REG-Lon.&Assoc.Props PLC: Annual Financial Report <Origin Href="QuoteRef">LAS.L</Origin> - Part 2
28/04/2017 12:05
- Part 2: For the preceding part double click ID:nPRrS2637a
prospective employees including those who are disabled and
operates in compliance with all relevant national legislation.
Director, employees and gender representation
At the year end the company had 6 directors
(6 male, 0 female), 2 senior managers (2 male,
0 female) and 26 employees (13 male, 13 female).
Bisichi Mining PLC
Bisichi Mining PLC’s group at the year end had
6 directors (6 male, 0 female), 7 senior managers (6 male, 1 female) and 187
employees (143 male, 44 female).
Detailed information relating to Bisichi Strategic Report is available in its
2016 financial statements.
Approved on behalf of the board of directors
Anil Thapar,
Finance Director
27 April 2017
GOVERNANCE
Directors & advisors
EXECUTIVE DIRECTORS
Sir Michael Heller MA FCA*
(Chairman)
John A Heller LLB MBA
(Chief Executive)
Anil K Thapar FCCA
(Finance Director)
NON-EXECUTIVE DIRECTORS
Howard D Goldring BSC (ECON) ACA†
Howard Goldring is Executive Chairman of Delmore Asset Management Limited
which specialises in the discretionary management of investment portfolios for
pension funds, charities, family trusts and private clients. He also acts as
an advisor providing high level asset allocation advice to family offices and
pension schemes, including Tesco Pension Investment Ltd. He has been a member
of the LAP Board since July 1992, and has over 30 years’ experience of the
real estate market. From 1997-2003 he was consultant director on global asset
allocation to Liverpool Victoria Asset Management Limited and was a director
of Living Bridge VCT 2 from 2010-2016. Howard is a regular guest host for
CNBC ‘Squawk Box’.
Clive A Parritt FCA CF FIIA #†
Clive Parritt joined the board on 1 January 2006. He is a chartered accountant
with over 40 years’ experience of providing strategic, financial and
commercial advice to businesses of all sizes. He is Chairman of BG Training
Limited and a director of Jupiter US Smaller Companies plc. Until April 2016
he was Group Finance Director of Audiotonix Limited (an international
manufacturer of audio mixing consoles). He has chaired and been a director of
a number of other public and private companies. Clive Parritt was President of
the Institute of Chartered Accountants in England and Wales in 2011-12. He is
Chairman of the Audit Committee and as Senior Independent Director he chairs
the Nomination and Remuneration Committees.
Robin Priest MA
Robin Priest joined the board on 31 July 2013. He is chairman of private real
estate company Property Alliance Group and a senior advisor to Alvarez &
Marsal LLP (“A&M”) and to a German real estate investment fund manager. He
has more than 35 years’ experience in real estate and structured finance. He
was formerly Managing Director of A&M’s real estate practice, advising
private sector and public sector clients on both operational and financial
real estate matters. Prior to joining A&M, Robin was lead partner for Real
Estate Corporate Finance in London with Deloitte LLP and before this he
founded and ran a property company backed by private equity.
He is also a trustee of London’s Oval House Theatre.
* Member of the nomination committee
# Senior independent director
† Member of the audit, remuneration and nomination committees
SECRETARY & REGISTERED OFFICE
Anil K Thapar FCCA
24 Bruton Place
London W1J 6NE
AUDITOR
RSM UK Audit LLP
PRINCIPAL BANKERS
Santander UK plc
Abbey National Treasury Services plc
Europa Capital Mezzanine Ltd
SOLICITORS
Olswang LLP
Pinsent Masons LLP
STOCKBROKER
Stockdale Securities Limited
REGISTRARS & TRANSFER OFFICE
Capita Asset Services
Shareholder Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
UK telephone: 0871 664 0300
International telephone: +44 (0) 20 8639 3399
(Calls cost 12p per minute plus your phone company’s access charge.
Calls outside the United Kingdom will be charged at the applicable
international rate).
Lines are open between 9.00am to 5.30pm, Monday to Friday, excluding public
holidays in England and Wales.
Website: www.capitaregistrars.com
Email: shareholderenquiries@capita.co.uk
Company registration number
341829 (England and Wales)
WEBSITE
www.lap.co.uk
E-MAIL
admin@lap.co.uk
Directors’ report
The Directors submit their report and the audited financial statements for the
year ended 31 December 2016.
Strategic report
A comprehensive review and assessment of the Group’s activities during the
year as well as its position at the year end and prospects for the forthcoming
year are included in the Chairman and Chief Executive’s Statement and the
Strategic Report. These reports can be found on pages 5 to 31 and should be
read in conjunction with this report.
Activities
The principal activities of the Group during the year were property investment
and development, as well as investment in joint ventures and an associated
company. The associated company is Bisichi Mining PLC (Bisichi) in which the
Company holds a 42 per cent interest. Bisichi is listed on the main market of
the London Stock Exchange and operates in England and South Africa with
subsidiaries which are involved in overseas mining and mining investment. The
results, together with the assets and liabilities, of Bisichi are consolidated
with those of LAP in accordance with the terms of IFRS 10 even though the
Group only has a minority interest – under IFRS 10 the 58% majority interest
is disclosed as a “non-controlling interest”.
Business review
Review of the Group’s development and performance
A review of the Group’s development and performance can be found below and
should be read in conjunction with the Strategic Report on pages 14 to 31.
