Annual Financial Report

FOR IMMEDIATE RELEASE 26 May 2015 LONDON & ASSOCIATED PROPERTIES PLC RESULTS FOR 12 MONTHS TO 31 DECEMBER 2014 London & Associated Properties (LAP) is a fully listed focused UK shopping centre and retail property specialist. HIGHLIGHTS * Accounts of Bisichi Mining PLC consolidated into LAP's for first time following new accounting standard * RBS corporate facility replaced with Â£45m non-recourse loans * Restructured loan portfolio leaves LAP in strong financial position * Total property portfolio valued at Â£250m, including properties under management * Property investments performing well reflecting strong investor and occupational demand * Fully diluted net assets now 50.35p per share * Dividend of 0.156p per share recommended - an increase of 25% "There is strong investor demand for shopping centre and retail property following a recovery in occupational demand. Rental levels for shops found a floor during 2014 and, in many locations, are now showing growth. A tightening of yields has meant that investors have looked outside London with more enthusiasm and provincial locations are in greater demand than for some time. In this environment of low interest rates and attractive risk premia, the value of properties in our portfolio should remain firm," said Sir Michael Heller, Chairman, and John Heller, Chief Executive. Contact: London & Associated Properties PLC Tel: 020 7415 5000 John Heller, Chief Executive Anil Thapar, Finance Director Baron Phillips Associates Tel: 07767 444193 Baron Phillips chairman and chief executive's statement We are pleased to report on a year of steady progress at LAP. As previously reported, the most significant event of last year was the refinancing of our Â£ 45 million facility away from the Royal Bank of Scotland to Santander UK PLC. At the same time we closed our associated long-dated swap positions. As a result we are in a much stronger financial position going forward with a less volatile balance sheet. As reported in 2013, Windsor Shopping Centre's sale was completed in January 2014 for Â£105 million. The sale proceeds were utilised to repay the related bank loan and all group to interest rate derivatives. In March 2015, we also repaid from our cash resources Â£1.25 million of the Â£5 million outstanding 2018 debenture stock from Prudential Assurance Co. The total consideration was Â£1.4 million and this will reduce interest expense by Â£ 145,000 per annum. As a result of both of these events, LAP's average cost of borrowing now stands at 5.8% (2013: 7.6%) while the Group's borrowing cost is 5.7% (2013: 7.2%). At 31 December 2014 our directly owned properties were valued at Â£103.7 million, compared to Â£102.1 million in the previous year. Total assets under management including those of our joint ventures amounted to Â£250 million (2013: Â£238 million). Our gross property income for 2014 amounted to Â£7.1 million (2013: Â£7.6 million). The Group loss before tax is Â£2.7 million (2013 profit Â£1.1 million). The result has, however, been impacted materially by the now terminated interest rate derivatives. Some Â£1.1 million has been charged in the current year as compared with a credit last year of Â£4.4 million. Had this been excluded the result this year would have been a small loss of Â£1.6 million (mainly attributable to short term loss of income in Sheffield and Â£1.1 million new interest derivatives charge) as compared with an adjusted loss in 2013 of Â£ 3.3 million. The after tax position is similarly affected by a deferred tax charge of Â£4.8 million arising as a result of the repayment of interest rate derivatives in the year. There is strong investor demand for shopping centres and retail property following a recovery in occupational demand. Rental levels for shops found a floor during 2014 and, in many locations, are now showing growth. A tightening of yields has meant that investors have looked outside London with more enthusiasm and provincial locations are in greater demand than for some time. In this environment of low interest rates and attractive risk premia, the value of the shopping centres in our portfolio should remain firm. As shareholders know, we have deliberately focused on both major city centres and value-orientated shopping locations. We expect both of these types of rental locations to continue to perform. This year for the first time we have consolidated the accounts of Bisichi Mining into our own, because under new accounting standard IFRS 10 we have effective control of Bisichi. This means that our accounts have been restated for 2013 as well. In reality, there has been no change in the relationship between the companies and Bisichi continues to be managed independently of LAP. While this change means that our accounts contain much more detail about the mining company and its assets and liabilities, there is no material difference to our net asset value. Previously we included only the value of our share of Bisichi's net assets, while we now include the full value of all the assets and liabilities and deduct the amount attributable to the other shareholders. We report on LAP's directly-owned portfolio Orchard Square, Sheffield There has been much activity at Orchard Square, our shopping centre in the heart of Sheffield. On Fargate, Sheffield's prime shopping street, most of the former Republic unit is under offer to a strong covenant for 15 years. The proposed letting is at ERV and will lead to a cash flow improvement of nearly Â£600,000 net per annum once rent free periods have expired and taking into account non-recoverable expenses currently payable. We will split the unit as part of the transaction, and there will be an additional smaller unit available once these works are completed. Elsewhere at Orchard Square, we agreed a new lease with River Island on our other unit fronting onto Fargate at Â£495,000 per annum. Since we reported on this letting in our interim accounts, Sheffield Council has revealed its plans for the New Retail Quarter, a significant redevelopment in the City Centre which will link Fargate with The Moor, Sheffield's other prime pedestrianised high street. Although we have not seen detailed plans yet, we view this news as positive and are confident that our position in Sheffield's retail hierarchy will be enhanced as the new scheme extends the prime retail pitch and further consolidates our position. We also believe that our two Fargate units will become reversionary once the development is completed. Elsewhere in our Centre, Schuh signed a reversionary lease and refitted its stores and we let the only two empty shops in the Centre to a bubble tea operator and to a chocolatier. Since the year end, two further units have become available due to tenants relocating to larger units which we do not have available within our Centre. We currently have both units under offer to national retailers. All lettings will at least maintain the Â£80 Zone A rental level of the Centre. Once these lettings complete, the retail units at Orchard Square will be effectively fully let. Brixton Market Our two markets continue to trade exceptionally well. The units remain fully let, and the waiting list of traders seeking space within the markets continues to grow. Within Brixton, Lambeth Council is currently promoting two significant redevelopments. One, directly to the rear of Brixton Village, is a major development of Somerleyton Road that will comprise a cultural hub (including a theatre), a chef school, along with some 350 new homes and a small element of retail. The second development is on the other side of Brixton Village and will comprise several hundred new homes plus further retail and leisure units to compliment those that we already own. Both of these events will place our markets at the very heart of a thriving major London village. We believe that this will have a positive effect on rental levels in the medium term. West Bromwich Kings Square has had a challenging year as West Bromwich absorbed a number of recently developed units and a new Tesco Extra. This had led to a surfeit of available space in the town. Last year, two of our tenants were enticed away with rental offers from rival Centres that we were unwilling to match. However, we have acted decisively to secure our position and have commenced lease extensions with a number of the anchor stores there. In addition, we have let a large unit to Pepkor, a retail chain from South Africa. We have also placed two units under offer to national retailers who will be new to the town. We feel that there is a positive shift in momentum at our Centre which we intend to capitalise upon. We will also carry out a re-branding of the Centre during this year. The rest of our directly-owned portfolio is trading well. Where units have fallen empty, we found it relatively easy to re-let them at similar rents. We currently have two joint ventures with third parties: Langney Our joint venture with Schroders is now in its fourth year and still owns a shopping centre in Langney, Eastbourne. This Centre has recovered from a roof collapse in heavy rain in December 2012 and is once again trading satisfactorily. We obtained planning consent in 2014 for a 30,000 sq ft extension and are at engrossment stage with an anchor tenant. We have also driven rental growth within the original part of the shopping centre, and together with our joint venture partner, consider this to be a good time to sell this asset. We expect to achieve a substantial surplus over cost. We now have ownership of 25% of Langney Joint Venture in the enlarged Group. Oaktree Capital Our other joint venture was set up with Oaktree Capital Management in 2013. It owns three shopping centres in Dunfermline, Loughborough and Kings Lynn. We felt at the time that they had suffered from underinvestment and I am pleased to report that early indications bear this out. Dunfermline We have achieved a number of important lettings at Kingsgate Shopping Centre as we seek to strengthen its position as a significant fashion-led Centre. During the year we carried out a letting to DW Sports and re-geared the leases of a number of fashion retailers, including Top Shop. In addition, Somerfield supermarket assigned its lease to 99p Stores. This has led to an improvement in footfall generally for the town, and particularly in that part of the Centre. We have now put a large unit under offer to a fashion retailer, new to the town, and are close to putting several further units under offer. Additionally, a number of the tenants have refitted their stores as the Centre improves generally. Loughborough At the time of acquisition this Centre had a number of empty units, some of which had never been let. Following our management initiatives, The Rushes will be fully let following successful lettings to Poundworld and 108 World Buffet, a Midlands-based restaurant chain and the completion of one final unit which is under offer to a national chain of restaurants. These lettings are ahead of estimated rental value at the time of acquisition and complement the existing tenant line-up which includes Tesco, Marks & Spencer, Next, TK Maxx and Argos. There is strong institutional demand for Centres with this quality of tenants. As there is now limited opportunity for further active management, this property is likely to be disposed of during the course of the year. Kings Lynn We have carried out a number of lettings at the Vancouver Centre to fashion retailers, including Select Fashion, Discount Shoe Zone and Romans Originals. In addition we have re-geared leases with a number of the existing fashion operators there as we seek to maximise occupancy and improve tenant mix. We are also exploring a major redevelopment of one section of the Centre and have an offer from a national fashion retailer who wishes to rent the majority of the space. The Council, which is the freeholder, is very supportive of the proposal and we are in negotiations with them to take this initiative forward. Bisichi Mining PLC Bisichi Mining PLC ("Bisichi") operates an open cast coal mine in Middelburg, South Africa and continues to operate in an environment of historically low coal prices. Bisichi achieved EBITDA of Â£4.7 million in 2014 compared to Â£3.0 million the previous year. The uplift was due to successful trading at Black Wattle Colliery, Bisichi's direct coal mining asset in Middelburg, South Africa. This was particularly pleasing as a year earlier the mining operation had run into old unrecorded underground workings. A turnaround plan was put in place which involved the swift movement of the machinery to two of Bisichi's more profitable production pits in order to increase production from these areas. Bisichi's Run of Mine production from Black Wattle weakened in 2014, with total production for the year of 1.53 million metric tonnes (2013: 1.77 million metric tonnes); production improved in the second half of the year. Although the plan initially suffered a set-back caused by unusually heavy rainfall in the first quarter of 2014, Black Wattle steadily increased production from its lower costing pits. This ensured that the mine returned to acceptable levels of profitability in the second half of 2014. In regard to the new reserve at Blue Nightingale, plans were initiated to develop the reserve by the end of 2014. Bisichi reports that delivery of coal from the reserve has commenced and they expect the reserve to begin contributing to earnings this year. Black Wattle will look to combine production from Black Wattle's existing reserves with coal received from the new reserve at Blue Nightingale. Bisichi also signed a new Â£6 million 5-year term loan facility with Santander UK plc. This new loan replaces the previous Â£5 million term facility and overdraft facility held with Royal Bank of Scotland. This new loan is secured against Bisichi's UK retail property portfolio which was externally valued at the 2014 year end at Â£11.6million (2013: Â£11.6 million). The coal mining income fell in the year from Â£34.1 million in 2013 to Â£25 million. However, due to lower production costs the operating profits increased. Bisichi continues to seek to balance the high risk of its mining operations with the dependable cash flow from its UK property investment operations. Dividends LAP is pleased to recommend a dividend of 0.156p, an increase of 25% over the dividend of 2013. On behalf of the Board and shareholders, I would like to thank all of our staff for their hard work during the course of the year. Robert Corry retired in December 2014 and we record our appreciation of his hard work and contribution to the Group over the last 22 years. He is replaced by Anil Thapar, who has been with the Group since 2005. We welcome Anil to the Board and look forward to continuing to work with him. Sir Michael Heller, John Heller, Chairman Chief Executive 21 May 2015 finanCIAL review The financial statements for 2014 have been prepared to reflect the requirements of IFRS 10. This has meant that the accounts of Bisichi Mining PLC (a London Stock Exchange main market quoted company - BISI) ("Bisichi"), have been consolidated with those of LAP. Bisichi continues to operate as a fully independent company and currently LAP owns only 41.52% of the issued ordinary share capital. However, because related parties also have shareholdings in Bisichi and there is a wide disposition of other shareholdings, LAP now has effective control of Bisichi for accounting purposes. This also means that Dragon Retail Property Limited ("Dragon"), our 50:50 joint venture with Bisichi is consolidated. In previous years the accounts reflected only our interests in the results and net assets of Bisichi and Dragon. These interests were included as a single line on the income statement and balance sheet, either as an associated company or as a joint venture. The revised treatment means that the income and net assets are disclosed in full and the value attributable to the "non-controlling interest" (58.48%) is shown as a liability. There is, therefore, no impact on the net assets attributable to LAP shareholders although there is much more disclosure. Cash flow As reported in 2013, LAP completed the disposal of Windsor Shopping Centre in January 2014 and the sale proceeds of Â£105 million were utilised to repay the Bank of Scotland ("BOS") loan of Â£70 million plus the costs of settling the related interest derivatives of Â£14.6 million. These proceeds were also utilised to meet the costs (Â£10.7 million) of terminating the remaining Royal Bank of Scotland ("RBS") derivatives while still leaving surplus cash for further investment. A major event during the year was the repayment of all borrowings from RBS. The RBS facility was replaced by a five year Â£45 million non-recourse loan from Santander, as senior lender, supported by Europa Capital Mezzanine Limited, as mezzanine lender. The senior loan facility is fully hedged with 50% of the loan being swapped at a rate of 2.25 % and the remaining 50% loan being covered by an interest cap at 2.25 %. This gives a blended current interest rate of 4.79 % for the total Â£45 million debt. LAP's long term debt (excluding Bisichi and Dragon), at the year-end consists of the new Â£45 million facility expiring in July 2019 and two debentures; one of Â£10 million expiring in August 2022 and another of Â£5 million with staged repayments to August 2018. Since the year end, we have repaid Â£1.25m of the Â£5 million debenture, leaving Â£750,000 to be repaid in August 2017 and the balance of Â£3 million in August 2018. All debentures are secured on core property and are covenant compliant. Our investment in a joint venture with Oaktree Capital Management (HRGT Shopping Centres LP), remains profitable and is generating management fees for our wholly owned management subsidiary (London & Associated Management Services Limited). We also received a Â£300,000 partial repayment of our loan investment. LAP acquired a property in New Kings Road, London at a cost of Â£0.68 million from our cash resources. This has since been included in the security for a debenture stock. After deducting bank overdrafts, LAP group, excluding Bisichi and Dragon, had Â£ 6.3 million (2013: Â£5.5 million) of cash and cash equivalent balances. Income statement As the Group's income statement now includes the income of Bisichi and Dragon on a consolidated basis, the 2013 figures has been restated. However shareholders in LAP will wish to understand the results without the distortions arising from this consolidation. The table below gives, I believe, a clearer understanding of Group results. Our results have been affected by some exceptional factors this year. Firstly, we spent Â£25.3 million on the termination of long dated swaps, which we had used to hedge our loans from BOS and RBS. While we had provided for the expected losses in the 2013 accounts, the actual costs of termination were higher, resulting in a further charge of Â£1.1 million against income in this year. LAP has now reorganised its finances at lower interest rates along with corresponding hedges, which have resulted in reduced interest costs from July 2014 onwards. The new swaps covering the Santander loan cost Â£1.08 million being a premium of Â£0.43 million payable for the interest cap and a mark to market charge of Â£0.65 million to reflect the year-end fair valuation of the swaps. The operating profits were further reduced by exceptional costs of Â£0.6 million relating to non- recoverable property costs and the loss of a significant tenant in Sheffield (Republic) which resulted in a short term loss of rental income. The cost of the Â£45 million borrowing was Â£1.18 million which is amortised over five years, being the period of the loan. This results in an additional cost of Â£0.1 million this year. There were additional professional fees and other costs of Â£0.5 million relating to the refinancing of the RBS debts together with related group restructuring. A further Â£0.3 million was spent on office costs relating to the renewal of the current office lease and the net costs of the previous sub-let office premises where the lease expired in October 2014. The results before tax, including Bisichi and Dragon, revaluation and other non-cash movements, show a loss of Â£2.7 million (2013: profit of Â£1.1 million). The segmental analysis in note 1 to the financial statements shows the split position, after excluding inter-company transactions. The income tax charge of Â£3.7 million is mostly due to deferred tax provision release, as a result of the repayment of 2013 interest derivative liabilities. 2014 2013 Â£'000 Â£'000 LAP (4,305) 810 Bisichi 1,531 (85) Dragon 81 414 (Loss)/profit before taxation (2,693) 1,139 Note: The figures excludes inter company revenue. Balance sheet Taking account of the changes required by IFRS 10 (see table below) LAP has group net assets of Â£53.4 million (2013: Â£59.7 million). Net assets per share attributable to equity shareholders at the year-end were 50.35p per share (2013: 59.00p per share). 2014 LAP Bisichi Dragon Consolidation LAP Original Mining PLC Retail adjustments Net assets Group Group Properties Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Investment properties 93,563 11,770 3,110 - 108,443 Other fixed assets 178 6,064 15 - 6,257 Investments in associate 7,184 - - (7,184) - Investments in joint ventures 2,276 3,938 - (1,740) 4,474 Other non current assets 4,520 152 - - 4,672 Current assets 8,497 12,289 2,693 (4,755) 18,724 Current liabilities (10,560) (7,148) (1,984) 4,755 (14,937) Non-current liabilities (62,812) (9,346) (2,102) - (74,260) Net assets 42,846 17,719 1,732 (8,924) 53,373 2013 Investment properties 92,046 11,755 3,110 - 106,911 Other fixed assets 203 7,096 19 - 7,318 Investments in associate 6,986 - - (6,986) - Investments in joint ventures 2,607 4,219 - (3,532) 3,294 Other non current assets 7,851 151 - - 8,002 Current assets 136,959 12,980 3,617 (5,660) 147,896 Current liabilities (167,696) (16,124) (1,112) 5,660 (179,272) Non-current liabilities (29,222) (3,090) (2,102) - (34,414) Net assets 49,734 16,987 3,532 (10,518) 59,735 BISICHI MINING PLC Although the results of our associated company have been consolidated in these financial statements, the Board of LAP has no direct influence over the management of Bisichi. The comments below are based on the published accounts of Bisichi. The Bischi group results in full are stated in its published 2014 financial statements which are available on its website: www.bisichi.co.uk. The Bisichi group achieved earnings before interest, tax, depreciation and amortisation (EBITDA) of Â£4.6 million (2013: Â£3.0 million). Of these earnings Â£ 3.5 million was generated in the second half of the year. Profit for the year after tax was Â£1.2 million (2013: Â£0.36 million). Bisichi has two core revenue streams -- investment in retail property in the UK; and coal mining in South Africa. The turnaround plan of Bisichi management at Black Wattle Colliery, the direct coal mining asset in South Africa was successful. The coal mined during the year, at a lower cost of production than 2013, helped offset the impact of weaker international coal prices. The mining turnover for the year was Â£25.5 million (2013: Â£34.1 million) and mining operating profit was Â£721,000 (2013: operating loss Â£545,000). The UK retail property portfolio valued at the year end at Â£11.6 million (2013: Â£11.6 million) and which underpins the Bisichi group, is actively managed by LAP and generates rental income of Â£931,000 (2013: Â£953,000). The Bisichi group signed a Â£6 million five year term loan with Santander in 2014 and the interest cost of the loan is 2.35% above LIBOR. The Bisichi group's cash and cash equivalents at the year-end was Â£2.8 million (2013: Â£1.7 million). Bisichi's net assets at 31 December 2014 were Â£17.7 million (2013: Â£17.0 million). ACCOUNTING JUDGEMENTs AND GOING CONCERN The most significant judgements made in preparing these accounts relate to the carrying value of the properties, investments and interest rate hedges. The swaps have been valued by the bank swap provider. The group uses external property valuers to determine the fair value of our properties. Under IFRS10 the group has included Bisichi Mining PLC for the first time in the consolidated accounts, as it is deemed to be under the effective control of LAP and has therefore been treated as a subsidiary. The Directors exercise their commercial judgement when reviewing the Group's cash flow forecasts and the underlying assumptions on which the forecasts are based. The Group's business activities, together with the factors likely to affect its future development, are set out in the Chairman and Chief Executive's Report and in this review. In addition the Directors consider that note 22 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; its exposure to credit risk and liquidity risk. LAP repaid its previous Â£40 million loan and successfully negotiated a new five year loan for Â£45 million with non-recourse security on better terms. Appropriate new hedge facilities are in place to minimise interest rate risk and fix cash flows. With a quality property portfolio comprising a majority of long leases supported by suitable financial arrangements, the Directors believe the company is well placed to manage its business risks successfully, despite the continuing uncertain economic climate. The Directors therefore have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements. DIVIDENDS The directors are proposing a final dividend of 0.156 p per ordinary share payable in July 2015. This is an increase of 25% compared to the 2013 dividend, reflecting the Group's confidence in its trading and future outlook together with the restructured loan facility and cash balances. principal activity, strategy & business model The Group's principal business model is the investment in and management of town centre retail property through direct investment and joint ventures, where we manage the property ourselves and on behalf of our partners. The principal activity of Bisichi Mining PLC is coal mining in South Africa. Further information is available in their 2014 Financial Statements which are available on their web site: www.bisichi.co.uk. STRATEGIC PRIORITIES ARE OUR STRATEGY IS MAXIMISING INCOME By achieving an appropriate tenant mix and shopping experience we can increase footfall through the centres, hence increase tenant demand for space and enhance income. CREATING QUALITY PROPERTY We look to improve the consumer experience at all our centres by achieving an appropriate tenant mix and a vibrant trading environment through investment activity, enhancement, refurbishment and development. CAPITAL STRENGTH We operate within a prudent and flexible financial structure. Our gearing, which has been substantially reduced, provides financial stability whilst giving capacity and flexibility to look for further investments. MAINTAIN THE VALUE OF By encouraging the Bisichi management to maximise INVESTMENT IN BISICHI sustainable profits and cash distributions. risk 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 in house teams with strong tenant and market knowledge who manage appropriate tenant mix. ASSET LIQUIDITY Assets may be liquid and Regular reporting of current and (SIZE AND affect flexing of balance projected position to the Board with GEOGRAPHICAL sheet. efficient treasury