London & Associated Properties Regulatory News (LAS)

FOR IMMEDIATE RELEASE

30 April 2013 LONDON & ASSOCIATED PROPERTIES PLC: RESULTS FOR 12 MONTHS TO 31 DECEMBER 2012

London & Associated Properties is a fully listed focused UK shopping centre andCentral London retail property specialist.

HIGHLIGHTS * Good progress achieved despite tough economic conditions

* Pre-tax profits of £7.6m against a loss of £18.6m in the comparable period

* Total value of directly owned property portfolio increased 6% to £205m

* EPRA based net assets rose 14.5% to £77.73m - equivalent to 92.5p per share

* Group rental income totalled £15.8m compared to £16.0m following temporary

loss of income at Windsor during redevelopment of former Boots unit * Portfolio voids continue at less than 2% by rental value

* Average unexpired lease term stands at 8.5 years against 8.1 years in 2011

* London & Associated Management Services continues to perform well reflecting market recognition of Company's asset management expertise * Head office move to generate £0.35m of annual saving "2012 was arguably the most difficult year for retailers in living memory. Anextremely challenging economy together with structural changes to shoppinghabits have led to a large number of retailer insolvencies and a surfeit ofvacant shops. We have successfully minimised the impact of those changes on ourportfolio reacting swiftly to dispose of a number of mature assets which wouldhave been adversely affected by this shift. We now own a limited number of coreshopping centre and other retail assets, all of which we believe will continueto trade successfully in their respective locations."

Sir Michael Heller, Chairman John Heller, Chief Executive

-more- Contact:

London & Associated Properties PLC Tel: 020 7415 5000John Heller, Chief Executive orRobert Corry, Finance Director

Baron Phillips Associates Tel: 020 7920 3161

Baron Phillips

London & Associated Properties PLCAnnual report & accounts 2012

We are a fully listed UK shopping centre and Central London retail propertyspecialist. We own and manage £244m of retail investments.

We look to create environments where major brands can thrive.

Financial calendar Annual General MeetingTuesday 4 June 2013 First interim management statementFriday 17 May 2013 Announcement of half year results to 30 June 2013Late August 2013 Second interim management statementMonday 18 November 2013 Announcement of annual results for 2013Late April 2014

Chairman and Chief Executive's statement

We have successfully minimised the impact of those changes on our portfolio,reacting swiftly to dispose of a number of mature assets which would have beenadversely affected by this shift In 2012, LAP has made a profit before tax under IFRS of £7.6 million comparedto a loss of £18.6 million in 2011. The principal reason for this improvementis the increase in the value of our Shopping Centre portfolio following thevaluation as at 31 December 2012. This is a particularly pleasing result giventhe pressure that most asset classes are experiencing in the current market,and reflects the successful performance of our larger assets. 2012 was arguably the most difficult year for retailers and retail focusedproperty companies in living memory. A combination of an extremely challengingeconomy together with ongoing structural change to shopping habits have led toa large number of retailer insolvencies and, consequently, a surfeit of vacantshops in Shopping Centres and High Streets around the country. We havesuccessfully minimised the impact of those changes on our portfolio, reactingswiftly to dispose of a number of mature assets which would have been adverselyaffected by this shift. As a result we now own a limited number of coreshopping centre and other retail assets, all of which we believe will continueto trade successfully in their respective locations. Faced with these challenging conditions, your Board is happy to report that ourgroup rental income for the year was £15.8 million compared to £ 16.0 millionin 2011, a small reduction primarily due to a temporary loss of income atWindsor while the former Boots space was being converted into three separateunits. At 31 December 2012 the total value of our directly owned portfolio ofshopping centres and other retail properties was £205 million compared to£194 million in 2011. Our diverse spread of retail tenants within the portfolio has provided someprotection from retailer failure. However, those tenants who have used someform of insolvency and who as a consequence had the opportunity to vacate theirshops have, in all but a couple of cases, remained within their units and takennew leases at the same rent as previously being paid. Where tenants did vacate,we have in almost all cases re-let their units with relative ease.Consequently, void levels in our portfolio by rental value have remained under2%, which we believe to be a strong performance against the current real estatebackdrop. Our average unexpired lease term is 8.5 years compared to 8.1 in2011. We manage our assets intensively - a policy that we have successfully followedfor more than thirty years. We exchanged contracts in December 2012 to sell for£9.5 million our property in Chesterfield which is let to Primark and CardFactory, as well as the mainly freehold element of the former Boots unit inWindsor which we developed and let to Superdry. Completion of the sale isdependent on freeholder consent from the Royal Borough of Windsor andMaidenhead. The consent is expected to be received shortly when we anticipatethat the sale will be completed. The proceeds of these two sales will be usedin part to reduce expensive long-term borrowings, the majority of which are dueto expire this year, with the balance being added to our cash reserves.

London & Associated Management Services (LAMS)

LAMS continues to perform well and this highlights market recognition of ourasset management expertise as we continue to be engaged by both lenders andadministrators to manage previously distressed assets on their behalf.

In August 2012 LAMS was appointed to asset manage a portfolio of four shoppingcentres in the north west of England. LAMS will receive a management fee forproviding these services. During 2012, LAMS successfully concluded the assetmanagement and subsequent disposal of a shopping centre and other assets inEaling, West London on behalf of NAMA, the Irish Governmental debt managementagency. In Ealing, our management initiatives involved the removal of a number ofsmaller tenants within the shopping centre and pre-letting the entire Centre toa major fashion retailer, a supermarket and a fast food restaurant. As a resultof these management initiatives, we wereable to generate a gross increase in value of 15% for our clients. We collectedfees of £0.7 million for this work.

We report on our major centres as follows:

King Edward Court, Windsor

King Edward Court remains fully let with the exception of a unit that weare holding vacant for a potential development. During the year, we experiencedthe failure of Game, whose unit has subsequently been re-let to a qualityFrench patisserie, La Tartine, at a rent over 20% higher than that passingpreviously. We also experienced the insolvency of Sony Centre, a multipleretailer, whose unit is currently under offer to a national retailer at a rentsignificantly higher than previously received. Last year, Travelodge also entered into a widely publicised creditors'voluntary arrangement. During this process, we were approached by their maincompetitor with an offer some 10% higher than the passing rent for the Windsorhotel, thus underscoring the rental value of this asset. In the event, thishotel was described as one of Travelodge's best performing locations, and wasretained by them on slightly improved lease terms. During 2012 there were several major rent reviews and we have achievedsignificant increases at Waitrose and Travelodge. King Edward Court is one ofthe few UK shopping centres to maintain or increase rental levels during thecurrent recession.

The car park performs at a high level and we have been able to achieve a priceincrease of 5%.

Orchard Square, Sheffield

Orchard Square, Sheffield, also remains fully let in spite of the difficulttrading conditions.

In March 2013, Republic, a tenant of one of our two prime units on Fargate,Sheffield's principal shopping street, went into administration and wasacquired by Sports Direct. We have received strong outside interest in thisprime unit should it become available to re-let. The Republic lease was alreadyon a rent geared to 80% of estimated rental value. Consequently, we expect toat least maintain our income levels at this unit. Where leases have become due for renewal, all affected tenants have remained inoccupation and we are in the process of negotiating new leases. Those that haverenewed already have been at rents ahead of the levels previously being paid.

Brixton Market

Our two indoor markets are let on 25 year leases from 1 April 2011 to InShopsLimited, a subsidiary of Groupe Geraud, who operate 200 markets across Europe.

LAP established Brixton Village as a quality retail and restaurant location,this development has continued under Groupe Geraud with our two markets nowrecognised as an exciting destination. There has been much press commentaryrecommending Brixton Market as an important tourist destination and it has justbeen awarded `Best Private Market in Britain' by the Communities Minister, DonFoster.

The market is fully let, and has currently over 100 retailers on the waitinglist for any available space.

In the period since we signed our lease to InShops, gross revenues haveincreased by almost 25%, notwithstanding that the markets were fully let at thetime. InShops believe that the outstanding demand will continue to drive rentsforward in the market and they expect cash flows to continue to increase. Wewill receive 50% of this increased rental income in line with our profit shareagreement with InShops.

The three properties detailed above continue to perform strongly and accountfor 83% of the LAP portfolio.

Kings Square, West Bromwich

In spite of the difficulties experienced in the the West Midlands economy,Kings Square has the same high level of occupancy as last year. SandwellCollege, which houses some 11,000 students, has opened to the rear of ourCentre and this has further increased footfall.

During 2012 and early 2013, both Bon Marche and Textiles Direct pursued aninsolvency process. Pleasingly, Bon Marche renewed their lease at the same rentas previously passing, and we know they trade well from this location. TextilesDirect continue to trade their unit here, and we are confident that this unitwill remain in occupation. Halifax

We own this property in a 50:50 joint venture with Lloyds Banking Group(formerly HBoS). Following a number of management initiatives carried out by usduring the year, the property remains fully let to national retailers. Weagreed with the local authority, who occupy the upper parts to remove itsfive-yearly break clauses in exchange for LAP refurbishing the lifts and atemporary rent concession. As a result, the Local Authority is now about toinvest in the property with a significant refurbishment of its office space.

This is the last joint venture that Uberior, Bank of Scotland's equity arm,entered into. The agreement comes to an end during the first half of 2013 andwill be liquidated. At this stage we expect to receive cash for our equitywhich will be added to our reserves.

The rest of our portfolio continues to trade well.

Banking

Our £44.2million Revolving Credit Facility with RBS expired in September 2012.We are in discussions with RBS to extend this term facility by three years andhope to report more fully when these negotiations are successfully concluded.

As previously reported, the relocation of our Head Office has also led to adecrease in ongoing expenses by c £0.35m per annum.

Dividends

The Board has taken the decision not to pay a final dividend. Thisis to retain cash in the business and adopt a cautious approach during thisperiod of economic uncertainty although we plan to resume dividends in the nearfuture.

We would like to thank all of the Directors, staff and advisors who havecontributed to our progress in what has been a demanding12 months to 31 December 2012.

Sir Michael Heller, John Heller,Chairman Chief Executive 18 April 2013 Finance Director's report

I am confident that the continued policy of managing the Group's cash resourcesprudently will benefit us as we continue to go through this period ofuncertainty

During 2012 management of our cash flow continued to be a priority for theGroup. Years of experience, prudent management and reasonably good fortune haveeach contributed to comparatively low void levels of around 2% and this hasenabled the group to continue to make good progress.

London & Associated Management Services (LAMS) manages property on behalf ofthird parties and this is producing a useful further revenue stream for theGroup. During the year LAMS was appointed by Lloyds Banking Group to managefour shopping centres, further enhancing its income stream.

Cash flow

During the year term debt reduced marginally to £136.6 million (2011: £136.8million). The Revolving Credit Facility of £44.2 million is being refinancedcurrently and I report on this more fully later in this report. We have concentrated on maximising income coupled with cost control and, as aresult we show an encouraging trading cash surplus, even after paying out £1.1million on the redevelopment of the three units in Windsor.