Future developments
The Group continues to look for new opportunities to acquire real estate
assets where it feels it can increase value by applying its intensive
management skills. At the same time, it seeks to reduce its interest payments
on its loans as they expire or where opportunities arise to refinance on
better terms. We also seek to improve our existing estate through the
continued pursuit of asset management initiatives.
Property activities
The Group is a long-term investor in property. It acquires retail properties,
actively manages those assets to improve rental income, and thus seeks to
enhance the value of its properties over time. In reviewing performance,
the principal areas regularly monitored by the Group include:
• Rental income – the aim of the Group is to maximise the maintainable
income from each property by careful tenant management supported by
sympathetic and revenue enhancing development. Income may be affected
adversely by the inability of tenants to pay their rent, but careful
monitoring of rent collection and tenant quality helps to mitigate this risk.
Risk is also minimised by a diversified tenant base, which should limit the
impact of the failure of any individual tenant.
• Cash flow – allowing for voids, acquisitions, development expenditure,
disposals and the impact of operating costs and interest charges, the Group
aims to maintain a positive cash flow over time.
• Financing costs – the exposure of the Group
to interest rate movements is managed partly by the use of swap and cap
arrangements (see note 23 on page 84 for full details of the contracts in
place) and also by using loans with fixed terms and interest rates. These
arrangements are designed to ensure that our interest costs are known in
advance and are always covered by anticipated rental income. Details of key
estimates that have been adopted are contained in the accounting policies note
on page 63.
• Property valuations – market sentiment and economic conditions have a
direct effect on property valuations, which can vary significantly (upwards or
downwards) over time. Bearing in mind the long term nature of the Group’s
business, valuation changes have little direct effect on the ongoing
activities or the income and expenditure of the Group. Tenants generally have
long term leases, so rents are unaffected by short term valuation changes.
Borrowings are secured against property values and if those values fall very
significantly, this could limit the ability of the Group to develop the
business using external borrowings. The risk is minimised by trying to ensure
that there is adequate cover to allow for fluctuations in value on a short
term basis.
It continues to be the policy of the Group to realise property assets when the
valuation of those assets reaches a level at which the directors consider that
the long-term rental yield has been reached. The Group also seeks to acquire
additional property investments on an opportunistic basis when the potential
rental yields offer scope for future growth.
Investment activities
The investments in joint ventures and Bisichi are for the long term.
LAP manages the UK property assets of Bisichi. However, the principal activity
of Bisichi is overseas mining investment (principally in South Africa). While
IFRS 10 requires the consolidation of Bisichi, the investment is held to
generate income and capital growth over the longer term. It is managed
independently of LAP and should be viewed by shareholders as an investment and
not a subsidiary. The other listed investments are held as current assets to
provide the liquidity needed to support the property activities while
generating income and capital growth.
Investments in property are made through joint ventures when the financing
alternatives and spreading of risk make such an approach desirable.
Dividend policy
The directors are recommending payment of a final dividend for 2016 of 0.165p
per share (2015 0.16p per share).
Subject to shareholder approval, the ordinary final dividend will be payable
on Friday 15 September 2017 to shareholders registered at the close of
business on Friday 18 August 2017.
The company’s ordinary shares held in treasury
At 31 December 2016, 221,061 (2015: 734,816) ordinary shares were held in
Treasury with a market value of £46,422 (2015: £181,867). At the Annual
General Meeting (AGM) in June 2016 members renewed the authority for the
Company to purchase up to 10 per cent of its issued ordinary shares. The
Company will be asking members to renew this authority at the next AGM to be
held on Tuesday
6 June 2017.
Movements in Treasury shares during the year: Number of shares
Treasury shares held at 1 January 2016 734,816
Issued for directors’ bonuses (69,225 shares at 24.50p) (69,225)
Issued for staff bonuses (154,073 shares at 24.50p) (154,073)
Issued for Share Incentive Plan (Directors 24,488 shares at 24.50p) (24,488)
Issued for Share Incentive Plan (Staff 36,732 shares at 24.50p) (36,732)
Issued for Share Incentive Plan (1,936 shares at 25p) (1,936)
Issued for directors’ bonuses (224,470 shares at 21.25p) (224,470)
Issued for Share Incentive Plan (2,831 shares at 21.25p) (2,831)
Treasury shares held at 31 December 2016 221,061
Treasury shares are not included in issued share capital for the purposes of
calculating earnings per share or net assets per share and they do not qualify
for dividends payable.
Investment properties
The freehold and long leasehold properties of the Company, its subsidiaries
and Bisichi were revalued as at 31 December 2016 by independent professional
firms of chartered surveyors – Allsop LLP, London (85.66 per cent of the
portfolio), Carter Towler, Leeds (12.60 per cent) – and by the Directors
(1.74 per cent). The valuations, which are reflected in the financial
statements, amount to £105.08 million (2015: £104.39 million).
Taking account of prevailing market conditions, the valuation of the
properties at 31 December 2016 resulted in an increase of £0.53 million
(2015: decrease of £0.18 million). The proportion of this revaluation
attributable to the Group (net of taxation) is reflected in the consolidated
income statement and the consolidated balance sheet.
Financial instruments
Note 23 to the financial statements sets out the risks in respect of financial
instruments. The board reviews and agrees overall treasury policies,
delegating appropriate authority for applying these policies to the Chief
Executive and Finance Director. Financial instruments are used to manage the
financial risks facing the Group and speculative transactions are prohibited.