management. LOCATION) PEOPLE: RETENTION AND Unable to retain and Nomination Committee and senior staff RECRUITMENT attract the best people for review skills gaps and succession OF STAFF the key roles. planning. Training and development offered. REPUTATION: BUSINESS Loss in revenue. Documented Recovery Plan in place. INTERRUPTION Impact on footfall. General and terrorism insurance Adverse publicity. policies in place and risks Potential for criminal/ monitored by trained security staff. civil proceedings. Health and Safety policies in place. CCTV in centres. FINANCING: FLUCTUATION IN Impact on covenants and Secure income flows. PROPERTY VALUES other loan agreement Regular monitoring of LTV and IC obligations. covenants and other obligations. Focus on quality assets. REDUCED AVAILABILITY Insufficient funds to meet Efficient treasury management. OF existing debts/interest Loan facilities extended where BORROWING FACILITIES payments and operational possible. payments. Regular reporting of current and projected position to the Board. LOSS OF CASH AND Financial loss. Only use a spread of banks and DEPOSITS financial institutions which have a strong credit rating. FLUCTUATION OF Uncertainty of interest Manage derivative contracts to achieve INTEREST RATES rate costs. a balance between hedging interest rate exposure and minimising potential cash calls. Bisichi risk and uncertainties Bisichi Mining PLC, our associate which we now consolidate under IFRS 10 has a number of key risks and uncertainties relating to mining for coal. Coal price risk The Bisichi's mining operational earnings are largely dependent on movements in the coal price. Coal washing The Bisichi's mining operation's earnings are highly sensitive to coal washing, therefore a stoppage or disruption to the process could significantly impact earnings. However, there is scope to raise earnings substantially if the yield from the washing process is improved even marginally. Mining risk Attached to mining there are inherent health and safety risks. Any such safety incidents disrupt operations, and can slow or even stop production. The Bisichi has a comprehensive Health and Safety programme in place to mitigate this. As with many mining operations, the reserve that is mined has the risk of not having the qualities and accessibility expected from geological and environmental analysis. Currency risk The Bisichi's South African operations are sensitive to currency movements, especially those between the South African Rand, US Dollar and British Pound. New reserves and mining permissions The acquisition of additional reserves, permissions to mine and new mining opportunities in South Africa generally are contingent on a number of factors outside of the Bisichi's control, e.g. approval by the Department of Mineral Resources and the Department of Water Affairs and Forestry. Regulatory risk The Bisichi's South African operations are subject to the government Mining Charter and scorecard which primarily seeks to: â€¢ Promote equitable access to South Africa's mineral resources for all people in South Africa; â€¢ Expand opportunities for historically disadvantaged South Africans (HDSAs), including women, to enter the mining and minerals industry and benefit from the extraction and processing of the country's resources; â€¢ Utilise the existing skills base for the empowerment of HDSAs; â€¢ Expand the skills base of HDSAs in order to serve the community; â€¢ Promote employment and the social and economic welfare of mining communities and areas supplying mining labour; and â€¢ Promote beneficiation of South Africa's mineral commodities beyond mining and processing, including the production of consumer goods. The Bisichi continues to make good progress towards meeting the Charter requirements. However any regulatory changes to these, or failure to meet existing targets, could adversely affect the mine's ability to retain its mining rights in South Africa. Transport risk At present the government owned Transnet Freight Rail (TFR) is the sole rail freight provider for coal in South Africa. The Bisichi's South African operations are therefore reliant on TFR for delivery of its export quality coal directly or indirectly via the Southern African ports to its end customers. Power supply risk The current utility provider for power supply in South Africa is the government run Eskom. Eskom continues to undergo capacity problems resulting in power cuts and lack of provision of power supply to new projects. The Bisichi's mining operations have to date not been affected by power cuts. Flooding risk The Bisichi's mining operations are susceptible to seasonal flooding which could disrupt production. Management monitors water levels on an ongoing basis and various projects have been completed, including the construction of additional dams, to mitigate this risk. Environmental risk The Bisichi's South African mining operations are required to adhere to local environmental regulations. Health & Safety risk The Bisichi's South African mining operations are required to adhere to local Health and Safety regulations. Labour risk The Bisichi's mining operations and coal washing plant facility are labour intensive and unionised. Any labour disputes, strikes or wage negotiations may disrupt production and impact earnings. Cashflow risk Bisichi seeks to balance the high risk of our mining operations with a dependable cash flow from their UK property investment operations. Fluctuations in property values, which are reflected in the Consolidated Income Statement and Balance Sheet, are dependent on an annual valuation of commercial properties. A fall in UK commercial property can have a marked effect on the profitability and the net asset value of the Bisichi. However, due to the long term nature of the leases, the effect on cash flows from property investment activities will remain stable as long as tenants remain in operation. key performance indicators The Group's Key Performance Indicators are selected to ensure clear alignment between its strategy and shareholder interests. The KPIs are calculated using data from management reporting systems. STRATEGIC PRIORITY KPI PERFORMANCE MAXIMISING INCOME - LIKE FOR LIKE PROPERTY INCOME TO INCREASE THE LIKE-FOR-LIKE Like-for-like The like-for-like rental income has INCOME FROM THE PROPERTY YEAR rental income as a fallen by Â£0.5m. This was primarily ON YEAR. percentage of the due to the loss of Republic at prior year rental. Sheffield, where the unit is currently under offer. MAXIMISING INCOME - OCCUPANCY WE AIM TO MAXIMISE THE TOTAL The ERV of the Void levels were higher in a INCOME IN OUR empty difficult trading environment. Void PROPERTIES BY ACHIEVING FULL units as a levels to date, excluding units let OCCUPANCY. percentage since the year end or currently of our total under offer, is 2.6%. income. CAPITAL STRENGTH - GROWTH IN NET ASSET VALUE PER SHARE THE NET ASSETS PER SHARE IS Movement in the The net assets per share fell THE net by 8.65 pence per share or 14.6%. PRINCIPAL MEASURE USED BY THE assets per share. However the strength and quality of GROUP FOR MONITORING ITS net NAV is significantly improved as PERFORMANCE AND IS AN a result of the re-financing. INDICATOR OF THE LEVEL OF RESERVES AVAILABLE FOR DISTRIBUTION BY WAY OF DIVIDEND. corporate responsibility Greenhouse gas reporting We have reported on all of the emission sources required under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations for the reporting period 1st January 2014 to 31st December 2014. The emissions are detailed in tables 1, 2, 3 and 4 below. We have employed the Financial Control definition to outline our carbon footprint boundary. Included within that boundary are Scope 1 & 2 emissions from the landlord & tenant controlled areas of shopping centres and facilities that we own. These include Orchard Square, Brewery Street, Brixton Market, Shipley, Bridgend and Kings Square. King Edward Court, Windsor, was sold in January 2014 so the gas and electricity usage for this site along with their associated emissions are reported for January 2014 only. This site was the largest of all LAP properties, making up 60% of total LAP emissions in 2013. As such, the selling of King Edward Court has resulted in a significant reduction in LAP emissions for the 2014 reporting year. Excluded from our footprint boundary are properties that we manage on behalf of others or are not wholly owned by LAP and emissions considered non material by the business. We have reported on emissions from Scope 1 & 2 emissions sources only. We have not measured and reported on our Scope 3 emissions sources. Emissions for landlord controlled areas have been calculated based on actual consumption information collected from each shopping centre. Emissions from tenant controlled areas have been calculated based on floor area and energy consumption benchmarks for general retail services in the UK. Bisichi has employed the Operational Control boundary definition to outline our carbon footprint boundary. Included within that boundary are Scope 1 & 2 emissions from coal extraction and onsite mining processes for Black Wattle Colliery. We have not measured and reported on our Scope 3 emissions sources. Excluded from the footprint boundary are emission sources considered non material by the group, including refrigerant use onsite. We have used the GHG Protocol Corporate Accounting and Reporting Standard (revised edition) and guidance provided by UK's Department of Environment and Rural Affairs (DEFRA) on voluntary and mandatory carbon reporting. Emission factors were used from UK Government's GHG Conversion Factors for Company Reporting 2014. As well as reporting Scope 1 and Scope 2 emissions, legislation requires that at least one intensity ratio is reported for the given reporting period. The intensity figure represented below shows the emissions in tCO2e per thousand pounds revenue. TABLE1. LANDLORD & TENANT CONTROLLED AREAS Emissions Source 2014 2013 % DIFFERENCE Scope 1 emissions Natural gas (tCO2e) 129 227 -43% Refrigerants (tCO2e) 0 9 -100% Scope 2 emissions Electricity (tCO2e) 4,386 5,829 -25% Total tCO2e 4,515 6,065 -26% Intensity ratio (tCO2e/Â£ 0.70 0.43 60% thousand) TABLE 2. LAP CONTROLLED AREAS Emissions Source 2014 2013 % DIFFERENCE Scope 1 emissions Natural gas (tCO2e) 129 227 -43% Refrigerants (tCO2e) 0 9 -100% Scope 2 emissions Electricity (tCO2e) 346 939 -52% Total tCO2e 475 1,175 -50% TABLE 3. TENANT CONTROLLED AREAS Emissions Source 2014 2013 % DIFFERENCE Scope 1 emissions Natural gas (tCO2e) - - - Refrigerants (tCO2e) - - - Scope 2 emissions Electricity (tCO2e) 4,040 4,890 -17% Total tCO2e 4,040 4,890 -17% TABLE 4. COAL MINING CARBON FOOTPRINT 2014 2013 CO2e CO2e Tonnes Tonnes Emissions source: Scope 1 Combustion of fuel & operation of facilities 14,867 24,862 Scope 1 Emissions from coal mining activities 26,872 31,014 Scope 2 Electricity, heat, steam and cooling purchased for 8,300 9,947 own use Total 50,039 65,823 Intensity: Intensity 1 Tonnes of CO2 per pound sterling of revenue 0.00189 0.00188 Environment The Group's principal UK activity is property investment, which involves renting premises to retail businesses. We seek to provide those tenants with good quality premises from which they can operate in an efficient and environmentally friendly manner. Where possible, improvements, repairs and replacements are made in an environmentally efficient manner and waste re-cycling arrangements are in place at all of the Company's locations. Employee, social, community and human rights The Group's principal UK activity 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. Director, employees and gender representation At the year end the company had 6 directors (6 male, 0 female), 5 senior managers (4 male, 1 female) and 19 employees (8 male, 11 female). Bisichi Mining PLC Bisichi Mining PLC's principal activity in the UK is property investment and in South Africa is coal mining. The employment terms and conditions of their UK office employees and South Africa Mining employees are regulated and operated in compliance of all relevant national legislation. Bisichi Mining PLC's group at the year end had 6 directors (6 male, 0 female), 7 senior managers (6 male,1 female) and 217 employees (165 male, 52 female). Detailed information relating to their Strategic Report is available in their 2014 financial statements. Approved on behalf of the board of directors Anil Thapar, Finance Director 21 May 2015 GOVERNANCE DIRECTORS & ADVISoRS EXECUTIVE DIRECTORS Sir Michael Heller MA FCA* (Chairman) John A Heller LLB MBA (Chief Executive) Robert J Corry BA FCA (Finance Director) Resigned 31 December 2014 Anil K Thapar FCCA (Finance Director) Appointed 1 January 2015 NON-EXECUTIVE DIRECTORS Howard D Goldring BSC (ECON) ACA â€ Howard Goldring has been a member of the board since July 1992, he is a global asset allocation specialist and has over 30 years' experience in the real estate market. He is Executive Chairman of Delmore Asset Management Limited which specialises in the management of investment portfolios for private clients, charities, family trusts and pension funds. He also acts as an advisor providing high level asset allocation advice to family offices and pension schemes, including among others, Tesco Pension Investment Ltd. From 1997-2003 he was consultant director on global asset allocation to Liverpool Victoria Asset Management Limited. Clive A Parritt FCA CF FIIA #â€ Clive Parritt joined the board on 1 January 2006. He is a chartered accountant with over 30 years' experience of providing strategic, financial and commercial advice to businesses of all sizes. He is Chairman of Baronsmead VCT 2 plc and BG Consulting Group Limited as well as being a director of Jupiter US Smaller Companies plc. Clive 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 Robin Priest joined the board on 31 July 2013. He is a Managing Director of Alvarez & Marsal Real Estate Advisory Services LLP (A&M) and has more than 30 years' experience in real estate and structured finance. He advises private sector and public sector clients on both operational and financial real estate matters. Prior to joining A&M, Robin Priest was lead partner for Real Estate Corporate Finance in London with Deloitte LLP. He is a member of the investment committee of a European real estate fund. He is also a trustee of London's Oval House Theatre. * Member of the nomination committee # Senior independent director â€ Member of the audit, remuneration and nomination committees SECRETARY & REGISTERED OFFICE Anil K Thapar FCCA 24 Bruton Place London W1J 6NE AUDITOR Baker Tilly UK Audit LLP PRINCIPAL BANKERS Santander UK plc Abbey National Treasury Services plc Europa Capital Mezzanine Ltd SOLICITORS Olswang LLP Pinsent Masons LLP STOCKBROKER Westhouse Securities Limited REGISTRARS & TRANSFER OFFICE Capita Asset Services Shareholder Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Telephone 0871 664 0300 (Calls cost 10p per minute + network extras, lines are open Mon-Fri 9.00am to 5.30pm) or +44 208 639 3399 for overseas callers. Website: www.capitaregistrars.com Email: shareholderenquiries@capita.co.uk Company registration number 341829 (England and Wales) WEBSITE www.lap.co.uk E-MAIL admin@lap.co.uk DIRECTORS' REPORT The Directors submit their report and the audited accounts, for the year ended 31 December 2014. Strategic report A comprehensive review and assessment of the Group's activities during the year as well as its position at the year end and prospects for the forthcoming year are included in the Chairman and Chief Executive's Statement and the Strategic Report. These reports can be found on pages 4 to 23 and should be read in conjunction with this report. Activities The principal activities of the Group during the year were property investment and development, as well as investment in joint ventures and an associated company. The associated company is Bisichi Mining PLC (Bisichi) in which the Company holds a 42 per cent interest. Bisichi is listed on the main market of the London Stock Exchange and operates in England and South Africa with subsidiaries which are involved in overseas mining and mining investment. The results, together with the assets and liabilities, of Bisichi are consolidated with those of LAP in accordance with the terms of IFRS 10 even though the Group only has a minority interest - under the new rules the 58% majority interest is disclosed as a "non-controlling interest". Business review Review of the Group's development and performance A review of the Group's development and performance can be found below and should be read in conjunction with the Strategic Report on pages 12 to 23. Property activities The Group is a long-term investor in property. It acquires retail properties, actively manages those assets to improve rental income and thus seeks to enhance the value of its properties over time. In reviewing performance, the principal areas regularly monitored by the Group include: â€¢ 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. Whilst income may be affected adversely by the inability of tenants to pay their rent, rent collection and tenant quality are monitored carefully. Risk is also minimised by a diversified tenant base, which should limit the impact of the failure of any individual tenant. â€¢ 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. â€¢ Financing costs - the exposure of the Group to interest rate movements is managed partly by the use of swap arrangements (see note 22 on page 71 for full details of the contracts in place) and also by using loans with fixed terms and interest rates. These arrangements are designed to ensure that our interest costs are known in advance and are always covered by anticipated rental income. Details of key estimates adopted are contained in the accounting policies note on page 49. â€¢ Property valuations - market sentiment and economic conditions have a direct effect on property valuations, which can vary significantly (upwards or downwards) over time. Bearing in mind the long-term nature of the Group's business, valuation changes have little direct effect on the ongoing activities or the income and expenditure of the Group. Tenants generally have long-term leases, so rents are unaffected by short-term valuation changes. Borrowings are secured against property values and if those values fall very significantly, this could limit the ability of the Group to develop the business using external borrowings. The risk is minimised by trying to ensure that there is adequate cover to allow for fluctuations in value on a short-term basis. It continues to be the policy of the Group to realise property assets when the valuation of those assets reaches a level at which the directors consider that the long-term rental yield has been reached. The Group also seeks to acquire additional property investments on an opportunistic basis when the potential rental yields offer scope for future growth. Investment activities The investments in joint ventures and Bisichi are for the long term. LAP manages the UK property assets of Bisichi. However the principal activity of Bisichi is overseas mining investment (principally in South Africa). While IFRS 10 requires 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 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 and spreading of risk make such an approach desirable. Dividend policy The directors are recommending payment of a final dividend for 2014 of 0.156p per share (2013 0.125p per share). Subject to shareholder approval, the total dividend per ordinary share for 2014 will be 0.156p per ordinary share (2013 0.125p per share). The final dividend will be payable on Friday 3 July 2015 to shareholders registered at the close of business on 5 June 2015. The company's ordinary shares held in treasury At 31 December 2014, 1,032,991 (2013: 1,254,738) ordinary shares were held in Treasury with a market value of Â£400,284 (2013: Â£552,084). At the Annual General Meeting (AGM) in June 2014 members renewed the authority for the Company to purchase up to 10 per cent of its issued ordinary shares. The Company will be asking members to renew this authority at the next AGM to be held on Wednesday 24 June 2015. Movements in Treasury shares during the year: Number of shares Treasury shares held at 1 January 2014 1,254,738 Issued for directors' bonuses (264,257 shares at 58.25p) (264,257) Issued for staff bonuses (91,728 shares at 58.25p) (91,728) Issued for Share Incentive Plan (5,150) (Directors 5,150 shares at 58.25p) Issued for Share Inventive Plan (30,368) (Staff 30,368 shares at 58.25p) Purchase of shares (171,674 shares at 50.65p) 171,674 Issued for Share Incentive Plan - dividends (1,918) (1,918 shares at 39.5p) Treasury shares held at 31 December 2014 1,032,991 Treasury shares are not included in issued share capital for the purposes of calculating earnings per share and net assets per share and they do not qualify for dividends payable. Following the year-end, 598,373 shares were transferred from Treasury to enable the issue of shares in connection with an approved HMRC Share Incentive Plan and Directors' and Staff bonuses. The shares were issued at 38p on 15 January 2015. Investment properties The freehold and long leasehold properties of the Company, its subsidiaries and Bisichi were revalued as at 31 December 2014 by external professional firms of chartered surveyors - Allsop LLP, London (84.07 per cent of the portfolio), Carter Towler, Leeds (11.17 per cent) and by the Directors (4.76 per cent). The valuations, which are reflected in the financial statements, amount to Â£103.65 million (2013: Â£102.12 million). Taking account of prevailing market conditions, the valuation of the properties at 31 December 2014 resulted in an increase of Â£0.85 million (2013: decrease of Â£0.2 million). The impact of property revaluations on the Company's joint venture (Langney Shopping Centre Unit Trust) was an increase of Â£3.98 million (2013: reduction of Â£0.7 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 22 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, R J Corry, H D Goldring, C A Parritt and R Priest were Directors of the company for the whole of 2014. R J Corry retired as a Director on 31 December 2014. J A Heller and C A Parritt are retiring by rotation at the Annual General Meeting in 2015 and offer themselves for re-election. A K Thapar was appointed an executive Director on 1 January 2015 and will offer himself for election at the Annual General Meeting in 2015. Brief details of the Directors offering themselves for re-election, are as follows: John Heller has been a Director since 1998 and was appointed Chief Executive in September 2001. He has a contract of service determinable upon twelve months' notice. The board has considered the re-appointment of John Heller and recommends his re-election as a Director. Clive Parritt has been a Director since January 2006 and has a contract of service determinable upon three months' notice and is the Senior Independent Director and chairman of the audit, nomination and remuneration committees. He is a chartered accountant with over 30 years' experience in providing strategic, financial and commercial advice to business. His financial knowledge and broad commercial experience are of significant benefit to the business. The board has considered the re-appointment of Clive Parritt and recommends his re-election as a Director. Anil Thapar was appointed a Director on 1 January 2015 and is also the Company Secretary. He has a contract of employment determinable upon three months' notice. Anil Thapar is a Chartered Certified Accountant and has worked with LAP as Group Financial Controller since November 2005. He has worked in the property section since 1998 and previously in industry. The board has considered the appointment of Anil Thapar and recommends his election as a Director. Directors' interests The interests of the Directors in the ordinary shares of the Company, including family and trustee holdings, where appropriate, can be found on page 35 of the Annual Remuneration Report. Substantial shareholdings At 31 December 2014 Sir Michael Heller and his family had an interest in 47.6 million shares of the Company, representing 56.3 per cent of the issued share capital net of treasury shares (2013: 47.6 million shares representing 56.5 per cent). Cavendish Asset Management Limited had an interest in 7,705,611 shares representing 9.12 per cent of the issued share capital of the Company (2013: 7,717,314 shares representing 9.16 per cent). James Hyslop had an interest in 3,856,258 shares representing 4.56 per cent of the issued share capital of the Company (2013: 3,856,258 shares representing 4.58 per cent). The Company does not consider that the Heller family have a controlling share interest irrespective of the number of shares held as no individual party holds a majority and there is no legal obligation for shareholders to act in concert. Therefore the Directors deem no party to have control. The Company is not aware of any other holdings exceeding 3 per cent of the issued share capital. After the year-end and at the date of this report Sir Michael Heller and his family's interest increased to 48 million shares of the Company representing 56.4 per cent of the issued share capital net of treasury shares. 