LONDON &
ASSOCIATED
PROPERTIES
ANNUAL REPORT 2022
Contents
Annual General Meeting
8 June 2023
Announcement of half year results to 30 June 2023
Late August 2023
Announcement of annual results for 2023
Late April 2024
OVERVIEW
1 LAP at a glance
2 Chairman and Chief Executive’s review 2022
STRATEGIC REPORT
5 Financial and performance review
10 Principal activities, strategy & business model
10 Risks and uncertainties
11 Bisichi risks and uncertainties
12 Key performance indicators
13 Corporate responsibility
GOVERNANCE
23 Directors & advisors
24 Directors’ report
27 Corporate Governance
29 Governance Statement by the Chairman of The Remuneration Committee
30 Annual remuneration report
34 Remuneration Policy Summary
36 Remuneration Policy
39 Audit committee report
40 Directors’ responsibilities statement
41 Independent auditor’s report
FINANCIAL STATEMENTS
48 Consolidated income statement
48 Consolidated statement of comprehensive income
49 Consolidated balance sheet
50 Consolidated statement of changes in shareholders’ equity
51 Consolidated cash flow statement
52 Group accounting policies
59 Notes to the financial statements
87 Five year financial summary
Financial calendar
London & Associated Properties PLC 2022 1
FINANCIAL HIGHLIGHTS
Fully diluted net
assets per equity share IFRS net assets
Properties portfolio
valuation*
38.14p
£53.7m £60.0m
2021: 34.78p 2021: £40.2m 2021: £66.9m
*Includes investment properties, head leases,
assets held for sale and property inventory.
Excludes properties under management.
OVERVIEW
LAP at a glance
OVERVIEW
KEY PROJECTS HIGHLIGHT
Property • Orchard Square, Sheffield
• Runcorn Manor Park Industrial Estate
• Adlington Court Industrial Estate, Warrington
• West Bromwich
• West Ealing development
• Debt Management
• Sale of final enclosed shopping centre in portfolio in
West Bromwich with proceeds added to cash
reserves
• Aviva debenture and Metro Bank loan refinanced
with QIB
• Food hub development at Sheffield complete and
trading
• Runcorn Industrial portfolio being managed actively
for rental growth
• Ealing residential development – reviewing options
for build-out or sell
• Industrial units at Warrington performing well
Coal
production
• In South Africa, Black Wattle produced 0.82m
metric tonnes of Run of Mine Coal in 2022
(2021: 1.05m metric tonnes)
• The API4 price averaged $273 in 2022
compared to $125 in 2021. The higher export
prices achievable for coal along with higher
domestic prices, contributed significantly to an
increase in Bisichi’s revenue and profitability
during the year.
• Despite the lower coal production from Sisonke
Coal Processing, volumes remained adequate.
During the year, 1.29 million metric tonnes of
coal were sold compared to 1.45 million metric
tonnes in 2021.
• Climate related risks being addressed for coal
processing operations
John Heller was appointed Executive Chairman following the death of Sir Michael Heller on 30
th
January 2023.
KEY PROJECTS
2 London & Associated Properties PLC 2022
OVERVIEW
Chairman and Chief Executive’s
review 2022
This Review is the first since 1971 that has not been
presented by Sir Michael Heller, Chairman of London
& Associated Properties (formerly London &
Associated Investment Trust Plc (“LAIT”)) who died on
January 30th 2023. A successful entrepreneur and
businessman Sir Michael was a key figure in a number
of successful businesses through his long career, but it
was the acquisition of a controlling interest in LAIT
and, consequently, an indirect interest in Bisichi, that
was to occupy most of his time. He was heavily
involved in managing and directing the company until
late 2022 when he went into hospital but continued to
scrutinise the management accounts and ask for
updates right until the end. Sir Michael was
responsible for the original strategy of investing in
retail property and set the standards of honesty and
integrity that LAP continues today. He was an
exemplary chairman and will be sorely missed.
CONSOLIDATED RESULTS
LAP has continued its strategy of moving away from fashion
orientated shopping centres and investing instead in other real
estate sectors. To this end, in July 2022, we disposed of our long
leasehold interest in Kings Square, West Bromwich to Sandwell
Council for £4.75 million before costs. At the time of sale, the net
operating income of the Centre was circa £0.4 million per annum
with a number of lease expiries coming up in the next 24 months.
We believe that we achieved a strong result in the circumstances
and that continued ownership may have led to increased pressure
on our cash flows, as recent lease renewals there were transacted at
levels below passing rent.
We also disposed of a shopping arcade in a former supermarket in
Rugeley, Staffordshire for £0.5 million. At the time of disposal, the
arcade was bringing in no operating cash surplus and again we
believe that this disposal was a strong result for the Group. The
arcade formed part of a wider LAP holding in the town and the
remaining shops and flats have been retained and are fully let.
The proceeds of these two sales have been added to our cash
reserves and we are looking to reinvest in new property that meets
our investment criteria. Any acquisitions will need to be cash flow
positive from day one, and with strong letting fundamentals. Our
preferred sectors remain multi-let secondary industrial and
value-orientated retail property.
In January 2022, we acquired several industrial units in Warrington,
Cheshire for £2.35 million. I am pleased to report that in the short
time that we have owned them, we have increased rental income by
33% following a successful rent review on the largest unit. This
review was at £6.50 per square foot compared to £4.24 at the time
of acquisition. We believe there is further growth to come.
Our consolidated property portfolio was valued at £60.0 million at
31 December 2022. With some £6.2 million of property sales
during the year including head leases and £2.5 million of additions,
the like for like property values held at 31 December 2021 is £60.7
million compared to £57.5 million at 31st December 2022. This
decrease in valuation reflects capital expenditure invested of £0.7
million as well as a valuation reduction including head leases of £3.9
million.
This lower overall valuation resulted from: a £2.8 million inventory
impairment charge on our last remaining shopping centre
redevelopment, which is very much in line with the overall market
for this type of asset; a precautionary provision of £0.3 million
against our costs to date on the Purley residential development
following refusal of a planning consent at committee stage, although
this remains subject to the outcome of a planning appeal; an
increase of £0.1 million in our industrial portfolio; a decrease in the
remaining portfolio of community retail assets of £0.2 million; and a
£0.7 million decrease as a result of lower head lease costs
negotiated with the council.
Like for like rental income for the Group (excluding sold properties
and bad debt charges) increased by £0.02 million (0.4%) to £3.65
million (2021: £3.63 million). This result reflects the resilience of the
rents being achieved on new lettings within the portfolio and our
longstanding strategy of disposing of fashion orientated assets
where declines in rents have been much more pronounced.
Rental income resilience can also be seen in our occupancy levels,
which were 96.4% at year end (2021: 96.0%). A retail unit
accounting for 0.9% of those voids is now let. Rent collection levels
have improved with 90% of Q1 2023 rents received to date
compared to 83% at the corresponding time last year and 53% in
Q1 2021 which was affected by lockdown during the pandemic.
We continue to monitor our cost base following the outsourcing of
our asset and property management functions and our relocation to
smaller offices. The head office move is generating £0.2 million of
annualised savings from 2022 onwards.
DEBT MANAGEMENT
LAP has continued to maintain excellent relationships with its
lenders and its record of never breaching a debt covenant remains
intact. In 2022 there were two loan expiries, the £10 million 1997
debenture from Aviva at 8.109%, and the £12.7 million loan
through QSix (formerly PMM) at SONIA + 5.95%. This loan is
secured only against Orchard Square in Sheffield with no recourse
to LAP. In September 2022 we exercised our option to extend it for
a further year with expiry now set for September 2023. LAP has
engaged advisors and has commenced the process of exploring
options for repaying this loan including seeking new lenders for the
existing property, partners for longer term opportunities at the
property or an outright sale. We will keep shareholders updated as
the refinancing progresses.
The Aviva loan was repaid in full on expiry following the execution
of a new £13.6 million 5-year term loan with QIB (UK) PLC. At the
same time we also repaid our £3.5 million term loan with Metro
Bank. The interest rate on the loan with QIB is at the Bank of
England base rate + 3.95% and there is no amortisation.
London & Associated Properties PLC 2022 3
OVERVIEW Chairman and Chief Executive’s review 2022
LAP PROPERTY ACTIVITIES
Orchard Square, Sheffield
2022 was a period of significant progress for Orchard Square as we
continued the process of repositioning the property away from
being a shopping centre and more towards being a food and
beverage (F&B) led mixed use asset.
In September we took full control of the running of Sheffield Plate
following a poor experience with a third party management
company. We have since installed an excellent management team
and, as a result of our hands-on approach, we have increased
revenue by some 50% per annum. This feeds directly through to the
company’s income as we receive a percentage of tenant turnover.
In addition we now control the bars at the venue and all profits that
are being made will be for our account. We are projecting a cash
flow surplus of some £0.1m per annum in the next 12 months with
further growth to come. Sheffield Plate is also contributing well to
the repositioning of the Centre and has been receiving strong and
positive coverage in the local press.
Elsewhere in Orchard Square, we continue to introduce exciting
new F&B operators, the most recent being Cider Hole which will
offer comedy nights and food as well as drinks. There is only one
unit that is not let or under offer in the scheme which is an excellent
achievement given the malaise in the wider world of shopping
centres. Rents are stable and we are continuing to agree leases on a
traditional rental basis without having to concede leases on a total
occupational costs or turnover basis.
The rental income for the asset is £1.7 million per annum which
compares favourably to a similar rental income of £1.7 million in
September 2019, notwithstanding the pandemic in the interim and
the dire letting market currently facing shopping centres.
During the year we commenced refurbishment of the public realm
areas within Orchard Square at a cost of £0.7 million. These works
are being funded in their entirety by a grant from Future High Street
Fund and agreed with Sheffield Council. In addition, we have been
successful in applying for a further grant of over £0.3 million to
assist with a residential scheme for 8 flats above one of the existing
shops. The documentation for the first grant has been completed
while that for the second grant is in the process of being agreed.
Runcorn
Manor Park in Runcorn has remained fully let since we completed
the refurbishment and subsequent letting of a 15,000 sq ft unit at
£6.50 per square foot. The letting market for these types of units
remains strong and we are confident that they will be reversionary
over the medium term.
West Ealing
As previously reported, we obtained a resolution to grant planning
consent for 56 flats and four retail units at the end of 2020. During
2022 we explored the possibility of a consented land sale but we
did not receive sufficiently attractive offers to persuade us to sell
during a period of an unsettled economy and extreme building costs
inflation. We have spent the intervening period working up detailed
plans to improve building efficiency which will help us to maximise
potential returns. A final decision on whether to sell the land or
build out the flats has not yet been made.
Purley
We have also worked with the same joint venture partner to acquire
options on six semi-detached houses with large gardens in Purley,
London. A planning application submitted in 2022 for 44 flats and 4
town houses was rejected in January 2023 despite being
recommended for approval by the planning officer. We have
appealed this decision and will update shareholders on progress in
due course.
The remainder of our portfolio has performed well and remains
effectively fully let.
DRAGON RETAIL PROPERTIES
Dragon owns a property in Clifton, Bristol let to Boots the Chemist
and Lizard Lounge, one of Bristol’s best-known nightclubs. After a
difficult period during lockdown when neither tenant paid rent, we
are pleased to report that all rental payments are now up to date.
Dragon’s loan of £1.2 million from Santander originally expired in
September 2020, but has been extended to October 2023.
Santander has indicated that it is willing to provide a new term loan
and we expect to complete this in the near future.
4 London & Associated Properties PLC 2022
STRATEGIC
REPORT
BISICHI PLC
For 2022, Bisichi plc our 41.6% owned subsidiary, made a profit
before interest, tax, depreciation and amortisation (EBITDA) of
£40.0 million (2021: £5.8 million) and an operating profit before
depreciation, fair value adjustments and exchange movements
(Adjusted EBITDA) of £39.4 million (2021: £5.0 million). These
unprecedented earnings for the Group can be attributed to a strong
performance from Sisonke Coal Processing, the Group’s South
African coal processing operation which benefited from significantly
improved prices in all its markets.
During the year, a disconnect in global energy markets contributed
to an increase in the weekly Free on Board (FOB) coal price from
Richards Bay Coal Terminal (API4 price) from $125 per metric tonne
at the end of 2021 to a peak of over $360 in August. Overall, the
API4 price averaged $273 in 2022 compared to $125 in 2021. The
higher export prices achievable for their coal along with higher
domestic prices, particularly during the second half of the year,
contributed significantly to the increase in revenue and profitability.
Overall, revenues would have been even better if Bisichi had not
encountered constraints in transporting coal for export on the
South African rail network. These constraints were beyond Bisichi’s
control. Overall, exports during the year decreased to 262,000
metric tonnes compared to 320,000 metric tonnes in 2021.
At Black Wattle, Bisichi’s South African coal mining operation, the
transition into new mining areas impacted adversely on coal
production, particularly during the first half of the year. As
previously reported, the transition into the new mining areas was
completed in July last year and in the second half of the year Black
Wattle achieved improved production of 0.52 million metric tonnes
compared to 0.30 million metric tonnes in the first half of the year.
Overall, the mine achieved production of 0.82 million metric tonnes
in 2022 compared to 1.05 million metric tonnes in 2021. The
increases evident on the balance sheet in mining reserves, plant and
equipment are attributable mainly to the costs of completing the
development of these new mining areas which will be mined
throughout 2023.
Despite the lower coal production from Black Wattle, at Sisonke
Coal Processing Bisichi was able to maintain adequate levels of coal
processed. During the year the Group sold 1.29 million metric
tonnes compared to 1.45 million metric tonnes of coal in 2021.
Overall the Group reported £95.1 million in mining revenue (2021:
£50.5million) with the higher prices achievable for coal offsetting
the lower overall quantity of coal sold.
Looking forward into 2023, in the first quarter API4 prices have
averaged $145 and uncertainties remain, particularly with regard to
the outlook for the international coal price as well as the impact of
continued constraints in transporting coal for export on the South
African rail network. In light of this, Bisichi’s management will be
focusing in 2023 on improving upon production levels achieved in
2022, maintaining a diversified sales market and keeping operating
costs low.
We are pleased to include in our annual report this year our new
climate change report on page 13. Bisichi’s operations contribute
over 99% of our CO
2
emissions and are the operations on which we
have focused in this report. Bisichi recognises that climate change
represents one of the most significant challenges facing the world
today and supports the goals of the Paris Agreement and the UN
Framework Convention on Climate Change. Bisichi recognises the
need, and is committed to, diversifying its future business activities
into areas outside of coal. Bisichi is continually looking at alternative
independent mining and renewable energy related opportunities, as
well as new opportunities to add to its existing UK property and
listed equity investment portfolios. In the interim Bisichi continues
to work closely with Vunani Mining, its BEE partner in Black Wattle
and Sisonke Coal processing, to be responsible stewards of its
legacy coal operations, taking into account the climate related risks
outlined in our climate report and the impact these risks may have
on all our stakeholders.
In the UK, Bisichi has seen its rental revenue from its retail property
portfolio remain stable in 2022. Overall, Bisichi billed revenue from
its directly owned property portfolio of £1.11 million (2021: £1.12
million) during the year.
In light of the strong results achieved for the year and the
performance of Bisichi’s South African operations, for the year
ended 31 December 2022 the Bisichi directors have recommended
a final dividend of 4p (2021: 4p) per share and a special dividend of
8p (2021: 2p) per share. LAP will receive £0.5 million.
As previously announced, we are pleased to welcome Andrew Heller
to the Board of London & Associated Properties PLC as a Non-
executive Director. The appointment took effect on 29 March 2023.
Andrew Heller is the Chairman and Managing Director of Bisichi
PLC in which LAP holds a 41.6% stake. As chief executive of Bisichi
PLC, Andrew has valuable mining expertise which will strengthen
the skill base of the Board. His knowledge and experience will bring
a vital perspective to an important investment for the Group.
Finally, we would like to thank employees, advisors and stakeholders
for their ongoing efforts and support.
John Heller,
Chairman and Chief Executive
27 April 2023
STRATEGIC REPORT Chairman and Chief Executive’s review 2022
London & Associated Properties PLC 2022 5
STRATEGIC
REPORT
Financial and performance review
The financial statements for 2022 have been
prepared to reflect the requirements of IFRS 10.
This means that the accounts of Bisichi PLC (a
London Stock Exchange main market quoted
company – BISI) (“Bisichi”), have been consolidated
with those of LAP.
Bisichi continues to operate as a fully independent company and
currently LAP owns only 41.6% 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” (58.4%) is shown separately in the equity
section as a non-controlling interest. There is no impact on the net
assets attributable to LAP shareholders.
Dragon Retail Properties Limited (“Dragon”) and West Ealing
Projects Limited (“West Ealing”), are both 50:50 joint ventures with
Bisichi and are also consolidated. Another joint venture,
Development Physics Limited (“DPL”) is owned 33% each by LAP,
Bisichi and a third party. This too is consolidated.
Shareholders are aware that LAP is a property business with a
significant investment in a listed mining company.
The effect of consolidating the results, assets and liabilities of the
property business and the mining company makes the figures
complex and less transparent. Property company accounts are
already subject to significant volatility as valuations of property
assets as well as derivative liabilities can be subject to major
movements based on market sentiment. Most of these changes,
though, have little or no effect on the cash position and it is, of
course, self-evident that cash flow is the most important factor
influencing the success of a property business. We explain the
factors affecting the property business first, clearly separating these
from factors affecting the mining business which we do not manage.
Comments about Bisichi (the mining business) are based on
information provided by the independent management of that
company.
This report comments on the performance of each of the Group’s
segments separately.
LONDON & ASSOCIATED PROPERTIES PLC
We own industrial and community retail property and invest in and
seek to develop housing for local communities. Our key objective is
to ensure that we offer safe and secure environments in which
people can live, work and visit.
LAP’s core objectives in 2022 have continued to be:
• Provide environments in which tenants can thrive.
• Continually improve the business’ operating cashflow.
• Reduce exposure to the fashion led or shopping centre retail sector.
• Ensure gearing is at an appropriate level.
• Maintain sufficient cash in the business to be able to take
advantage of opportunities as they arise.
Rental Income and Occupancy
Rent collections have normalised post the pandemic. As at 17 April
2023 Q1 2023 collections were 90% (2021: 83%, 2020: 53%).
We continue to engage with occupiers to ensure a diversified mix of
tenants to match customers’ evolving requirements. This is
particularly applicable to our community retail assets, due to a
change in working habits accelerated by the pandemic.
Like for like rental income was up by £0.02 million (0.4%), which
reflects rent increases being achieved on new lettings within the
community retail portfolio offset by reduced income from Orchard
Square due to vacancies in 2022, between old and new tenant
occupations.
Void levels decreased to 3.6% (2021: 4.0%). In 2022, a single unit
consisting 0.9% of these voids has though been let to a new tenant.
Void levels remain low across the portfolio.
Property Investment Activity
During 2022 two properties were sold further progressing our twin
strategy of divesting away from retail property and recycling capital
into areas where there is greater scope to increase value through
asset management activities. We sold a retail market in Rugeley and
our remaining under cover shopping centre in West Bromwich.
These sales generated gross proceeds of £5.27 million.
In January 2022 we acquired an industrial property in Warrington
for £2.35 million, where we have subsequently achieved significant
rental growth.
LAP continues to look for investment opportunities, particularly
within the industrial sector.
6 London & Associated Properties PLC 2022
STRATEGIC REPORT Financial and performance review
EBITDA
2022
£’000
2021
£’000
Operating (loss)/profit (3,042) 311
Excluding non-cash items:
Depreciation 265 241
Impairment of Inventory 3,098 816
EBITDA 321 1,368
Income from subsidiaries:
Management fees 236 236
Dividend income 711 -
Adjusted EBITDA 1,268 1,604
INCOME STATEMENT
BUSINESS ANALYSIS
2022
£’000
2021
£’000
Rental income 4,175 5,024
Service charge income 788 852
Management income from third party properties 18 18
LAP Revenue 4,981 5,894
Direct property costs (1,995) (2,181)
Impairment of inventory (3,098) (816)
Overheads (2,665) (2,345)
Depreciation (265) (241)
Operating (loss)/profit (3,042) 311
Finance income 24 12
Finance expenses (2,120) (1,713)
Result before valuation movements (5,138) (1,390)
Other segment items
Net decrease on revaluation of investment properties (5) (316)
(Loss)/profit on disposal of investment properties (83) 436
Profit/(loss) on disposal of fixed assets 36 (133)
Adjustment to interest rate derivative 69 130
Revaluation and other movements 17 117
LAP loss for the year before taxation (5,121) (1,273)
Note: The figures exclude inter-company transactions.
The above figures for LAP and commentary below exclude
management fee income from Bisichi and Dragon of £236,000
(2021: £236,000) and dividend income from Bisichi of £711,000
(2021: £nil).
The impairment of inventory largely relates to value changes to the
development property Orchard Square, Sheffield at the end of the
year arising from yield movements affected by rising interest rates
and market sentiment.
Overheads, adjusted for inflation, are largely in line with 2021, other
than costs of circa £0.2 million associated with refinancing activities
in the year, discussed previously.
LAP generated an operating loss of £3.0 million (2021: profit of
£0.3 million). A significant element of this result arises from the
non-cash items of depreciation and inventory impairment. LAP
generated an adjusted EBITDA of £1.3 million (2021: £1.6 million).
LAP generates the majority of its income from property rentals,
property management fees and development activities.
Whilst interest rates increased during the year interest paid on all
facilities was similar to last year, with the effect of increased interest
rates on our unhedged loans being offset by savings following the
August 2022 refinance of the Aviva debenture in particular.
In 2021 a long standing provision of £0.5m for contingent interest was
no longer required, resulting in a decrease in finance expenses last year.
Property Development Activity
In September 2021, we completed the development of a street
food hub at our property in Sheffield, branded Sheffield Plate. This
was an important step in the reposition of this asset towards a food
and beverage led offering in Sheffield city centre and trading at this
development has been strong and has continued to grow during 2022.
Work has recently commenced on public realm works at Sheffield to
improve weather protection and the overall experience for
customers and tenants at the property, fully funded by a Future
High Street Fund grant from Sheffield council.