Treasury operations are reported at each board meeting and are subject to
weekly internal reporting. Hedging arrangements are in place for the Company,
its subsidiaries and joint ventures in order to limit the effect of higher
interest rates upon the Group. Where appropriate, hedging arrangements are
covered in the Chairman and Chief Executive’s Statement and the Financial
Review.
Directors
Sir Michael Heller, J A Heller, A K Thapar, H D Goldring, C A Parritt and
R Priest were Directors of the company for the whole of 2016.
R Priest is retiring by rotation at the Annual General Meeting in 2017 and
offers himself for re-election.
Robin Priest is chairman of private real estate company Property Alliance
Group and a senior advisor to Alvarez & Marsal LLP (“A&M”) and to a
German real estate investment fund manager. He has more than 35 years’
experience in real estate and structured finance. He was formerly Managing
Director of A&M’s real estate practice, advising private sector and public
sector clients on both operational and financial real estate matters. Prior to
joining A&M, Robin was lead partner for Real Estate Corporate Finance in
London with Deloitte LLP and before this he founded and ran a property company
backed by private equity. Robin Priest has a contract of service with the
Company determinable upon three months notice. The board has considered the
appointment of Robin Priest and recommends his re-election as Director. His
knowledge of structured finance and experience of dealing with challenging and
complex assets and portfolios is of significant benefit to the business.
Directors’ interests
The interests of the Directors in the ordinary shares of the Company,
including family and trustee holdings, where appropriate, can be found on page
44 of the Annual Remuneration Report.
Substantial shareholdings
At 31 December 2016, Sir Michael Heller and his family had an interest in
48.08 million shares of the Company, representing 56.35 per cent of the issued
share capital net of treasury shares (2015: 47.8 million shares representing
56.4 per cent). Cavendish Asset Management Limited had an interest in
8,173,875 shares representing 9.58 per cent of the issued share capital of the
Company (2015: 8,280,434 shares representing 9.76 per cent). James Hyslop had
an interest in 4,456,258 shares representing 5.22 per cent of the issued
share capital of the Company (2015: 3,856,258 shares representing 4.55 per
cent).
The Company does not consider that the Heller family have a controlling share
interest irrespective of the number of shares held as no individual party
holds a majority and there is no legal obligation for shareholders to act in
concert. The Directors do not consider that any party has control.
The Company is not aware of any other holdings exceeding 3 per cent of the
issued share capital.
Takeover directive
The Company has one class of share capital, namely ordinary shares.
Each ordinary share carries one vote. All the ordinary shares rank pari
passu. There are no securities issued by the Company which carry special
rights with regard to control of the Company.
The identity of all significant direct or indirect holders of securities in
the Company and the size and nature of their holdings is shown in
“Substantial Shareholdings” above.
The rights of the ordinary shares to which the HMRC approved Share Incentive
Plan relates, are exercisable by the trustees on behalf of the employees.
There are no restrictions on voting rights or on the transfer of ordinary
shares in the Company, save in respect of treasury shares. The rules governing
the appointment and replacement of Directors, alteration of the articles of
association of the Company and the powers of the Company’s Directors accord
with usual English company law provisions. Each Director is re-elected at
least every three years. The Company has requested authority from shareholders
to buy back its own ordinary shares and there will be a resolution to renew
the authority at this year’s AGM (Resolution 10).
The Company is not party to any significant agreements that take effect, alter
or terminate upon a change of control of the Company following a takeover bid.
The Company is not aware of any agreements between holders of its ordinary
shares that may result in restrictions on the transfer of its ordinary shares
or on voting rights.
There are no agreements between the Company and its Directors or employees
providing for compensation for loss of office or employment that occurs
because of a takeover bid.
Statement as to disclosure of information to the auditor
The Directors in office at the date of approval of the financial statements
have confirmed that, so far as they are aware, there is no relevant audit
information of which the auditor is unaware. Each of the Directors has
confirmed that they have taken all the steps that they ought to have taken as
a Director in order to make them aware of any relevant audit information and
to establish that it has been communicated to the auditor.
Directors and officers liability insurance
The Group maintains Directors and officers insurance, which is reviewed
annually and is considered to be adequate by the Company and its insurance
advisers.
Donations
No political donations were made during the year (2015: £Nil). No donations
for charitable purposes were made during the year (2015: £Nil).
CORPORATE RESPONSIBILITY
Environment
The environmental considerations of the group’s South African coal mining
operations are covered in the Bisichi Mining PLC Strategic Report.
The group’s UK activities are principally property investment whereby
premises are provided for rent to retail businesses. The group seeks to
provide those tenants with good quality premises from which they can operate
in an efficient and environmentally efficient manner and waste re-cycling
arrangements are in place at all the company’s locations.
Greenhouse gas emissions
Details of the group’s greenhouse gas emissions for the year ended 31
December 2016 can be found on pages 28 and 29 of the Strategic Report.
Employment
The group’s policy is to attract staff and motivate employees by offering
competitive terms of employment. The group provides equal opportunities to all
employees and prospective employees including those who are disabled. The
Bisichi Mining PLC Strategic Report gives details of the group’s activities
and policies concerning the employment, training, health and safety and
community support and social development concerning the group’s employees in
South Africa.