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 in the Company which carry special rights with regard to control of the Company. The identity of all significant direct or indirect holders of securities in the Company and the size and nature of their holdings is shown in "Substantial Shareholdings" above. The rights of the ordinary shares to which the HMRC approved Share Incentive Plan relates, are exercisable by the trustees on behalf of the employees. There are no restrictions on voting rights or on the transfer of ordinary shares in the Company, save in respect of Treasury Shares. The rules governing the appointment and replacement of Directors, alteration of the articles of association of the Company and the powers of the Company's Directors accord with usual English company law provisions. Each Director is re-elected at least every three years. The Company has requested authority from shareholders to buy back its own ordinary shares and there will be a resolution to renew the authority at this year's AGM (Resolution 11). The Company is not party to any significant agreements that take effect, alter or terminate upon a change of control of the Company following a takeover bid. The Company is not aware of any agreements between holders of its ordinary shares that may result in restrictions on the transfer of its ordinary shares or on voting rights. There are no agreements between the Company and its Directors or employees providing for compensation for loss of office or employment that occurs because of a takeover bid. Statement as to disclosure of information to the auditor The Directors in office on 31 December 2014 have confirmed that, so far as they are aware, there is no relevant audit information of which the auditor is unaware. Each of the Directors has confirmed that they have taken all the steps that they ought to have taken as a Director in order to make them aware of any relevant audit information and to establish that it has been communicated to the auditor. Directors and officers liability insurance The Group maintains Directors and officers insurance, which is reviewed annually and is considered to be adequate by the Company and its insurance advisers. Donations No political donations were made during the year (2013: Â£Nil). Donations for charitable purposes amounted to Â£1,005 (2013: Â£2,548). Greenhouse Gas Reporting Details of the Group's Greenhouse Gas Reporting for the year ended 31 December 2014 can be found on page 22 of the Strategic Report. Going concern The directors have reviewed the cash flow forecasts of the Group and the underlying assumptions on which they are based. The Group's business activities, together with the factors likely to affect its future development, are set out in the Chairman's and Chief Executive's Statement and Financial Review. In addition note 22 to the financial statements sets out the Company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposure to credit risk and liquidity risk. With secured long term banking facilities, sound financial resources and long term leases in place the Directors believe it remains appropriate to adopt the going concern basis of accounting in preparing the annual financial statements. Corporate Governance The Corporate governance report can be found on page 30 of the annual report and accounts. Annual General Meeting The Annual General Meeting will be held at 24 Bruton Place, London W1J 6NE on Wednesday 24 June 2015 at 10.30 a.m. Items 1 to 9 will be proposed as ordinary resolutions. More than 50 per cent of shareholders' votes cast at the meeting must be in fa vour for those resolutions to be passed. Items 10 to 12 will be proposed as special resolutions. At least 75 per cent of shareholders' votes cast at the meeting must be in favour for those 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 not 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. Ordinary resolutions Resolution 9 - Authority to allot securities Paragraph 9.1.1 of Resolution 9 would give the Directors the authority to allot shares in the Company and grant rights to subscribe for or convert any security into shares in the Company up to an aggregate nominal value of Â£ 2,836,936. This represents approximately 1/3 (one third) of the ordinary share capital of the Company in issue (excluding treasury shares) as at 15 May 2015 (being the last practicable date prior to the publication of this Directors' Report). In line with guidance issued by the Investment Association ('IA') paragraph 9.1.2 of Resolution 9 would give the directors the authority to allot shares in the Company and grant rights to subscribe for or convert any security into shares in the Company up to a further aggregate nominal value of Â£2,836,936, in connection with a rights issue. This amount represents approximately 1/3 (one third) of the ordinary share capital of the Company in issue (excluding treasury shares) as at 15 May 2015 (being the last practicable date prior to the publication of this Directors' Report). The Directors' authority will expire on 31 August 2016 or if earlier 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 Investment Association regarding its use (including as regards the Directors standing for re-election in certain cases). Special resolutions The following special resolutions will be proposed at the Annual General Meeting: Resolution 10 - Disapplication of pre-emption rights Under company law, when new shares are allotted or treasury shares are sold for cash (otherwise than pursuant to an employee share scheme) they must first be offered to existing shareholders in proportion to their existing shareholdings. This special resolution gives the Directors authority, for the period ending on the date of the next annual general meeting to be held in 2016, to: (a) allot shares of the Company and sell treasury shares for cash in connection with a rights issue or other pre-emptive offer; and (b) otherwise allot shares of the Company, or sell treasury shares, for cash up to an aggregate nominal value of Â£425,540 representing, in accordance with institutional investor guidelines, approximately 5 per cent of the total ordinary share capital in issue as at 15 May 2015 (being the last practicable date prior to the publication of this Directors' Report) in each case as if the pre-emption rights in company law did not apply. Save in respect of issues of shares in respect of employee share schemes and share dividend alternatives, the Directors do not currently intend to make use of these authorities. The board intends to adhere to the provisions in the Pre-emption Group's Statement of Principles not to allot shares for cash on a non-pre-emptive basis in excess of an amount equal to 7.5 per cent of the Company's ordinary share capital within a rolling three-year period without prior consultation with shareholders. The Directors' authority will expire on on 31 August 2016 or if earlier the next AGM. Resolution 11 - Purchase of own ordinary shares The effect of Resolution 11 would be to renew the Directors' current authority to make limited market purchases of the Company's ordinary shares of 10 pence each. The power is limited to a maximum aggregate number of 8,510,809 ordinary shares (representing approximately 10 per cent of the Company's issued share capital as at 15 May 2015 (being the latest practicable date prior to publication of this Directors' Report)). The minimum price (exclusive of expenses) which the Company would be authorised to pay for each ordinary share would be 10 pence (the nominal value of each ordinary share). The maximum price (again exclusive of expenses) which the Company would be authorised to pay for an ordinary share is an amount equal to 105 per cent of the average market price for an ordinary share for the five business days preceding any such purchase. The authority conferred by Resolution 11 will expire at the conclusion of the Company's next annual general meeting to be held in 2016 or 15 months from the passing of the resolution, whichever is the earlier. Any purchases of ordinary shares would be made by means of market purchases through the London Stock Exchange. If granted, the authority would only be exercised if, in the opinion of the Directors, to do so would result in an increase in earnings per share or asset values per share and would be in the best interests of shareholders generally. In exercising the authority to purchase ordinary shares, the Directors may treat the shares that have been bought back as either cancelled or held as treasury shares (shares held by the Company itself). No dividends may be paid on shares which are held as treasury shares and no voting rights are attached to them. Other matters Baker Tilly UK Audit LLP has expressed its willingness to continue in office as auditor. A proposal will be made at the Annual General Meeting for reappointment. By order of the board Anil Thapar Secretary 21 May 2015 24 Bruton Place London W1J 6NE CORPORATE GOVERNANCE The Company has adopted the Corporate Governance Code for Small and Mid-Size Quoted Companies (the QCA Code) published by the Quoted Companies Alliance. The QCA Code provides governance guidance to small and mid-size quoted companies. The paragraphs below set out how the Company has applied this guidance during the year. The Company has complied with the QCA Code throughout the year. Principles of corporate governance The board promotes good corporate governance in the areas of risk management and accountability as a positive contribution to business prosperity. The board endeavours to apply corporate governance principles in a sensible and pragmatic fashion having regard to the circumstances of the business. The key objective is to enhance and protect shareholder value. Board structure During the year the board comprised the Chairman, the Chief Executive, one other executive Director and three non-executive Directors. Their details appear on page 26. The board is responsible to shareholders for the proper management of the Group. The Directors' responsibility statement in respect of the accounts is set out on page 41. 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: â€¢ 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 are used to assist the process. All Directors are subject to re-election at a maximum of every three years. â€¢ The remuneration committee is responsible for making recommendations to the board on the Company's framework of executive remuneration and its cost. The committee determines the contract terms, remuneration and other benefits for each of the executive directors, including performance related bonus schemes, pension rights and compensation payments. The board itself determines the remuneration of the non-executive Directors. The committee comprises two non-executive Directors and it is chaired by C A Parritt. The executive Chairman of the board is normally invited to attend. The Annual Remuneration Report is set out on pages 33 to 37. The audit committee comprises two non-executive Directors and is chaired by C A Parritt. The audit committee report is set out on page 40. Board and board committee meetings held in 2014 The number of regular meetings during the year and attendance was as follows: Meetings Meetings held attended R J Corry Board 11 11 Audit committee 2 2 H D Goldring Board 11 11 Audit committee 2 2 Nomination committee 2 2 Remuneration committee 2 2 Sir Michael Heller Board 11 11 Nomination committee 2 2 Remuneration committee 2 2 J A Heller Board 11 11 Audit committee 2 2 C A Parritt Board 11 11 Audit committee 2 2 Nomination committee 2 2 Remuneration committee 2 2 R Priest Board 11 10 Performance evaluation - board, board committees and directors The performance of the board as a whole and of its committees and the non-executive Directors is assessed by the Chairman and the Chief Executive and is discussed with the senior non-executive independent Director. Their recommendations are discussed at the nomination committee prior to proposals for re-election being recommended to the board. The performance of executive Directors is discussed and assessed by the remuneration committee. The senior independent Director meets regularly with the Chairman, executive and non-executive Directors individually outside of formal meetings. The Directors will take outside advice in reviewing performance but have not found this to be necessary to date. Independent directors The senior independent non-executive Director is C A Parritt. The other independent non-executive Directors are H D Goldring and R Priest. Delmore Asset Management Limited (Delmore) is a Company in which H D Goldring is the majority shareholder and a Director. Delmore provides consultancy services to the Company on a fee paying basis. Alvarez and Marsal Real Estate Advisory Services (A&M) is a Company in which R Priest is a Managing Director. A&M provides consultancy and advisory services the Company on a fee paying basis. C A Parritt also provides some advisory services from his accounting practice. The board encourages all three non-executive Directors to act independently and does not consider that length of service of any individual non-executive Director, nor any connection with the above mentioned consultancy and advisory companies has resulted in the inability or failure to act independently. In the opinion of the board the three non-executive Directors continue to fulfil their roles as independent non-executive Directors. The independent Directors exchange views regularly between board meetings and meet when required to discuss corporate governance and other issues concerning the Group. Internal control The Directors are responsible for the Group's system of internal control and for reviewing its effectiveness at least annually, and for the preparation and review of its financial statements. The board has designed the Group's system of internal control in order to provide the Directors with reasonable assurance that assets are safeguarded, that transactions are authorised and properly recorded and that material errors and irregularities are either prevented or would be detected within a timely period. However, no system of internal control can eliminate the risk of failure to achieve business objectives or provide absolute assurance against material misstatement or loss. The key elements of the control system in operation are: â€¢ 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; â€¢ 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; â€¢ The departmental heads are required annually to undertake a full assessment process to identify and quantify the risks that face their departments and functions, and assess the adequacy of the prevention, monitoring and modification practices in place for those risks. In addition, regular reports about significant risks and associated control and monitoring procedures are made to the executive Directors. The process adopted by the Group accords with the guidance contained in the document "Internal Control Guidance for Directors on the Combined Code" issued by the Institute of Chartered Accountants in England and Wales. The audit committee receives reports from external auditors and from executive Directors of the Group. During the period, the audit committee has reviewed the effectiveness of the system of internal control as described above. The board receives periodic reports from all committees. â€¢ 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 2014. Up to the date of approval of this report and the financial statements, the board has not been required to deal with any related material internal control issues. The Directors confirm that the board has reviewed the effectiveness of the system of internal control as described during the period. Communication with shareholders Prompt communication with shareholders is given high priority. Extensive information about the Group and its activities is provided in the Annual Report. In addition, a half-year report is produced for each financial year and published on the Company's website. The Company's website www.lap.co.uk is updated promptly with announcements and Annual Reports upon publication. Copies from previous years are also available on the website. The Company's share price is published daily in the Financial Times. The share price history and market information can be found at http:// www.londonstockexchange.com/prices-and-markets/markets/prices.htm. The company code is LAS. There is a regular dialogue with the Company's stockbrokers and institutional investors. Enquiries from individuals on matters relating to their shareholdings and the business of the Group are dealt with promptly and informatively. The Company's website is under continuous development to enable better communication with both existing and potential new shareholders. The Bribery Act 2010 The Company is committed to acting ethically, fairly and with integrity in all its endeavours and compliance with the code is monitored closely. statement by the chairman of remuneration committee The remuneration committee is pleased to present its report for the year ended 31 December 2014. The report is presented in two parts in accordance with the regulations. The first part, is the Annual Remuneration Report which details remuneration awarded to Directors and non-executive Directors during the year. The shareholders will be asked to approve the Annual Remuneration Report as an ordinary resolution (as in previous years) at the AGM in June 2015. The second part, is the Remuneration Policy which details the remuneration policy for Directors. This policy was subject to a binding vote by shareholders at the AGM in 2014 and approved for a 3 year period commencing from then. The committee reviewed the existing policy and deemed no changes necessary to the current arrangements. Both of the above 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, Baker Tilly UK Audit LLP is required by law to audit certain disclosures and where disclosures have been audited they are indicated as such. C A Parritt Chairman, Remuneration Committee 21 May 2015 annual remuneration report The following information has been audited Single total figure of remuneration for the year ended 31 December 2014 Salary and BONUSES BENEFITS PENSIONS TOTAL NOTIONAL TOTAL fees Â£'000 Â£'000 Â£'000 BEFORE SHARE VALUE OF 2014 Â£'000 OPTIONS VESTING SHARE Â£'000 Â£'000 OPTIONS Â£'000 Executive Directors Sir Michael 7 91 40 - 138 n/a 138 Heller* J A Heller 333 442 24 36 835 n/a 835 R J Corry 180 - 25 33 238 n/a 238 520 533 89 69 1,211 - 1,211 Non-executive Directors H D Goldring* 43 - 5 - 48 n/a 48 + C A Parritt * 32 - - - 32 n/a 32 + R Priest * 63 - - - 63 n/a 63 138 - 5 - 143 - 143 Total 658 533 94 69 1,354 - 1,354 * Note 27 "Related party transactions" + Members of the remuneration committee for year ended 31 December 2014 Benefits include the provision of car, health and other insurance and subscriptions Single total figure of remuneration for the year ended 31 December 2013 Salary BONUSES BENEFITS PENSIONS TOTAL NOTIONAL VALUE TOTAL 2013 and Â£'000 Â£'000 Â£'000 BEFORE OF VESTING Â£'000 fees SHARE OPTIONS SHARE OPTIONS Â£'000 Â£'000 Â£'000 Executive Directors Sir Michael 7 216 34 - 257 n/a 257 Heller* J A Heller 327 326 30 33 716 n/a 716 R J Corry 166 10 24 33 233 n/a 233 500 552 88 66 1,206 - 1,206 Non-executive Directors H D Goldring*+ 43 - 5 - 48 n/a 48 C A Parritt*+ 32 - - - 32 n/a 32 R Priest* 37 - - - 37 n/a 37 112 - 5 - 117 - 117 Total 612 552 93 66 1,323 - 1,323 * Note 27 "Related party transactions" + Members of the remuneration committee for year ended 31 December 2013 Benefits include the provision of car, health and other insurance and subscriptions Sir Michael Heller is a director of Bischi Mining PLC, (a subsidiary for IFRS 10 purposes from this year) and received a salary from that company of Â£75,000 (2013: Â£75,000) for services. Although Sir Michael Heller receives reduced remuneration in respect of his services to the Group, the Group does supply office premises, property management, general management, accounting and administration services for a number of companies in which Sir Michael Heller has an interest. The board estimates that the value of these services, if supplied to a third party, would have been Â£300,000 (2013: Â£300,000) for the year. Further details of these services are set out in Note 27 "Related party transactions" to the financial statements. John Heller is a director of Dragon Retail Properties Limited, (a subsidiary for IFRS 10 purposes from this year) and received benefits from that company of Â£7,250 (2013: Â£5,250) for services. H D Goldring's company, Delmore Asset Management Limited provides consultancy services to the Group. This is detailed in Note 27 to the financial statements. C A Parritt provides consultancy services to the Group. This is detailed in Note 27 to the financial statements. R Priest is a managing director of Alvarez & Marsal Real Estate Advisory Services who provide consultancy services to the Group. This is detailed in Note 27 to the financial statements. R J Corry resigned as a director on 31 December 2014. Summary of directors' terms Date of Unexpired Notice contract term period Executive Directors Sir Michael Heller 1 January Continuous 6 months 1971 John Heller 1 May 2003 Continuous 12 months Robert Corry 1 September Continuous 6 months 1992 Non-executive Directors H D Goldring 1 July 1992 Continuous 3 months C A Parritt 1 January Continuous 3 months 2006 R Priest 31 July 2013 Continuous 3 months Total pension entitlements Two directors had benefits under money purchase schemes. Under their contracts of employment they were entitled to a regular employer contribution (currently Â£33,000 a year). There are no final salary schemes in operation. No pension costs are incurred on behalf of non-executive Directors. Share Incentive Plan (SIP) In 2006 the Directors set up an HMRC approved share incentive plan (SIP). The purpose of the plan, which is open to all eligible LAP executive Directors and head office based staff, is to enable them to acquire shares in the Company and give them a continuing stake in the Group. The SIP comprises four types of share - (1) free shares under which the Company may award shares of up to the value of Â£3,000 each year, (2) partnership shares, under which members may save up to Â£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: 35,518 free shares were awarded in 2014 in respect of 2013 bonuses (see below as 2013). Additionally, 55,218 shares were awarded in January 2015 relating to 2014 bonuses and these are shown below as 2014. Free shares awarded: Number of members Number of shares Value of shares 2014 2013 2014 2013 2014 2013 Â£ Â£ Directors: - 1 - 5,150 - 3,000 R J Corry J A Heller 1 - 7,947 - 3,000 - Staff 6 6 47,271 30,368 17,845 17,690 Total at 31 December 7 7 55,218 35,518 20,845 20,690 2. Partnership shares: No partnership shares were issued between November 2013 and October 2014. 3. Matching shares: The partnership share agreements for the year to 31 October 2014 provide for two matching shares to be awarded free of charge for each partnership share acquired. No partnership shares were acquired in 2014 (2013: nil). Matching shares will usually be forfeited if a member leaves employment in the Group within 5 years of their grant. 4. Dividend shares: Dividends on shares acquired under the SIP will be utilised to acquire additional shares. Accumulated dividends received on shares in the SIP to 31 December 2014 amounted to nil (2013: nil). Dividend shares issued: Number of members Number of shares Value of shares 2014 2013 2014 2013 2014 2013 Â£ Â£ Directors: 1 - 293 - 116 - R J Corry J A Heller 1 - 253 - 100 - Staff 9 - 1,372 - 542 - Total at 31 December 11 - 1,918 - 758 - 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 2014. 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 2014 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. 20,000 options under the Unapproved Scheme, were issued during the year and following the resignation of the option holder, the share option lapsed during the year to 31 December 2014. Further details of this scheme are set out in Note 25 "Share Capital" to the financial statements. Payments to past directors No payments were made to past Directors in the year ended 31 December 2014. Payments for loss of office No payments for loss of office were made in the year ended 31 December 2014. Statement of directors' shareholding and share interest Directors' interests The interests of the Directors in the ordinary shares of the Company, including family and trustee holdings, where appropriate, were as follows: Beneficial interests Non-beneficial interests 31 Dec 14 1 Jan 14 31 Dec 14 1 Jan 14 Sir Michael Heller 6,421,089 6,335,252 19,277,931 19,277,931 R J Corry 1,040,637 1,028,448 - - H D Goldring 19,819 19,819 - - J A Heller 1,668,976 1,673,581 â€ 14,073,485 â€ 14,073,485 C A Parritt 36,168 36,168 - - â€ These non-beneficial holdings are duplicated with those of Sir Michael Heller. The beneficial holdings of Directors shown above include their interests in the Share Incentive Plan. Remuneration of the Chief Executive over the last TEN years Year CEO Chief Executive Single Annual bonus payout Long-term incentive total figure against maximum vesting rates of remuneration opportunity* against maximum Â£'000 % opportunity* % 2014 J A Heller 835 n/a n/a 2013 J A Heller 716 n/a n/a 2012 J A Heller 417 n/a n/a 2011 J A Heller 671 n/a n/a 2010 J A Heller 577 n/a n/a 2009 J A Heller 982 n/a n/a 2008 J A Heller 688 n/a n/a 2007 J A Heller 1,032 n/a n/a 2006 J A Heller 981 n/a n/a 2005 J A Heller 637 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. Percentage change in Chief Executive's Remuneration (audited) The table below shows the percentage change in Chief Executive remuneration for the prior year compared to the average percentage change for all other Head Office based employees. To provide a meaningful comparison, the same group of employees (although not necessarily the same individuals) appear in the 2013 and 2014 group. The remuneration committee chose Head Office based employees as the comparator group as this group forms the closest comparator group. Chief Executive Head Office Employees Â£'000 Â£'000 2014 2013 % change 2014 2013 % change Base salary 333 327 2% 848 894 (5%) Taxable benefits 24 30 (20%) 113 117 (3%) Annual bonus 442 326 36% 235 209 12% Total 799 683 17% 1,196 1,220 (2%) Relative importance of spend on pay The total expenditure of the Group on remuneration to all employees (Note 28 refers) is shown below: 2014 2013 Â£'000 Â£'000 Employee Remuneration 7,786 8,851 Distributions to shareholders 106 - Statement of implementation of remuneration policy The policy was approved at the AGM in June 2014 and was effective from 10 June 2014. The vote on the remuneration policy is binding in nature. The Company may not then make a remuneration payment or payment for loss of office to a person who is, is to be, or has been a director of the Company unless that payment is consistent with the approved remuneration policy, or has otherwise been approved by a resolution of members. Unless changed it will be presented next for approval at the AGM in 2017. 