LAP continues to develop and refurbish all its properties as
appropriate to provide environments in which tenants can thrive.
Our joint venture residential developments are discussed in more
detail later in this review.
Funding & Refinancing Activities
LAP refinanced a £10 million debenture with Aviva, reaching the
end of its twenty-five-year period, and a £3.5 million term loan with
Metro Bank with a £13.6 million 5-year term loan with QIB (UK)
PLC, in August 2022.
During the year we executed the option to extend our 3-year term
loan with Phoenix CRE S.à.r.l with a current principal outstanding of
£12.7 million, for one year to September 2023. This loan is secured
on a single property, Orchard Square, Sheffield and the extension
will enable us to complete the current stage of our development
activities at the property before repaying the loan through either an
investment refinance, refinancing the loan with a view to undertaking
the next phases of development or an outright sale of the property.
All of LAP’s loans are covenant compliant.
Further details can be found in note 18 to the accounts.
London & Associated Properties PLC 2022 7
STRATEGIC REPORT Financial and performance review
BALANCE SHEET
SEGMENT ASSETS
2022
£’000
2021
£’000
Non-current assets – property 24,497 28,386
Non-current assets – property, plant & equipment 543 840
Trading assets 22,862 25,213
Cash & cash equivalents 4,685 5,473
Current assets – others 1,328 1,635
Total assets excluding investment in joint ventures 53,915 61,547
Segment liabilities
Borrowings (30,306) (30,981)
Current liabilities (4,253) (5,172)
Non-current liabilities (1,375) (3,148)
Total liabilities (35,934) (39,301)
Net assets 17,981 22,246
Note: The figures exclude inter-company transactions.
Investment property valuation reductions of £nil (2021: £0.3 million)
arose from a decrease in retail property values of £0.1 million (2021:
£1.5 million) and an increase in industrial property values of £0.1
million (2021: £1.2 million). Following the sale of one shopping
centre in West Bromwich, the remaining retail properties all form
part of our community retail portfolio. These assets are relatively
high yielding, have low vacancy rates and are not as affected as
other asset classes by recent increases in interest rates. This further
strengthens our view that the market is differentiating between
community retail investments and shopping centre or fashion
focused retail investments.
Producing a profit through ongoing asset management activities to
generate further rental income, investing cash currently on deposit
at the appropriate time into new property investments combined
with generating returns from our existing investments, including
Bisichi, remains the business’ key focus for the future.
Total assets, consisting mainly of trading and investment properties,
have reduced from £61.5 million to £53.9 million. This included a
£2.8 million impairment reducing our Sheffield development
property to net realisable value and net movements on investment
properties arising from sales and acquisitions of £2.9 million, as
discussed in the Property Investment Activity section.
Property, plant and equipment reduced by £0.3 million in the year due
to depreciating right of use asset that represents the lease of our head
office. The lease comes to an end in 2024 at which point the asset will
be fully depreciated. The present value of future rentals of £0.5 million
is included within liabilities.
LAP’s main borrowings consist of a £13.6 million term loan facility
expiring in August 2027, a £12.7 million term loan expiring in
September 2023, and a rolling development loan relating to West
Ealing of £4.4 million that expires in July 2023. As in previous years,
all loans are secured on core property and are covenant compliant
at the year end.
GEARING
2022
£’000
2021
£’000
Total borrowings 30,306 30,981
Less cash and cash equivalents (4,685) (5,473)
Net borrowings 25,621 25,508
Total Equity 17,981 22,246
142.5% 114.7%
The business has not set a target gearing level but monitors its debt and asset values constantly to maintain an appropriate level,
considering market sentiment, the availability and cost of debt and cash flow forecasts.
CASH FLOW
CASH FLOW FROM OPERATIONS
2022
£’000
2021
£’000
Cash (outflows)/inflows from operating activities (723) 398
Cash inflows/(outflows) from investing activities 3,458 4,141
Cash outflows from financing activities (3,523) (2,479)
Net increase/(decrease) in cash and cash equivalents (788) 2,060
Cash and cash equivalents at 1 January 5,473 3,413
Cash and cash equivalents at 31 December 4,685 5,473
Note: The figures within the LAP cashflow include inter-company transactions such as management fee income of £236,000 (2021: £236,000) and dividends
from Bisichi of £711,000 (2021: £nil).
Cash outflows from operating activities take account of expenditure
on development properties of £0.7 million (2021: £1.0 million).
Excluding this expenditure, adjusted cash inflows from operating
expenditure were £0.0 million (2021: £1.4million).
Investing activities include the sale of two retail properties and
acquisition of one investment property, as discussed above, for net
proceeds of £2.6 million received in the year, along with dividend
income from Bisichi of £0.7 million.
Financing activities in 2022 include net loan repayments of £0.9
million and the refinance of the £10m Aviva debenture and £3.5
million term loan with a new £13.6 million 5-year term loan, as
discussed previously. Interest payments on the servicing of debt of
£2.15 million were made in 2022 (2021: £1.97 million), with the
increase arising as a result of increases in interest rates during 2022.
Interest rate risk is discussed further in note 21.
8 London & Associated Properties PLC 2022
STRATEGIC REPORT Financial and performance review
WEST EALING PROJECTS LIMITED
West Ealing is a 50:50 joint venture between LAP and Bisichi
created with the purpose of delivering a primarily residential
development in West Ealing, London. The joint venture owns 90%
of the property which is under development and on which £8.11
million has been spent to date (2021: £7.48 million), West Ealing is
disclosed within LAP in the segmental analysis in note 1 to the
financial statements. There is a linked development loan of £4.40
million (2021: £4.20 million), described further in note 18. Planning
permission is held for the creation of 56 new residential apartments
and ground floor shops on the site.
DEVELOPMENT PHYSICS LIMITED
Development Physics is a 1/3:1/3:1/3 joint venture between LAP,
Bisichi and Metroprop Real Estate, set up, with the purpose of
delivering a residential development of 44 flats and 4 town houses
in Purley, London. Development Physics acquired a series of options
on the site and is progressing through the planning process for its
development. £0.3 million (2021: £0.2 million) has been spent to
date on the development.
BISICHI PLC
Although the results of Bisichi PLC have been consolidated in these
financial statements, 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 2022 financial
statements which are available on its website www.bisichi.co.uk.
Bisichi has two core revenue streams – investment in retail property
in the UK and coal mining in South Africa.
The Bisichi group’s profit before tax was £38.3 million (2021: £2.8
million). In South Africa, Black Wattle produced 0.82m metric tonnes
of Run of Mine Coal in 2022 (2021: 1.05m metric tonnes). Despite
the lower coal production from Black Wattle, at Sisonke Coal
Processing, adequate levels of coal processed were maintained.
During the year 1,29 million metric tonnes of coal were sold
compared to 1.45 million metric tonnes in 2021. The API4 price
averaged $273 in 2022 compared to $125 in 2021. The higher
export prices achievable for coal along with higher domestic prices,
contributed significantly to an increase in Bisichi’s revenue and
profitability during the year.
UK retail property investments were valued at the year end at
£10.60 million (2021: £10.70 million). The property portfolio is
actively managed by LAP and generated rental income of £0.9
million in the year (2021: £0.9 million).
During the year Bisichi’s non-current investments held at fair value
through profit and loss increased from £3.6 million in 2021 to £12.6
million with net additions during the year of £8.3 million (2021: £1.2
million) and gains from investments of £0.7 million (2021: £0.7
million). The investments comprise £6.8 million (2021: £1.56 million)
of investments listed on stock exchanges in the United Kingdom
and £5.8 million (2021: £2.07 million) of investments listed on
overseas stock exchanges. The Group’s listed investments are
primarily in entities involved in extractive and energy related
(including renewable energy) business activities.
Bisichi has a structured trade finance facility with Absa Bank Limited
for R85 million held by Sisonke Coal Processing (Pty) Limited, a 100%
subsidiary of Black Wattle Colliery (Pty) Limited. This facility comprises
an R85 million revolving facility to cover the working capital
requirements of Bisichi’s South African operations. The facility is
renewable annually on 25 January and is secured against inventory,
debtors and cash that are held in Bisichi’s South African operations.
Bisichi holds a 5-year term facility of £3.9 million with Julian Hodge
Bank Limited at an initial LTV of 40%, with the loan being secured
against the company’s UK retail property portfolio. The amount
repayable on the loan at year end was £3.8 million (2021: £3.8
million). The debt package has a five-year term and is repayable at
the end of the term in December 2024. The interest cost of the loan
is 4.00% above Bank of England base rate. The loan is secured by
way of a first charge over the investment properties in the UK which
are included in the financial statements at a value of £10.5 million.
No banking covenants were breached by Bisichi during the year.
Bisichi’s cash and cash equivalents increased during the year by
£7.0 million (2021: £1.5 million). The net balance of cash and cash
equivalents (including bank overdrafts) at year end was a cash
positive amount of £7.5 million (2021: £0.5 million).
Bisichi has considerable financial resources available at short notice
including cash and cash equivalents (excluding bank overdrafts) of
£10.7 million (2021: £3.0 million) and listed investments of £13.5
million (2021: £4.3 million) as at year end. The above financial
resources total £24.2 million (2021: £7.3 million).
Bisichi’s net assets at 31st December 2022 were £34.5 million
(2021: £16.7 million).
Bisichi continues to seek and evaluate opportunities to transition
into alternative mining related activities through new commercial
arrangements. In the UK, Bisichi is looking forward to progressing its
property development opportunities in West Ealing and
Development Physics as well as seeking other opportunities to
expand upon on its property and equity investment portfolios. This
is in line with Bisichi’s overall strategy of balancing the high risk of
mining operations with a dependable cash flow and capital appreciation
from UK property investment operations and equity investments.
DRAGON RETAIL PROPERTIES LIMITED
Dragon is a UK property investment company, owned 50:50 by LAP
and Bisichi. The company has a Santander bank loan of £1.2 million
secured against its investment property, see note 18, which is
covenant compliant.
The loan originally expired in October 2020 but has been extended
to October 2023 and we are negotiating a new longer term loan
with the existing lender.
Dragon incurred management fees of £72,000 (2021: £72,000)
split equally between the two joint venture partners. Dragon has
net assets of £1.2 million (2021: £1.3 million). Dragon continues to
trade at near break-even, excluding property revaluations.
ACCOUNTING JUDGEMENTS AND GOING
CONCERN
The most significant judgements made in preparing these accounts
relate to the carrying value of the properties and investments. The
Group uses external property valuers to determine the fair value of
most of its properties.
Under IFRS10 the Group has included Bisichi PLC in the
consolidated accounts, as it is deemed to be under the effective
control of LAP and has therefore been treated as a subsidiary. The
directors of Bisichi consider their judgements and estimates
surrounding the life of the mine and its reserves to have significant
effect on the amounts recognised in the financial statements and to
be an area where the financial statements are subject to significant
estimation uncertainty. The life of mine remaining is currently
estimated at 7 years.
The Directors exercise their commercial judgement when reviewing
the Group’s cash flow forecasts and the underlying assumptions on
which the forecasts are based. The Group’s business activities,
together with the factors likely to affect its future development, are
set out in the Chairman’s Statement and Chief Executive’s Review
and in this Report. Further disclosure of specific factors affecting
going concern are discussed in more detail in the going concern
section of the group accounting policies section of the financial
statements. In addition, the Directors consider that Note 21 to the
financial statements sets out the Group’s objectives, policies and
processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities;
and its exposure to credit risk, liquidity risk and other risks.
London & Associated Properties PLC 2022 9
STRATEGIC REPORT Financial and performance review
STATEMENT REGARDING SECTION 172 OF THE
UK COMPANIES ACT
Section 172 of the UK Companies Act requires the Board to report
on how the directors have had regard to the matters outlined below
in performing their duties. During the year, the Directors consider
that they have acted in a way, and have made decisions that would
most likely promote the success of the Group for the benefit of its
members as a whole as outlined in the matters below:
• The likely consequences of any decision in the long term: see
Principal Activity, Strategy & Business Model and Risks and
Uncertainties on pages 10 to 11;
• The interests of the Group’s employees; ethics and compliance;
fostering of the Company’s business relationships with suppliers,
customers and others; and the impact of the Group’s operations
on the community and environment: see Corporate Responsibility
and Sustainability reports on pages 13 to 22;
• The need to act fairly between members of the Company: see the
Corporate Responsibility section on pages 13 to 22;
• The desirability of maintaining a reputation for high standards of
business conduct: see the Corporate Governance section on pages
27 to 28.
GOING CONCERN
LAP
In reviewing going concern it is necessary to consider separately the
position of LAP Group and Bisichi. Although both are consolidated
into group accounts (as required by IFRS 10), they are managed
independently and in the unlikely event that Bisichi was unable to
continue trading this would not affect the ability of LAP Group to
continue operating as a going concern. The same would be true for
Bisichi in reverse.
The directors have reviewed the cash flow forecasts of the LAP
Group and the underlying assumptions on which they are based for
the 15 months from the date of signing. The LAP Group’s business
activities, together with the factors likely to affect its future
development, are set out in the Chairman and Chief Executive’s
Statement and Financial Review. In addition, Note 21 to the
financial statements sets out the Group’s objectives, policies and
processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities;
and its exposure to credit risk and liquidity risk.
Directors assess the longer term prospects of the business over a
four year time horizon as covered by the Group’s annual rolling
four-year strategic financial plan. This is considered to be the
optimum balance between our need to plan for the long term,
recognising that property investment is a long-term business, and
the progressively unreliable nature of forecasting in later years.
There is one significant loan which expires in 2023, the potential
outcomes of which the directors have examined in detail when
considering going concern. The directors have also considered the
debt covenants on existing loans and the effects that a wide range
of property valuation movements would have on these and the
Group’s ability to mitigate these effects.
Geo-political events in Ukraine are continuing to result in higher global
energy prices. Although the outcome of the events in Ukraine is
uncertain, the Directors at present do not foresee the events having a
significant negative impact on the Group’s UK and South African
operations’ ability to remain in operation for the foreseeable future.
Bisichi
Detailed budget and cash flow forecasts for Bisichi’s operations
demonstrate that Bisichi has sufficient resources to meet its liabilities
as they fall due for at least the next 12 months and that Bisichi will be
able to manage its business risks and have adequate cash resources to
continue in operational existence for the foreseeable future. Further
details can be found in the Bisichi plc 2022 Financial Statements
which are available on their web site: www.bisichi.co.uk.
Overall position
With a quality property portfolio comprising tenants with a mix of
short and long leases supported by suitable financial arrangements,
the Directors believe that the group property operations (including
Bisichi and Dragon) are well placed to address the current business
risks successfully, despite the continuing uncertain economic
climate. The mining operations too, as a key industry in South Africa,
have a positive future. It is also relevant that LAP would be able to
continue as a viable business if Bisichi were to face unexpected
problems as there are no cross guarantees and LAP is not
dependent on the income from Bisichi.
Having made enquiries and having considered the principal risks
facing the Group, including liquidity and solvency risks, and material
uncertainties, the Directors have a reasonable expectation that the
Group and the Company have adequate resources to continue in
operational existence for the foreseeable future. Thus, they
continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
TAXATION
The LAP Group tax strategy is to account for tax on an accurate and
timely basis. We only structure our affairs based on sound
commercial principles and wish to maintain a low tax risk position.
We do not engage in aggressive tax planning.
The LAP Group (excluding Bisichi and Dragon) has unused tax losses
and deductions with a potential value of £11.6 million (2021: £11.1
million). As LAP returns to profit, these tax losses and deductions
should be utilised.
DIVIDENDS AND FUTURE PROSPECTS
Due to the current economic uncertainties, the LAP Board has
agreed that it will not be recommending a dividend for the financial
year ending 31 December 2022 (2021: £nil).
Looking forwards to medium term trading, we intend to pursue our
previously stated strategies. These include further reducing the
Group’s reliance on shopping centres although we feel that our
value-orientated properties with low reliance on fashion retailers
have inbuilt defensive qualities. We do not need to fire-sell assets
therefore, but we are prepared to enter into negotiations with
parties that have approached us to explore disposals or joint
ventures to redevelop certain assets within our portfolio. A number
of these negotiations are ongoing although we are not yet able to
say if any will come to fruition.
We will also pursue our policy of investing in other asset classes,
including industrial property where we have enjoyed success and in
further joint ventures to undertake residential development. Our
development in Ealing has received planning consent and options
for either building out the development or seeking to sell our shares
in the joint venture are being considered currently. Our development
in Purley is currently in the planning stage.
We continue to progress the development of the Sheffield shopping
centre. Work has recently commenced on public realm works at the
property, fully funded by a Future High Street grant from Sheffield
council. This will enable year-round activities to further support all
of the tenants at the property, particularly the growing number of
hospitality operations. Planning permission has been granted for 8
apartments above ground floor level to be built in a space previously
used for property management activities and not income producing.
This development has also been allocated council approved funding.
Bisichi
In the first quarter of the 2023, the API4 price average was $145 and
uncertainties remain, particularly in regard to the sustainability of the
higher international coal price and the impact of continued constraints
in transporting coal for export on the South African rail network. In
light of this, management will be focusing on improving upon
production levels achieved in 2022, maintaining a diversified sales
market and keeping operating costs low.
Bisichi continues to seek and evaluate opportunities to transition into
alternative mining related opportunities through new commercial
arrangements.
10 London & Associated Properties PLC 2022
STRATEGIC REPORTSTRATEGIC REPORT
Principal activities, strategy & business model
The LAP Group’s principal business model is the investment in and management and development of industrial and retail property through
direct investment and joint ventures.
The principal activity of Bisichi PLC is coal mining and coal processing in South Africa. Further information is available in its 2022 Financial
Statements which are available on their web site: www.bisichi.co.uk
STRATEGIC PRIORITIES ARE OUR STRATEGY IS
Maximising income By achieving an appropriate tenant mix and providing vibrant environments with excellent facilities
we can increase tenant demand for space and enhance income.
Creating quality property We look to improve the tenant experience at all our properties by achieving an appropriate tenant
mix and a vibrant trading environment through investment activity, enhancement, refurbishment
and development.
Capital strength We operate within a prudent and flexible financial structure. Our gearing policy provides financial
stability whilst giving capacity and flexibility to look for further investments.
Maintain the value of investment
in Bisichi
By encouraging the Bisichi management to maximise sustainable profits and cash distributions.
Risks and uncertainties
DESCRIPTION OF RISK DESCRIPTION OF IMPACT MITIGATION
ASSET MANAGEMENT:
Tenant failure Financial loss. Initial and subsequent assessment of tenant covenant
strength combined with an active credit control function.
Leases not renewed Financial loss. Lease expiries regularly reviewed. Experienced teams
with strong tenant and market knowledge who
manage appropriate tenant mix.
Asset liquidity (size and
geographical location)
Assets may be illiquid and affect flexing
of balance sheet.
Regular reporting of current and projected position
to the Board with efficient treasury management.
PEOPLE:
Retention and
recruitment of staff
Unable to retain and attract the best
people for the key roles.
Nomination Committee and senior staff review
skills gaps and succession planning. Training and
development offered.
REPUTATION:
Business interruption Loss in revenue.
Impact on footfall.
Adverse publicity.
Potential for criminal/civil proceedings.
Documented Recovery Plan in place.
General and terrorism insurance policies in place
and risks monitored by trained security staff.
Health and Safety policies in place.
CCTV in centres.
FINANCING:
Fluctuation in property
values
Impact on covenants and other loan
agreement obligations.
Secure income flows.
Regular monitoring of LTV and IC covenants and other
obligations.
Focus on quality assets.
Reduced availability of
borrowing facilities
Insufficient funds to meet existing debts/
interest payments and
operational payments.
Efficient treasury management.
Loan facilities extended where possible.
Regular reporting of current and projected position
to the Board.
Loss of cash and deposits Financial loss. Only use a spread of banks and financial institutions
which have a strong credit rating.
Fluctuation of interest rates Uncertainty of interest rate costs. Manage derivative contracts to achieve a balance
between hedging interest rate exposure and
minimising potential cash calls.
London & Associated Properties PLC 2022 11
STRATEGIC REPORT
Bisichi risks and uncertainties
Bisichi (although it is consolidated into group accounts as required by IFRS 10) is managed independently of LAP. The risks outlined below
are an abbreviated summary of the risks reported by the Directors of Bisichi to the shareholders of that Company. Full details are available
in the published accounts of Bisichi (www.bisichi.co.uk).
These risks, although critical to Bisichi, are of less significance to LAP which only has a minority investment of 41.6% in the company. In the
unlikely event that Bisichi was unable to continue trading, it would not affect the ability of LAP to continue operating as a going concern.
DESCRIPTION OF RISK DESCRIPTION OF IMPACT MITIGATION
Coal prices can be impacted materially by
market and currency variations and
geopolitical factors
Affects sales value and therefore
margins.
Bisichi primarily focuses on managing its
underlying production and processing costs to
mitigate coal price volatility as well as from time
to time entering into forward sales contracts with
the goal of preserving future revenue streams.
Bisichi has not entered into any such contracts in
2021 and 2022.
Bisichi assesses on an ongoing basis the
impact that the geo-political events in Ukraine,
regulatory changes related to climate change and
governmental CO
2
emission commitments may
have on the Group’s mining operations and
future investment decisions.
Mining operations are inherently risky.
Mineral reserves, regulations, licensing,
power availability, health and safety can
all damage operations
Loss of production causing loss
of revenue.
Use of geology experts, careful attention to
regulations, health and safety training, employee
dialogue to minimise controllable risks.
Currency risk Affects realised sales value and
therefore margins.
Regular monitoring and review of forward
currency situation.
Cashflow variation because of mining risks,
commodity price or currency variations
Variations can deliver significant
shifts in cash flow.
UK property investments used to offset high risk
mining operations.
There has been no change in the risks faced by either LAP or Bisichi.
12 London & Associated Properties PLC 2022
STRATEGIC REPORT
Key performance indicators
The Group’s Key Performance Indicators are selected to ensure clear alignment between its strategy and shareholder interests.