The utilisation of the cash over the year is shown in the chart below:

Income statement

Group operating profit before interest was £11.4 million as compared with £12.2million in the previous year. The result for the previous year was enhanced bysubstantial surrenders of £0.9 million as well as a£0.3 million profit on property sales. After eliminating these exceptionalitems the result in 2012 is a satisfactory improvement of £0.5 million inoperating profit before interest. Under IFRS rules the accounts are required to reflect the impact of variousnon-cash items. Appreciation in property valuations add £10.7 million to theresult (2011 a depreciation of £1.0 million), whilst the mark-to-marketvaluations of derivatives resulted in an increased liability of £3.1 million(2011: £17.2 million). After these items the Group declared a profit before taxof £7.6 million, a significant turnaround from the loss of £18.6 million in theprevious year. 2012 2011 £'000 £'000 Annual rental income from properties still held 15,189 15,420 Surrenders (23) 943 Income from properties sold in year - 16 Revenue as per income statement 15,166

16,379

As can be seen the continuing rental income has been maintained at a verysimilar level as in 2011. However the strength of the ongoing income isunderpinned by the fact that the `Weighted Unexpired Average Lease Term' is8.55 years across the Group compared to 8.1 years in 2011. Additionally the top50 tenants produce over 78% of the total income. An analysis of the tenantincome is given in note 23 to the accounts.

We continue to keep our overheads under review and we try to reduce themwherever we can. During the year we relocated our head office in London whichwill give annualised savings of approximately £0.35 million. The operatingprofit includes a one-off charge of £0.24 million for the costs incurred in themove. In 2007 we entered into interest rate swaps to hedge the risk of the group'sincome being severely impacted by higher interest rates. Effectively we havecontracted to pay a fixed rate of interest up to maturity. However we arerequired to calculate and disclose the liability which would arise if we wereto settle this liability at the respective balance sheet date. The net presentvalue (NPV) calculated in this way does not give a true picture of the positionof the business. Interest rates have fluctuated substantially in recent yearsand this generates large movements in the IFRS calculation of the Group's netassets.

Should interest rates rise, the deficit of £33.9 million, as shown on thebalance sheet, will reverse. The tax charge in the year is £0.4 million. Thisrelates entirely to deferred tax.

Balance sheet

The underlying assets of the Group on a management adjusted basis are shown inthe table below: 2012 Per IFRS Deferred Mark-to- Head EPRA balance tax market leases Adjusted sheet £'000 of £'000 net interest assets £'000 swaps £'000 £'000 Investment properties 234,069 (28,657) 205,412 Other fixed assets 2,173 2,173 Investments in associate and joint 8,608 8,608ventures Other assets 8,000 (2,664) 5,336 Other liabilities (75,106) 33,935 28,657 (12,514) Net debt (131,287) (131,287) Net assets 46,457 (2,664) 33,935 - 77,728 Adjusted NAV per share 92.5p 2011 Investment properties 222,409 (28,661) 193,748 Other fixed assets 2,482 2,482 Investments in associate and joint 9,050 9,050ventures Other assets 8,614 (2,841) 5,773 Other liabilities (68,964) 30,850 28,661 (9,453) Net debt (133,662) (133,662) Net assets 39,929 (2,841) 30,850 - 67,938 Adjusted NAV per share 80.9p Group net assets under IFRS were £46.5 million (2011: £39.9 million), but themore meaningful EPRA figure shows net assets of £77.7 million (2011: 67.9million), equivalent to 92.5p per share (2011: 80.9p), an increase of 14.3% on2011.

Accounting judgments and going concern

The most significant judgements made in preparing these accounts relate to thecarrying value of the properties, investments and interest rate hedges whichare stated at open market value. The Group uses external professional valuersto determine the values of our properties. Interest rate hedges (as explainedabove) are stated at net present value of the estimated extra costs which willarise to maturity if current market interest rates stayed the sameuntil maturity. The Directors exercise their commercial judgement when reviewing the Group'scash flow forecasts and the underlying assumptions on which the forecasts arebased. The Group's business activities, together with the factors likely toaffect its future development, are set out in the Chairman and ChiefExecutive's Report and in this Report. In addition the Directors consider thatnote 17 to the financial statements sets out the company's objectives, policiesand processes for managing its capital; its financial risk managementobjectives; details of its financial instruments and hedging activities; itsexposure to credit risk and liquidity risk. Negotiations are continuing in relation to the renewal of the £44.2 millionterm bank facility that originally expired in September 2012. While thesenegotiations are ongoing the existing facility was extended to 2 April 2013 anda further extension to 2 July 2013 has been agreed. The terms for a newfacility are being finalised and the process of documenting them is beingstarted. We will report more fully once the facility has been signed. With a quality property portfolio comprising a majority of long leasessupported by suitable financial arrangements, the Directors believe the companyis well placed to manage its business risks successfully, despite thecontinuing uncertain economic climate. The Directors therefore have areasonable expectation that the company has adequate resources to continue inoperational existence for the foreseeable future. Thus they continue to adoptthe going concern basis of accounting in preparing the annual financialstatements.

Dividends

To preserve cash within the Group while we see how the economy develops, theDirectors are not proposing a final dividend.

Our associated company Bisichi Mining PLC, in which we hold a 41.9% stake, hada strong year. The annual profit after taxation was £1.54 million. This figureis after a revaluation deficit under IFRS of £0.46 million. I am confident that the continued policy of managing the Group's cash resourcesprudently will benefit us as we continue to go through this period ofuncertainty. Robert Corry,Finance Director 18 April 2013 Directors and advisors Directors Executive Directors * Sir Michael Heller MA FCA(Chairman) John A Heller LLB MBA(Chief Executive) Robert J Corry BA FCA(Finance Director) Non-executive Directors † Howard D Goldring BSC (ECON) ACAHoward Goldring has been a member of the board since July 1992 and is a globalasset allocation specialist. He is Executive Chairman of Delmore AssetManagement Limited which specialises in the management of investment portfoliosfor private clients, charities, family trusts and pension funds. He also actsas an advisor providing high level asset allocation advice to family officesand pension schemes, including among others, Tesco Pension Investment Ltd. From1997-2003 he was consultant director on global asset allocation to LiverpoolVictoria Asset Management Limited. #† Clive A Parritt FCA CF FIIAClive A Parritt joined the board on 1 January 2006.He is a chartered accountant with over 30 years experience of providingstrategic, financial and commercial advice to businesses of all sizes. He isChairman of Baronsmead VCT 2 plc, DiGiCo Global Limited and BG Consulting GroupLimited as well as being a director of F&C US Smaller Companies plc. Clive wasPresident of the Institute of Chartered Accountants in England and Wales in2011-12. He is Chairman of the audit committee and as Senior IndependentDirector he chairs the Nomination and Remuneration Committees.

* Member of the nomination committee

# Senior independent director

† Member of the audit, remuneration and nomination committees

Secretary & registered office Heather A Curtis ACIS24 Bruton Place,London W1J 6NE Director of property Mike J Dignan FRICS Auditor Baker Tilly UK Audit LLP Principal bankers HSBC Bank PLCLloyds Banking Group PLCNational Westminster Bank PLCRoyal Bank of Scotland PLC Solicitors Olswang LLPPinsent Masons LLP Stockbroker Westhouse Securities Limited Registrars & transfer office Capita RegistrarsShareholder ServicesThe Registry34 Beckenham RoadBeckenhamKentBR3 4TU Telephone 0871 664 0300(Calls cost 10p per minute + network extras,lines are open Mon-Fri 8.30am to 5.30pm)or +44 208 639 3399 for overseas callers. Website: www.capitaregistrars.comEmail: ssd@capitaregistrars.com Company registration number341829 (England and Wales) Website www.lap.co.uk E-mail admin@lap.co.uk Directors' report

The directors submit their report and the audited accounts, for the year ended31 December 2012.

Activities The 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 Review

Review of the group's development and performance

The Chairman and Chief Executive's Statement and Finance Director's Report onthe preceding pages 4 to 14 provide a comprehensive review and assessment ofthe Group's activities during the year as well as its position at the year endand prospects for the forthcoming year.

Property activities

The Group is a long-term investor in property. It acquires retail properties,actively manages those assets to improve rental income and thus 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. Whilst income may be adversely affected by theinability of tenants to pay their rent, rent collection and tenant quality aremonitored carefully. Risk is also minimised by a diversified tenant base, whichshould limit the impact of the failure of any individual tenant.

• Cash flow - allowing for voids, acquisitions, development expenditure,disposals and the impact of operating costs and interest charges, the Groupaims to maintain a positive cash flow.

• Financing costs - the exposure of the Group to interest rate movements ismanaged by the use of swap arrangements (see note 17 on page 44 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 theaccounting policies note on page 34. • Property valuations - market sentiment and economic conditions have a directeffect on property valuations, which can vary significantly (upwards ordownwards) 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 activities

The 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 ofthe associate. However the principal activity of the associate is overseasmining investment (principally in South Africa). The investment is held togenerate income and capital growth over the longer term. The other listedinvestments are held as current assets to provide the liquidity needed tosupport the property activities while generating income and capital growth.

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

Corporate responsibility

Environment

The Group's principal UK activity is property investment, which involvesrenting premises 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 of the company's locations.

Employment

The Group's policy is to attract staff and motivate employees by offeringcompetitive terms of employment. The Group provides equal opportunities to allemployees and prospective employees including those who are disabled.

Performance indicators

Our 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 consider that the KeyPerformance Indicator of the Group is the Net Asset per Share value shown atthe foot of the Balance Sheet on page 31 and as discussed in the FinanceDirector's Report. Cash flow is shown on page 33.

Dividend Policy

The directors are not recommending payment of a dividend for 2012.An interimdividend for 2011 of 0.75p was paid on 20 January 2012.

The company's ordinary shares held in treasury

At 31 December 2012 1,538,398 (2011: 1,538,398) ordinary shares were held inTreasury with a market value of £276,042 (2011: £403,829). At the AnnualGeneral Meeting (AGM) in May 2012 members renewed the authority for the companyto purchase up to 10 per cent. of its issued ordinary shares. The company willbe asking members to renew this authority at the next AGM in June 2013. Movements in Treasury shares during the year Number of shares Treasury shares held at 1 January 2012 1,538,398 Treasury shares held at 31 December 2012 1,538,398

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

Subsequent to the year-end, 283,660 shares have been transferred from Treasuryin respect of shares issued in connection with an approved HMRC share incentiveplan and Directors' and staff bonuses. The shares were issued at a pricebetween 21.75p and 22p on 2 January 2013.

Investment properties

The freehold and long leasehold properties of the company and its subsidiarieswere revalued as at 31 December 2012 by external professional firms ofchartered surveyors - Allsop LLP, London (97.97 per cent of the portfolio), andBNP Paribas, Leeds (2.03 per cent). The valuations, which are reflected in thefinancial statements, amount to £205.4 million (2011: £193.7 million). Taking account of prevailing market conditions, the valuation of Groupproperties at 31 December 2012 resulted in an increase of £10.7 million (2011:reduction of £1million). This has been reflected in the income statement inaccordance with the requirements of IFRS. The impact of property revaluationson the company's joint ventures (Analytical Ventures Limited, Dragon RetailProperties Limited and Langney Shopping Centre Unit Trust) and the associatecompany (Bisichi Mining PLC) was a reduction of £2.5 million (2011: reductionof £0.5 million). The proportion of this revaluation attributable to the Group(net of taxation) is reflected in the income statement and the consolidatedbalance sheet.