Going concern
The directors have reviewed the cash flow forecasts of the Group and the
underlying assumptions on which they are based. The Group’s business
activities, together with the factors likely to affect its future development,
are set out in the Chairman’s and Chief Executive’s Statement and
Financial Review. In addition, note 23 to the financial statements sets out
the Group’s objectives, policies and processes for managing its capital; its
financial risk management objectives; details of its financial instruments and
hedging activities; and its exposure to credit risk and liquidity risk.
With secured long term banking facilities, sound financial resources and long
term leases in place the Directors believe it remains appropriate to adopt the
going concern basis of accounting in preparing the annual financial
statements.
The Bisichi directors continue to adopt the going concern basis of accounting
in preparing the Bisichi annual financial statements.
Corporate Governance
The Corporate governance report can be found on pages 39 and 40 of the
annual report and accounts.
Annual General Meeting
The Annual General Meeting will be held at 24 Bruton Place, London W1J 6NE
on Tuesday 6 June 2017 at 11.00 a.m. Items 1 to 8 will be proposed as
ordinary resolutions. More than 50 per cent. of shareholders’ votes cast at
the meeting must be in favour for those ordinary resolutions to be passed.
Items 9 to 11 will be proposed as special resolutions. At least 75 per cent.
of shareholders’ votes cast at the meeting must be in favour for those
special resolutions to be passed. The Directors consider that all of the
resolutions to be put to the meeting are in the best interests of the Company
and its shareholders as a whole and accordingly the board unanimously
recommends that shareholders vote in favour of all of the resolutions, as the
Directors intend to do in respect of their own beneficial holdings of ordinary
shares. Please note that the following paragraphs are only summaries of
certain of the resolutions to be proposed at the Annual General Meeting and do
not represent the full text of the resolutions. You should therefore read this
section in conjunction with the full text of the resolutions contained in the
notice of Annual General Meeting which accompanies this Directors’ Report.
Ordinary resolutions
Resolution 3 – Remuneration Policy
Resolution 3 is to approve the remuneration policy of the Company for the
three year period from the date of this Annual General Meeting in compliance
with section 439A of the Companies Act 2006. The vote on the remuneration
policy is binding and the company may not make a remuneration payment or
payment for loss of office to a person who is, is to be, or has been a
director of the Company unless that payment is consistent with the approved
remuneration policy, or has otherwise been approved by a resolution of
members. If Resolution 3 is passed, the remuneration policy will take effect
from the conclusion of the Annual General Meeting. The remuneration policy
will be put to shareholders again no later than the Company’s Annual General
Meeting in 2020.
Resolution 8 – Authority to allot securities
Paragraph 8.1.1 of Resolution 8 would give the Directors the authority to
allot shares in the Company and grant rights to subscribe for or convert any
security into shares in the Company up to an aggregate nominal value of
£2,836,478. This represents approximately 1/3 (one third) of the ordinary
share capital of the Company in issue (excluding treasury shares) as at 21
April 2017 (being the last practicable date prior to the publication of this
Directors’ Report).
In line with guidance issued by the Investment Association (‘IA’),
paragraph 8.1.2 of Resolution 8 would give the directors the authority to
allot shares in the Company and grant rights to subscribe for or convert any
security into shares in the Company up to a further aggregate nominal value of
£2,836,478, in connection with an offer by way of a rights issue. This amount
represents approximately 1/3 (one third) of the ordinary share capital of the
Company in issue (excluding treasury shares) as at 21 April 2017 (being the
last practicable date prior to the publication of this Directors’ Report).
The Directors’ authority will expire on the earlier of 31 August 2018 or the
next AGM. The Directors do not currently intend to make use of this
authority. However, if they do exercise the authority, the Directors intend to
follow best practice as recommended by the IA regarding its use (including as
regards the Directors standing for re-election in certain cases).
Special resolutions
The following special resolutions will be proposed at the Annual General
Meeting:
Resolution 9 – Disapplication of pre-emption rights
Under English company law, when new shares are allotted or treasury shares are
sold for cash (otherwise than pursuant to an employee share scheme) they must
first be offered at the same price to existing shareholders in proportion to
their existing shareholdings. This special resolution gives the Directors
authority, for the period ending on the date of the next annual general
meeting to be held in 2017, to: (a) allot shares of the Company and sell
treasury shares for cash in connection with a rights issue or other
pre-emptive offer; and (b) otherwise allot shares of the Company, or sell
treasury shares, for cash up to an aggregate nominal value of £425,472
representing, in accordance with institutional investor guidelines,
approximately 5 per cent. of the total ordinary share capital in issue as at
21 April 2017 (being the last practicable date prior to the publication of
this Directors’ Report) in each case as if the pre-emption rights in English
company law did not apply.
Save in respect of issues of shares in respect of employee share schemes and
share dividend alternatives, the Directors do not currently intend to make use
of these authorities. The board intends to adhere to the provisions in the
Pre-emption Group’s Statement of Principles not to allot shares for cash on
a non-pre-emptive basis in excess of an amount equal to 7.5 per cent. of the
Company’s ordinary share capital within a rolling three-year period without
prior consultation with shareholders. The Directors’ authority will expire
on the earlier of 31 August 2018 or the date of next AGM.