The KPIs are calculated using data from management reporting systems.
STRATEGIC PRIORITY KPI PERFORMANCE
MAXIMISING INCOME – LIKE FOR LIKE PROPERTY INCOME
To increase the like-for-
like income from each
property year on year.
Like-for-like rental income
as a percentage of the
prior year rental.
The like-for-like rental income of the
group by property has increased by
£15,000 (0.4%) (2021: increase of
£253,000 and 4.5%).
In the continuing difficult trading
environment, this is considered
positive.
MAXIMISING INCOME – OCCUPANCY
We aim to maximise
the total income in our
properties by achieving
full occupancy.
The estimated rental value
("ERV") of the empty units
as a percentage of our
total income.
Void levels decreased to 3.6%
(2021: 4.0%). In 2022, a single unit
consisting 0.9% of these voids is
now let to a new tenant following
refurbishments completed during
the year.
There continue to be minimal voids
across the portfolio which is positive.
CAPITAL STRENGTH – GROWTH IN NET ASSET VALUE PER SHARE
The net assets per
share is the principal
measure used by the
group for monitoring its
performance and is an
indicator of the level of
reserves available for
distribution by way of
dividend.
Movement in the net
assets per share.
The net assets per share increased
by 3.36 pence per share (9.7%) to
38.14p (2021: 34.78p).
This is a positive result.
CHANGE IN LIKE-FOR-LIKE
INCOME*
VOIDS
NET ASSETS PER SHARE
2020
2020
6.0
8.0
9.0
75.0
4.0
50.0
2.0
25.0
0.0
0.0
2021
2021
2022
2022
2020
500
250
0.0
-250
-500
2021 2022
London & Associated Properties PLC 2022 13
STRATEGIC REPORT
Corporate responsibility
SUSTAINABLE DEVELOPMENT
Bisichi’s Black Wattle continues to strive to conduct business in a
safe, environmentally and socially responsible manner. Some
highlights of their Health, Safety and Environment performance
during 2022:
• Black Wattle Colliery recorded 2 Lost time Injuries during 2022
(2021: 2).
• No cases of Occupational Diseases were recorded.
• Zero claims for the Compensation for Occupational Diseases
were submitted.
In South Africa, the Broad-Based Socio-Economic Empowerment
Charter for the Mining and Minerals Industry (New Mining Charter)
is a regulatory instrument that facilitates sustainable transformation,
growth and development of the mining industry. Bisichi is
committed to fully complying with the New Mining Charter and
providing adequate resources to this area in order to ensure
opportunities are expanded for historically disadvantaged South
Africans (HDSAs) to enter the mining and minerals industry. In
addition, Bisichi continues to adhere to and make progress in terms
of their Social and Labour Plan and various BEE initiatives. A fuller
explanation of these can be found in Bisichi’s 2022 Financial
Statements which are available on their web site: www.bisichi.co.uk
CLIMATE CHANGE REPORTING
The Group recognises that climate change represents one of the
most significant challenges facing the world today and supports the
goals of the Paris Agreement and the UN Framework Convention
on Climate Change.
Our aim is to:
• minimize our contribution to greenhouse gas emissions;
• to consider and plan for the physical and transitional risks of
climate change on our operations; and
• to work with stakeholders, including local government and
communities, to mitigate the impact of climate-related challenges.
In the current year, the Group has aligned climate disclosures in this
Strategic Report to the four Task force on Climate-related Financial
Disclosure (“TCFD”) recommendations as follows:
14 London & Associated Properties PLC 2022
STRATEGIC REPORT Corporate responsibility
TCFD AREA TCFD CONSIDERATION LONDON & ASSOCIATED PROPERTIES PLC & BISICHI PLC
Governance Board’s oversight of climate risk
and opportunities
The LAP & Bisichi Boards have ultimate responsibility for the monitoring and
development of the Groups’ approach to climate risk and opportunities.
In light of the size of the Group, ESG matters are considered as part of the
Group’s regular board meetings and at other appropriate points during the year.
The Board has developed and implemented a Climate Change Policy and monitor
the content, effectiveness and implementation of this Policy on a regular basis.
The Group’s Climate Change Policy can be found on the Group’s website at
www.lap.co.uk.
Short, medium and long term strategic decisions, including those on capital
allocation and portfolio management, are considered by Group management
who make recommendations to the Board. Climate related issues and policy are
included as significant factors for consideration in the decision making process,
both in the management recommendation and in the Board’s consideration of
the relevant issue.
On-going climate related issues are integrated into the Group’s business risk
management process and reporting thereof to the Board and Audit Committee.
The Group has regard to best practice in its area of operations, its health and
safety and environmental obligations and seeks to ensure high standards of
business conduct in its operations. It will review compliance with the TCFD
Recommendations on an ongoing basis, and report on its performance on a
yearly basis.
Management’s role in assessing
and managing climate-related
risks and opportunities
Responsibility for the application of this Policy rests with, but is not limited to,
all employees and contractors engaged in relevant activities under the Group’s
operational control. The Group’s managers are responsible for promoting and
ensuring compliance with this Policy and any related individual site-level policies
and practices.
At Bisichi’s South African operations, management have commenced
engagement with key stakeholders in order to ensure awareness of our
climate change policy as well as the potential impact of climate change on our
environment and operations. We continue our collaboration with our contractors
on GHG Emission Reporting and we are actively looking for opportunities to
partner with our stakeholders to drive the uptake of carbon neutral solutions.
For material strategic or financial decisions, the Group may consider procuring
expert advice from third party consultants on the impact in the short, medium
and long term of the decision, and ensure that such information is fully
considered as part of the evaluation of the relevant matter.
London & Associated Properties PLC 2022 15
STRATEGIC REPORT Corporate responsibility
TCFD AREA TCFD CONSIDERATION LONDON & ASSOCIATED PROPERTIES PLC & BISICHI PLC
Strategy Climate-related risks and
opportunities the Group has
identified over the short,
medium, and long run
Bisichi considers the current life of mine of its South African operations to fall
within a short to medium term horizon. Within this horizon, climate change
transition risks may impact their South African coal mining and processing
operations. Risks include:
• coal price and demand volatility;
• availability and cost of financing and third party services such as insurance;
• delays or restrictions to regulatory approvals;
• early retirement of our coal processing and mining operations; and
• Carbon pricing and taxes, that may create additional costs through the value chain.
The Group have assessed physical climate risk profiles produced by the World
Bank, particularly in relation to the South African operations. Bisichi considers
the physical risks of variations in climate over the current life of mine of the
South African operations to be mainly limited to an increased risk of seasonal
flooding that may impact the operating efficiency, costs and revenues of the
mining and processing operations.
In a longer term horizon, and in a scenario where the useful life of Bisichi’s South
African operations is extended, the above short to medium term transitional
risks are expected to continue to apply. In addition, in a scenario, such as the
International Energy Association’s (“IEA”) Pathway to Net Zero by 2050 (“NZE
2050”), where climate policies are effectively implemented that support a
transformation to net zero emissions by 2050 and limiting the rise of global
temperatures to 1.5°C by the end of the century, policies will lead to significant
coal demand decline over the longer term. This in turn will impact the carrying
value and long term viability of Bisichi’s South African coal operations as well as
the stakeholders and communities reliant on our operations. Extreme weather
events, over the long term in South Africa, such as floods, and droughts, as
well as changes in rainfall patterns, temperature, and storm frequency will also
affect the operating efficiency, costs and revenues of the mining and processing
operations, supply chains and impact the communities living close to the
operations.
Clean coal research and technology initiatives such as carbon capture may result
in opportunities to increase the useful life of Bisichi’s South African coal mining
and processing operations. In addition, the clean energy transition provides
opportunities for Bisichi to diversify its business activities and equity investment
portfolio into renewable and extractive industries that will benefit from and are
critical to the transition to a clean energy system.
The main sources of scope 1 & 2 Green House Gas (GHG) emissions for the
Group have been associated with the South African coal mining and processing
operations, namely due to fuel combustion and electricity usage. Improvements
in the cost competitiveness of lower emission sources of energy provide
opportunities to lower overall operating costs at our operations as well as
reduce overall GHG Emissions.
In the UK we have identified the following material physical and transitional risks
related to our UK property portfolio:
• Long term physical risk through changes in climate, flood risk and extreme
weather; and
• Short-term transition risk from emerging regulation related to energy
performance (“EPC”) and enhanced disclosures
16 London & Associated Properties PLC 2022
STRATEGIC REPORT Corporate responsibility
TCFD AREA TCFD CONSIDERATION LONDON & ASSOCIATED PROPERTIES PLC & BISICHI PLC
Strategy Impact of climate-related risks
and opportunities on businesses,
strategy, and financial planning
Bisichi’s management have incorporated and regularly review the following
strategies and procedures in relation to their South African coal operations:
• Review of the impact of climate change and the global transition to clean energy,
particularly in relation to the current life of mine of Bisichi’s coal operations;
• Regular research and analysis of the coal market demand outlook;
• Regular research and analysis on the outlook of the South African coal mining
industry and climate change regulation including mining regulation, energy
procurement and licensing, and carbon taxing;
• Regular communication with financial service providers and suppliers on any
future changes to availability and cost of services.
• Regular research and analysis on the progress of clean coal technology and
related regulatory initiatives; and
• Regular dialogue and seeking collaboration with governments and local
communities and other stakeholders on climate change-related challenges.
Bisichi have identified the need to mitigate GHG emission heavy sources of
electricity usage at our coal washing plant. Management are currently in the
process of evaluating opportunities to reduce these emissions taking into particular
consideration the financial viability and long term sustainability of the projects.
The below areas have been identified where GHG emissions can be further
reduced through:
• Minimising land clearance for new project facilities;
• Adoption of mitigation strategies for preserving integrity of environment;
• Minimising tree felling;
• The use of modern, energy and fuel efficient equipment;
• the inclusion of the impact of GHG emissions as an evaluation criteria in
the selection of mining contractors, suppliers and equipment. Particular
consideration will be given to the choice of vehicles used for the mine fleet,
employee transportation and the haulage fleet. Where possible energy and fuel
efficiency will be a factor in the selection of vehicles as this will not only reduce
GHG emissions but also reduce operating costs. In addition to the efficiency
of the fleet itself, opportunities will be sought for improving the use of the
vehicles.
• Scheduling of excavation and haulage activities to optimise activities and avoid
double handling, where this is operationally practical; and
• The upgrading of energy-intensive machinery over time will be used to improve
efficiency and reduce CO
2
emissions compared to machinery that has been removed.
Further energy efficiency opportunities will also be investigated.
Potential water scarcity has increased management focus on opportunities to
increase the usage efficiency of our existing water supply and water recycling
systems. The introduction of a closed loop filter press system for coal fines in
2019 and additional other work concluded or planned on our water recycling
systems at our coal processing facility will result in a lowering of our overall cost
of water and the environmental footprint of our operations. Increased risks of
flooding have been incorporated at planning stage in new opencast mining areas
that have been opened.
Transition and physical risks related to climate change are regularly discussed
at Bisichi’s Board level, particularly those related to the long term viability of
Bisichi’s South African coal operations and the future allocation of capital. Bisichi
regularly considers the need for coal as an energy source both globally and in
South Africa over the life of mine of our operations and in its long term planning.
Bisichi is committed to responsible stewardship of their legacy South African coal
assets taking into account the impact climate change related risks may have on all
our local stakeholders. Bisichi recognise the need to collaborate with government,
employees and communities, to ensure a just transition for our stakeholders
through the transition to a low carbon economy.
Bisichi regularly evaluates and continues to seek opportunities to diversify its
business activities and equity investment portfolio, particularly into renewable
and extractive industries that predominantly mine commodities identified by
the IEA as critical in the transition to a clean energy system. Any significant
developments will be reported to shareholders in due course.
The Board continue to monitor and regularly review adherence by the Group to
changes to UK EPC. The Group have incorporated the ongoing impact of EPC
regulatory standards into its decision making process.
London & Associated Properties PLC 2022 17
STRATEGIC REPORT Corporate responsibility
TCFD AREA TCFD CONSIDERATION LONDON & ASSOCIATED PROPERTIES PLC & BISICHI PLC
Strategy Resilience of strategy, taking
into consideration different
climate-related scenarios,
including a 2°C or lower
scenario.
Bisichi’s management have incorporated climate scenarios into their strategic
operational planning and review process. Bisichi have assessed the resilience of
our coal operations compared to the IEA’s NZE2050 Scenario, which sets out
what additional measures would be required over the next ten years to put the
world as a whole on track for net zero emissions by mid-century. The Scenario
indicates a significant coal demand decline over the longer term impacting the
potential commercial longevity of Bisichi’s South African operations. In addition
Bisichi have assessed physical climate risk profiles for their South African
operations obtained via the World Bank Group’s Climate Change Knowledge
Portal. The outcomes of scenario testing and physical climate profiling have
been incorporated into the long term strategic planning and decision making
processes of Bisichi.
Over the short to medium term, considering the potential impact of transitional
climate risks on Bisichi Group’s South African operations, the Group’s climate
strategy and policy is regularly scrutinised by Bisichi’s senior management and
Board in regard to any changes in coal demand outlook and climate regulatory
policy that may impact our operations over the current life of mine. A recent
example being the Just Energy Transition Investment Plan (“JET IP”) announced
by the South African Government for 2023-2027.
The Board encourages senior and local management to assess principal and
emerging climate-related risks on a regular basis. Risks identified are to be
reported to and discussed at Board level and incorporated into the strategy and
planning of the Group.
Risk
management
Processes for identifying and
assessing climate related risks.
The Group’s risk management processes are developed, implemented and
reviewed by the Board, who retain ultimate responsibility for them.
In addition to the Group’s management of its principal risks and uncertainties,
climate change impacts are mainly considered from two environmental
perspectives, the impact of our South African coal mining and processing
operations on the climate and the effect of global climate change on our
operations and stakeholders.
Heavy sources of GHG emissions have been identified from our annual
Greenhouse Gas emissions recording and reporting.
The Bisichi Board and Senior management remain in regular communication
with local regulatory bodies, climate research providers, coal market analysts,
suppliers, and services providers to ensure climate related risks and changes in
regulatory policy are identified and assessed on a regular basis. Bisichi’s senior
and local management in South Africa are encouraged by the Board to identify
local climate related risks and changes in regulatory policy that may impact our
South African coal operations.
Bisichi’s management continually engage with governments and local
communities and other stakeholders on climate change-related challenges
impacting the local area and the South African coal industry at large.
Processes for managing
climate-related risks.
The Board and Senior management co-ordinate the Group’s analysis and
planning of the effects of climate change on our business. The Board discuss
regularly the impact of any risks identified through the organisation, particularly
in relation to material matters that may impact the viability of the Group’s coal
operations. The Bisichi Board regularly review and analyse coal market and
outlook research, particularly in relation to targets set out in local climate policy
such as JET IP and global climate scenarios such as NZE 2050.
The mitigation of GHG emissions and identification of climate related risks has
been integrated into our corporate policy, project and procurement evaluation
criteria at Bisichi’s South African operations to ensure it is consistently applied
and managed.
The Group continuously monitors and reports key performance indications
relating to environmental matters, including the location of CO2 emissions, their
levels and intensity.
On an ongoing basis, the Group assesses the impact of carbon pricing, climate
regulation and taxation on going concern assumptions, the Group’s current and
future strategy and operations.
18 London & Associated Properties PLC 2022
STRATEGIC REPORT Corporate responsibility
TCFD AREA TCFD CONSIDERATION LONDON & ASSOCIATED PROPERTIES PLC & BISICHI PLC
Risk
management
Processes for identifying,
assessing, and managing
climate-related risks are
integrated into the overall risk
management.
New or evolving climate change risks identified by both senior and local
management are to be reported to and discussed at Board level and
incorporated into the strategy, planning and climate policy of the Group.
Where possible, plans to mitigate the effect of climate change on Bisichi’s
operations and local communities will be integrated into the mines regulatory
environmental management and social and labour plans.
Metrics and
targets
Metrics used by the Group to
assess climate related risks and
opportunities in line with its
strategy and risk management
process
A financial segmentation of the Group’s South African coal mining and
processing assets that are impacted by the climate related risks and
opportunities outlined above can be found in Bisichi’s 2022 Financial Statements
which are available on their website: www.bisichi.co.uk.
Bisichi recognises that its ability to reduce overall carbon emissions is
constrained at present by the main segment of it business activities, being
coal mining and processing in South Africa. Bisichi has, however, sought to
appropriately target its emission reduction strategy to the elements of its
operations where a meaningful reduction in greenhouse gas emissions can be
effected, and this will be reflected in the targets set by the Group in due course.
The Group measures and report our CO
2
emissions across the Group including
a breakdown of UK and South African operations. See below for disclosure of
emissions during the year.
Scope 1, Scope 2 and,
if appropriate, Scope 3
greenhouse gas (GHG)
emissions, and the related risks.
The Group is committed to measuring and reporting our scope 1 and 2
greenhouse gas emissions, see below for disclosure of emissions during the year.
Scope 3 emissions are not currently measured given the size and life of mine of
the Group’s South African coal operations and the uncertainty and impracticality
in accurately measuring such emissions throughout the value chain. The Group
will continue to assess the above approach as part of its continued review of
compliance with the TCFD Recommendations and taking into account any
material changes in future business activities.
Targets used by the Group
to manage climate-related
risks and opportunities and
performance against targets.
Over 99% of the Group’s GHG Emissions relate to Bisichi’s South African coal
operations which has a current life of mine of 7 years.
In the short term, the Group’s continues to evaluate areas where GHG emissions
can be further reduced, particularly scope 2 emissions related to the heavy
sources of electricity usage at Bisichi’s coal washing plant. Once the Group
has identified the scope of further potential reductions, their time, capital cost
and practicability of implementation, short term targets for the Group will be
reassessed.
Over the long term, as part of the Group’s business strategy, the Board
continues to evaluate opportunities to diversify its business activities. In turn,
targets related to GHG emissions will be re-evaluated in line with any future
changes in the Group’s planned operating activities.
London & Associated Properties PLC 2022 19
STRATEGIC REPORT Corporate responsibility
GREENHOUSE GAS REPORTING
As a quoted organisation incorporated in the UK, we have reported
on all emission sources required under the Companies (Directors’
Report) and Limited Liability Partnerships (Energy and Carbon
Report) Regulations 2018. for the period 1st January 2022 to 31st
December 2022.
The emissions are detailed in Tables 1, 2 and 3 below.
We have employed the Financial Control definition to outline our
carbon footprint boundary, reporting Scope 1 & 2 emissions only for
both landlord & tenant-controlled areas of LAP owned properties
and facilities.
During 2022 LAP had landlord-controlled areas in Kings Square,
Orchard Square, Brewery Street, Shipley and Little Portland Street.
Properties that LAP manage on behalf of others or are not wholly
owned by LAP are excluded from our footprint boundary. An
estimate of the emissions associated with the LAP offices on Little
Portland Street has been included in this year’s calculations.
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 main requirements of the ISO14064-11 standard
and HM Government Environmental Reporting Guidelines (2019)
including streamlined energy and carbon reporting guidance.
Emission factors were from the UK Government’s GHG Conversion
Factors for Company Reporting 2022.
As well as reporting Scope 1 and Scope 2 emissions, the regulations
require that at least one intensity ratio is reported for the given
reporting period. The intensity figure below shows emissions in
tCO2e per thousand pounds revenue.
1 ISO14064-1:2018 - Greenhouse gases - Part 1: Specification with guidance
at the organization level for quantification and reporting of greenhouse gas
emissions and removals
Table 1. Landlord & tenant controlled areas
EMISSIONS SOURCE tCO
2
e 2022 2021 CHANGE
Scope 1 emissions Natural gas 35 59 -40%
Refrigerants 0 0 n/a
Scope 2 emissions Electricity 1,265 1,443 -12%
Total tCO
2
e 1,300 1,502 -13%
Intensity ratio (tCO
2
e/£k) 0.240 0.289
Table 2. LAP controlled areas
EMISSIONS SOURCE tCO
2
e 2022 2021 CHANGE
Scope 1 emissions Natural gas 35 57 -39%
Refrigerants 0 0 n/a
Scope 2 emissions Electricity 39 115 -66%
Total tCO
2
e 74 172 -57%
2
Totals differ due to rounding
Table 3. Tenant controlled areas
EMISSIONS SOURCE tCO
2
e 2022 2021 CHANGE
Scope 1 emissions Natural gas 0 1 n/a
Refrigerants 0 0 n/a
Scope 2 emissions Electricity 1,226 1,329 -8%
Total tCO
2
e 1,226 1,331 -8%
20 London & Associated Properties PLC 2022
STRATEGIC REPORT Corporate responsibility
Table 4. Coal mining carbon footprint
2022
CO
2
E
TONNES
2021
CO
2
E
TONNES
Emissions source:
Emissions from the combustion of fuel or the operation of any facility including fugitive emissions from
refrigerants use
39,564 41,960
Emissions resulting from the purchase of electricity, heat, steam or cooling by the company for its own
use (location based)
12,267 12,040
Total gross emissions/tCO
2
e 51,831 54,000
Intensity:
Intensity 1 Tonnes of CO
2
per pound sterling of revenue 0.0005 0.0011
Intensity 2 Tonnes of CO
2
per pound of coal produced 0.0629 0.0516
kWh kWh
Energy consumption used to calculate above emissions 87,292,816 83,079,614
Of which UK 12,341 10,186
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 Group's locations.
South Africa
Under the terms of the mine’s Environmental Management
Programme approved by the Department of Mineral Resource and
Energy (“DMRE”), Black Wattle undertakes a host of environmental
protection activities to ensure that the approved Environmental
Management Plan is fully implemented. In addition to these routine
activities, Black Wattle regularly carries out environmental
monitoring activities on and around the mine, including evaluation
of ground water quality, air quality, noise and lighting levels, ground
vibrations, air blast monitoring, and assessment of visual impacts. In
addition to this Black Wattle also performs quarterly monitoring of
all boreholes around the mine to ensure that no contaminated water
filters through to the surrounding communities. Black Wattle is fully
compliant with the regulatory requirements of the Department of
Water Affairs and Forestry and has an approved water use licence.