Financial instruments

Note 17 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 are in place for the company, its subsidiariesand joint ventures in order to limit the effect of higher interest rates uponthe Group. Directors

Sir Michael Heller, J A Heller, R J Corry, H D Goldring, C A Parritt weredirectors of the company for the whole of 2012. Sir Michael Heller and H DGoldring are retiring by rotation at the Annual General Meeting in 2013 andoffer themselves for re-election.

Brief details of the directors offering themselves for re-election are asfollows:

Sir Michael Heller is executive chairman and has been a director since 1971. Hehas a contract of service determinable at six months notice. Sir Michael Helleris a chartered accountant and a member of the nomination committee. He isexecutive chairman of Bisichi Mining PLC, our associate company. The board hadconsidered the re-appointment of Sir Michael Heller and recommends hisre-election as director. Howard Goldring has been a director since 1992 and has a contract of servicedeterminable upon three months notice. He is a member of the audit,remuneration and nomination committees. Howard Goldring is a charteredaccountant and global asset allocation specialist. He is executive chairman ofDelmore Asset Management Limited which specialises in the management ofinvestment portfolios for private clients, charities, family trusts and pensionfunds. He also acts as an advisor providing high level asset allocation adviceto family offices and pension schemes, including among others, Tesco PensionInvestment Ltd. The board has considered the re-appointment of Howard Goldringand recommends his re-election as a director. His specialised economicknowledge and broad business experience are of significant benefit to thebusiness.

Directors' interests

The interests of the directors in the ordinary shares of the company, includingfamily and trustee holdings, where appropriate, were as follows:

Beneficial interests Non-beneficial interests 31 Dec 12 1 Jan 12 31 Dec 12 1 Jan 12 Sir Michael Heller 6,304,002 6,304,002 19,277,931 19,277,931 R J Corry 998,355 998,355 - - H D Goldring 19,819 19,819 - - J A Heller 1,630,649 1,630,649 †14,073,485 †14,073,485 C A Parritt 36,166 36,166 - -

† These non-beneficial holdings are duplicated with those of Sir MichaelHeller.

No director had any material interest in any contract or agreement with theGroup during the year other than as shown in this annual report. (Please seenote 20 to the financial statements and the remuneration report).

The beneficial holdings of directors shown above include their interests in theShare Incentive Plan.

Substantial shareholdings At 31 December 2012 Sir Michael Heller and his family had an interest in 47.5million shares of the company, representing 56.6 per cent. of the issued sharecapital net of treasury shares (2011: 47.5 million shares representing 56.6 percent.). Cavendish Asset Management Limited had an interest in 6,985,120 sharesrepresenting 8.32 per cent. of the issued share capital of the company (2011:5,667,134 shares representing 6.75 per cent.). James Hyslop had an interest in3,336,258 shares representing 3.97 per cent. of the issued share capital of thecompany. The company is not aware of any other holdings exceeding 3 per cent. of theissued share capital. Subsequent to the year-end and at the date of this reportSir Michael Heller and his family's interest increased to 47.6 million sharesof the company representing 56.5 per cent. of the issued share capital net oftreasury shares. James Hyslops' holding increased to 3,376,258 representing4.01 per cent. of the issued share capital.

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 Planrelate, 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 (Resolution 9). 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 employeesproviding for compensation for loss of office or employment that occurs becauseof a takeover bid.

Statement as to disclosure of information to the auditor

The directors in office on 31 December 2012 have confirmed that, so far as theyare aware, there is no relevant audit information of which the auditor isunaware. Each of the directors has confirmed that they have taken all the stepsthat they ought to have taken as a director in order to make them aware of anyrelevant audit information and to establish that it has been communicated tothe auditor. Corporate governance The Company has adopted the Guidance for Smaller Quoted Companies (SQC)published by the Quoted Companies Alliance. The Alliance provides guidance toSQC and their guidance covers the implementation of The UK Corporate GovernanceCode for SQC. The paragraphs below set out how the company has applied thisguidance during the year. The company has complied with the Quoted CompaniesAlliance guidance throughout the year, except insofar that non-executivedirectors are not appointed for fixed terms (section A.7.2).

Principles of corporate governance

The board promotes good corporate governance in the areas of risk managementand accountability 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 the chairman, the chief executive, oneother executive director and two non-executive directors. Their details appearon page 15. The board is responsible to shareholders for the proper managementof the Group. The directors' responsibility statement in respect of the accounts is set outon page 27. The non-executive directors have a particular responsibility toensure that the strategies proposed by the executive directors are fullyconsidered. To enable the board to discharge its duties, all directors havefull and timely access to all relevant information and there is a procedure forall directors, in furtherance of their duties, to take independent professionaladvice, if necessary, at the expense of the Group. The board has a formalschedule of matters reserved to it and normally has eleven regular meetingsscheduled each year. Additional meetings are held for special business whenrequired.

The board is responsible for overall Group strategy, approval of major capitalexpenditure and consideration of significant financial and operational matters.

The board committees, which have written terms of reference, deal with specificaspects of the Group's affairs:

• The nomination committee is chaired by C A Parritt and comprises thenon-executive directors and the executive chairman. The committee isresponsible for proposing candidates for appointment to the board, havingregard to the balance and structure of the board. In appropriate casesrecruitment consultants are used to assist the process. All directors aresubject to re-election at a maximum of 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 of the board is normally invited to attend. The directors'remuneration report is set out on pages 23 to 25.

• The audit committee comprises the non-executive directors and is chaired by CA Parritt. The audit committee report is set out on page 26.

Board and board committee meetings held in 2012

The number of regular meetings during the year and attendance was as follows: Meetings Meetings held attended R J Corry Board 11 11 Audit committee 2 2 H D Goldring Board 11 10 Audit committee 2 2 Nomination committee 1 1 Remuneration committee 1 1 Sir Michael Heller Board 11 11 Nomination committee 1 1 Remuneration committee 1 1 J A Heller Board 11 11 Audit Committee 2 2 C A Parritt Board 11 11 Audit committee 2 2 Nomination committee 1 1 Remuneration committee 1 1

Performance evaluation - board, board committees and directors

The 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 directors

The 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 feepaying basis. H D Goldring's association with Delmore and the length of hisservice on the board mean that the criteria for independence set out in the UKCorporate Governance Code are not met.

However, the board considers that the independence of H D Goldring is notimpaired either because he has served on the board for more than nine years orbecause of his association with Delmore. The board therefore regards H DGoldring as being independent.

The independent directors regularly meet prior to and after board meetings todiscuss corporate governance and other issues concerning the Group.

Directors and officers liability insurance

The Group maintains directors and officers insurance, which is reviewedannually and is considered to be adequate by the company and its insuranceadvisers.

Internal control

The directors are responsible for the Group's system of internal control andfor reviewing its effectiveness at least annually, and for the preparation andreview of its financial statements. The board has designed the Group's systemof internal control in order to provide the directors with reasonable assurancethat assets are safeguarded, that transactions are authorised and properlyrecorded and that material errors and irregularities are either prevented orwould be detected within a timely period. However, no system of internalcontrol can eliminate the risk of failure to achieve business objectives orprovide absolute assurance against material misstatement or loss. The keyelements 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 ofcapital expenditure and information systems for monitoring the Group'sfinancial 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 established procedures for the presentation and review of thefinancial statements and the Group has in place an organisational structurewith clearly defined lines of responsibility and with appropriate delegation ofauthority.

There are no internal control issues to report in the annual report andfinancial statements for the year ended 31 December 2012. Up to the date ofapproval of this report and the financial statements, the board has not beenrequired to deal with any related material internal control issues. Thedirectors confirm that the board has reviewed the effectiveness of the systemof internal control as described during the period.

Risk assessment

The audit committee has assessed the key risks to the group as follows:

Description of risk Description of impact Mitigation Asset management: Tenant failure Financial loss Initial and subsequent assessment of tenant covenant strength combined with an active credit control function. Leases not renewed Financial loss Lease expiries regularly reviewed. Experienced in house teams with strong tenant and market knowledge who manage appropriate tenant mix. Asset illiquidity Assets may be illiquid Regular reporting of current and(size and and affect flexing projected position to the Board geographical location) of balance sheet with efficient treasury management. People:

Retention and Unable to retain and Nomination Committee and seniorrecruitment of staff attract the best staff review skills gaps and

people for the key succession planning. Training and roles. development offered. Loss of knowledge and key skills. Reputation: Business interruption Loss in revenue. Documented Recovery Plan in place. Impact on footfall. Adverse publicity. General and terrorism insurance Potential for criminal/ policies in place and risks civil proceedings. monitored by trained security staff. Health and Safety policies in place. CCTV in centres. Financing: Fluctuation in Impact on covenants and Secure income flows.property values other loan agreement obligations. Regular monitoring of LTV and IC covenants and other obligations. Focus on quality assets. Reduced availability Insufficient funds to Efficient treasury management.of borrowing meet existing debts/facilities interest payments and Loan facilities extended where operational payments. possible. Regular reporting of current and projected position to the Board. Loss of cash and Financial loss Only use a spread of banks anddeposits financial institutions which have a strong credit rating. Fluctuation of Uncertainty of interest Manage derivative contracts tointerest rates rate costs achieve a balance between hedging interest rate exposure and minimising potential cash calls.

Communication with shareholders

Prompt communication with shareholders is given high priority. Extensiveinformation about the Group and its activities is provided in the AnnualReport. In addition, a half-year report and two interim management statementsare produced for each financial year and published on the company's website.The company's website www.lap.co.uk is promptly updated with announcements andAnnual Reports upon publication. Copies from previous years are also availableon the website. The company's share price is published daily in the Financial Times. The shareprice history and market information can be found athttp://www.londonstockexchange.com/prices-and-markets/markets/prices.htm. Ourcode is LAS.

There is a regular dialogue with the company's stockbrokers and institutionalinvestors. Enquiries from individuals on matters relating to theirshareholdings and the business of the group are dealt with promptly andinformatively.

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

The Bribery Act 2010

The Bribery Act 2010 came into force on 1 July 2011. All directors and staffhave since completed an e-learning course and continue to do so on a bi-annualbasis. The company is committed to acting ethically, fairly and with integrityin all its endeavours and compliance with the code is closely monitored.

Payments to suppliers

The 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 27 daysannual trade purchases (2011: 16 days).

Donations

No political donations were made during the year (2011: £Nil). Donations forcharitable purposes amounted to £3,200 (2011: £2,000).