Resolution 10 – Purchase of own ordinary shares
The effect of Resolution 10 would be to renew the Directors’ current
authority to make limited market purchases of the Company’s ordinary shares
of 10 pence each. The power is limited to a maximum aggregate number of
8,509,435 ordinary shares (representing approximately 10 per cent. of the
Company’s issued share capital as at 21 April 2017 (being the latest
practicable date prior to publication of this Directors’ Report)). The
minimum price (exclusive of expenses) which the Company would be authorised to
pay for each ordinary share would be 10 pence (the nominal value of each
ordinary share). The maximum price (again exclusive of expenses) which the
Company would be authorised to pay for an ordinary share is an amount equal to
105 per cent. of the average market price for an ordinary share for the five
business days preceding any such purchase. The authority conferred by
Resolution 10 will expire at the conclusion of the Company’s next annual
general meeting to be held in 2018 or 15 months from the passing of the
resolution, whichever is the earlier. Any purchases of ordinary shares would
be made by means of market purchases through the London Stock Exchange.
If granted, the authority would only be exercised if, in the opinion of the
Directors, to do so would result in an increase in earnings per share or asset
values per share and would be in the best interests of shareholders generally.
In exercising the authority to purchase ordinary shares, the Directors may
treat the shares that have been bought back as either cancelled or held as
treasury shares (shares held by the Company itself). No dividends may be paid
on shares which are held as treasury shares and no voting rights are attached
to them.
Resolution 11 – Notice of General Meetings
Resolution 11 shall be proposed to allow the Company to call general meetings
(other than an Annual General Meeting) on 14 clear days’ notice. A
resolution in the same terms was passed at the Annual General Meeting in 2016.
The notice period required by the Companies Act 2006 for general meetings of
the Company is 21 days, unless shareholders approve a shorter notice period,
which cannot however be less than 14 clear days. Annual General Meetings must
always be held on at least 21 clear days’ notice. It is intended that the
flexibility offered by this resolution will only be used for time-sensitive,
non-routine business and where merited in the interests of shareholders as a
whole. The approval will be effective until the Company’s next Annual
General Meeting, when it is intended that a similar resolution will be
proposed.
Other matters
RSM UK Audit LLP has expressed its willingness to continue in office as
auditor. A proposal will be made at the Annual General Meeting for its
reappointment.
By order of the board
Anil Thapar
Secretary
27 April 2017
24 Bruton Place
London
W1J 6NE
Corporate Governance
The Company has adopted the Corporate Governance Code for Small and Mid-Size
Quoted Companies (the QCA Code) published by the Quoted Companies Alliance.
The QCA Code provides governance guidance to small and mid-size quoted
companies. The paragraphs below set out how the Company has applied this
guidance during the year. The Company has complied with the QCA Code
throughout the year.
Principles of corporate governance
The board promotes good corporate governance in the areas of risk management
and accountability as a positive contribution to business prosperity. The
board endeavours to apply corporate governance principles in a sensible and
pragmatic fashion having regard to the circumstances of the business. The key
objective is to enhance and protect shareholder value.
Board structure
During the year the board comprised the Chairman, the Chief Executive, one
other executive Director and three non-executive Directors. Their details
appear on page 34. The board is responsible to shareholders for the proper
management of the Group.
The Directors’ responsibilities statement in respect of the accounts is set
out on page 52. The non-executive Directors have a particular responsibility
to ensure that the strategies proposed by the executive Directors are fully
considered. To enable the board to discharge its duties, all Directors have
full and timely access to all relevant information and there is a procedure
for all Directors, in furtherance of their duties, to take independent
professional advice, if necessary, at the expense of the Group. The board has
a formal schedule of matters reserved to it and normally has eleven regular
meetings scheduled each year. Additional meetings are held for special
business when required.
The board is responsible for overall Group strategy, approval of major capital
expenditure and consideration of significant financial and operational
matters.
The board committees, which have written terms of reference, deal with
specific aspects of the Group’s affairs:
• The nomination committee is chaired by C A Parritt and comprises one other
non-executive Director and the executive Chairman. The committee is
responsible for proposing candidates for appointment to the board, having
regard to the balance and structure of the board. In appropriate cases
recruitment consultants may be used to assist the process. All Directors are
subject to re-election at a maximum of every three years.
• The remuneration committee is responsible for making recommendations to
the board on the Company’s framework of executive remuneration and its cost.
The committee determines the contract terms, remuneration and other benefits
for each of the executive directors, including performance related bonus
schemes, pension rights and compensation payments. The board itself determines
the remuneration of the non-executive Directors. The committee comprises two
non-executive Directors and it is chaired by C A Parritt. The executive
Chairman of the board is normally invited to attend. The Annual Remuneration
Report is set out on pages 42 to 45.
• The audit committee comprises two non-executive Directors and is chaired
by C A Parritt. The audit committee report, with its terms of reference, is
set out on page 51. The Chief Executive and Finance Director are normally
invited to attend.
Board and board committee meetings held in 2016
The number of regular meetings during the year and attendance was as follows:
Meetings held Meetings attended
Sir Michael Heller Board Nomination committee Remuneration committee 10 1 1 10 1 1
J A Heller Board Audit committee 10 2 10 2
A K Thapar Board Audit committee 10 2 10 2
C A Parritt Board Audit committee Nomination committee Remuneration committee 10 2 1 1 10 1 1 1
H D Goldring Board Audit committee Nomination committee Remuneration committee 10 2 1 1 10 2 1 1
R Priest Board 10 9
Performance evaluation – board, board committees and directors
The performance of the board as a whole, its committees and the non-executive
Directors is assessed by the Chairman and the Chief Executive and is discussed
with the senior non-executive independent Director. Their recommendations are
discussed at the nomination committee prior to proposals for re-election being
recommended to the board. The performance of executive Directors is discussed
and assessed by the remuneration committee. The senior independent Director
meets regularly with the Chairman, executive and non-executive Directors
individually outside of formal meetings. The Directors will take outside
advice in reviewing performance but have not found this to be necessary to
date.