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 2014. Increases were awarded and no external advice was taken in reaching this decision. Shareholder voting At the Annual General Meeting on 10 June 2014, there was an advisory vote on the resolution to approve the Remuneration Report the result of which is detailed below: % of votes % of votes Number of for against votes withheld Resolution to approve the Remuneration 99.11 0.69 62,723 Report Resolution to approve the Remuneration 99.12 0.67 66,918 Policy remuneration POLICY Set out below is an extract of the Group policy on Directors' remuneration. This policy was approved at the 2014 AGM and it is effective from 10 June 2014. Unless changed it will be presented next for approval at the AGM in 2017. A copy of the full policy can be found at www.lap.co.uk. In setting the policy, the Remuneration Committee has taken the following into account: â€¢ The need to attract, retain and motivate individuals of a calibre who will ensure successful leadership and management of the Company â€¢ The Group's general aim of seeking to reward all employees fairly according to the nature of their role and their performance â€¢ Remuneration packages offered by similar companies within the same sector â€¢ The need to align the interests of shareholders as a whole with the long-term growth of the Group â€¢ The need to be flexible and adjust with operational changes throughout the term of this policy The remuneration of non-executive Directors is determined by the board, and takes into account additional remuneration for services outside the scope of the ordinary duties of non-executive Directors. FUTURE POLICY TABLE Element Purpose Policy Operation Opportunity and performance conditions EXECUTIVE DIRECTORS Base To recognise: Considered by Reviewed annually There is no salary Skills remuneration whenever there is a prescribed maximum Responsibility committee on change of role or salary or maximum Accountability appointment operational rate of increase Experience Set at a level responsibility No specific Value considered Paid monthly in performance appropriate to cash conditions are attract, retain, attached to base motivate and reward salaries the right individuals Pension To provide Company contribution The contribution Company competitive offered at up to 10% payable by the contribution retirement of base salary as Company is included offered at up to benefits part of overall in the Director's 10% of base salary remuneration package contract of as part of overall employment remuneration Paid into money package purchase schemes No specific performance conditions are attached to pension contributions Benefits To provide a Contractual benefits The committee The costs competitive include: retains the associated with benefits Car or car allowance discretion to benefits offered package Group health cover approve changes in are closely Death in service contractual controlled and cover benefits in reviewed on an Permanent health exceptional annual basis insurance circumstances or No specific where factors performance outside the control conditions are of the Group lead attached to to increased costs contractual (e.g. medical benefits inflation) The value of benefits for each Director for the year ended 31 December 2014 is shown in the table on page 33 Annual To reward and In assessing the The remuneration The current maximum Bonus incentivise performance of the committee bonus will not executive team, and determines the exceed 200% of base in particular to level of bonus on salary in any one determine whether an annual basis year but the bonuses are merited applying such remuneration the remuneration performance committee reserves committee takes into conditions and the power to award account the overall performance up to 300% in an performance of the measures as it exceptional year business, as well as considers Performance individual appropriate conditions will be contribution to the assessed on an business in the annual basis period The performance Bonuses are generally measures applied offered in cash or may be financial, shares non-financial, corporate, divisional or individual and in such proportion as the remuneration committee considers appropriate Share To provide Granted under Offered at Entitlement to Options executive existing schemes (see appropriate times share options Directors with page 35) by the remuneration granted under the a committee Approved Option long-term scheme are not interest in subject to the Company performance criteria. Share Options granted under the Unapproved Scheme are subject to the performance criteria specified in the Scheme rules Share options will be offered by the remuneration committee as appropriate There are no maximum levels for share options offered Share To offer a Offered to executive Maximum Of any bonus Incentive shorter term Directors and head participation awarded, Directors Plan incentive in office staff levels are set by may opt to have (SIP) the Company HMRC maximum of Â£3,000 and to give of per year paid in Directors a 'Free Shares' under stake in the the SIP scheme Group rules Full detail of the SIP can be found on page 34 NON-EXECUTIVE DIRECTORS Base To recognise: Considered by the Reviewed annually There is no salary Skills board on appointment prescribed maximum Experience Set at a level salary or maximum Value considered rate of increase appropriate to No performance attract, retain and conditions are motivate the attached to base individual salaries Experience and time required for the role are considered on appointment Pension No pension offered Benefits No benefits offered The committee The costs except to one retains the associated with non-executive discretion to benefits offered Director who is approve changes in are closely eligible for health contractual controlled and cover (see annual benefits in reviewed on an remuneration report exceptional annual basis page 33) circumstances or No specific where factors performance outside the control conditions are of the Group lead attached to to increased costs contractual (e.g. medical benefits inflation) Share Non-executive Options Directors do not participate in the share option schemes Notes to the Future Policy Table The remuneration committee considers the performance measures outlined in the table above to be appropriate measures of performance AUDIT COMMITTEE REPORT The committee's terms of reference have been approved by the board and follow published guidelines, which are available on request from the company secretary. At the year end the audit committee comprised two of the non-executive directors - H D Goldring and C A Parritt, both of whom are Chartered Accountants. The audit committee's primary tasks are to: â€¢ review the scope of external audit, to receive regular reports from Baker Tilly UK Audit LLP and to review the half-yearly and annual accounts before they are presented to the board, focusing in particular on accounting policies and areas of management judgement and estimation; â€¢ monitor the controls which are in force to ensure the integrity of the information reported to the shareholders; â€¢ 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; â€¢ 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; â€¢ consider once a year the need for an internal audit function; â€¢ advise the board on the appointment of the external auditors, the rotation of the audit partner every five years and on their remuneration for both audit and non-audit work; discuss the nature and scope of their audit work and undertake a formal assessment of their independence each year, which includes: i) a review of non-audit services provided to the Group and related fees; ii) discussion with the auditors of their written report detailing all relationships with the Company and any other parties that could affect independence or the perception of independence; iii) a review of the auditors' own procedures for ensuring the independence of the audit firm and partners and staff involved in the audit, including the regular rotation of the audit partner; and iv) obtaining a written confirmation from the auditors that, in their professional judgement, they are independent. Meetings The committee meets at least twice prior to the publication of the annual results and discusses and considers the half year results prior to their approval by the board. The audit committee meetings are attended by the external audit partner, chief executive, finance director and company secretary. During the year the members of the committee also meet on an informal basis to discuss any relevant matters which may have arisen. Additional formal meetings may be held as necessary. During the past year the committee: â€¢ met with the external auditors, and discussed their reports to the audit committee; â€¢ approved the publication of annual and half year financial results; â€¢ considered and approved the annual review of internal controls; â€¢ decided that there was no current need for an internal audit function; â€¢ agreed the independence of the auditors and approved their fees for both audit and non-audit services as set out in note 2 to the financial statements; and â€¢ the chairman of the audit committee has also had separate meetings and discussions with the external audit partner. External Auditor Baker Tilly UK Audit LLP held office throughout the period under review. In the United Kingdom London & Associated Properties PLC provides extensive administration and accounting services to Bisichi Mining PLC, which has its own audit committee and employs BDO LLP, a separate and independent firm of registered auditor. C A Parritt Chairman - Audit Committee 21 May 2015 directors' responsibility statement The Directors are responsible for preparing the Strategic Report and the Directors' Report, the Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare group and company financial statements for each financial year. The Directors are required under the Listing Rules of the Financial Conduct Authority to prepare group financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") and have elected under company law to prepare the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The Group financial statements are required by law and IFRS adopted by the EU to present fairly the financial position and performance of the Group; the Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing each of the Group and Company financial statements, the Directors are required to: a. select suitable accounting policies and then apply them consistently; b. make judgements and accounting estimates that are reasonable and prudent; c. for the Group financial statements, state whether they have been prepared in accordance with IFRSs adopted by the EU and for the company financial statements state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the company financial statements; and d. prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's and the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Directors' statement pursuant to the Disclosure and Transparency Rules Each of the directors, whose names and functions are listed on page 26 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 profit of the Company and the undertakings included in the consolidation taken as a whole; and b. the Strategic Report contained in the Annual Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the London & Associated Properties PLC website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. independent auditor's report to the members of London & Associated Properties PLC We have audited the Group and parent Company financial statements ("the financial statements") on pages 44 to 88. The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditor As more fully explained in the Directors' Responsibilities Statement set out on page 41 the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at http://www.frc.org.uk/ auditscopeukprivate Opinion on financial statements In our opinion â€¢ 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 2014 and of the group's loss for the year then ended; â€¢ the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; â€¢ the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and â€¢ the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation. Opinion on other matters prescribed by the Companies Act 2006 In our opinion: â€¢ the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and â€¢ 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. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: â€¢ 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 â€¢ the parent company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or â€¢ certain disclosures of Directors' remuneration specified by law are not made; or â€¢ we have not received all the information and explanations we require for our audit. Euan Banks (Senior Statutory Auditor) For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory Auditor Chartered Accountants 25 Farringdon Street London EC4A 4AB 21 May 2015 consolidated income statement for the year ended 31 December 2014 Notes 2014 2013 Â£'000 restated Â£'000 Group revenue 1 33,526 43,291 Operating costs (31,237) (40,101) Income from listed investments held for trading 3 3 (4) Operating profit 2,292 3,186 Finance income 5 115 247 Finance expenses 5 (4,875) (5,958) Interest rate derivative break cost 22 (1,117) - Result before valuation movements (3,585) (2,525) Non-cash changes in valuation of assets and liabilities Increase/(decrease) in value of investment properties 853 (241) (Decrease)/increase in trading investments (86) 38 Increase/(decrease) in value of other investments 1 (1) Adjustment to interest rate derivative 22 (1,086) 4,419 Share of profit/(loss) of joint ventures, net of tax 12 1,124 (90) Result including revaluation and other movements (2,779) 1,600 Attributable to discontinued operations 7 86 (461) (Loss)/profit for the year before taxation 2 (2,693) 1,139 Income tax (charge)/credit 6 (3,702) 2,547 (Loss)/profit for the year (6,395) 3,686 Attributable to: Equity holders of the Company (7,140) 3,473 Non-controlling interest 26 745 213 (Loss)/profit for the year (6,395) 3,686 Earnings per share (Loss)/profit per share - basic and diluted - 9 (8.55)p 2.74p continuing operations Profit per share - basic and diluted - discontinued 9 0.10p 1.38p operations Total 9 (8.45)p 4.12p consolidated statement of comprehensive income for the year ended 31 December 2014 2014 2013 Â£'000 restated Â£'000 (Loss)/profit for the year (6,395) 3,686 Other comprehensive income: Items that may be subsequently recycled to the income statement: Exchange differences on translation of foreign operations (121) (858) Transfer of gain on available for sale investments 56 - Taxation (15) - Other comprehensive income for the year net of tax (80) (858) Total comprehensive income for the year net of tax (6,475) 2,828 Attributable to: Equity shareholders (7,168) 3,153 Non-controlling interest 693 (325) (6,475) 2,828 consolidated balance sheet at 31 December 2014 Notes 2014 2013 2012 Â£'000 restated restated Â£'000 Â£'000 Non-current assets Market value of 10 103,655 102,118 219,834 properties attributable to Group Present value of 30 4,788 4,793 28,859 head leases Property 108,443 106,911 248,693 Mining reserves, 11 6,257 7,318 8,921 plant and equipment Investments in 12 3,434 2,310 1,153 joint ventures Loan to joint 13 1,040 984 1,117 venture Held to maturity 16 2,196 2,200 1,913 investments Other 152 151 131 investments Deferred tax 23 2,324 5,651 3,324 123,846 125,525 265,252 Current assets Inventories 15 1,760 1,756 1,876 Assets held for 7 - 126,590 - sale Trade and other 17 6,774 9,741 10,185 receivables Corporation tax 35 36 49 recoverable Available for 18 796 822 787 sale investments Investments held 18 122 133 145 for trading Cash and cash 9,237 8,818 10,156 equivalents 18,724 147,896 23,198 Total assets 142,570 273,421 288,450 Current liabilities Liabilities 7 - (111,523) - associated with assets held for sale Trade and other 19 (11,323) (13,775) (17,333) payables Borrowings 20 (3,590) (53,960) (58,852) Current tax (24) (14) (22) liabilities (14,937) (179,272) (76,207) Non-current liabilities Borrowings 20 (65,476) (17,074) (88,910) Interest rate 22 (656) (9,569) (33,935) derivatives Present value of 30 (4,788) (4,793) (28,859) head leases on properties Provisions 21 (930) (874) (989) Deferred tax 24 (2,410) (2,104) (2,605) liabilities (74,260) (34,414) (155,298) Total (89,197) (213,686) (231,505) liabilities Net assets 53,373 59,735 56,945 Equity attributable to the owners of the parent Share capital 25 8,554 8,554 8,554 Share premium 4,866 4,866 4,866 account Translation (696) (658) (338) reserve in associate Capital 47 47 47 redemption reserve Retained 30,659 38,084 34,749 earnings (excluding treasury shares) Treasury 25 (883) (1,159) (1,421) shares Retained 29,776 36,925 33,328 earnings Total equity 42,547 49,734 46,457 attributable to equity shareholders Non - 26 10,826 10,001 10,488 controlling interest Total equity 53,373 59,735 56,945 Net assets per 9 50.35p 59.00p share Diluted net 9 50.35p 59.00p assets per share These financial statements were approved by the board of directors and authorised for issue on 21 May 2015 and signed on its behalf by: Sir Michael Heller Anil Thapar Company Registration No. 341829 Director Director consolidated statement of changes in shareholders' equity for the year ended 31 December 2014 Share Share Translation Capital Treasury Retained Total Non- Total capital premium reserves redemption shares earnings excluding controlling equity Â£'000 Â£'000 Â£'000 reserve Â£'000 excluding Non- Interests Â£'000 Â£'000 treasury Controlling Â£'000 shares Interests Â£'000 Â£'000 Balance at 1 8,554 4,866 (338) 47 (1,421) 34,749 46,457 - 46,457 January 2013 as previously reported IFRS 10 - - - - - - - 10,488 10,488 adjustments Restated 8,554 4,866 (338) 47 (1,421) 34,749 46,457 10,488 56,945 balance at 1 January 2013 Profit for year - - - - - 3,473 3,473 213 3,686 Other comprehensive income: Currency - - (320) - - - (320) (538) (858) translation in associate Total other - - (320) - - - (320) (538) (858) comprehensive income Total - - (320) - - 3,473 3,153 (325) 2,828 comprehensive income Transactions - - - - - 62 62 - 62 with owners: Equity share options Shares issued - - - - - - - 86 86 to non-controlling interests Dividends - - - - - - - - (248) (248) non-controlling interests Disposal of own - - - - 62 - 62 - 62 shares Loss on - - - - 200 (200) - - - transfer of own shares Transactions - - - - 262 (138) 124 (162) (38) with owners Balance at 31 8,554 4,866 (658) 47 (1,159) 38,084 49,734 10,001 59,735 December 2013 (Loss)/profit - - - - - (7,140) (7,140) 745 (6,395) for year Other comprehensive income: Currency - - (45) - - - (45) (76) (121) translation Gain on - - - - - 17 17 24 41 available for sale investments (net of tax) Total other - - (45) - - 17 (28) (52) (80) comprehensive income Total - - (45) - - (7,123) (7,168) 693 (6,475) comprehensive income Transaction with owners: Equity share - - - - - 27 27 - 27 options Shares issued - - - - - - - 313 313 to non-controlling interests Dividends - - - - - - (106) (106) - (106) equity holders Dividends - - - - - - - - (292) (292) non-controlling interests Change in - - 7 - - (88) (81) 111 30 equity held by LAP Acquisition of - - - - (88) - (88) - (88) own shares Disposal of own - - - - 229 - 229 - 229 shares Loss on - - - - 135 (135) - - - transfer of own shares Transactions - - 7 - 276 (302) (19) 132 113 with owners Balance at 31 8,554 4,866 (696) 47 (883) 30,659 42,547 10,826 53,373 December 2014 consolidated cash flow statement for the year ended 31 December 2014 2014 2013 Â£'000 restated Â£'000 Operating activities Operating profit - continuing operations 2,292 3,186 - discontinued operations 250 6,557 Depreciation and amortisation 2,732 2,875 Profit on disposal of non-current assets (43) (21) Share based payment expense 65 120 (Increase)/decrease in inventories (4) 120 Decrease/(increase) in receivables 2,922 (1,527) (Decrease)/increase in payables (5,253) 934 Change in provisions - 15 Cash generated from operations 2,961 12,259 Interest received 97 188 Interest paid (403) (252) Income tax (received)/paid (26) 11 Cash inflows from operating activities 2,629 12,206 Investing activities Investment in shares and loan stock in joint ventures - 409 Disposal of/(Investment in) shares and loans held to maturity 300 (2,200) Acquisition of investment properties, mining reserves, plant and (2,601) (3,127) equipment Sale of plant and equipment - continuing operations 58 57 Sale of investment properties - discontinued operations 102,663 9,310 Acquisition of investments - (102) Interest received - continuing operations 24 41 Interest received - discontinued operations 7 - Cash inflows from investing activities 100,451 4,388 Financing activities Purchase of treasury shares (88) - Sale of treasury shares 229 62 Interest paid - continuing operations (4,387) (3,314) - discontinued operations (623) (5,990) Interest on obligation under finance leases - continuing (292) (269) operations - discontinued operations (544) (1,786) Debenture stock break costs paid - discontinued operations - (545) Interest derivatives paid - continuing operations (430) - Interest derivatives break costs paid - continuing operations (10,686) - Interest derivatives break costs paid - discontinued operations (14,599) - Payment of bank loan - Bisichi Mining PLC 5,902 39 Repayment of bank loan - Bisichi Mining PLC (5,000) (96) Payment of bank loan - continuing operations 45,002 - Repayment of bank loan - continuing operations (44,452) - Repayment of bank loan - discontinued operations (70,000) - Short term loan from joint ventures and related parties - 700 Repayment of debenture stocks - discontinued operations - (6,700) Repayment of medium term bank loan - (247) Equity dividends paid (106) - Equity dividends paid - non-controlling interests (250) (248) Net proceeds from issue of ordinary shares - non-controlling 13 27 interests Cash outflows from financing activities (100,311) (18,367) Net increase/(decrease) in cash and cash equivalents 2,769 (1,773) Cash and cash equivalents at beginning of year 4,299 5,797 Exchange adjustment 50 275 Cash and cash equivalents at end of year 7,118 4,299 The cash flows above relate to continuing and discontinued operations. See Note 7 for information on discontinued operations. Cash and cash equivalents For the purpose of the cash flow statement, cash and cash equivalents comprise the following balance sheet amounts: 2014 2013 Â£'000 restated Â£'000 Cash and cash equivalents (before bank overdrafts) 9,237 8,818 Bank overdrafts (2,119) (4,519) Cash and cash equivalents at end of year 7,118 4,299 Â£0.5 million of cash deposits at 31 December 2013 was charged as security to a debenture stock and released in 2014. group accounting policies The following are the principal Group accounting policies: Basis of accounting The Group financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The Company has elected to prepare the parent company's financial statements in accordance with UK GAAP, as applied in accordance with the provisions of the Companies Act 2006 and these are presented in Note 32. The financial statements are prepared under the historical cost convention, except for the revaluation of freehold and leasehold properties and financial assets held for trading as well as fair value of interest derivatives. The Group financial statements are presented in Pounds Sterling and all values are rounded to the nearest thousand pounds (Â£'000) except when otherwise stated. London & Associated Properties PLC, the parent company is a listed public company, incorporated and domiciled in England and quoted on the London Stock Exchange. The Company registration number is 341829. Going concern 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 and Chief Executive's Statement and Financial Review. In addition Note 22 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; its exposure to credit risk and liquidity risk. The directors believe that the Group has adequate resources to continue in operational existence for the foreseeable future and that the Group is well placed to manage its business risks. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements. 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. The directors consider their judgements and estimates surrounding the life of the mine and its reserves to have the most significant effect on the amounts recognised in the financial statements and to be the area where the financial statements are at most risk of a material adjustment due to estimation uncertainty. Areas where key estimates and judgements are considered to have a significant effect on the amounts recognised in the financial statements include: Depreciation, amortisation of mineral rights, mining development costs and plant and equipment. The annual depreciation/amortisation charge to operations, can fluctuate from initial estimates. This could generally result when there are significant changes in any of the factors or assumptions used in estimating mineral reserves and resources which in turn affects the life of mine or the expected life of reserves. Estimates of proven and probable reserves and resources are prepared by suitable qualified experts. Assessments of depreciation/ amortisation rates against the estimated reserve and resource base are performed regularly. Provision for mining rehabilitation including restoration and de-commissioning costs A provision for future rehabilitation including restoration and decommissioning costs requires estimates and assumptions to be made around the relevant regulatory framework, the timing, extent and costs of the rehabilitation activities and of the risk adjusted discount rates used to determine the present value of the future cash outflows. The provisions including the estimates and assumptions contained therein are reviewed regularly by management. Mining impairment Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be fully recoverable. Future cash flow estimates are discounted using asset specific discount rates and are based on expectations about future operations, primarily comprising estimates about production and sales volumes, commodity prices, reserves and resources, operating, rehabilitation and restoration costs and capital expenditures. Changes in such estimates could impact recoverable values of these assets. Estimates are reviewed regularly by management. Fair value measurements of investment properties, investments and interest rate hedges An assessment of the fair value of assets and liabilities, in particular investment properties, is required to be performed. In such instances, fair value measurements are estimated based on the amounts for which the assets and liabilities could be exchanged at the relevant transaction date or reporting period end. To the extent possible, the assumptions and inputs used take into account externally verifiable inputs. However, such information is by nature subject to uncertainty. The directors note that the fair value measurement of the investment properties, may be considered to be less judgemental where external valuers have been used and as a result of the nature of the underlying assets. All interest rate hedges are held at fair value as valued by the hedge provider. Further detail is provided in notes 20 and 22. Bisichi Mining PLC The directors are required to consider the implications of IFRS 10 on the LAP investment in Bisichi Mining PLC ("Bisichi"). Related parties also have shareholdings in Bisichi when combined with the 42% held by LAP and taking account of the wide disposition of other shareholders, there is potential for LAP and these related parties to exercise voting control over Bisichi. IFRS 10 makes it clear that possible voting control is of more significance than actual management control. For this reason the directors have decided that it is a requirement to consolidate Bisichi with LAP. While, in theory, they could achieve control, in practice they do not get involved in the day to day operations of Bisichi. They have, therefore, presented consolidated accounts using the published accounts of Bisichi and it is important to note that any figures, risks and assumptions attributable to that company are the responsibility of the Bisichi Board of directors who are independent from LAP. International Accounting Standards (IAS/IFRS) The financial statements are prepared in accordance with International Financial Reporting Standards and Interpretations in force at the reporting date. These are prepared under the historic cost basis as modified by the revaluation of investment properties and held for trading investments. The application of the following International Financial Reporting Standards effective January 1, 2014, resulted in changes to London & Associated Properties PLC accounting methods and presentation in 2014: IFRS 10 - Consolidated Financial Statements IFRS 10 contains a new, comprehensive definition of control. The new standard replaces the provisions of IAS 27 - Separate Financial Statements (previously "Consolidated and Separate Financial Statements"), which regulates the preparation of consolidated financial statement, as well as SIC 12 Consolidation - Special Purpose Entities. According to both IAS 27 and IFRS 10, a Group consists of a parent entity and the subsidiaries controlled by the parent. IFRS 10 provides a new definition of control compared with IAS 27. This is applied in determining the companies to be consolidated. "Control" assumes the simultaneous fulfilment of the following three criteria: The