transactions with wholly owned subsidiaries;
* Disclosures in respect of capital management;
* The effects of new but not yet effective IFRSs;
* Disclosures in respect of the compensation of Key Management Personnel.
As the consolidated financial statements include the equivalent disclosures,
the Company has also taken the exemptions under FRS 101 available in respect of
the following disclosures:
* IFRS 2 Share Based Payments in respect of Group settled share based
payments;
* The disclosures required by IFRS 7 and IFRS 13 regarding financial
instrument disclosures have not been provided apart from those which are
relevant for the financial instruments which are held at fair value and are not
either held as part of 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. In such instances, fair value
measurements are estimated based on the amounts for which the assets and
liabilities could be exchanged between market participants. To the extent
possible, the assumptions and inputs used take into account externally
verifiable inputs. However, such information is by nature subject to
uncertainty. The fair value measurement of the investment properties may be
considered to be less judgemental where external valuers have been used as is
the case with the Company.
The following accounting policies are consistent with those of the Group and
are disclosed on page 36 to 41 of the Group financial statements.
* Revenue
* Property operating expenses
* Employee benefits
* Financial instruments
* Investment properties
* Other assets and depreciation
* Assets held for sale
* Income taxes
* Leases
30.2. RESULT for the financial year
The Company's result for the year was a loss of GBP6,805,000 (2017: loss of GBP
1,771,000). In accordance with the exemption conferred by Section 408 of the
Companies Act 2006, the Company has not presented its own profit and loss
account.
30.3. Tangible assets
Investment Properties
Office
equipment
Leasehold Leasehold and motor
over 50 under 50 vehicles
Total Freehold years years GBP'000
GBP'000 GBP'000 GBP'000 GBP'000
Cost or valuation at 1 January 2018 25,645 9,295 14,039 1,947 364
Reclassification - - (30) 30 -
Additions 6,540 6,540 - - -
Disposals to group companies (7,258) (1,050) (4,469) (1,721) (18)
(Decrease)/increase on revaluation (815) (815) - - -
Cost or valuation at 31 December 2018 24,112 13,970 9,540 256 346
Representing assets stated at:
Valuation 23,766 13,970 9,540 256 -
Cost 346 - - - 346
24,112 13,970 9,540 256 346
Depreciation at 1 January 2018 248 - - - 248
Charge for the year 9 - - - 9
Disposals (17) - - - (17)
Depreciation at 31 December 2018 240 - - - 240
Net book value at 1 January 2018 25,397 9,295 14,039 1,947 116
Net book value at 31 December 2018 23,872 13,970 9,540 256 106
The freehold and leasehold properties, excluding the present value of head
leases and directors' valuations, were valued as at 31 December 2018 by
professional firms of chartered surveyors. The valuations were made at fair
value. The directors' property valuations were made at fair value.
2018 2017
GBP'000 GBP'000
Allsop LLP 21,120 20,375
Directors' valuation 1,600 1,825
22,720 22,200
Add: Present value of headleases 1,046 3,081
23,766 25,281
The historical cost of investment properties was as follows:
Leasehold Leasehold
Freehold over 50 under 50
GBP'000 years years
GBP'000 GBP'000
Cost at 1 January 2018 4,889 13,966 1,939
Additions 6,540 - -
Disposals to group companies (1,201) (4,633) (1,154)
Cost at 31 December 2018 10,228 9,333 785
Long leasehold properties are held on leases with an unexpired term of more
than fifty years at the balance sheet date.
30.4. Other investments
Cost or valuation Shares
Shares in in
subsidiary joint Shares in
Total companies ventures associate
GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2018 43,087 42,434 164 489
Impairment provision - - - -
At 31 December 2018 43,087 42,434 164 489
Subsidiary companies
Details of the Company's subsidiaries are set out in Note 11. Under IFRS 10
Bisichi Mining Plc and its subsidiaries, West Ealing Projects Limited and its
subsidiary and Dragon Retail Properties Limited are treated in the financial
statements as subsidiaries of the Company.
In the opinion of the directors the value of the investment in subsidiaries is
not less than the amount shown in these financial statements.
30.5. Debtors
2018 2017
GBP'000 GBP'000
Trade debtors 351 366
Amounts due from associate and joint ventures 755 33
Amounts due from subsidiary companies 2,127 100
Other debtors 82 118
Prepayments and accrued income 449 408
3,764 1,025
30.6. Investments
2018 2017
GBP'000 GBP'000
Market value of the listed investment portfolio - 19
Unrealised gain of market value over cost - 1
Listed investment portfolio at cost - 18
The remaining investment portfolio was sold in the year.
30.7. Creditors: amounts falling due within one year
2018 2017
GBP'000 GBP'000
Amounts owed to subsidiary companies 50,874 29,775
Amounts owed to joint ventures 156 2,214
Other taxation and social security costs 200 278
Other creditors 1,442 1,400
Accruals and deferred income 1,992 1,873
54,664 35,540
30.8. Creditors: amounts falling due after more than one year
2018 2017
GBP'000 GBP'000
Present value of head leases on properties 1,046 3,081
Term Debenture stocks:
GBP10 million First Mortgage Debenture Stock 2022 at 8.109 per cent* 9,939 9,922
9,939 9,922
10,985 13,003
*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 18.
