London & Associated Properties Regulatory News (LAS)

30 Apr 2009 07:02

FOR IMMEDIATE RELEASE

30 April 2009 LONDON & ASSOCIATED PROPERTIES PLC:See www.lap.co.uk for the Annual Report to 31 December 2008

FINAL RESULTS FOR YEAR TO 31 DECEMBER 2008

London & Associated Properties is a fully listed UK shopping centre and Central London retail property specialist. The company owns and manages £244m of retail investments

HIGHLIGHTS

•Wholly-owned retail investment portfolio performed well in difficult market, valued at £218.5m reflecting a decline of 13.2% - less than half the decline across the real estate sector.•Outperformance attributed in part in part to well-timed development programme â€" completed ahead of current market conditions•£140m of sales completed between 2006 and 2008 at “top of market”

prices

•Total annualised rent roll rose 27% to £17.3m from £13.6m•Minimal impact from retail sector insolvencies with only £0.6m a year of the rent roll becoming non-income producing•“Management adjusted” net assets stood at £54.4m against £88.0m in 2007. (IFRS: £40.3m against £89.0m in 2007).•“Management adjusted” net assets per share stood at 71.2p against 115.5p in 2007. (IFRS: 52.7p against 116.9p in 2007).•Final recommended payment to shareholders of 1.2p comprising 0.4p in cash and 0.8p in bonus shares â€" an equivalent nominal amount equal to 1.95p â€" consistent with the 26 year record of increasing or holding the dividend.•£8.8m invested in developing existing portfolio â€" generating £0.5m in annualised incremental rents“I am particularly encouraged that our property valuations exceeded industry benchmarks. I am also content that we have made significant progress in improving and managing our property portfolio, and this is part of the reason that so far we appear to have avoided the worst of the tenant defaults within the retail sector,” John Heller, Chief Executive.

CHAIRMAN'S STATEMENT

In future years 2008 may well be seen by historians as the beginning of one ofthe harshest economic periods in history. Within this crisis, one of thehardest hit areas has been commercial property, where an imbalance between ahigh number of sellers, often in distressed situations, and an extremely lowlevel of buyers caused values to collapse. This collapse has been across allsectors and has affected all property investors, including LAP.As at 31st December 2008, our property portfolio was valued at £218.5m, a dropof 13.2% on a like-for-like basis. While this is a significant reduction invalue, it nevertheless compares favourably with the Investment PropertyDatabank (IPD), the property market benchmark, which showed retail propertycapital values fell by some 28% during 2008. Our relative outperformance canbe attributed to a number of factors:

Firstly, it is now becoming increasingly clear that our recent development programme was well-timed as it was completed prior to the current economic difficulties. A number of our centres are now benefiting from significant increases in income as the tenants to whom we pre-let units before development commenced have started paying rent. This increase in income has provided a cushion and helped to limit the fall in the value of our properties.

Secondly, between 2006 and 2008, we sold approximately £140m of properties atprices which can now be seen to be the top of the market. These disposals werefrom the more secondary end of our portfolio, the retail property sector thathas faced the steepest decline. Additionally we disposed of Chenil House,King's Road, in July 2008 for £14.9m. This reflected our desire to move awayfrom developments that were not pre-let as we predicted correctly the onset ofthe fall in values of residential property.

Finally, we have upgraded the quality of our portfolio over the last few years. 56% by value of our holdings is in prime locations within London and the South East, and additionally the quality of our tenants has never been higher. Our top 52 tenants account for approximately 75% of our income, and all

are household names. While in these difficult times this does not provide the same level of comfort that it used to, we feel relatively confident that we should experience more limited tenant default.

During December and since the year-end, only 11 tenants have gone into someform of insolvency. In total, those units that became non-income producingaccounted for £0.6m per year out of our total annualised rent roll of £17.3m,representing less than 3.5%. This figure is heavily skewed by the loss ofZavvi at Orchard Square, our shopping centre in Sheffield, who were paying£368,000 per annum. Zavvi occupied a flagship store and we quickly receivedthree offers, all from national retailers, at levels in excess of the previousrent passing. This unit is now under offer to a leading fashion retailer, andwe will complete soon.We currently have units under offer with a rental income approaching £0.5m perannum. Once these units in the LAP portfolio are let, total vacant units otherthan those that are deliberately held empty for redevelopment will account forjust £0.3m per annum of additional rental income.Naturally, our net assets have been adversely affected by the write-down ofour property. On a management adjusted accounting basis, which excludescertain fair value adjustments, our net assets are £54.4m compared to £88.0mfor 2007, and our net assets per share are 71p (2007:115p). These numbers areshown in more detail in the Finance Director's Report. The non cashadjustments required under IFRS relating to interest rate hedges produceresults that do not reflect the board's view of the underlying value of thegroup or the prudent manner in which the business has been managed, notably inminimising the impact of interest rate volatility. Applying this hedgingadjustment to the IFRS accounts has resulted in a further £14.1m beingdeducted from our net assets. Last year, the same interest rate swaps werevalued at a surplus of £1.0m, an adverse swing of some £15.1m. Net assetsunder IFRS as a result stand at £40.3m compared to £89.0m at the end of 2007,while net assets per share are 52.7p (2007: 116.9p).In support of its view that this adjustment is unrealistic, the Board hasnoted that if the hedge had been valued on the same basis as at 7 April 2009this would have resulted in an adjustment of £8.4m, a positive swing of £5.7min the space of three months.

It is important to note that £70.0m, or 43% of our loans, are non-recourse to the Group's balance sheet. Crucially, we remain within our banking covenants.

Notwithstanding the valuation reduction, which was industry-wide, we performedwell in 2008. Annual revenue rose 27% to £16.5m from £13.0m. This reflects, inpart, the full consolidation of Analytical Properties following ouracquisition in September 2007 from Bank of Scotland of the 50% of the equitythat we did not previously own. Rental income also rose following thecompletion of new retail units in Sheffield which now generate £0.9m perannum. There were also key lettings elsewhere in the portfolio and we receivedfull contributions from our recent acquisitions in Chesterfield and Solihull.The Chief Executive's Review provides fuller details.

On a management adjusted basis (as detailed in the Finance Director's Report), we made a small loss in 2008 of £1.0m (2007: £0.5m profit). This loss principally reflects the fact that we have held empty a number of units for redevelopment. As stated above, our development programme has been well

timed and is now mostly completed, although we are still intending to develop two further properties in Islington and Chelsea. Both properties have been pre-let to excellent covenants.

Our developments in 2008 were all funded from existing cash resources. We will also fund the future works at Islington and Chelsea from cash resources.

In this constrained market, we will defer certain developments that are stillat an early stage. These include a residential-led scheme at Brixton Village,which was reappraised following the fall in residential values and the lack oflikely joint venture partners from within the housebuilding industry.Associated costs of £0.2m have been written-off through the income statement.Under IFRS total property expenses include £0.6m of pre-development costswhich have been written off in the year.The Board feels that in the current economic conditions it is imperative thatthe Group maximises its financial flexibility, including conserving cashwherever appropriate. The Board is therefore recommending an amount equivalentto a final dividend for 2008 of 1.2p per ordinary share. This will besatisfied by paying 0.4p per ordinary share by way of a cash dividend and byissuing new ordinary shares to existing shareholders with a value equal to0.8p per ordinary share. This results in a total for 2008 of an equivalentnominal amount equal to 1.95p per ordinary share and is consistent with our 26year record of increasing or holding our dividend. Subject to shareholderapproval, the cash dividend will be paid on 3 July 2009 to shareholders on theregister at the close of business on 5 June 2009 and the issue of shares willtake effect on 3 July 2009 to shareholders registered at the close of businesson 5 June 2009.

Total assets under management, including those of Bisichi Mining Plc, our associate company, and Dragon Retail Properties, our joint venture with Bisichi, stood at £244m at the year end.

Bisichi had a very successful year and generated trading profits of £6.0m before the write-down of its property portfolio. Net of the write-down, Bisichi's profits were £2.1m.

Our performance in 2008 has been satisfactory given the rapid deterioration ofthe property investment market. I am particularly encouraged that our propertyvaluations exceeded industry benchmarks. I am also content that we have madesignificant progress in improving and managing our property portfolio, andthis is part of the reason that so far we appear to have avoided the worst ofthe tenant defaults within the retail sector.There seems to be a polarisation within the property investment market betweenprime properties, where there are some early indications of a return ofinvestor appetite, and the remainder of the market which has yet to findinvestor support. We expect these trends to continue and that the quality ofour portfolio should mitigate the effects of this market correction.Michael HellerChairman17 April 2009CHIEF EXECUTIVE'S REPORT

2008 was a very difficult year for the UK property investment market duringwhich capital values declined across the board by 27.1% in aggregate. Retailproperty values were down by 28.0% caused by reduced consumer spending, a lackof available funds due to the banking crisis and investor fears over tenantdefault.We can take considerable comfort from the fact that LAP's portfolio fell byjust 13.2% over this period. This can be attributed in part to our successfulstrategy over the last few years of selling mature and more secondaryproperties into what was an unsustainably strong market. We reinvested theproceeds into high quality, well located property as well as into improvementsto our core portfolio. Few disposals are likely in the coming months, althoughwe do not rule out the possibility of certain targeted sales where we are ableto take advantage of opportunities and relatively strong investor demand.As a result of the quality of our portfolio and the continued drive to upgradeit through selective development, our valuations have held up relatively well.The decision to focus our portfolio more towards central London and the SouthEast has also been beneficial. We believe this market will retain value betterthan elsewhere in the UK, particularly in the more prime areas, asinternational buyers

are still looking to invest in one of the world's most important capital cities. This trend has been reinforced by the substantial decline

of sterling over the last 18 months.

We have also invested some £8.8m into developing our existing portfolio, andthis has generated annual incremental rental flows of £0.5m to date. This alsostrengthens our cash flow and extends the average lease term of our tenants.Our strategy of investing in quality property means we have suffered limitedtenant defaults. In total, tenants accounting for annual rental income of£0.8m suffered some form of insolvency from the fourth quarter of 2008 untilnow. Of this total, tenants vacating their units and leaving us with nonincome-producing space amounted to £0.6m per annum. Zavvi, the largest singleone of these tenants, accounted for £368,000 per annum. This space is nowunder offer at a higher rent than had previously been passing, and we have atotal of approximately £0.5m per annum under offer. Once these lettingscomplete our voids, not including those units held for redevelopment willstand at 1.7% of our total rent roll of £17.3m.Cash collection from our tenants in December 2008 and March 2009 has remainedas strong as ever. We collected in excess of 95% of all rent, service chargeand other sums due within 14 days of each quarter day.The economic and financial environment declined sharply at the end of 2008.Notwithstanding this, we successfully completed a number of new leases, leaserenewals and rent reviews during the year. These amounted to a net £0.9m perannum.WindsorOur development at King Edward Court, Windsor, undertaken in 2006, continuesto underpin the strong performance of this centre. Further lettings wereachieved which generated £0.3m per annum. The centre agreed net incrementalrents during 2008 of £0.1m after taking into account the two voids accountingfor £0.2m that occurred when Officers Club and Barratts both went intoadministration and vacated their units. Our agents are currently marketing thevacant units and report encouraging interest in them. We are confident ofmaintaining a strong tenant mix at this centre, which we believe to be animportant factor in its continued long term performance.

New tenants to King Edward Court in 2008 include Benefit, an international cosmetics retailer, which has taken a unit opposite the redeveloped shops at £50,000 per annum. This letting shows a zone A level of £115 per sq. ft.

Income from the car park has also increased and now stands at approximately£2.0m per annum. This compares favourably with £1.2m per annum two years agoand reflects both the increases in price that we have been able to implementand increased usage following the upgrading of the centre.

Sheffield

Orchard Square has been dramatically transformed over the last few years, and2008 was probably its most successful year to date. The principal developmentwas the creation of a new flagship 45,000 sq. ft. store for TK Maxx whichanchors the rear of the centre. TK Maxx took possession of the unit in Augustand they have informed us that this unit has performed at the very top oftheir expectations and is one of the company's best performing stores in theUK.

Total costs for the construction were approximately £5.0m, and the incremental rent of this unit is some £0.4m per annum.

Elsewhere in the centre, we completed the extension of four shop units. Theseunits were "shaded" by the River Island unit, and they have now become muchmore prominent. Three of the four units were pre-let to Starbucks, Evans andBlue Banana, while the fourth was subsequently let to La Coupe Hairdressers ata record Zone A rent for the centre of £91 per sq. ft. The fact that thisletting took place right at the end of the year, in the midst of what is nowknown to be the worst lettings market during the economic crisis to date,underscores the strength of demand for space in this centre.We suffered our biggest single tenant default at Orchard Square when Zavviwent into administration at the end of December, although it traded there onfull rent until mid-February. I am pleased to report that we quickly receivedthree offers on this unit, all from leading fashion retailers. The unit iscurrently under offer at a rent in excess of the previous passing rent. Wehave agreed to give the incoming tenant an incentive package equivalent to 18months of rent. Given that most retailers who are currently looking for largerstores are demanding substantially lower rents than those previously passing,and incentive packages of up to three years rent, we consider that this againshows the strength of Orchard Square.Once this unit is let, some £1.7m per annum out of the centre's total annualrent of £2.8m will be produced by the three anchor tenants, all of whom aresuccessful established retailers with excellent covenants.

The London Portfolio

The London Portfolio continues to perform well and we have achieved a number of notable successes.

We previously reported to shareholders that we sold Chenil House on King's Road, Chelsea for £14.9m in July last year. The market has now shown that this disposal was particularly well timed and we no longer have exposure to the weakening high-end residential development market.

At The Mall, Islington, we successfully appealed a refusal by IslingtonCouncil to grant listed building consent. We had applied to replace the groundfloor slab and to remove kiosks at ground floor level. The Planning Inspectorhas allowed the works to proceed and we were awarded costs. This decision cameafter the end of 2008 and has therefore not been reflected in our valuations.The ground and basement are pre-let to Jack Wills, the fashion retailer, at£275,000 per annum. This part of The Mall formerly produced a net £100,000 perannum. The cost of the works is anticipated to be around £1.0m, which will befunded from our existing resources.At Antiquarius on King's Road, Chelsea, we have exchanged an agreement for thelease of the entire building with Anthropologie, one of the brands owned byUrban Outfitters Inc, at a rent of £1.1m per annum. This compares with anestimated net income of approximately £0.5m from Antiquarius in its currentform. The anticipated costs of these works are approximately £2.0m, which willalso be funded from our existing cash balances.

We have applied for the requisite listed building and freeholder consents. We are confident that we should receive both consents and will notify shareholders once they are obtained.

We have recently taken the decision to not proceed with a proposed redevelopment of Brixton Village, one of our two indoor markets in Brixton. This development would have created several blocks of flats and reinstated the market on the ground floor at completion. This decision is a consequence of the sharp fall in residential values, which we do not foresee improving sufficiently to make this project viable for some time. We are exploring a number of different ways to improve revenues at Brixton Village.

Market Row, our other investment in Brixton, has performed well in 2008 and isfully let. We believe that this market will continue to trade well in thecurrent climate as shoppers look for good value and diverse ranges of productson offer.Elsewhere, our portfolio continues to perform well in the current climate.

Analytical Ventures

This joint venture was established with Bank of Scotland, now Lloyds BankingGroup, in March 2008 to acquire prime retail properties. So far, it hasacquired Westgate House in Halifax, for which it paid £10.5m in July 2008. Theground floor shops are now fully let following the completion of the lastremaining letting to William Hill at £45,000 per annum. The tenants at thisproperty have strong covenants, and we are confident that this property willcontinue to perform well.Outlook

Most commentators agree that 2009 is unlikely to witness a strong recovery ineither the economy or the property market. We also remain cautious about theoutlook and will continue to intensively manage our portfolio. Our successfulstrategy of focusing on prime locations and high quality tenants will continueto reap rewards for us. We believe that the quality of our asset base will beat the forefront of any market recovery. In addition, the further incrementalrents we are generating from our remaining pre-let developments will stand

usin good stead.John HellerChief executive17 April 2009FINANCE DIRECTOR'S REPORT

The exceptionally challenging conditions in the second half of 2008 have continued into the current year. We have always managed the group on a prudent cash flow basis and this remains the case today.

This strategy has placed us in a strong position to cope with the difficult conditions, and is more relevant than ever in the current environment. Even in these difficult trading conditions we have met our loan covenants.

Due to the relatively long term nature of our financing, none of the Group'sterm loans expire for some time. The first loan that will require refinancingis our Revolving Credit Facility with Royal Bank of Scotland which expires

inAugust 2011.Cash Flow

The group remains in a satisfactory financial position and currently has some £25.9m of unencumbered cash and undrawn facilities.

During the year we sold Chenil House, Kings Road, London for £14.9m and aretail property in Bradford for £1.5m. The proceeds were used to pay down ourRevolving Credit Facility, which is now £69.4m drawn against a peak of £83.6mduring the year, and to boost our cash resources.The group completed major developments in 2008 at our centre in Sheffieldwhere some £5.3m was spent building a new 45,000 sq. ft. store for TK Maxx andextending four other units. These are discussed in the Chief Executive'sreport. In accordance with our normal practice, these developments were onlyundertaken once the majority of the space was pre-let.

Further works are planned for 2009 at The Mall, Islington where we will build a new store for Jack Wills, the fashion retailer, and potentially at Antiquarius where we intend to develop a new store for the American chain Anthropologie, subject to obtaining the necessary consents. The anticipated cost of these works is around £3.0m, and will be funded from our cash resources. Once completed the two units will produce an annual income of £1.4m, an incremental rent of £0.7m.

Income Statement

The group's loss before tax as reported under IFRS was £57.3m (2007: £23.9m). This figure is arrived at after deducting the fall in value

of the property portfolio and a number of other non-cash items. These adjustments are required under IFRS accounting standards and they lead to significant volatility in the reporting of our results. However, the underlying performance of the group, on a management adjusted basis to reflect operations more clearly, was as shown in the table below.

The cash items loss of £1.0m has for the most part been caused by deliberately holding vacant a number of units in order to carry

out development and the writing off to the income statement of certain costs that related to the early stages of some redevelopments. Most of these were completed during the year and are now income producing. Once our last remaining pre-let development activities are concluded, the group will on current forecasts be cash positive for the foreseeable future.

The average cost of debt has remained at 6.1% for the year. This is because we took out a series of interest rate swaps to fix the cost

of debt going forward. These swaps are still in place and provide certainty of interest payments over a long period irrespective

of the current rate prevailing.