Going concern

The Group's business activities, together with the factors likely to affect itsfuture development are set out in the Chairman and Chief Executive's Statementon the preceding pages 4 and 7. The Finance Director's Report on pages 10 to 13sets out the financial position of the company, its cash flows, liquidityposition and borrowing facilities. The Directors have also considered theimpact of the renewal of the £44.2 million Revolving Credit Facility with RBSand extended to April 2013, as has been set out in both the Chairman and ChiefExecutives Statement and the Finance Directors Report. A further extension toJuly 2013 has been agreed. In addition Note 17 to the financial statementsgives details of the group's financial instruments and interest rate risk, andmaturity and hedging profile. The Group has sufficient financial resources and has long term leases with themajority of the tenants of its property portfolio. As a consequence, thedirectors believe that the company is well placed to manage its business riskssuccessfully despite the current uncertain economic outlook. The directors have a reasonable expectation that the company has adequateresources to continue in operational existence for the foreseeable future. Thusthey continue to adopt the going concern basis of accounting in preparing theannual financial statements. Annual General Meeting The Annual General Meeting will be held at the Royal Automobile Club, 89 PallMall, London SW1Y 5HS on Tuesday 4 June 2013 at 10.30 a.m. Items 1 to 7 will beproposed as ordinary resolutions. More than 50 per cent. of shareholders' votesmust be in favour for these resolutions to be passed. Items 8 to 10 will beproposed as special resolutions. At least 75 per cent. of shareholders' votesmust be in favour for these resolutions to be passed. The directors considerthat all of the resolutions to be put to the meeting are in the best interestsof the company and its shareholders as a whole and accordingly the boardunanimously recommends that shareholders vote in favour of all of theresolutions, as the directors intend to do in respect of their own beneficialholdings of ordinary shares. Please note that the following paragraphs are onlysummaries of certain of the resolutions to be proposed at the Annual GeneralMeeting and not the full text of the resolutions. You should therefore readthis section in conjunction with the full text of the resolutions contained inthe notice of Annual General Meeting.

Ordinary Resolutions

1. Resolution 7 - Authority to allot securities

Paragraph 7.1.1 of Resolution 7 would give the directors the authority to allotshares in the company and grant rights to subscribe for or convert any securityinto shares in the company up to an aggregate nominal value of £2,809,599. Thisrepresents approximately 1/3 (one third) of the ordinary share capital of thecompany in issue (excluding treasury shares) as at 15 April 2013 (being thelast practicable date prior to the publication of this Directors' Report). In line with guidance issued by the Association of British Insurers (`ABI')paragraph 7.1.2 of Resolution 7 would give the directors the authority to allotshares in the company and grant rights to subscribe for or convert any securityinto shares in the company up to a further aggregate nominal value of £2,809,599, in connection with a rights issue. This amount representsapproximately 1/3 (one third) of the ordinary share capital of the company inissue (excluding treasury shares) as at 15 April 2013 (being the lastpracticable date prior to the publication of this Directors' Report). The directors' authority will expire at the conclusion of the next AnnualGeneral Meeting. The directors do not currently intend to make use of thisauthority. However, if they do exercise the authority, the directors intend tofollow best practice as recommended by the ABI regarding its use (including asregards the directors standing for re-election in certain cases).

Special Resolutions

The following special resolutions will be proposed at the Annual GeneralMeeting:

Resolution 8 - Disapplication of pre-emption rights

Under company law, when new shares are allotted or treasury shares are sold forcash (otherwise than pursuant to an employee share scheme) they must first beoffered to existing shareholders in proportion to their existing shareholdings.This special resolution gives the directors authority, for the period ending onthe date of the next annual general meeting to be held in 2014, to: (a) allotshares of the company and sell treasury shares for cash in connection with arights issue or other pre-emptive offer; and (b) otherwise allot shares of thecompany, or sell treasury shares, for cash up to an aggregate nominal value of£421,440 representing in accordance with institutional investor guidelines,approximately 5 per cent. of the total ordinary share capital in issue as at 15April 2013 (being the last practicable date prior to the publication of thisDirectors' Report) in each case as if the pre-emption rights in company law didnot apply. Save in respect of issues of shares in respect of employee share schemes andshare dividend alternatives, the directors do not currently intend to make useof these authorities. The board intends to adhere to the provisions in thePre-emption Group's Statement of Principles not to allot shares for cash on anon-pre-emptive basis in excess of an amount equal to 7.5 per cent. of thecompany's ordinary share capital within a rolling three-year period withoutprior consultation with shareholders.

Resolution 9 - Purchase of own ordinary shares

The effect of Resolution 9 would be to renew the directors' current authorityto make limited market purchases of the company's ordinary shares of 10 penceeach. The power is limited to a maximum aggregate number of 8,428,797 ordinaryshares (representing approximately 10 per cent. of the company's issued sharecapital as at 15 April 2013 (being the latest practicable date prior topublication of this Directors' Report)). 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 105 per cent. of the average marketprice for an ordinary share for the five business days preceding any suchpurchase. The authority conferred by Resolution 9 will expire at the conclusionof the company's next annual general meeting to be held in 2014 or 15 monthsfrom the passing of the resolution, whichever is the earlier. Any purchases ofordinary shares would be made by means of market purchase through the LondonStock Exchange. If granted, the authority would only be exercised if, in the opinion of thedirectors, to do so would result in an increase in earnings per share or assetvalues per share and would be in the best interests of shareholders generally.In exercising the authority to purchase ordinary shares, the directors maytreat the shares that have been bought back as either cancelled or held astreasury shares (shares held by the company itself). No dividends may be paidon shares which are held as treasury shares and no voting rights are attachedto them. As at 15 April 2013 (being the last practicable date prior to the publicationof this Directors' Report) options were outstanding to subscribe for a total of70,000 ordinary shares representing 0.08 per cent. of the company's issuedshare capital. If the authority to make new market purchases sought underResolution 9 is ever used in full, such options would represent approximately0.09 per cent. of the reduced issued share capital of the company (based on theshare capital as at 15 April 2013).

Other matters

Baker Tilly UK Audit LLP has expressed its willingness to continue in office asauditor. A proposal will be made at the Annual General Meeting forreappointment.

By order of the boardHeather CurtisSecretary 18 April 201324 Bruton PlaceLondonW1J 6NE Remuneration report

The remuneration committee is pleased to present its report for the year ended31 December 2012.

The remuneration committee is a formally constituted committee of the board andis comprised entirely of independent non-executive directors.

The members of the 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 thelonger term development of the Group.

The remuneration committee receives updates on pay and employment conditionsapplying to other Group employees. These are taken into consideration whensetting executive directors' remuneration consistent with the group's generalaim of seeking to reward all employees fairly according to the nature of theirrole, their performance and market forces.

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 executivedirectors with normal commercial terms and without extended terms of noticewhich could give rise to extraordinary termination payments.

Summary of Directors' terms

Date of Unexpired term Notice period contract Executive Directors Sir Michael 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 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 2012

Salary Bonus Bonus Other 2012 Pension Total 2011 Pension Total and in in benefits total contrib- 2012 total contrib- 2011 fees cash shares £'000 before utions £'000 before utions £'000 £'000 £'000 £'000 pension £'000 pension £'000 contrib- contrib- utions utions £'000 £'000 Sir Michael 7 - 14 40 61 - 61 51 - 51Heller* J A Heller 300 30 15 42 387 30 417 641 30 671 R J Corry 166 - 9 23 198 33 231 189 33 222 M C Stevens† - - - - - - - 51 3 54 473 30 38 105 646 63 709 932 66 998 Non-executivedirectors H D Goldring* 43 - - 4 47 - 47 47 - 47 C A Parritt * 33 - - - 33 - 33 33 - 33 76 - - 4 80 - 80 80 - 80 Total 549 30 38 109 726 63 789 1,012 66 1,078remunerationfordirectors'serviceduring year

* See "Directors" below and Note 20 "Related party transactions".Other benefits include the provision of car, health and other insurance andsubscriptions.

† M C Stevens retired 30 April 2011

Pension schemes and incentives

Two (2011: three) directors have benefits under money purchase pension schemes.Contributions in 2012 were £63,000 (2011: £66,000) as set out in the tableabove. Directors are not entitled to benefits under any bonus or incentiveschemes apart from the share option and share incentive plan, details of whichare set out below. Bonuses are awarded by the remuneration committee whenmerited. In assessing the performance of the executive team and, in particularto determine whether bonuses are merited, the remuneration committee takesaccount of the overall performance of the business. Specific areas addressedinclude: enhancement of the asset base by effective development; changes inrental income generated; quality and risk profile of the tenant base; voids;timely acquisitions and disposals; security of funding arrangements; andoverall teamwork. Bonuses were awarded by the remuneration committee to threeexecutive directors during 2012 (2011: one) and no non-executive directors(2011: nil).

Directors

Although Sir Michael Heller receives reduced remuneration in respect of hisservices to the Group, the Group does supply office premises, propertymanagement, general management accounting and administration services for anumber of companies in which Sir Michael Heller has an interest. The boardestimates that the value of these services, if supplied to a third party, wouldhave been £275,000 (2011: £275,000) for the year. Further details of theseservices are set out in Note 20 "Related party transactions" to the financialstatements.

H D Goldring's company, Delmore Asset Management Limited provides consultancyservices to the Group. This is dealt with in Note 20 to the financialstatements.

C A Parritt provides consultancy services to the group. This is dealt with inNote 20 to the financial statements.

Share option scheme

The company has an HMRC approved scheme (Approved Scheme). It was set up in1986 in accordance with HMRC rules to gain HMRC approved status which gave themembers certain tax advantages. No director has any options outstanding underthe Approved Scheme.

There are no performance criteria for the exercise of options under theApproved Scheme, as this was set up before such requirements were considered tobe necessary.

A share option scheme known as the "Non-approved Executive Share Option Scheme"(Unapproved Scheme) which does not have HMRC approval was set up during 2000.At 31 December 2012 there were no options to subscribe for ordinary sharesoutstanding. The exercise of options under the unapproved scheme is subject tothe satisfaction of objective performance conditions specified by theremuneration committee which conforms to institutional shareholder guidelinesand best practice provisions. No options under the unapproved scheme wereexercised, granted or lapsed during the year to 31 December 2012. Furtherdetails of this scheme are set out in Note 19 "Share Capital" to the financialstatements The bid market price of London & Associated Properties PLC ordinary shares at31 December 2012 was 22.0p (2011: 26.25p). During the year the share mid-marketprice ranged between 20.0 and 28.5p.

