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 |
|
|
|
|
2,753 |
2,799 |
5,049 |
|
401 |
- |
802 |
- - Management income from third parties
|
240 |
268 |
718 |
Bisichi |
|
|
|
|
650 |
549 |
1,065 |
|
106 |
|
137 |
|
25,731 |
24,266 |
48,713 |
|
|
|
|
|
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 |