parent company holds decision-making power over the relevant activities of the investee, The parent company has rights to variable returns from the investee, and The parent company can use its decision-making power to affect the variable returns. The introduction of this standard has required a change in accounting policy as follows: Under IFRS 10, as explained above, it is necessary to consolidate Bisichi from the earliest date at which it is believed by the Board that, under current rules, Bisichi would have been deemed to be controlled by LAP. Having determined the date at which "control" under current IFRS rules occurred, it is necessary to calculate the amount of any goodwill or premium arising on consolidation at that date. Any goodwill or surplus arising at the date of deemed control would have been amortised over 10 years. Based on the distribution of all shareholdings in Bisichi the directors have concluded that, with effect from late 1976, Bisichi was under the voting control of LAP and related parties. Our review of fair values at that date suggests that no material goodwill or reserve would have been created. However, even if it had been created any such goodwill or reserve would have been written off completely some years ago. In these circumstances no adjustments are required to the book values of Bisichi assets and liabilities. As a result of treating Bisichi as a "subsidiary" Dragon Retail Properties Limited ("Dragon") also becomes a subsidiary for accounting purposes as each of LAP and Bisichi own 50% of that joint venture business. The quantitative impact of the changes is set out below: Summary of quantitative impacts The Group has taken advantage of the transitional provisions of Consolidated Financial Statements, Joint Arrangements and Disclosure of interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) and the tables below show the restated consolidated balance sheets at 1 January 2013 and 31 December 2013. Consolidated balance sheet at 1 January 2013 As previously Impact of As reported IFRS 10 restated Â£'000 Â£'000 Â£'000 Non-current assets Market value of properties attributable to Group 205,412 14,422 219,834 Present value of head leases 28,657 202 28,859 Property 234,069 14,624 248,693 Mining reserves, plant and equipment 260 8,661 8,921 Investments in joint ventures 1,337 (184) 1,153 Investments in associated company 7,271 (7,271) - Loan to joint venture - 1,117 1,117 Held to maturity investments 1,913 - 1,913 Other investments - 131 131 Deferred tax 3,324 - 3,324 248,174 17,078 265,252 Current assets Inventories - 1,876 1,876 Trade and other receivables 4,656 5,529 10,185 Corporation tax recoverable - 49 49 Available for sale investments - 787 787 Investments held for trading 20 125 145 Cash and cash equivalents 8,303 1,853 10,156 12,979 10,219 23,198 Total assets 261,153 27,297 288,450 Current liabilities Trade and other payables (12,514) (4,819) (17,333) Borrowings (52,666) (6,186) (58,852) Current tax liabilities - (22) (22) (65,180) (11,027) (76,207) Non-current liabilities Borrowings (86,924) (1,986) (88,910) Interest rate derivatives (33,935) - (33,935) Present value of head leases on properties (28,657) (202) (28,859) Provisions - (989) (989) Deferred tax liabilities - (2,605) (2,605) (149,516) (5,782) (155,298) Total liabilities (214,696) (16,809) (231,505) Net assets 46,457 10,488 56,945 Equity attributable to the owners of the parent Share capital 8,554 - 8,554 Share premium account 4,866 - 4,866 Translation reserve in associate (338) - (338) Capital redemption reserve 47 - 47 Retained earnings (excluding treasury shares) 34,749 - 34,749 Treasury shares (1,421) - (1,421) Retained earnings 33,328 - 33,328 Total equity attributable to equity shareholders 46,457 - 46,457 Non - controlling interest - 10,488 10,488 Total equity 46,457 10,488 56,945 Consolidated balance sheet at 31 December 2013 As previously Impact of As reported IFRS 10 restated Â£'000 Â£'000 Â£'000 Non-current assets Market value of properties attributable to Group 87,449 14,669 102,118 Present value of head leases 4,597 196 4,793 Property 92,046 14,865 106,911 Mining reserves, plant and equipment 203 7,115 7,318 Investments in joint ventures 2,607 (297) 2,310 Loan to joint venture - 984 984 Investments in associated company 6,986 (6,986) - Held to maturity investments 2,200 - 2,200 Other investments - 151 151 Deferred tax 5,651 - 5,651 109,693 15,832 125,525 Current assets Inventories - 1,756 1,756 Assets held for sale 126,590 - 126,590 Trade and other receivables 3,356 6,385 9,741 Corporation tax recoverable - 36 36 Available for sale investments - 822 822 Financial assets - investments held for trading 23 110 133 Cash and cash equivalents 6,990 1,828 8,818 136,959 10,937 147,896 Total assets 246,652 26,769 273,421 Current liabilities Liabilities associated with assets held for sale (111,523) - (111,523) Trade and other payables (10,255) (3,520) (13,775) Borrowings (45,918) (8,042) (53,960) Current tax liabilities - (14) (14) (167,696) (11,576) (179,272) Non-current liabilities Borrowings (15,056) (2,018) (17,074) Interest rate derivatives (9,569) - (9,569) Present value of head leases on properties (4,597) (196) (4,793) Provisions - (874) (874) Deferred tax liabilities - (2,104) (2,104) (29,222) (5,192) (34,414) Total liabilities (196,918) (16,768) (213,686) Net assets 49,734 10,001 59,735 Equity attributable to the owners of the parent Share capital 8,554 - 8,554 Share premium account 4,866 - 4,866 Translation reserve in associate (658) - (658) Capital redemption reserve 47 - 47 Retained earnings (excluding treasury shares) 38,084 - 38,084 Treasury shares (1,159) - (1,159) Retained earnings 36,925 - 36,925 Total equity attributable to equity shareholders 49,734 - 49,734 Non - controlling interest - 10,001 10,001 Total equity 49,734 10,001 59,735 Consolidated income statement for the year ended 31 December 2013 As Impact of As previously IFRS 10 restated reported Group revenue 8,229 35,062 43,291 Operating costs (5,250) (34,851) (40,101) Income from listed investments held for trading 2 (6) (4) Operating profit 2,981 205 3,186 Finance income 59 188 247 Finance expenses (5,616) (342) (5,958) Result before valuation movements and exchange (2,576) 51 (2,525) movements Non-cash changes in valuation of assets and liabilities Decrease in value of investment properties (488) 247 (241) Gains on held for trading investments 3 35 38 Decrease in value of other investments - (1) (1) Adjustment to interest rate derivative 4,419 - 4,419 Share of profit of associate, after tax 151 (151) - Share of profit of joint ventures, net of tax 99 (189) (90) Result including revaluation and other movement 1,608 (8) 1,600 Attributable to discontinued operations (461) - (461) Profit for the year before taxation 1,147 (8) 1,139 Income tax 2,326 221 2,547 Profit for the year 3,473 213 3,686 Attributable to: Equity holders of the Company 3,473 - 3,473 Non-controlling interest - 213 213 Profit for the year 3,473 213 3,686 Consolidated statement of comprehensive income for the year ended 31 December 2013 As previously Impact of As reported IFRS 10 restated Â£'000 Â£'000 Profit for the year 3,473 213 3,686 Other comprehensive income: Items that may be subsequently recycled to the income statement: Exchange differences on translation of foreign (320) (538) (858) operations Total comprehensive income for the year net of (320) (538) (858) tax Attributable to: Equity shareholders 3,153 - 3,153 Non-controlling interest - (325) (325) 3,153 (325) 2,828 Consolidated cash flow statement for the year ended 31 December 2013 As Impact of As previously IFRS 10 restated reported Â£'000 Â£'000 Cash flow related to operating activities: 10,834 1,372 12,206 Cash flow related to investment activities 7,727 (3,339) 4,388 Cash flow related to financing activities (18,089) (278) (18,367) Exchange adjustment - 275 275 Change in cash and cash equivalents 472 (1,970) (1,498) Cash and cash equivalents at beginning of year 5,028 769 5,797 Cash and cash equivalents at end of year 5,500 (1,201) 4,299 IFRS 12 - Disclosure of Interests in Other Entities IFRS 12 stipulates the disclosures required with regard to the new IFRS 10 - Consolidated Financial Statements. This standard replaces the disclosures previously required by IAS 27 - Separate Financial Statements and IAS 28 - Investments in Associates. The application of IFRS 12 is intended to enable assessment of the nature of, and risks associated with, interests in subsidiaries, joint arrangements, associated companies and unconsolidated structured entities. The following standards and interpretations have been applied for the first time in these financial statements: â€¢ Amendments to IAS 32 - Financial instruments: presentation - offsetting financial assets and financial liabilities â€¢ Amendments to IAS 39 - Novation of Derivatives and Continuation of Hedge â€¢ Amendments to IFRS 12 and IAS 27 - Investment entities â€¢ IFRIC 21 - Levies â€¢ IFRS 11 Joint Arrangements â€¢ Amendment of IAS 36 - Impairment of assets The accounting treatment detailed in the above standards has not resulted in a change of the Group's accounting policy and had no impact on the Group's financial position or performance. All other standards and interpretations that were mandatory for the accounting period and were required to be adopted by the Group either had no material impact on the Group's financial statements or were not relevant to the operations of the Group. The Group has not adopted any standards or interpretations in advance of the required implementation dates. The following new or revised standards that are applicable to the Group were issued but not yet effective: â€¢ IFRS 9 - Financial instruments â€¢ IFRS 15 - Revenue from Contracts with Customers â€¢ Amendments to IAS 16 and IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortisation It is not expected that adoption of any standards or interpretations which have been issued by the International Accounting Standards Board but have not been adopted will have a material impact on the financial statements. Basis of consolidation The Group accounts incorporate the accounts of London & Associated Properties PLC and all of its subsidiary undertakings, together with the Group's share of the results and net assets of its joint ventures. Non-controlling interests in subsidiaries are presented separately from the equity attributable to equity owners of the parent company. When changes in ownership in a subsidiary do not result in a loss of control, the non-controlling shareholders' interests are initially measured at the non-controlling interests' proportionate share of the subsidiaries net assets. Subsequent to this, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. Subsidiaries Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries acquired during the year are consolidated using the acquisition method. Their results are incorporated from the date that control passes. All intra Group transactions, balances, income and expenses are eliminated on consolidation. Details of Group's trading subsidiary companies are set out in Note 14. Joint ventures Investments in joint ventures, being those entities over whose activities the Group has joint control, as established by contractual agreement, include the appropriate share of the results and net assets of those undertakings. Goodwill Goodwill arising on acquisition is recognised as an intangible asset and initially measured at cost, being the excess of the cost of the acquired entity over the Group's interest in the fair value of the assets and liabilities acquired. Goodwill is carried at cost less accumulated impairment losses. Goodwill arising from the difference in the calculation of deferred tax for accounting purposes and fair value in negotiations is judged not to be an asset and is accordingly impaired on completion of the relevant acquisition. Revenue Revenue comprises sales of coal, property rental income and property management fees. Revenue in Bisichi is recognised when delivery of the product or service has been made and when the customer has a legally binding obligation to settle under the terms of the contract and has assumed all significant risks and rewards of ownership. Bisichi only recognises revenue on individual sales of coal when all of the significant risks and rewards of ownership have been transferred to a third party. In most instances revenue is recognised when the product is delivered to the location specified by the customer, which is typically when loaded into transport, where the customer pays the transportation costs. Rental income Rental income arises from operating leases granted to tenants. An operating lease is a lease other than a finance lease. A finance lease is one whereby substantially all the risks and rewards of ownership are passed to the lessee. Rental income is recognised in the Group income statement on a straight-line basis over the term of the lease. This includes the effect of lease incentives to tenants, which are normally in the form of rent free periods. Contingent rents, being the difference between the rent currently receivable and the minimum lease payments, are recognised in property income in the periods in which they are receivable. Rent reviews are recognised when such reviews have been agreed with tenants. Reverse surrender premiums Payments received from tenants to surrender their lease obligations are recognised immediately in the income statement. Dilapidations Dilapidations monies received from tenants in respect of their lease obligations are recognised immediately in the income statement. Other revenue Revenue in respect of listed investments held for trading represents investment dividends received and profit or loss recognised on realisation. Dividends are recognised in the income statement when the dividend is received. Mining and Property operating expenses Operating expenses are expensed as incurred and any property operating expenditure not recovered from tenants through service charges is charged to the income statement. Employee benefits Share based remuneration The Company operates a long-term incentive plan and two share option schemes. The fair value of the conditional awards on shares granted under the long- term incentive plan and the options granted under the share option scheme is determined at the date of grant. This fair value is then expensed on a straight-line basis over the vesting period, based on an estimate of the number of shares that will eventually vest. At each reporting date, the fair value of the non-market based performance criteria of the long-term incentive plan is recalculated and the expense is revised. In respect of the share option scheme, the fair value of options granted is calculated using a binomial method. Pensions The Company operates a defined contribution pension scheme. The contributions payable to the scheme are expensed in the period to which they relate. Foreign currencies Monetary assets and liabilities are translated at year end exchange rates and the resulting exchange rate differences are included in the consolidated income statement within the results of operating activities if arising from trading activities and within finance cost/income if arising from financing. For consolidation purposes, income and expense items are included in the consolidated income statement at average rates, and assets and liabilities are translated at year end exchange rates. Translation differences arising on consolidation are recognised in other comprehensive income. Where foreign operations are disposed of, the cumulative exchange differences of that foreign operation are recognised in the consolidated income statement when the gain or loss on disposal is recognised. Transactions in foreign currencies are translated at the exchange rate ruling on transaction date. Financial instruments Investments Held to maturity investments are stated at amortised cost using the effective interest rate method. Investments held for trading are included in current assets at fair value. For listed investments, fair value is the bid market listed value at the balance sheet date. Realised and unrealised gains or losses arising from changes in fair value are included in the income statement of the period in which they arise. Trade and other receivables Trade and other receivables are recognised initially at fair value. A provision for impairment of trade receivables is made when there is evidence that the Group will not be able to collect all amounts due. Trade and other payables Trade and other payables are non-interest bearing and are stated at their nominal value. Bank loans and overdrafts Bank loans and overdrafts are included as financial liabilities on the Group balance sheet net of the unamortised discount and costs of issue. The cost of issue is recognised in the Group income Statement over the life of the bank loan. Interest payable on those facilities is expensed as a finance cost in the period to which it relates. Debenture loans The debenture loans are included as a financial liability on the balance sheet net of the unamortised costs on issue. The cost of issue is recognised in the Group income statement over the life of the debenture. Interest payable to debenture holders is expensed in the period to which it relates. Finance lease liabilities Finance lease liabilities arise for those investment properties held under a leasehold interest and accounted for as investment property. The liability is calculated as the present value of the minimum lease payments, reducing in subsequent reporting periods by the apportionment of payments to the lessor. Lease payments are allocated between the liability and finance charges so as to achieve a constant financing rate. Contingent rents payable, such as rent reviews or those related to rental income, are charged as an expense in the period in which they are incurred. Interest rate derivatives The Group uses derivative financial instruments to hedge the interest rate risk associated with the financing of the group's business. No trading in such financial instruments is undertaken. At each reporting date, these interest rate derivatives are recognised at their fair value to the business, being the Net Present Value of the difference between the hedged rate of interest and the market rate of interest for the remaining period of the hedge. Where a derivative is designated as a hedge of the variability of a highly probable forecast transaction i.e. an interest payment, the element of the gain or loss on the derivative that is an effective hedge is recognised directly in equity. When the forecast transaction subsequently results in the recognition of a financial asset or a financial liability, the associated gains or losses that were recognised directly in equity are reclassified into the income statement in the same period or periods during which the asset acquired or liability assumed affects the income statement i.e. when interest income or expense is recognised. The gain or loss arising from any adjustment to the fair value to the business calculation is recognised immediately in the group income statement when the criteria set out in IAS 32 allowing the movements to be shown in equity have not been met. Ordinary Shares Shares are classified as equity when there is no obligation to transfer cash or other assets. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Treasury Shares When the Group's own equity instruments are repurchased, consideration paid is deducted from equity as treasury shares until they are cancelled. When such shares are subsequently sold or reissued, any consideration received is included in equity. Investment properties Valuation Investment properties are those that are held either to earn rental income or for capital appreciation or both, including those that are undergoing redevelopment. They are reported on the Group balance sheet at fair value, being the amount for which an investment property could be exchanged between knowledgeable and willing parties in an arm's length transaction. The directors' property valuation is at fair value. The valuation of properties is undertaken by independent valuers who hold recognised and relevant professional qualifications and have recent experience in the locations and categories of properties being valued. Surpluses or deficits resulting from changes in the fair value of investment property are reported in the Group income statement in the period in which they arise. Capital expenditure Investment properties are measured initially at cost, including related transaction costs. Additions to capital expenditure, being costs of a capital nature, directly attributable to the redevelopment or refurbishment of an investment property, up to the point of it being completed for its intended use, are capitalised in the carrying value of that property. The redevelopment of an existing investment property will remain an investment property measured at fair value and is not reclassified. Capitalised interest is calculated with reference to the actual rate payable on borrowings for development purposes, or for that part of the development costs financed out of borrowings the capitalised interest is calculated on the basis of the average rate of interest paid on the relevant debt outstanding. Disposal The disposal of investment properties is accounted for on completion of contract. On disposal, any gain or loss is calculated as the difference between the net disposal proceeds and the valuation at the last year end plus subsequent capitalised expenditure in the period. Depreciation and amortisation In applying the fair value model to the measurement of investment properties, depreciation and amortisation are not provided in respect of investment properties. Mining reserves, plant and equipment The cost of property, plant and equipment comprises its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in accordance with agreed specifications. Freehold land is not depreciated. Other property, plant and equipment is stated at historical cost less accumulated depreciation. Other non-current assets, comprising motor vehicles and office equipment, are depreciated at a rate of between 10% and 33% per annum which is calculated to write off the cost, less estimated residual value of the assets, on a straight line basis over their expected useful lives. Mine INVENTORIES Inventories are stated at the lower of cost and net realisable value. Cost includes materials, direct labour and overheads relevant to the stage of production. Net realisable value is based on estimated selling price less all further costs to completion and all relevant marketing, selling and distribution costs. Mine Provisions Provisions are recognised when the Group has a present obligation as a result of a past event which it is probable will result in an outflow of economic benefits that can be reliably estimated. A provision for rehabilitation of the mine is carried at present value and is provided for over the life of mine. The provision includes the restoration of the underground, opencast, surface operations and de-commissioning of plant and equipment and is estimated to be utilised at the end of the life of mine of the Group. The timing and final cost of the rehabilitation is uncertain and will depend on the duration of the mine life and the quantities of coal extracted from the reserves. Mine IMPAIRMENT Whenever events or changes in circumstance indicate that the carrying amount of an asset may not be recoverable an asset is reviewed for impairment. A review involves determining whether the carrying amounts are in excess of their recoverable amounts. An asset's recoverable amount is determined as the higher of its fair value less costs of disposal and its value in use. Such reviews are undertaken on an asset-by-asset basis, except where assets do not generate cash flows independent of other assets, in which case the review is undertaken on a company or group level. If the carrying amount of an asset exceeds its recoverable amount an asset's carrying value is written down to its estimated recoverable amount (being the higher of the fair value less cost to sell and value in use). Any change in carrying value is recognised in the comprehensive income statement. Mine reserves and development cost The purpose of mine development is to establish secure working conditions and infrastructure to allow the safe and efficient extraction of recoverable reserves. Depreciation on mine development is not charged until production commences or the assets are put to use. On commencement of full production, depreciation is charged over the life of the associated mine reserves on a straight-line basis. Surface mine development Expenditure incurred prior to the commencement of working surface mine sites, net of any residual value and taking into account the likelihood of the site being mined, is capitalised within property, plant and equipment and charged to the income statement over the life of the recoverable reserves of the scheme. Other assets and depreciation The cost, less estimated residual value, of other property, plant and equipment is written off on a straight-line basis over the asset's expected useful life. Residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Changes to the estimated residual values or useful lives are accounted for prospectively. Heavy surface mining and other plant and equipment is depreciated at varying rates depending upon its expected usage. The depreciation rates generally applied are: Mining The shorter of its useful life or the life of the mine equipment Mining reserves Over the expected life of the reserves using the units of production basis Motor vehicles 25-33 per cent per annum Office 10-33 per cent per annum equipment Income taxes The charge for current taxation is based on the results for the year as adjusted for disallowed or non-assessable items. Tax payable upon realisation of revaluation gains recognised in prior periods is recorded as a current tax charge with a release of the associated deferred tax. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the tax computations, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. In respect of the deferred tax on the revaluation surplus, this is calculated on the basis of the chargeable gains that would crystallise on the sale of the investment portfolio as at the reporting date. The calculation takes account of indexation on the historic cost of properties and any available capital losses. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the Group income statement, except when it relates to items charged or credited directly to equity, in which case it is also dealt with in equity. DIVIDENDS Dividends payable on the ordinary share capital are recognised as a liability in the period in which they are approved. Cash and cash equivalents Cash comprises cash in hand and on demand deposits, net of bank overdrafts. Cash equivalents comprise short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and original maturities of three months or less. Segmental reporting For management reporting purposes, the Group is organised into business segments distinguishable by economic activity. The Group's business segments are LAP operations, Bisichi operations and Dragon operations. These business segments are subject to risks and returns that are different from those of other business segments and are the primary basis on which the Group reports its segmental information. This is consistent with the way the Group is managed and with the format of the Group's internal financial reporting. Significant revenue from transactions with any individual customer, which makes up 10 percent or more of the total revenue of the Group, is separately disclosed within each segment. notes to the financial statements for the year ended 31 December 2014 1. Results for the year and segmental analysis Operating Segments are based on the internal reporting and operational management of the Group. LAP is focused primarily on property activities (which generate trading income), but it also holds and manages investments. The introduction of IFRS 10 has caused the Group to change the accounting treatment for Bisichi which is now consolidated rather than being included in the accounts as an associate using the equity method. The Group has also consolidated Dragon, a company which the Company jointly controls with Bisichi; Dragon was previously accounted for as a joint venture. Bisichi is a coal mining company with operations in South Africa and also holds investment property in the United Kingdom and derives income from property rentals. Dragon is a property investment company and derives its income from property rentals. These operating segments (LAP, Bisichi and Dragon) are each viewed separately and have been so reported below. Business segments Business analysis 2014 Bisichi Dragon Total LAP Â£'000 Â£'000 Â£'000 Â£'000 Rental income 6,000 930 180 7,110 Management income from third party 880 - - 880 properties Mining - 25,536 - 25,536 Group Revenue 6,880 26,466 180 33,526 Direct property costs (1,468) (63) (31) (1,562) Direct mining costs - (18,244) - (18,244) Overheads (4,743) (3,783) (30) (8,556) Exchange losses - (143) - (143) Depreciation and amortisation (46) (2,682) (4) (2,732) Operating profit before listed investments 623 1,551 115 2,289 held for trading Income from listed investments held for 1 - 2 3 trading Operating profit 624 1,551 117 2,292 Finance income 18 97 - 115 Finance expenses (4,248) (593) (34) (4,875) Interest rate derivative costs (1,117) - - (1,117) Result before valuation movements (4,723) 1055 83 (3,585) Other segment items Net increase/(decrease) on revaluation of 859 (6) - 853 investment properties Net increase in value of other investments - 1 - 1 Net decrease on revaluation of investments (2) (82) (2) (86) held for trading Adjustment to interest rate derivative (1,086) - - (1,086) Share of profit of joint ventures, net of 561 563 - 1,124 tax Result including revaluation and other (4,391) 1,531 81 (2,779) movements Attributable to discontinued operations 86 - - 86 (Loss)/profit for the year before taxation (4,305) 1,531 81 (2,693) Segment assets - Non - current assets - property 93,563 17,721 3,110 114,394 - Non - current assets - plant and 178 113 15 306 equipment - Cash and cash equivalents 6,286 2,838 113 9,237 - Non - current assets 2,196 152 - 2,348 - Non - current assets - deferred tax asset 2,324 - - 2,324 - Current assets - others 2,073 7,277 137 9,487 Total assets excluding investment in joint 106,620 28,101 3,375 138,096 ventures Segment liabilities Borrowings (59,014) (8,152) (1,900) (69,066) - Current liabilities (6,702) (4,566) (79) (11,347) - Non-current liabilities (5,249) (3,333) (202) (8,784) Total liabilities (70,965) (16,051) (2,181) (89,197) Net assets 35,655 12,050 1,194 48,899 Investment in joint ventures non segmental 4,474 Net assets as per balance sheet 53,373 Major customers Customer A - 12,607 - 12,607 Customer B - 6,455 - 6,455 These customers are for mining revenue in South Africa. Geographic analysis United South 2014 Kingdom Africa Total Â£'000 Â£'000 Â£'000 Revenue 7,990 25,536 33,526 Operating profit 1,571 721 2,292 Non-current assets excluding investments 123,879 6,030 129,909 Total net assets 49,377 5,296 54,673 Capital expenditure 724 1,877 2,601 Business analysis 2013 Bisichi Dragon Total LAP Â£'000 Â£'000 Â£'000 Â£'000 Rental income 6,540 917 207 7,664 Management income from third party 1,510 - - 1,510 properties Mining - 34,117 - 34,117 Group Revenue 8,050 35,034 207 43,291 Direct property costs (851) (121) (17) (989) Direct mining costs - (26,158) - (26,158) Overheads (4,345) (4,826) (28) (9,199) Exchange losses - (880) - (880) Depreciation and amortisation (54) (2,817) (4) (2,875) Operating profit before listed investments 2,800 232 158 3,190 held for trading Income/(losses) from listed investments 2 - (6) (4) held for trading Operating profit 2,802 232 152 3,186 Finance income 59 188 - 247 Finance expenses (5,479) (446) (33) (5,958) Result before valuation movements (2,618) (26) 119 (2,525) Other segment items Net (decrease)/increase on revaluation of (488) (53) 300 (241) investment properties Net decrease in value of other investments - (1) - (1) Net increase/(decrease) on revaluation of 3 40 (5) 38 investments held for trading Adjustment to interest rate derivative 4,419 - - 4,419 Share of loss of joint ventures, net of tax (45) (45) - (90) Result including revaluation and other 1,271 (85) 414 1,600 movements Attributable to discontinued operations (461) - - (461) Profit/(Loss) for the year before taxation 810 (85) 414 1,139 Segment assets - Non - current assets - property 92,046 18,739 3,110 113,895 - Non - current assets - plant and 203 112 19 334 equipment - Cash and cash equivalents 6,990 1,707 121 8,818 - Non - current assets 2,200 151 - 2,351 - Non - current assets - deferred tax asset 5,651 - - 5,651 - Current assets - others 3,241 9,093 154 12,488 - Current assets - assets held for sale 126,590 - - 126,590 Total assets excluding investment in joint 236,921 29,802 3,404 270,127 ventures Segment liabilities - Borrowings (60,174) (8,960) (1,900) (71,034) - Current liabilities (6,955) (6,739) (95) (13,789) - Non-current liabilities (14,166) (2,972) (202) (17,340) - Non-current liabilities - associated with (111,523) - - (111,523) assets held for sale Total liabilities (192,818) (18,671) (2,197) (213,686) Net assets 44,103 11,131 1,207 56,441 Investment in joint ventures non segmental 3,294 Net assets as per balance sheet 59,735 Major customers Customer A - 12,981 - 12,981 Customer B - 7,448 - 7,448 Customer C - 6,829 - 6,829 These customers are for mining revenue in South Africa. Geographic analysis United South 2013 Kingdom Africa Total Â£'000 Â£'000 Â£'000 Revenue 9,174 34,117 43,291 Operating profit/(loss) 3,731 (545) 3,186 Non-current assets excluding investments 123,999 7,050 131,049 Total net assets 52,487 7,248 59,735 Capital expenditure 95 3,012 3,173 Group revenue is external to the Group and the directors consider that inter segmental revenues are not material. Operating profit excludes the share of profit and losses of joint ventures, finance income and expenses, movement on revaluation of investment properties and investments held for trading and the movement on interest rate derivatives. 2. (Loss)/profit for the year before taxation 2014 2013 Â£'000 restated Â£'000 (Loss)/profit for the year before taxation is stated after charging/(crediting): Staff costs (note 28) 7,786 8,581 Depreciation on tangible fixed assets - owned assets 2,732 2,875 Operating lease rentals - land and buildings 610 645 Exchange loss 143 880 Profit on disposal of motor vehicles and office equipment (43) (21) Amounts payable to the auditor in respect of both audit and non-audit services Audit services: Statutory - Company and consolidation 87 75 - subsidiaries 78 68 Further assurance services 8 19 Other services 28 5 201 167 Staff costs are included in overheads. 3. Listed investments held for trading 2014 2013 Â£'000 restated Â£'000 Loss on disposal - (10) Dividends receivable 3 6 Net Profit/(loss) from listed investments 3 (4) 4. Directors' emoluments 2014 2013 Â£'000 Â£'000 Emoluments 1,367 1,337 Defined contribution pension scheme contributions 69 66 1,436 1,403 Details of directors' emoluments and share options are set out in the remuneration report. 5. Finance income and expenses 2014 2013 Â£'000 restated Â£'000 Finance income 115 247 Finance expenses Interest on bank loans and overdrafts (2,366) (1,982) Unwinding of discount (Bisichi) (87) (89) Other loans (1,508) (1,489) Interest on derivatives (655) (2,111) Interest on obligations under finance leases (259) (287) Total finance expenses (4,875) (5,958) (4,760) (5,711) 6. Income tax 2014 2013 Â£'000 restated Â£'000 Current tax Corporation tax on profit of the period 17 8 Adjustments in respect of previous periods 29 - Total current tax 46 8 Deferred tax Origination of timing differences (1,554) (3,453) Revaluation of investment properties 192 (1,206) Accelerated capital allowances 299 (867) Fair value of interest derivatives 4,702 2,971 Adjustment in respect of prior years 17 - Total deferred tax (notes 23 and 24) 3,656 (2,555) Tax on profit on ordinary activities 3,702 (2,547) Factors affecting tax charge for the year The corporation tax assessed for the year is different from that at the effective rate of corporation tax in the United Kingdom of 21.5 per cent (2013: 23.25 per cent). The differences are explained below: 2014 2013 Â£'000 restated Â£'000 (Loss)/profit for the year before taxation (2,693) 1,139 Taxation at 21.5 per cent (2013: 23.25%) (579) 265 Effects of: Other differences 4,051 (1,311) Joint ventures (14) - Adjustment in respect of prior years 46 - Deferred tax rate adjustment 198 (1,501) Income tax charge/(credit) for the year 3,702 (2,547) The main component of other differences in the reconciliation relates to capital gains of (Â£0.1 million) (2013: Â£1.4 million) and indexation allowances of (Â£0.5 million) (2013: (Â£0.6 million)) and fair value of interest derivatives of Â£4.7 million (2013: (Â£1.7 million)). Factors that may affect future tax charges: Based on current capital expenditure plans, the Group expects to continue to be able to claim capital allowances in excess of depreciation in future years, but at a slightly lower level than in the current year. A deferred tax provision has been made for gains on revaluing investment properties. At present it is not envisaged that any tax will become payable in the foreseeable future. 7. Discontinued operations and assets and liabilities classified as held for sale A. Disposals As part of the Group's strategy to focus on core assets, the Group disposed of King Edward Court, Windsor during the year. The profits and losses arising from this disposals are classified as discontinued operations. Contracts for the sale of King Edward Court had been exchanged in 2013 and completion took place in January 2014. The transaction was included as a discontinued operation in 2013 in order to show a true and fair view. B. Result for the year of discontinued operations 2014 2013 Â£'000 Â£'000 Gross property income 464 7,370 Direct property costs (144) (720) Net property income 320 6,650 Overheads (70) (93) Net revenue from property 250 6,557 Loss on sale of investment properties - (165) 250 6,392 Finance expenses (164) (5,990) Debenture break costs - (545) 86 (143) Net decrease on revaluations of investment properties - (5,351) Share of loss of joint venture after tax - (315) Interest rate derivative - 5,348 Profit/(loss) before tax attributable to shareholders 86 (461) Income tax - 1,626 C. Cash flows from discontinued operations 2014 2013 Â£'000 Â£'000 Cash flows from operating activities 250 6,392 Cash flows from investing activities 102,670 9,310 Cash flows from financing activities (85,766) (15,021) Net cash inflow from discontinued operations 17,154 681 D. Summary of assets and liabilities associated with assets held for sale 2014 2013 Â£'000 Â£'000 Investment properties - 102,663 Present value of head leases - 23,627 Property - 126,290 Trade and other receivables - 300 Assets held for sale - 126,590 Net current borrowings - (70,000) Trade and other payables - (3,297) Interest rate derivatives - (14,599) Present value of head leases - (23,627) Liabilities associated with assets held for sale - (111,523) Net assets associated with assets held for sale - 15,067 8. Dividend 2014 Â£'000 2013 Â£'000 Per Per share share Dividends paid during the year relating to the prior 0.125p 106 - - period Dividends to be paid: Proposed final dividend 0.156p 133 0.125p 105 9. (Loss)/profit per share and net assets per share (Loss)/profit per share has been calculated as follows: 2014 2013 (Loss)/profit for the year for the purposes of basic and diluted profit (7,140) 3,473 per share (Â£'000) Weighted average number of ordinary shares in issue for the purpose of 84,500 84,266 basic profit per share ('000) Basic (loss)/profit per share (8.45)p 4.12p Weighted average number of ordinary shares in issue for the purpose of 84,500 84,266 diluted profit per share ('000) Fully diluted (loss)/profit per share (8.45)p 4.12p Weighted average number of shares in issue is calculated after excluding treasury shares of 1,032,991 (2013: 1,254,738). The loss for continuing operations was Â£7,226,000 (2013: profit Â£2,308,000) and the profit for discontinued operations was Â£86,000 (2013: Â£1,165,000). There was no dilutive effect of the outstanding options in either year. Net assets per share have been calculated as follows: 2014 2013 Net assets (Â£'000) 42,547 49,734 Shares in issue ('000) 84,510 84,288 Basic net assets per share 50.35p 59.00p Net assets diluted (Â£'000) 42,547 49,734 Shares in issue ('000) 84,510 84,288 Diluted net assets per share 50.35p 59.00p 10. Investment properties Total Freehold Leasehold Leasehold Â£'000 Â£'000 over under 50 years 50 years Â£'000 Â£'000 Cost or valuation at 1 January 2014 106,911 82,644 23,986 281 Reclassification - - (1,493) 1,493 Additions 684 684 - - Decrease in present value of head leases (4) - (2) (2) Increase/(decrease) on revaluation 852 1,752 (900) - Cost or valuation at 31 December 2014 108,443 85,080 21,591 1,772 Representing assets stated at: Valuation 103,655 85,080 17,450 1,125 Present value of head leases 4,788 - 4,141 647 108,443 85,080 21,591 1,772 Net book value at 1 January 2014 106,911 82,644 23,986 281 Net book value at 31 December 2014 108,443 85,080 21,591 1,772 Total Freehold Leasehold Leasehold Â£'000 Â£'000 over under 50 years 50 years Â£'000 Â£'000 Cost or valuation at 1 January 2013 248,693 88,956 159,431 306 Discontinued operations (126,290) - (126,290) - Additions 14 - 14 - Disposals (9,475) (7,585) (1,890) - Decrease in present value of head leases (433) - (433) - (Decrease)/ Increase on revaluation (5,598) 1,273 (6,846) (25) Cost or valuation at 31 December 2013 106,911 82,644 23,986 281 Representing assets stated at: Valuation 102,118 82,644 19,199 275 Present value of head leases 4,793 - 4,787 6 106,911 82,644 23,986 281 Net book value at 1 January 2013 248,693 88,956 159,431 306 Net book value at 31 December 2013 106,911 82,644 23,986 281 The leasehold and freehold properties, excluding the present value of head leases and directors valuations, were valued as at 31 December 2014 by external professional firms of chartered surveyors. The valuations were made at fair value. The directors' property valuations were made at fair value. 2014 2013 Â£'000 Â£'000 Allsop LLP 87,145 87,240 Woolhouse Real Estate - 13,053 Carter Towler 11,575 - Directors valuations 4,935 1,825 103,655 102,118 Add: Present value of headleases 4,788 4,793 108,443 106,911 The historical cost of investment properties, including total capitalised interest of Â£1,161,000 (2013: Â£1,161,000) was as follows: Freehold 2014 Leasehold Freehold 2013 Leasehold Â£'000 Leasehold under 50 Â£'000 Leasehold under 50 Over 50 years Over 50 years years Â£'000 years Â£'000 Â£'000 Â£'000 Cost at 1 January 70,917 18,660 785 83,277 122,963 785 Reclassification - (1,154) 1,154 - - - Additions 684 - - - 14 - Disposals - - - (12,360) (2,322) - Discontinued - - - - (101,995) - operations Cost at 31 December 71,601 17,506 1,939 70,917 18,660 785 Each year external valuers are appointed by the Executive Directors on behalf of the Board. The valuers are selected based upon their knowledge, independence and reputation for valuing assets such as those held by the Group. Valuations are performed annually and are performed consistently across all properties in the Group's portfolio. At each reporting date appropriately qualified employees of the Group verify all significant inputs and review the computational outputs. Valuers submit their report to the Board on the outcome of each valuation. Valuations take into account tenure, lease terms and structural condition. The inputs underlying the valuations include market rent or business profitability, likely incentives offered to tenants, forecast growth rates, yields, EBITDA, discount rates, construction costs including any specific site costs (for example section 106), professional fees, developer's profit including contingencies, planning and construction timelines, lease regear costs, planning risk and sales prices based on known market transactions for similar properties to those being valued. Valuations are based on what is determined to be the highest and best use. When considering the highest and best use the valuer will consider, on a property by property basis, its actual and potential uses which are physically, legally and financially viable. Where the highest and best use differs from the existing use, the valuer will consider the cost and likelihood of achieving and implanting this change in arriving at its valuation. There are often restrictions on Freehold and Leasehold property which could have a material impact on the realisation of these assets. The most significant of these occur when planning permission or lease extension and renegotiation of use are required or when a credit facility is in place. These restrictions are factored in the property's valuation by the external valuer. The methods of fair value measurement are classified into a hierarchy based on the reliability of the information used to determine the valuation, as follows: Level 1: valuation based on inputs on quoted market prices in active markets. Level 2: valuation based on inputs other than quoted prices included within level 1 that maximise the use of observable data directly or from market prices or indirectly derived from market prices. Level 3: where one or more inputs to valuations are not based on observable market data. Class of property Carrying / Valuation Key Range Level 3 Fair value technique unobservable (weighted 2014 inputs average) Â£'000 2014 Freehold - external valuation 80,145 Income Estimated Â£4 - Â£41 capitalisation Rental Value (Â£7 - Â£15) Per sq ft 5.3% - p.a 12.5% Equivalent (6.9%) Yield Leasehold over 50 years - 21,591 Income Estimated Â£7 - Â£26 external valuation capitalisation Rental Value (Â£13 - Â£ Per sq ft 19) p.a 6.9% - Equivalent 11.3% Yield (8.8%) Leasehold under 50 years - 1,772 Income Estimated Â£5 - Â£11 external valuation capitalisation Rental Value (Â£8) Per sq ft 14.3% - p.a 23.8% Equivalent (15.6%) Yield Freehold - Directors' valuation 4,935 Income Estimated Â£5 - Â£19 capitalisation Rental Value (Â£9) Per sq ft 5.9% - p.a 8.3% Equivalent (6.8%) Yield At 31 December 2014 108,443 There are interrelationships between all these inputs as they are determined by market conditions. The existence of an increase in more than one input would be to magnify the input on the valuation. The impact on the valuation will be mitigated by the interrelationship of two inputs in opposite directions, for example, an increase in rent may be offset by an increase in yield. The table below illustrates the impact of changes in key unobservable inputs on the carrying / fair value of the Group's properties. Estimated Equivalent rental yield value 25 basis 10% point increase contraction or or (decrease) (expansion) Â£'000 Â£'000 Freehold - external valuation 8,014/ 3,532/ (8,014) (4,716) Leasehold over 50 years - external valuation 1,745/ 412/(418) (1,745) Leasehold under 50 years - external valuation 113/(112) 17/(19) Freehold - Directors' valuation 493/(494) 184/(171) 11. Mining reserves, plant and equipment Total Mining Mining Office Â£'000 reserves equipment Equipment Â£'000 Â£'000 and motor vehicles Â£'000 Cost at 1 January 2014 18,985 1,310 16,328 1,347 Exchange adjustment (600) (44) (550) (6) Additions 1,917 - 1,838 79 Disposals (766) - (77) (689) Cost at 31 December 2014 19,536 1,266 17,539 731 Accumulated depreciation at 1 January 2014 11,667 1,184 9,470 1,013 Exchange adjustment (369) (38) (329) (2) Charge for the year 2,732 3 2,641 88 Disposals (751) - (77) (674) Accumulated depreciation at 31 December 13,279 1,149 11,705 425 2014 Net book value at 31 December 2014 6,257 117 5,834 306 Cost at 1 January 2013 19,939 1,651 16,835 1,453 Exchange adjustment (3,853) (341) (3,479) (33) Additions 3,093 - 2,972 121 Disposals (194) - - (194) Cost at 31 December 2013 18,985 1,310 16,328 1,347 Accumulated depreciation at 1 January 2013 11,018 1,438 8,462 1,118 Exchange adjustment (2,068) (296) (1,749) (23) Charge for the year 2,875 42 2,757 76 Disposals in year (158) - - (158) Accumulated depreciation at 31 December 11,667 1,184 9,470 1,013 2013 Net book value at 31 December 2013 7,318 126 6,858 334 12. Investment in joint ventures Shares in joint ventures: 2014 2013 Â£'000 Â£'000 At 1 January 2,310 1,153 Share of profit/(loss) after tax 1,124 (404) Investment in shares - 151 Transferred to subsidiary undertaking - 1,410 1,124 1,157 At 31 December 3,434 2,310 Results of joint ventures: Langney Ezimbokodweni 2014 2013 Â£'000 Â£'000 Â£'000 Â£'000 Turnover 1,048 - 1,048 1,312 Profit and loss Profit/(loss) before and after 4,496 - 4,496 (360) taxation Balance sheet Non-current assets 19,688 2,120 21,808 18,352 Current assets 3,080 6 3,086 1,935 Current liabilities (1,376) (2,126) (3,502) (2,707) Non-current liabilities (10,392) - (10,392) (11,076) Net assets at 31 December 11,000 - 11,000 6,504 Reconciliation to amounts included in the financial statements: Group share of: Langney Ezimbokodweni 2014 2013 25% 49% Â£'000 Â£'000 Â£'000 Â£'000 Net assets at 1 January 1,626 - 1,626 1,716 Profit/(loss) before and after taxation 1,124 - 1,124 (90) Share of net assets at 31 December 2,750 - 2,750 1,626 Investment not represented by net assets - 684 684 684 Shares in joint ventures 2,750 684 3,434 2,310 Langney Shopping Centre Unit Trust (Langney) - unlisted property investment unit trust. The Company acquired 12.50 per cent of the total ordinary units in issue in June 2011. A further 12.50 per cent is owned by Bisichi Mining PLC. The remaining 75 per cent is owned by Columbus Capital Management LLP. Langney is incorporated in Jersey and has 7,707 (2013: 7,707) ordinary units in issue of Â£1,000 each. The Company has a management contract to manage the property on behalf of Langney and accordingly has a significant influence in Langney. It is a single asset unit trust. Ezimbokodweni Mining (pty) Limited (Ezimbokodweni) - unlisted coal production company. The Group owns, via Bisichi Mining PLC, 49% of the issued share capital. The company is incorporated in South Africa. It has issued share capital of 100 (2013: 100) ordinary shares of ZAR1 each. 13. Loan to joint venture 2014 2013 Joint Joint ventures ventures assets assets Â£'000 Â£'000 Loan to Ezimbokodweni Mining (pty) Limited At 1 January 984 1,117 Exchange adjustments (36) (242) Additions 92 109 Transfers - - At 31 December 1,040 984 14. Subsidiary companies The Group owns the ordinary share capital of the following principal subsidiaries which are included within the consolidated financial statements: Entity Activity Percentage Country of of incorporation share capital LAP Ocean Holdings Limited Property 100% England and Investment Wales Brixton Village Limited Property 100% England and Investment Wales Market Row Limited Property 100% England and Investment Wales Analytical Properties Holdings Limited Property 100% England and Investment Wales Analytical Properties Limited Property 100% England and Investment Wales Newincco 1243 Limited Property 100% England and Investment Wales Newincco 1244 Limited Property 100% England and Investment Wales Newincco 1245 Limited Property 100% England and Investment Wales Newincco 1299 Limited Property 100% England and Investment Wales Newincco 1300 Limited Property 100% England and Investment Wales London & Associated Management Services Limited Property 100% England and Management Wales Services Bisichi Mining PLC (note C) Coal 41.58% England and mining Wales Mineral Products Limited (note A) Share 100% England and dealing Wales Bisichi (Properties) Limited (note A) Property 100% England and Wales Black Wattle Colliery (pty) Limited (note A) Coal 62.5% South Africa mining Bisichi Coal Mining (pty) Limited (note A) Coal 100% South Africa mining Dragon Retail Properties Limited (note B)(note C) Property 100% England and Wales Details on the non-controlling interest in subsidiaries are shown under note 26. Note A: these companies are owned by Bisichi and the equity shareholdings disclosed relate to that company. Note B: this entity is a joint venture owned 50% by LAP and 50% by Bisichi. Note C: These entities are included in the consolidated financial statements as a result of the change in accounting policy described on pages 50 - 54. The directors are satisfied that the fair value of assets at the effective date of acquisition of Bisichi Mining PLC in 1976 and Dragon Retail Properties Limited were not materially different to the values included under the previous equity accounting treatment and that accordingly no goodwill or discount to book value would have arisen at that time. They have been treated as if they had been subsidiaries from the date of acquisition and the comparative figures have been amended accordingly. 15. Inventories 2014 2013 Â£'000 Â£'000 Coal Washed 606 481 Run of mine 1,070 754 Work in progress 45 487 Other 39 34 1,760 1,756 16. Held to maturity investments 2014 Unlisted Loan Stock 2013 Unlisted Loan Stock Total Shares Â£'000 Total Shares in joint Â£'000 Â£'000 Â£'000 Â£'000 ventures Â£'000 Cost At 1 January 2,200 2,200 - 1,913 5 1,908 Reclassification 300 (2,199) 2,499 (1,423) - (1,423) Loan stock issued - - - 26 - 26 Repayments (304) - (304) (511) - (511) Impairment - - - (5) (5) - Additions - HRGT - - - 2,200 2,200 - At 31 December 2,196 1 2,195 2,200 2,200 - HRGT - The Group acquired a 6.95% interest in the equity and loans of HRGT Shopping Centres LP (HRGT), a limited partnership set up in England to acquire and own 3 shopping centres in Dunfermline, Kings Lynn and Loughborough. 92.10% of the equity and loans are owned by Oaktree Capital Management and 0.95% by Gooch Cunliffe Whale LLP. London & Associated Management Services Limited has a management contract to manage the properties on behalf of HRGT. 17. Trade and other receivables 2014 2013 Â£'000 Â£'000 Trade receivables 4,790 6,699 Amounts due from joint ventures 338 476 Other receivables 669 725 Prepayments and accrued income 977 1,841 6,774 9,741 The directors consider that the carrying amount of trade and other receivables approximates to their fair value. 18. Investments available for sale and held for trading 2014 2013 Â£'000 Â£'000 Market bid value of the listed investment portfolio - available for sale 796 822 Market bid value of the listed investment portfolio - held for trading 122 133 Unrealised gain/(loss) of market value over cost 54 (85) Listed investment portfolio at cost 763 760 Investments are listed on the London Stock Exchange with the exception of Â£ 38,000 (2013: Â£44,000) listed outside Great Britain. 