Share incentive plan

Following a recommendation of the remuneration committee the directors set upan HMRC approved share incentive plan (SIP) in May 2006. The purpose of theplan, which is open to all eligible LAP head office based executive directorsand staff, 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 20 December 2012, 90,480 free shares up to the annualmaximum of £3,000 per member were awarded at 22.0p (2011: 41.75p)

* The shares below were not transferred from treasury to members until 2January 2013. Free shares awarded: Number of Number of Value of members shares shares 2012 2011 2012* 2011 2012* 2011 £ £ Directors: R J Corry 1 1 13,636 7,185 3,000 3,000 J A Heller 1 0 13,636 0 3,000 0 M C Stevens † - 1 - 7,185 - 3,000 Staff 5 11 63,208 62,027 13,906 25,896 Total at 31 December 7 13 90,480 76,397 19,906 31,896

2. Partnership shares: No partnership shares were issued between November 2011and October 2012.

3. Matching shares: The partnership share agreements for the year to 31 October2012 provide for two matching shares to be awarded free of charge for eachpartnership share acquired. No partnership shares were acquired in 2012 (2011:nil). Matching shares will usually be forfeited if a member leaves employmentin the group within 5 years of their grant. 4. 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 2012 amounted to nil (2011: £5,775). * The shares in thetable below were not transferred to members until 2 January 2013. Dividend shares issued: Number of Number of Value of members shares shares 2012 2011 2012* 2011 2012* 2011 £ £ Directors: R J Corry 1 1 2,462 2,423 535 739 J A Heller 1 1 2,211 2,329 481 710 Staff 12 15 20,109 21,648 4,373 6,603 Total at 31 December 14 17 24,782 26,400 5,389 8,052

† M C Stevens retired 30 April 2011

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 following information is unaudited

The 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 Committee

18 April 2013

Audit committee report

The committee's terms of reference have been approved by the board and followpublished guidelines, which are available on request from the companysecretary.

At the year end the audit committee comprised the two non-executive directors -H D Goldring and C A Parritt, both of whom are 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 theinformation reported to the shareholders;

• act as a forum for discussion of internal control issues and contribute tothe board's review of the effectiveness of the Group's internal control andrisk management systems and processes;

• to review the risk assessments made by management, consider key risks withaction taken to mitigate these and to act as a forum for discussion of riskissues and contribute to the board's review of the effectiveness of the Group'srisk management control and processes;

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

• advise the board on the appointment of the external auditors, the rotation ofthe audit 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 their independence each year, which includes:

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

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

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

iv) obtaining a written confirmation from the auditors that, in theirprofessional 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 prior to theirapproval by the board. The audit committee meetings are attended by theexternal audit partner, chief executive, finance director and companysecretary. During the year the members of the committee meet on an informalbasis to discuss any relevant matters which may have arisen. Additional formalmeetings may be held as necessary.

During the past year the committee:

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

• 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 bothaudit and non-audit services as set out in note 2 to the financial statements.

• the chairman of the audit committee has also had separate discussions withthe external audit partner.

External Auditor Baker 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 auditor. C A ParrittChairman - Audit Committee 18 April 2013

Directors' responsibility statement

The directors are responsible for preparing the Directors' Report,the Directors' Remuneration Report and the financial statements in accordancewith applicable law and regulations.

Company law requires the directors to prepare group and company financialstatements for each financial year. The directors are required under theListing Rules of the Financial Conduct Authority to prepare group financialstatements in accordance with International Financial Reporting Standards("IFRS") as adopted by the European Union ("EU") and have elected under companylaw to prepare the company financial statements in accordance with UnitedKingdom Generally Accepted Accounting Practice (United Kingdom AccountingStandards and applicable 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 2006 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. Under company law the directors must not approve the financial statementsunless they are satisfied that they give a true and fair view of the state ofaffairs of the group and the company and of the profit or loss of the group forthat period.

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

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

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

c. for the group financial statements, state whether they have been prepared 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 isinappropriate to presume that the group and the company will continue inbusiness.

The directors are responsible for keeping adequate accounting records that aresufficient to show and explain the group's and the company's transactions anddisclose with reasonable accuracy at any time the financial position of thegroup and the company and enable them to ensure that the financial statementsand the Directors' Remuneration Report comply with the Companies Act 2006 and,as regards the group financial statements, Article 4 of the IAS Regulation.They are also responsible for safeguarding the assets of the group and thecompany and hence for taking reasonable steps for the prevention and detectionof fraud and other irregularities.

Directors' statement pursuant to the Disclosure and Transparency Rules

Each of the directors, whose names and functions are listed on page 15 confirmthat, to the best of each person's knowledge:

a. the financial statements, prepared in accordance with the applicable set ofaccounting standards, give a true and fair view of the assets, liabilities,financial position and profit of the company and the undertakings included inthe consolidation taken as a whole; and b. the management report contained in the Annual Report includes a fair reviewof the development and performance of the business and the position of thecompany and the undertakings included in the consolidation taken as a whole,together with a description of the principal risks and uncertainties that theyface.

The directors are responsible for the maintenance and integrity of thecorporate and financial information included on the London & AssociatedProperties PLC website.

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

Valuers' certificates

To the Directors of London & Associated Properties PLC

In accordance with your instructions we have carried out a valuation of thefreehold and leasehold property interests held as at 31 December 2012 by thecompany as detailed in our Valuation Reports dated 12 February 2013 and 4 March2013.

Having regard to the foregoing, we are of the opinion that the open marketvalue as at 31 December 2012 of these interests was:

£'000 Freehold 73,080 Leasehold 128,155 201,235 33 Wigmore Street, London W1U 1BZ Allsop LLP4 March 2013 Regulated by Royal Institution of Chartered Surveyors

To the Directors of London & Associated Properties PLC

In accordance with your instructions we have carried out a valuation of thefreehold property interests held as at 31 December 2012 by the company asdetailed in our Valuation Report dated 21 February 2013.

Having regard to the foregoing, we are of the opinion that the open marketvalue as at 31 December 2012 of these interests was:

£'000 Freehold 4,177 Capitol House, Russell Street, Leeds LS1 5SP BNP Paribas Real Estate Advisory &Property Management UK Limited21 February 2013 Regulated by Royal Institution of Chartered Surveyors

Independent auditor's report

TO THE MEMBERS OF London & Associated Properties PLC

We have audited the group and parent company financial statements ("thefinancial statements") which comprise the Consolidated income statement, theConsolidated balance sheet, the Consolidated statement of changes inshareholders' equity, the Consolidated statement of comprehensive income, theConsolidated cash flow statement, the Group accounting policies, the Notes tothe Financial Statements, the Company balance sheet, and the related notes.The financial reporting framework that has been applied in the preparation ofthe group financial statements is applicable law and International FinancialReporting Standards (IFRSs) as adopted by the European Union. The financialreporting framework that has been applied in the preparation of the parentcompany financial statements is applicable law and United Kingdom AccountingStandards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the company's members, as a body, in accordancewith Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has beenundertaken so that we might state to the company's members those matters we arerequired to state to them in an auditor's report and for no other purpose. Tothe fullest extent permitted by law, we do not accept or assume responsibilityto anyone 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 auditor

As more fully explained in the Directors' Responsibilities Statement set out onpage 27 the directors are responsible for the preparation of the financialstatements and for being satisfied that they give a true and fair view. Ourresponsibility is to audit and express an opinion on the financial statementsin accordance with applicable law and International Standards on Auditing (UKand Ireland). Those standards require us to comply with the Auditing PracticesBoard's (APB's) Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided onthe APB's website at www.frc.org.uk/apb/scope/private.cfm.

Opinion on financial statements

In our opinion

• the financial statements give a true and fair view of the state of thegroup's and of the parent company's affairs as at 31 December 2012 and of thegroup's profit for the year then ended;

• the group financial statements have been properly prepared in accordance withIFRSs as adopted by the European Union;

• the parent company financial statements have been properly prepared inaccordance with United Kingdom Generally Accepted Accounting Practice; and

• the financial statements have been prepared in accordance with therequirements of the Companies Act 2006 and, as regards the group financialstatements, Article 4 of the IAS Regulation.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

• the part of the Directors' Remuneration Report to be audited has beenproperly prepared in accordance with the Companies Act 2006; and

• the information given in the Directors' Report for the financial year forwhich the financial statements are prepared is consistent with the financialstatements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in ouropinion:

• adequate accounting records have not been kept by the parent company, orreturns adequate for our audit have not been received from branches not visitedby us; or

• the parent company financial statements and the part of the Directors'Remuneration Report to be audited are not in agreement with the accountingrecords and returns; or

• certain disclosures of directors' remuneration specified by law are not made;or

• we have not received all the information and explanations we require for ouraudit.

Under the Listing Rules we are required to review:

• the directors' statement, set out on page 21, in relation to going concern;

• the part of the Corporate Governance Statement relating to the company'scompliance with the nine provisions of the UK Corporate Governance Codespecified for our review; and

• certain elements of the report to shareholders by the Board on directors'remuneration.

Euan Banks (Senior Statutory Auditor)For and on behalf ofBaker Tilly UK Audit LLP,Statutory Auditor Chartered Accountants25 Farringdon Street,London, EC4A 4AB 18 April 2013

Consolidated income statement

for the year ended 31 December 2012

Notes 2012 2011 £'000 £'000 Gross rental income Group and share of joint ventures 15,827 16,047 Lease surrenders (23) 943 Less: joint ventures - share of rental income (638) (611) Revenue 1 15,166 16,379 Direct property expenses (1,351) (1,819) Overheads (2,514) (2,700) Property overheads 1 (3,865) (4,519) Net rental income 1 11,301 11,860 Listed investments held for trading 3 97 24 Profit on sale of investment properties - 310 Operating profit before financing charges 1 11,398 12,194 Finance income 5 47 34 Finance expenses 5 (11,344) (11,344) Operating profit after financing charges 101 884 Revaluation and other movements, associates and joint ventures Net increase/(decrease) on revaluation of investment 10,692 (1,021)properties Net increase/(decrease) in value of investments held 4 (104)for trading Share of (loss)/profit of joint ventures, after tax 10 (634) 10

Share of profit/(loss) of associate, after tax 11 545 (189)

Interest rate derivative break cost 17 -

(920)

Adjustment to the Net Present Value of interest rate 17 (3,085) (17,223)derivative Profit/(loss) including revaluation and other movements 7,623 (18,563) Income tax 6 (354) 3,742 Profit/(loss) for the year attributable to the owners 7,269 (14,821)of the parent Basic profit/(loss) per share 8 8.65p (17.63)p Diluted profit/(loss) per share 8 8.65p

(17.63)p

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

Consolidated balance sheet at 31 December 2012 Notes 2012 2011 £'000 £'000 Non-current assets Market value of properties attributable to Group 205,412 193,748 Present value of head leases 28,657 28,661 Property 9 234,069 222,409 Plant and equipment 9 260 484 Investments in joint ventures 10 1,337 2,039 Investments in associated company 11 7,271 7,011 Held to maturity investments 12 1,913 1,998 Deferred tax 18 3,324 3,678 248,174 237,619 Current assets Trade and other receivables 13 4,656 4,301 Financial assets - investments held for trading 14 20 635 Cash and cash equivalents 8,303 6,464 12,979 11,400 Total assets 261,153 249,019 Current liabilities Trade and other payables 15 (12,514) (9,453) Financial liabilities - borrowings 16 (52,666) (48,012) (65,180) (57,465) Non-current liabilities Financial liabilities - borrowings 16 (86,924) (92,114) Interest rate derivatives 17 (33,935) (30,850) Present value of head leases on properties (28,657) (28,661) (149,516) (151,625) Total liabilities (214,696) (209,090) Net assets 46,457 39,929 Equity attributable to the owners of the parent Share capital 19 8,554 8,554 Share premium account 4,866 4,866 Translation reserve in associate (338) (216) Capital redemption reserve 47 47 Retained earnings (excluding treasury shares) 34,749 28,099 Treasury shares 19 (1,421) (1,421) Retained earnings 33,328 26,678 Total shareholders' equity 46,457 39,929 Net assets per share 8 55.30p 47.53p Diluted net assets per share 8 55.29p 47.53p