Repayment of borrowings: 2018 2017
GBP'000 GBP'000
Debentures:
Repayable within one year - 3,000
Repayable between two and five years 9,939 9,922
Repayable in more than five years - -
9,939 12,922
30.9. deferred tax
2018 2017
GBP'000 GBP'000
Deferred Taxation
Balance at 1 January 2,059 2,082
Transfer to profit and loss account (2,803) (23)
Balance at 31 December (744) 2,059
The deferred tax balance comprises the following:
Accelerated capital allowances (795) (833)
Short-term timing differences (124) (124)
Revaluation of investment properties 175 66
Loss relief - 2,950
Deferred tax (liability)/asset at year end (744) 2,059
30.10. Share capital
Details of share capital, treasury shares and share options are set out in Note
23.
30.11. 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 36 (i) (156) -
Loan account (103) - 2,000
Bisichi Mining PLC
Current account 153 (ii) 3 -
Simon Heller Charitable Trust
Current account (63) - -
Loan account - (700) -
Directors and key management
M A Heller and J A Heller 18 (i) 1 -
H D Goldring (Delmore Holdings Limited) (15) (iii) - -
C A Parritt (20) (iii) - -
R Priest (35) (iii) (8) -
Totals at 31 December 2018 (29) (860) 2,000
Totals at 31 December 2017 (73) (2,884) -
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 2013 Dragon lent the company GBP2 million at 6.875 per
cent annual interest. This loan was repaid in full during the year.
Bisichi Mining PLC - The company has 41.52 per cent ownership of 'Bisichi'.
Other details of related party transactions are given in note 25.
30.12. EMPLOYEES
2018 2017
The average weekly number of employees of the company during the year were GBP'000 GBP'000
as follows:
Directors & Administration 24 24
Staff costs during the year were as follows: 2018 2017
GBP'000 GBP'000
Salaries 2,184 1,375
Social Security costs 263 163
Pension costs 107 119
2,554 1,657
30.13. Capital commitments
There were no capital commitments at 31 December 2018 (2017: GBPNil).
30.14. OPERATING AND FINANCE LEASES
At 31 December 2018 the Company had commitments under non-cancellable operating
leases on land and buildings as follows:
2018 2017
GBP'000 GBP'000
Expiring in two to five years 1,200 -
Expiring in more than five years - 1,440
In addition, the Company has an annual commitment to pay ground rents on its
leasehold investment properties which amount to GBP201,000 (2017: GBP201,000).
Present value of head leases on properties
Minimum lease Present value
payments of minimum
lease payments
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
Within one year 66 201 66 201
Second to fifth year 266 803 247 746
After five years 8,066 15,483 733 2,134
8,398 16,487 1,046 3,081
Future finance charges on finance leases (7,352) (13,406) - -
Present value of finance lease liabilities 1,046 3,081 1,046 3,081
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:
30.15. Contingent liabilities and post balance sheet events
There were no contingent liabilities at 31 December 2018 (2017: GBPNil).
Five year financial summary
2018 2017 2016 2015 2014
GBPM GBPM GBPM GBPM GBPM
Portfolio size
Investment properties-LAP^ 32 62 89 89 89
Investment properties-joint ventures - - - 19 20
Investment properties-Dragon Retail Properties 2 3 3 3 3
Investment properties-Bisichi Mining^ 13 13 13 13 12
Assets held for sale-LAP 2 36 - 2 -
Inventories-LAP 39 - - - -
88 114 105 126 124
Portfolio activity GBPM GBPM GBPM GBPM GBPM
Acquisitions 6.55 - - 1.00 0.68
Disposals (36.44) - - (0.40) -
Capital Expenditure 6.26 - 0.16 0.36 -
(23.63) - 0.16 0.96 0.68
Consolidated income statement GBPM GBPM GBPM GBPM GBPM
Restated Restated Restated Restated
Group income 56.65 47.87 31.81 34.61 35.74
Profit/(loss) before tax 1.27 11.28 (0.97) (2.09) (2.69)
Taxation (0.68) (2.98) (1.18) 0.04 (3.70)
Profit/(loss) attributable to shareholders (2.08) 7.69 (2.36) (1.90) (7.14)
Earnings/(loss) per share - basic and diluted (2.44)p 9.01p (2.77)p (2.24)p (8.45)p
Dividend per share 0.180p 0.300p 0.165p 0.160p 0.156p
Consolidated balance sheet GBPM GBPM GBPM GBPM GBPM
Shareholders' funds attributable to equity 43.38 45.86 38.24 40.08 42.55
shareholders
Net borrowings 35.99 58.42 62.22 62.39 59.71
Net assets per share - basic 50.83 53.74p 44.83p 47.26p 50.35p
50.83 53.74p 44.83p 47.26p 50.35p
- fully diluted
Consolidated cash flow statement GBPM GBPM GBPM GBPM
Cash generated from operations 1.92 10.29 5.59 4.37 2.96
Capital investment and financial investment 20.78 (1.80) (0.18) (2.77) 100.42
Notes:
^ Excluding the present value of head leases
END
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