The current tax charge for 2008 is £0.5m. With a deferred tax recovery of £10.3m, this has resulted in total tax credit for the year of £9.8m.

2008 2007 Per Per Cash Non-cash income Cash Non-cash income items items statement items items statement £'000 £'000 £'000 £'000 £'000 £'000 Net rental income 8,958 - 8,958 5,577 - 5,577Income and gains oninvestments held for trading 298 - 298 144 - 144Cost of evaluation and goodwill - - - (339) (173) (512)Profit on sale of investment properties 897 - 897 2,295

- 2,295

Net decrease on revaluation of investment properties - (33,125) (33,125) -

(25,208) (25,208)

Net decrease in value ofinvestments held for trading - (1,530) (1,530) - (16) (16)Operating profit/(loss) 10,153 (34,655) (24,502) 7,677 (25,397) (17,720)Share of joint ventures and associates 131 (547) (416) 109 1,015 1,124Interest rate derivative - (21,063) (21,063) - - -Net interest (11,285) - (11,285) (7,291) - (7,291)

(Loss)/profit before taxation (1,001) (56,265) (57,266) 495

(24,382) (23,887)Balance Sheet

The overall property portfolio, including the properties owned by Bisichi Mining plc, Dragon Retail Properties and Analytical Ventures, was £243.7m. On a like-for-like basis this shows a fall of 13.3% for the year.

The valuation of the interest rate swaps has been calculated on the basis ofthe net present value of the additional cost of interest payable over theterms of the hedging arrangement against the prevailing rates as at 31December 2008. The Directors consider this to be the most appropriate methodfor calculating the value of these products.

There is no independent market for our swap instruments which we could use to provide a realistic independent valuation. Whilst this calculation shows a substantial liability on the balance sheet at the year end, several points should be noted:

- the group has taken the swaps out in order to manage the business in a prudent manner going forward so that our cost of funds are a known amount;

- we do not intend to cash in the swap for the foreseeable future; and

- since taking out the derivatives the group has saved some £1.5m in interest payments up to the end of March 2009,

Our underlying net assets on a management adjusted basis were as shown in thetables below: 2008 Mark-to- market of Deferred interest Head Adjusted Per IFRS tax swaps leases net assets £'000 £'000 £'000 £'000 £'000Investment properties 245,770 (27,238) 218,532Other fixed assets 2,722 2,722Investments in associate andjoint ventures 8,360 8,360Other net assets 810 810Other non-current liabilities (49,662) (5,493) 19,616 27,238 (8,301)Net debt (167,694) (167,694)Net assets 40,306 (5,493) 19,616 - 54,429Adjusted NAV per share 71.2p 2007Investment properties 279,747 (31,671) 248,076Other fixed assets 886 886Investments in associate andjoint ventures 8,282 8,282Other net assets 13,934 (1,447) 12,487Other non-current liabilities (44,742) 446 31,671 (12,625)Net debt (169,116) (169,116)Net assets 88,991 446 (1,447) - 87,990Adjusted NAV per share 115.5p

Should interest rates rise again in the future we will be protected againstvolatility, and the swaps would be shown in our balance sheet with a positivevalue. The volatility of the interest rates is clearly demonstrated in that ifthese hedges were revalued as at the 7 April 2009 the liability beforedeferred taxation relief would be £11.6m against £19.6m at 31 December 2008.It remains our policy not to repay the debt early and to maintain the interestrate protection.Under IFRS there was a write down of the property portfolio of £33.1m, and arevaluation of our interest rate swaps in light of current low interest rates,of £15.1m. As a result, the net assets of the group are now calculated at£40.3m (2007: £89.0m).

Accounting judgments

The most significant judgements made in preparing these accounts relate to thecarrying value of the properties, investments and hedges which are stated atopen market value. The Group uses external professional valuers to determinethe values of our properties.

Based on the judgements used to prepare the accounts, the Directors also reviewed the cash flow forecasts of Group and the underlying assumptions on which they are based. They are satisfied that there are sufficient resources for the Group to continue to trade over the foreseeable future.

Dividends

In order to preserve cash in the business the company is proposing an amountequivalent to a final dividend of 1.2p. This makes a total for the year of1.95p per share - an equivalent amount to the total dividend for 2007. This isto be made up of 0.4p per share in cash and 0.8p per share as a bonus shareissue. This will save the company some £0.6m of cash.Our associated company Bisichi, in which we hold a 41.7% stake, had a strongyear and produced profits of £2.1m. This figure is after a revaluation deficitunder IFRS of £3.9m. Of Bisichi's trading profit of £6.0m, £5.2m was earned inthe second half of the year.

I feel confident that the policy of prudently managing the Group's cash resources will benefit us as we go through this period of uncertainty.

Robert CorryFinance Director17 April 2009DIRECTORS AND ADVISORSDIRECTORSEXECUTIVE DIRECTORS

*Michael A Heller ma fca (Chairman)

John A Heller llb mba (Chief executive)

Robert J Corry ba fca (Finance Director)

Michael C Stevens fca

NON-EXECUTIVE DIRECTORS

†Howard D Goldring bsc (econ) aca

Howard Goldring has been a member of the board since July 1992 and is a globalasset allocation specialist. He is chairman of Delmore Asset Management Limitedwhich manages investment portfolios and provides global asset allocation advice toprivate clients, family offices and pension funds. From 1997-2003 he was consultant director onglobal asset allocation to Liverpool Victoria Asset Management Limited.

#†Clive A Parritt fca cf fiia

Clive A Parritt joined the board on 1 January 2006. He is a charteredaccountant with over 30 years experience of providing strategic, financial andcommercial advice to businesses. He is chairman of Barronsmead VCT 2 plc and BGConsulting Group Limited as well as a non-executive director of F&C US SmallerCompanies plc. He is also a member of the Council and Board of the Institute ofChartered Accountants in England and Wales. He is chairman of the auditcommittee and as Senior Independent Director he chairs the Nomination andRemuneration Committees.

* Member of the nomination committee

# Senior independent director

†Member of the audit, remuneration and nomination committees

Secretary & registered office

Michael C Stevens FCA

Carlton House, 22a St James's Square

London SW1Y 4JH Director of propertyMike J Dignan FRICS AuditorBaker Tilly UK Audit LLP Principal bankersHSBC Bank PLCLloyds Banking Group PLC

National Westminster Bank PLC

Royal Bank of Scotland PLC SolicitorsOlswangPinsent Masons LLPStockbrokerOriel Securities Limited

Registrars & transfer office

Capita Registrars,Northern HouseWoodsome ParkFenay BridgeHuddersfieldW.YorkshireHD8 0LATelephone 0871 664 0300

(Calls cost 10p per minute + network extras)

or +44 208 639 3399 for overseas callers

Website: www.capitaregistrars.com

Email: ssd@capitaregistrars.com

Company registration number341829 (England and Wales) Websitewww.lap.co.uk E-mailadmin@lap.co.ukDIRECTORS' REPORT

The directors submit their report and the audited accounts, for the year ended 31 December 2008.

ActivitiesThe principal activities of the group during the year were property investmentand development, as well as investment in joint ventures and an associatedcompany. The associated company is Bisichi Mining PLC in which the companyholds a 42 per cent interest. Bisichi Mining PLC is listed on the London StockExchange and operates in England and South Africa with subsidiaries which areinvolved in overseas mining and mining investment.Business ReviewReview of the group's developmentand performanceThe Chairman's Statement, Chief Executive's Report and Finance Director'sReport on the preceding pages 2 to 19 provide a comprehensive review andassessment of the group's activities during the year as well as its position atthe year end and prospects for the forthcoming year.Property activitiesThe group is a long-term investor in property. It acquires retail properties,actively manages those assets to improve rental income and thus enhance thevalue of its properties over time. In reviewing performance, the principalareas regularly monitored by the group include:• Rental income - the aim of the group is to maximise the maintainable incomefrom each property by careful tenant management supported by sympathetic andrevenue enhancing development. Income may be affected adversely by theinability of tenants to pay their rent. Rent collection and tenant quality aremonitored carefully. This risk is minimised as a result of the diversifiedtenant base, which should limit the impact of the failure of any individualtenant.

• 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 taking one year with another.

• Financing costs - the exposure of the group to interest rate movements ismanaged by the use of swap arrangements (see note 18 for fulldetails of the contracts in place). These swap arrangements are designed toensure that our interest costs are fixed and always covered by anticipatedrental income. Once put in place we intend that such swaps are generallyretained until maturity. Details of key estimates adopted are contained in the accounting policies note.• Property valuations - market sentiment and economic conditions have a directeffect on property valuations, which therefore can vary significantly (upwardsor downwards) over time. Bearing in mind the long-term nature of the group'sbusiness, valuation changes have little direct effect on the ongoing activitiesor the income and expenditure of the group. Tenants generally have long-termleases, so rents are unaffected by short-term valuation changes. Borrowings aresecured against property values and if those values fall very significantly,this could limit the ability of the group to develop the business usingexternal borrowings. The risk is minimised by trying to ensure that there isadequate 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 thevaluation of those assets reaches a level at which the directors consider thatthe long-term rental yield has been reached. The group also seeks to acquireadditional property investments on an opportunistic basis when the potentialrental yields offer scope for future growth.Investment activitiesThe investments in joint ventures and the associate are for the long term.

The group is an investor in the associate and manages the UK property assets of the associate. However the principal activity of the associate is overseas mining investment (principally in South Africa). The investment is held to generate income and capital growth over the longer term. The other listed investments are held as current assets to provide the liquidity needed to support the property activities while generating income and capital growth.

Investments in property are made through joint ventures when the financing and spreading of risk make it desirable.

Corporate responsibilityEnvironmentThe group's principal UK activity is property investment providing premiseswhich are rented to retail businesses. We seek to provide those tenants withgood quality premises from which they can operate in an efficient andenvironmentally friendly manner. Wherever possible, improvements, repairs andreplacements are made in an environmentally efficient manner and wastere-cycling arrangements are in place at all the company's locations.

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.

Performance indicatorsOur success is principally measured in terms of net asset value per share andtrading cash flow (where we aim over a period of time to deliver a positivecash return) and net asset value per share after adjusting for valuationvolatility and excluding IFRS adjustments. The directors considerthat the Key Performance Indicator of the Group is the Net Asset per Sharevalue shown at the foot of the Balance Sheet on page 34. Cash flow is shown onpage 36.

Dividend Policy and Capitalisation Issue

An interim dividend for 2008 of 0.75p was paid on 23 January 2009 (2007 interimdividend: 0.65p paid on 25 January 2008). The directors recommend payment of afinal dividend for 2008 of 0.40p per ordinary share of 10 pence each (the FinalDividend and Ordinary Share respectively). In addition to the Final Dividendthe directors propose to issue Ordinary Shares in lieu of the full finaldividend that would otherwise have been paid, by issuing to existingshareholders new Ordinary Shares (the Capitalisation Issue) with an aggregatevalue equal to 0.80p (the Capitalisation Amount) for each Ordinary Share heldby them.Subject to shareholder approval, the total dividend per Ordinary Share for 2008will be 1.15p per Ordinary Share. When added to the Capitalisation Amount, thisresults in an equivalent nominal amount of 1.95p per Ordinary Share (2007 totaldividend: 1.95p).The Final Dividend of 0.40p per Ordinary Share will be payable on 3 July 2009to shareholders registered at the close of business on 5 June 2009. TheCapitalisation Issue will take effect on 3 July 2009 to shareholders registeredat the close of business on 5 June 2009.The Capitalisation Issue is conditional on, amongst other things, shareholders'approval at the AGM of the company to be held on 10 June 2009 of the grantingof authority to the directors to allot and issue Ordinary Shares in connectionwith the Capitalisation Issue (the Capitalisation Issue Shares). TheCapitalisation Issue also requires shareholders to authorise the capitalisationof reserves to allow the Capitalisation Issue Shares to be issued.

Further details concerning the Capitalisation Issue (including certain general taxation considerations in respect of the Capitalisation Issue) are set out below and a summary and explanation of the resolution to be proposed at the Annual General Meeting in respect of the Capitalisation Issue is set out on page 23 of this Directors' Report.

The Capitalisation Issue

Reason for Dividend Policy and Capitalisation Issue

In light of current economic conditions, the board of directors feels that itis imperative that the group maximises its financial flexibility, includingconserving cash wherever possible, and accordingly considers that it would beprudent to issue the Capitalisation Issue Shares in lieu of a cash dividendequal to 0.80p per Ordinary Share. Also, the Capitalisation Issue enablesshareholders to build up their shareholding in the company without incurringdealing costs or stamp duty.

The board of directors reserves the right not to complete the Capitalisation Issue if it considers such action would not be in the best interests of the company or its shareholders.

Entitled Shareholders

Holders of Ordinary Shares on the register as at 5 June 2009 will be entitledto receive Capitalisation Issue Shares. Accordingly, the last date transferswill be accepted for registration to participate in the Capitalisation Issuewill be 5 June 2009 (the Capitalisation Issue Record Date).

Entitlement to Capitalisation Issue Shares

Each shareholder's entitlement to Capitalisation Issue Shares will becalculated by taking the Capitalisation Amount per Ordinary Share multiplied bythe number of Ordinary Shares held by that shareholder at the CapitalisationIssue Record Date and dividing that amount by the Capitalisation Issue Price.The Capitalisation Issue Price will be the average of the middle marketquotations for Ordinary Shares for the three dealing days starting on, andincluding, 3 June 2009, the day when the Ordinary Shares are first quoted``ex-dividend'', as derived from the Official List of the UK Listing Authority.The Capitalisation Issue Price, once fixed, will also be notified on thecompany's website at www.lap.co.uk.

Entitlements to Capitalisation Issue Shares will be rounded down to the nearest whole number of Ordinary Shares. No fraction of an Ordinary Share will be allotted.

The Capitalisation Issue Shares

The company will apply to the UK Listing Authority for the Capitalisation IssueShares to be admitted to the Official List and to the London Stock Exchange forthe Capitalisation Issue Shares to be admitted to trading on its market forlisted securities on 3 July 2009. Subject to the applications beingsuccessful, the Capitalisation Issue Shares are expected to be allotted on anddealings in Capitalisation Issue Shares are expected to begin on or around 3July 2009.The Capitalisation Issue Shares will be issued fully paid and will rank paripassu in all respects with the existing Ordinary Shares, including the right toreceive all dividends or other distributions declared, made or paid after thedate of their issue (but excluding for the avoidance of doubt the FinalDividend).

Subject to the Capitalisation Issue becoming effective:

(a) in respect of Ordinary Shares held in certificated form on theCapitalisation Issue Record Date, share certificates will be issued in respectof Capitalisation Issue Shares and posted to shareholders as soon as reasonablypracticable after the Capitalisation Issue becomes effective; and(b) in respect of Ordinary Shares held in uncertificated form (i.e. CREST) onthe Capitalisation Issue Record Date, prior to the commencement of dealings inthe Capitalisation Issue Shares on the London Stock Exchange, the appropriatestock account in CREST of the relevant shareholder will be credited with suchperson's entitlement to Capitalisation Issue Shares. The Capitalisation IssueShares are expected to be eligible to be traded through the CREST system witheffect from the date of commencement of dealings on the London Stock Exchange.

Dividends

The timing of the payment of the company's cash dividends will not be affected by the Capitalisation Issue. All mandates and other instructions in force relating to dividend payments will, unless and until revoked, remain in force.

Share Plans

The company operates an HMRC approved share incentive plan. Executive directorand staff participations may be adjusted to take account of the CapitalisationIssue in accordance with the rules of the scheme. Participants will becontacted separately and further information provided as to how theirentitlements might be affected.

UK tax treatment of the Capitalisation Issue

The directors have sought advice as to the expected tax treatment ofshareholders on receipt of Capitalisation Issue Shares. The followingstatements are intended only as a general guide to current UK tax law andpractice of Her Majesty's Revenue & Customs (HMRC). They are intended to applyonly to shareholders who are resident or ordinarily resident in the UK for UKtax purposes, who hold their Ordinary Shares as investments and who are thebeneficial owners of their Ordinary Shares. The statements may not apply tocertain classes of shareholders such as dealers in securities. Shareholders whoare in any doubt as to their tax position regarding the acquisition, ownershipand disposition of the Capitalisation Issue Shares or who are subject to tax ina jurisdiction other than the UK should consult their own tax advisers.The Capitalisation Issue should be treated as a reorganisation of the company'sshare capital for the purposes of taxation of chargeable gains. Accordingly, ashareholder should not be subject to a charge to tax on capital gains (CGT)upon receipt of Capitalisation Issue Shares. Instead, a shareholder's existingOrdinary Shares and the Capitalisation Issue Shares should, taken together, betreated for CGT purposes as the same asset, acquired at the time and for thesame price that the shareholder acquired their existing Ordinary Shares. Asubsequent sale or other disposal by a shareholder of some or all of theCapitalisation Issue Shares might give rise to a CGT liability for thatshareholder.The receipt of Capitalisation Issue Shares should not give rise to a charge totax on income for shareholders. The Capitalisation Issue should not be subjectto stamp duty or stamp duty reserve tax.

Overseas Shareholders

It is the responsibility of overseas shareholders to ensure that all relevantlaws and regulations in overseas jurisdictions applicable to them or theirshareholdings (for example, exchange control laws or regulations) are compliedwith and that they obtain any permissions or consents required to be obtained,or make any filings required to be made by them. Shareholders should consulttheir professional advisers if they are not sure whether any formalities mustbe observed in order to receive Capitalisation Issue Shares. It is theresponsibility of any person resident outside the UK wishing to receiveCapitalisation Issue Shares to be satisfied as to full observance of the lawsof the relevant territory, including obtaining any government or other consentswhich may be required and observing other formalities in such territories.The company's ordinary sharesheld in treasuryDuring 2008 the company issued 293,680 of its own shares from Treasury for anaverage price of 44.0p which increased the "issued share capital" by the samenumber of shares (see table below for details).At 31 December 2008 5,873,865 (2007: 6,167,545) shares were held in treasurywith a market value of £1,468,466 (2007:£5,273,250). At the Annual GeneralMeeting (AGM) in June 2008 members renewed the authority for the company topurchase up to 10 per cent of its issued ordinary shares. The company will beasking members to renew this authority at the next AGM in June 2009.Movements in Treasury Transaction Number ofshares during the year: price shares Treasury shares held at 1 6,167,545January 2008 November 2008 - Issue of Treasury shares in connection with the HMRC approved share 44.00p (293,680)incentive plan Treasury shares held at 31 5,873,865December 2008

Treasury shares are not included in issued share capital for the purposes of calculating earnings per share and net assets per share, and they do not qualify for dividends payable.