These financial statements were approved by the board of directors andauthorised for issue on 18 April 2013 and signed on its behalf by:

Sir Michael Heller R J Corry Company Registration No. 341829Director Director

Consolidated statement of changes in shareholders' equity

for the year ended 31 December 2012

Retained earnings Share Share Translation Capital Treasury Retained Total capital premium reserves in redemption shares earnings equity £'000 £'000 associate reserve £'000 excluding £'000 £'000 £'000 treasury shares £'000 Balance at 1 January 8,554 4,866 30 47 (2,078) 44,342 55,7612011 Loss for year - - - - - (14,821) (14,821) Other comprehensiveincome: Currency translation in - - (246) - - - (246)associate Total other - - (246) - - - (246)comprehensive income Total comprehensive - - (246) - - (14,821) (15,067)income Transactions withowners: Equity share options in - - - - - 6 6associate Acquisition of own - - - - (101) - (101)shares and expenses Disposal of own shares - - - - 294 - 294 Loss on transfer of own - - - - 464 (464) -shares Dividends paid - - - - - (964) (964) Transactions with - - - - 657 (1,422) (765)owners Balance at 31 December 8,554 4,866 (216) 47 (1,421) 28,099 39,9292011 Profit for year - - - - - 7,269 7,269 Other comprehensiveincome: Currency translation in - - (122) - - - (122)associate Total other - - (122) - - - (122)comprehensive income Total comprehensive - - (122) - - 7,269 7,147income Transaction withowners: Equity share options in - - - - - 11 11associate Dividends paid - - - - - (630) (630) Transactions with - - - - - (619) (619)owners

Balance at 31 December 8,554 4,866 (338) 47 (1,421) 34,749 46,4572012

All the above are attributable to the owners of the parent.

Consolidated statement of comprehensive income

for the year ended 31 December 2012

2012 2011 £'000 £'000 Profit/(loss) for the year 7,269 (14,821) Other comprehensive income: Currency translation in associate (122)

(246)

Other comprehensive income for the year net of tax (122)

(246)

Total comprehensive income for the period attributable to owners 7,147 (15,067)of the parent

Consolidated cash flow statement

for the year ended 31 December 2012

2012 2011 £'000 £'000 Operating activities Operating profit before financing charges 11,398 12,194 Depreciation 188 158 (Profit)/loss on disposal of non-current assets (121) 9 Profit on sale of investment properties -

(310)

Decrease/(increase) in net current assets 1,257

(1,160)

Cash generated from operations 12,722 10,891 Income tax paid - - Cash inflows from operating activities 12,722 10,891 Investing activities Investment in shares and loan stock in joint ventures 85

(940)

Investment in shares in associate -

(131)

Property acquisitions and improvements (1,115) (298) Sale of properties - 910 Purchase of office equipment and motor vehicles (37)

(70)

Sale of office equipment and motor vehicles 194 33 Interest received 47 34 Dividends received from associate and joint ventures 242 181 Cash outflows from investing activities (584) (281) Financing activities Purchase of treasury shares - (101) Sale of treasury shares - 294 Equity dividends paid (630) (964) Interest paid (9,514) (9,244) Interest on obligation under finance leases (1,477)

(1,682)

Interest rate derivatives break costs paid -

(920)

Short term loan from joint ventures 2,000 - Repayment of short term bank loan -

(910)

(Repayment)/payment of medium term bank loan (236) 943 Cash outflows from financing activities (9,857)

(12,584)

Net increase/(decrease) in cash and cash equivalents 2,281

(1,974)

Cash and cash equivalents at beginning of year 2,747

4,721

Cash and cash equivalents at end of year 5,028

2,747

Cash and cash equivalents

For the purpose of the cash flow statement, cash and cash equivalents comprisethe following balance sheet amounts:

2012 2011 £'000 £'000 Cash and cash equivalents (before bank overdrafts) 8,303 6,464 Bank overdrafts (3,275) (3,717) Cash and cash equivalents at end of year 5,028

2,747

Group accounting policies

The following are the principal group accounting policies:

Basis of accounting

The group financial statements for the year ended 31 December 2012 are preparedin accordance with International Financial Reporting Standards (IFRS), asadopted by the European Union and with those parts of the Companies Act 2006applicable 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 2006 and these are presented in note 25. 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 arepresented in Pounds Sterling and all values are rounded to the nearest thousandpounds (£'000) except when otherwise stated.

London & Associated Properties PLC is a public listed parent company,incorporated and domiciled in England and quoted on the London Stock Exchange.The Company registration number is 341829.

Going concern

The Directors exercised their commercial judgements when reviewing the cashflow forecasts of the Group and the underlying assumptions on which they arebased. They have also considered the impact of the renewal of its bankingfacilities. The Group's business activities, together with the factors likelyto affect its future development, are set out in the Chairman and ChiefExecutive's Statement and Finance Director's Report. In addition the Directorsconsider that note 17 to the financial statements sets out the company'sobjectives, policies and processes for managing its capital; its financial riskmanagement objectives; details of its financial instruments and hedgingactivities; its exposure to credit risk and liquidity risk. Negotiations are continuing in relation to the renewal of the £44.2 millionterm bank facility that originally expired in September 2012. While thesenegotiations are ongoing the existing facility was extended to 2 April 2013 anda further extension to 2 July 2013 has been agreed. The terms for a newfacility are being finalised and the process of documenting them is beingstarted. We will report more fully once the facility has been signed. With sound financial resources, the pending renewal of the £44 million facilityand long term leases in place with the tenants, the Directors believe that theGroup is well placed to manage its business risks despite the current uncertaineconomic outlook. As the Group is working with its bank and advisors on therenewal of the term facilities the Directors have a reasonable expectation thatthe Group has adequate resources to continue in operational existence for theforeseeable future. Thus they continue to adopt the going concern basis ofaccounting in preparing the annual financial statements.

Key judgements and estimates

The 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.Further details of the estimates are contained in the Directors' Report. The most significant judgements made in preparing these accounts relate to thecarrying value of the properties, investments and interest rate hedges whichare stated at open market value. The Group uses external professional valuersto determine the values of our properties.

International Accounting Standards (IAS/IFRS)

The following standards and interpretations have been applied for the firsttime in these financial statements, were in issue:

IFRS 7 Financial Instruments: Disclosures (amendment).

At the date of approval of these financial statements, the following standardsand interpretations have been issued and adopted by the EU but are noteffective for the year ended 31 December 2012 and have not been adopted early:

IFRS 7 Financial Instruments (amendment)

IFRS 10 Consolidated Financial Statements

IFRS 11 Joint Arrangements

IFRS 12 Disclosure of Interests in Other Entities

IFRS 13 Fair Value Measurement

IAS 1 Presentation of Financial Statements (amendment)

IAS 12 Income taxes (amendment)

IAS 19 Employee Benefits (revised)

IAS 27 Separate Financial Statements (revised)

IAS 28 Investments in Associates and Joint Ventures (revised)

IAS 32 Financial Instruments: Presentation (amendment)

The adoption of the standards and interpretations in issue but not yeteffective is not expected to have a material impact on the financial statementsof the Group.

Basis of consolidation The 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 benefit economically 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 onconsolidation. Details of Group trading subsidiary companies are set out innote 25.4.

Joint ventures

Investments 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 income

Rental 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. Contingentrents, being the difference between the rent currently receivable and theminimum lease payments, are recognised in property income in the periods inwhich they are receivable. Rent reviews are recognised when such reviews havebeen agreed with tenants. Reverse surrender premiums

Payments received from tenants to surrender their lease obligations arerecognised immediately in the income statement.

Dilapidations

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

Other revenue

Revenue in respect of listed investments held for trading represents investmentdividends received and profit or loss recognised on realisation. Dividends arerecognised in the income statement when the dividend is received.

Property operating expenses

Property operating expenses are expensed as incurred and any property operatingexpenditure not recovered from tenants through service charges is charged tothe income statement. Employee benefits Share based remuneration The company operates a long-term incentive plan and two share option schemes.The fair value of the conditional awards on shares granted under the long- termincentive plan and the options granted under the share option scheme isdetermined 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 contributionspayable 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 effectiveinterest 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 provisionfor impairment of trade receivables is made when there is evidence that theGroup 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 theirnominal value.

Bank loans and overdrafts

Bank 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 loans

The debenture loans are 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 liabilities

Finance 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 derivatives

The 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 thecurrent market rate of interest assuming that this rate is applied for theremainder of the hedge. Where a derivative is designated as a hedge of the variability of a highlyprobable forecast transaction e.g. 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 e.g. 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. Ordinary Shares

Shares are classified as equity when there is no obligation to transfer cash orother assets. Incremental costs directly attributable to the issue of newshares are shown in equity as a deduction, net of tax, from the proceeds.

Treasury Shares

When the Group's own equity instruments are repurchased, consideration paid isdeducted from equity as treasury shares until they are cancelled. When suchshares are subsequently sold or reissued, any consideration received isincluded in equity.

Investment properties Valuation 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 expenditure

Investment 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 ofcontract. On disposal, any gain or loss is calculated as the difference betweenthe net disposal proceeds and the valuation at the last year end plussubsequent capitalised expenditure in the period.

Depreciation and amortisation

In applying the fair value model to the measurement of investment properties,depreciation and amortisation are not provided in respect of investmentproperties.

Plant and equipment

Other 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 taxes

The 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 equivalents

Cash 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.

Segmental Reporting For management reporting purposes, the Group is organised into businesssegments distinguishable by economic activity. The Group's business segmentsare investment properties and other investments. These business segments aresubject to risks and returns that are different from those of other businesssegments and are the primary basis on which the Group reports its segmentinformation. This is consistent with the way the Group is managed and with theformat of the Group's internal financial reporting.