Black Wattle Colliery has substantially improved its water
management by erecting and upgrading all its pollution control dams
in consultation with the Department of Water Affairs and Forestry.
A performance assessment audit was conducted to verify
compliance to our 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.
London & Associated Properties PLC 2022 21
STRATEGIC REPORT Corporate responsibility
EMPLOYMENT AND DIVERSITY
The Board of London & Associated Properties PLC at 31 December 2022 comprised of:
NUMBER OF
BOARD MEMBERS
PERCENTAGE OF
THE BOARD
NUMBER
OF SENIOR
POSITIONS ON
THE BOARD
NUMBER IN
EXECUTIVE
MANAGEMENT
PERCENTAGE
OF EXECUTIVE
MANAGEMENT
Men 6 100% 3 3 100%
Women 0 0% 0 0 0%
Not specified/prefer not to say 0 0% 0 0 0%
NUMBER OF
BOARD MEMBERS
PERCENTAGE OF
THE BOARD
NUMBER
OF SENIOR
POSITIONS ON
THE BOARD
NUMBER IN
EXECUTIVE
MANAGEMENT
PERCENTAGE
OF EXECUTIVE
MANAGEMENT
White British or other White
(including minority white groups)
6 100% 3 3 100%
Mixed/Multiple Ethnic Groups 0 0% 0 0 0%
Asian/Asian British 0 0% 0 0 0%
Black/African/Caribbean/Black British 0 0% 0 0 0%
Other ethnic group, including Arab 0 0% 0 0 0%
The above data has been collected through self-reporting by the
Board members. Questions asked include gender identity or sex and
ethnic background.
At 31 December 2022 the Company did not meet the target that at
least 40% of the individuals on its board of directors are women and
at least one of the senior positions on the Board is held by a
women. The Group is committed to improving upon its gender and
diversity targets at all employment levels within the Group through
a required build-up of sufficient talent pools, training up of
employees and targeted recruitment policies.
BISICHI PLC
In terms of directors, employees and gender representation, at the
year end the Group had 9 directors (8 male and 2 from a minority
ethnic or HDSA Background, 1 female from a minority ethnic or
HDSA Background), 6 senior managers (5 male and 2 from a
minority ethnic or HDSA Background, 1 female from a minority
ethnic or HDSA Background) and 228 employees (158 male and
134 from a minority ethnic or HDSA Background, 70 female and 66
from a minority ethnic or HDSA Background).
The Group’s South African operations are committed to achieving
the goals of the South African Employment Equity Act and is
pleased to report the following:
• Black Wattle Colliery has exceeded the 10 percent women in
management and core mining target.
• Black Wattle Colliery has achieved over 15 percent women in
core mining.
• 94 percent of the women at Black Wattle Colliery are HDSA
females.
Black Wattle Colliery has successfully submitted their annual
Employment Equity Report to the Department of Labour. In terms
of staff training some highlights for 2022 were:
• 1 employee was trained in ABET (Adult Basic Educational
Training) on various levels.
• An additional 8 disabled HDSA women continued their training
on ABET levels one to four.
• Four HDSA persons were enrolled for apprenticeships in 2022;
these are categorised as follows:
- One HDSA female employee was enrolled for her
apprenticeship.
- Two HDSA females and one HDSA male from the local
community were enrolled for their apprenticeships.
• Further to the above, we confirm that one HDSA Male completed
his bursary studies in 2022, while two HDSA females continued
their bursary studies in 2022.
• Two HDSA females were allocated new Bursaries for 2022.
22 London & Associated Properties PLC 2022
STRATEGIC REPORT Corporate responsibility
Highlights for 2022 for Sisonke Coal Processing:
• One employee was trained in ABET (Adult Basic Educational
Training) on various levels
Employment terms and conditions for the employees based at
Bisichi's UK office and at their South African mining operations are
regulated by and are operated in compliance with all relevant
prevailing national and local legislation. Employment terms and
conditions provided to mining staff meet or exceed the national
average. Bisichi's mining operations and coal washing plant facility
are labour intensive and unionised. During the year no labour
disputes, strikes or wage negotiations disrupted production or had a
significant impact on earnings. Bisichi's relations to date with labour
representatives and labour related unions continue to remain strong.
Detailed information relating to the Bisichi Strategic Report is
available in its 2022 financial statements.
Approved on behalf of the board of directors
Jonathan Mintz
Finance Director
27 April 2023
London & Associated Properties PLC 2022 23
GOVERNANCE
Directors & advisors
EXECUTIVE DIRECTORS
John A Heller LLB MBA
(Chief Executive)
Jonathan Mintz FCA
(Finance Director)
NON-EXECUTIVE DIRECTORS
Howard D Goldring BSC (ECON) ACA
†
Howard Goldring was, until 2020, Executive Chairman of Alberon
Holdings Limited which specialises in the discretionary management
of investment portfolios for pension funds, charities, family trusts
and private clients. He also acted as an advisor providing high level
asset allocation advice to family offices and pension schemes. He
has been a member of the LAP Board since July 1992, and has over
40 years’ experience of the real estate market. He was a director of
Baronsmead VCT 2 PLC from 2010-2016, and has specialised in
providing many companies with investor relations support.
Clive A Parritt FCA CF FIIA
#†
Clive Parritt joined the board on 1 January 2006. He is a chartered
accountant with over 40 years’ experience of providing strategic,
financial and commercial advice to businesses of all sizes. He is a
director of Brown Advisory US Smaller Companies plc and a
member of the Performance, Audit and Risk Committee of Arts
Council England. Until April 2016 he was Group Finance Director of
Audiotonix Limited (an international manufacturer of audio mixing
consoles). He has chaired and been a director of a number of other
public and private companies. Clive Parritt was President of the
Institute of Chartered Accountants in England and Wales in
2011-12. He is Chairman of the Audit Committee and as Senior
Independent Director he chairs the Nomination and 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
Brixton House Theatre.
Andrew R Heller MA, ACA
Andrew Heller joined the board on 29 March 2023. He is a qualified
Chartered Accountant, serves as Chairman & Managing Director of
Bisichi PLC and has nearly 30 years’ experience in the mining
industry.
† Member of the audit, remuneration and nomination committees
# Senior independent director
SECRETARY & REGISTERED OFFICE
Jonathan Mintz FCA
2nd Floor, 12 Little Portland Street,
London W1W 8BJ
AUDITOR
Kreston Reeves LLP
PRINCIPAL BANKERS
Phoenix CRE Sàrl
Santander UK plc
Metro Bank plc
QIB (UK) plc
SOLICITORS
Pinsent Masons LLP
Wake Smith Solicitors Limited
STOCKBROKER
Shore Capital Markets Limited
REGISTRARS & TRANSFER OFFICE
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
UK telephone: 0871 664 0300
International telephone: +44 371 664 0300
(Calls are charged at the standard geographic rate and will vary by
provider. Calls outside the United Kingdom will be charged at the
applicable international rate).
Lines are open between 8.00am to 5.30pm, Monday to Friday,
excluding public holidays in England and Wales.
Website: www.linkgroup.eu
Email: shareholderenquiries@linkgroup.co.uk
Company registration number
341829 (England and Wales)
WEBSITE
www.lap.co.uk
E-MAIL
admin@lap.co.uk
24 London & Associated Properties PLC 2022
GOVERNANCE
GOVERNANCE
Directors’ report
The Directors submit their report and the audited
financial statements for the year ended
31 December 2022.
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
Review and the Strategic Report. These reports can be found on
pages 2 to 22 and should be read in conjunction with this report.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were property
investment and development, as well as investment in joint ventures
and an associated company. The associated company is Bisichi PLC
(Bisichi) in which the Company holds a 41.6% 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
58.4% majority interest is disclosed as a “non-controlling interest”.
BUSINESS REVIEW AND POST BALANCE SHEET
EVENTS
Review of the Group’s development and performance
A review of the Group’s development and performance can be
found below and should be read in conjunction with the Strategic
Report on pages 5 to 22.
Details of any post balance sheet events are disclosed in Note 29 to
the financial statements.
FUTURE DEVELOPMENTS
The Group continues to look for new opportunities to acquire real
estate assets where it feels it can increase value by applying its intensive
management skills. At the same time, it seeks to reduce its interest
payments on its loans as they expire or where opportunities arise to
refinance on better terms. We also seek to improve our existing estate
through the continued pursuit of asset management initiatives.
PROPERTY ACTIVITIES
The Group is a long-term investor in property. It acquires properties,
actively manages those assets to improve rental income, and thus
seeks to enhance the value of its properties over time.
In reviewing performance, the principal areas regularly monitored by
the Group include:
• Rental income – the aim of the Group is to maximise the
maintainable income from each property by careful tenant
management supported by sympathetic and revenue enhancing
development. Income may be affected adversely by the inability
of tenants to pay their rent, but careful monitoring of rent
collection and tenant quality helps to mitigate this risk. Risk is also
minimised by a diversified tenant base, which should limit the
impact of the failure of any individual tenant.
• Developments – the Group develops customer-focused spaces
to generate returns and portfolio income growth above that
available from standing investments alone.
• Cash flow – allowing for voids, acquisitions, development
expenditure, disposals and the impact of operating costs and
interest charges, the Group aims to maintain a positive cash flow
over time.
• Financing costs – the exposure of the Group to interest rate
movements is managed partly by the use of swap and cap
arrangements, where appropriate (see Note 21 for full details of
the contracts in place) and also by using loans with fixed terms
and interest rates. These arrangements are designed to ensure
that our interest costs are known in advance and are always
covered by anticipated rental income.
• Property valuations – market sentiment and economic conditions
have a direct effect on property valuations, which can vary
significantly (upwards or downwards) over time. Bearing in mind
the long term nature of the Group’s business, valuation changes
have little direct effect on the ongoing activities or the income
and expenditure of the Group. Tenants generally have long term
leases, so rents are unaffected by short term valuation changes.
Borrowings are secured against property values and if those
values fall very significantly, this could limit the ability of the
Group to develop the business using external borrowings. The
risk is minimised by trying to ensure that there is adequate cover
to allow for fluctuations in value on a short term basis.
It continues to be the policy of the Group to realise property assets
when the valuation of those assets reaches a level at which the
directors consider that the long-term rental yield has been reached.
The Group also seeks to acquire additional property investments on
an opportunistic basis when the potential rental yields offer scope
for future growth.
INVESTMENT ACTIVITIES
The investments in joint ventures and Bisichi are for the long term.
LAP manages the UK property assets of Bisichi. However, the
principal activity of Bisichi is overseas mining investment (in South
Africa). While IFRS 10 requires the consolidation of Bisichi, the
investment is held to generate income and capital growth over the
longer term. It is managed independently of LAP and should be
viewed by shareholders as an investment and not a subsidiary. The
other listed investments are held as current assets to provide the
liquidity needed to support the property activities while generating
income and capital growth.
Investments in property are made through joint ventures when the
financing alternatives and spreading of risk make such an approach
desirable.
DIVIDEND
In the light of the current uncertain economic environment, the
directors are not recommending payment of a final dividend for
2022 (2021: Nil per share).
London & Associated Properties PLC 2022 25
GOVERNANCE Directors’ report
THE COMPANY’S ORDINARY SHARES HELD IN
TREASURY
At 31 December 2022, 216,715 (2021: 216,715) ordinary shares
were held in Treasury with a market value of £43,343 (2021:
£26,006).
Treasury shares held at 1 January 2022
and 31 December 2022
216,715
No shares (2021: 1,482 shares) were issued to employees in the
year in place of cash for dividends associated with shares held
within the share incentive plan.
Treasury shares are not included in issued share capital for the
purposes of calculating earnings per share or net assets per share
and they do not qualify for dividends payable.
INVESTMENT PROPERTIES
The freehold and long leasehold properties of the Company, its
subsidiaries, Dragon and Bisichi were revalued as at 31 December
2022 by independent professional firms of chartered surveyors
– Allsop LLP, London (70.6 per cent of the portfolio), Carter Towler,
Leeds (29.4 per cent). The valuations, which are reflected in the
financial statements, amount to £35.6 million (2021: £37.9 million).
Property of £22.9 million (2021: £25.7 million) is included under
current assets, with £22.9 million of inventory (2021: £25.2 million),
at the lower of cost or net realisable value and £nil as assets held for
sale (2021: £0.5 million).
Taking account of prevailing market conditions, the valuation of the
properties at 31 December 2022 resulted in a decrease of £0.1
million (2021: decrease of £0.1 million). The proportion of this
revaluation attributable to the Group (net of taxation) is reflected in
the consolidated income statement and the consolidated balance
sheet.
FINANCIAL INSTRUMENTS
Note 21 to the financial statements sets out the risks in respect of
financial instruments. The board reviews and agrees overall treasury
policies, delegating appropriate authority for applying these policies
to the Chief Executive and Finance Director. Financial instruments
are used to manage the financial risks facing the Group and
speculative transactions are prohibited. Treasury operations are
reported at each board meeting and are subject to weekly internal
reporting. Hedging arrangements are in place for the Company, its
subsidiaries and joint ventures in order to limit the effect of higher
interest rates upon the Group. Where appropriate, hedging
arrangements are covered in the Chairman and Chief Executive’s
Statement and the Financial Review.
DIRECTORS
Sir Michael Heller, J A Heller, J Mintz, H D Goldring, C A Parritt and
R Priest were Directors of the company for the whole of 2022.
Sir Michael Heller passed away on 30 January 2023.
A R Heller was appointed as a non-executive by the Board on 29
March 2023 and offers himself for re-election. Andrew Heller is the
Chairman and Managing Director of Bisichi PLC in which LAP holds
a 41.6% stake and has valuable mining expertise which will
strengthen the skill base of the Board. His knowledge and
experience will bring a vital perspective to an important investment
for the Group. The board has considered the appointment of
Andrew Heller and recommends his re-election as Director.
R Priest is retiring by rotation at the Annual General Meeting in
2023 and offers himself for re-election.
Robin Priest has been a Director since 2013. He is a senior advisor
to Alvarez & Marsal LLP (“A&M”) and to real estate data science
consulting firm Arca Blanca. He has more than 40 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 Brixton House Theatre.
The board has considered the appointment of Robin Priest and
recommends his re-election as Director. His knowledge of
structured finance and experience of dealing with challenging and
complex assets and portfolios is of significant benefit to the
business.
DIRECTORS’ INTERESTS
The interests of the Directors in the ordinary shares of the
Company, including family and trustee holdings, where appropriate,
can be found on page 31 in the Annual Remuneration Report.
Substantial shareholdings
31 DEC 2022 31 DEC 2021
NO. % NO. %
Sir Michael Heller
and family
48,080,880 56.35 48,080,511 56.35
Stonehage Fleming
Investment
Management Ltd
7,513,214 8.81 7,513,214 8.81
James Hyslop 5,136,258 6.20 5,286,258 6.20
Maland Pension Fund 2,885,000 3.38 3,500.000 4.10
The Company does not consider that the Heller family has a
controlling share interest irrespective of the number of shares held
as no individual party holds a majority and there is no legal
obligation for shareholders to act in concert. The Directors do not
consider that any single party has control.
The Company is not aware of any other holdings exceeding
3 per cent of the issued share capital.
SHARE CAPITAL AND TAKEOVER DIRECTIVE
The Company has one class of share capital, namely ordinary shares.
Each ordinary share carries one vote. All the ordinary shares rank
pari passu. There are no securities issued by the Company which
carry special rights with regard to control of the Company.
The identity of all significant direct or indirect holders of securities
in the Company and the size and nature of their holdings is shown
in “Substantial Shareholdings” above.
The rights of the ordinary shares to which the HMRC approved
Share Incentive Plan relates are exercisable by the trustees on
behalf of the employees.
There are no restrictions on voting rights or on the transfer of
ordinary shares in the Company, save in respect of treasury shares.
The rules governing the appointment and replacement of Directors,
alteration of the articles of association of the Company and the
powers of the Company’s Directors accord with usual English
company law provisions. Each Director is subject to re-election at
least every three years.
The Company is not party to any significant agreements that take
effect, alter or terminate upon a change of control of the Company
following a takeover bid. The Company is not aware of any
agreements between holders of its ordinary shares that may result
in restrictions on the transfer of its ordinary shares or on voting
rights.
There are no agreements between the Company and its Directors or
employees providing for compensation for loss of office or
employment that occurs because of a takeover bid.
26 London & Associated Properties PLC 2022
GOVERNANCE Directors' report
STATEMENT AS TO DISCLOSURE OF
INFORMATION TO THE AUDITOR
The Directors in office at the date of approval of the financial
statements have confirmed that, so far as they are aware, there is
no relevant audit information of which the auditor is unaware. Each
of the Directors has confirmed that they have taken all the steps
that they ought to have taken as a Director in order to make them
aware of any relevant audit information and to establish that it has
been communicated to the auditor.
INDEMNITIES AND INSURANCE
The Articles of Association of the company provide for it to indemnify,
to the extent permitted by law, directors and officers (excluding the
Auditor) of the company, including officers of subsidiaries and associated
companies, against liabilities arising from the conduct of the Group’s
business. The indemnities are qualifying third party indemnity provisions
of the Companies Act 2006 and each of these qualifying third party
indemnities was in force during the course of the financial year ended
31 December 2022 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 (2021: £Nil).
No donations for charitable purposes were made during the year
(2021: £Nil).
CORPORATE RESPONSIBILITY
Environment
The environmental considerations of the group’s South African coal
mining operations are covered in the Bisichi PLC Strategic Report.
The group’s UK activities are principally property investment
whereby premises are provided for rent to commercial businesses.
The group seeks to provide those tenants with good quality
premises from which they can operate in an efficient and
environmentally efficient manner and waste re-cycling arrangements
are in place at all the company’s locations.
Greenhouse gas emissions
Details of the group’s greenhouse gas emissions for the year ended
31 December 2022 can be found on pages 19 and 20 of the
Strategic Report.
Employment
The group’s policy is to attract staff and motivate employees by offering
competitive terms of employment. The group provides equal
opportunities to all employees and prospective employees including
those who are disabled. The Bisichi PLC Strategic Report gives details of
the Bisichi group’s activities and policies concerning the employment,
training, health and safety and community support and social
development concerning the Bisichi group’s employees in South Africa.
Section 172 statement
This is contained within the Strategic Report on page 9.
GOING CONCERN
The directors have reviewed the cash flow forecasts of the Group and
the underlying assumptions on which they are based. The Group’s
business activities, together with the factors likely to affect its future
development, are set out in the Chairman’s Statement and Chief
Executive’s Review and in the Financial and Performance Review. In
addition, note 21 to the financial statements sets out the Group’s
objectives, policies and processes for managing its capital; its financial
risk management objectives; details of its financial instruments and
hedging activities; and its exposure to credit risk and liquidity risk.
With secured banking facilities, sound financial resources, low void
rates and long term leases in place the Directors believe it remains
appropriate to adopt the going concern basis of accounting in
preparing the annual financial statements.
The Bisichi directors continue to adopt the going concern basis of
accounting in preparing the Bisichi annual financial statements.
CORPORATE GOVERNANCE
The Corporate governance report can be found on pages 27 and 28
of the annual report and accounts.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at Meeting Room 2, 12
Charles II Street, St James, London SW1Y 4QU on Wednesday 8 June
2023 at 10.30 a.m. Items 1 to 8 will be proposed as ordinary
resolutions. More than 50 per cent. of shareholders’ votes cast at the
meeting must be in favour for those ordinary resolutions to be passed.
The Directors consider that all of the resolutions to be put to the
meeting are in the best interests of the Company and its shareholders
as a whole and accordingly the board unanimously recommends that
shareholders vote in favour of all of the resolutions as the Directors
intend to do in respect of their own beneficial holdings of ordinary
shares. Please note that the following paragraphs are only summaries
of certain of the resolutions to be proposed at the Annual General
Meeting and do not represent the full text of the resolutions. You
should therefore read this section in conjunction with the full text of
the resolutions contained in the notice of Annual General Meeting
which accompanies this Directors’ Report.
ORDINARY RESOLUTIONS
Resolution 8 – Authority to allot securities
Paragraph 8.1.1 of Resolution 8 would give the Directors the authority
to allot shares in the Company and grant rights to subscribe for or
convert any security into shares in the Company up to an aggregate
nominal value of £2,841,200. This represents approximately 1/3 (one
third) of the ordinary share capital of the Company in issue (excluding
treasury shares) as at 26 April 2023 (being the last practicable date
prior to the publication of this Directors’ Report).
In line with guidance issued by the Institutional Voting Information
Service (IVIS), paragraph 8.1.2 of Resolution 8 would give the directors
the authority to allot shares in the Company and grant rights to
subscribe for or convert any security into shares in the Company up to
a further aggregate nominal value of £2,841,200, in connection with
an offer by way of a rights issue. This amount represents approximately
another 1/3 (one third) of the ordinary share capital of the Company in
issue (excluding treasury shares) as at 26 April 2023 (being the last
practicable date prior to the publication of this Directors’ Report).
The Directors’ authority will expire on the earlier of 31 August 2024
or the next AGM. The Directors do not currently intend to make use
of this authority. However, if they do exercise the authority, the
Directors intend to follow best practice as recommended by the IVIS
regarding its use (including as regards the Directors standing for
re-election in certain cases).
OTHER MATTERS
Kreston Reeves LLP has acted as auditor throughout the year and
has expressed its willingness to continue in office. A proposal will be
made at the Annual General Meeting for its reappointment.
By order of the board
Jonathan Mintz
Secretary
For and on behalf of London & Associated Properties PLC
2nd Floor, 12 Little Portland Street
London, W1W 8BJ
London & Associated Properties PLC 2022 27
GOVERNANCE
Corporate Governance
The Company has adopted the Corporate Governance
Code for Small and Mid-Size Quoted Companies
(the QCA Code) published by the Quoted Companies
Alliance. The QCA Code provides governance
guidance to small and mid-size quoted companies.
The paragraphs below set out how the Company
has applied this guidance during the year. The
Company has complied with the QCA Code
throughout the year.