Investment properties

All of the freehold and long leasehold properties of the company and itssubsidiaries were revalued as at 31 December 2008 by external professionalfirms of chartered surveyors - Allsop LLP, London (98.31 per cent of theportfolio), and Atisreal Limited, Leeds (1.69 per cent). The valuations, which arereflected in the financial statements, amount to £218.5 million (2007: £248.1million).Taking account of prevailing market conditions, the valuation of groupproperties at 31 December 2008 resulted in a reduction of £33.1 million (2007:£25.2 million). This has been reflected in the income statement in accordancewith the requirements of IFRS. The impact of property revaluations on thecompany's joint ventures (Analytical Ventures Limited and Dragon RetailProperties Limited) and the associate company (Bisichi Mining plc) was areduction of £4.2 million (2007 £3.1 million). The proportion of thisrevaluation attributable to the Group (net of taxation) is reflected in theincome statement and the consolidated balance sheet.

Financial instruments

Note 18 to the financial statements sets out the risks in respect of financialinstruments. The board reviews and agrees overall treasury policies, delegatingappropriate authority for applying these policies to the Chief Executive andFinance Director. Financial instruments are used to manage the financial risksfacing the group - speculative transactions are prohibited. Treasury operationsare reported at each board meeting and are subject to weekly internalreporting. Hedging arrangements have been put in place in the company,subsidiaries and joint ventures in order to limit the exposure to interest raterisk.

Directors

M A Heller, J A Heller, R J Corry, H D Goldring, C A Parritt and M C Stevens were directors of the company for the whole of 2008.

R J Corry, H D Goldring, J A Heller and C A Parritt are retiring by rotation atthe Annual General Meeting in 2009 and offer themselves for re-election. Briefdetails of the directors offering themselves for re-election are as follows:

Robert Corry has been Finance Director since 1993. He has a contract of employment determinable at six months notice. Robert Corry is a Chartered Accountant and has worked in the retail and real estate sectors for much of his career.

Howard Goldring has been a director since 1992 and has a contract of servicedeterminable at three months notice. He is a member of the audit, remunerationand nomination committees. Howard Goldring is a Chartered Accountant and globalasset allocation specialist. He is executive chairman of Delmore AssetManagement Limited which specialises in the management of investment portfolios andthe provision of asset allocation advice for private clients, family officesand pension funds. The board has considered the re-appointment of HowardGoldring and recommends his re-election as a director. His specialised economicknowledge and broad business experience are of significant benefit to thebusiness.John Heller has been a director since 1998 and was appointed Chief Executive inSeptember 2001. He has a contract of employment determinable at twelve monthsnotice.Clive Parritt has been a director since January 2006 and has a contract ofservice determinable at three months notice and is the Senior IndependentDirector and chairman of the audit, remuneration and nomination committees.He is a Chartered Accountant with over 30 years experience in providingstrategic, financial and commercial advice to business. The board hasconsidered the re-appointment of Clive Parritt and recommends his re-electionas a director. His financial knowledge and broad commercial experience are ofsignificant 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, were as follows:

Beneficial Non-beneficial interests interests 31 Dec 08 1 Jan 08 31 Dec 08 1 Jan 08 M A Heller 4,871,757 4,871,757 18,520,634 18,520,634 R J Corry 359,110 342,065 - - H D Goldring 11,080 11,080 - - J A Heller 1,153,971 1,139,691 +13,520,634+13,520,634 C A Parritt 24,364 24,364 - - M C Stevens 492,267 475,222 ++777,534 ++483,854

†These non-beneficial holdings are duplicated with those of M A Heller.

++ The non-beneficial interest of M C Stevens arises by reason of his being adirector of London & Associated Securities Limited, a company which acts as atrustee.

No director had any material interest in any contract or agreement with the group during the year other than as shown in this annual report. (Please see note 21 and the remuneration report).

Between 1 January 2009 and the date of this report the beneficial interests ofa number of directors in the ordinary shares of the company have increased

tothe following totals:M A Heller 5,351,757R J Corry 631,403J A Heller 1,438,744M C Stevens 724,320

No other changes in these holdings have taken place between 31 December 2008 and the date of this report.

Details of options granted to directors to subscribe for new ordinary shares ofthe company are shown in the Remuneration Report under "Share option schemes"on page 28.

The beneficial holdings of directors above include their interests in the Share Incentive Pla

Substantial shareholdingsAt 31 December 2008 M A Heller and his family had an interest in 43.09 millionshares of the company, representing 56.4 per cent of the issued share capitalnet of treasury shares (2007: 43.08 million shares representing 56.6 per cent).Cavendish Asset Management Limited has an interest in 3,470,351 sharesrepresenting 4.54 per cent of the issued share capital of the company (2007:2,685,200 shares representing 3.5 per cent).

Between 1 January 2009 and the date of this report the following changes occurred:

The interest of M A Heller and his family increased to 43.86 million shares in the company, representing 56.42 per cent of the issued share capital net of Treasury shares.

Cavendish Asset Management Limited increased their interests to 4,739,228 shares representing 6.10 per cent of the issued share capital of the company net of Treasury shares.

The company is not aware of any other holdings exceeding 3 per cent of the issued share capital and no relevant changes have occurred since the year end.

Takeover Directive

The company has one class of share capital, namely ordinary shares. Eachordinary share carries one vote. All the ordinary shares rank pari passu. Thereare no securities issued in the company which carry special rights with regardto control of the company.The identity of all significant direct or indirect holders of securities in thecompany and the size and nature of their holdings is shown in "Substantialshareholdings" above.

The rights of the ordinary shares to which HMRC approved Share Incentive Plan relate, are exercisable by the trustees on behalf of the employees.

There are no restrictions on voting rights or on the transfer of ordinaryshares in the company save in respect of Treasury Shares. The rules governingthe appointment and replacement of directors, alteration of the articles ofassociation of the company and the powers of the company's directors accordwith usual English company law provisions. Each director is re-elected at leastevery three years. The company has requested authority from shareholders to buyback its own ordinary shares and there will be a resolution to renew theauthority at this year's AGM.The company is not party to any significant agreements that take effect, alteror 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 ordinaryshares that may result in restrictions on the transfer of its ordinary sharesor 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 ofinformation to auditorsThe directors in office on 31 December 2008 have confirmed that, as far as theyare aware, there is no relevant audit information of which the auditor isunaware. All of the directors have confirmed that they have taken all the stepsthat they ought to have taken as directors in order to make themselves aware ofany relevant audit information and to establish that it has been communicatedto the auditor.Corporate governanceThe company has adopted the Guidance for Smaller Quoted Companies (SQC's)published by the Quoted Companies Alliance (QCA). The QCA provides guidance toSQC's. The QCA's guidance covers the implementation of the Revised CombinedCode on Corporate Governance for SQC's and the paragraphs below set out how thecompany has applied this guidance during the year. The company has compliedwith the QCA's guidance throughout the year, except insofar that non-executivedirectors are not appointed for fixed terms (section A.7.2).Principles of corporate governanceThe board promotes good corporate governance in the areas of accountability andrisk management as a positive contribution to business prosperity. The boardendeavours to apply corporate governance principles in a sensible and pragmaticfashion having regard to the circumstances of the business. The key objectiveis to enhance and protect shareholder value.

Board structure During the year the board comprised four executive directors, being the chairman, chief executive, finance director and company secretary, and two non-executive directors. Their details appear on page 21. The board is responsible to shareholders for the proper management of the group.

A directors' responsibility statement in respect of the accounts is set out onpage 32. The non-executive directors have a particular responsibility to ensurethat the strategies proposed by the executive directors are fully considered.To enable the board to discharge its duties, all directors have full and timelyaccess to all relevant information and there is a procedure for all directors,in furtherance of their duties, to take independent professional advice, ifnecessary, at the expense of the group. The board has a formal schedule ofmatters reserved to it and normally has eleven regular meetings scheduled eachyear. Additional meetings are held for special business as 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 the non-executive directors and the executive chairman. The committee is responsible for proposing candidates for appointment to the board, having regard to the balance and structure of the board. In appropriate cases recruitment consultants are used to assist the process. All directors are subject to re-election at least every three years.

• The remuneration committee is responsible for making recommendations to theboard on the company's framework of executive remuneration and its cost. Thecommittee determines the contract terms, remuneration and other benefits foreach of the executive directors, including performance related bonus schemes,pension rights and compensation payments. The board itself determines theremuneration of the non-executive directors. The committee comprises thenon-executive directors and it is chaired by C A Parritt. The executivechairman is normally invited to attend. The directors' remuneration report isset out on pages 27 to 29.• The audit committee comprises the non-executive directors and is chaired by CA Parritt. The audit committee report is set out on page 30. The auditcommittee comprises the non-executive directors and is chaired by C A Parritt.The audit committee report is set out on page 30.

Board and board committee meetings in 2008

The number of regular meetings during the year and attendance was as follows: Meetings Meetings held attended R J Corry Board 11 11 Audit committee 2 2 H D Board 11 10 Goldring Audit committee 2 2 Nomination 1 1 committee 1 1 Remuneration committee M A Board 11 11 Heller Nomination 1 1 committee 1 1 Remuneration committee J A Board 11 10 Heller Audit committee 2 2 C A Board 11 11 Parritt Audit committee 2 2 Nomination 1 1 committee 1 1 Remuneration committee M C Board 11 10 Stevens Audit committee 2 2 Performance evaluation - board,board committees and directorsThe performance of the board as a whole and of its committees and thenon-executive directors is assessed by the chairman and the chief executive andis discussed with the senior independent director. Their recommendations arediscussed at the nomination committee prior to proposals for re-election beingrecommended to the board. The performance of executive directors is discussedand assessed by the remuneration committee. The senior independent directormeets regularly with the chairman, executive and non-executive directorsindividually outside of formal meetings. The directors will take outside advicein reviewing performance but have not found this to be necessary to date.Independent directorsThe senior independent non-executive director is C A Parritt. The otherindependent non-executive director is H D Goldring. Delmore Asset ManagementLimited (Delmore) is a company in which H D Goldring is a majority shareholderand director. Delmore provides consultancy services to the company on a feebasis. H D Goldring's association with Delmore and the length of his service onthe board mean that the criteria for independence set out in the Combined Codeof Corporate Governance are not met.

However the board considers that the independence of H D Goldring is not impaired either because he has served on the board for more than nine years or because of his association with Delmore. The board therefore regards H D Goldring as being independent.

The independent directors regularly meet prior to or after board meetings to discuss corporate governance and other issues concerning the group.

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.

Internal controlThe directors are responsible for the group's system of internal control andfor reviewing its effectiveness at least annually. The board has designed thegroup's system of internal control in order to provide the directors withreasonable assurance that assets are safeguarded, that transactions areauthorised and properly recorded and that material errors and irregularitiesare either prevented or would be detected within a timely period. However, nosystem of internal control can eliminate the risk of failure to achievebusiness objectives or provide absolute assurance against material misstatementor loss. The key elements of the control system in operation are:• The board meets regularly with a formal schedule of matters reserved for itsdecision and has put in place an organisational structure with clearly definedlines 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 assessmentprocess to identify and quantify the risks that face their departments andfunctions, and assess the adequacy of the prevention, monitoring andmodification practices in place for those risks. In addition, regular reportsabout significant risks and associated control and monitoring procedures aremade to the executive directors. The process adopted by the group accords withthe guidance contained in the document "Internal Control Guidance for Directorson the Combined Code" issued by the Institute of Chartered Accountants inEngland and Wales. The audit committee receives reports from external auditorsand from executive directors of the group. During the period, the auditcommittee has reviewed the effectiveness of the system of internal control asdescribed above. The board receives periodic reports from all committees.There are no internal control issues to report in the annual report andfinancial statements for the year ended 31 December 2008 and up to the date ofapproval of the report and financial statements the board has not been requiredto deal with any related material internal control issues. The directorsconfirm that the board has reviewed the effectiveness of the system of internalcontrol as described during the period.Communication with shareholdersCommunications with shareholders are given high priority. Extensive informationabout the group and its activities is provided in the Annual Report . Thecompany's website www.lap.co.uk is also updated with all announcements andreports promptly when they are issued. There is a regular dialogue with thecompany's stockbroker and institutional investors. Enquiries from individualson matters relating to their shareholdings and the business of the group aredealt with informatively and promptly.

The company's website is under continuous development to enable better communication with existing and potential new shareholders.

Payments tosuppliersThe company and the group agree the terms of contracts when orders are placed.It is group policy that payments to suppliers are made in accordance with thoseterms, provided that suppliers also comply with all relevant terms andconditions. Trade creditors outstanding at the year end represent 17.3 daysannual trade purchases (2007: 10.0 days).

Donations

No political donations were made during the year (2007: £Nil). Donations for charitable purposes amounted to £250 (2007: £650).

Going concernThe group's business activities, together with the factors likely to affect itsfuture development are set out in the Chairman's Statement, Chief Executive'sReport and Finance Director's Report on the preceding pages 2 to 19. Inaddition Note 18 to the financial statements includes the group's treasurypolicy, interest rate risk, liquidity risk and hedging profile.The group has considerable financial resources together with long term leaseswith the majority of its tenants. The directors believe the group is wellplaced to successfully manage its business risks through the current uncertaineconomic outlook.

After making enquiries and forecasts the directors confirm that they have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the going concern basis has been adopted in the preparation of the financial statements.

Annual General Meeting

The Annual General Meeting will be held at the RAC Club, 89 Pall Mall, LondonSW1Y 5HS on Wednesday 10 June 2009 at 10.30 a.m. Items 1 to 10 will be proposedas ordinary resolutions. More than 50 per cent of shareholders' votes must bein favour for these resolutions to be passed. Items 11 and 12 will be proposedas special resolutions. At least 75 per cent of shareholders' votes must be infavour for these resolutions to be passed. The directors consider that theCapitalisation Issue and all of the resolutions to be put to the meeting are inthe best interests of the company and its shareholders as a whole andaccordingly the board unanimously recommends that shareholders vote in favourof all of the resolutions, as the directors intend to do in respect of theirown beneficial holdings of Ordinary Shares. Please note that the followingparagraphs are only summaries of certain of the resolutions to be proposed atthe Annual General Meeting and not the full text of the resolutions. You shouldtherefore read this section in conjunction with the full text of theresolutions contained in the notice of Annual General Meeting.

Ordinary Resolution

Resolution 10 - the Capitalisation Issue

In order to enable the directors to effect the Capitalisation Issue the following ordinary resolution will be proposed at the Annual General Meeting:(a) To give the directors the authority to issue new Ordinary Shares in lieu of paying cash dividendsof an amount equivalent to 0.8p per Ordinary Share

Paragraph (a) of Resolution 10 will grant the directors authority to capitalisesuch amount of the company's share premium account as the directors maydetermine up to £622,000 and to apply such sum in paying up the CapitalisationIssue Shares.

(b) To give the directors the authority to allot Ordinary Shares

Paragraph (b) of Resolution 10 will grant the directors the authority to allotauthorised but unissued Ordinary Shares in the share capital of the company. IfResolution 10 is passed and taking into account the existing authority to allottshares granted to the directors at the Annual General Meeting held on 5 June 2007,the maximum aggregate amount the directors are authorised to allot represents 40.69 per cent. of the total issued ordinary share capital of the company (excluding treasury shares) as at 16 April 2009 (being the latest practicabledate prior to the date of this Directors' Report). The authority given byparagraph (b) of Resolution 10 shall expire at the conclusion of the company'sAnnual General Meeting to be held in 2010 or, if earlier, 15 months from thedate of the Annual General Meeting at which Resolution 10 is passed.

The directors at present intend to use the authority conferred by paragraph (b) of Resolution 10 to allot the Capitalisation Issue Shares.

Further information relating to the proposed Capitalisation Issue is set out on pages 22 and 23 of this Directors' Report.

.

Special Resolutions

The following special resolutions will be proposed at the Annual General Meeting:

1. Resolution 11 - disapplication of pre-emption rights

Shares allotted for cash must normally first be offered to shareholders inproportion to their existing shareholdings. The directors will, at theforthcoming Annual General Meeting of the company (Resolution 11), seekauthority to allot shares for cash as if the pre-emption rights contained inSection 89(1) of the Companies Act 1985 did not apply up to a maximum of 5% ofthe company's issued share capital. The authority will expire at the earlier ofthe conclusion of the company's next Annual General Meeting and 15 months fromthe passing of Resolution 11.

2. Resolution 12 - purchase of own Ordinary Shares

The effect of Resolution 12 to be proposed at the Annual General Meeting wouldbe to give the company a general authority to purchase a maximum of 8,231,697of its own Ordinary Shares of 10 pence each (representing approximately 10 percent of the company's issued share capital). The minimum price (exclusive ofexpenses) which the company would be authorised to pay for each Ordinary Sharewould 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 foran ordinary share is an amount equal to the higher of (i) 105% of the averagemarket price for an ordinary share for the five business days preceding anysuch purchase and (ii) the higher of the last independent trade for an ordinaryshare and the highest current independent bid for an ordinary share as derivedfrom the trading venue where the purchase is carried out. The authorityconferred by Resolution 12 will expire at the conclusion of the 2010 AnnualGeneral Meeting or 15 months from the passing of the resolution, whichever isthe earlier.If granted, the authority would only be exercised if to do so would result inan increase in earnings per share or asset values per share and would be in thebest interests of shareholders generally. In exercising the authority topurchase ordinary shares, the directors may treat the shares that have beenbought back as either cancelled or held in treasury

(or a combination of both). The total number of options to subscribe for new ordinary shares in the company as at 31 December 2008 was 120,000 shares representing 0.157% of the company's issued share capital as at 31 December 2008. Such number of options to subscribe for new ordinary shares would represent approximately 0.175% of the reduced issued share capital of the company assuming full use of the authority to make market purchases sought under Resolution 12.

Other mattersBaker Tilly UK Audit LLP have expressed their willingness to continue in officeas auditors. A proposal will be

made at the Annual General Meeting for their reappointment.

By order of the boardM C Stevens, Secretary17 April 2009Carlton HouseSt James's SquareLondon SW1Y 4JHREMUNERATION REPORT

The remuneration committee is pleased to present its report for the year ended 31 December 2008.

The remuneration committee is a formally constituted committee of the board andis comprised entirely of independent non-executive directors. The members ofthe committee are C A Parritt (chairman) and H D Goldring.

