REG-Lon.&Assoc.Props PLC: Half Year Results to 30 June 2019
28/08/2019 07:35
FOR IMMEDIATE RELEASE
28 August 2019
LONDON & ASSOCIATED PROPERTIES PLC
HALF YEAR RESULTS TO 30 JUNE 2019
London & Associated Properties PLC (“LAP” or “the Group”) is a main
market listed property investment group that specialises in industrial and
community retail.
It also holds a substantial stake in the main market listed Bisichi Mining PLC
which operates coal mines in South Africa and owns UK property investments.
HIGHLIGHTS
* Sale of long lease on Sheffield retail unit on 11 July 2019 for £9.5
million, with net cash inflow utilised to pay down debt.
* Sale of Coldharbour Lane, Brixton for £2.35 million completed on 31 July
2019, with net proceeds available for investment.
* Write down of £1.75 million investment in joint venture with Oaktree
Capital Management.
* Group net assets of £55.2 million (£55.7 million December 2018) and those
attributable to shareholders of £41.7 million (£43.4 million December 2018)
* New lettings completed at Orchard Square, Sheffield, generating £337,000 of
annualised income.
* Terms agreed for the refinancing of the £18.3 million non-recourse loan
repayable later this year.
* Retail property portfolio continues to perform satisfactorily with Group
occupancy levels of 93.7% by rental income (June 2018: 97.0%)
* Runcorn industrial leasing transactions achieved 25% uplift above prevailing
rates at time of acquisition
* JV with Metroprop Real Estate Limited, development in West Ealing: *
Favourable pre-planning application feedback received
* Planning application now submitted
“The market for retail and retail property remains extremely challenging.
However, we are satisfied that our portfolio remains relevant and fit for
purpose. This can be evidenced by the strong lease renewal programme that we
have recently completed at Orchard Square …... while the remainder of our
directly owned portfolio remains well-let with 93.7% occupancy levels.” Sir
Michael Heller, Chairman and John Heller, Chief Executive
-more-
Contact:
London & Associated Properties
PLC Tel: 020 7415 5000
John Heller, Chief Executive
Baron Phillips
Associates
Tel: 07767 444193
Baron Phillips
Half year results for the period ended 30 June 2019
Half year review
We are pleased to report on anther period of progress for LAP.
Group revenue increased by 7.2% to £30.0 million from £28.0 million as
compared with the same period last year. Profits before tax decreased to £1.3
million from £3.5 million last year. The current periods profits have been
affected by movements in the value of two investments at Fargate, Sheffield
and Project Harrogate, as described below.
During the period under review and since the half-year end, we have completed
a number of important transactions that have further strengthened the Group.
The most significant of these was the disposal in July of our flagship unit in
Fargate to Metro Bank for £9.5 million. This unit was developed by us in
2007/8 for River Island who were still in occupation at the time of disposal,
although they had executed their break clause. They were paying £475,000, a
level of rent that would have been hard and very expensive to replace once the
unit had become vacant. In agreement with our lenders, the net proceeds of
the disposal which amounted to £9.3 million were used to pay down debt. The
negotiations with Metro Bank had been ongoing for a considerable period of
time and as a result the Fargate property had been valued at £10.3 million at
the 2018 year end. However, we believe that this result represents an
excellent outcome for shareholders and significantly de-risks this asset.
We also completed in July the sale of our nightclub building in Coldharbour
Lane, Brixton to an overseas purchaser for £2.35 million. The property was
valued at £2.35 million, less costs, at the year end to reflect the fact that
we had exchanged conditional contracts at that time. It had previously been
valued at £1.15 million. The nightclub had produced just £37,500 per annum
and the proceeds should produce a significant increase to our cashflow once
they are reinvested.
As mentioned at the year end, the loan from Santander and Europa Mezzanine
which is secured against Orchard Square and a property in Wickersley, South
Yorkshire, expired in July this year and we commenced a search for new
lenders. The total amount outstanding at the year end was £28.3 million;
however, following the sale of the Fargate property plus cash accrued in the
Special Purpose Vehicle that owns these two assets, the current amount
outstanding is £18.3 million. We have negotiated an extension of these loans
until the beginning of October 2019.
We are currently in detailed negotiations with a new lender to finance Orchard
Square alone, and I hope to be able to provide an update in the near future.