PRINCIPLES OF CORPORATE GOVERNANCE
The board promotes good corporate governance in the areas of risk
management and accountability as a positive contribution to
business prosperity. The board endeavours to apply corporate
governance principles in a sensible and pragmatic fashion having
regard to the circumstances of the business. The key objective is to
enhance and protect shareholder value.
BOARD STRUCTURE
During the year the board comprised the Chairman, the Chief
Executive, one other executive Director and three non-executive
Directors. Their details appear on page 23. 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 40. 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 30 to 33.
• 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 39. The Chief Executive
and Finance Director are normally invited to attend.
BOARD AND BOARD COMMITTEE MEETINGS
HELD IN 2022
The number of regular meetings during the year and attendance
was as follows:
MEETINGS
HELD
MEETINGS
ATTENDED
Sir Michael Heller Board
Nomination committee
Remuneration committee
10
1
2
8
1
1
J A Heller* Board
Audit committee
10
2
10
2
J Mintz* Board
Audit committee
10
2
10
2
C A Parritt Board
Audit committee
Nomination committee
Remuneration committee
10
2
1
2
10
2
1
2
H D Goldring Board
Audit committee
Nomination committee
Remuneration committee
10
2
1
2
10
2
1
2
R Priest Board 10 10
*Attended audit committee by invitation.
PERFORMANCE EVALUATION – BOARD,
BOARD COMMITTEES AND DIRECTORS
The performance of the board as a whole, its committees and
the non-executive Directors is assessed by the Chairman and
the Chief Executive and is discussed with the senior independent
non-executive Director. Their recommendations are discussed at
the nomination committee prior to proposals for re-election being
recommended to the board. The performance of executive
Directors is discussed and assessed by the remuneration committee.
The senior independent Director meets regularly with the Chairman,
executive and non-executive Directors individually outside of formal
meetings. The Directors will take outside advice in reviewing
performance but have not found this to be necessary to date.
28 London & Associated Properties PLC 2022
GOVERNANCE Corporate Governance
NON-EXECUTIVE DIRECTORS
The senior independent non-executive Director is C A Parritt. The
other non-executive Directors are H D Goldring, R Priest and A R
Heller. 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 four non-executive Directors to act
independently and does not consider that length of service of any
individual non-executive Director, has resulted in the inability or
failure to act independently. In the opinion of the board C A Parritt,
H D Goldring and R Priest continue to fulfil their roles as
independent non-executive Directors. The background and skills of
all non-executive directors are set out on page 23.
The Directors are responsible for the Group’s system of internal
control and for reviewing its effectiveness at least annually, and for
the preparation and review of its financial statements. The board
has designed the Group’s system of internal control in order to
provide the Directors with reasonable assurance that assets are
safeguarded, that transactions are authorised and properly recorded
and that material errors and irregularities are either prevented or
would be detected within a timely period. However, no system of
internal control can eliminate the risk of failure to achieve business
objectives or provide absolute assurance against material
misstatement or loss. The key elements of the control system in
operation are:
• The board meets regularly on full notice with a formal schedule of
matters reserved for its decision and has put in place an
organisational structure with clearly defined lines of responsibility
and with appropriate delegation of authority;
• There are established procedures for planning, approval and
monitoring of capital expenditure and information systems for
monitoring the Group’s financial performance against approved
budgets and forecasts;
• The responsible executives are required regularly to undertake a
full assessment process to identify and quantify the risks that face
the functional activities for which they are responsible and assess
the adequacy of the prevention, monitoring and modification
practices in place for those risks. In addition, regular reports about
significant risks and associated control and monitoring procedures
are made to the executive Directors. The process adopted by the
Group accords with the guidance contained in the document
“Internal Control Guidance for Directors on the Combined Code”
issued by the Institute of Chartered Accountants in England and
Wales. The audit committee receives reports from external
auditors and from executive Directors of the Group. During the
period the audit committee has reviewed the effectiveness of the
system of internal control as described above. The board receives
periodic reports from all committees.
• There are established procedures for the presentation and review
of the financial statements and the Group has in place an
organisational structure with clearly defined lines of responsibility
and with appropriate delegation of authority.
There are no internal control issues to report in the annual report
and financial statements for the year ended 31 December 2022. Up
to the date of approval of this report and the financial statements,
the board has not been required to deal with any related material
internal control issues. The Directors confirm that the board has
reviewed the effectiveness of the system of internal control as
described during the period.
COMMUNICATION WITH SHAREHOLDERS
Prompt communication with shareholders is given high priority.
Extensive information about the Group and its activities is provided
in the Annual Report. In addition, a half-year report is produced for
each financial year and published on the Company’s website. The
Company’s website www.lap.co.uk is updated promptly with
announcements and Annual Reports upon publication. Copies from
previous years are also available on the website.
The share price history and market information can be found at
https://www.londonstockexchange.com/stock/LAS/london-
associated-properties-plc/company-page. The company code is LAS.
There is a regular dialogue with the Company’s stockbrokers and
institutional investors. Enquiries from individuals on matters relating
to their shareholdings and the business of the Group are dealt with
promptly and informatively.
The Company’s website is under continuous development to enable
better communication with both existing and potential new
shareholders.
THE BRIBERY ACT 2010
The Company is committed to acting ethically, fairly and with
integrity in all its endeavours and compliance with the Company’s
anti–bribery code is monitored closely.
London & Associated Properties PLC 2022 29
GOVERNANCE
Governance statement by the Chairman
of the remuneration committee
The remuneration committee is pleased to present
its report for the year ended 31 December 2022.
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 2023
The current remuneration policy, which details the remuneration
policy for directors, can be found at www.lap.co.uk. The current
remuneration policy was subject to a binding vote which was
approved by shareholders at the AGM in June 2020. The approval
will continue to apply for a 3-year period up to the AGM on
8 June 2023.
The second part details the Remuneration Policy for Directors. This
policy is subject to a binding vote which will be proposed to
shareholders at the AGM in 2023 and if approved will apply for a 3
year period commencing from the conclusion of the AGM. Both of
the reports have been prepared in accordance with The Large and
Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013.
The Company’s auditor, Kreston Reeves LLP is required by law to
audit certain disclosures and where disclosures have been audited
that is indicated in the independent auditor’s report.
C A Parritt
Chairman, Remuneration Committee
27 April 2023
30 London & Associated Properties PLC 2022
GOVERNANCE
Annual remuneration report
THE FOLLOWING INFORMATION HAS BEEN AUDITED
Single total figure of remuneration for the year ended 31 December 2022
SALARY
AND FEES
£’000
BONUSES
£’000
BENEFITS
£’000
LONG TERM
INCENTIVE
AWARDS
£’000
PENSIONS
£’000
TOTAL
2022
£’000
TOTAL FIXED
REMUNERA-
TION
£’000
TOTAL
VARIABLE
REMUNERA-
TION
£’000
Executive Directors
Sir Michael Heller* 7 - 74 - - 81 81 -
Sir Michael Heller - Bisichi 200 580 - - - 780 200 580
J A Heller 558 - 38 - 33 628 628 -
J Mintz 168 70 10 - 16 263 193 70
932 650 122 - 49 1,752 1,102 650
Non-executive Directors
H D Goldring*+ 18 - - - - 18 18 -
C A Parritt*+ 38 - - - - 38 38 -
R Priest* 35 - - - - 35 35 -
90 - - - - 90 90 -
Total 1,022 650 122 - 49 1,843 1,193 650
J A Heller has an entitlement to an employer pension contribution of £33,075 for 2022 (2021: £31,500). He has elected for this not to be
paid at this time.
Single total figure of remuneration for the year ended 31 December 2021
SALARY
AND FEES
£’000
BONUSES
£’000
BENEFITS
£’000
LONG TERM
INCENTIVES
AWARDS
£’000
PENSIONS
£’000
TOTAL
2021
£’000
TOTAL FIXED
REMUNERA-
TION
£’000
TOTAL VARI-
ABLE REMU-
NERATION
£’000
Executive Directors
Sir Michael Heller* 7 - 68 - - 75 75 -
Sir Michael Heller - Bisichi 83 - - - - 83 83 -
J A Heller 533 - 25 - 32 590 590 -
J Mintz 160 50 8 - 15 233 183 50
783 50 101 - 47 981 931 50
Non-executive Directors
H D Goldring+ 18 - 13 - - 31 31 -
C A Parritt*+ 37 - - - - 37 37 -
R Priest* 35 - - - - 35 35 -
90 - 13 - - 103 103 -
Total 873 50 114 - 47 1,084 1,034 50
* Note 25 “Related party transactions”
+ Members of the remuneration committee for years ended 31 December 2021 and 31 December 2022. C A Parritt was the chair of the remuneration committee
throughout both years.
Benefits include the provision of car, health and other insurance and
subscriptions.
Sir Michael Heller was a director of Bisichi PLC, (a subsidiary for
IFRS 10 purposes) and received a salary from that company of
£200,000 (2021: £82,500) for services. He received a bonus of
£580,000 in 2022 (2021: £Nil).
Although Sir Michael Heller received 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 had an interest. The board estimates that the annual
value of these services, if supplied to a third party, would have been
£300,000 (2021: £300,000). Further details of these services are
set out in Note 25 to the financial statements “Related party
transactions”.
J A Heller is a director of Dragon Retail Properties Limited, (a
subsidiary for IFRS 10 purposes) and received benefits from that
company of £10,404 (2021: £3,404) for services. This is included in
the remuneration figures disclosed above.
The remuneration figures for C A Parritt include fees paid to his
accountancy practice for consultancy services provided to the
Group. This is detailed in Note 25 to the financial statements.
R Priest provides consultancy services to the Group. This is detailed
in Note 25 to the financial statements.
London & Associated Properties PLC 2022 31
GOVERNANCE Annual remuneration report
Summary of directors’ terms
DATE OF
CONTRACT UNEXPIRED TERM NOTICE PERIOD
Executive Directors
John Heller 1 May 2003 Continuous 12 months
Jonathan Mintz 11 February 2019 Continuous 3 months
Non-executive Directors
H D Goldring 1 July 1992 Continuous 3 months
C A Parritt 1 January 2006 Continuous 3 months
R Priest 31 July 2013 Continuous 3 months
A R Heller 29 March 2023 Continuous 3 months
STATEMENT OF DIRECTORS’ SHAREHOLDINGS AND SHARE INTERESTS
Directors’ interests
The interests of the Directors in the ordinary shares of the Company, including family and trustee holdings, where appropriate, were as follows:
BENEFICIAL
INTERESTS
NON-BENEFICIAL
INTERESTS
31 DEC 22 1 JAN 22 31 DEC 21 1 JAN 21
Sir Michael Heller 5,749,341 5,749,341 19,277,931 19,277,931
J A Heller 1,872,410 1,872,410 †14,073,485 †14,073,485
J Mintz 100,000 100,000 - -
H D Goldring 19,819 19,819 - -
C A Parritt 36,168 36,168 - -
R Priest - - - -
† These non-beneficial holdings are duplicated with those of Sir Michael Heller.
TOTAL PENSION ENTITLEMENTS
Two directors had benefits under money purchase schemes. Under
his contract of employment, one Director was entitled to a regular
employer contribution (currently £15,750 a year). Under his contract
of employment, the other Director was entitled to a regular
employer contribution (currently £33,075 a year) but has elected to
defer the payment into his pension scheme. There are no final salary
schemes in operation. No pension costs are incurred on behalf of
non-executive Directors. There are no additional benefits payable to
any Director in the event of early retirement.
SHARE INCENTIVE PLAN (SIP)
In 2006 the Directors set up an HMRC approved share incentive
plan (SIP). The purpose of the plan, which is open to all eligible LAP
executive Directors and head office based staff, is to enable them to
acquire shares in the Company and give them a continuing stake in
the Group.
The SIP comprises four types of share – (1) free shares under which
the Company may award shares of up to the value of £3,000 each
year, (2) partnership shares, under which members may save up to
£1,500 per annum to acquire shares, (3) matching shares, through
which the Company may award up to two shares for each share
acquired as a partnership share, and (4) dividend shares, acquired
from dividends paid on shares within the SIP.
1. Free shares: No free shares were issued in 2021 or 2022.
2. Partnership shares: No partnership shares were issued in 2021 or
2022.
3. Matching shares: The partnership share agreements for the year
to 31 October 2022 provide for two matching shares to be
awarded free of charge for each partnership share acquired.
No partnership shares were acquired in 2022 (2021: 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 2022 amounted to
£nil (2021: £156). Of these J A Heller received no shares (2021:
369 shares). No other Directors received dividend shares.
The SIP is set up as an employee benefit trust. The trustee is
London & Associated Securities Limited, a wholly owned subsidiary
of LAP, and all shares and dividends acquired under the SIP will be
held by the trustee until transferred to members in accordance with
the rules of the SIP.
SHARE OPTION SCHEMES
The Company has an HMRC approved scheme (Approved Scheme).
It was set up in 1986 in accordance with HMRC rules to gain HMRC
approved status which gave the members certain tax advantages. There
are no performance criteria for the exercise of options under the
Approved Scheme, as this was set up before such requirements were
considered to be necessary. No Director has any options outstanding
under the Approved Scheme nor were any options granted under the
Approved Scheme for the year ended 31 December 2022.
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 2022
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 2022 (2021: none).
PAYMENTS FOR LOSS OF OFFICE
No payments for loss of office were made in the year ended 31
December 2022 (2021: none).
32 London & Associated Properties PLC 2022
GOVERNANCE Annual remuneration report
The beneficial holdings of Directors shown above include their interests in the Share Incentive Plan.
No share awards were made to the Directors in the year, and accordingly no discretion was exercised in determining any award or bonus
payment as a result of any share price appreciation.
There are no requirements or guidelines for any Director to own shares in the Company.
THE FOLLOWING INFORMATION IS UNAUDITED:
The graph illustrates the Company’s performance as compared with a broad equity market index over a five year period. Performance is
measured by total shareholder return. The directors have chosen the FTSE All Share – Total Return Index as a suitable index for this
comparison as it gives an indication of performance against a large spread of quoted companies.
The middle market price of London & Associated Properties PLC ordinary shares at 31 December 2022 was 20.0p (2021: 12.0p). During
the year the share middle market price ranged between 25.1p and 12.0p.
Total Shareholder Return
REMUNERATION OF THE CHIEF EXECUTIVE OVER THE LAST TEN YEARS
YEAR CEO
CHIEF EXECUTIVE SINGLE
TOTAL FIGURE OF
REMUNERATION
£’000
ANNUAL BONUS PAYMENT
AGAINST MAXIMUM
OPPORTUNITY*
%
LONG-TERM INCENTIVE
VESTING RATES
AGAINST MAXIMUM
OPPORTUNITY*
%
2022 J A Heller 628 0% n/a
2021 J A Heller 590 0% n/a
2020 J A Heller 418 0% n/a
2019 J A Heller 648 0% n/a
2018 J A Heller 870 20% n/a
2017 J A Heller 487 11% n/a
2016 J A Heller 569 18% n/a
2015 J A Heller 762 41% n/a
2014 J A Heller 835 49% n/a
2013 J A Heller 716 n/a n/a
*There were no formal criteria or conditions to apply in determining the amount of bonus payable or the number of shares to be issued prior to 2014.
In light of the prevailing economic situation at the time the Chief Executive did not draw £185,000 (35%) of his salary in 2020.
London & Associated Properties FTSE All Share Index
25.00
40.00
55.00
70.00
85.00
100.00
115.00
130.00
145.00
1/1/2018 1/1/2019 1/1/2020 1/1/2021 1/1/2022
London & Associated Properties PLC 2022 33
GOVERNANCE Annual remuneration report
PERCENTAGE CHANGE IN EXECUTIVE AND NON-EXECUTIVE DIRECTOR REMUNERATION (AUDITED)
The table below shows the percentage change in remuneration of the Directors undertaking the role of Chief Executive Officer, Finance
Director and Non-Executive Directors and the average of Company’s colleagues in London & Associated Properties PLC on a full-time
equivalent basis.
BASE SALARY %
CHANGE
BENEFITS %
CHANGE
BONUSES %
CHANGE
DIRECTOR 2022 2021 2022 2021 2022 2021
Executive:
Sir Michael Heller 0% 0% 9% 10% 0% 0%
J A Heller 5% 53% 52% -38% 0% 0%
J Mintz 5% 0% 25% 100% 40% N/A
Non-Executive:
H D Goldring 0% 0% -100% 18% 0% 0%
C A Parritt 0% 0% 0% 0% 0% 0%
R Priest 0% 0% 0% 0% 0% 0%
Colleague pay 5% -9% 7% 19% 15% 100%
RELATIVE IMPORTANCE OF SPEND ON PAY
The total expenditure of the Group on remuneration to all employees (Note 26 refers) is shown below:
2022
£’000
2021
£’000
Employee Remuneration 13,676 8,999
Distributions to shareholders 0 0
In addition, on 30 July 2020, there was a binding vote on the resolution to approve the Remuneration Policy. The results are detailed below
% OF VOTES
FOR
% OF VOTES
AGAINST
NUMBER OF
VOTES
WITHHELD
Resolution to approve the Remuneration Report (15 June 2022) 98.69 1.31 7,513,214
Resolution to approve the Remuneration Policy (30 July 2020) 80.73 19.27 27,265
STATEMENT OF IMPLEMENTATION OF
REMUNERATION POLICY
The policy was approved at the AGM in June 2020 and was
effective from 1 August 2020. The vote on the remuneration policy
is binding in nature. The Company may not then make a
remuneration payment or payment for loss of office to a person
who is, is to be, or has been a director of the Company unless that
payment is consistent with the approved remuneration policy, or
has otherwise been approved by a resolution of members. It is to
be presented for approval at the forthcoming AGM. During the year
there were no deviations from the procedure for the
implementation of the remuneration policy as set out in the policy.
CONSIDERATION BY THE DIRECTORS OF
MATTERS RELATING TO DIRECTORS’
REMUNERATION
The Remuneration Committee considered the executive Directors’
remuneration and the Board considered the non-executive
Directors’ remuneration in the year ended 31 December 2022. No
increases were awarded and no external advice was taken in
reaching this decision. The Company did not engage any consultants
to provide advice or services to materially assist the remuneration
committee’s considerations.
SHAREHOLDER VOTING
At the Annual General Meeting on 30 July 2020, there was an
advisory vote on the resolution to approve the Remuneration
Report, other than the part containing the remuneration policy.
34 London & Associated Properties PLC 2022
GOVERNANCE
Remuneration policy summary
The remuneration policy summary below is an extract
of the group’s current remuneration policy on directors’
remuneration (excluding Bisichi PLC), which was
approved by a binding vote at the 2020 AGM. The
approved policy took effect from 1 August 2020.
A copy of the full policy can be found at www.lap.co.uk.
POLICY TABLE
ELEMENT PURPOSE POLICY OPERATION OPPORTUNITY AND PERFORMANCE CONDITIONS
Executive directors
Base salary To recognise:
Skills
Responsibility
Accountability
Experience
Value
Considered by remuneration committee on appointment
Set at a level considered appropriate to attract, retain, motivate
and reward the right individuals
Reviewed annually whenever there is a change
of role or operational responsibility
Paid monthly in cash
There is no prescribed maximum salary or maximum rate of increase, although any
increase in excess of inflation is unlikely, unless there are changes in responsibility
No individual director will be awarded a base salary in excess of £575,000 a year
No specific performance conditions are attached to base salaries
Pension To provide competitive retirement benefits Company contribution offered at up to 10% of base salary as part
of overall remuneration package
The contribution payable by the Company is
included in the director’s contract of employment
Paid into money purchase schemes
Company contribution offered at up to 10% of base salary as part of overall
remuneration package
No specific performance conditions are attached to pension contributions
Benefits To provide a competitive benefits package Contractual benefits include:
Car or car allowance
Group health cover
Death in service cover
Permanent health insurance
The committee retains the discretion to approve
changes in contractual benefits in exceptional
circumstances or where factors outside the
control of the Group lead to increased costs
(e.g. medical inflation)
The costs associated with benefits offered are closely controlled and reviewed on an
annual basis
No director will receive benefits of a value in excess of 30% of their base salary
No specific performance conditions are attached to contractual benefits
Annual
bonus
To reward and incentivise In assessing the performance of the executive team, and in particular
to determine whether bonuses are merited the remuneration
committee takes into account the overall performance of the business,
as well as individual contribution to the business in the period
The remuneration committee is using its discretion
to determine the level of bonus on an annual basis
In assessing performance consideration is given
to the level of net rental income, cash flow, voids,
realised development gains and income from
managing joint ventures, as well as NAV changes.
Achieved results are then compared with
expectation taking account of market conditions
Bonuses are generally offered in cash or shares
The current maximum bonus will not exceed 80% of base salary in any one year
but the remuneration committee reserves the power to award up to 150% in an
exceptional year
Performance conditions will be assessed on an annual basis
The performance measures applied may be financial, non-financial, corporate,
divisional or individual and in such proportion as the remuneration committee
considers appropriate
Share
options
To provide executive directors with
a long-term interest in the company
Where it is necessary to attract, retain, motivate and reward the right
individuals, the directors may establish new schemes to replace any
expired schemes
Offered at appropriate times by the
remuneration committee
The aggregate number of shares over which options may be granted under all of the
company’s option schemes (including any options and awards granted under the
company’s employee share plans) in any period of ten years, will not exceed, at the
time of grant, 10% of the ordinary share capital of the company from time to time
Share options will be offered by the remuneration committee at their discretion and
will be subject to appropriate performance criteria at the time.
Share incentive
plan (SIP)
To offer a shorter term incentive in the
company and to give directors a stake in
the group
Offered to executive directors and head office staff
Maximum participation levels are set by HMRC Of any bonus awarded, Directors may opt to have maximum of £3,000 per year paid
in ‘Free Shares’ under the SIP scheme rules
Non-executive directors
Base salary To recognise:
Skills
Responsibility
Experience
Risk
Value
Considered by the board on appointment
Set at a level considered appropriate to attract, retain and motivate
the individual
Experience and time required for the role are considered on
appointment
Reviewed annually No individual non-executive director will be awarded a base salary in excess of
£40,000 a year
No performance conditions are attached to base salaries
Pension No pension offered
Benefits No benefits offered except in exchange for sacrificing fees.