Independent directors
The senior independent non-executive Director is C A Parritt. The other
independent non-executive Directors are H D Goldring and R Priest. Delmore
Asset Management Limited (Delmore) is a Company in which H D Goldring is the
majority shareholder and the Executive Chairman. Delmore provides consultancy
services to the Company on a fee paying basis. Alvarez and Marsal Real Estate
Advisory Services (A&M) is a Company in which R Priest is a senior advisor.
A&M provides consultancy and advisory services to the Company on a fee paying
basis. C A Parritt also provides some advisory services as part of his
accounting practice.
The board encourages all three non-executive Directors to act independently
and does not consider that length of service of any individual non-executive
Director, nor any connection with the above mentioned consultancy and advisory
companies has resulted in the inability or failure to act independently. In
the opinion of the board the three non-executive Directors continue to fulfil
their roles as independent non-executive Directors.
The independent Directors exchange views regularly between board meetings and
meet when required to discuss corporate governance and other issues concerning
the Group.
Internal control
The Directors are responsible for the Group’s system of internal control and
for reviewing its effectiveness at least annually, and for the preparation and
review of its financial statements. The board has designed the Group’s
system of internal control in order to provide the Directors with reasonable
assurance that assets are safeguarded, that transactions are authorised and
properly recorded and that material errors and irregularities are either
prevented or would be detected within a timely period. However, no system of
internal control can eliminate the risk of failure to achieve business
objectives or provide absolute assurance against material misstatement or
loss. The key elements of the control system in operation are:
• The board meets regularly on full notice with a formal schedule of matters
reserved for its decision and has put in place an organisational structure
with clearly defined lines of responsibility and with appropriate delegation
of authority;
• There are established procedures for planning, approval and monitoring of
capital expenditure and information systems for monitoring the Group’s
financial performance against approved budgets and forecasts;
• The departmental heads are required annually to undertake a full
assessment process to identify and quantify the risks that face their
departments and functions, and assess the adequacy of the prevention,
monitoring and modification practices in place for those risks. In addition,
regular reports about significant risks and associated control and monitoring
procedures are made to the executive Directors. The process adopted by the
Group accords with the guidance contained in the document “Internal Control
Guidance for Directors on the Combined Code” issued by the Institute of
Chartered Accountants in England and Wales. The audit committee receives
reports from external auditors and from executive Directors of the Group.
During the period the audit committee has reviewed the effectiveness of the
system of internal control as described above. The board receives periodic
reports from all committees.
• There are established procedures for the
presentation and review of the financial statements and the Group has in place
an organisational structure with clearly defined lines of responsibility and
with appropriate delegation of authority.
There are no internal control issues to report in the annual report and
financial statements for the year ended 31 December 2016. Up to the date of
approval of this report and the financial statements, the board has not been
required to deal with any related material internal control issues. The
Directors confirm that the board has reviewed the effectiveness of the system
of internal control as described during the period.
Communication with shareholders
Prompt communication with shareholders is given high priority. Extensive
information about the Group and its activities is provided in the Annual
Report. In addition, a half-year report is produced for each financial year
and published on the Company’s website. The Company’s website
www.lap.co.uk is updated promptly with announcements and Annual Reports upon
publication. Copies from previous years are also available on the website.
The Company’s share price is published daily in the Financial Times.
The share price history and market information can be found at
http://www.londonstockexchange.com/prices-and-markets/markets/prices.htm.
The company code is LAS.
There is a regular dialogue with the Company’s stockbrokers and
institutional investors. Enquiries from individuals on matters relating to
their shareholdings and the business of the Group are dealt with promptly and
informatively.
The Company’s website is under continuous development to enable better
communication with both existing and potential new shareholders.
The Bribery Act 2010
The Company is committed to acting ethically, fairly and with integrity
in all its endeavours and compliance with the code is monitored closely.
Governance Statement by the Chairman of The Remuneration Committee
The remuneration committee is pleased to present its report for the year ended
31 December 2016. The report is presented in two parts in accordance with the
regulations.
The first part is the Annual Remuneration Report which details remuneration
awarded to Directors and non-executive Directors during the year. The
shareholders will be asked to approve the Annual Remuneration Report as an
ordinary resolution (as in previous years) at the AGM in June 2017.
The current remuneration policy, which details the remuneration policy for
directors, can be found at www.lap.co.uk. The current remuneration policy was
subject to a binding vote which was approved by shareholders at the AGM in
June 2014. The approval will continue to apply for a 3 year period up to the
AGM on 6 June 2017.
The second part details the Remuneration Policy for Directors. This policy is
subject to a binding vote which will be proposed to shareholders at the AGM in
2017 and if approved will apply for a 3 year period commencing from the
conclusion of the AGM.
Both of the reports have been prepared in accordance with The Large and
Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013.
The Company’s auditor, RSM UK Audit LLP is required by law to audit certain
disclosures and where disclosures have been audited that is indicated.