19. Trade and other payables 2014 2013 Â£'000 Â£'000 Trade payables 1,905 4,365 Amounts owed to joint ventures 7 - Other taxation and social security costs 896 765 Other payables 3,229 2,026 Accruals and deferred income 5,286 6,619 11,323 13,775 The directors consider that the carrying amount of trade and other payables approximates to their fair value. 20. Borrowings Current borrowings - amounts falling due within one year 2014 2013 Â£'000 Â£'000 Other loans (Bisichi) 20 13 Â£5 million First Mortgage Debenture Stock 2018 at 11.6 per cent 1,250 - Bank overdrafts (secured) - 1,490 Bank overdrafts (secured) - Bisichi 2,119 3,029 Â£5 million revolving credit facility(secured) repayable on demand - 5,000 Â£1 million term bank loan repayable by 2015 (unsecured) 201 258 Â£47 million revolving credit facility (secured) repayable in 2013 - 44,170 * 3,590 53,960 Non-current borrowings - amounts falling due after more than one year 2014 2013 Â£'000 Â£'000 Term borrowings Debenture stocks: Â£5 million First Mortgage Debenture Stock 2018 at 11.6 per cent 3,750 5,000 Â£10 million First Mortgage Debenture Stock 2022 at 8.109 per cent 9,871 9,855 * 13,621 14,855 Other loans (Bisichi) 111 118 Term bank loans: Â£6 million term bank loan (secured) repayable by 2019 (Bisichi)* 5,902 - Â£1.9 million revolving credit facility term bank loan (secured) 1,900 1,900 repayable by 2016 (Dragon) Â£1 million term bank loan (unsecured) repayable by 2015 - 201 Â£34.895 million term bank loan (secured) repayable by 2019* 34,124 - Â£10.105 million term bank loan (secured) repayable by 2019* 9,818 - 51,855 2,219 65,476 17,074 * The Â£10 million debenture and bank loans are shown after deduction of un-amortised issue costs. Interest payable on the term bank loans is variable being based upon the London inter-bank offered rate (LIBOR) plus margin. First Mortgage Debenture Stocks August 2018 and 2022 and the Â£34.895 million and Â£10.105 million term bank loans repayable in July 2019 are secured by way of a charge on specific freehold and leasehold properties which are included in the financial statements at a value of Â£87.1 million. The Bisichi United Kingdom bank loans and overdraft are secured by way of a first charge over the investment properties in the UK which are included in the financial statements at a value of Â£11.6 million. At the year-end an amount of Â£472,500 was held in a blocked account by Santander UK PLC that relates to the new Â£6 million loan facility. The funds have been blocked in order to satisfy the bank that certain conditions relating to the facility will be fulfilled. Subsequent to year end these conditions have been fulfilled and Santander UK PLC have confirmed that these funds will be released in the near future. The Bisichi South African bank loans and overdrafts of Â£2,179,000 (2013: Â£ 2,794,000) are secured by way of a first charge over specific pieces of mining equipment, inventory and the debtors of the relevant company which holds the loan which are included in the financial statements at a value of Â£6.3 million. The Â£1.9 million bank loan (Dragon) is repayable in May 2016 and is secured by way of a first charge on specific freehold properties which are included in the financial statements at a value of Â£3.1 million. The Group's objectives when managing capital are: - To safeguard the Group's ability to continue as a going concern, so that it may provide returns for shareholders and benefits for other stakeholders; and - To provide adequate returns to shareholders by ensuring returns are commensurate with the risk. 21. Provisions 2014 2013 Â£'000 Â£'000 At 1 January 874 989 Exchange adjustment (31) (204) Unwinding of discount 87 89 At 31 December 930 874 The above provision relates to mine rehabilitation costs in Bisichi. 22. Financial instruments Total financial assets and liabilities The Group's financial assets and liabilities and their fair values are as follows: Fair 2014 Fair 2013 value Carrying Value Carrying Â£'000 value Â£'000 value Â£'000 Â£'000 Cash and cash equivalents 9,237 9,237 8,818 8,818 Financial assets - investments held for 918 918 955 955 trading Other assets 6,774 6,774 9,741 9,741 Derivative liabilities (656) (656) (9,569) (9,569) Bank overdrafts (2,119) (2,119) (4,519) (4,519) Bank loans (53,137) (52,076) (51,684) (51,660) Present value of head leases on properties (4,788) (4,788) (4,793) (4,793) Other liabilities (11,323) (11,323) (13,775) (13,775) Total financial liabilities before (55,094) (54,033) (64,826) (64,802) debentures Fair value of debenture stocks Fair value of the Group's debenture liabilities: Book Fair 2014 2013 value value Fair value Fair Value Â£'000 Â£'000 adjustment adjustment Â£'000 Â£'000 Debenture stocks (15,000) (19,320) (4,320) (4,365) Tax at 20 per cent (2013: 20 per cent) 864 873 Post tax fair value adjustment (3,456) (3,492) Post tax fair value adjustment - basic pence (4.0)p (3.7)p per share There is no material difference in respect of other financial liabilities or any financial assets. The fair values were calculated by the directors as at 31 December 2014 and reflect the replacement value of the financial instruments used to manage the Group's exposure to adverse rate movements. The fair values of the debentures are based on the net present value at the relevant gilt interest rate of the future payments of interest on the debentures. The bank loans and overdrafts are at variable rates and there is no material difference between book values and fair values. Investments held for trading fall under level 1 of the fair value hierarchy into which fair value measurements are recognised in accordance with the levels set out in IFRS 7. Other investments are held at cost. The directors are of the opinion that the difference in value between cost and fair value of other investments is not significant or material. The comparative figures for 2013 fall under the same category of financial instrument as 2014. Treasury policy The Group enters into derivative transactions such as interest rate swaps and forward exchange contracts in order to help manage the financial risks arising from the Group's activities. The main risks arising from the Group's financing structure are interest rate risk, liquidity risk and market price risk. The policies for managing each of these risks and the principal effects of these policies on the results are summarised below. Interest rate risk Treasury activities take place under procedures and policies approved and monitored by the Board to minimise the financial risk faced by the Group. The Â£ 34.8975 million bank loan and Bisichi United Kingdom bank loans and overdraft are secured by way of a first charge on certain fixed assets. The rates of interest vary based on LIBOR in the UK. The Â£10.105 million term bank loan is secured by way of a second charge on certain fixed assets. This loan is based on a fixed interest rate. The Bisichi South African bank loans are secured by way of a first charge over specific pieces of mining equipment, inventory and the debtors of the relevant company which holds the loan. The rates of interest vary based on PRIME in South Africa. The Â£1.9 million bank loan (Dragon) is secured by way of a first charge on specific freehold properties. The rate of interest varies based on LIBOR in the UK. Sensitivity analysis As all variable interest term debt has been covered by hedged derivatives it is not considered that there is any material sensitivity for the Group to changes in interest rates. Liquidity risk The Group's policy is to minimise refinancing risk by balancing its exposure to interest risk and to refinancing risk. In effect the Group seeks to borrow for as long as possible at the lowest acceptable cost. Efficient treasury management and strict credit control minimise the costs and risks associated with this policy which ensures that funds are available to meet commitments as they fall due. Cash and cash equivalents earn interest at rates based on LIBOR in the UK. These facilities are considered adequate to meet the Group's anticipated cash flow requirements for the foreseeable future. The table below analyses the Group's financial liabilities into maturity Groupings and also provides details of the liabilities that bear interest at fixed, floating and non-interest bearing rates. 2014 Less than 2-5 years Over Total 1 year Â£'000 5 years Â£'000 Â£'000 Â£'000 Bank overdrafts (floating) 2,119 2,119 - - Debentures (fixed) 15,000 1,250 3,750 10,000 Bank loans (fixed) 10,105 - 10,105 - Bank loans (floating)* 43,032 221 42,811 - Trade and other payables (non-interest) 17,221 16,338 749 134 87,477 19,928 57,415 10,134 2013 Less than 2-5 years Over Total 1 year Â£'000 5 years Â£'000 Â£'000 Â£'000 Bank overdrafts (floating) 4,519 4,519 - - Debentures (fixed) 15,000 - 5,000 10,000 Bank loans (floating)* 51,684 49,465 2,219 - Trade and other payables (non-interest) 19,452 19,269 49 134 90,655 73,253 7,268 10,134 The Group would normally expect that sufficient cash is generated in the operating cycle to meet the contractual cash flows as disclosed above through effective cash management. *Certain bank loans are fully hedged with appropriate interest derivatives. Details of all hedges are shown below. Market price risk The Group is exposed to market price risk through interest rate and currency fluctuations. Credit risk At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. The Group only deposits surplus cash with well-established financial institutions of high quality credit standing. Borrowing facilities At 31 December 2014 the Group was within its bank borrowing facilities and was not in breach of any of the covenants. Term loan repayments are as set out below. Details of other financial liabilities are shown in Notes 19 and 20. Hedge profile At 31 December 2013 the Group had hedges totalling Â£50.4 million to cover the Â£ 44.2 million facility. These consisted of a 20 year swap for Â£10.4 million with a 7 year call option in favour of the bank, taken out in November 2007, at 4.76 per cent; and a 20 year swap for Â£40 million with a 7 year call option in favour of the bank, taken out in December 2007, at 4.685 per cent. During the year all above hedges were cancelled and the bank loans repaid in full. Terminating the hedges cost a total of Â£10,686,000 against a provision of Â£ 9,569,000 at 31 December 2013. The amount of hedge break costs recognised in the 2014 income statement was a loss of Â£1,117,000. At 31 December 2014 the Group had hedges totalling Â£35 million to cover the Â£ 34.9 million bank loan. These consisted of a 5 year swap for Â£17.5 million, taken out in July 2014 at 2.25%. A Â£17.5 million cap agreement taken out in July 2014 at 2.25% until 29 January 2016 and a swaption at 2.25% on the capped portion from 29 January 2016 to 1 July 2019. Under IFRS 13 the hedges are not deemed to be eligible for hedge accounting and any movement in the value of the hedges is therefore charged directly to the consolidated income statement. At the year end the fair value liability in the accounts was Â£656,000 as valued by the hedge provider. The additional charge to the consolidated income statement of Â£430,000 relates to the premiums paid on the purchase of the swaption and a total charge to consolidated income statement of Â£1,086,000. Fair value of financial instruments Fair value estimation The Group has adopted the amendment to IFRS 7 for financial instruments that are measured in the balance sheet at fair value. This requires the methods of fair value measurement to be classified into a hierarchy based on the reliability of the information used to determine the valuation, as follows: - Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). - Inputs for the asset or liability that are not based on observable market data (that is unobservable inputs) (level 3). Level 1 Level 2 Level 3 Total 2014 Â£'000 Â£'000 Â£'000 Â£'000 loss to income statement '000 Financial assets Other financial assets held for trading and available for sale Quoted equities 918 - - 918 (86) Financial liabilities Derivative financial instruments Interest rate swaps - 656 - 656 (1,086) Level 1 Level 2 Level 3 Total 2013 Â£'000 Â£'000 Â£'000 Â£'000 Gain to income statement '000 Financial assets Other financial assets held for trading and available for sale Quoted equities 955 - - 955 38 Financial liabilities Derivative financial instruments Interest rate swaps - 9,569 - 9,569 4,419 Discontinued Derivative financial instruments Interest rate swaps - 14,599 - 14,599 5,348 Capital structure The Group sets the amount of capital in proportion to risk. It ensures that the capital structure is commensurate to the economic conditions and risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may vary the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group considers its capital to include share capital, share premium, capital redemption reserve, translation reserve and retained earnings, but excluding the interest rate derivatives. Consistent with others in the industry, the Group monitors its capital by its debt to equity ratio (gearing levels). This is calculated as the net debt (loans less cash and cash equivalents) as a percentage of the equity. During 2014 this increased to 94.1 per cent (2013: 80.2 per cent) which was calculated as follows: 2014 2013 Â£'000 Â£'000 Total debt 69,066 71,034 Less cash and cash equivalents (9,237) (8,818) Net debt 59,829 62,216 Total equity 53,598 67,390 111.6% 92.3% All the debt, apart from the overdrafts, is at fixed rates of interest as shown in Notes 19 and 20. The Group does not have any externally imposed capital requirements. Financial assets Financial assets are disclosed in Notes 16, 17 and 18 and above. The Group's principal financial assets are bank balances and cash, trade and other receivables and investments. The Group has no significant concentration of credit risk as exposure is spread over a large number of counterparties and customers. The credit risk in liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies. The Group's credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables, estimated by the Group's management based on prior experience and the current economic environment. Financial assets maturity Cash and cash equivalents all have a maturity of less than three months. 2014 2013 Â£'000 Â£'000 Cash at bank and in hand 9,237 8,818 These funds are primarily invested in short term bank deposits maturing within one year bearing interest at the bank's variable rates. Financial liabilities maturity Repayment of borrowings 2014 2013 Â£'000 Â£'000 Bank loans and overdrafts: Repayable on demand or within one year 2,340 53,960 Repayable between two and five years 51,855 2,115 Repayable after five years - 104 54,195 56,179 Debentures: Repayable within one year 1,250 - Repayable between two and five years 3,750 5,000 Repayable in more than five years 9,871 9,855 69,066 71,034 Certain borrowing agreements contain financial and other conditions that if contravened by the Group, could alter the repayment profile. Commodity price risk Commodity price risk is the risk that the Group's future earnings will be adversely impacted by changes in the market of commodities. Bisichi is exposed to commodity price risk as its future revenues will be derived based on a contract with a physical off-take partner at prices that will be determined by reference to market prices of coal at the delivery date. From time to time Bisichi may manage its exposure to commodity price risk by entering into forward sales contracts with the goal of preserving future revenue streams. Foreign exchange risk Only Bisichi is subject to this risk. For Bisichi all trading is undertaken in the local currencies. Funding is also in local currencies other than inter-company investments and loans and it is not the Group's policy to obtain forward contracts to mitigate foreign exchange risk on these amounts. During 2014 and 2013 the Group did not hedge its exposure of foreign investments held in foreign currencies. The table below shows the currency profiles of cash and cash equivalents: 2014 2013 Â£'000 Â£'000 Sterling 1,697 139 South African Rand 1,138 1,426 US Dollar 3 142 2,838 1,707 Cash and cash equivalents earn interest at rates based on LIBOR in Sterling and Prime in Rand. The tables below shows the currency profiles of net monetary assets and liabilities by functional currency of the Group: 2014: Sterling South Â£'000 African Rands Â£'000 Sterling (2,515) - South African Rand 153 618 US Dollar 20 - (2,342) 618 2013: Sterling South Â£'000 African Rands Â£'000 Sterling (4,082) - South African Rand 768 (1,065) US Dollar 187 - (3,127) (1,065) The directors consider there to be no significant risk from exchange rate movements of foreign currencies against the functional currencies of the reporting companies within the Group. As such no sensitivity analysis is prepared. Interest rate risk and hedge profile 2014 2013 Â£'000 Â£'000 Fixed rate borrowings 25,105 15,000 Floating rate borrowings - Subject to interest rate swap 34,898 50,400 - Excess hedge - (4,281) 60,003 61,119 Average fixed interest rate 9.36% 9.27% Weighted average swapped interest rate 4.79% 7.19% Weighted average cost of debt on overdrafts, bank loans and 5.70% 7.25% debentures Average period for which borrowing rate is fixed 5.5 years 7.7 years Average period for which borrowing rate is swapped 4.5 years 13.9 years The Group's floating rate debt bears interest based on LIBOR for the term bank loans and bank base rate for the overdrafts. 23. Deferred tax asset 2014 2013 Â£'000 Â£'000 Deferred tax asset balance at 1 January 5,651 3,324 Transfer to consolidated income statement (3,327) 2,327 Balance at 31 December 2,324 5,651 The deferred tax balance comprises the following: Revaluation of investment properties (3,211) (3,020) Accelerated capital allowances (1,052) (1,029) Fair value of interest derivatives 131 4,833 Short-term timing differences (143) (143) (4,275) 641 Loss relief 6,599 5,010 Deferred tax asset provision at end of period 2,324 5,651 The directors consider the temporary differences arising in connection with the interests in joint ventures are insignificant. There is no time limit in respect of the Group tax loss relief. 24. Deferred tax liabilitIES 2014 2013 Â£'000 Â£'000 Deferred tax liability balance at 1 January 2,070 2,605 Recognised as income 378 (228) Exchange adjustment (38) (273) Balance at 31 December 2,410 2,104 The deferred tax balance comprises the following: Revaluation of properties 929 912 Accelerated capital allowances 1,421 1,186 Short-term timing differences 60 6 Deferred tax liability provision at end of period 2,410 2,104 25. Share capital Number of Number of 2014 2013 ordinary ordinary Â£'000 Â£'000 10p 10p shares shares 2014 2013 Authorised: Ordinary shares of 10p each 110,000,000 110,000,000 11,000 11,000 Allotted, issued and fully paid share 85,542,711 85,542,711 8,554 8,554 capital Less: held in Treasury (see below) (1,032,991) (1,254,738) (103) (125) "Issued share capital" for reporting 84,509,720 84,287,973 8,451 8,429 purposes The Company has one class of ordinary shares which carry no right to fixed income. Treasury shares Number of ordinary Cost/issue value 10p shares 2014 2013 2014 2013 Â£'000 Â£'000 Shares held in Treasury at 1 January 1,254,738 1,538,398 1,159 1,421 Issued to meet directors bonuses (Feb 14 - (264,257) (103,580) (244) (96) 58.25p) 2013: (Jan 13 - 22p) Issued to meet staff bonuses (Feb 14 - (91,728) (64,818) (84) (60) 58.25p) 2013: (Jan 13 - 22p) Issued for new directors share incentive (5,150) (27,272) (5) (25) plan (Feb 14 - 58.25p) 2013: (Jan 13 - 22p) Issued for new staff share incentive plan (30,368) (63,208) (28) (58) (Feb 14 - 58.25p) 2013: (Jan 13 - 22p) Issued for new directors share incentive - (4,673) - (4) plan 2013: (Jan 13 - 21.75p) Issued for new staff share incentive plan - (20,109) - (19) 2013: (Jan 13 - 21.75p) Purchase of shares (Apr 14 - 50.65p) 171,674 - 87 - Issued to meet staff bonuses (Dec 14 - (1,918) - (2) - 39.5p) Shares held in Treasury at 31 December 1,032,991 1,254,738 883 1,159 Share Option Schemes Employees' share option scheme (Approved scheme) At 31 December 2014 there were no options to subscribe for ordinary shares outstanding, issued under the terms of the Employees' Share Option Scheme. This share option scheme was approved by members in 1986, and has been approved by Her Majesty's Revenue and Customs (HMRC). There are no performance criteria for the exercise of options under the Approved scheme, as this was set up before such requirements were considered to be necessary. A summary of the shares allocated and options issued under the scheme up to 31 December 2014 is as follows: Changes during the year At 1 Options Options Options At 31 January Exercised granted lapsed December 2014 2014 Shares issued to date 2,367,604 - - - 2,367,604 Options granted which have not - - 20,000 (20,000) - been exercised Shares allocated over which 1,549,955 - - - 1,549,955 options have not been granted Total shares allocated for issue 3,917,559 - 20,000 (20,000) 3,917,559 to employees under the scheme Non-approved Executive Share Option Scheme (Unapproved scheme) A share option scheme known as the "Non-approved Executive Share Option Scheme" which does not have HMRC approval was set up during 2000. At 31 December 2014 there were no options to subscribe for ordinary shares outstanding. The exercise of options under the Unapproved scheme is subject to the satisfaction of objective performance conditions specified by the remuneration committee which confirms to institutional shareholder guidelines and best practice provisions. A summary of the shares allocated and options issued under the scheme up to 31 December 2014 is as follows: Changes during the year At 1 Options Options Options At 31 January Exercised granted lapsed December 2014 2014 Shares issued to date 450,000 - - - 450,000 Shares allocated over which 550,000 - - - 550,000 options have not yet been granted Total shares allocated for issue 1,000,000 - - - 1,000,000 to employees under the scheme The Bisichi Mining PLC Unapproved Option Schemes Details of the share option schemes in Bisichi are as follows: Year of Subscription Period within Number of Number of Number of grant price per which options share share options share share exercisable for which issued/ for which options exercised/ options outstanding at (cancelled) outstanding at 31 December during year 31 December 2013 2014 2004 149.0p Sep 2007 - Sep 80,000 (80,000) - 2014 2006 237.5p Oct 2009 - Oct 325,000 - 325,000 2016 2010 202.5p Aug 2013 - Aug 80,000 - 80,000 2020 2012 34.0p Oct 2012 - Sep 233,000 (40,000) 193,000 2022 The exercise of options under the Unapproved Share Option Schemes, for certain option issues, is subject to the satisfaction of objective performance conditions specified by the remuneration committee, which will confirm to institutional shareholder guidelines and best practice provisions in force from time to time. The performance conditions for the 2010 scheme, agreed by members on 31 August 2010 respectively, requires growth in net assets over a three year period to exceed the growth of the retail prices index by a scale of percentages. There are no performance conditions attached to the other schemes. 2014 2014 2013 2013 Number Weighted Number Weighted average average exercise exercise price price Outstanding at 1 January 718,000 157.7p 718,000 157.7p Cancelled during the year (80,000) (149.0p) - - Exercised during the year (40,000) (34.0p) - - Outstanding at 31 December 598,000 167.1p 718,000 157.7p Exercisable at 31 December 598,000 167.1p 718,000 157.7p 26. Non-controlling interest ("NCI") 2014 2013 Â£'000 Â£'000 As at 1 January 10,001 10,488 Share of profit for the year 745 213 Share of gain on available for sale investments 24 - Dividends received (292) (248) Shares issued 313 86 Exchange adjustment (76) (538) Other changes in equity 111 - As at 31 December 10,826 10,001 The following subsidiaries had material NCI: Bisichi Mining Plc Black Wattle Colliery (Pty) Ltd Summarised financial information for these subsidiaries is set out below. The information is before inter-company eliminations with other companies in the Group. Bisichi Mining Plc 2014 2013 Â£'000 Â£'000 Revenue 26,500 35,105 Profit for the year attributable to owners of the parent 458 151 Profit for the year attributable to NCI 745 213 Profit for the year 1,203 364 Other comprehensive income attributable to owners of the parent (67) (320) Other comprehensive income attributable to NCI (13) (538) Other comprehensive income for the year (80) (858) Balance sheet Non-current assets 21,924 23,221 Current assets 12,289 12,980 Total assets 34,213 36,201 Current liabilities (7,148) (16,124) Non-current liabilities (9,346) (3,090) Total liabilities (16,494) (19,214) Net current assets at 31 December 17,719 16,987 Cash flows From operating activities 3,406 1,302 From investing activities (1,903) (3,162) From financing activities 488 (455) Net cash flows 1,991 (2,315) The non-controlling interest comprises of a 37.5% shareholding in Black Wattle Colliery (Pty) Ltd, a coal mining company incorporated in South Africa. 26. Non-controlling interest ("NCI") continued Summarised financial information reflecting 100% of the underlying subsidiary's relevant figures, is set out below. Black Wattle Colliery (pty) Limited ("Black Wattle") 2014 Â£'000 Revenue 25,536 Expenses (24,866) Profit for the year 670 Other comprehensive income - Total comprehensive income for the year 670 Balance sheet Non-current assets 6,030 Current assets 8,054 Current liabilities (9,125) Non-current liabilities (2,260) Net assets at 31 December 2,699 The non-controlling interest relates to the disposal of a 37.5% shareholding in Black Wattle in 2010. The total issued share capital in Black Wattle was increased from 136 shares to 1,000 shares at par of ZAR1 (South African Rand) through the following shares issue: - a subscription for 489 ordinary shares at par by Bisichi Mining (Exploration) Limited increasing the number of shares held from 136 ordinary shares to a total of 675 ordinary shares; - a subscription for 110 ordinary shares at par by Vunani Mining (pty) Ltd; - a subscription for 265 "A" shares at par by Vunani Mining (pty) Ltd Bisichi Mining (Exploration) Limited is a wholly owned subsidiary of Bisichi Mining PLC incorporated in England and Wales. Vunani Mining (pty) Ltd is a South African Black Economic Empowerment company and minority shareholder in Black Wattle. The "A" shares rank pari passu with the ordinary shares save that they will have no dividend rights until such time as the dividends paid by Black Wattle on the ordinary shares subsequent to 30 October 2008 will equate to ZAR832,075,000. A non-controlling interest of 15% in Black Wattle is recognised for all profits distributable to the 110 ordinary shares held by Vunani Mining (pty) Ltd from the date of issue of the shares (18 October 2010). An additional non-controlling interest will be recognised for all profits distributable to the 265 "A" shares held by Vunani Mining (pty) Ltd after such time as the profits available for distribution, in Black Wattle, before any payment of dividends after 30 October 2008, exceeds ZAR832,075,000. 