Remuneration policy for executive directors and non-executive directors

The principal function of the remuneration committee is to determine, on behalfof the board, the remuneration and other benefits of the executive directorsand senior executives, including pensions, share options and service contracts.The company's policy is designed to attract, retain and motivate individuals ofa calibre who will ensure the successful leadership and management of thecompany. Remuneration packages are designed to reward the executive directorsand senior executives fairly for their contributions whilst remaining withinthe range of benefits offered by similar companies in the sector. Theemoluments of each executive director comprise basic salary, a bonus at thediscretion of the remuneration committee, provision of a car, premiums paid inrespect of individual defined-contribution pension arrangements, healthinsurance premium and share options. The remuneration of non-executivedirectors is determined by the board, and takes into account additionalremuneration for services outside the scope of the ordinary duties ofnon-executive directors. No pension costs are incurred on behalf ofnon-executive directors and they do not participate in the share optionschemes.

The board's policy is to grant share incentives to executive directors, managers and staff at appropriate times to provide them with an interest in the longer term development of the group.

Service and employment contracts

All executive directors have full-time contracts of employment with thecompany. Non-executive directors have contracts of service. No director has acontract of employment or contract of service with the company, its jointventure or associated companies with a fixed term which exceeds twelve months.All directors' contracts, as amended from time to time, have run from the dateof appointment. Details of the directors standing for re-election are providedunder `Directors' in the directors' report.

It is the policy of the committee to issue employment contracts to executive directors with normal commercial terms and without extended terms of notice which could give rise to extraordinary termination payments.

Summary of directors' terms

Date of contract Unexpired term Notice period Executive directors M A Heller 01-Jan-71 Continuous 6 months J A Heller 01-May-03 Continuous 12 months R J Corry 01-Sep-92 Continuous 6 months M C Stevens 14-Oct-85 Continuous 6 months Non-executive directors H D Goldring 01-Jul-92 Continuous 3 months C A Parritt 01-Jan-06 Continuous 3 months

The following information has been audited

Directors' Remuneration for the year ended 31 December 2008

Total Total before before Salary Bonus Bonus Pension Pension Pension Pension And in in Other contrib- contrib Total contrib contrib Total fees cash shares benefits utions utions 2008 utions utions 2007 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Executive directors M A Heller* 7 - 150 47 204 - 204 353 - 353 J A Heller 300 150 156 52 658 30 688 1,002 30 1,032 R J Corry 166 25 6 24 221 118 339 272 113 385 M C Stevens 110 - 6 20 136 67 203 133 128 261 583 175 318 143 1,219 215 1,434 1,760 271 2,031 Non-executive directors H D Goldring* 35 - - 3 38 - 38 35 - 35 C A Parritt 25 - - - 25 - 25 23 - 23 B J O'Connell - - - - - - - 26 - 26†60 - - 3 63 - 63 84 - 84 Total remuneration for directors' 643 175 318 146 1,282 215 1,497 1,844 271 2,115service during year

* See "Directors" below and Note 21 "Related party transactions". Other benefits include the provision of car, health and other insurance and subscriptions.

†B J O'Connell retired from the board on 31 October 2007.

Pension schemes and incentives

Three (2007: three) directors have benefits under money purchase pensionschemes. Contributions in 2008 were £215,000 (2007: £271,000) as set out in thetable above. Directors are not entitled to benefits under any bonus orincentive schemes apart from the share option and share incentive plan, detailsof which are set out below.Bonuses are awarded by the remuneration committee when merited. In assessingthe performance of the executive team and, in particular to determine whetherbonuses are merited the remuneration committee takes account of the overallperformance of the business. Specific areas addressed include: enhancement ofthe asset base by effective development; changes in rental income generated;quality and risk profile of the tenant base; voids; timely acquisitions anddisposals; security of funding arrangements; and overall teamwork. Bonuses wereawarded by the remuneration committee to 4 executive directors during 2008(2007: four).

Directors

Although M A Heller receives reduced remuneration in respect of his services tothe group, the group does supply office premises, property management, generalmanagement accounting and administration services for a number of companies inwhich M A Heller has an interest. The board estimates that the value of theseservices, if supplied to a third party, would have been £275,000 (2007: £275,000) for the year. Further details of these services are set out in Note 21"Related party transactions" to the financial statements.

H D Goldring's company, Delmore Asset Management Limited provides consultancy services to the group. This is dealt with in Note 21 to the financial statements.

Share option schemes

The company has two share option schemes:

1. The HMRC approved scheme (Approved Scheme) was set up in 1986 in accordancewith HMRC rules to gain HMRC approved status which gave the members certain taxadvantages. No director has any options outstanding under the Approved Scheme.

2. The non-HMRC approved scheme (Unapproved Scheme) was set up in 1998 and is not subject to HMRC rules for approval.

One executive director has options to subscribe for ordinary shares under the Unapproved Scheme as follows:

Number of share options Option Exercised Granted 31 Exercisable 1January December price 2008 In 2008 in 2008 2008 from to Unapproved Scheme: M C Stevens 25.66p 50,000 - - 50,000 8-Mar-02 7-Mar-09There are no performance criteria for the exercise of options under theApproved Scheme, as this was set up before such requirements were considered tobe necessary. The exercise of options under the Unapproved Scheme is subject tothe satisfaction of objective performance conditions specified by theremuneration committee, which conform to institutional shareholder guidelinesand best practice provisions. These performance conditions have been achieved.

M C Stevens exercised the 50,000 options above on 12 February 2009 when the mid-market price was 31.25p.

The bid market price of London & Associated Properties PLC ordinary shares at31 December 2008 was 25.0p (2007: 85.5p). During the year the share mid-marketprice ranged between 85.75p and 23.75p.

Share incentive plan

Following a recommendation of the remuneration committee the directors set up aHMRC approved share incentive plan (SIP) in May 2006. The purpose of the plan,which is open to all eligible LAP head office based executive directors andstaff is to enable them to acquire shares in the company to give them acontinuing stake in the group. The SIP comprises four types of share - (1) freeshares under which the company may award shares up to the value of £3,000 eachyear, (2) partnership shares, under which members may save up to £1,500 perannum to acquire shares, (3) matching shares through which the company mayaward 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 On 17 November 2008 (2007: 19 November) free shares of up to theannual maximum of £3,000 per member were awarded at 44.00p (2007: 96.25p)

pershare as follows: Number of members Number of shares Value of shares 2008 2007 2008 2007 2008 2007 £ £ Directors: R J Corry 1 1 6,818 3,117 3,000 3,000 J A Heller 1 1 6,818 3,117 3,000 3,000 M C Stevens 1 1 6,818 3,117 3,000 3,000 Staff 19 19 80,682 15,819 35,500 15,225 Total at 31 December 22 22 101,136 25,170 44,500 24,225

2. Partnership shares On 17 November 2008 (2007: 19 November) directors andstaff were invited to complete partnership share agreements and commence savingfor partnership shares over the period November 2008 to October 2009. At 31December 2008 three directors and fifteen staff had saved a total of £2,847towards the cost of partnership shares to be acquired in November 2009. Theshares will be acquired at the prevailing market price on the day ofacquisition. Partnership shares issued: acquired on 17 November 2008: Number of members Number of shares Value of shres 2008 2007 2008 2007 2008 2007 Directors: £ £ R J Corry 1 1 3,409 1,558 1,500 1,500 J A Heller 1 1 3,409 1,558 1,500 1,500 M C Stevens 1 1 3,409 1,558 1,500 1,500 Staff 19 19 53,955 23,526 23,740 22,650 Total at 31 December 22 22 64,182 28,200 28,240 27,1503. Matching shares The partnership share agreements for the year to 31 October2008 provide for two matching shares to be awarded free of charge for eachpartnership share acquired in November 2008. On 17 November 2008 128,364matching shares were allocated (2007: 56,417). Matching shares will usually beforfeited if a member leaves employment in the group within 5 years of theirgrant.Matching shares granted: Number of members Number of shares Value of shares 2008 2007 2008 2007 2008 2007 £ £ Directors: R J Corry 1 1 6,818 3,117 3,000 3,000 J A Heller 1 1 6,818 3,117 3,000 3,000 M C Stevens 1 1 6,818 3,117 3,000 3,000 Staff 19 19 107,910 47,066 47,480 45,301 Total at 31 December 22 22 128,364 56,417 56,480 54,3014. Dividend shares Dividends on shares acquired under the SIP will be utilisedto acquire additional shares. Accumulated dividends received on shares in theSIP to 31 December 2008 amounted to £6,833 (2007: £677).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 sharesand dividends acquired under the SIP will be held by the trustee untiltransferred to members in accordance with the rules of the SIP. (The trusteeacquired the Dividend Shares on 6 March 2009).The following information is unauditedThe graph illustrates the company's performance as compared with a broad equitymarket index over a five year period. Performance is measured by totalshareholder return. The directors have chosen the FTSE All Share - Total ReturnIndex as a suitable index for this comparison as it gives an indication ofperformance against a large spread of quoted companies.C A ParrittChairman - Remuneration Committee17 April 2009AUDIT COMMITTEE REPORT

The committee's terms of reference have been approved by the board and follow published guidelines, which are available on request from the company secretary.

At the year end the audit committee comprised the two non-executive directors - H D Goldring and C A Parritt, both Chartered Accountants.

The audit committee's prime tasks are to:

• review the scope of external audit, to receive regular reports from BakerTilly UK Audit LLP and to review the half-yearly and annual accounts beforethey are presented to the board, focusing in particular on accounting policiesand areas of management judgement and estimation;

• monitor the controls which are in force to ensure the integrity of the information reported to the shareholders;

• act as a forum for discussion of internal control issues and contribute to the board's review of the effectiveness of the group's internal control and risk management systems and processes;

• consider once a year the need for an internal audit function;

• advise the board on the appointment of external auditors, the rotation of theaudit partner every five years and on their remuneration for both audit andnon-audit work; discuss the nature and scope of their audit work and undertakea formal assessment of the auditors' independence each year, which includes:

i) a review of non-audit services provided to the group and related fees;

ii) discussion with the auditors of their written report detailing all relationships with the company and any other parties that could affect independence or the perception of independence;

iii) a review of the auditors' own procedures for ensuring the independence of the audit firm and partners and staff involved in the audit, including the regular rotation of the audit partner; and

iv) obtaining a written confirmation from the auditors that, in their professional judgement, they are independent.

Meetings

The committee meets at least twice prior to the publication of the annualresults and discusses and considers the half year results at a board meetingand approves them with a committee of the board prior to their release. Theaudit committee meetings are attended by the external audit partner, chiefexecutive, finance director and company secretary. Prior to monthly boardmeetings the members of the committee meet on an informal basis to discuss anyrelevant matters which may have arisen. Additional formal meetings may be heldas necessary.

During the past year the committee:

• met with the external auditors, and discussed their reports to the audit committee.

• approved the publication of annual and half year financial results.

• considered and approved the annual review of internal controls.

• decided that there was no current need for an internal audit function.

• agreed the independence of the auditors and approved their fees for both audit and non-audit services as set out in note 2 to the financial statements.

• the chairman of the audit committee had a separate meeting with the external audit partner.

External AuditorsBaker Tilly UK Audit LLP held office throughout the period under review. In theUnited Kingdom London & Associated Properties PLC provides extensiveadministration and accounting services to Bisichi Mining PLC, which has its ownaudit committee and employs PKF (UK) LLP, a separate and independent firm ofregistered auditors.C A ParrittChairman - Audit Committee17 April 2009INDEPENDENT AUDITOR'S REPORT

to the members of London & Associated Properties PLC

We have audited the group and parent company financial statements on pages 33 to 60. We have also audited the information in the Directors' Remuneration Report that is described as having been audited.

This report is made solely to the company's members, as a body, in accordancewith section 235 of the Companies Act 1985. Our audit work has been undertakenso that we might state to the company's members those matters we are requiredto state to them in an auditor's report and for no other purpose. To thefullest extent permitted by law, we do not accept or assume responsibility toanyone other than the company and the company's members as a body, for ouraudit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

The directors' responsibilities for preparing the Annual Report, and the groupfinancial statements in accordance with applicable law and InternationalFinancial Reporting Standards (IFRSs) as adopted by the European Union ("EU"),and for preparing the parent company financial statements and the Directors'Remuneration Report in accordance with applicable law and United KingdomAccounting Standards (United Kingdom Generally Accepted Accounting Practice)are set out in the Directors' Responsibility Statement.Our responsibility is to audit the financial statements and the part of theDirectors' Remuneration Report to be audited in accordance with relevant legaland regulatory requirements, and International Standards on Auditing (UK andIreland).We report to you our opinion as to whether the financial statements give a trueand fair view and whether the financial statements and the part of theDirectors' Remuneration Report to be audited have been properly prepared inaccordance with the Companies Act 1985 and whether, in addition, the groupfinancial statements have been properly prepared in accordance with Article 4of the IAS Regulation. We also report to you whether in our opinion theinformation given in the Directors' Report is consistent with the financialstatements. The information given in the Directors' Report includes thatspecific information presented in the Chairman's Statement, Chief Executive'sReport and the Finance Director's Report that is cross referenced from theBusiness Review section of the Directors' Report.

In addition we report to you if, in our opinion, the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and other transactions is not disclosed.

We review whether the Corporate Governance Statement reflects the company'scompliance with the nine provisions of the 2006 FRC Combined Code specified forour review by the Listing Rules of the Financial Services Authority, and wereport if it does not. We are not required to consider whether the board'sstatements on internal control cover all risks and controls, or form an opinionon the effectiveness of the group's corporate governance procedures or its riskand control procedures.We read other information contained in the Annual Report and consider whetherit is consistent with the audited financial statements. The other informationcomprises only the Directors' Report, the unaudited part of the Directors'Remuneration Report, the Chairman's Statement, the Chief Executive's Report,the Finance Director's Report and the Corporate Governance Statement. Weconsider the implications for our report if we become aware of any apparentmisstatements or material inconsistencies with the financial statements. Ourresponsibilities do not extend to any other information.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing(UK and Ireland) issued by the Auditing Practices Board. An audit includesexamination, on a test basis, of evidence relevant to the amounts anddisclosures in the financial statements and the part of the Directors'Remuneration Report to be audited. It also includes an assessment of thesignificant estimates and judgements made by the directors in the preparationof thefinancial statements, and of whether the accounting policies are appropriate tothe group's and company's circumstances, consistently applied and adequatelydisclosed.We planned and performed our audit so as to obtain all the information andexplanations which we considered necessary in order to provide us withsufficient evidence to give reasonable assurance that the financial statementsand the part of the Directors' Remuneration Report to be audited are free frommaterial misstatement, whether caused by fraud or other irregularity or error.In forming our opinion we also evaluated the overall adequacy of thepresentation of information in the financial statements and the part of theDirectors' Remuneration Report to be audited.

Opinion

In our opinion:

- the group financial statements give a true and fair view, in accordance withIFRSs as adopted by the European Union, of the state of the group's affairs asat 31 December 2008 and of its loss for the year then ended;

- the group financial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation;

- the parent company financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the parent company's affairs as at 31 December 2008;

- the parent company financial statements and the part of the Directors' Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985; and

- the information given in the Directors' Report is consistent with the financial statements.

Emphasis of matter

Without qualifying our opinion we draw attention to notes 18 and 26.8 to thefinancial statements concerning the fair values of the hedging arrangementsentered into by the group and the company. Differences exist between thedirectors'valuations and those of the counterparty to the hedging instruments.As indicated in the notes, considerable volatility exists in these valuationsas demonstrated by the marked reduction in the liabilities since the year endand it is not the group's or company's intention to crystallise the instruments.Baker Tilly UK Audit LLPRegistered AuditorChartered Accountants2 Bloomsbury StreetLondon WC1B 3ST20 April 2009

DIRECTORS' RESPONSIBILITY STATEMENT

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

UK Company law requires the directors to prepare Group and Company FinancialStatements for each financial year. Under that law the directors are requiredto prepare Group financial statements in accordance with InternationalFinancial Reporting Standards ("IFRS") as adopted by the EU and have elected toprepare the company financial statements in accordance with United KingdomGenerally Accepted Accounting Practice (United Kingdom Accounting Standards andapplicable law).The group financial statements are required by law and IFRS adopted by the EUto present fairly the financial position and performance of the group; theCompanies Act 1985 provides in relation to such financial statements thatreferences in the relevant part of that Act to financial statements giving atrue and fair view are references to their achieving a fair presentation.

The company financial statements are required by law to give a true and fair view of the state of affairs of the company.

In preparing each of the group and company financial statements, the directors are required to:

a. select suitable accounting policies and then apply them consistently;

b. make judgements and estimates that are reasonable and prudent;

c. for the group financial statements, state whether they have been prepared inaccordance with IFRSs adopted by the EU; and for the company financialstatements state whether applicable UK accounting standards have been followed,subject to any material departures disclosed and explained in the companyfinancial statements;

d. prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the company will continue in business.

The directors are responsible for keeping proper accounting records whichdisclose with reasonable accuracy at any time the financial position of thecompany and to enable them to ensure that the financial statements comply withthe requirements of the Companies Act 1985. They are also responsible forsafeguarding the assets of the group and hence for taking reasonable steps forthe prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The directors confirm, to the best of their knowledge:

(a) that the financial statements, which have been prepared in accordance withIFRSs as adopted by the EU, give a true and fair view of the assets,liabilities, financial position and profit or loss of the company and of thegroup taken as a whole; and(b) the management report included within the Directors' Report includes a fairreview of the development and performance of the business and the position ofthe company and the group taken as a whole, together with a description of theprincipal risks and uncertainties that they face.

valuers' certificates

To the Directors of London & Associated Properties PLC

In accordance with your instructions we have carried out a valuation of the freehold and leasehold property interests held as at 31 December 2008 by the company as detailed in our Valuation Report dated 27 January 2009.

Having regard to the foregoing, we are of the opinion that the open market value as at 31 December 2008 of these interests was:

£'000 Freehold 93,965 Leasehold 120,890 214,855

27 Soho Square, London W1D 3AY Allsop LLP

27 January 2009 Property Consultants

To the Directors of London & Associated Properties PLC

In accordance with your instructions we have carried out a valuation of the freehold property interests held as at 31 December 2008 by the company as detailed in our Valuation Report dated 11 February 2009.