C A Parritt
Chairman, Remuneration Committee
27 April 2017
Annual remuneration report
The following information has been audited
Single total figure of remuneration for the year ended 31 December 2016
Salary and fees £’000 BONUSES £’000 BENEFITS £’000 PENSIONS £’000 TOTAL SHARE OPTIONS £’000 TOTAL 2016 £’000
BEFORE SHARE OPTIONS £’000
Executive Directors
Sir Michael Heller* 7 - 43 - 50 n/a 50
Sir Michael Heller - Bisichi 75 - - - 75 n/a 75
J A Heller 333 166 40 30 569 n/a 569
A K Thapar 152 35 11 15 213 n/a 213
567 201 94 45 907 - 907
Non-executive Directors
H D Goldring*+ 32 - 5 - 37 n/a 37
C A Parritt*+ 38 - - - 38 n/a 38
R Priest* 51 - - - 51 n/a 51
121 - 5 - 126 - 126
Total 688 201 99 45 1,033 - 1,033
Single total figure of remuneration for the year ended 31 December 2015
Salary and fees £’000 BONUSES £’000 BENEFITS £’000 PENSIONS £’000 TOTAL BEFORE SHARE OPTIONS £’000 SHARE OPTIONS £’000 TOTAL 2015 £’000
Executive Directors
Sir Michael Heller* 7 - 42 - 49 n/a 49
Sir Michael Heller - Bisichi 75 - - - 75 n/a 75
J A Heller 333 366 30 33 762 n/a 762
A K Thapar 130 55 8 40 233 n/a 233
545 421 80 73 1,119 - 1,119
Non-executive Directors
H D Goldring*+ 47 - 5 - 52 n/a 52
C A Parritt*+ 38 - - - 38 n/a 38
R Priest* 63 - - - 63 n/a 63
148 - 5 - 153 - 153
Total 693 421 85 73 1,272 - 1,272
* Note 28 “Related party transactions”
+ Members of the remuneration committee for years ended 31 December 2015 and
31 December 2016
Benefits include the provision of car, health and other insurance and
subscriptions
Sir Michael Heller is a director of Bisichi Mining PLC, (a subsidiary for IFRS
10 purposes) and received a salary from that company of £75,000 (2015:
£75,000) for services.
Although Sir Michael Heller receives reduced remuneration in respect of his
services to LAP, the Company does supply office premises, property management,
general management, accounting and administration services for a number of
companies in which Sir Michael Heller has an interest. The board estimates
that the annual value of these services, if supplied to a third party, would
have been £300,000 (2015: £300,000). Further details of these services are
set out in Note 28 to the financial statements “Related party
transactions”.
J A Heller is a director of Dragon Retail Properties Limited, (a subsidiary
for IFRS 10 purposes) and received benefits from that company of £11,336
(2015: £7,250) for services. This is included in the remuneration figures
disclosed above.
The remuneration figures disclosed for H D Goldring include fees paid to his
company, Delmore Holdings Limited for consultancy services provided to the
Group. This is detailed in Note 28 to the financial statements.
The remuneration figures for C A Parritt include fees paid to his accountancy
practice for consultancy services provided to the Group. This is detailed in
Note 28 to the financial statements.
Until 31 July 2016 R Priest was a managing director of Alvarez & Marsal Real
Estate Advisory Services who provide consultancy services to the Group. The
figure of disclosed remuneration for Mr Priest includes the value of these
services up to 31 July 2016. This is detailed in Note 28 to the financial
statements.
Summary of directors’ terms
Date of contract Unexpired term Notice period
Executive Directors
Sir Michael Heller 1 January 1971 Continuous 6 months
John Heller 1 May 2003 Continuous 12 months
Anil Thapar 1 January 2015 Continuous 6 months
Non-executive Directors
H D Goldring 1 July 1992 Continuous 3 months
C A Parritt 1 January 2006 Continuous 3 months
R Priest 31 July 2013 Continuous 3 months
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 £30,000 and £15,000 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 £3,000 each year, (2) partnership shares, under which members
may save up to £1,500 per annum to acquire shares, (3) matching shares,
through which the Company may award up to two shares for each share acquired
as a partnership share, and (4) dividend shares, acquired from dividends paid
on shares within the SIP.
1. Free shares: No free shares were issued for 2016 bonuses. 61,220 shares
were awarded in January 2016 relating to 2015 bonuses and these are shown
below as 2015.
Free shares awarded:
Number of members Number of shares Value of shares
2016 2015 2016 2015 2016 £ 2015 £
Directors: J A Heller - 1 - 12,244 - 3,000
A K Thapar - 1 - 12,244 - 3,000
Staff - 3 - 36,732 - 9,000
Total at 31 December - 5 - 61,220 - 15,000
2. Partnership shares: No partnership shares were issued between November 2015
and October 2016.
3. Matching shares: The partnership share agreements for the year to 31
October 2016 provide for two matching shares to be awarded free of charge for
each partnership share acquired. No partnership shares were acquired in 2016
(2015: nil). Matching shares will usually be forfeited if a member leaves
employment in the Group within 5 years of their grant.
4. Dividend shares: Dividends on shares acquired under the SIP will be
utilised to acquire additional shares. Accumulated dividends received on
shares in the SIP to 31 December 2016 amounted to £602 (2015: £484).