However, these are extremely uncertain times in the lending market and
completion of this loan cannot be taken for granted. The smaller Wickersley
property will be refinanced through our existing facilities and cash
resources.
The market for retail and retail property remains extremely challenging.
However, we are satisfied that our portfolio remains relevant and fit for
purpose. This can be evidenced by the strong lease renewal programme that we
have recently completed at Orchard Square where all but two of the retailers
renewed on rents that were on average at 82.5% of previously passing rents,
while the remainder of our directly owned portfolio remains well-let with
93.7% occupancy levels.
At Manor Park, Runcorn, our first industrial investment, we are pleased to
report on strong progress with agreed leasing transactions where we have now
achieved £5.00 psf. This growth has been a result of creating additional
space through active management to meet tenant requirements, and compares
favourably to the passing rent of just over £4.00 psf at time of acquisition.
We also are shortly to have our first vacant and to let property which we
anticipate will offer an opportunity to build on the growth seen to date.
We continue to manage intensively all of our properties and were pleased to
extend the headlease on a property that we own in Castleford by 55 years for a
single cash payment of £57,000. This should have a positive effect on the
valuation of this property going forward.
At West Ealing, our joint venture with Bisichi and Metroprop which we acquired
in October last year, we have now submitted a planning application for 54
apartments following a positive pre-application with the Council. We should
receive the decision in the second half of this year and I will update
shareholders in due course.
As announced in June, our £1.7 million investment in the Project Harrogate
joint venture has been written off following the decision by Oaktree Capital
Management, the 97% shareholder, not to cure a Loan-to-Value breach following
a revaluation by the agents of the CMBS secured against the portfolio. The
value of the properties dropped from £104 million to £86 million in a single
year reflecting the difficulties that the vast majority of secondary shopping
centres are facing in the current markets. LAP owned less than 3% of the
equity of this joint venture following a decision in December 2017 to invest
no further funds at the time of refinancing the portfolio. This decision has
been borne out by subsequent events.
LAMS, our asset management subsidiary, will cease to asset manage the
Harrogate portfolio from the end of September. This will impact on our cash
flow as LAMS received management fees of £0.4 million per annum, although
this deficit will be partly offset by savings to our overhead.
Bisichi Mining plc, our 42% owned subsidiary, had another successful six
months with profit before tax of £4.4 million (2018: £3.9 million) from
revenue of £26.4million (2018: £24.8million).
These results can be attributed to another strong performance from the
group’s South African coal mining and coal processing operations. During the
first half of 2019, Black Wattle Colliery, their South African mining
operation, achieved total production of 655,000 metric tonnes, consistent with
total production of 670,000 metric tonnes achieved in the first half of 2018.
In addition, strong demand for their coal continued to impact positively on
the prices achievable for their coal and overall group revenue in the first
half of the year.
In terms of markets, Bisichi has continued to see global economic factors
impacting coal demand in the international market. At the end of June 2019 the
average weekly price of Free on Board (FOB) Coal from Richard Bay Coal
Terminal (API4 price) reached levels below US$65 per metric tonne, compared to
US$95 at the end of 2018. Although Bisichi expect demand for our coal to
remain stable, the weakening of prices in the international market may impact
overall group revenue in the second half the year. Management will focus on
maintaining production levels and keeping the cost of production low in order
to ensure the group remains in a strong position to achieve significant value
from its South African mining operations during the second half of the year.
Black Wattle signed an agreement in 2018 to acquire a new coal reserve
contiguous to Black Wattle’s operations. The reserve has an expected run of
mine tonnage of 1.9 million metric tonnes, can be mined by opencast and is of
a similar quality to Black Wattle’s existing reserves. At present the
acquisition remains subject to regulatory approval from the South African
Department of Mineral Resources and Bisichi have no further news to report at
this stage. Looking forward, the group continues to seek further opportunities
to extend the life of mine of its existing mining operations or to develop new
independent mining operations in South Africa.
We do not intend to pay a dividend at the half year point; however, our
strategy is to maximise income over the medium term and our dividend policy
will reflect this once our cash has been reinvested and our income has
returned to previous levels. We continue to explore new opportunities and
have bid on a number of properties and portfolios over the last year.
However, we do not intend to overpay and are unwilling to match offers from
other parties that would not bring our requisite levels of return.
Following approval at the June 2018 Annual General Meeting, the 2018 final
dividend of 0.18 pence per share is payable on 13 September 2019, to
shareholders on the register at the close of business on 16 August 2019.