Having regard to the foregoing, we are of the opinion that the open market value as at 31 December 2008 of these interests was:

£'000 Freehold 3,677

Capitol House, Russell Street, Atisreal Limited

Leeds LS1 5SP Chartered Surveyors and 11 February 2009 International Real Estate Consultants Consolidated income statementfor the year ended 31 December 2008 2008 2007 Notes £'000 £'000 Gross rental income Group and share of joint ventures 16,775

14,260

Less: joint ventures - share of rental (272) (1,228)income Revenue 1 16,503 13,032 Direct property expenses (3,137) (2,481) Overheads (4,408) (4,974) Property overheads 1 (7,545) (7,455) Net rental income 1 8,958 5,577

Listed investments held for trading 3 298

144 Costs of evaluation 6 - (339) Goodwill impairment 6 - (173) - (512) Profit on sale of investment properties 897

2,295

Net decrease on revaluation of investment (33,125) (25,208)properties

Net decrease in value of investments held (1,530)

(16)for trading Operating loss 1 (24,502) (17,720) Share of (loss)/profit of joint ventures 11 (588) 1,572after tax Share of profit/(loss) of associate after 12 172 (448)tax Loss before interest and taxation (24,918) (16,596) Interest rate derivatives 18 (21,063) - Finance income 5 681 1,583 Finance expenses 5 (11,966) (8,874) Loss before taxation (57,266) (23,887) Income tax 7 9,812 11,384 Loss for the yearattributable to the (47,454)

(12,503)

equity shareholders of the company

Basic loss per share 9 (62.30)p (16.40)p Diluted loss per share 9 (62.30)p (16.40)p

The revenue and operating result for the year is derived from continuing operations in the United Kingdom.

consolidated balance sheetat 31 December 2008 2008 2007 Notes £'000 £'000 Non-current assets Market value of properties attributable to 218,532 248,076group Present value of head leases 27,238 31,671 Property 10 245,770 279,747 Plant and equipment 10 917 881 Investments in joint ventures 11 1,793 1,881 Investments in associated company 12 6,567 6,401 Held to maturity investments 13 1,805 5 256,852 288,915 Current assets Trade and other receivables 14 3,974 7,214 Financial assets-investments held for 15 2,330 5,113trading Cash and cash equivalents 8,191 16,464 14,495 28,791 Total assets 271,347 317,706 Current liabilities Trade and other payables 16 (11,268) (12,988) Financial liabilities - borrowings 17 (7,277) (6,250) Current tax liabilities (2,417) (1,869) (20,962) (21,107) Non-current liabilities Financial liabilities-borrowings 17 (160,417) (162,866) Interest rate derivatives 18 (19,616) - Present value of head leases on properties (27,238) (31,671) Deferred tax 19 (2,808) (13,071) (210,079) (207,608) Total liabilities (231,041) (228,715) Net assets 40,306 88,991

Equity attributable to the equity

shareholders of the company Share capital 20 8,232 8,232 Share premium account 5,236 5,236 Translation reserve in associate (504)

(530)

Fair value reserve - interest rate - 1,001derivatives Capital redemption reserve 47 47 Retained earnings (excluding treasury 33,532 81,554shares) Treasury shares 20 (6,237) (6,549) Retained earnings 27,295 75,005 Total shareholders' equity 40,306 88,991 Net assets per share 9 52.73p 116.86p Diluted net assets per share 9 52.70p 116.73p

These financial statements were approved by the board of directors and authorised for issue on 17 April 2009 and signed on its behalf by:

M A Heller R J Corry

Director Director

Consolidated statement of changes in shareholders' equity

for the year ended 31 December 2008

Retained earnings Retained Earnings Translation Fair Capital Treasury excluding Share Share reserves value redemption treasury Total capital premium reserve* reserve shares shares equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Balance at 1 January 2007 8,232 5,236 (517) -

47 (6,533) 95,395 101,860

Fair value of interest - - - 1,388 - - 1,388derivatives Deferred taxation on - - - (387) - - - (387)interest derivative Currency translation in - - (13) - - - - (13)associate Net (losses)/gains - - (13) 1,001 - - - 988recognised directly in equity Loss for year - - - -

- - (12,503) (12,503)

Total recognised (expense)/ - - - -

- - (12,503) (12,503)income Equity share options in - - - - - - 99 99associate Acquisition of own shares - - - - - (278) - (278) Disposal of own shares - - - - - 262 - 262 Loss on disposal of own - - - - - - (27) (27)shares Dividend - - - - - - (1,410) (1,410)

Balance at 31 December 2007 8,232 5,236 (530) 1,001

47 (6,549) 81,554 88,991 Reclassification of fair - - - (1,001) - - 1,001 -value of interest derivatives Currency translation in - - 26 - - - - 26associate Net gains recognised - - 26 (1,001) - - 1,001 26directly in equity Loss for year - - - - - - (47,454) (47,454)

Total recognised (expense)/ - - - -

- - (47,454) (47,454)income Equity share options in - - - - - - 99 99associate Disposal of own shares - - - - - 312 - 312 Loss on disposal of own - - - - - - (183) (183)shares Dividend - - - - - - (1,485) (1,485)

Balance at 31 December 2008 8,232 5,236 (504) -

47 (6,237) 33,532 40,306

* Interest rate derivatives

All the above are attributable to the equity shareholders of the parent.

Consolidated cash flow statement

for the year ended 31 December 2008

2008 2007 £'000 £'000 Operating activities Loss before interest and taxation (24,918) (16,596) Depreciation 200 201 Goodwill impairment - 173 Costs of evaluation - 339 - 512

(Profit)/loss on disposal of non-current assets (2)

9

Profit on sale of investment properties (897)

(2,295)

Net decrease on revaluation of investment properties 33,125

25,208

Share of loss/(profit) of joint ventures and associate after 416 (1,124)tax

Net decrease in value of investments held for trading 1,530

16

Decrease/(increase) in net current assets 2,566

(1,966)

Cash generated from operations 12,020 3,965 Income tax repaid/(paid) 104 (3,420)

Cash inflows from operating activities 12,124

545 Investing activities

Investment in shares and loan stock in joint ventures (2,300)

-

Acquisition of subsidiary investments (net of cash acquired) - (11,097)

Costs on evaluation of subsidiary investments -

(339)

Property acquisitions and improvements (19,788) (22,455) Sale of properties 16,229 43,804 Purchase of office equipment and motor cars (294)

(104)

Sale of office equipment and motor cars 61

29 Interest received 681 1,916 Dividends received 131 3,343 Cash (outflows)/inflows from investing activities (5,280) 15,097 Financing activities Purchase of treasury shares - (278) Sale of treasury shares 129 235 Equity dividends paid (1,485) (1,410) Interest paid (12,210) (9,303) Repayment of short term loan from joint ventures (7)

(163)

Repayment of medium term bank loan (2,571)

(3,371)

Cash outflows from financing activities (16,144)

(14,290)

Net (decrease)/increase in cash and cash equivalents (9,300) 1,352

Cash and cash equivalents at beginning of year 10,214

8,862

Cash and cash equivalents at end of year 914

10,214

Cash and cash equivalentsFor the purpose of the cash flow statement, cash and cash equivalents comprisethe following balance sheet amounts: 2008 2007 £'000 £'000 Cash and cash equivalents (before bank overdrafts) 8,191 16,464 Bank overdrafts (7,277) (6,250) Cash and cash equivalents at end of year 914

10,214

£9.5million of cash deposits at 31 December 2007 was charged as security to the Prudential. This was released in 2008.

Group accounting policies

The following are the principal group accounting policies:

Basis of accounting

The group financial statements for the year ended 31 December 2008 are preparedin accordance with International Financial Reporting Standards (IFRS), asadopted by the European Union and with those parts of the Companies Act 1985applicable to companies reporting under IFRS.The company has elected to prepare the parent company's financial statements inaccordance with UK GAAP, as applied in accordance with the provisions of theCompanies Act 1985 and these are presented in note 26. The financial statementsare prepared under the historical cost convention, except for the revaluationof freehold and leasehold properties and financial assets held for trading andfair value of interest derivatives.

The group financial statements are presented in Pounds Sterling and all values are rounded to the nearest thousand pounds (£'000) except when otherwise stated.

The group financial statements have been prepared on a going concern basis. Further details of which are contained in the Directors' Report.

Key judgements and estimatesThe preparation of the financial statements requires management to makeassumptions and estimates that may affect the reported amounts of assets andliabilities and the reported income and expenses, further details of which areset out below. Although management believes that the assumptions and estimatesused are reasonable, the actual results may differ from those estimates.

International Accounting Standards (IAS/IFRS)

At the date of approval of these financial statements, the following new Standards and interpretations which have not been applied in these Financial statements, were in issue but not yet effective:

IAS 1 (amended) Presentation of financial statements

IAS 23 (amended ) Borrowing costs.

IAS 27 (revised) Consolidated and separate financial statements.

IAS 39 (amended) Eligible hedged items.

IFRS 1 (amended) Cost of investment in a subsidiary, jointly controlled entity or associate.

IFRS 2 (amended) Share-based payments - vesting conditions and cancellations.

IFRS 3 (revised) Business combinations.

IFRS 8 Operating segments.

IFRIC 15 Agreements for the construction of real estate.

IFRIC 17 Distributions of non-cash assets to owners.

The directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements of the Group.

Basis of consolidationThe group accounts incorporate the accounts of London & Associated PropertiesPLC and all of its subsidiary undertakings, together with the group's share ofthe results and net assets of its joint ventures and associate.

Subsidiaries

Subsidiaries are those entities controlled by the group. Control is assumedwhen the group has the power to govern the financial and operating policies ofan entity or business and to economically benefit from its activities.Subsidiaries acquired during the year are consolidated using the acquisitionmethod. Their results are incorporated from the date that control passes.

All intra group transactions, balances, income and expenses are eliminated on consolidation. Details of group subsidiary companies are set out in note 26.4.

Joint venturesInvestments in joint ventures, being those entities over whose activities thegroup has joint control, as established by contractual agreement, include theappropriate share of the results and net assets of those undertakings.

Associates

Undertakings in which the group has a participating interest of not less than20% of the voting capital and over which it has the power to exert significantinfluence are defined as associated undertakings. The financial statementsinclude the appropriate share of the results and reserves of thoseundertakings.

Goodwill

Goodwill arising on acquisition is recognised as an intangible asset andinitially measured at cost, being the excess of the cost of the acquired entityover the group's interest in the fair value of the assets and liabilitiesacquired. Goodwill is carried at cost less accumulated impairment losses.Goodwill arising from the difference in the calculation of deferred tax foraccounting purposes and fair value in negotiations is judged not to be an assetand is accordingly impaired on completion of the relevant acquisition.

Revenue

Rental incomeRental income arises from operating leases granted to tenants. An operatinglease is a lease other than a finance lease. A finance lease is one wherebysubstantially all the risks and rewards of ownership are passed to the lessee.Rental income is recognised in the group income statement on a straight-linebasis over the term of the lease. This includes the effect of lease incentivesto tenants, which are normally in the form of rent free periods or capitalcontributions in lieu of rent free periods. For income from property leased outunder a finance lease, a lease receivable asset is recognised in the balancesheet at an amount equal to the net investment in the lease, as defined in IAS17. Minimum lease payments receivable, again as defined in IAS 17, areapportioned between finance income and the reduction of the outstanding leasereceivable so as to produce a constant periodic rate of return on the remainingnet investment in the lease. Contingent rents, being the difference between therent currently receivable and the minimum lease payments, are recognised inproperty income in the periods in which they are receivable.

Reverse surrender premiums Payments received from tenants to surrender their lease obligations are recognised immediately in the income statement.

Dilapidations

Dilapidations monies received from tenants in respect of their lease obligations are recognised immediately in the income statement.

Other revenueRevenue in respect of listed investments held for trading represents investmentdividends received and profit or loss recognised on realisation. Dividends arerecognised in the income statement whenthe dividend is received.Property operating expensesProperty operating expenses are expensed as incurred and any property operatingexpenditure not recovered from tenants through service charges is charged tothe income statement.Employee benefitsShare based remunerationThe company operates a long-term incentive plan and two share option schemes.The fair value of the conditional awards on shares granted under the long- termincentive plan and the options granted under the share option scheme aredetermined at the date of grant. This fair value is then expensed on astraight-line basis over the vesting period, based on an estimate of the numberof shares that will eventually vest. At each reporting date, the fair value ofthe non-market based performance criteria of the long-term incentive plan isrecalculated and the expense is revised. In respect of the share option scheme,the fair value of options granted is calculated using a binomial method.

Pensions

The company operates a defined contribution pension scheme. The contributions payable to the scheme are expensed in the period to which they relate.

Financial instruments

Investments

Held to maturity investments are stated at amortised cost using the effective interest rate method.

Investments held for trading are included in current assets at fair value. Forlisted investments, fair value is the bid market listed value at the balancesheet date. Realised and unrealised gains or losses arising from changes infair value are included in the income statement of the period in which theyarise.

Trade and other receivables Trade and other receivables are recognised initially at fair value. A provision for impairment of trade receivables is made when there is evidence that the group will not be able to collect all amounts due.

Trade and other payables Trade and other payables are non interest bearing and are stated at their nominal value.

Bank loans and overdraftsBank loans and overdrafts are included as financial liabilities on the groupbalance sheet net of the unamortised discount and costs of issue. Interestpayable on those facilities is expensed as a finance cost in the period towhich it relates.Debenture loanThe debenture loan is included as a financial liability on the balance sheetnet of the unamortised costs on issue. The cost of issue is recognised in thegroup income statement over the life of the debenture. Interest payable todebenture holders is expensed in the period to which it relates.Finance lease liabilitiesFinance lease liabilities arise for those investment properties held under aleasehold interest and accounted for as investment property. The liability iscalculated as the present value of the minimum lease payments, reducing insubsequent reporting periods by the apportionment of payments to the lessor.Lease payments are allocated between the liability and finance charges so as toachieve a constant financing rate. Contingent rents payable, such as rentreviews or those related to rental income, are charged as an expense in theperiod in which they are incurred.Interest rate derivativesThe group uses derivative financial instruments to hedge the interest rate riskassociated with the financing of the group's business. No trading in suchfinancial instruments is undertaken. At each reporting date, these interestrate derivatives are recognised at their fair value to the business, being theNet Present Value of the difference between the hedged rate of interest and therate of interest for the remaining period of the hedge.Where a derivative is designated as a hedge of the variability of a highlyprobable forecast transaction i.e. an interest payment, the element of the gainor loss on the derivative that is an effective hedge is recognised directly inequity. When the forecast transaction subsequently results in the recognitionof a financial asset or a financial liability, the associated gains or lossesthat were recognised directly in equity are reclassified into the incomestatement in the same period or periods during which the asset acquired orliability assumed affects the income statement i.e. when interest income orexpense is recognised.The gain or loss arising from any adjustment to the fair value to the businesscalculation is recognised immediately in the group income statement when thecriteria set out in IAS 32 allowing the movements to be shown in equity havenot been met.Treasury sharesWhen the group's own equity instruments are repurchased, consideration paid isdeducted from equity as treasury shares until they are cancelled. When suchshares are subsequently sold or reissued, any consideration received isincluded in equity.Investment propertiesValuation

Investment properties are those that are held either to earn rental income orfor capital appreciation or both, including those that are undergoingredevelopment. They are reported on the group balance sheet at fair value,being the amount for which an investment property could be exchanged betweenknowledgeable and willing parties in an arm's length transaction. The valuationis undertaken by independent valuers who hold recognised and relevantprofessional qualifications and have recent experience in the locations andcategories of properties being valued. Surpluses or deficits resulting fromchanges in the fair value of investment property are reported in the groupincome statement in the period in which they arise.Capital expenditureInvestment properties are measured initially at cost, including relatedtransaction costs. Additions to capital expenditure, being costs of a capitalnature, directly attributable to the redevelopment or refurbishment of aninvestment property, up to the point of it being completed for its intendeduse, are capitalised in the carrying value of that property. The redevelopmentof an existing investment property will remain an investment property measuredat fair value and is not reclassified. Capitalised interest is calculated withreference to the actual rate payable on borrowings for development purposes, orfor that part of the development costs financed out of borrowings thecapitalised interest is calculated on the basis of the average rate of interestpaid on the relevant debt outstanding.

Disposal

The disposal of investment properties is accounted for on completion of contract. On disposal, any gain or loss is calculated as the difference between the net disposal proceeds and the valuation at the last year end plus subsequent capitalised expenditure in the period.

Depreciation and amortisationIn applying the fair value model to the measurement of investment properties,depreciation and amortisation are not provided in respect of investmentproperties.Plant and equipmentOther non-current assets, comprising motor vehicles and office equipment, aredepreciated at a rate of between 10% and 33% per annum which is calculated towrite off the cost, less estimated residual value of the assets, on a straightline basis over their expected useful lives.Income taxesThe charge for current taxation is based on the results for the year asadjusted for disallowed or non-assessable items. Tax payable upon realisationof revaluation gains recognised in prior periods is recorded as a current taxcharge with a release of the associated deferred tax. Deferred tax is the taxexpected to be payable or recoverable on differences between the carryingamounts of assets and liabilities in the financial statements and thecorresponding tax bases used in the tax computations, and is accounted forusing the balance sheet liability method. Deferred tax liabilities aregenerally recognised for all taxable temporary differences and deferred taxassets are recognised to the extent that it is probable that taxable profitswill be available against which deductible temporary differences can beutilised. In respect of the deferred tax on the revaluation surplus, this iscalculated on the basis of the chargeable gains that would crystallise on thesale of the investment portfolio as at the reporting date. The calculationtakes account of indexation on the historic cost of properties and anyavailable capital losses. Deferred tax is calculated at the tax rates that areexpected to apply in the period when the liability is settled or the asset isrealised. Deferred tax is charged or credited in the group income statement,except when it relates to items charged or credited directly to equity, inwhich case it is also dealt with in equity.Cash and cash equivalentsCash comprises cash in hand and on demand deposits, net of bank overdrafts.Cash equivalents comprise short-term, highly liquid investments that arereadily convertible to known amounts of cash and which are subject to aninsignificant risk of changes in value and original maturities of three monthsor less.1. Segmental analysisBusiness segments 2008 2007 Property Listed Total Property Listed Total investments investments £'000 £'000 £'000 £'000 £'000 £'000 Rental income 16,503 - 16,503 13,032 - 13,032 Property overheads (7,545) - (7,545) (7,455) - (7,455) Net rental income 8,958 - 8,958 5,577 - 5,577 Other income - 298 298 - 144 144 Profit on sale of 897 - 897 2,295 - 2,295investment properties Net decrease on (33,125) - (33,125) (25,208) - (25,208)revaluation of investment properties Net decrease on - (1,530) (1,530) - (16) (16)revaluation of investments held for trading Segment result (23,270) (1,232) (24,502) (17,336) 128 (17,208) Costs of evaluation - - - (339) - (339) Goodwill impairment - - - (173) - (173)

Operating (loss)/profit (23,270) (1,232) (24,502) (17,848) 128 (17,720)

Total assets (excluding 258,857 2,330 261,187 304,311 5,113 309,424investments in associate and joint ventures) Total liabilities (60,930) - (60,930) (57,730) - (57,730)(excluding borrowings and current tax) Borrowings (167,694) - (167,694) (169,116) - (169,116) Net assets 30,233 2,330 32,563 77,465 5,113 82,578 Current tax liabilities: (2,417) (1,869)non segmental Investments in joint 3,593 1,881ventures: non segmental (note 11) Investments in 6,567 6,401associate: non segmental (note 12) Net assets as per 40,306 88,991balance sheet Other segment items: Depreciation 200 - 200 201 - 201 Capital expenditure 19,208 - 19,208 121,952 - 121,952Rental income Dragon Group Property Analytical Total Retail Share 2007 Ventures 2008 Properties Total £'000 £'000 £'000 £'000 £'000 £'000 Rental income 16,503 341 203 17,047 16,775 14,260 Direct property expenses (3,137) (12) (26) (3,175) (3,156) (2,840) Overheads (4,408) (262) (48) (4,718) (4,563) (5,128) 8,958 67 129 9,154 9,056 6,292

Less: attributable to joint (98)

(715)ventures Net rental income 8,958 5,577Geographical segments

At net rental income level, the Group operates in the United Kingdom only. The directors consider it to be the only geographical segment of the business.