Share options Non-executive directors do not participate in the share option schemes
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
London & Associated Properties PLC 2022 35
GOVERNANCE Remuneration policy summary
POLICY TABLE
ELEMENT PURPOSE POLICY OPERATION OPPORTUNITY AND PERFORMANCE CONDITIONS
Executive directors
Base salary To recognise:
Skills
Responsibility
Accountability
Experience
Value
Considered by remuneration committee on appointment
Set at a level considered appropriate to attract, retain, motivate
and reward the right individuals
Reviewed annually whenever there is a change
of role or operational responsibility
Paid monthly in cash
There is no prescribed maximum salary or maximum rate of increase, although any
increase in excess of inflation is unlikely, unless there are changes in responsibility
No individual director will be awarded a base salary in excess of £575,000 a year
No specific performance conditions are attached to base salaries
Pension To provide competitive retirement benefits Company contribution offered at up to 10% of base salary as part
of overall remuneration package
The contribution payable by the Company is
included in the director’s contract of employment
Paid into money purchase schemes
Company contribution offered at up to 10% of base salary as part of overall
remuneration package
No specific performance conditions are attached to pension contributions
Benefits To provide a competitive benefits package Contractual benefits include:
Car or car allowance
Group health cover
Death in service cover
Permanent health insurance
The committee retains the discretion to approve
changes in contractual benefits in exceptional
circumstances or where factors outside the
control of the Group lead to increased costs
(e.g. medical inflation)
The costs associated with benefits offered are closely controlled and reviewed on an
annual basis
No director will receive benefits of a value in excess of 30% of their base salary
No specific performance conditions are attached to contractual benefits
Annual
bonus
To reward and incentivise In assessing the performance of the executive team, and in particular
to determine whether bonuses are merited the remuneration
committee takes into account the overall performance of the business,
as well as individual contribution to the business in the period
The remuneration committee is using its discretion
to determine the level of bonus on an annual basis
In assessing performance consideration is given
to the level of net rental income, cash flow, voids,
realised development gains and income from
managing joint ventures, as well as NAV changes.
Achieved results are then compared with
expectation taking account of market conditions
Bonuses are generally offered in cash or shares
The current maximum bonus will not exceed 80% of base salary in any one year
but the remuneration committee reserves the power to award up to 150% in an
exceptional year
Performance conditions will be assessed on an annual basis
The performance measures applied may be financial, non-financial, corporate,
divisional or individual and in such proportion as the remuneration committee
considers appropriate
Share
options
To provide executive directors with
a long-term interest in the company
Where it is necessary to attract, retain, motivate and reward the right
individuals, the directors may establish new schemes to replace any
expired schemes
Offered at appropriate times by the
remuneration committee
The aggregate number of shares over which options may be granted under all of the
company’s option schemes (including any options and awards granted under the
company’s employee share plans) in any period of ten years, will not exceed, at the
time of grant, 10% of the ordinary share capital of the company from time to time
Share options will be offered by the remuneration committee at their discretion and
will be subject to appropriate performance criteria at the time.
Share incentive
plan (SIP)
To offer a shorter term incentive in the
company and to give directors a stake in
the group
Offered to executive directors and head office staff
Maximum participation levels are set by HMRC Of any bonus awarded, Directors may opt to have maximum of £3,000 per year paid
in ‘Free Shares’ under the SIP scheme rules
Non-executive directors
Base salary To recognise:
Skills
Responsibility
Experience
Risk
Value
Considered by the board on appointment
Set at a level considered appropriate to attract, retain and motivate
the individual
Experience and time required for the role are considered on
appointment
Reviewed annually No individual non-executive director will be awarded a base salary in excess of
£40,000 a year
No performance conditions are attached to base salaries
Pension No pension offered
Benefits No benefits offered except in exchange for sacrificing fees.
Share options Non-executive directors do not participate in the share option schemes
36 London & Associated Properties PLC 2022
GOVERNANCEGOVERNANCE
Remuneration policy
FUTURE POLICY TABLE
ELEMENT PURPOSE POLICY OPERATION OPPORTUNITY AND PERFORMANCE CONDITIONS
Executive directors
Base salary To recognise:
Skills
Responsibility
Accountability
Experience
Value
Considered by remuneration committee on appointment
Set at a level considered appropriate to attract, retain, motivate
and reward the right individuals
Reviewed annually whenever there is a change
of role or operational responsibility
Paid monthly in cash
There is no prescribed maximum salary or maximum rate of increase, although any
increase in excess of inflation is unlikely, unless there are changes in responsibility
No individual director will be awarded a base salary in excess of £675,000 a year
No specific performance conditions are attached to base salaries
Pension To provide competitive retirement benefits Company contribution offered at up to 10% of base salary as part
of overall remuneration package
The contribution payable by the Company is
included in the director’s contract of employment
Paid into money purchase schemes
Company contribution offered at up to 10% of base salary as part of overall
remuneration package
No specific performance conditions are attached to pension contributions
Benefits To provide a competitive benefits package Contractual benefits include:
Car or car allowance
Group health cover
Death in service cover
Permanent health insurance
The committee retains the discretion to approve
changes in contractual benefits in exceptional
circumstances or where factors outside the
control of the Group lead to increased costs
(e.g. medical inflation)
The costs associated with benefits offered are closely controlled and reviewed on an
annual basis
No director will receive benefits of a value in excess of 30% of their base salary
No specific performance conditions are attached to contractual benefits
Annual
bonus
To reward and incentivise In assessing the performance of the executive team, and in particular
to determine whether bonuses are merited the remuneration
committee takes into account the overall performance of the business,
as well as individual contribution to the business in the period
The remuneration committee is using its discretion
to determine the level of bonus on an annual basis
In assessing performance consideration is given
to the level of net rental income, cash flow, voids,
realised development gains and income from
managing joint ventures, as well as NAV changes.
Achieved results are then compared with
expectation taking account of market conditions
Bonuses are generally offered in cash or shares
The current maximum bonus will not exceed 80% of base salary in any one year
but the remuneration committee reserves the power to award up to 150% in an
exceptional year
Performance conditions will be assessed on an annual basis
The performance measures applied may be financial, non-financial, corporate,
divisional or individual and in such proportion as the remuneration committee
considers appropriate
Share
options
To provide executive directors with
a long-term interest in the company
Where it is necessary to attract, retain, motivate and reward the right
individuals, the directors may establish new schemes to replace any
expired schemes
Offered at appropriate times by the
remuneration committee
The aggregate number of shares over which options may be granted under all of the
company’s option schemes (including any options and awards granted under the
company’s employee share plans) in any period of ten years, will not exceed, at the
time of grant, 10% of the ordinary share capital of the company from time to time
Share options will be offered by the remuneration committee at their discretion and
will be subject to appropriate performance criteria at the time.
Share incentive
plan (SIP)
To offer a shorter term incentive in the
company and to give directors a stake in
the group
Offered to executive directors and head office staff
Maximum participation levels are set by HMRC Of any bonus awarded, Directors may opt to have maximum of £3,000 per year paid
in ‘Free Shares’ under the SIP scheme rules
Non-executive directors
Base salary To recognise:
Skills
Responsibility
Experience
Risk
Value
Considered by the board on appointment
Set at a level considered appropriate to attract, retain and motivate
the individual
Experience and time required for the role are considered on
appointment
Reviewed annually No individual non-executive director will be awarded a base salary in excess of
£50,000 a year
No performance conditions are attached to base salaries
Pension No pension offered
Benefits No benefits offered except in exchange for sacrificing fees.
Share options Non-executive directors do not participate in the share option schemes
Set out below is the LAP Group policy on directors’
remuneration (excluding Bisichi). This will be proposed
for a binding vote at the 2023 AGM. If approved the
policy will take effect from 8 June 2023.
Notes to the Remuneration Policy
There have been no significant changes made to the proposed future
remuneration policy from its predecessor other than rates which have
been amended after taking into account inflation.
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
London & Associated Properties PLC 2022 37
GOVERNANCE Remuneration policy
FUTURE POLICY TABLE
ELEMENT PURPOSE POLICY OPERATION OPPORTUNITY AND PERFORMANCE CONDITIONS
Executive directors
Base salary To recognise:
Skills
Responsibility
Accountability
Experience
Value
Considered by remuneration committee on appointment
Set at a level considered appropriate to attract, retain, motivate
and reward the right individuals
Reviewed annually whenever there is a change
of role or operational responsibility
Paid monthly in cash
There is no prescribed maximum salary or maximum rate of increase, although any
increase in excess of inflation is unlikely, unless there are changes in responsibility
No individual director will be awarded a base salary in excess of £675,000 a year
No specific performance conditions are attached to base salaries
Pension To provide competitive retirement benefits Company contribution offered at up to 10% of base salary as part
of overall remuneration package
The contribution payable by the Company is
included in the director’s contract of employment
Paid into money purchase schemes
Company contribution offered at up to 10% of base salary as part of overall
remuneration package
No specific performance conditions are attached to pension contributions
Benefits To provide a competitive benefits package Contractual benefits include:
Car or car allowance
Group health cover
Death in service cover
Permanent health insurance
The committee retains the discretion to approve
changes in contractual benefits in exceptional
circumstances or where factors outside the
control of the Group lead to increased costs
(e.g. medical inflation)
The costs associated with benefits offered are closely controlled and reviewed on an
annual basis
No director will receive benefits of a value in excess of 30% of their base salary
No specific performance conditions are attached to contractual benefits
Annual
bonus
To reward and incentivise In assessing the performance of the executive team, and in particular
to determine whether bonuses are merited the remuneration
committee takes into account the overall performance of the business,
as well as individual contribution to the business in the period
The remuneration committee is using its discretion
to determine the level of bonus on an annual basis
In assessing performance consideration is given
to the level of net rental income, cash flow, voids,
realised development gains and income from
managing joint ventures, as well as NAV changes.
Achieved results are then compared with
expectation taking account of market conditions
Bonuses are generally offered in cash or shares
The current maximum bonus will not exceed 80% of base salary in any one year
but the remuneration committee reserves the power to award up to 150% in an
exceptional year
Performance conditions will be assessed on an annual basis
The performance measures applied may be financial, non-financial, corporate,
divisional or individual and in such proportion as the remuneration committee
considers appropriate
Share
options
To provide executive directors with
a long-term interest in the company
Where it is necessary to attract, retain, motivate and reward the right
individuals, the directors may establish new schemes to replace any
expired schemes
Offered at appropriate times by the
remuneration committee
The aggregate number of shares over which options may be granted under all of the
company’s option schemes (including any options and awards granted under the
company’s employee share plans) in any period of ten years, will not exceed, at the
time of grant, 10% of the ordinary share capital of the company from time to time
Share options will be offered by the remuneration committee at their discretion and
will be subject to appropriate performance criteria at the time.
Share incentive
plan (SIP)
To offer a shorter term incentive in the
company and to give directors a stake in
the group
Offered to executive directors and head office staff
Maximum participation levels are set by HMRC Of any bonus awarded, Directors may opt to have maximum of £3,000 per year paid
in ‘Free Shares’ under the SIP scheme rules
Non-executive directors
Base salary To recognise:
Skills
Responsibility
Experience
Risk
Value
Considered by the board on appointment
Set at a level considered appropriate to attract, retain and motivate
the individual
Experience and time required for the role are considered on
appointment
Reviewed annually No individual non-executive director will be awarded a base salary in excess of
£50,000 a year
No performance conditions are attached to base salaries
Pension No pension offered
Benefits No benefits offered except in exchange for sacrificing fees.
Share options Non-executive directors do not participate in the share option schemes
• 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
In addition to the entitlements set out above, Bisichi PLC, which is
treated as a subsidiary of the Group under the Companies Act
2006, shall be entitled to pay, and any executive director of Bisichi
PLC who is also a director of the Company, shall be entitled to
retain, any remuneration permissible in accordance with Bisichi
PLC’s remuneration policy. Any such remuneration will be (i) to the
extent required, permitted by this remuneration policy and (ii)
excluded from the calculation of any limits on remuneration under
this remuneration policy.
The remuneration of non-executive directors is determined by the
board, and takes into account additional remuneration for services
outside the scope of the ordinary duties of non-executive directors.
For details of remuneration of other company employees please see
page 33.
38 London & Associated Properties PLC 2022
GOVERNANCE Remuneration policy
REMUNERATION SCENARIOS
An indication of the possible level of remuneration that would be
received by each Executive director in the year commencing 8 June
2023 in accordance with the directors’ remuneration policy is
shown below.
ASSUMPTIONS
Minimum
Consists of base salary, benefits and pension. Base salary, benefits
and pension for 2023 are assumed at the levels included in the
single total figure remuneration table for the year ended 31
December 2022.
On target
Based on the minimum, enhanced by a bonus calculated as the
average percentage bonus awarded to the individual in the three
years ended on 31 December 2022. As outlined in the policy table
above, the remuneration committee has discretion to award
bonuses of up to 80% of base salary in any one year (up to 150% in
an exceptional year).
Maximum
Based on the minimum, enhanced by the maximum bonus available
in an exceptional year (150% of base salary).
APPROACH TO NEW RECRUITMENT REMUNERATION
All appointments to the board are made on merit. The components
of the remuneration package (for a new director who is recruited
within the life of the approved remuneration policy) would comprise
base salary, pension, benefits and an opportunity to earn an annual
bonus and be granted share options as outlined above. The
approach to such appointments is detailed within the policy
summary above. The company will pay remuneration to new
directors at a level that will enable it to attract appropriately skilled
and experienced individuals but which is not, in the opinion of the
remuneration committee excessive.
SERVICE CONTRACTS
All executive directors have full-time contracts of employment with
the company. Non-executive directors have contracts of service. No
director has a contract of employment or contract of service with
the company, its joint venture or associated companies with a fixed
term which exceeds twelve months. Directors’ notice periods (see
the annual remuneration report) are set in line with market practice
and are of a length considered sufficient to ensure an effective
handover of duties should a director leave the company.
All directors’ contracts as amended from time to time, have run
from the date of appointment. Service contracts are kept at the
registered office.
POLICY ON PAYMENT FOR LOSS OF OFFICE
There are no contractual provisions that could impact on a
termination payment. Termination payments will be calculated in
accordance with the existing contract of employment or service
contract. It is the policy of the remuneration committee to issue
employment contracts to executive directors with normal
commercial terms and without extended terms of notice which
could give rise to extraordinary termination payments.
CONSIDERATION OF EMPLOYMENT CONDITIONS
ELSEWHERE IN THE COMPANY
In setting this policy for directors’ remuneration the remuneration
committee has been mindful of the company’s objective to reward
all employees fairly according to their role, performance and market
forces. In setting the policy for Directors’ remuneration the
committee has considered the pay and employment conditions of
the other employees within the group, but no formal consultation
has been undertaken with employees in drawing up the policy. The
committee has not used formal comparison measures.
APPLICABILITY OF THE REMUNERATION POLICY
The remuneration policy applies to all remuneration payable to
directors of the Company, whether by the Company or members of
its group. While it is a separately listed and independently run
business, Bisichi PLC is treated as part of the Group under the
Companies Act 2006. Therefore Directors who are appointed both
to the board of the Company and the board of Bisichi PLC are
subject to both the Company’s and Bisicihi PLC’s remuneration
policy. This remuneration policy has therefore been amended to
permit the payment by Bisichi PLC of remuneration in accordance
with its own remuneration policy.
CONSIDERATION OF SHAREHOLDER VIEWS
There have been no direct consultations with shareholders in
formulating this policy, but the Committee has taken note of
comments made at the 2022 AGM and the votes against the
Remuneration report. In accordance with the regulations, an
ordinary resolution for approval of this policy will be put to
shareholders at the AGM on 8 June 2023.
1,600
1,400
1,200
1,000
800
600
400
200
0
Minimum On target Maximum
100%
628 628
1,428
£'000
100% 44%
56%
Bonus
Salary, benefits and pension
John Heller
450
400
350
300
250
200
150
100
50
0
Minimum On target Maximum
100%
194
264
419
£'000
61%
39%
46%
54%
J Mintz
Bonus
Salary, benefits and pension
London & Associated Properties PLC 2022 39
GOVERNANCEGOVERNANCE
Audit committee report
The committee’s terms of reference have been
approved by the board and follow published
guidelines, which are available on request from the
company secretary.
The audit committee’s primary tasks are to:
• review the scope of external audit, to receive regular reports from
Kreston Reeves LLP and to review the half-yearly and annual
accounts before they are presented to the board, focusing in
particular on accounting policies and areas of management
judgement and estimation;
• monitor the controls which are in force to ensure the integrity
of the information reported to the shareholders;
• act as a forum for discussion of internal control issues and
contribute to the board’s review of the effectiveness of the
Group’s internal control and risk management systems and
processes;
• to review the risk assessments made by management, consider
key risks with action taken to mitigate these and to act as a forum
for discussion of risk issues and contribute to the board’s review
of the effectiveness of the Group’s risk management control and
processes;
• consider once a year the need for an internal audit function;
• advise the board on the appointment of the external auditors,
the rotation of the audit partner every five years and on their
remuneration for both audit and non-audit work; discuss the
nature and scope of their audit work and undertake a formal
assessment of their independence each year, which includes:
i) a review of non-audit services provided to the Group and
related fees;
ii) discussion with the auditors of their written report detailing
all relationships with the Company and any other parties that
could affect independence or the perception of
independence;
iii) a review of the auditors’ own procedures for ensuring the
independence of the audit firm and partners and staff
involved in the audit, including the regular rotation of the
audit partner; and
iv) obtaining a written confirmation from the auditors that, in
their professional judgement, they are independent.
MEETINGS
The committee meets at least twice a year prior to the publication
of the annual results and discusses and considers the half year
results prior to their approval by the board. The audit committee
meetings are attended by the external audit partner, chief executive,
finance director and company secretary. During the year the
members of the committee also meet on an informal basis to
discuss any relevant matters which may have arisen. Additional
formal meetings may be held as necessary.
During the past year the committee:
• met with the external auditors, and discussed their reports to
the audit committee;
• approved the publication of annual and half year financial results;
• considered and approved the annual review of internal controls;
• decided that there was no current need for an internal audit
function due to the scale of the business and processes in place;
• agreed the independence of the auditors and approved their fees
for both audit and non-audit services as set out in Note 2 to the
financial statements;
• the chairman of the audit committee has also had separate
meetings and discussions with the external audit partner; and
FINANCIAL REPORTING
As part of its role, the Audit Committee assessed the audit findings
that were considered most significant to the financial statements,
including those areas requiring significant judgement and/or
estimation. When assessing the identified financial reporting
matters, the committee assessed quantitative materiality primarily
by reference to the carrying value of the group’s total assets, given
that the group operates a principally asset based business. When
determining quantitative materiality, the Board also gave
consideration to the value of revenues generated by the group and
net asset value, given that they are key trading and business KPIs.
The qualitative aspects of any financial reporting matters identified
during the audit process were also considered when assessing their
materiality. Based on the considerations set out above we have
considered quantitative errors individually or in aggregate in excess
of approximately £1.611 million in relation to the Group and £0.548
million in relation to the parent company and £0.7 million for the
Bisichi group to be material.
EXTERNAL AUDITOR
Kreston Reeves LLP has held office throughout the period under
review. In the United Kingdom London & Associated Properties PLC
provides extensive administration and accounting services to Bisichi
PLC, which has its own audit committee and employs Kreston
Reeves LLP as its auditor.
C A Parritt
Chairman – Audit Committee
27 April 2023
40 London & Associated Properties PLC 2022
GOVERNANCE
Directors’ responsibilities statement
Directors are responsible for preparing the
Strategic Report and the Directors’ Report, the
Directors’ Remuneration Report and the financial
statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare group and company
financial statements for each financial year. The directors have
elected under company law to prepare group financial statements in
accordance with UK-adopted international accounting standards.
The directors have elected under company law to prepare the
company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law) including FRS 101
“Reduced Disclosure Framework”.
The group financial statements are required by law and international
accounting standards in conformity with the requirements of the
Companies Act 2006 and UK-adopted international financial
reporting standards to present fairly the financial position and
performance of the group; the Companies Act 2006 provides in
relation to such financial statements that references in the relevant
part of that Act to financial statements giving a true and fair view
are references to their achieving a fair presentation.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and the company and of the
profit or loss of the group for that period.
In preparing each of the group and company financial statements,
the directors are required to:
a. select suitable accounting policies and then apply them
consistently;
b. make judgements and accounting estimates that are reasonable
and prudent;
c. for the group financial statements, state whether applicable
UK-adopted international accounting standards have been
followed, subject to any material departures disclosed and
explained in the Financial Statements;
d. for the company financial statements, state whether applicable
UK accounting standards, comprising FRS101, have been
followed, subject to any material departures disclosed and
explained in the company financial statements;
e. prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and the
company will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the group’s and the
company’s transactions and disclose with reasonable accuracy at
any time the financial position of the group and the company and
enable them to ensure that the financial statements and the
Directors’ Remuneration Report comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the
group and the company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
DIRECTORS’ STATEMENT PURSUANT TO THE
DISCLOSURE GUIDANCE AND TRANSPARENCY
RULES
The Directors consider that the Annual Report and Accounts, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s and
Company’s position and performance, business model and strategy
Each of the directors, whose names and functions are listed on page
23 confirm that, to the best of each person’s knowledge:
a. the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of
the assets, liabilities, financial position and loss of the company
and the undertakings included in the consolidation taken as a
whole; and
b. the Strategic Report contained in the Annual Report includes a
fair review of the development and performance of the business
and the position of the company and the undertakings included in
the consolidation taken as a whole, together with a description of
the principal risks and uncertainties that they face.