Sir Michael
Heller
John Heller
Chairman
Chief Executive
28 August 2019
Consolidated income statement
for the six months ended 30 June 2019
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
(unaudited) (unaudited) (audited)
Notes £’000 (restated) £’000 £’000
Group revenue 1 29,967 27,965 56,651
Operating costs (25,443) (22,472) (49,293)
Operating profit 1 4,524 5,493 7,358
Finance income 2 30 25 61
Finance expenses 2 (1,642) (1,975) (3,682)
Result before valuation and other movements 2,912 3,543 3,737
Non–cash changes in valuation of assets and liabilities and other movements
Decrease in value of investment properties (62) - (2,565)
Write off investment in joint venture (1,749) - -
Increase/(decrease) in value of trading investments 59 (31) (169)
Adjustment to interest rate derivative 168 168 265
Result including revaluation and other movements 1,328 3,680 1,268
Profit for the period before taxation 1 1,328 3,680 1,268
Income tax charge 3 (1,071) (941) (675)
Profit for the period 257 2,739 593
Attributable to:
Equity holders of the Company (1,507) 961 (2,082)
Non–controlling interest 1,764 1,778 2,675
Profit for the period 257 2,739 593
(Loss)/profit per share – basic and diluted 4 (1.77)p 1.13p (2.44)p
A revenue recognition error was identified in the second half of 2018 in
respect of Bisichi’s 2018 financial year end. In respect of the comparative
6 month period ended 30 June 2018 the error amounted to £1,408,000 which had
been incorrectly recorded as a deduction against revenue rather than shown as
an operating cost. There is no profit or net asset impact as a result of the
prior period restatement. The above comparatives have been restated
accordingly. Refer to note 11 – Financial Information
Consolidated statement of comprehensive incomefor the six months ended 30 June
2019
30 June 30 June 31 December
2019 2018 2018
(unaudited) (unaudited) (audited)
£'000 £'000 £’000
Profit for the period 257 2,739 593
Other comprehensive income:
Items that may be subsequently recycled to the income statement:
Exchange differences on translation of foreign operations 69 (226) (430)
Other comprehensive income/(expense) for the period, net of tax 69 (226) (430)
Total comprehensive income for the period, net of tax 326 2,513 163
Attributable to:
Equity shareholders (1,486) 885 (2,239)
Non–controlling interest 1,812 1,628 2,402
326 2,513 163
Consolidated balance sheet
at 30 June 2019
30 June 30 June 31 December
2019 2018 2018
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Non–current assets
Market value of properties attributable to Group 47,506 78,040 47,430
Right of use assets 4,276 3,228 3,261
Property 5 51,782 81,268 50,691
Mining reserves, plant and equipment 9,625 8,089 8,659
Investments in joint ventures - - 1,783
Held to maturity investments - 1,748 -
Other investments at fair value 35 32 -
Deferred tax 172 - -
61,614 91,137 61,133
Current assets
Inventories – mining 1,316 985 828
Inventories – property 5 37,734 560 -
Assets held for sale 5 2,285 - 36,441
Trade and other receivables 12,358 9,190 8,022
Investments in listed securities at fair value 1,090 1,049 887
Cash and cash equivalents 20,184 27,549 20,655
74,967 39,333 71,916
Total assets 136,581 130,470 133,049
Current liabilities
Trade and other payables (13,756) (13,866) (13,341)
Borrowings (42,921) (4,783) (41,388)
Interest rate derivatives - - (169)
Lease liabilities (193) - -
Current tax liabilities (133) (839) (73)
(57,003) (19,488) (54,971)
Non–current liabilities
Borrowings (16,211) (45,110) (15,255)
Interest rate derivatives 6 - (267) -
Present value of head leases on properties (4,138) (3,228) (3,261)
Provisions (1,615) (1,276) (1,571)
Deferred tax liabilities (2,397) (2,837) (2,305)
(24,361) (52,718) (22,392)
Total liabilities (81,364) (72,206) (77,363)
Net assets 55,217 58,264 55,686
Equity attributable to the owners of the parent
Share capital 8,554 8,554 8,554
Share premium account 4,866 4,866 4,866
Translation reserve (Bisichi Mining PLC) (831) (772) (852)
Capital redemption reserve 47 47 47
Retained earnings (excluding treasury shares) 29,245 33,948 30,906
Treasury shares (144) (145) (144)
Retained earnings 29,101 33,803 30,762