Dividend shares issued:
Number of members Number of shares Value of shares
2016 2015 2016 2015 2016 £ 2015 £
Directors: J A Heller 1 1 402 255 85 64
A K Thapar 1 1 495 331 105 83
Staff 6 8 1,934 1,350 412 337
Total at 31 December 8 10 2,831 1,936 602 484
The SIP is set up as an employee benefit trust. The trustee is London &
Associated Securities Limited, a wholly owned subsidiary of LAP, and all
shares and dividends acquired under the SIP will be held by the trustee until
transferred to members in accordance with the rules of the SIP.
Share Option Schemes
The Company has an HMRC approved scheme (Approved Scheme). It was set up in
1986 in accordance with HMRC rules to gain HMRC approved status which gave the
members certain tax advantages. There are no performance criteria for the
exercise of options under the Approved Scheme, as this was set up before such
requirements were considered to be necessary. No Director has any options
outstanding under the Approved Scheme nor were any options granted under the
Approved Scheme for the year ended 31 December 2016.
A share option scheme known as the “Non-approved Executive Share Option
Scheme” (Unapproved Scheme) which does not have HMRC approval was set up
during 2000. At 31 December 2016 there were no options to subscribe for
ordinary shares outstanding. The exercise of options under the Unapproved
Scheme is subject to the satisfaction of objective performance conditions
specified by the remuneration committee which conforms to institutional
shareholder guidelines and best practice provisions. Further details of this
scheme are set out in Note 26 “Share Capital” to the financial
statements.
Payments to past directors
No payments were made to past Directors in the year ended 31 December 2016.
Payments for loss of office
No payments for loss of office were made in the year ended 31 December 2016.
Statement of directors’ shareholding and share interest
Directors’ interests
The interests of the Directors in the ordinary shares of the Company,
including family and trustee holdings, where appropriate, were as follows:
Beneficial interests Non-beneficial interests
31 Dec 16 1 Jan 16 31 Dec 16 1 Jan 16
Sir Michael Heller 6,053,541 6,353,541 19,277,931 19,277,931
H D Goldring 19,819 19,819 - -
J A Heller 1,867,393 1,630,022 †14,073,485 †14,073,485
C A Parritt 36,168 36,168 - -
R Priest - - - -
A K Thapar 120,495 150,047 - -
†These non-beneficial holdings are duplicated with those of Sir Michael
Heller.
The beneficial holdings of Directors shown above include their interests in
the Share Incentive Plan.
The following information is unaudited:
The graph illustrates the Company’s performance as compared with a broad
equity market index over a five year period. Performance is measured by total
shareholder return. The directors have chosen the FTSE All Share – Total
Return Index as a suitable index for this comparison as it gives an indication
of performance against a large spread of quoted companies.
The middle market price of London & Associated Properties PLC ordinary shares
at 31 December 2016 was 21p (2015: 25p). During the year the share middle
market price ranged between 19p and 28.38p.
Remuneration of the Chief Executive over the last ten years
Year CEO Chief Executive Single total figure of remuneration £’000 Annual bonus payment against maximum opportunity* % Long-term incentive vesting rates against maximum opportunity* %
2016 J A Heller 569 18 % n/a
2015 J A Heller 762 41 % n/a
2014 J A Heller 835 49 % n/a
2013 J A Heller 716 n/a n/a
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
*There were no formal criteria or conditions to apply in determining the
amount of bonus payable or the number of shares to be issued prior to 2014.
Percentage change in Chief Executive’s Remuneration (audited)
The table below shows the percentage change in Chief Executive remuneration
for the prior year compared to the average percentage change for all other
Head Office based employees. To provide a meaningful comparison, the same
group of employees (although not necessarily the same individuals) appears in
the 2015 and 2016 group. The remuneration committee chose Head Office based
employees as the comparator group as this group forms the closest comparator
group.
Chief Executive £’000 Head Office Employees £’000
2016 2015 % change 2016 2015 % change
Base salary and allowances 333 333 0% 692 691 0%
Taxable benefits 40 30 33% 77 67 15%
Annual bonus 166 366 (55%) 97 126 (23%)
Total 539 729 (26%) 866 884 (2%)
Relative importance of spend on pay
The total expenditure of the Group on remuneration to all employees (Note 29
refers) is shown below:
2016 £’000 2015 £’000
Employee Remuneration 7,173 7,219
Distributions to shareholders 136 133
Statement of implementation of remuneration policy
The policy was approved at the AGM in June 2014 and was effective from 10 June
2014. The vote on the remuneration policy is binding in nature. The Company
may not then make a remuneration payment or payment for loss of office to a
person who is, is to be, or has been a director of the Company unless that
payment is consistent with the approved remuneration policy, or has otherwise
been approved by a resolution of members. It is to be presented for approval
at the forthcoming AGM.
Consideration by the directors of matters relating to directors’
remuneration
The Remuneration Committee considered the executive Directors’ remuneration
and the board considered the non-executive Directors’ remuneration in the
year ended 31 December 2016. No increases were awarded and no
- More to follow, for following part double click ID:nPRrS2637cRecent news on London & Associated Properties
See all newsREG-London & Associated Properties Plc: Annual Report and Notice of AGM
AnnouncementREG-London & Associated Properties Plc: Results for 12 Months to 31 December 2023
AnnouncementREG-London & Associated Properties Plc: Resignation of Director
AnnouncementREG-London & Associated Properties Plc: Half-year Report
AnnouncementREG-London & Associated Properties Plc: Report on Payments to Governments
Announcement