2. Loss before taxation 2008 2007 £'000 £'000

Loss before taxation is arrived at after charging/(crediting):

Staff costs (note 22) 2,829 3,620

Depreciation on tangible fixed assets - owned assets 200

201

Operating lease rentals - land and buildings 373

334

(Profit)/loss on disposal of motor vehicles and office equipment (2)

9

Amounts payable to the auditors in respect of both audit and

non-audit services Audit services:

Statutory - company and consolidation 82

78 - subsidiaries 65 47 Further assurance services 11 12

Services related to corporate finance -

55 Other services 8 28 166 220

Staff costs and depreciation of tangible fixed assets are included in overheads.

3. Listed investments held for trading

2008 2007 £'000 £'000 Investment sales 1,603 628 Dividends receivable 141 164 1,744 792 Cost of sales (1,421) (623) 323 169 Attributable overheads (25) (25) 298 1444. Directors' emoluments 2008 2007 £'000 £'000 Emoluments 1,282 1,844

Defined contribution pension scheme contributions 215

271 1,497 2,115Details of directors' emoluments and share options are set out in theremuneration report.5. Finance costs 2008 2007 £'000 £'000 Finance income 681 1,583 Finance expenses Interest on bank loans and overdrafts (9,575) (6,592) Interest on other loans (2,178) (3,138) Hedging 1,614 509

Interest on obligations under finance leases (1,989)

(798) Total borrowing costs (12,128) (10,019)

Amounts included in the cost of qualifying assets 162

1,145 (11,966) (8,874) (11,285) (7,291)

£162,000 interest payable (2007: £1,145,000) has been transferred to the costof investment properties (Note 10). The amount transferred represents the costof funds forming part of the group's borrowings which were used in financingmajor capital projects.6. Exceptional items 2008 2007 £'000 £'000 Costs of evaluation - 339 Goodwill impairment - 173 - 512The costs of evaluation represent fees incurred by the Company, prior to thedecision being taken that the company should acquire the 50% interest in theissued share capital of Analytical Properties Holdings Limited (AnalyticalGroup) not already owned by the Company. Goodwill impairment arose on theacquisition of the Analytical Group on 25 September 2007. This goodwill aroseprimarily as a result of recognising the deferred tax which would arise if theproperties within Analytical Group were realised at the fair valuation appliedon acquisition. This goodwill is immediately written off to the incomestatement. The company also acquired £1,829,000 of B loan stock of AnalyticalGroup at par value.7. Income tax 2008 2007 £'000 £'000 Current tax:

Corporation tax on loss of the period 299

1,700

Adjustments in respect of previous periods 152

21 Total current tax 451 1,721 Deferred tax

Origination and reversal of timing differences 2,269

711

Revaluation of investment properties (7,726)

(12,962)

Revaluation of investments held for trading -

(587)

Accelerated capital allowances 397

(267)

Fair value of interest derivatives (5,898)

-

Adjustments in respect of previous periods 695

- Total deferred tax (note 19) (10,263) (13,105) Tax on loss on ordinary activities (9,812)

(11,384)

Factors affecting tax charge for the year

The corporation tax assessed for the year is different from that at the standard rate of corporation tax in the United Kingdom of 28.5 per cent (2007: 30 per cent). The differences are explained below:

Loss on ordinary activities before taxation (57,266)

(23,887)

Taxation on ordinary activities at 28.5 per cent (2007: 30%) (16,321) (7,166) Effects of:

Expenses not deductible for tax purposes 8

30 Other differences 5,243 (3,166) Joint ventures and associate 119 (150) Deferred tax rate adjustment 292 (953)

Adjustment in respect of prior years 847

21 Tax credit for the period (9,812) (11,384)

The main component of other differences in the reconciliation relates to indexation allowance of £4.8 million.

Factors that may affect future tax charges:

Based on current capital expenditure plans, the group expects to continue to beable to claim capital allowances in excess of depreciation in future years, butat a slightly lower level than in the current year.Deferred tax provision has been made for gains on revaluing investmentproperties. At present it is not envisaged that any tax will become payable inthe foreseeable future.8. Dividend 2008 2007 Per £'000 Per £'000 share share Dividends paid during the year relating to the 1.95p 1,485 1.85p 1,410prior period Dividends to be paid: Interim dividend for 2008 paid on 23 January 0.75p 571 0.65p 4972009

Proposed equivalent final dividend for 2008 1.20p 933 1.30p 988 (0.4p in cash and 0.8p in ordinary shares)

1.95p 1,504 1.95p 1,485

The proposed final dividend will be payable on 3 July 2009 to shareholders registered at the close of business on 5 June 2009.

9. Losses per share and net assets per share

Losses per share have been calculated as follows: 2008

2007

Loss for the year for the purposes of basic and diluted losses (47,454) (12,503)per share (£'000)

Weighted average number of ordinary shares in issue for the 76,172 76,230 purpose of basic losses per share ('000)

Basic losses per share (62.30p) (16.40p)

Weighted average number of ordinary shares in issue for the 76,172 76,230 purpose of diluted losses per share ('000)

Fully diluted losses per share (62.30p)

(16.40p)

Weighted average number of shares in issue is calculated after excluding treasury shares of 5,873,865 (2007: 6,167,545).

On the basis that the Group has made a loss for the year, there is no dilutive effect of the outstanding options.

Net assets per share have been calculated as follows:

Shares Shares Net Net Net Net in in assets assets Assets Assets per per issue issue share share 2008 2007 2008 2007 2008 2007 £'000 £'000 `000 `000 Pence Pence Basic At 31 December 40,306 88,991 76,443 76,149 52.73 116.86 Dilution adjustments for shares subject to option agreements: Issue of outstanding share 40 40 120 120 options Diluted 40,346 89,031 76,563 76,269 52.70 116.73

10. Property and plant and equipment

Freehold Investment Total Office Properties equipment Leasehold and motor over 50 vehicles years £'000 £'000 £'000 £'000 Cost or valuation at 1 116,206 163,541 279,747 1,554January 2008 Additions 15,438 3,476 18,914 294 Disposals (15,333) - (15,333) (166) Decrease in present value - (4,433) (4,433) -of head leases Decrease on revaluation (21,039) (12,086) (33,125) - Cost or valuation at 31 95,272 150,498 245,770 1,682December 2008 Representing assets stated -at: Valuation 95,272 123,260 218,532 Present value of head - 27,238 27,238 -leases Cost - - - 1,682 95,272 150,498 245,770 1,682 Depreciation at 1 January - - - 6732008 Charge for the year - - - 200 Disposals - - - (108) Depreciation at 31 December - - - 7652008 Net book value at 1 January 116,206 163,541 279,747 8812008 Net book value at 31 95,272 150,498 245,770 917December 2008 Freehold Investment Total Office Properties equipment Leasehold and motor over 50 vehicles years £'000 £'000 £'000 £'000

Cost or valuation at 1 January 109,102 93,026 202,128

1,6332007 Additions 16,309 7,299 23,608 87 Additions through business 4,875 93,382 98,257 -combinations Present value of head leases - 25,771 25,771 -through business combination Disposals (4,835) (36,534) (41,369) (166) Decrease in present value of - (3,440) (3,440) -head leases Decrease on revaluation (9,245) (15,963) (25,208) - Cost or valuation at 31 116,206 163,541 279,747 1,554December 2007

Representing assets stated at: 116,206 131,870 248,076

- Valuation: Present value of head leases - 31,671 31,671 - Cost - - - 1,554 116,206 163,541 279,747 1,554

Depreciation at 1 January 2007 - - -

600 Charge for the year - - - 201 Disposals - - - (128) Depreciation at 31 December - - - 6732007 Net book value at 1 January 109,102 93,026 202,128 1,0332007

Net book value at 31 December 116,206 163,541 279,747

881

2007 The leasehold over fifty years and freehold properties, excluding the presentvalue of head leases, were valued as at 31 December 2008 by externalprofessional firms of chartered surveyors. The valuations were made at openmarket value. 2008 2007 £'000 £'000 Allsop LLP, Chartered Surveyors 214,855

243,205

Atisreal Limited, Chartered Surveyors 3,677 4,839 Directors' valuation - 32 218,532 248,076 Add: Present value of headleases 27,238 31,671 245,770 279,747

The historical cost of investment properties, including total capitalised interest of £6,051,000 (2007: £5,889,000) was as follows:

2008 2008 2007 2007 Freehold Leasehold Freehold Leasehold Over 50 Over 50 years years £'000 £'000 £'000 £'000 Cost at 1 January 94,957 127,975 77,402 46,623 Additions (including through 15,438 3,476 21,184 100,681business combination) Disposals (14,087) - (3,629) (19,329) Cost at 31 December 96,308 131,451 94,957 127,975

11. Investment in joint ventures

2008 2007 £'000 £'000 Group share of: Turnover 272 1,228 (Loss)/profit before tax (684) 346 Taxation 96 1,226 (Loss)/profit after tax (588) 1,572 Non-current assets 6,712 1,746 Current assets 1,874 1,578 Current liabilities (1,485) (75) Non-current liabilities (5,308) (1,368) Net assets 1,793 1,881

Analytical Ventures Limited (Analytical Ventures) - unlisted property investment company. During the year a new joint venture was set up with the Bank of Scotland. The company owns 50 per cent of the issued share capital and 50 per cent of the issued loan stock.

The remaining 50 per cent is owned by the Bank of Scotland. Analytical Venturesis incorporated and operates in England and Wales and has issued share capitalof 7,558,000 ordinary shares. Analytical Ventures is managed by a board ofdirectors with neither party having overall control.Dragon Retail Properties Limited (Dragon) - unlisted property trading andinvestment company. The company owns 50 per cent of the issued share capital ofDragon Retail Properties Limited. The remaining 50 per cent is owned by BisichiMining PLC. Dragon is incorporated and operates in England and Wales and hasissued share capital of 500,000 ordinary shares of £1 each (2007:500,000ordinary shares of £1 each). Dragon is managed by a board of directors withneither party having overall control.(2007: Analytical Properties Holdings Limited (Analytical) - unlisted propertyinvestment company. The company owned 50 per cent of the issued share capitaland 50 per cent of the issued 7.3 per cent loan stock of Analytical PropertiesHoldings Limited. The remaining 50 per cent was owned by the Bank of Scotland.Analytical is incorporated and operates in England and Wales and has issuedshare capital of 100 ordinary shares of £1 each (2006:7,558,000 ordinary sharesof £1 each). Analytical was managed by a board of directors with neither partyhaving overall control. On 25 September 2007 the Company acquired Analytical'sremaining 50 per cent issued share capital and has been treated as a whollyowned subsidiary from that date.)Shares in joint ventures: 2008 2007 £'000 £'000 At 1 January 1,881 15,263 Share of (loss)/profit after tax (588) 1,572 Dividend received - (3,234) Investment valuation 500 - Transferred to subsidiary undertaking - (11,720) (88) (13,882) At 31 December 1,793 1,881

12. Investments in associated company

2008 2007 £'000 £'000 Bisichi Mining PLC

- listed mining and property investment company

Group share of: Turnover 10,828 6,958 Profit/(loss) before tax 929 (191) Taxation (757) (257) Profit/(loss) after tax 172 (448) Non-current assets 9,573 9,937 Current assets 4,574 2,673 Current liabilities (5,929) (3,527) Non-current liabilities (1,651) (2,682) Net assets 6,567 6,401 2008 2007 £'000 £'000 Shares in associate: At 1 January 6,401 6,872 Share of profit/(loss) after tax 172 (448) Equity share options 99 99 Currency translation (26) (13) Dividend received (131) (109) 166 (471) At 31 December 6,567 6,401The company owns 42 per cent (2007: 42 per cent) of the issued share capital ofBisichi Mining PLC (Bisichi), a company registered in England and Wales.Bisichi has an issued share capital of 10,451,506 ordinary shares of 10p each,and its principal countries of operation are the United Kingdom (propertyinvestment) and South Africa (coal mining). Bisichi is an associatedundertaking by virtue that London & Associated Properties PLC has aparticipating interest. Bisichi has an independent board of directors whichcontrols its operating and financial policies.

The market (bid) value of this investment at 31 December 2008 was £6,087,000 (2007: £11,532,000).

13. Held to maturity investments

2008 Unlisted Loan 2007 Unlisted Loan Total Stock Shares Stock in Total Shares joint in joint ventures ventures £'000 £'000 £'000 £'000 £'000 £'000 Cost At 1 January 5 5 - 1,834 5 1,829 Transferring to subsidiary - - - (1,829) - (1,829)undertaking Loan stock 1,800 - 1,800 - - - At 31 December 1,805 5 1,800 5 5 -

14. Trade and other receivables

2008 2007 £'000 £'000 Trade receivables 966 1,533

Amounts due from associate and joint ventures 148

191

Interest rate swap - cash flow hedges - 1,447 Other receivables 474 2,335 Prepayments and accrued income 2,386 1,708 3,974 7,214

The directors consider that the carrying amount of trade and other receivables approximates to their fair value.

15. Investments held for trading

2008 2007 £'000 £'000 Market bid value of the listed investment 2,330 5,113portfolio Unrealised (deficit)/excess of market value (490) 1,812over cost Listed investment portfolio at cost 2,820

3,301

All investments are listed on the London Stock Exchange.

16. Trade and other payables

2008 2007 £'000 £'000 Trade payables 1,070 927 Amounts owed to joint ventures 1,454

1,437

Other taxation and social security costs 303

344 Other payables 1,124 2,329 Accruals and deferred income 7,317 7,951 11,268 12,988

The directors consider that the carrying amount of trade and other

17. Borrowings

Current borrowings - amounts falling due within one year

2008 2007 £'000 £'000 Bank overdrafts (unsecured) 7,277 6,250

Non-current borrowings - amounts falling due after more

than one year Term borrowings Debenture stocks: £5 million First Mortgage Debenture Stock 2013 at 11.3 per 5,000 5,000cent £1.7 million First Mortgage Debenture Stock 2016 at 8.67 1,700 1,700per cent £5 million First Mortgage Debenture Stock 2018 at 11.6 per 5,000 5,000cent £10 million First Mortgage Debenture Stock 2022 at 8.109 9,770 9,753per cent* 21,470 21,453 Term bank loans:

£90 million revolving credit facility repayable in 2011* 69,184 71,694

£70 million term bank loan repayable in 2014* 69,763 69,719 138,947 141,413 160,417 162,866

\* The £10 million debenture and bank loans are shown after deduction of outstanding amortised issue costs.

Interest payable on the term bank loans is variable being based upon the London inter bank offered rate (LIBOR) plus margin.

First Mortgage Debenture Stocks 2013, 2016, 2018 and 2022, the long term £90million bank revolving credit facility repayable in September 2011 and the longterm £70 million term bank loan repayable in November 2014 are secured onspecific freehold and leasehold properties which are included in the financialstatements at a value of £212.6 million.

The bank loans and debentures are secured by way of a first charge over the investment properties in the UK.

The Group's objectives when managing capital are:

- To safeguard the group's ability to continue as a going concern, so that it may provide returns for shareholders and benefits for other stakeholders; and

- To provide adequate returns to shareholders by ensuring returns are commensurate with the risk.

18. Financial instrumentsTreasury policyThe Group enters into derivative transactions such as interest rate swaps andforward exchange contracts in order to help manage the financial risks arisingfrom the Group's activities. The main risks arising from the Group's financingstructure are interest rate risk, liquidity risk and market price risk. Thepolicies for managing each of these risks and the principal effects of thesepolicies on the results are summarised below.

Interest rate risk

Treasury activities take place under procedures and policies approved andmonitored by the Board to minimise the financial risk faced by the Group. Thebank loans are secured by way of a first charge on certain fixed assets. Therates of interest vary based on LIBOR in the UK.

Sensitivity analysis

As all term debt has been covered by hedged derivatives it is not considered that there is any material sensitivity for the group to changes in interest rates.

Liquidity risk

The group's policy is to minimise refinancing risk by balancing its exposure tointerest risk and to refinancing risk. In effect the group seeks to borrow foras long as possible at the lowest acceptable cost. Efficient treasurymanagement and strict credit control minimise the costs and risks associatedwith this policy which ensures that funds are available to meet commitments asthey fall due. Cash and cash equivalents earn interest at rates based on LIBORin the UK. These facilities are considered adequate to meet the group'santicipated cash flow requirements for the foreseeable future.

The table below analyses the group's financial liabilities into maturity groupings and also provides

details of the liabilities that bear interest at fixed, floating andnon-interest bearing rates. Less 2-5 Over 5 2008 than years years Total 1 year £'000 £'000 £'000 £'000 Bank overdrafts (floating) 7,277 - - 7,277 Debentures (fixed) - 5,000 16,700 21,700 Bank loans (floating)* - 69,429 70,000 139,429 Trade and other payables 11,268 - - 11,268(non-interest) 18,545 74,429 86,700 179,674 Less 2-5 Over 5 2007 than years years Total 1 year £'000 £'000 £'000 £'000 Bank overdrafts (floating) 6,250 - - 6,250 Debentures (fixed) - - 21,700 21,700 Bank loans (floating)* - 72,000 70,000 142,000 Trade and other payables 12,988 - - 12,988(non-interest) 19,238 72,000 91,700 182,938

The group would normally expect that sufficient cash is generated in the operating cycle to meet the contractual cash flows as disclosed above through effective cash management.