Notes to the financial statements

for the year ended 31 December 2012

1. Segmental analysis

Operating Segments are based on the internal reporting and operationalmanagement of the Group. The Group is organised into Property and otherinvestments. Business segments Property 2012 Total Property 2011 Total £'000 Other £'000 £'000 Other £'000 investments investments £'000 £'000 Rental income 15,166 - 15,166 16,379 - 16,379 Property overheads (3,865) - (3,865) (4,519) - (4,519) Net rental income 11,301 - 11,301 11,860 - 11,860 Listed investment income - 97 97 - 24 24 Profit on sale of - - - 310 - 310investment properties Operating profit before 11,301 97 11,398 12,170 24 12,194financing charges* Total assets (excluding 250,612 20 250,632 237,336 635 237,971investments in associateand joint ventures) Total liabilities (75,106) - (75,106) (68,964) - (68,964)(excluding borrowingsand current tax) Borrowings (139,590) - (139,590) (140,126) - (140,126) Net assets 35,916 20 35,936 28,246 635 28,881 Investments in joint 3,245 4,032ventures: non segmental(notes 10 and 12) Investments in associate: 7,271 7,011non segmental (note 11) Investments in unlisted 5 5companies Net assets as per balance 46,457 39,929sheet Other segment items: Net increase/(decrease) 10,692 - 10,692 (1,021) - (1,021)on revaluationof investment properties Net increase/(decrease) - 4 4 - (104) (104)on revaluationof investments held fortrading Finance income 47 - 47 34 - 34 Finance expenses 11,344 - 11,344 11,344 - 11,344 Depreciation 188 - 188 158 - 158 Capital expenditure 1,009 - 1,009 493 - 493 Net rental income Joint Ventures Group Analytical Dragon Langney Total Group 2011 exclude: Retail Ventures Shopping £'000 Share £'000 joint Properties ventures £'000 Centre 2012 £'000 £'000 Unit £'000 Trust £'000 Rental income 15,166 715 203 1,431 17,515 15,804 16,990 Direct property expenses (1,351) (111) (58) (183) (1,703) (1,458) (1,860) Overheads (2,514) (211) (118) (129) (2,972) (2,695) (2,895) 11,301 393 27 1,119 12,840 11,651 12,235 Less: attributable to joint (350) (375)ventures Net rental income 11,301 11,860 * Operating profit before financing charges is defined as profit before tax andexcludes the share of profit & losses of joint ventures and associate, financeincome and expenses, movement on revaluation of investment properties andinvestments held for trading and the movement of interest rate derivatives.

Geographical segments

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

Further information in respect of the property reportable segment is includedwithin the primary statements. No customer represents revenue in excess of 10per cent of total revenue (2011: none).

2. Profit/(loss) before taxation

2012 2011 £'000 £'000 Profit/(loss) before taxation is arrived at after charging/ (crediting): Staff costs (note 21) 1,946 2,283 Depreciation on tangible fixed assets - owned assets 188

158

Operating lease rentals - land and buildings 550

375

(Profit)/loss on disposal of motor vehicles and office equipment (121) 10 Amounts payable to the auditor in respect of both audit and non-audit services Audit services: Statutory - company and consolidation 69 63 - subsidiaries 29 32 Further assurance services 2 3 Other services 8 8 108 106

Staff costs and depreciation of tangible fixed assets are included inoverheads.

3. Listed investments held for trading

2012 2011 £'000 £'000 Investment sales 733 - Dividends receivable 8 24 741 24 Cost of sales (619) - 122 24 Attributable overheads (25) - Net income from listed investments 97 24 4. Directors' emoluments 2012 2011 £'000 £'000 Emoluments 726 1,012 Defined contribution pension scheme contributions 63 66 789 1,078

Details of directors' emoluments and share options are set out in theremuneration report.

5. Finance income and expenses

2012 2011 £'000 £'000 Finance income 47 34 Finance expenses Interest on bank loans and overdrafts (2,574) (2,518) Other loans (2,206) (2,103) Interest on derivatives adjustment (4,647)

(4,743)

Interest on obligations under finance leases (1,917) (1,980) Total finance expenses (11,344) (11,344) (11,297) (11,310) 6. Income tax 2012 2011 £'000 £'000 Current tax Corporation tax on profit/(loss) of the period - - Adjustments in respect of previous periods - - Total current tax - - Deferred tax Origination and reversal of timing differences 46

(381)

Revaluation of investment properties 1,770

(547)

Accelerated capital allowances (1,370)

1,045

Fair value of interest derivatives (92)

(3,897)

Adjustments in respect of previous periods - 38 Total deferred tax (note 18) 354 (3,742) Tax on loss on ordinary activities 354

(3,742)

Factors affecting tax charge for the year

The corporation tax assessed for the year is different from that at thestandard rate of corporation tax in the United Kingdom of 24.5 per cent (2011:26.5 per cent). The differences are explained below:

Profit/(loss) on ordinary activities before taxation 7,623

(18,563)

Taxation on ordinary activities at 24.5 per cent (2011: 26.5%) 1,868 (4,919) Effects of: Other differences (1,824) 951 Joint ventures and associate (33) (41) Deferred tax rate adjustment 343 229 Adjustment in respect of prior years - 38 Tax charge/(credit) for the period 354

(3,742)

The main component of other differences in the reconciliation relates topotential indexation for capital gains of £0.8 million (2011: indexationallowance £0.8 million) and the adjustment of capital allowances in the yearwhich are no longer payable of (£2.3 million) (2011: £NIL).

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. 7. Dividend 2012 £'000 2011 £'000 Per Per share share Dividends paid during the year relating to the 0.75p 630 1.15p 964prior period Dividends to be paid: Interim dividend - - 0.75p 630 Proposed final dividend - - - - - - 0.75p 630

8. Profit/(loss) per share and net assets per share

Profit/(loss) per share have been calculated as follows:

2012

2011

Profit/(loss) for the year for the purposes of basic and diluted 7,269 (14,821)profit/(loss) per share (£'000)

Weighted average number of ordinary shares in issue for the 84,004 84,074purpose of basic profit/(loss) per share ('000)

Basic profit/(loss) per share 8.65p

(17.63)p

Weighted average number of ordinary shares in issue for the 84,004 84,074purpose of diluted profit/(loss) per share ('000)

Fully diluted profit/(loss) per share 8.65p

(17.63)p

Weighted average number of shares in issue is calculated after excludingtreasury shares of 1,538,398 (2011: 1,538,398).

There was no dilutive effect of the outstanding options in either year.

Net assets per share have been calculated as follows:

Net assets Shares in Net assets issue per 2012 2011 2012 2011 2012 2011 £'000 £'000 `000 `000 Pence Pence Basic At 31 December 46,457 39,929 84,004 84,004 55.30 47.53 Dilution adjustments for shares subject to option agreements: Issue of outstanding share options 28 28 70 70 Diluted 46,485 39,957 84,074 84,074 55.29 47.53

9. Property and plant and equipment

Investment Properties Total Freehold Leasehold Leasehold Office £'000 £'000 over under equipment 50 years 50 years and motor £'000 £'000 vehicles £'000

Cost or valuation at 1 January 2012 222,409 79,678 142,275 456

1,344 Additions 972 626 346 - 37 Disposals - - - - (245) Decrease in present value of head (4) - (4) - -leases

Increase/(decrease) on revaluation 10,692 (3,047) 13,889 (150)

-

Cost or valuation at 31 December 2012 234,069 77,257 156,506 306

1,136

Representing assets stated at: Valuation 205,412 77,257 127,855 300 - Present value of head leases 28,657 - 28,651 6 - Cost - - - - 1,136 234,069 77,257 156,506 306 1,136

Depreciation at 1 January 2012 - - - -

860 Charge for the year - - - - 188 Disposals - - - - (172)

Depreciation at 31 December 2012 - - - -

876

Net book value at 1 January 2012 222,409 79,678 142,275 456

484

Net book value at 31 December 2012 234,069 77,257 156,506 306

260

9. Property and plant and equipment continued

Investment Properties Total Freehold Leasehold Leasehold Office £'000 £'000 over under equipment 50 years 50 years and motor £'000 £'000 vehicles £'000

Cost or valuation at 1 January 2011 223,610 82,973 140,131 506

1,586 Additions 423 - 423 - 70 Disposals (600) (600) - - (312) Decrease in present value of head (3) - (3) - -leases

(Decrease)/increase on revaluation (1,021) (2,695) 1,724 (50)

-

Cost or valuation at 31 December 2011 222,409 79,678 142,275 456

1,344

Representing assets stated at: Valuation: 193,748 79,678 113,620 450 - Present value of head leases 28,661 - 28,655 6 - Cost - - - - 1,344 222,409 79,678 142,275 456 1,344

Depreciation at 1 January 2011 - - - -

974 Charge for the year - - - - 158 Disposals - - - - (272)

Depreciation at 31 December 2011 - - - -

860

Net book value at 1 January 2011 223,610 82,973 140,131 506

612

Net book value at 31 December 2011 222,409 79,678 142,275 456

484

The leasehold and freehold properties, excluding the present value of headleases, were valued as at 31 December 2012 by external professional firms ofchartered surveyors. The valuations were made at open market value.

2012 2011 £'000 £'000 Allsop LLP 201,235 95,155 BNP Paribas Real Estate 4,177 4,033 Jones Lang LaSalle - 94,560 205,412 193,748 Add: Present value of headleases 28,657 28,661 234,069 222,409

The historical cost of investment properties, including total capitalisedinterest of £6,051,000 (2011: £6,051,000) was as follows:

Freehold 2012 Short Freehold 2011 Short £'000 Leasehold Leasehold £'000 Leasehold Leasehold Over 50 £'000 Over 50 £'000 years years £'000 £'000 Cost at 1 January 76,133 121,889 785 76,308 121,466 785 Additions 626 346 - - 423 - Disposals - - - (175) - - Cost at 31 December 76,759 122,235 785 76,133 121,889 785 Contracts were exchanged in December 2012 to sell for £9.5million the groupproperties in Chesterfield and a shop unit in Windsor. The sale is expected tobe completed by May 2013.

10. Investment in joint ventures

2012 2011 £'000 £'000 Group share of: Turnover 638 611 Loss before tax (683) (15) Taxation 49 25 (Loss)/profit after tax (634) 10 Non-current assets 7,522 8,268 Current assets 2,013 1,586 Current liabilities (6,040) (443) Non-current liabilities (2,158) (7,372) Net assets 1,337 2,039 Analytical Ventures Limited (Analytical Ventures) - unlisted propertyinvestment company. The company owns 50 per cent of the issued share capitaland £1,992,897 of loan stock of Analytical Ventures. The remaining 50 per centis owned by Uberior Ventures Limited. Analytical Ventures is incorporated andoperates in England and Wales and has issued share capital of 7,558,000ordinary shares of £1 each (2011: 7,558,000 ordinary shares of £1 each).Analytical Ventures is managed by a board of directors with neither partyhaving overall control. Dragon Retail Properties Limited (Dragon) - unlisted property trading andinvestment company. The company owns 50 per cent of the issued share capital.The remaining 50 per cent is owned by Bisichi Mining PLC. Dragon isincorporated and operates in England and Wales and has issued share capital of500,000 ordinary shares of £1 each (2011: 500,000 ordinary shares of £1 each).Dragon is managed by a board of directors with neither party having overallcontrol. Langney Shopping Centre Unit Trust (Langney) - unlisted property investmentunit trust. The company acquired 12.50 per cent of the total ordinary units inissue in June 2011. A further 12.50 per cent is owned by Bisichi Mining PLC.Theremaining 75 per cent is owned by Columbus Capital Management LLP. Langney isincorporated in Jersey and has 7,100 total ordinary units in issue of £1,000each. The company has a management contract to manage the property for Langneyand accordingly has a significant influence in Langney. It is a single assetunit trust. Since the year end the unitholders made additional capitalcontributions in proportion to their original holdings and the company's sharewas £31,250. Shares in joint ventures: 2012 2011 £'000 £'000 At 1 January 2,039 1,163 Share of (loss)/profit after tax (634) 10 Dividend received (68) (22) Investment in shares - 888 (702) 876 At 31 December 1,337 2,039

11. Investments in associated company

Associate 2012 2011 £'000 £'000 Bisichi Mining PLC - listed mining and property investment company Group share of: Turnover 15,100 12,551 Profit/(loss) before tax 818 (568) Taxation (273) 379 Profit/(loss) after tax 545 (189) Non-current assets 10,397 10,383 Current assets 4,624 5,083 Current liabilities (6,005) (7,071) Non-current liabilities (1,560) (1,324) Minority interest (185) (60) Net assets 7,271 7,011

11. Investments in associated company continued

2012 2011 £'000 £'000 Share in associate: At 1 January 7,011 7,483 Share of profit/(loss) after tax 545 (189) Investment in shares - 131 Equity share options 11 6 Currency translation (122) (246) Dividend received (174) (174) 260 (472) At 31 December 7,271 7,011 The company owns 42 per cent (2011: 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 10,556,839 (2011: 10,556,839) ordinaryshares of 10p each, and its principal countries of operation are the UnitedKingdom (property investment) and South Africa (coal mining). Bisichi is anassociated undertaking because 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 2012 was £4,654,000(2011: £6,206,000). No impairment is necessary as the Directors consider themarket value deficit temporary.