The directors are responsible for the maintenance and integrity of
the corporate and financial information included on the London &
Associated Properties PLC website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
London & Associated Properties PLC 2022 41
GOVERNANCE
Independent auditor’s report
TO THE SHAREHOLDERS OF LONDON & ASSOCIATED PROPERTIES PLC
FOR THE YEAR ENDED 31 DECEMBER 2022
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 2022 which comprise the
consolidated income statement, consolidated
statement of comprehensive income, consolidated
and company balance sheets, consolidated and
company statements of changes in shareholders’
equity, consolidated cash flow statement and notes
to the financial statements, including a summary of
significant Group accounting policies. The financial
reporting framework that has been applied in their
preparation of the group financial statements is
applicable law and UK adopted international
accounting standards. The financial reporting
framework that has been applied in the preparation
of the parent company financial statements is
applicable law and United Kingdom Accounting
Standards, including FRS 101 Reduced Disclosure
Framework (United Kingdom Generally Accepted
Accounting Practice).
In our opinion:
• the financial statements give a true and fair view of the state of
the Group’s and of the parent company's affairs as at 31 December
2022 and of the Group’s profit for the year then ended;
• the group financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
• the parent company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
• the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards
on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of
our report. We are independent of the Group and the parent company
in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed public entities, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial statements.
In particular, we looked at subjective judgements made by the directors,
for example in respect of significant accounting estimates that involved
making assumptions and considering future events that are inherently
uncertain. As in all of our audits we also addressed the risk of
management override of internal controls, including evaluating
whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud.
COVERAGE OVERVIEW
GROUP
REVENUE
GROUP
PROFIT/
(LOSS)
BEFORE TAX
GROUP NET
ASSETS
Full statutory audit
(Kreston Reeves
and BDO)
99.9%
99.6%
99.4%
Limited procedures 0.1% 0.4% 0.6%
Totals at 31
December 2022:
100%
100%
100%
We tailored the scope of our audit to ensure that we performed
sufficient work to be able to give an opinion on the financial statements
as a whole, taking into account the structure of the Group and the
parent company, the accounting processes and controls, and the
industry in which they operate.
Our scoping considerations for the Group audit were based both
on financial information and risk. As noted above limited assurance
audit work – which is to say the audit of balances and transactions
material at a group level – was only applied in respect of a small
element of the group. The below table summarises for the parent
company and its subsidiaries, the level of assurance gained:
GROUP COMPONENT LEVEL OF ASSURANCE
London & Associated Properties PLC Full statutory audit (Kreston Reeves LLP)
Analytical Properties Limited Full statutory audit (Kreston Reeves LLP)
Orchard Square Limited Full statutory audit (Kreston Reeves LLP)
Dragon Retail Limited Full statutory audit (Kreston Reeves LLP)
West Ealing Projects Limited Full statutory audit (Kreston Reeves LLP)
Bisichi PLC Full statutory audit (Kreston Reeves LLP)
Mineral Products Limited Full statutory audit (Kreston Reeves LLP)
Bisichi (Properties) Limited Full statutory audit (Kreston Reeves LLP)
Bisichi Northampton Limited Full statutory audit (Kreston Reeves LLP)
Bisichi Mining (Exploration) Limited Full statutory audit (Kreston Reeves LLP)
Black Wattle Colliery (Pty) Limited Full statutory audit (BDO South Africa
Incorporated)
Sisonke Coal Processing (Pty) Limited Full statutory audit (BDO South Africa
Incorporated)
Black Wattle Klipfontein (Pty) Limited Full statutory audit (BDO South Africa
Incorporated)
Bisichi Coal Mining (Pty) Limited Full statutory audit (BDO South Africa
Incorporated)
All other group undertakings Limited assurance
42 London & Associated Properties PLC 2022
REVENUE RECOGNITION:
Significance and nature of key risk How our audit addressed the key risk
Revenue is a key performance indicator for users in assessing
the group’s financial statements. Revenue generated has a
significant impact on cash inflows and profit before tax for the
group. As such revenue is a key determinant in profitability and
the group’s ability to generate cash.
Revenue comprises two key revenue streams: the property
rental income and sale of coal.
Rental income is recognised in the Group income statement on
a straight-line basis over the term of the lease.
Coal revenue is recognised when the customer has a legally
binding obligation to settle under the terms of the contract.
Rental income revenue was recalculated based on the terms included
in signed lease agreements. The recognition stages detailed in the
relevant standards were carefully considered to ensure revenue
recognised was in line with these and a substantive approach was
taken.
Sales of coal and coal processing services in the period were tested
from the trigger point of the sale to the point of recognition in the
financial statements, corroborating this to contract sales or service
terms and the recognition stages detailed in IFRS 15.
Revenue streams were further analytically reviewed via comparison to
our expectations. Expectations were based on a combination of prior
financial data, budgets and our own assessments based on industry
competitors.
Cut-off of revenue was reviewed for sales of coal by analysing sales
recorded during the period before and after the financial year end and
determining if the recognition applied was appropriate, whilst rental
income cut-off has been reviewed by generating a proof in total of the
income from the tenancy agreements and comparing to the income per
the nominal ledger.
Walkthrough testing was performed to ensure that key systems and
controls in place around the revenue cycle operated as designed.
The accuracy of revenue disclosures in the accounts were confirmed
to be consistent with the revenue cycle observed and audited. The
completeness of these disclosures was confirmed by reference to the
full disclosure requirements as detailed in IFRS 15.
KEY OBSERVATIONS COMMUNICATED TO THE AUDIT COMMITTEE
We have no concerns over the material accuracy of revenue recognised in the financial statements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest
effect on the overall audit strategy, the allocation of resources in
the audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. This is not a
complete list of all risks identified by our audit.
London & Associated Properties PLC 2022 43
GOVERNANCE Independent auditor’s report
VALUATION/IMPAIRMENT OF INVESTMENT PROPERTIES AND INVENTORY:
Significance and nature of key risk How our audit addressed the key risk
Investment properties comprise freehold and long leasehold
land and buildings, whilst properties classified as inventory are
properties which are currently being developed.
Investment properties are carried at fair value in accordance
with IAS 40 and are revalued annually by professional external
surveyors and included in the balance sheet at their fair value.
Gains or losses arising from changes in the fair values of
assets are recognised in the consolidated income statement
in the period to which they relate. In accordance with IAS 40,
investment properties are not depreciated.
The fair value of the head leases is the net present value of the
current head rent payable on leasehold properties until the
expiry of the lease.
Appropriate classification of each property was considered, IAS 40
for investment properties, IAS 2 for inventory and IFRS 5 for non-
current assets held for sale, to ensure each property has been classified
correctly and therefore accounted for and disclosed within these
financial statements in accordance with the relevant standard.
External valuation reports were obtained and vouched to stated fair
values. The competence and independence of the valuation experts
was carefully considered to ensure that the reports they produce can
be relied upon.
A meeting was held with the valuers to challenge the assumptions
in their report and discuss the movements in the values of specific
properties.
Supporting calculations for the long leasehold land and buildings were
reviewed to ensure they are materiality accurate, and any assumptions
are considered to be reasonable.
KEY OBSERVATIONS COMMUNICATED TO THE AUDIT COMMITTEE
We have no concerns over the material accuracy of investment properties and inventory values recognised in the financial statements.
VALUATION/IMPAIRMENT OF MINING RESERVES:
Significance and nature of key risk How our audit addressed the key risk
The valuation of the mine is material to the financial statements
and is considered to be a key accounting estimate.
The purpose of mine development is to establish secure working
conditions and infrastructure to allow the safe and efficient
extraction of recoverable reserves.
Depreciation on mine development costs is not charged
until production commences or the assets are put to use. On
commencement of full commercial production, depreciation is
charged over the life of the associated mine reserves extractable
using the asset on a unit of production basis.
The unit of production calculation is based on tonnes mined as
a ratio to proven and probable reserves and also includes future
forecast capital expenditure. The cost recognised includes the
recognition of any decommissioning assets related to mine
development.
The accounting requirements of IFRS 6 and IAS 16 were
considered to ensure capitalisation of costs to mine development
under IAS 16 was appropriate.
In considering impairment indicators, as governed by IAS 36, the
life of mine assessment was obtained. All significant input variables
were considered and stress-tested to assess headroom between
modelling and the value of mine development.
Consideration was given to the competence and independence
of the technical expert involved with the production of historic
technical reports on which the life of mine assessment is partially
built.
Depreciation of mine development was recalculated based on
the unit of production basis to ensure accurately recorded. This
basis was also considered for reasonableness by reference to the
accounting policies of industry peers.
The accuracy and appropriateness of mine development disclosures
in the accounts were confirmed to be consistent with the mine
development accounting cycle observed and audited.
KEY OBSERVATIONS COMMUNICATED TO THE AUDIT COMMITTEE
We have no concerns over the material accuracy of mining reserves and development values recognised in the financial statements.
44 London & Associated Properties PLC 2022
GOVERNANCE Independent auditor’s report
OUR APPLICATION OF MATERIALITY
GROUP FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS
Materiality £1,611,000 £548,000
Basis for determining materiality 3% of net assets 3% of net assets
Rationale for benchmark applied The group's principal activity is that
of investment, management and
development of industrial and retail
property and exploration and mining
operation. To this end, the business
is highly asset focused. Therefore, a
benchmark for materiality of the net
assets of the group is considered to be
appropriate.
The parent company’s principal activity
is that of investment, management and
development of industrial and retail
property . To this end, the business
is highly asset focused. Therefore, a
benchmark for materiality of the net
assets of the group is considered to be
appropriate.
Performance materiality £1,128,000 £383,000
Basis for determining performance
materiality
70% of materiality 70% of materiality
Rationale for performance materiality
applied
On the basis of our risk assessments,
together with our assessment of the
Group’s overall control environment,
our judgement was that performance
materiality was 70% of our planning
materiality. In assessing the appropriate
level, we consider the nature of the group
and our previous experience of auditing
the Group.
On the basis of our risk assessments,
together with our assessment of the
Company’s overall control environment,
our judgement was that performance
materiality was 70% of our planning
materiality. In assessing the appropriate
level, we consider the nature of the group
and our previous experience of auditing
the Company.
Triviality threshold £81,000 £27,000
Basis for determining triviality threshold 5% of materiality 5% of materiality
We reported all audit differences found in excess of our triviality
threshold to the directors and the Audit Committee.
For each Group company within the scope of our Group audit, we
allocated a materiality that is less than our overall Group materiality.
The range of materiality allocated across each Group company was
between £11,000 and £735,000. The scope of our audit was
influenced by our application of materiality as we set certain
quantitative thresholds for performance materiality and use these
thresholds to help to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the
effect of misstatements, both individually and in aggregate on the
financial statements as a whole.
We determined component materiality for the parent company to
be capped at below group materiality. This was also the case for
group subsidiaries registered outside of the UK. For the subsidiaries,
3% of that subsidiary’s gross assets was used. Gross assets have
been used to calculate materiality for the subsidiaries as this is
considered to be more appropriate in the circumstances.
Performance materiality was calculated at 70% of component
materiality. For the subsidiaries, their materiality and performance
materiality were capped by group materiality and group
performance materiality where appropriate.
London & Associated Properties PLC 2022 45
GOVERNANCE Independent auditor’s report
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the
Directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the Directors’ assessment of the Group and parent
company’s ability to continue to adopt the going concern basis of
accounting including the following:
• Gaining an understanding of the systems and controls around
managements’ going concern assessment, including for the
preparation and review process for forecasts and budgets.
• Evidence was obtained that management have undertaken a
formal going concern assessment, including sensitivity analysis on
cash flow forecasts, clear consideration of external factors
including the increase in interest rates and the potential liquidity
impact of these on cash balances including available facilities.
• We have evaluated the financial strength of the business at the
year end date.
• We tested the mechanical integrity of forecast model by checking
the accuracy and completeness of the model, including
challenging the appropriateness of estimates and assumptions
with reference to empirical data and external evidence.
• Based on our above assessment we performed our own
sensitivity analysis in respect of the key assumptions
underpinning the forecasts.
• We considered post year end performance of the business and
any significant events which may impact the going concern of the
group.
• The group's banking facility documentation was reviewed to
ensure that any covenants in place have not been breached.
• We reviewed the adequacy and completeness of the disclosure
included within the financial statements in respect of going
concern.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the group’s
or the parent company’s ability to continue as a going concern for a
period of at least twelve months from when the financial statements
are authorised for issue.
In relation to the Group and Parent Company’s reporting on how
they have applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the
directors’ statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern basis
of accounting.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections of
this report.
OTHER INFORMATION
The other information comprises the information included in the
annual report other than the financial statements and our auditor’s
report thereon. The directors are responsible for the other
information contained within the annual report. Our opinion on the
financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements, or our knowledge obtained in the
course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If,
based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
OUR OPINION ON THE REMUNERATION
REPORT
We have audited the Annual remuneration report set out on pages
30 to 33 of the Annual Report for the year ended 31 December
2022. The directors of the Company are responsible for the
preparation and presentation of the Remuneration Report in
accordance with the Companies Act 2006. Our responsibility is to
express an opinion on the Remuneration Report, based on our audit
conducted in accordance with International Accounting Standards.
In our opinion, the Remuneration Report of the Group for the year,
complies with the requirements of the Companies Act 2006.
OPINIONS ON OTHER MATTERS PRESCRIBED
BY THE COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’
report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared
in accordance with applicable legal requirements.
MATTERS ON WHICH WE ARE REQUIRED TO
REPORT BY EXCEPTION
In the light of our knowledge and understanding of the Group and
parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic
report or the directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
• adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the parent company financial statements are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are
not made; or
• we have not received all the information and explanations we
require for our audit.
46 London & Associated Properties PLC 2022
GOVERNANCE Independent auditor’s report
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the directors’ statement in
relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Group’s and Parent
Company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified set out on page 26;
• Directors’ explanation as to its assessment of the group’s
prospects, the period this assessment covers and why the period
is appropriate set out on page 9;
• Directors’ statement on whether it has a reasonable expectation
that the group will be able to continue in operation and meets its
liabilities set out on page 9;
• Directors’ statement on fair, balanced and understandable set out
on page 40;
• Board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on pages 10 to 11;
• Section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems set
out on page 28; and
• Section describing the work of the Audit Committee set out on
page 39.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement
(set out on page 40), the directors are responsible for the
preparation of the financial statements and for being satisfied that
they give a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are responsible
for assessing the Group’s and parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or parent company or
to cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT
OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the
basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud is detailed below:
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the group and industry, and through
discussion with the directors and other management (as required by
auditing standards), we identified that the principal risks of non-
compliance with laws and regulations related to health and safety,
anti-bribery and employment law. We considered the extent to
which non-compliance might have a material effect on the financial
statements. We also considered those laws and regulations that
have a direct impact on the preparation of the financial statements
such as the Companies Act 2006, IFRS, FRS 101, taxation
legislation and mining laws and regulations. We communicated
identified laws and regulations throughout our team and remained
alert to any indications of non-compliance throughout the audit. We
evaluated management’s incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of
override of controls) and determined that the principal risks were
related to posting inappropriate journal entries to increase revenue
or reduce expenditure, management bias in accounting estimates
and judgemental areas of the financial statements including the
valuation of investment properties and the impairment review of the
mining reserves. Audit procedures performed by the group
engagement team and component auditors included:
• We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Group and determined that
the most significant are those that relate to the reporting
framework and the relevant tax compliance regulations in the
jurisdictions in which London & Associated Properties PLC
operates. In addition, we concluded that there are certain
significant laws and regulations that may have an effect on the
determination of the amounts and disclosures in the financial
statements, mainly relating to health and safety, employee matters,
bribery and corruption practices, environmental and certain
aspects of company legislation recognising the regulated nature of
the Group’s mining and oil and gas activities and its legal form.
• Identifying and assessing the design effectiveness of controls that
management has in place to prevent and detect fraud; and
• Detailed discussions were held with management to identify any
known or suspected instances of non- compliance with laws and
regulations; and
• Challenging assumptions and judgements made by management
in its significant accounting estimates. These include reviewing
the valuation reports from third party experts for the investment
properties and discussing and challenging the assumptions used
by the expert. For the impairment review of the mines, we have
undertaken a sensitivity analysis on the life of the mine model and
challenged the assumptions made by management; and
• Confirmation of related parties with management, and review of
transactions throughout the period to identify any previously
undisclosed transactions with related parties outside the normal
course of business; and
• Performing integrity testing to verify the legitimacy of banking
records obtained from management; and
• Reading minutes of meetings of those charged with governance; and
• Performing analytical procedures with automated data analytics
tools to identify any unusual or unexpected relationships,
including related party transactions, that may indicate risks of
material misstatement due to fraud.
London & Associated Properties PLC 2022 47
GOVERNANCE Independent auditor’s report
Because of the inherent limitations of an audit, there is a risk that
we will not detect all irregularities, including those leading to a
material misstatement in the financial statements or non-compliance
with regulation. This risk increases the more that compliance with a
law or regulation is removed from the events and transactions
reflected in the financial statements, as we will be less likely to
become aware of instances of non-compliance.
As part of an audit in accordance with ISAs (UK), we exercise
professional judgment and maintain professional scepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures
made by the directors.
• Conclude on the appropriateness of the directors’ use of the
going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the
Group’s or the parent company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group or the
parent company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities within
the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and
performance of the Group audit. We remain solely responsible for
our audit opinion.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
OTHER MATTERS WHICH WE ARE REQUIRED
TO ADDRESS
We were appointed by the audit committee on 19 November 2021
to audit the financial statements for the year ending 31 December
2021. Our total uninterrupted period of engagement is two years,
covering the year ended 31 December 2022.
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 report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company’s members as a body, for
our audit work, for this report, or for the opinions we have formed.
Stephen Tanner BSc(Econ) FCA (Senior Statutory Auditor)
For and on behalf of
Kreston Reeves LLP
Chartered Accountants
Statutory Auditor
London
27 April 2023
48 London & Associated Properties PLC 2022
NOTES
2022
£’000
2021
£’000
Group revenue 1 100,243 56,477
Operating costs 1 (64,730 ) (53,457 )
Operating profit 35,513 3,020
Finance income 4 199 34
Finance expenses 4 (3,218 ) (2,543 )
Result before revaluation and other movements 32,494 511
Non–cash changes in valuation of assets and liabilities and other movements
Exchange losses (270 ) (121 )
Decrease in value of investment properties 8 (115 ) (111 )
(Loss)/profit on disposal of investment properties (83 ) 436
Profit/(loss) on disposal of fixed assets 36 (133 )
Increase in value of trading investments 1,036 812
Adjustment to interest rate derivative 21 70 130
Profit for the year before taxation 2 33,168 1,524
Income tax charge 5 (12,002 ) (698 )
Profit for the year 21,166 826
Attributable to:
Equity holders of the Company 2,704 (152 )
Non-controlling interest 24 18,462 978
Profit for the year 21,166 826
Earnings per share
Profit/(loss) per equity share - basic and diluted 7 3.17 0.18
Consolidated statement of comprehensive
income
for the year ended 31 December 2022
2022
£’000
2021
£’000
Profit for the year 21,166 826
Other comprehensive expense:
Items that may be subsequently recycled to the income statement:
Exchange differences on translation of Bisichi PLC foreign operations (43 ) (63 )
Other comprehensive expense for the year net of tax (43 ) (63 )
Total comprehensive income for the year net of tax 21,123 763
Attributable to:
Equity shareholders 2,696 (177 )
Non–controlling interest 18,427 940
Total comprehensive income for the year net of tax 21,123 763
FINANCIAL
STATEMENTS
Consolidated income statement
for the year ended 31 December 2022
financial state-
ments
London & Associated Properties PLC 2022 49
FINANCIAL STATEMENTS
Consolidated balance sheet
at 31 December 2022
NOTES
2022
£’000
2021
£’000
Non–current assets
Market value of properties attributable to Group 8 35,610 37,945
Present value of head leases 8 1,552 3,221
Property 37,162 41,166
Mining reserves, property, plant and equipment 9 16,928 9,917
Other investments at fair value through profit and loss ("FVPL") 14 12,590 3,631
Current assets
Inventories - Property 12 22,862 25,213
Inventories - Mining 13 5,199 1,253
Assets held for sale 10 – 504
Trade and other receivables 15 7,915 9,917
Corporation tax recoverable – 19
Investments in listed securities held at FVPL 16 886 685
Cash and cash equivalents 15,382 8,518
Total assets 118,924 100,823
Current liabilities
Trade and other payables 17 (17,058 ) (15,197 )
Borrowings 18 (22,061 ) (31,405 )
Lease liabilities 19 (414 ) (513 )
Interest rate derivatives – (70 )
Current tax liabilities (4,256 ) (726 )
(43,789 ) (47,911 )
Non–current liabilities
Borrowings 18 (17,113 ) (7,259 )
Lease liabilities 19 (1,839 ) (3,734 )
Provisions 20 (1,716 ) (1,391 )
Deferred tax liabilities 22 (752 ) (309 )
(21,420 ) (12,693 )
Total liabilities (65,209 ) (60,604 )
Net assets 53,715 40,219
Equity attributable to the owners of the parent
Share capital 23 8,554 8,554
Share premium account 4,866 4,866
Translation reserve (Bisichi PLC) (1,063 ) (1,055 )
Capital redemption reserve 47 47
Retained earnings (excluding treasury shares) 20,286 17,415
Treasury shares 23 (144 ) (144 )
Retained earnings 20,142 17,271
Total equity attributable to equity shareholders 32,546 29,683
Non–controlling interest 24 21,169 10,536
Total equity 53,715 40,219
Net assets per share attributable to equity shareholders 7 38.14 p 34.78 p
These financial statements were approved by the board of directors and authorised for issue on 27 April 2023 and signed on its behalf by:
John Heller Jonathan Mintz Company Registration No. 341829
Director Director
50 London & Associated Properties PLC 2022
FINANCIAL STATEMENTS
Consolidated statement of changes in
shareholders’ equity
for the year ended 31 December 2022
SHARE
CAPITAL
£’000
SHARE
PREMIUM
£’000
TRANSLA-
TION
RESERVES
£’000
CAPITAL
REDEMP-
TION
RESERVE
£’000
TREASURY
SHARES
£’000
RETAINED
EARNINGS
EXCLUDING
TREASURY
SHARES
£’000
TOTAL
EXCLUDING
NON–
CON-
TROLLING
INTERESTS
£’000
NON–
CON-
TROLLING
INTERESTS
£’000
TOTAL
EQUITY
£’000
Balance at 1 January 2021 8,554 4,866 (1,030 ) 47 (144 ) 17,567 29,860 9,686 39,546
(Loss)/profit for year – – – – – (152 ) (152 ) 978 826
Other comprehensive expense:
Currency translation – – (25 ) – – – (25 ) (38 ) (63 )
Total other comprehensive
expense
Total comprehensive
(expense)/income
Transactions with owners:
Dividends – non–controlling
interests
Transactions with owners – – – – – – – (90 ) (90 )
Balance at 31 December
2021
Profit for year – – – – – 2,704 2,704 18,462 21,166
Other comprehensive
expense:
Currency translation – – (8 ) – – – (8 ) (35 ) (43 )
Total other comprehensive
expense
Total comprehensive
(expense)/income
Transactions with owners:
Share options – – – – – 167 167 237 404
Dividends – equity holders – – – – – – – (7,034 ) (7,034 )
Dividends – non–controlling
interests
Transactions with owners – – – – – 167 167 (7,794 ) (7,627 )
Balance at 31 December 2022 8,554 4,866 (1,063 ) 47 (144 ) 20,286 32,546 21,169 53,715
London & Associated Properties PLC 2022 51
FINANCIAL STATEMENTS
Consolidated cash flow statement
for the year ended 31 December 2022
NOTES
2022
£’000
2021
£’000
Operating activities
Profit for the year before taxation 33,168 1,524
Finance income 4 (199 ) (34 )
Finance expense 4 3,218 2,543
Decrease in value of investment properties 8 115 111
Increase in value of trading investments (1,036 ) (812 )
Adjustment to interest rate derivative 21 (70 ) (130 )
Loss/(profit) on sale of investment properties 83 (436 )
Depreciation 9 1,362 2,815
(Profit)/loss on disposal of non-current assets (36 ) 133
Share based payment expense 405 –
Development expenditure on inventories 12 (747 ) (1,016 )
Exchange adjustments 270 121
Change in inventories (911 ) 2,921
Change in receivables 2,194 (1,813 )
Change in payables 811 (107 )
Cash generated from operations 38,627 5,820
Income tax paid (7,946 ) (216 )
Cash inflows from operating activities 30,681 5,604
Investing activities
Acquisition of investment properties, mining reserves, plant and equipment (11,011 ) (1,871 )
Sale of plant and equipment 102 –
Sale of investment properties 5,171 4,219
Disposal of other investments 2,083 705
Acquisition of other investments (10,207 ) (1,630 )
Interest received 199 34
Cash (outflows)/inflows from investing activities (13,663 ) 1,457
Financing activities
Interest paid (2,751 ) (2,621 )
Interest obligation under finance leases (353 ) (199 )
Repayment of lease liability (236 ) (235 )
Lease assignment costs paid (52 ) (101 )
Receipt of bank loan - Bisichi PLC 524 46
Repayment of bank loan - Bisichi PLC (55 ) (317 )
Repayment of bank loan - Dragon Retail Properties Ltd (21 ) (21 )
Receipt of bank loan - London & Associated Properties PLC 13,337 522
Repayment of bank loan - London & Associated Properties PLC (14,247 ) (606 )
Equity dividends paid (641 ) –
Equity dividends paid - non-controlling interests (6,323 ) –
Cash outflows from financing activities (10,818 ) (3,532 )
Net increase in cash and cash equivalents 6,200 3,529
Cash and cash equivalents at beginning of year 5,982 2,348
Exchange adjustment (25 ) 105
Cash and cash equivalents at end of year 12,157 5,982
The cash flows above relate to continuing operations.
Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise the following balance sheet amounts:
2022
£’000
2021
£’000
Cash and cash equivalents (before bank overdrafts) 15,382 8,518
Bank overdrafts 18 (3,225 ) (2,536 )
Cash and cash equivalents at end of year 12,157 5,982
£349,000 of cash deposits at 31 December 2022 were charged as security to bank loans (2021: £1,000,000 ).
52 London & Associated Properties PLC 2022
FINANCIAL STATEMENTS
Group accounting policies
London & Associated Properties PLC 2022 53
Group accounting policies
54 London & Associated Properties PLC 2022
London & Associated Properties PLC 2022 55
56 London & Associated Properties PLC 2022
London & Associated Properties PLC 2022 57
58 London & Associated Properties PLC 2022
London & Associated Properties PLC 2022 59
FINANCIAL STATEMENTSFINANCIAL STATEMENTS
60 London & Associated Properties PLC 2022
London & Associated Properties PLC 2022 61
62 London & Associated Properties PLC 2022
London & Associated Properties PLC 2022 63
64 London & Associated Properties PLC 2022
London & Associated Properties PLC 2022 65
66 London & Associated Properties PLC 2022
London & Associated Properties PLC 2022 67
68 London & Associated Properties PLC 2022
2021
£’000
2021
£’000
London & Associated Properties PLC 2022 69
70 London & Associated Properties PLC 2022
London & Associated Properties PLC 2022 71
.
72 London & Associated Properties PLC 2022
London & Associated Properties PLC 2022 73
74 London & Associated Properties PLC 2022
London & Associated Properties PLC 2022 75
76 London & Associated Properties PLC 2022
London & Associated Properties PLC 2022 77
FINANCIAL STATEMENTS Notes to the financial statementsFINANCIAL STATEMENTS Notes to the financial statements
78 London & Associated Properties PLC 2022
79 London & Associated Properties PLC 2022
80 London & Associated Properties PLC 2022
FINANCIAL STATEMENTS Notes to the financial statements
30. COMPANY FINANCIAL STATEMENTS
Company balance sheet at 31 December 2022
NOTES
2022
£’000
2021
£’000
Fixed assets
Tangible assets 30.3 728 20,556
Other investments:
Associated company 30.4 489 489
Subsidiaries and others 30.4 672 4,545
1,161 5,034
1,889 25,590
Current assets
Assets held for sale – 504
Debtors 30.5 15,346 7,191
Bank balances 3,867 3,707
19,213 11,402
Creditors
Amounts falling due within one year 30.6 (1,976) (3,618)
Borrowings 30.7 – (9,990)
Net current liabilities 17,237 (2,206)
Total assets less current liabilities 19,126 23,384
Creditors
Amounts falling due after more than one year 30.7 (227) (1,383)
Deferred tax falling due after more than one year – (451)
Net assets 18,899 21,550
Capital and reserves
Share capital 30.9 8,554 8,554
Share premium account 4,866 4,866
Capital redemption reserve 47 47
Treasury shares 30.9 (144) (144)
Retained earnings 5,576 8,227
Shareholders’ funds 18,899 21,550
The loss for the financial year was £2,652,000 (2021: profit £2,004,000)
These financial statements were approved by the board of directors and authorised for issue on 27th April 2023 and signed on its behalf by:
John Heller Jonathan Mintz Company Registration No. 341829
Director Director
London & Associated Properties PLC 2022 81
FINANCIAL STATEMENTS Notes to the financial statements
30. COMPANY FINANCIAL STATEMENTS CONTINUED
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022
SHARE
CAPITAL
£’000
SHARE
PREMIUM
£’000
CAPITAL
REDEMPTION
RESERVE
£’000
TREASURY
SHARES
£’000
RETAINED
EARNINGS
EXCLUDING
TREASURY
SHARES
£’000
TOTAL
EQUITY
£’000
Balance at 1 January 2021 8,554 4,866 47 (144) 6,223 19,546
Profit for the year – – – – 2,004 2,004
Total comprehensive expense – – – – 2,004 2,004
Balance at 31 December 2021 8,554 4,866 47 (144) 8,227 21,550
Loss for the year – – – – (2,651) (2,651)
Total comprehensive income – – – – (2,651) (2,651)
Balance at 31 December 2022 8,554 4,866 47 (144) 5,576 18,899
£5.6 million (2021: £8.2 million) of retained earnings (excluding treasury shares) is distributable.
30.1. COMPANY
Accounting policies
The following are the main accounting policies of the Company:
Basis of preparation
The financial statements have been prepared on a going concern basis and in accordance with Financial Reporting Standard 101 ’Reduced
Disclosure Framework’ (FRS 101) and Companies Act 2006. The financial statements are prepared under the historical cost convention as
modified to include the revaluation of freehold and leasehold properties and fair value adjustments in respect of current asset investments
and interest rate hedges.
The results of the Company are included in the consolidated financial statements. No profit or loss is presented by the Company as
permitted by Section 408 of the Companies Act 2006.
In these financial statements, the company has applied the exemptions available under FRS 101 in respect of the following disclosures:
• Cash Flow Statement and related notes;
• Comparative period reconciliations for share capital, tangible fixed assets and intangible assets;
• Disclosures in respect of transactions with wholly owned subsidiaries;
• Disclosures in respect of capital management;
• The effects of new but not yet effective IFRSs;
• Disclosures in respect of the compensation of Key Management Personnel.
As the consolidated financial statements include the equivalent disclosures, the Company has also taken the exemptions under FRS 101
available in respect of the following disclosures:
• IFRS 2 Share Based Payments in respect of Group settled share based payments;
• The disclosures required by IFRS 7 and IFRS 13 regarding financial instrument disclosures have not been provided apart from those
which are relevant for the financial instruments which are held at fair value and are not either held as part of the trading portfolio or
derivatives.
Key judgements and estimates
The preparation of the financial statements requires management to make assumptions and estimates that may affect the reported amounts
of assets and liabilities and the reported income and expenses, further details of which are set out below. Although management believes
that the assumptions and estimates used are reasonable, the actual results may differ from those estimates. Further details of the estimates
are contained in the Directors’ Report and in the Group accounting policies.
Investments in subsidiaries, associated undertakings and joint ventures
Investments in subsidiaries, associated undertakings and joint ventures are held at cost less accumulated impairment losses.
82 London & Associated Properties PLC 2022
FINANCIAL STATEMENTS Notes to the financial statements
30.1. COMPANY CONTINUED
Fair value measurements of investment properties and investments
An assessment of the fair value of certain assets and liabilities, in particular investment properties, is required. In such instances, fair value
measurements are estimated based on the amounts for which the assets and liabilities could be exchanged between market participants. To
the extent possible, the assumptions and inputs used take into account externally verifiable inputs. However, such information is by nature
subject to uncertainty. The fair value measurement of the investment properties may be considered to be less judgemental where external
valuers have been used as is the case with the Company.
The following accounting policies are consistent with those of the Group and are disclosed on pages 52 to 58 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 £2,651,000 (2021: profit of £2,004,000). In accordance with the exemption conferred by
Section 408 of the Companies Act 2006, the Company has not presented its own profit and loss account.
30.3. TANGIBLE ASSETS
INVESTMENT PROPERTIES OFFICE
TOTAL
£’000
FREEHOLD
£’000
LEASEHOLD
OVER 50 YEARS
£’000
LEASEHOLD
UNDER 50
YEARS
£’000
EQUIPMENT
AND MOTOR
VEHICLES
£’000
OFFICE
BUILDING
£’000
Cost or valuation at 1 January 2022 20,628 13,815 5,695 206 124 788
Additions in the year 2,582 2,530 – – 6 46
Disposals (22,093) (16,345) (5,695) – (53) –
Decrease in present value of head
leases
(1) – – (1) – –
Decrease on revaluation (58) – – (20) – (38)
Cost or valuation at 31 December 2022 1,058 – – 185 77 796
Representing assets stated at:
Valuation 185 – – 185 – –
Cost 873 – – – 77 796
1,058 – – 185 77 796
Depreciation at 1 January 2022 72 – – – 28 44
Charge for the year 264 – – – 1 263
Disposals (6) – – – (6) –
Depreciation at 31 December 2022 330 – – – 23 307
Net book value at 1 January 2022 20,556 13,815 5,695 206 96 744
Net book value at 31 December 2022 728 – – 185 54 489
The freehold and leasehold properties, excluding the present value of head leases and directors’ valuations, were valued as at 31 December
2022 by professional firms of chartered surveyors. The valuations were made at fair value. The directors’ property valuations were made at
fair value.
During the year one long leasehold investment property, West Bromich was sold with gross proceed of £4.75 million, being its carrying
value in the accounts.
During the year the majority of the company’s remaining investment properties were transferred to a wholly owned subsidiary for the
purposes of refinancing the £10 million 25 year debenture that reached the end of its term and was repayable. The properties were
transferred at the values attributed to them by the new lender’s valuer at the date of transfer.
London & Associated Properties PLC 2022 83
FINANCIAL STATEMENTS Notes to the financial statements
30.3. TANGIBLE ASSETS CONTINUED
2022
£’000
2021
£’000
Allsop LLP 180 18,765
Directors’ valuation - -
180 18,765
Add: Present value of headleases 5 951
185 19,716
The historical cost of investment properties was as follows:
FREEHOLD
£’000
LEASEHOLD
OVER 50 YEARS
£’000
LEASEHOLD
UNDER 50
YEARS
£’000
Cost at 1 January 2022 7,965 9,333 785
Disposals (7,965) (9,333) –
Cost at 31 December 2022 – – 785
Head leases on investment property represent the value attributed to the right of the Company to occupy and use investment property that
has a head lease interest. In the current year total cash outflow for head leases is £nil (2021: £0.1 million). A number of these leases provide
for payment of contingent rent, usually a proportion of net rental income, in addition to fixed rents.
Office building represents the value attributed under IFRS 16 to the right of the Company to occupy its sole office building. In the current
year total cash outflow for the office lease liability is £0.3 million (2021: £0.3 million).
30.4. OTHER INVESTMENTS
COST OR VALUATION
TOTAL
£’000
SHARES IN
SUBSIDIARY
COMPANIES
£’000
SHARES IN
JOINT
VENTURES
£’000
SHARES IN
ASSOCIATE
£’000
At 1 January 2022 5,034 4,381 164 489
Impairment provision (3,873) (3,873) – –
At 31 December 2022 1,161 508 164 489
Subsidiary companies
Details of the Company’s subsidiaries, joint ventures and associates are set out in note 11. Dragon is a joint venture and Bisichi and
Development Physics are associates of the Company.
During the year the Company impaired its investment in Orchard Square Limited by £3,647,000 (2021: impairment of £662,000), following
a reduction in the carrying value of the Orchard Square, Sheffield development property. The Company also impaired its investment in
Analytical Properties Holdings Limited by £226,000 following a reduction in the carrying value of the Purley development property.
30.5. DEBTORS
2022
£’000
2021
£’000
Trade debtors 66 499
Amounts due from associate and joint ventures 1,380 1,114
Amounts due from subsidiary companies 12,931 4,547
Other debtors 818 370
Prepayments and accrued income 151 661
15,346 7,191
84 London & Associated Properties PLC 2022
FINANCIAL STATEMENTS Notes to the financial statements
30.6. CURRENT LIABILITIES
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2022
£’000
2021
£’000
Trade payables 57 42
Amounts owed to subsidiary companies 384 321
Amounts owed to joint ventures 120 156
Other taxation and social security costs 39 45
Lease liabilities 252 314
Other creditors 787 1,486
Accruals and deferred income 338 1,254
1,977 3,618
Borrowings
Borrowings relate to the £10 million debenture which is shown after deduction of un–amortised issue costs in 2021 and was repaid in
August 2022, with further details set out in note 18.
30.7. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
2022
£’000
2021
£’000
Lease liabilities 227 1,383
227 1,383
REPAYMENT OF BORROWINGS:
2022
£’000
2021
£’000
Debentures:
Repayable within one year – 9,990
– 9,990
LEASE LIABILITIES
2022
TOTAL
£’000
2022
HEAD LEASES
ON INVESTMENT
PROPERTY
1
£’000
2022
OFFICE
£’000
2021
TOTAL
£’000
Minimum lease payments fall due:
Within one year 287 - 287 347
Second to fifth year 241 2 239 768
After five years 12 12 - 7,153
540 14 526 8,268
Future finance charges on lease liabilities (62) (9) (53) (6,571)
Present value of lease liabilities 478 5 473 1,697
Present value of lease liabilities:
Within one year 251 - 251 314
Second to fifth year 224 2 222 717
After five years 3 3 - 666
478 5 473 1,697
Lease liabilities greater than one year are £227,000 (2021: £1,383,000).
Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.
1 Many head leases on investment properties provide for contingent rent in addition to the rents above, usually a proportion of rental income.
London & Associated Properties PLC 2022 85
FINANCIAL STATEMENTS Notes to the financial statements
30.8. DEFERRED TAX LIABILITY
2022
£’000
2021
£’000
Deferred Taxation
Balance at 1 January (451) (671)
Transfer to profit and loss account 451 220
Balance at 31 December – (451)
The deferred tax balance comprises the following:
Accelerated capital allowances (39) (466)
Short–term timing differences 290 (278)
Revaluation of investment properties 447 293
Loss relief (698) –
Deferred tax liability at year end – (451)
30.9. SHARE CAPITAL
Details of share capital, treasury shares and share options are set out in note 23.
30.10. RELATED PARTY TRANSACTIONS
COST
RECHARGED
TO (BY)
RELATED
PARTY
£’000
AMOUNTS
OWED
BY (TO)
RELATED
PARTY
£’000
ADVANCED TO
(BY) RELATED
PARTY
£’000
Related party:
Development Physics Limited
Current account – 142 66
Dragon Retail Properties Limited
Current account 36 (i) (120) –
West Ealing Projects Limited
Current account – 1,238 240
Bisichi Mining PLC
Current account 200 (ii) – –
Simon Heller Charitable Trust
Current account (63) – –
Loan account – (700) –
Directors and key management
M A Heller and J A Heller 18 (i) – –
J Mintz – 10 –
C A Parritt (18) (iii) – –
R Priest (35) (iii) (9) –
Totals at 31 December 2022 138 561 306
Totals at 31 December 2021 138 (738) (93)
Nature of costs recharged – (i) Management fees (ii) Property management fees (iii) Consultancy fees
During the period, the Company entered into transactions, in the ordinary course of business, with other related parties. The company has
taken advantage of the exemption under paragraph 8(k) of FRS101 not to disclose transactions with wholly owned subsidiaries.
Dragon Retail Properties Limited – ‘Dragon’ is owned equally by the Company and Bisichi PLC.
Bisichi PLC – The company has 41.6 per cent ownership of ‘Bisichi’.
Other details of related party transactions are given in note 25.
86 London & Associated Properties PLC 2022
FINANCIAL STATEMENTS Notes to the financial statements
30.11. EMPLOYEES
THE AVERAGE WEEKLY NUMBER OF EMPLOYEES OF THE COMPANY DURING THE YEAR WERE AS FOLLOWS:
2022
£’000
2021
£’000
Directors & Administration 18 17
STAFF COSTS DURING THE YEAR WERE AS FOLLOWS:
2022
£’000
2021
£’000
Salaries 1,432 1,279
Social security costs 171 158
Pension costs 82 71
1,685 1,508
30.12. CAPITAL COMMITMENTS
There was a capital commitment of £nil at 31 December 2022, being approved and contracted for (2021: £40,000).
30.13. FUTURE AGGREGATE MINIMUM RENTALS RECEIVABLE
The Company leases out its investment properties to tenants under operating leases. The future aggregate minimum rentals receivable
under non–cancellable operating leases are as follows:
2022
£’000
2021
£’000
2022 7 1,454
2023 7 1,161
2024 5 889
2025 - 606
2026 + - 2,348
19 6,458
30.14. CONTINGENT LIABILITIES AND POST BALANCE SHEET EVENTS
A charge over the Company’s assets of £2 million to QIB (UK) PLC in relation to a loan to one of the Company’s subsidiaries was created in
2022 for future potential shortfalls in the value of the property charged to the loan. At 31 December 2022 the loan balance was £13.6
million and the assets charged to the loan had a value of £22.9 million.
There are no other contingent liabilities at 31 December 2022.
There were no contingent liabilities at 31 December 2021.
There have been no other events or transactions that require disclosure.
London & Associated Properties PLC 2022 87
FINANCIAL STATEMENTSFINANCIAL STATEMENTS
Five year financial summary
2022
£M
2021
£M
2020
£M
2019
£M
2018
£M
Portfolio size
Investment properties–LAP^ 23 25 31 31 32
Investment properties–Dragon Retail Properties 2 2 2 2 2
Investment properties–Bisichi ^ 10 11 10 12 13
Assets held for sale-LAP – 1 – – 2
Inventories-LAP 23 25 25 27 39
58 64 68 72 88
Portfolio activity £M £M £M £M £M
Acquisitions 2.53 0.09 0.33 0.14 6.55
Disposals (5.70) (4.17) – (12.59) (36.44)
Additions to inventory at cost 0.75 1.02 0.39 0.41 6.26
(2.42) (3.06) 0.72 (12.04) (23.63)
Consolidated income statement £M £M £M £M £M
Group income 100.24 56.48 35.02 63.97 56.65
Profit/(loss) before tax 33.17 1.52 (10.15) (4.54) 1.27
Taxation (12.00) (0.70) (1.09) (0.95) (0.68)
Profit/(loss) attributable to shareholders 2.70 (0.15) (6.70) (6.48) (2.08)
Profit/(loss) per equity share – basic and diluted 3.17p (0.18)p (7.86)p (7.59)p (2.44)p
Dividend per share 0.00p 0.00p 0.00p 0.00p 0.18p
Consolidated balance sheet £M £M £M £M £M
Shareholders’ funds attributable to equity shareholders 32.55 29.70 29.86 36.73 43.38
Net borrowings, excluding lease obligations 23.47 30.15 33.93 27.65 35.99
Net assets per share 38.14p 34.78p 34.99p 43.04p 50.83p
Consolidated cash flow statement £M £M £M £M £M
Cash generated from operations 39.39 5.82 1.64 14.98 1.92
Notes:
^ Excluding the present value of head leases
88 London & Associated Properties PLC 2022
LONDON & ASSOCIATED PROPERTIES PLC
EMAIL: ADMIN@LAP.CO.UK
www.lap.co.uk
FSC
®
C001785