*All the bank loans are fully hedged with appropriate interest derivatives. Details of all hedges are shown below.

Market price risk

The group is exposed to market price risk through interest rate and currency fluctuations.

Credit riskAt the balance sheet date there were no significant concentrations of creditrisk. The maximum exposure to credit risk is represented by the carrying amountof each financial asset in the balance sheet. The group only deposits surpluscash with well-established financial institutions of high quality creditstanding.

Borrowing facilities

At 31 December 2008 the Group was within its bank borrowing facilities and wasnot in breach of any of the covenants. Overdrafts are renewable annually. Termloan repayments are as set out below. Details of other financial liabilitiesare shown in notes 16 and 17.The group has undrawn facilities of £22,544,000 (2007:£21,000,000) as follows: 2008 2007 £'000 £'000 Overdrafts 1,973 3,000 Term facilities expiring in two to five years 20,571 18,000 22,544 21,000Hedge profilea) There is a hedge to cover part of the £90 million revolving credit facility,which currently covers the full £69 million drawn. It consists of a 20 yearswap for £35 million with a 7 year call option in favour of the bank, taken outin November 2007, at 4.76 per cent and a 20 year swap for £40 million with a 7year call option in favour of the bank, taken out in December 2007, at 4.685per cent.b) There is a hedge to cover the £70 million term bank loan drawn. It consistsof a 20 year swap for £70 million with a 7 year call option in favour of thebank, taken out in November 2007, at 4.76 per cent.At the year end the amount recognised was £14,146,000 deficit (2007:£1,001,000surplus) being the estimated financial effect of the fair value to the businessof these hedging instruments less the deferred tax thereon.The Directors have estimated the financial effect of the fair value to thebusiness of these hedging instruments. This has been calculated as the NetPresent Value of the difference between the 19 year interest rate, which was3.73 per cent at 31 December 2008 against the rate payable under the specifichedge. This has given a liability at 31 December 2008 of £19,616,000 as shownin the balance sheet. The banks own initial quotations at 31 December 2008 toclose each of the hedges were £28,010,000.Since the end of the year the long term 19 year has increased and at 7 April2009 it was 4.12 per cent. This rate would give a fair value of £11,623,000, adecrease in the liability of £7,993,000. The banks quote to close the hedges atthe same date would have been £21.4 million, a decrease of £6.6 million. It isnot the company's intention to crystallise the derivatives.Under IAS 39 the hedges are not deemed to be eligible for hedge accounting, asthe banks have an option to cancel the hedge in January 2015 even though thisis after the expiry of the term loans and the level of the hedges closelyequates to the amount of the loans outstanding.

Any movement in the value of the hedges has therefore to be charged directly to the Consolidated Income Statement.

Capital structure

The group sets the amount of capital in proportion to risk. It ensures that thecapital structure is commensurate to the economic conditions and riskcharacteristics to the underlying assets. In order to maintain or adjust thecapital structure, the group may adjust the capital structure, vary the amountof dividends paid to shareholders, return capital to shareholders, issue newshares or sell assets to reduce debt.

The group considers its capital to include share capital, share premium, capital redemption reserve, translation reserve and retained earnings, but excluding the fair value reserve and the interest rate derivatives.

Consistently with others in the industry, the group monitors its capital by itsdebt to equity ratio (gearing levels). This is calculated as the net debt(loans less cash and cash equivalents) as a percentage of the equity. During2008 this increased to 266.2 per cent (2007: 173.5 per cent) which wascalculated as follows: 2008 2007 £'000 £'000 Total debt 167,694 169,116 Less cash and cash equivalents (8,191) (16,464) Net debt 159,503 152,652 Total equity 59,922 87,990 266.2% 173.5%

The gearing increased primarily due to the fall in the asset values in the year. All the debt, apart from the overdrafts, is at fixed rates of interest as shown in notes 17 and 18. The group does not have any externally imposed capital requirements.

Financial assets

Financial assets are disclosed in notes 13, 14 and 15 and above.

The group's principal financial assets are bank balances and cash, trade andother receivables and investments. The group has no significant concentrationof credit risk as exposure is spread over a large number of counterparties andcustomers. The credit risk in liquid funds and derivative financial instrumentsis limited because the counterparties are banks with high credit ratingsassigned by international credit-rating agencies. The group's credit risk isprimarily attributable to its trade receivables. The amounts presented in thebalance sheet are net of allowances for doubtful receivables, estimated by thegroup's management based on prior experience and the current economicenvironment.

Financial assets maturity

Cash and cash equivalents all have a maturity of less than three months.

2008 2007 £'000 £'000 Cash at bank and in hand 8,191 16,464These funds are primarily invested in short term bank deposits maturing withinone year bearing interest at the bank's variable rates. (2007: £9.5 million ofthe cash was secured against the 2013, 2016 and 2018 First MortgageDebentures).

Financial liabilities maturity

Repayment of borrowingsBank loans and overdrafts: 2008 2007 £'000 £'000 Repayable on demand or within one year 7,277

6,250

Repayable between two and five years 69,184

71,694

Repayable after more than five years 69,763 69,719 146,224 147,663 Debentures:

Repayable between two and five years 5,000

-

Repayable in more than five years 16,470 21,453 167,694 169,116

Certain borrowing agreements contain financial and other conditions that if contravened by the group, could alter the repayment profile.

Group undrawn banking facilities

which expire within one year 1,973 3,000 which expire in two to five years 20,571 18,000 22,544 21,000 2008 2007 £'000 £'000 Fixed rate borrowings 21,700 21,700 Floating rate borrowings - Subject to interest rate swap 145,000 145,000 - Not hedged 1,706 3,250 168,406 169,950 Average fixed interest rate 9.69% 9.69% Weighted average swapped interest rate 5.59%

5.59%

Weighted average cost of debt on overdrafts, 6.10% 6.14%bank loans and debentures

Average period for which borrowing rate is fixed 10.5 years 11.5 years

Average period for which borrowing rate is 18.9 years 19.9 yearsswapped

The swapped interest rate have calls by the bank 5.9 years 6.9 years

The group's floating rate debt bears interest based on LIBOR for the term bank loans and Bank base rate for the overdrafts.

Total financial assets and liabilities

The group's financial assets and liabilities and their fair values are asfollows: 2008 Fair 2007 Fair Carrying Value Carrying value value value £'000 £'000 £'000 £'000 Cash and cash equivalents 8,191 8,191 16,464 16,464 Financial assets - 2,330 2,330 5,113 5,113

investments held for trading

Other assets 3,974 3,974 5,767 5,767 Derivative (liabilities)/ (19,616) (19,616) 1,447 1,447assets Bank overdrafts (7,277) (7,277) (6,250) (6,250) Bank loans (139,429) (138,947) (142,000) (141,413) Present value of head leases (27,238) (27,238) (31,671) (31,671)on properties Other liabilities (11,268) (11,268) (12,988) (12,988) Before debentures (190,333) (189,851) (164,118) (163,531)

Fair value of debenture stocks

Fair value of the Fair 2008 2007Group's debenture Book liabilities: value Fair value Fair Value value Adjustment adjustment £'000 £'000 £'000 £'000 Debenture stocks 21,700 29,279 (7,579) (4,126)

Tax at 28 per cent (2007: 30 per 2,122

1,238cent) Post tax fair value adjustment (5,457)

(2,888)

Post tax fair value adjustment - (9.91)p

(3.79)p

basic pence per share

There is no material difference in respect of other financial liabilities or any financial assets.

The fair values were calculated by the directors as at 31 December 2008 and reflect the replacement value of the financial instruments used to manage the Group's exposure to adverse rate movements.

The fair values of the debentures are based on the net present value at the relevant gilt interest rate of the future payments of interest on the debentures. The bank loans and overdrafts are at variable rates and there is no material difference between book values and fair values.

19. Deferred tax 2008 2007 £'000 £'000 Balance at 1 January 13,071 22,223 Deferred tax on acquisition of subsidiary - 3,566undertakings Transfer to profit and loss account (10,263) (13,105) Transfer to reserves - 387 Balance at 31 December 2,808 13,071 2008 2007 £'000 £'000

The deferred tax balance comprises the

following: Revaluation of investment properties 5,075

12,801

Accelerated capital allowances 1,852

1,306

Fair value of interest derivatives (5,493)

- Short-term timing differences 1,374 208 2,808 14,315 Loss relief - (1,244) Provision at end of period 2,808 13,071

The directors consider the temporary differences arising in connection with theinterests in associate and joint ventures are insignificant. There is no timelimit in respect of the group tax loss relief.20. Share capital Number of Number of 2008 2007 ordinary ordinary 10p shares 10p shares 2008 2007 £'000 £'000 Authorised: Ordinary 110,000,000 110,000,000 11,000 11,000shares of 10p each Allotted, issued and fully 82,316,972 82,316,972 8,232 8,232paid Less: held in Treasury (5,873,865) (6,167,545) (588) (617)(see below) "Issued share capital" for 76,443,107 76,149,427 7,644 7,615reporting purposes The company has one class of ordinary shares which carry no right to fixedincome.Treasury shares Number of ordinary 10p Cost/issue value shares Price. 2008 2007 2008 2007 excl. Date costs £'000 £'000 Shares held in Treasury at 6,167,545 6,088,355 6,549 6,5331 January Market purchases (Oct 07 - 25,000 25100.00p) Market purchases (Oct 07 - 49,030 51103.51p) Issued to meet directors Nov-08 107.25p (293,680) (244,840) (312) (262)and staff bonuses (Dec 07 - 107.25p) Market purchases (Dec 07 - 250,000 20280.00p) Shares held in Treasury at 5,873,865 6,167,545 6,237 6,54931 December Share Option Schemes

Employees' share option scheme (Approved scheme)

At 31 December 2008 the following options to subscribe for ordinary shares were outstanding, issued under the terms of the Employees' Share Option Scheme:

Number of shares Date of grant Option Price Normal Exercise Date 70,000 14 October 2003 39.5p 14 October 2006 to 13 October 2013

This share option scheme was approved by members in 1986, and has been approved by Her Majesty's Revenue and Customs (HMRC).

There are no performance criteria for the exercise of options under the Approved scheme, as this was set up before such requirements were considered to be necessary.

A summary of the shares allocated and options issued under the scheme up to 31December 2008 is as follows: Changes during the year At 1 Options Options Options At January lapsed 2008 Exercised granted 31 December 2008 Shares issued to date 2,337,604 - - - 2,337,604 Options granted which have not been 70,000 - - - 70,000exercised Shares allocated over which options 1,549,955 - - - 1,549,955have not been granted

Total shares allocated for issue to 3,957,559 - - - 3,957,559 employees under the scheme

Non-approved Executive Share Option Scheme (Unapproved scheme)

A share option scheme known as the "Non-approved Executive Share Option Scheme"which does not have HMRC approval was set up during 2000. At 31 December 2008the following options to subscribe for ordinary shares were outstanding, issuedunder the terms of the scheme:Number of shares Date of Grant Option Normal Exercise Date Price 50,000 8 March 1999 25.66p 8 March 2002 - 7 March 2009

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.

A summary of the shares allocated and options issued under the scheme up to 31December 2008 is as follows:Changes during year Changes during the year At 1 Options Options Options At January lapsed 2008 Exercised granted 31 December 2008 Shares issued to date 400,000 - - - 400,000 Options granted which have not 50,000 - - - 50,000been exercised Shares allocated over which 550,000 - - - 550,000

options have not been granted

Total shares allocated for issue 1,000,000 - - - 1,000,000 to employees under the scheme

On 12 February 2009 the 50,000 share options were exercised at the option price of 25.66 pence.

21. Related party transactions

Cost Amounts Owed Cash recharged to to (by) advanced to (by) related related party (by) related party party £'000 £'000 £'000 Related party: Analytical Ventures Limited Current Account 37 1 - Dragon Retail Properties Limited Current account (1) (24) - Loan account (80) (1,430) 7 Bisichi Mining PLC Current account 355 (i) 147 - Directors and key management M A Heller and J A Heller 8 (ii) - - H D Goldring (Delmore Asset (17) (iii) - -Management Limited) Totals at 31 December 2008 302 (1,306) 7 Totals at 31 December 2007 294 (1,247) 162

Nature of costs recharged - (i) Management fees (ii) Property management fees (iii) Portfolio management fee.

The related party companies above are the associate and joint ventures and are treated as non current asset investments - details are shown in Note 11 and 12.

Analytical Ventures Limited (joint venture)Analytical Ventures Limited (Analytical Ventures) is owned 50 per cent by thecompany and 50 per cent by the Bank of Scotland.Dragon Retail Properties Limited (joint venture)Dragon Retail Properties Limited (Dragon) is owned 50 per cent by the company,and 50 per cent by Bisichi Mining PLC.Dragon had surplus cash which was deposited equally with London & AssociatedProperties PLC and Bisichi Mining PLC.The company provides office premises, property management, general management,accounting and administration services for both joint ventures.Bisichi Mining PLC (associate)The company provides office premises, property management, general management,accounting and administration services for Bisichi Mining PLC and itssubsidiaries.

Directors

London & Associated Properties PLC provides office premises, propertymanagement, general management, accounting and administration services for anumber of private property companies in which M A Heller and J A Heller have aninterest. Under an agreement with M A Heller no charge is made for theseservices on the basis that he reduces by an equivalent amount the charge forhis services to London & Associated Properties PLC. The board estimates thatthe value of these services, if supplied to a third party, would have been £275,000 for the year (2007: £275,000).The companies for which services are provided are: Barmik Properties Limited,Cawgate Limited, Clerewell Limited, Cloathgate Limited, Ken-Crav InvestmentsLimited, London & South Yorkshire Securities Limited, Metroc Limited, PenrithRetail Limited, Shop.com Limited, South Yorkshire Property Trust Limited,Wasdon Investments Limited, Wasdon (Dover) Limited, and Wasdon (Leeds) Limited.

In addition the company received management fees of £40,000 (2007: £40,000) for work done for two charitable foundations,

the Michael & Morven Heller Charitable Foundation and the Simon Heller Charitable Trust.

Delmore Asset Management Limited (Delmore) is a company in which H D Goldringis a majority shareholder and director. Delmore provides consultancy servicesto the company on an invoiced fee basis.

M A Heller is a director of Bisichi Mining PLC, the associated company and received a salary of £75,000 (2007: £75,000) for services.

The directors are considered to be the only key management personnel and theirremunerations including employers national insurance for the year was £1,656,000 (2007: £2,346,000). All other disclosures required including interestin share options in respect of those directors are included within theremuneration report.

22. Employees

The average number of employees, including directors, of the group during the year involved in management and administration was 43 (2007: 48).

2008 2007 £'000 £'000

Staff costs during the year were as follows:

Salaries and other costs 2,113 2,773 Social security costs 280 376 Pension costs 416 471 2,829 3,62023. Capital Commitments 2008 2007 £'000 £'000 Commitments to capital expenditure contracted for at -

6,755

the year end

The group's share of capital commitments of joint ventures at the year end amounted to £Nil (2007: £Nil).

24. Commitments under operating leases

Operating leases

At 31 December 2008 the group has total of future minimum commitments under non-cancellable operating leases on land and buildings as follows:

2008 2007 £'000 £'000 Within one year 392 334 In the second to fifth years inclusive 1,566 1,336 After five years 325 612 2,283 2,282

Operating lease payments represent rentals payable by the group for its office premises.

The leases are for an average term of 7 years and rentals are fixed for anaverage of one year. Minimum lease Present value of minimum payments lease payments 2008 2007 2008 2007 £'000 £'000 £'000 £'000

Present value of head leases

on properties Accounts payable under finance leases: Within one year 1,874 1,847 1,874 1,847 In the second to fifth years 7,497 7,389 6,925 6,908inclusive After five years 236,019 233,762 18,439 22,916 245,390 242,998 27,238 31,671 Future finance charges on (218,152) (211,327) - -finance leases Present value of finance 27,238 31,671 27,238 31,671lease liabilities Finance lease liabilities are in respect of leased investment property. Manyleases provide for contingent rent in addition to the rents above, usually aproportion of rental income.

Finance lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.

The Group leases out its investment properties to tenants under operating leases. The future aggregate minimum rentals receivable under non-cancellable operating leases are as follows:

2008 2007 £'000 £'000 Within one year 12,842 10,691 In the second to fifth years inclusive 46,793 38,272 After five years 65,613 55,734 125,248 104,69725. Contingent Liabilities

There were no contingent liabilities at 31 December 2008 (2007: £Nil).

26. Company financial statements

Company balance sheets at 31 December 2008

Notes 2008 2007 £'000 £'000 Fixed assets Tangible assets 26(3) 98,101 103,151 Other investments: Associated company 26(4) 358 358 Subsidiaries and others 26(4) 46,400 44,490 26(4) 46,758 44,848 144,859 147,999 Current assets Debtors 26(5) 38,970 36,555 Investments 26(6) 2,330 5,113 Bank balances 5,849 12,334 47,149 54,002 Creditors Amounts falling due within one year 26(7) (39,387) (22,158) Net current assets 7,762 31,844 Total assets less current liabilities 152,621 179,843 Creditors Amounts falling due after more than one 26(8) (100,580) (93,147)year Provisions for liabilities and charges 26(9) - (1,337) Net assets 52,041 85,359 Capital and reserves Share capital 26(10) 8,232 8,232 Share premium account 26(11) 5,236 5,236 Capital redemption reserve 26(11) 47 47 Revaluation reserve 26(11) 10,549 31,968

Fair value reserve - interest rate 26(11) -

688derivative Treasury shares 26(10) (6,237) (6,549) Retained earnings 26(11) 34,214 45,737 Shareholders' funds 52,041 85,359

These financial statements were approved by the board of directors and authorised for issue on 17 April 2009 and signed on its behalf by:

M A Heller R J CorryDirector Director

26.1. Company accounting policies

The following are the main accounting policies of the company:

Basis of accountingThe financial statements have been prepared under the historical costconvention as modified to include the revaluation of freehold and leaseholdproperties and fair value adjustments in respect of current asset investmentsand interest rate hedges and in accordance with applicable accountingstandards. All accounting policies applied are consistent with those of priorperiods.Investment properties are accounted for in accordance with SSAP 19, "Accountingfor Investment Properties", which provides that these should not be subject toperiodic depreciation charges, but should be shown at open market value. Thisis contrary to the Companies Act 1985 which states that, subject to anyprovision for depreciation or diminution in value, fixed assets are normally tobe stated at purchase price or production cost. Current cost accounting or therevaluation of specific assets to market value, as determined at the date oftheir last valuation, is also permitted.The treatment of investment properties under the Companies Act 1985 does notgive a true and fair view as these assets are not held for consumption in thebusiness but as investments, the disposal of which would not materially affectany manufacturing or trading activities of the enterprise. In such a case it isthe current value of these investments, and changes in that current value,which are of prime importance. Consequently, for the proper appreciation of thefinancial position, the accounting treatment required by SSAP 19 is consideredappropriate for investment properties. Details of the current value andhistorical cost information for investment properties are set out in note 26(3).Depreciation or amortisation is only one of the many factors reflected inthe annual revaluation and the amount that might otherwise have been showncannot be separately identified or quantified.