27. Related party transactions Cost Amounts Cash recharged Owed advanced to/(by) (to)/by to/(by) related related related party party party Â£'000 Â£'000 Â£'000 Related party: Langney Shopping Centre Unit Trust Current account 106 (i) 11 - Loan account - 335 (128) Ezimbokodweni Mining (pty)Limited 92 1,040 Simon Heller Charitable Trust Current account (63) - - Loan account - (700) - Directors and key management M A Heller and J A Heller 7 (i) 16 - H D Goldring (Delmore Asset Management (25) (ii) - - Limited) C A Parritt (18) (iii) - - R Priest (Alvarez & Marsal Real Estate (34) (iii) - - Advisory Services LLP) Totals at 31 December 2014 65 702 (128) Totals at 31 December 2013 170 (2,628) (468) Nature of costs recharged - (i) Property management fees (ii) Portfolio management fees (iii) Consultancy fees. Langney Shopping Centre Unit Trust (joint venture) Langney Shopping Centre Unit Trust (Langney) is owned 12.5 per cent by the Company and 12.5 per cent by Bisichi Mining PLC. The remaining 75 per cent is owned by Columbus Capital Management LLP. At the year-end LAP and Bisichi each had a loan of Â£167,625 repayable, of which Â£104,125 each has been received since the year-end. The Company provides property management services to Langney. Directors London & Associated Properties PLC provides office premises, property management, general management, accounting and administration services for a number of private property companies in which Sir Michael Heller and J A Heller have an interest. Under an agreement with Sir Michael Heller no charge is made for these services on the basis that he reduces by an equivalent amount the charge for his services to London & Associated Properties PLC. The board estimates that the value of these services, if supplied to a third party, would have been Â£300,000 for the year (2013: Â£300,000). The companies for which services are provided are: Barmik Properties Limited, Cawgate Limited, Clerewell Limited, Cloathgate Limited, Ken-Crav Investments Limited, London & South Yorkshire Securities Limited, Metroc Limited, Penrith Retail Limited, Shop.com Limited, South Yorkshire Property Trust Limited, Wasdon Investments Limited, Wasdon (Dover) Limited, and Wasdon (Leeds) Limited. In addition the Company received management fees of Â£10,000 (2013: Â£10,000) for work done for two charitable foundations, the Michael & Morven Heller Charitable Foundation and the Simon Heller Charitable Trust. The Simon Heller Trust has placed on deposit with LAP Â£700,000 at an interest rate of 9% which is refundable on demand. Delmore Asset Management Limited (Delmore) is a Company in which H D Goldring is a majority shareholder and director. Delmore provides consultancy services to the Company on an invoiced fee basis. Alvarez & Marsal Real Estate Advisory Services LLP (A&M) is a company in which R Priest is a director. A&M provides consultancy services to the Company on an invoiced fee basis. During the year A&M were paid Â£180,000 for services provided. J A Heller received a loan of Â£40,000, which has been repaid in the year. In 2012 a loan was made by Bisichi to one of the Bisichi directors A R Heller. The loan amount outstanding at the year end was Â£101,000 (2013: Â£116,000) and a repayment of Â£15,000 (2013: Â£nil) was made during the year. The directors are considered to be the only key management personnel and their remunerations including employers national insurance for the year were Â£ 1,521,000 (2013: Â£1,485,000). All other disclosures required including interest in share options in respect of those directors are included within the remuneration report. 28. Employees The average number of employees, including directors, of the Group during the year was as follows: 2014 2013 Â£'000 Â£'000 Production 213 220 Administration 45 49 258 269 2014 2013 Â£'000 Â£'000 Staff costs during the year were as follows: Salaries and other costs 6,843 7,503 Social security costs 378 376 Pension costs 510 582 Share based payments 55 120 7,786 8,581 29. Capital Commitments 2014 2013 Â£'000 Â£'000 Commitments for capital expenditure approved but not contracted 389 402 for at the year end Share of commitment of capital expenditure in joint venture 1,402 1,451 All the above relates to Bisichi Mining PLC. 30. Operating and finance leases Operating leases on land and buildings At 31 December 2014 the Group had commitments under non-cancellable operating leases on land and buildings expiring as follows: 2014 2013 Â£'000 Â£'000 Within one year - 324 In more than five years 240 - 240 324 Operating lease payments represent rentals payable by the Group for its office premises. The leases are for an average term of ten years and rentals are fixed for an average of five years. Present value of head leases on properties Minimum lease Present value payments of minimum lease payments 2014 2013 2014 2013 Â£'000 Â£'000 Â£'000 Â£'000 Amounts payable under finance leases: Within one year 306 306 306 306 In the second to fifth years inclusive 1,226 1,226 1,139 1,139 After five years 30,456 30,770 3,343 3,348 31,988 32,302 4,788 4,793 Future finance charges on finance leases (27,200) (27,509) - - Present value of finance lease liabilities 4,788 4,793 4,788 4,793 Finance lease liabilities are in respect of leased investment property. Many leases provide for contingent rent in addition to the rents above, usually a proportion of rental income. Finance lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default. Future aggregate minimum rentals receivable The Group leases out its investment properties to tenants under operating leases. The future aggregate minimum rentals receivable under non-cancellable operating leases are as follows: 2014 2013 Â£'000 Â£'000 Within one year 6,129 6,290 In the second to fifth years inclusive 19,479 21,886 After five years 35,141 40,322 60,749 68,498 31. Contingent liabilities and post balance sheet events There were no contingent liabilities at 31 December 2014 (2013: Â£Nil), except as disclosed in Note 22. Since the year end the Group has repaid early Â£1.25 million of the Â£5 million debenture stock 2018, at an additional cost of Â£0.16 million. Bank guarantees have been issued by the bankers of Black Wattle Colliery (Pty) Limited on behalf of the company to third parties. The guarantees are secured against the assets of the company and have been issued in respect of the following: 2014 2013 Â£'000 Â£'000 Rail siding 158 62 Rehabilitation of mining land 1,114 1,153 Water & electricity 52 54 32. Company financial statements Company balance sheet at 31 December 2014 Notes 2014 2013 Â£'000 Â£'000 Fixed assets Tangible assets 32.3 24,048 65,912 Other investments: Associated company - Bisichi Mining PLC 32.4 489 489 Subsidiaries and others including Dragon Retail 32.4 57,917 47,649 Properties Limited 32.4 58,406 48,138 82,454 114,050 Current assets Debtors 32.5 6,491 15,436 Investments 32.6 21 23 Bank balances 3,793 4,969 10,305 20,428 Creditors Amounts falling due within one year 32.7 (53,226) (78,711) Net current liabilities (42,921) (58,283) Total assets less current liabilities 39,533 55,767 Creditors Amounts falling due after more than one year 32.8 (13,621) (24,625) Net assets 25,912 31,142 Capital and reserves Share capital 32.10 8,554 8,554 Share premium account 32.11 4,866 4,866 Capital redemption reserve 32.11 47 47 Revaluation reserve 32.11 3,212 2,151 Treasury shares 32.10 (883) (1,159) Retained earnings 32.11 10,116 16,683 Shareholders' funds 25,912 31,142 These financial statements were approved by the board of directors and authorised for issue on 21 May 2015 and signed on its behalf by: Sir Michael Heller Anil Thapar Company Registration No. 341829 Director Director 32.1. Company Accounting policies The following are the main accounting policies of the Company: Basis of accounting The financial statements have been 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 and in accordance with applicable accounting standards. All accounting policies applied are consistent with those of prior periods. Investment properties are accounted for in accordance with SSAP 19, "Accounting for Investment Properties", which provides that these should not be subject to periodic depreciation charges, but should be shown at open market value. This is contrary to the Companies Act 2006 which states that, subject to any provision for depreciation or diminution in value, fixed assets are normally to be stated at purchase price or production cost. Current cost accounting or the revaluation of specific assets to market value, as determined at the date of their last valuation, is also permitted. The treatment of investment properties under the Companies Act 2006 does not give a true and fair view as these assets are not held for consumption in the business but as investments, the disposal of which would not materially affect any manufacturing or trading activities of the enterprise. In such a case it is the current value of these investments, and changes in that current value, which are of prime importance. Consequently, for the proper appreciation of the financial position, the accounting treatment required by SSAP 19 is considered appropriate for investment properties. Details of the current value and historical cost information for investment properties are set out in Note 32.3. Depreciation or amortisation is only one of the many factors reflected in the annual revaluation and the amount that might otherwise have been shown cannot be separately identified or quantified. The financial statements have been prepared on a going concern basis. Further details of which are contained in Group accounting policies on page 49 and in the Financial review and Directors' report. Revenue Revenue comprises rental income, listed investment sales, dividends and other income. The profit or loss on disposal of properties is recognised on completion of sale. Dividends receivable Dividends are credited to the profit and loss account when the dividend is received. Tangible fixed assets a) Investment properties An external professional valuation of investment properties is carried out every year. Properties professionally valued by Chartered Surveyors are on an existing use open market value basis, in accordance with the Practice Statements contained within the RICS valuation standards 2012 prepared by the Royal Institution of Chartered Surveyors. Directors' valuation of properties are at fair value. The cost of improvements includes attributable interest. b) Other tangible fixed assets Other tangible fixed assets are stated at historical cost. Depreciation is provided on all other tangible fixed assets at rates calculated to write each asset down to its estimated residual value evenly over its expected useful life. The rates generally used are - office equipment - 10 to 33 per cent per annum, and motor vehicles - 20 per cent per annum, on a straight line basis. Investments Long term investments are described as participating interests and are classified as fixed assets. Short term investments are classified as current assets. a) Investments held as fixed assets These comprise investments in subsidiaries and investments in Dragon Retail Properties Limited and Langney Shopping Centre Unit Trust (unlisted joint ventures), Bisichi Mining PLC (listed associate) and in unlisted companies which are all held for the long term. Provision is made for any impairment in the value of fixed asset investments. b) Investments held as current assets Investments held for trading are included in current assets and are revalued to fair value. For listed investments, fair value is the bid market listed value at the balance sheet date. Realised and unrealised gains or losses arising from changes in fair value are included in the income statement of the period in which they arise. Financial Instruments Bank loans and overdrafts Bank loans and overdrafts are included in creditors on the Company balance sheet at the amounts drawn on the particular facilities. Interest payable on those facilities is expensed as a finance cost in the period to which it relates. Interest rate derivatives The Company uses derivative financial instruments to hedge the interest rate risk associated with the financing of the Company's business. No trading in such financial instruments is undertaken. At previous reporting dates, these interest rate derivatives were recognised at their fair value, being the Net Present Value of the difference between the hedged rate of interest and the current market rate of interest assuming that this rate was applied for the remainder of the hedge. Where a derivative is designated as a hedge for the variability of a highly probable forecast transaction e.g. an interest payment, the element of the gain or loss on the derivative that is an effective hedge is recognised directly in equity. When the forecast transaction subsequently results in the recognition of a financial asset or a financial liability, the associated gains or losses that were recognised directly in equity are reclassified into the income statement in the same period or periods during which the asset acquired or liability assumed affects the income statement e.g. when interest income or expense is recognised. The gain or loss arising from any adjustment to the fair value is recognised in the income statement. Debtors Debtors do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Creditors Creditors are not interest bearing and are stated at their nominal value. Joint ventures Investments in joint ventures, being those entities over whose activities the Group has joint control as established by contractual agreement, are included at cost. Deferred taxation Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the Company's taxable profits and its results as stated in the financial statements. Deferred tax is measured at the average tax rates which are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis. Leased assets and obligations All leases are "Operating Leases" and the annual rentals are charged to the profit and loss account on a straight line basis over the lease term. Rent free periods or other incentives received for entering into a lease are accounted for over the period of the lease so as to spread the benefit received over the lease term. Retirement benefits For defined contribution schemes the amount charged to the profit and loss account in respect of pension costs and other post retirement benefits is the contributions payable for the year. Differences between contributions payable in the year and contributions actually paid are shown as either prepayments or accruals at the balance sheet date. 32.2. Profit for the financial year The Company's result for the year was a loss of Â£4,114,000 (2013 profit: Â£ 9,684,000). 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. 32.3. Tangible assets Investment Properties Office Total Freehold Long Short Equipment Â£'000 Â£'000 leasehold leasehold and motor Â£'000 Â£'000 vehicles Â£'000 Cost or valuation at 1 January 66,779 48,759 16,675 275 1,070 2014 Reclassification - - (850) 850 - Additions 698 662 - - 36 Disposals (42,009) (41,350) - - (659) Decrease on revaluation (1,151) (126) (1,025) - - Cost or valuation at 31 December 24,317 7,945 14,800 1,125 447 2014 Representing assets stated at: Valuation 23,870 7,945 14,800 1,125 - Cost 447 - - - 447 24,317 7,945 14,800 1,125 447 Depreciation at 1 January 2014 867 - - - 867 Charge for the year 46 - - - 46 Disposals (644) - - - (644) Depreciation at 31 December 2014 269 - - - 269 Net book value at 1 January 2014 65,912 48,759 16,675 275 203 Net book value at 31 December 24,048 7,945 14,800 1,125 178 2014 The freehold and leasehold properties were valued as at 31 December 2014 by external professional firms of chartered surveyors. The valuations were made at fair value. The directors' property valuations were made at fair value. 2014 2013 Â£'000 Â£'000 Allsop LLP 22,045 62,390 Woolhouse Real Estate - 1,494 Directors' valuation 1,825 1,825 23,870 65,709 The historical cost of investment properties, including total capitalised interest of Â£Nil (2013: Â£1,161,000) was as follows: Freehold Long Short Â£'000 Leasehold Leasehold Â£'000 Â£'000 Cost at 1 January 2014 47,761 14,972 785 Reclassification - (1,154) 1,154 Additions 662 - - Disposals (43,562) - - Cost at 31 December 2014 4,861 13,818 1,939 Long leasehold properties are held on leases with an unexpired term of more than fifty years at the balance sheet date. 32.4. Other investments Cost Total Shares in Loan stock Shares in Shares in Â£'000 subsidiary in joint associate companies subsidiary ventures Â£'000 Â£'000 companies Â£'000 Â£'000 At 1 January 2014 48,138 42,863 3,658 1,128 489 Additions 15,000 15,000 - - - Repayments (3,658) - (3,658) - - Impairment (1,074) (1,074) - - - At 31 December 2014 58,406 56,789 - 1,128 489 Subsidiary companies The Company owns 100 per cent of the ordinary share capital of the following companies that are trading, all of which are registered in England and Wales: Entity Activity % Held by % Held by Company Group LAP Ocean Holdings Limited Property 100 100 Investment Brixton Village Limited Property - 100 Investment Market Row Limited Property - 100 Investment Analytical Properties Limited Property - 100 Investment Analytical Properties Holdings Limited Property 100 100 Investment London & Associated Management Services Limited Property 100 100 Management Services Newincco 1243 Limited Property - 100 Investment Newincco 1244 Limited Property - 100 Investment Newincco 1245 Limited Property - 100 Investment Newincco 1299 Limited Property 100 100 Investment Newincco 1300 Limited Property - 100 Investment In the opinion of the Directors the value of the investment in subsidiaries is not less than the amount shown in these financial statements. Details of the joint ventures are set out in Notes 12 and 13. 32.5. Debtors 2014 2013 Â£'000 Â£'000 Trade debtors 384 893 Amounts due from subsidiary companies 390 8,949 Amounts due from associate and joint ventures 308 381 Deferred tax asset (note 32.9) 4,661 3,706 Other debtors 157 181 Prepayments and accrued income 591 1,326 6,491 15,436 32.6. Investments 2014 2013 Â£'000 Â£'000 Market value of the listed investment portfolio 21 23 Unrealised deficit of market value over cost (2) - Listed investment portfolio at cost 23 23 All investments are listed on the London Stock Exchange. 32.7. Creditors: amounts falling due within one year 2014 2013 Â£'000 Â£'000 Bank overdrafts (unsecured) - 1,490 Bank loans (secured)* - 44,170 Bank loans (unsecured) 201 258 Debenture stocks Â£5 million First Mortgage Debenture Stock 2018 1,250 - at 11.6 per cent Amounts owed to subsidiary companies 44,947 22,982 Amounts owed to joint ventures 2,406 3,300 Other taxation and social security costs 536 635 Other creditors 1,630 1,408 Accruals and deferred income 2,256 4,468 53,226 78,711 *The bank loans are shown after deduction of un-amortised issue costs. 32.8. Creditors: amounts falling due after more than one year 2014 2013 Â£'000 Â£'000 Interest rate derivatives - 9,569 Term Debenture stocks: Â£5 million First Mortgage Debenture Stock 2018 at 11.6 per cent 3,750 5,000 Â£10 million First Mortgage Debenture Stock 2022 at 8.109 per cent 9,871 9,855 * 13,621 14,855 Bank loans: Repayable after more than one year - 201 13,621 24,625 *The Â£10 million debenture is shown after deduction of un-amortised issue costs. Details of terms and security of overdrafts, loans and loan renewal and debentures are set out in note 20. Repayment of borrowings: Bank loans and overdrafts: Repayable within one year 201 45,918 Repayable between two and three years - 201 201 46,119 Debentures: Repayable within one year 1,250 - Repayable between two and five years 3,750 5,000 Repayable in more than five years 9,871 9,855 15,072 60,974 Hedge profile At 31 December 2013 the Company had hedges totalling Â£50.4 million to cover the Â£44.2 million bank loan facility. These consisted of a 20 year swap for Â£10.4 million with a 7 year call option in favour of the bank, taken out in November 2007, at 4.76 per cent; and a 20 year swap for Â£40 million with a 7 year call option in favour of the bank, taken out in December 2007, at 4.685 per cent. The Board has decided to terminate all the long dated derivatives rather than hold them to maturity. During the year all the above hedges were cancelled and the bank loans repaid in full. Under FRS 29 the hedges are not deemed to be eligible for hedge accounting and any movement in the value of the hedges is therefore charged directly to the profit and loss account. This results in a total cost of Â£10,686,000 against a provision of Â£9,569,000 at 31 December 2013. The amount of hedge break cost recognised in the profit and loss was a loss of Â£1,117,000. Fair value of financial instruments Fair value estimation The Company has adopted the amendment to FRS29 for financial instruments that are measured in the balance sheet at fair value. This requires the methods of fair value measurement to be classified into a hierarchy based on the reliability of the information used to determine the valuation, as follows: - Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). - Inputs for the asset or liability that are not based on observable market data (that is unobservable inputs) (level 3). Level 1 Level 2 Level 3 Total 2014 Â£'000 Â£'000 Â£'000 Â£'000 loss to profit and loss account Â£'000 Financial assets Other financial assets held for trading Quoted equities 21 - - 21 (2) Financial liabilities Derivative financial instruments Interest rate swaps - - - - - Level 1 Level 2 Level 3 Total 2013 Â£'000 Â£'000 Â£'000 Â£'000 Gain to profit and loss account Â£'000 Financial assets Other financial assets held for trading Quoted equities 23 - - 23 3 Financial liabilities Derivative financial instruments Interest rate swaps - 9,569 - 9,569 4,419 Liquidity The table below analyses the Company's financial liabilities into maturity groupings and also provides details of the liabilities that bear interest at fixed, floating and non-interest bearing rates. Less than 2-5 years Over 2014 1 year Â£'000 5 years Total Â£'000 Â£'000 Â£'000 Debentures (fixed) 1,250 3,750 10,000 15,000 Bank loans (floating) 201 - - 201 Trade and other payables (non-interest) 51,775 - - 51,775 53,226 3,750 10,000 66,976 Less than 2-5 years Over 2013 1 year Â£'000 5 years Total Â£'000 Â£'000 Â£'000 Bank overdrafts (floating) 1,490 - - 1,490 Debentures (fixed) - 5,000 10,000 15,000 Bank loans (floating)* 44,451 201 - 44,652 Trade and other payables (non-interest) 32,793 - - 32,793 78,734 5,201 10,000 93,935 The Company would normally expect that sufficient cash is generated in the operating cycle to meet the contractual cash flows as disclosed above through effective cash management. *The bank loans are fully hedged with appropriate interest derivatives. Details of the hedges are shown above. Total financial assets and liabilities The Company's financial assets and liabilities and their fair values are as follows: Fair 2014 Fair 2013 value Carrying value Carrying Â£'000 value Â£'000 value Â£'000 Â£'000 Cash and cash equivalents 3,793 3,793 4,969 4,969 Investments 21 21 23 23 Other assets 6,491 6,491 15,436 15,436 Bank overdrafts - - (1,490) (1,490) Bank loans (201) (201) (44,451) (44,428) Derivative liabilities - - (9,569) (9,569) Other liabilities (51,775) (51,775) (32,793) (32,793) Total financial liabilities before debentures (41,671) (41,671) (67,875) (67,852) Additional details of borrowings and financial instruments are set out in Notes 20 and 22. 32.9. Provisions for liabilities and charges 2014 2013 Â£'000 Â£'000 Deferred Taxation Balance at 1 January (3,706) (4,644) Transfer to profit and loss account (955) 938 Balance at 31 December (4,661) (3,706) No provision has been made for the approximate taxation liability at 20 per cent (2013: 20 per cent) of Â£38,000 (2013: Â£101,000) which would arise if the investment properties were sold at the stated valuation. The deferred tax balance comprises the following: Accelerated capital allowances 955 934 Fair value of interest derivatives - (1,914) Short-term timing differences 146 146 Losses (5,762) (2,872) Provision at end of period (4,661) (3,706) 32.10. Share capital Details of share capital, treasury shares and share options are set out in Note 25. 32.11. Reserves Share Capital Revaluation Retained Total Premium redemption reserve Earnings Â£'000 Account reserve Â£'000 Â£'000 Â£'000 Â£'000 Balance at 1 January 2014 4,866 47 2,151 16,683 23,747 Decrease on valuation of - - (1,151) - (1,151) investment properties Retained loss for year - - - (4,114) (4,114) Dividends paid in year - - - (106) (106) Loss on disposal of Treasury - - - (135) (135) Shares Transfer of realised - - 2,212 (2,212) - revaluation loss Balance at 31 December 2014 4,866 47 3,212 10,116 18,241 32.12. Related party transactions Details of related party transactions are given in Note 27. As provided under Financial Reporting Standard 8: Related Party Disclosures, the Company has taken advantage of the exemption from disclosing transactions with other Group companies. 32.13. Capital commitments There were no capital commitments at 31 December 2014 (2013: Â£Nil). 32.14. Commitments under operating leases At 31 December 2014 the Company had annual commitments under non-cancellable operating leases on land and buildings as follows: 2014 2013 Â£'000 Â£'000 Expiring in less than one year - 324 Expiring in more than five years 240 - 240 324 In addition, the Company has an annual commitment to pay ground rents on its leasehold investment properties which amount to Â£299,000 (2013: Â£327,000). 32.15. Contingent liabilities and post balance sheet events There were no contingent liabilities at 31 December 2014 (2013: Â£Nil), except as disclosed in Note 32.8. Since the year end the Company has repaid early Â£1.25 million of the Â£5 million debenture stock 2018, at an additional cost of Â£0.16 million. five year financial summary 2014 2013 2012* 2011* 2010* Â£m Â£m Â£m Â£m Â£m Portfolio size Investment properties-LAP^ 89 87 205 194 195 Investment properties-joint 25 16 27 29 13 ventures Investment properties-Dragon 3 3 - - - Retail Properties Investment properties-Bisichi 12 12 12 12 12 Mining^ 129 118 244 235 220 Portfolio activity Â£m Â£m Â£m Â£m Â£m Acquisitions 0.68 - - - - Disposals - (9.47) - (0.60) (20.74) Capital Expenditure - - 0.97 0.42 0.49 0.68 (9.47) 0.97 (0.18) (20.25) Consolidated income statement Â£m Â£m Â£m Â£m Â£m Group income 33.53 43.29 15.17 16.38 15.98 Profit/(loss) before tax (2.69) 1.14 7.62 (18.56) (10.69) Taxation (3.70) 2.55 (0.35) 3.74 7.19 Loss/profit attributable to (7.14) 3.47 7.27 (14.82) (3.50) shareholders Earnings/(loss) per share - (8.45)p 4.12p 8.65p (17.63)p (4.24)p basic Earnings/(loss) per share - (8.45)p 4.12p 8.65p (17.63)p (4.24)p fully diluted Dividend per share 0.156 0.125p - 0.75p 1.15p Consolidated balance sheet Â£m Â£m Â£m Â£m Â£m Shareholders' funds attributable 42.55 49.73 46.46 39.93 55.76 to equity shareholders Net borrowings 59.71 53.96 131.27 133.03 130.77 Net assets per share 50.35 59.00p 55.30p 47.53p 66.71p - basic - fully diluted 50.35 59.00p 55.29p 45.53p 66.69p Consolidated cash flow statement Â£m Â£m Â£m Â£m Â£m Cash generated from operations 2.96 12.23 12.72 10.89 9.58 Capital investment and financial 100.42 4.35 (0.87) (0.50) 20.42 investment Notes: * Original LAP group - pre IFRS 10 amendments ^ Excluding the present value of head leases

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