Total equity attributable to equity shareholders 41,737 46,498 43,377
Non – controlling interest 13,480 11,766 12,309
Total equity 55,217 58,264 55,686
Net assets per share 7 48.92 54.50p 50.83p
Diluted net assets per share 7 48.92 54.50p 50.83p
Consolidated statement of changes in shareholders’ equity
for the six months ended 30 June 2019
Share capital £’000 Share premium £’000 Translation reserves £’000 Capital redemption reserve £’000 Treasury shares £’000 Retained earnings excluding treasury shares £’000 Total excluding Non– Controlling Interests £’000 Non–controlling Interests £’000 Total equity £’000
Balance at 1 January 2018 8,554 4,866 (695) 47 (145) 33,227 45,854 10,856 56,710
(Loss)/profit for the period - - - - - 961 961 1,778 2,739
Other comprehensive income:
Currency translation - - (77) - - - (77) (149) (226)
Total other comprehensive income - - (77) - - 961 884 1,629 2,513
Total comprehensive income/(expense)
Transactions with owners:
Share options charge - - - - - 16 16 23 39
Dividends – equity holders - - - - - (256) (256) - (256)
Dividends – non–controlling Interests - - - - - - - (742) (742)
Transactions with owners (240) (240) (719) (959)
Balance at 30 June 2018 (unaudited) 8,554 4,866 (772) 47 (145) 33,948 46,498 11,766 58,264
Balance at 1 January 2018 8,554 4,866 (695) 47 (145) 33,227 45,854 10,856 56,710
Profit for year - - - - - (2,082) (2,082) 2,675 593
Other comprehensive income: - - - - -
Currency translation - - (157) - - - (157) (273) (430)
Total other comprehensive income - - (157) - - - (157) (273) (430)
Total comprehensive income - - (157) - - (2,082) (2,239) 2,402 163
Transaction with owners:
Share options charge - 16 16 8 24
Dividends – equity holders - - - - - (256) (256) - (256)
Dividends – non–controlling Interests - - - - - - - (956) (956)
Disposal of own shares - - - - 1 - 1 - 1
Transactions with owners - - - - 1 (240) (239) (948) (1,187)
Balance at 31 December 2018 (audited) 8,554 4,866 (852) 47 (144) 30,906 43,377 12,309 55,686
Consolidated statement of changes in shareholders’ equity - continued
for the six months ended 30 June 2019
Share capital £’000 Share premium £’000 Translation reserves £’000 Capital redemption reserve £’000 Treasury shares £’000 Retained earnings excluding treasury shares £’000 Total excluding Non– Controlling Interests £’000 Non–controlling Interests £’000 Total equity £’000
Balance at 1 January 2019 8,554 4,866 (852) 47 (144) 30,906 43,377 12,309 55,686
(Loss)/profit for the period - - - - - (1,507) (1,507) 1,764 257
Other comprehensive income:
Currency translation - - 21 - - - 21 48 69
Total other comprehensive income - - 21 - - - 21 48 69
Total comprehensive (expense)/income - - 21 - - (1,507) (1,486) 1,812 326
Transactions with owners:
Dividends – equity holders - - - - - (154) (154) - (154)
Dividends – non-controlling interests - - - - - - - (641) (641)
Transactions with owners - - - - -
Balance at 30 June 2019 (unaudited) 8,554 4,866 (831) 47 (144) 29,245 41,737 13,480 55,217
Consolidated cash flow statement
for the six months ended 30 June 2019
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating activities
Profit for the year before taxation 1,328 3,680 1,268
Finance income (30) (25) (61)
Finance expense 1,642 1,975 3,682
(Increase)/decrease in value of investment properties - - 2,565
Write off investments in joint venture 1,749 - -
Increase in trading investments - - 169
Adjustment to interest rate derivative (168) (168) (265)
Depreciation 1,150 1,082 2,122
Profit on disposal of non–current assets - 37 -
Share based payment expense - 39 18
Exchange adjustments (12) 63 65
Change in inventories 1,219 (233) (797)
Development expenditure on inventories (178) (560) (6,256)
Change in receivables (3,400) (2,530) (235)
Change in payables (749) 969 (354)
Cash generated from operations 2,551 4,329 1,921
Income tax paid (1,134) (1,328) (2,281)
Cash inflows from operating activities 1,417 3,001 (360)
Investing activities
Disposal of assets held for sale (144) 36,441 36,474
Acquisition of investment properties, mining reserves, plant and equipment (1,772) (1,143) (9,438)
Sale of investment properties, plant and equipment – continuing operations - - 1
Interest received 30 94 199