The financial statements have been prepared on a going concern basis. Further details of which are contained in the Directors' report.

Revenue

Revenue comprises rental income, listed investment sales, dividends and other income. The profit or loss on disposal of properties is recognised on completion of sale.

Dividends receivable Dividends are credited to the profit and loss account when the dividend is received.

Tangible fixed assetsa) Investment propertiesAn external professional valuation of investment properties is carried outevery year. Properties professionally valued by Chartered Surveyors are on anexisting use open market value basis, in accordance with the PracticeStatements contained within the RICS valuation standards 2008 prepared by theRoyal Institution of Chartered Surveyors.

The cost of improvements includes attributable interest.

b) Other tangible fixed assetsOther tangible fixed assets are stated at historical cost. Depreciation isprovided on all other tangible fixed assets at rates calculated to write eachasset down to its estimated residual value evenly over its expected usefullife. The rates generally used are - office equipment - 10 to 33 per cent perannum, and motor cars - 20 per cent per annum, on a straight line basis.

Investments

Long term investments are described as participating interests and are classified as fixed assets. Short term investments are classified as current assets.

a) Investments held as fixed assets:These comprise investments in subsidiaries and investments in AnalyticalProperties Holdings Limited and Dragon Retail Properties Limited (unlistedjoint ventures), Bisichi Mining PLC (listed associate), and in unlistedcompanies which are all held for the long term. Provision is made for anyimpairment in the value of fixed asset investments. Analytical PropertiesHoldings Limited's remaining 50 per cent issued share capital was acquired on25 September 2007, and is since treated as a wholly owned subsidiary.b) Investments held as current assets:Investments held for trading are included in current assets and are revalued tofair value. For listed investments, fair value is the bid market listed valueat the balance sheet date. Realised and unrealised gains or losses arising fromchanges in fair value are included in the income statement of the period inwhich they arise.Financial InstrumentsBank loans and overdraftsBank loans and overdrafts are included in creditors on the company balancesheet at the amounts drawn on the particular facilities. Interest payable onthose facilities is expensed as a finance cost in the period to which itrelates.Interest rate derivativesThe company uses derivative financial instruments to hedge the interest raterisk associated with the financing of the company's business. No trading insuch financial instruments is undertaken. At each reporting date, theseinterest rate derivatives are recognised at their fair value to the business,being the Net Present Values of the difference between the hedged rate ofinterest and the rate of interest for the remaining period of the hedge.Where a derivative is designated as a hedge of the variability of a highlyprobable forecast transaction i.e. an interest payment, the element of the gainor loss on the derivative that is an effective hedge is recognised directly inequity. When the forecast transaction subsequently results in the recognitionof a financial asset or a financial liability, the associated gains or lossesthat were recognised directly in equity are reclassified into the incomestatement in the same period or periods during which the asset acquired orliability assumed affects the income statement i.e. when interest income orexpense is recognised.

The gain or loss arising from any adjustment to the fair value to the business is recognised in the income statement.

Debtors

Debtors do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated recoverable amounts.

Creditors

Creditors are not interest bearing and are stated at their nominal value.

Joint venturesInvestments in joint ventures, being those entities over whose activities thegroup has joint control as established by contractual agreement, are includedat cost.Deferred taxationDeferred tax is recognised in respect of all timing differences that haveoriginated but not reversed at the balance sheet date where transactions orevents that result in an obligation to pay more tax in the future or a right topay less tax in the future have occurred at the balance sheet date. Timingdifferences are differences between the company's taxable profits and itsresults as stated in the financial statements. Deferred tax is measured at theaverage tax rates which are expected to apply in the periods in which timingdifferences are expected to reverse, based on tax rates and laws that have beenenacted or substantially enacted by the balance sheet date. Deferred tax ismeasured on a non-discounted basis.Leased assets and obligationsAll leases are "Operating Leases" and the annual rentals are charged to theprofit and loss account on a straight line basis over the lease term. Rent freeperiods or other incentives received for entering into a lease are accountedfor over the period of the lease so as to spread the benefit received over thelease term.Retirement benefitsFor defined contribution schemes the amount charged to the profit and lossaccount in respect of pension costs and other post retirement benefits is thecontributions payable for the year. Differences between contributions payablein the year and contributions actually paid are shown as either prepayments oraccruals at the balance sheet date.

26.2. (Loss)/profit for the financial year

The company's loss for the year was £11,212,000 (profit 2007: £1,334,000). In accordance with the exemption conferred by Section 230 of the Companies Act 1985, the company has not presented its own profit and loss account.

26.3. Tangible assets Investment Properties Total Freehold Long Office leasehold Equipment and motor vehicles £'000 £'000 £'000 £'000 Cost or valuation at 1 103,890 73,341 28,950 1,599January 2008 Additions 16,772 14,154 2,324 294 Disposals (996) (827) - (169) Decrease on revaluation (20,750) (16,136) (4,614) - Cost or valuation at 31 98,916 70,532 26,660 1,724December 2008 Representing assets stated at: Valuation 97,192 70,532 26,660 - Cost 1,724 - - 1,724 98,916 70,532 26,660 1,724 Depreciation at 1 January 739 - - 7392008 Charge for the year 188 - - 188 Disposals (112) - - (112) Depreciation at 31 December 815 - - 8152008 Net book value at 1 January 103,151 73,341 28,950 8602008 Net book value at 31 98,101 70,532 26,660 909December 2008 The freehold and long leasehold properties were valued as at 31 December 2008by external professional firms of chartered surveyors. The valuations were madeat open market value on the basis of existing use. The decrease in book valuewas transferred to revaluation reserve. 2008 2007 £'000 £'000 Allsop LLP, Chartered Surveyors 93,515

97,420

Atisreal Limited, Chartered Surveyors 3,677 4,839 Directors' valuation - 32 97,192 102,291

The historical cost of investment properties, including total capitalised interest of £1,222,000 (2007: £1,060,000) was as follows:

Freehold Long Leasehold £'000 £'000 Cost at 1 January 2008 54,530 15,756 Additions 14,154 2,324 Disposals (158) - Cost at 31 December 2008 68,526 18,080

Long leasehold properties are held on leases with an unexpired term of more than fifty years at the balance sheet date.

26.4. Other investments

Shares in Loan stock Shares Loan Shares in Unlisted Total in in stock subsidiary subsidiary in joint associate shares joint companies companies ventures ventures £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 2008 44,848 40,663 3,658 164 - 358 5 Additions 2,300 - - 500 1,800 - - Impairment (390) - - (390) - - - At 31 December 46,758 40,663 3,658 274 1,800 358 52008 Subsidiary companies

The company owns 100 per cent of the ordinary share capital of the following companies, all of which are registered in England and Wales:

Activity % Held by % Held by company group Analytical Investments Dormant 100 100 Limited

London & African Investments Dormant 100 100

London & Associated Dormant 100 100 Securities Limited

London & Associated Limited Dormant 100 100 LAP Ocean Holdings Limited Property investment 100 100

APL Ocean Limited Property investment - 100 LAP Ocean Limited Property investment - 100 Antiquarius Limited Property investment - 100

LAP Antiques Centres Limited Property letting - 100

Chenil House Limited Property investment - 100 Brixton Village Limited Property investment - 100 Market Row Limited Property investment - 100 Ski Investments Limited Property investment - 100 LAP Estates Limited Property investment - 100 Analytical Properties Property investment 100 100 Holdings Limited

Analytical Properties Limited Property investment - 100

Analytical Properties (St Property investment - 100 Helens)

Analytical Portfolios Limited Dormant - 100

In the opinion of the directors the value of the investment in subsidiaries is not less than the amount shown in these financial statements.

Details of the associate and joint ventures are set out in notes 11 and 12.

26.5. Debtors 2008 2007 £'000 £'000 Trade debtors 760 578 Amounts due from subsidiary companies 35,640

34,086

Amounts due from associate and joint ventures 148

191 Deferred tax asset 1,350 -

Interest rate swap - cash flow hedges -

956 Other debtors 92 40

Prepayments and accrued income 980

704 38,970 36,55526.6. Investments 2008 2007 £'000 £'000 Market value of the listed investment 2,330 5,113portfolio Unrealised (deficit)/excess of market value (490) 1,812over cost Listed investment portfolio at cost 2,820

3,301

All investments are listed on the London Stock Exchange.

26.7. Creditors: Amounts falling due within one year

2008 2007 £'000 £'000 Bank overdrafts (unsecured) 7,277 6,250 Amounts owed to subsidiary companies 22,817

7,582

Amounts owed to joint ventures 1,454 1,438 Corporation tax 1,824 1,586

Other taxation and social security costs 282

324 Other creditors 756 466 Accruals and deferred income 4,977 4,512 39,387 22,158

26.8. Creditors: Amounts falling due after more than one year

2008 2007 £'000 £'000 Interest rate derivatives 9,926 - Term Debenture stocks:

£5 million First Mortgage Debenture Stock 2013 5,000

5,000at 11.3 per cent

£1.7 million First Mortgage Debenture Stock 1,700

1,7002016 at 8.67 per cent

£5 million First Mortgage Debenture Stock 2018 5,000

5,000at 11.6 per cent

£10 million First Mortgage Debenture Stock 9,770

9,7532022 at 8.109 per cent* 21,470 21,453 Term bank loans: Repayable after more than two years* 69,184 71,694 100,580 93,147

\* The £10 million debenture and bank loans are shown after deduction of un-amortised issue costs.

Details of terms and security of overdrafts, loans and debentures are set outin note 17.Repayment of borrowings: Bank loans and overdrafts: Repayable within one year 7,277 6,250

Repayable between two and three years 69,184

-

Repayable between three and five years - 71,694 76,461 77,944 Debentures:

Repayable between three and five years 5,000

-

Repayable in more than five years 16,470 21,453 97,931 99,397Hedge profileThere is a hedge to cover part of the £90 million revolving credit facility,which currently covers the full £69 million drawn.It consists of a 20 year swap for £35 million with a 7 year call option infavour of the bank, taken out in November 2007, at 4.76 per cent and a 20 yearswap for £40 million with a 7 year call option in favour of the bank, taken outin December 2007, at 4.685 per cent.At the year end the amount recognised was £7,147,000 deficit (2007: £688,000surplus) being the estimated financial effect of the fair value to the businessof these hedging instruments less the deferred tax thereon.The Directors have estimated the financial effect of the fair value to thebusiness of these hedging instruments. This has been calculated as the NetPresent Value of the difference between the 19 year interest rate , which was3.73 per cent at 31 December 2008 against the rate payable under the specifichedge. This has given a liability at 31 December 2008 of £9,926,000 as shown inthe balance sheet. The banks own initial quotations at 31 December 2008 toclose each of the hedges were £14,182,000.Since the end of the year the long term 19 year interest rate has increased andat 7 April 2009 it was 4.12 per cent. This rate would give a fair value of £5,798,000, a decrease in the liability of £4,128,000. The banks quote to closethe hedges at the same date would have been £11.1 million, a decrease of £3.1million. It is not the company's intention to crystallise the derivatives.The hedges arenot deemed to be eligible for hedge accounting, as the banks havean option to cancel the hedge in January 2015, even though this is after theexpiry of the term loans and the level of the hedges closely equate to theamount of the loans outstanding. Any movement in the value of the hedges hastherefore to be charged directly to the Income Statement.

Liquidity

The table below analyses the company's financial liabilities into maturity groupings and also provides details of the liabilities that bear interest at fixed, floating and non-interest bearing rates.

Less than Over 2008 1 year 2-5 years 5 years Total £'000 £'000 £'000 £'000Bank overdrafts (floating) 7,277 - - 7,277Debentures (fixed) - 5,000 16,700 21,700Bank loans (floating)* - 69,429 - 69,429Trade and other payables (non-interest) 32,110 - - 32,110 39,387 74,429 16,700 130,516 Less than Over 2007 1 year 2-5 years 5 years Total £'000 £'000 £'000 £'000Bank overdrafts (floating) 6,250 - - 6,250Debentures (fixed) - - 21,700 21,700Bank loans (floating)* - 72,000 - 72,000Trade and other payables (non-interest) 15,908 - - 15,908 22,158 72,000 21,700 115,858

The company would normally expect that sufficient cash is generated in the operating cycle to meet the contractual cash flows as disclosed above through effective cash management. \* The bank loans are fully hedged interest derivatives. Details of the hedges are shown above.

Total financial assets and liabilitiesThe company’s financial assets and liabilities and their fair values are as follows: 2008 2007 Fair Carrying Fair Carrying Value value value value £'000 £'000 £'000 £'000Cash and cash equivalents 5,849 5,849 12,334 12,334Investments 2,330 2,330 5,113 5,113Derivative assets - - 956 956Other assets 38,970 38,970 35,599 35,599Bank overdrafts (7,277) (7,277) (6,250) (6,250)Bank loans (69,429) (69,184) (72,000) (71,694)Derivative liabilities (9,926) (9,926) - -Other liabilities (32,110) (32,110) (15,908) (15,908)Before debentures (71,593) (71,348) (40,156) (39,850)

Additional details of borrowings and financial instruments are set out in notes 17 and 18.

26.9. Provisions for liabilities and charges

2008 2007 £'000 £â€™000Deferred TaxationBalance at 1 January 1,337 2,053

Transfer to profit and loss account (2,687) (716) Balance at 31 December

(1,350) 1,337

No provision has been made for the approximate taxation liability at 28 per cent (2007: 28 per cent) of £649,000 (2007: £4,484,000) which would arise if the investment properties were sold at the stated valuation.

The deferred tax balance comprises the following:

Accelerated capital allowances 1,184 1,059 Fair value of interest derivatives (2,779) 268 Short-term timing differences 245 10 Provision at end of period (1,350) 1,337

26.10. Share capitalDetails of share capital, treasury shares and share options are set out in

note20.26.11. Reserves Share Capital Revaluation Fair Retained Premium redemption reserve value Account reserve Earnings reserve £'000 £'000 £'000 £'000 £'000 Balance at 1 January 5,236 47 31,968 688 45,7372008 Decrease on valuation - - (20,750) - -of investment properties Retained loss for year - - - - (11,212) Dividends paid in year - - - - (1,485) Loss on disposal of - - - - (183)Treasury Shares Reclassification of fair - - - (688) 688value of interest derivatives (net of deferred tax) Transfer of realised - - (669) - 669revaluation profit Balance at 31 December 5,236 47 10,549 - 34,2142008

26.12. Related party transactions

Details of related party transactions are given in note 21.

As provided under Financial Reporting Standard 8: Related Party Disclosures,the company has taken advantage of the exemption from disclosing transactionswith other group companies.26.13. Capital commitments 2008 2007 £'000 £'000

Commitments to capital expenditure contracted for at the - 4,693 year end

26.14. Commitments under operating leases

At 31 December 2008 the company had annual commitments under non-cancellable operating leases on land and buildings as follows:

2008 2007 £'000 £'000

Expiring in more than five years 392

334

In addition, the company has an annual commitment to pay ground rents on itsleasehold investment properties which amount to £326,000 (2007: £294,000), theleases on which expire in more than fifty years.

26.15. Contingent liabilities

There were no contingent liabilities at 31 December 2008 (2007: £Nil).

Five year financial summary

IFRS IFRS IFRS IFRS IFRS Restated 2008 2007 2006 2005 2004 £m £m £m £m £m Portfolio size

Investment properties-group^ 219 248 193 117 108

Investment properties-joint 3 3 91 140 127ventures Investment 12 15 17 15 15properties-associate 234 266 301 272 250 Portfolio activity £m £m £m £m £m Acquisitions 9.18 112.71 50.70 2.72 8.38 Disposals at book value (15.33) (41.37) (1.62) (6.70) (5.05) Capital Expenditure 9.73 9.15 5.13 3.34 2.16 3.58 80.49 54.21 (0.64) 5.49

Consolidated income statement £m £m £m £m

£m Rental income - Group and 16.77 14.26 11.84 12.39 12.96share of joint ventures Less: attributable to joint (0.27) (1.23) (3.95) (4.52) (5.20)venture partners Group rental income 16.50 13.03 7.89 7.87 7.76 (Loss)/profit before interest (24.91) (16.59) 21.76 21.48 21.98and tax (Loss)/profit before tax (57.27) (23.89) 18.32 17.89 18.62 Taxation (9.81) (11.38) 3.11 3.04 2.00 (Loss)/profit attributable to (47.45) (12.50) 15.22 14.85 16.62shareholders (Loss)/earnings per share - (62.30p) (16.40p) 20.00p 18.83p 20.34pbasic (Loss)/earnings per share - (62.30p) (16.40p) 19.97p 18.79p 20.23pfully diluted Dividend per share 1.95p* 1.95p 1.85p 1.725p 1.65p

Consolidated balance sheet £m £m £m £m

£m Shareholders funds 40.30 88.99 101.86 88.34 80.60 Net borrowings 157.17 147.54 86.12 44.14 34.33 Net gearing 390.01% 165.79% 84.55% 49.97% 42.59% Net assets per share - basic 52.73p 116.86p 133.62p 116.04p 98.82p - fully diluted 52.70p 116.73p 133.47p 115.88p 98.14p Consolidated cash flow £m £m £m £m £mstatement Net cash inflow from 12.02 3.97 3.44 3.88 2.60operating activities Capital investment and (6.09) 9.84 (26.86) 0.69 (5.36)financial investment

Notes: ^Excluding the present value of head leases

*Equivalent dividend includes new issue shares equal to 0.8p

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