Cash inflows/(outflows) from investing activities (1,886) 35,392 27,236
Financing activities
Interest paid (1,576) (2,027) (3,711)
Interest on obligation under finance leases - (91) (178)
Repayment of bank loan – Dragon Retail Properties Limited - (65) (65
Receipt of bank loan – Bisichi Mining PLC 174 63 753
Repayment of bank loan – Bisichi Mining PLC (74) (3) (19)
Receipt of bank loan 119 - 7,202
Repayment of bank loan (88) (16,674) (16,438)
Short term loan from joint ventures and related parties - - (30)
Repayment of debenture stocks - - (3,000)
Equity dividends paid - - (255)
Equity dividends paid – non–controlling interests (63) (63) (309)
Cash outflows from financing activities (1,508) (18,860) (16,050)
Consolidated cash flow statement - continued
for the six months ended 30 June 2019
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net (decrease)/increase in cash and cash equivalents (1,977) 19,533 10,826
Cash and cash equivalents at beginning of period 17,122 6,266 6,266
Exchange adjustment 7 (11) 28
Cash and cash equivalents at end of period 15,152 25,788 17,120
The cash flows above relate to continuing and discontinued operations.
Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise
the following balance sheet amounts:
Cash and cash equivalents (before bank overdrafts) 20,184 27,549 20,655
Bank overdrafts (5,032) (1,761) (3,535)
Cash and cash equivalents at end of period 15,152 25,788 17,120
£340,000 of cash deposits at 30 June 2019 were charged as security to
debenture stocks.
£500,000 of cash deposits at 30 June 2019 were charged as security to bank
loans.
Notes to the half year report
for the six months ended 30 June 2019
1. Segmental analysis 6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
(unaudited) (unaudited) (audited)
(restated)
£'000 £'000 £'000
Revenue
LAP
* - Rental Income 2,753 2,799 5,049
* - Service charge income 401 - 802
* - Management income from third parties 240 268 718
Bisichi
* - Rental Income 650 549 1,065
* - Service charge income 106 137
* - Mining 25,731 24,266 48,713
* Dragon
* - Rental Income 86 83 167
29,967 27,965 56,651
Operating (loss)/profit
LAP (165) 1,182 (2,818)
Bisichi 4,630 4,240 6,526
Dragon 59 71 29
4,524 5,493 3,737
(Loss)/profit before taxation
LAP (3,104) (308) (4,723)
Bisichi 4,395 3,939 6,142
Dragon 37 49 (151)
1,328 3,680 1,268
The Directors have disclosed service charge income separately as a component of revenue in 2019, with a corresponding grossing up of direct property costs. In the first 6 months of 2018 service charges were shown netted against direct property costs. Management considers the approach adopted in 2019 is more informative and intends to continue with this approach in future years. The revised disclosure does not change operating profit. For the 6 months to June 2018, the amount of service charge income
received by the Group was £420,000. Accordingly, the change in presentation is not considered to be sufficiently material to warrant amending prior periods’ disclosures.
2. Finance costs 6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Finance income 30 25 61
Finance expenses:
Interest on bank loans and overdrafts (1,019) (1,051) (2,034)
Other loans (441) (659) (1,169)
Unwinding of discount (Bisichi Mining PLC) - - (43)
Interest on derivatives (122) (141) (269)
Interest on obligations under finance leases (60) (124) (167)
Total finance expenses (1,642) (1,975) (3,682)
(1,612) (1,950) (3,621)
Notes to the half year report - continued
3. Income tax 6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Current tax 1,094 1,810 2,050
Deferred tax (23) (869) (1,375)
1,071 941 675
4. Earnings per share 6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
(unaudited) (unaudited) (audited)
Group profit/(loss) after tax (£’000) (1,507) 961 (2,082)
Weighted average number of shares in issue for the period ('000) 85,325 85,322 85,325
Basic earnings per share (1.77)p 1.13p (2.44)p
Diluted number of shares in issue ('000) 85,325 85,322 85,325
Diluted earnings per share (1.77)p 1.13p (2.44)p
5. Properties
Properties at 30 June 2019 are included at valuation as at 31 December 2018,
plus additions in the period, or at value where a sale has been agreed.
No properties were sold during the six months ended 30 June 2019.
£2.285 million of assets held for sale at 30 June 2019, were sold in July
2019.
£9.30 million of assets held as inventory at 30 June 2019 were sold in July
2019.
6. Interest rate derivatives
At 30 June 2019 the fair value liability was £nil, with the sole derivative
expiring on 1 July 2019 (30 June 2018: £267,000, 31 December 2018:
£168,000).
Under IFRS 13 the hedges are not deemed to be eligible for hedge accounting
and any movement in the value of the hedge is charged directly to the
consolidated income statement.
Notes to the half year report - continued
7. Net assets per share 30 June 30 June 31 December
2019 2018 2018
(unaudited) (unaudited) (audited)
Shares in issue ('000) 85,325 85,322 85,322
Net assets per balance sheet (£'000) 41,737 46,498 43,377
Basic net assets per share 48.92p 54.50p 50.83p
Shares in issue diluted by outstanding share options ('000) 85,325 85,322 85,322
Net assets after issue of share options (£'000) 41,737 46,498 43,377
Fully diluted net assets per share 48.92p 54.50p 50.83p
8. Related party transactions
The related parties and the nature of costs recharged are as disclosed in the
group’s annual financial statements for the year ended 31 December 2018.
9. Dividends
There is no interim dividend payable for the period (30 June 2018: Nil).
The final dividend in respect of 2018 of 0.18p per share, amounting to
£154,000, is payable on 13 September 2019. As the 2018 final dividend was
approved by the shareholders at the Annual General Meeting held on 12 June
2019, it is included as a liability in these interim financial statements.
10. Risks and uncertainties
The group’s principal risks and uncertainties are reported on pages 7 and 8
in the 2018 Annual Report. They have been reviewed by the Directors and
remain unchanged for the current period.
The largest area of estimation and uncertainty in the interim financial
statements is in respect of the valuation of investment properties (which are
not revalued at the half year) and the valuation of interest rate derivatives.
For our subsidiary, Bisichi Mining PLC, it also relates to currency movements
and coal mining activities in South Africa, including depreciation, impairment
and the provision for rehabilitation (relating to environmental rehabilitation
of mining areas).
Notes to the half year report - continued
11. Financial
information
The above financial information does not constitute statutory accounts within
the meaning of section 434 of the Companies Act 2006. The figures for the year
ended 31 December 2018 are based upon the latest statutory accounts, which
have been delivered to the Registrar of Companies; the report of the auditor
on those accounts was unqualified and did not contain a statement under
Section 498(2) or (3) of the Companies Act 2006.
As required by the Disclosure and Transparency Rules of the UK's Financial
Conduct Authority, the interim financial statements have been prepared in
accordance with the International Financial Reporting Standards (IFRS) and in
accordance with both IAS 34 'Interim Financial Reporting' as adopted by the
European Union and the disclosure requirements of the Listing Rules.
The half year results have not been audited or subject to review by the
company's auditor.
The annual financial statements of London & Associated Properties PLC are
prepared in accordance with IFRS as adopted by the European Union. The same
accounting policies are used for the six months ended 30 June 2019 as were
used for the year ended 31 December 2018.
During the 2018 year-end review of revenue recognition in South Africa a
revenue recognition error was identified in respect of the treatment of
transport and loading costs to deliver export coal under certain export
agreements. The costs had been incorrectly recorded as a deduction against
revenue rather than shown as an operating cost. In the Annual Financial
Statements for the year ended 31 December 2018, such costs have been recorded
in operating costs and the comparatives restated accordingly.
The impact on the interim results for the six months ended 30 June 2019 is a
restatement of the prior period comparatives for the six months ended 30 June
2018. Both revenue and operating costs in the comparatives have been increased
by £1,408,000. There is no profit or net assets impact as a result of the
prior year restatement.
As stated in the 2018 Annual Report in the group accounting policies, Bisichi
Mining PLC and Dragon Retail Properties Limited are consolidated with LAP, as
required by IFRS 10.
The assessment of new standards, amendments and interpretations issued but not
effective, is that these are not anticipated to have a material impact on the
financial statements.
The following new standards have become effective and have been adopted by the
Group during the year:
IFRS 16 – Leases
There is no significant impact on the Group as a lessor. The impact of the
adoption of the IFRS 16 leasing standard on the Group as a lessee and the new
accounting policies are disclosed below.
The Group has applied IFRS 16, ‘Leases’ on 1 January 2019. In accordance
with the transition provisions in IFRS 16, the new rules have been adopted
retrospectively, with the cumulative effect of initially applying the new
standard recognised on 1 January 2019. Comparatives for the 2018 financial
year have not been restated. On adoption of IFRS 16, the Group recognised
lease liabilities in relation to leases which had previously been classified
as ‘operating leases’ under the principles of IAS 17. Until the 2019
financial year, the payments made under the operating leases (net of any
incentives received from the lessor) were charged to profit or loss on a
straight line basis over the period of the lease. The Group holds three types
of ‘operating leases’.
* Head leases: A small proportion of the investment properties owned by the
Group is situated on land held through leasehold arrangements, as opposed to
the Group owning the freehold. The remaining lease terms for the leasehold
arrangements range between 39 and 126 years.
* Office leases: Office space occupied by the Group’s operations.
* Mining equipment – used in Biscihi’s operations
Upon initial recognition the lease liabilities were measured at the present
value of the remaining lease payments, discounted using the lessee’s
incremental borrowing rate as of 1 January 2019. The associated right-of-use
“(ROU)” assets were measured equal to the lease liability. As a result,
there is no impact on opening retained earnings at 1 January 2019. In applying
IFRS 16 for the first time, the Group has used the practical expedients
permitted by the standard. The Balance Sheet impact of recognising the lease
liability and associated ROU asset upon adoption at 1 January 2019 and
subsequently at 30 June 2019 is set out below.
Balance Sheet caption 30 June 2019 £’000 1 January 2019 £’000
Investment property (ROU asset) 4,276 4,315
Current liabilities (leases) 193 193
Non-current liabilities (leases) 4,138 4,179
There was no material impact on the profit after tax for the 6 months period
ended 30 June 2019. There was no impact on Adjusted EPS.
12. Board approval
The half year results were approved by the Board of London & Associated
Properties PLC on 27 August
2019.
Directors' responsibility statement
The Directors confirm that to the best of their
knowledge:
(a) the condensed set of financial statements have been prepared in accordance
with applicable accounting standards and IAS 34 Interim Financial Reporting as
adopted by the
EU;
(b) the interim management report includes a fair review of the information
required
by:
(1) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication
of important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
(2) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do
so.
This report contains forward-looking statements. These statements are based on
current estimates and projections of management and currently available
information. Future statements are not guarantees of the future developments
and results outlined therein. Rather, future developments and results are
dependent on a number of factors; they involve various risks and uncertainties
and are based upon assumptions that may not prove to be accurate. Risks and
uncertainties identified by the Group are set out on pages 7 and 8 of the 2018
Annual Report & Accounts. We do not assume any obligation to update the
forward-looking statements contained in this report.
Signed on behalf of the Board on 27 August 2019
Sir Michael Heller Jonathan
Mintz
Director
Director
Directors and advisors
Directors
Executive directors
* Sir Michael Heller MA FCA (Chairman)
John A Heller LLB MBA (Chief Executive)
Jonathan Mintz FCA (Finance Director) Appointed 11 February 2019
Non-executive directors
† Howard D Goldring BSC (ECON) ACA
#†Clive A Parritt FCA CF FIIA
Robin Priest MA
* Member of the nomination committee
# Senior independent director
† Member of the audit, remuneration and nomination
committees.
Secretary & registered office
Jonathan Mintz FCA
24 Bruton Place,
London W1J 6NE
Registrars & transfer office
Link Asset Services Shareholder Services
The Registry, 34 Beckenham Road
Beckenham, Kent BR3 4TU
UK Telephone: 0871 664 0300 (Calls cost 12p per minute plus network access charges; lines are open Monday to Friday between 9.00am and 5.30pm) International Telephone: +44 371 664 0300 (Calls outside the United Kingdom will be charged at applicable international rate) Website: www.linkassetservices.com E-mail: shareholderenquiries@linkgroup.co.uk
Company registration number
341829 (England and Wales)
Website
www.lap.co.uk
E-mail
admin@lap.co.uk
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