12. Held to maturity investments

2012 Unlisted Loan 2011 Unlisted Loan Stock Stock Total Shares Total Shares in joint in joint £'000 £'000 £'000 £'000 ventures ventures £'000 £'000 Cost At 1 January 1,998 5 1,993 1,946 5 1,941 Loan stock issued - - - 220 - 220 Repayments (85) - (85) (168) - (168) At 31 December 1,913 5 1,908 1,998 5 1,993

13. Trade and other receivables

2012 2011 £'000 £'000 Trade receivables 1,261 1,100 Amounts due from associate and joint ventures 178 442 Other receivables 221 191 Prepayments and accrued income 2,996 2,568 4,656 4,301

The Directors consider that the carrying amount of trade and other receivablesapproximates to their fair value.

14. Investments held for trading

2012 2011 £'000 £'000 Market bid value of the listed investment portfolio 20 635 Unrealised deficit of market value over cost (3) (499) Listed investment portfolio at cost 23 1,134

All investments are listed on the London Stock Exchange.

15. Trade and other payables

2012 2011 £'000 £'000 Trade payables 1,409 426 Amounts owed to joint ventures 3,266

1,144

Other taxation and social security costs 1,216 954 Other payables 939 725 Accruals and deferred income 5,684 6,204 12,514 9,453

The Directors consider that the carrying amount of trade and other payablesapproximates to their fair value.

16. Borrowings

Current borrowings - amounts falling due within one year

2012 2011 £'000 £'000 £5 million First Mortgage Debenture Stock 2013 at 11.3 per cent 5,000 - Bank overdrafts (secured) 3,275 3,717 £1 million term bank loan repayable by 2015 (unsecured) 247

226

£47 million revolving credit facility repayable in 2013* 44,144 44,069(secured) 52,666 48,012

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 cent - 5,000

£1.7 million First Mortgage Debenture Stock 2016 at 8.67 per cent 1,700 1,700

£5 million First Mortgage Debenture Stock 2018 at 11.6 per cent 5,000 5,000

£10 million First Mortgage Debenture Stock 2022 at 8.109 per cent 9,837 9,821* 16,537 21,521 Term bank loans: £1 million term bank loan repayable by 2015 460

706

£70 million term bank loan repayable in 2014* 69,927 69,887 70,387 70,593 86,924 92,114

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

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

First Mortgage Debenture Stocks October 2013, 2016, August 2018 and 2022, the £47 million bank revolving credit facility repayable in April 2013 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 £202.8 million. The Directors are working with theirbank and advisors on the renewal of the facility expiry in April 2013 and whichhas been agreed to extend to July 2013.

The bank loans and debentures are secured by way of a first charge over theinvestment 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 itmay provide returns for shareholders and benefits for other stakeholders; and

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

17. Financial instruments Treasury policy The 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 consideredthat there is any material sensitivity for the Group to changes in interestrates.

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 maturityGroupings and also provides details of the liabilities that bear interest atfixed, floating and non-interest bearing rates.

Less than 2-5 years Over 2012 1 year £'000 5 years Total £'000 £'000 £'000 Bank overdrafts (floating) 3,275 - - 3,275 Debentures (fixed) 5,000 1,700 15,000 21,700 Bank loans (floating)* 44,441 70,460 - 114,901 Trade and other payables 12,514 - - 12,514(non-interest) 65,230 72,160 15,000 152,390 Less than 2-5 years Over 2011 1 year £'000 5 years Total £'000 £'000 £'000 Bank overdrafts (floating) 3,717 - - 3,717 Debentures (fixed) - 6,700 15,000 21,700 Bank loans (floating)* 44,420 70,706 - 115,126 Trade and other payables (non-interest) 9,453 - - 9,453 57,590 77,406 15,000 149,996

The Group would normally expect that sufficient cash is generated in theoperating cycle to meet the contractual cash flows as disclosed above througheffective 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 currencyfluctuations.

Credit risk At 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 2012 London & Associated Properties PLC was within its bankborrowing facilities and was not in breach of any of the covenants. Overdraftsare renewable annually. Term loan repayments are as set out below. Details ofother financial liabilities are shown in notes 15 and 16. The Group has undrawn facilities of £3,531,000 (2011: £3,089,000) as follows: 2012 2011 £'000 £'000 Overdrafts 725 283 Term facilities expiring in one year 2,806 2,806 3,531 3,089 Hedge profile a) There is a hedge to cover the £47 million revolving credit facility, whichcurrently covers the full £44 million drawn. It consists of a 20 year swap for£10.4 million (2011: £10.4 million) with a 7 year call option in favour of thebank, taken out in November 2007, at 4.76 per cent and a 20 year swap for £40million with a 7 year call option in favour of the bank, taken out in December2007, at 4.685 per 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 £26,130,000 deficit (2011: £23,137,000 deficit) being the estimated financial effect of the fair value tothe business of these hedging instruments less the deferred tax thereon.

During the year the Company broke £Nil (2011: £5.0 million) of the 4.76 percent swap at a cost of £Nil (2011: £0.920 million).

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 15 year interest rate, which was2.47 per cent at 31 December 2012 against the rate payable under the specifichedge. This has given a liability at 31 December 2012 of £33,935,000 (2011: £30,850,000) as shown in the balance sheet and this value changes byapproximately £1,600,000 for each 0.1% change in interest rate. The banks owninitial quotation at 31 December 2012 to close each of the hedges was £39,423,000 (2011: £37,039,000). It is not the company's intention tocrystallise the derivatives. Under IAS 39 the hedges are not deemed to be eligible for hedge accounting andany movement in the value of the hedges is therefore charged directly to theconsolidated income statement. The banks have an option to cancel the hedges inNovember 2014 and January 2015. The cost to the Group to exit the instrumentsbefore November 2014 and January 2015 has been attributed a cost by the bank of£401,000 (2011: £1,280,000). It is not the intention of the Directors to exitthe instruments and this cost has not been recognised.

Fair value of financial instruments

Fair value estimation

The Group has adopted the amendment to IFRS 7 for financial instruments thatare measured in the balance sheet at fair value, this requires disclosure offair value measurements by level of the following fair value hierarchy:

- Quoted prices (unadjusted) in active markets for identical assets orliabilities (level 1).

- Inputs other than quoted prices included within level 1 that are observablefor the asset or liability, either directly (that is, as prices) or indirectly(that is, derived from prices) (level 2).

- Inputs for the asset or liability that are not based on observable marketdata (that is unobservable inputs) (level 3).

Level Level Level Total 2012 1 2 3 £'000 Gain/ £'000 £'000 £'000 (loss) to income statement '000 Financial assets Other financial assets held for trading Quoted equities 20 - - 20 4 Financial liabilities Derivative financial instruments Interest rate swaps - - 33,935 33,935 (3,085) Level Level Level Total 2011 1 2 3 £'000 Gain/ £'000 £'000 £'000 (loss) to income statement '000 Financial assets Other financial assets held for trading Quoted equities 635 - - 635 (104) Financial liabilities Derivative financial instruments Interest rate swaps - - 30,850 30,850 (17,223) 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, butexcluding the interest rate derivatives.

Consistent 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. During2012 this decreased to 163.3 per cent (2011: 188.8 per cent) which wascalculated as follows: 2012 2011 £'000 £'000 Total debt 139,590 140,126 Less cash and cash equivalents (8,303) (6,464) Net debt 131,287 133,662 Total equity 80,392 70,779 163.3% 188.8%

All the debt, apart from the overdrafts, is at fixed rates of interest as shownin notes 16 and 17. The Group does not have any externally imposed capitalrequirements.

Financial assets

Financial assets are disclosed in notes 12, 13 and 14 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.

2012 2011 £'000 £'000 Cash at bank and in hand 8,303 6,464

These funds are primarily invested in short term bank deposits maturing withinone year bearing interest at the bank's variable rates.

Financial liabilities maturity

Repayment of borrowings Bank loans and overdrafts: Repayable on demand or within one year 47,666

48,012

Repayable between two and five years 70,387 70,593 118,053 118,605 Debentures: Repayable within one year 5,000 - Repayable between two and five years 1,700

6,700

Repayable in more than five years 14,837 14,821 139,590 140,126

Certain borrowing agreements contain financial and other conditions that ifcontravened by the Group, could alter the repayment profile.

Group undrawn banking facilities

Which expire within one year 3,531 3,089

Interest rate risk and hedge profile

2012 2011 £'000 £'000 Fixed rate borrowings 21,700 21,700 Floating rate borrowings - Subject to interest rate swap 120,400 120,400 - Excess hedge (5,499) (5,263) 136,601 136,837 Average fixed interest rate 9.69% 9.69% Weighted average swapped interest rate 6.00%

6.00%

Weighted average cost of debt on overdrafts, bank loans and 6.48% 6.48%debentures Average period for which borrowing rate is fixed 6.5 7.5 years years Average period for which borrowing rate is swapped 14.9 15.9 years years The swapped interest rate have calls by the bank 1.9 2.9 years

years

The Group's floating rate debt bears interest based on LIBOR for the term bankloans 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: Fair 2012 Fair 2011 value Carrying Value Carrying £'000 value £'000 value £'000 £'000 Cash and cash equivalents 8,303 8,303 6,464 6,464 Financial assets - investments held for 20 20 635 635 trading Other assets 4,656 4,656 4,302 4,302 Derivative liabilities (33,935) (33,935) (30,850) (30,850) Bank overdrafts (3,275) (3,275) (3,717) (3,717) Bank loans (114,901) (114,778) (115,126) (114,888) Present value of head leases on (28,657) (28,657) (28,661) (28,661)properties Other liabilities (12,514) (12,514) (9,453) (9,453)

Total financial liabilities before (180,303) (180,180) (176,406) (176,168)debentures

Fair value of debenture stocks

Fair value of the Group's debenture liabilities:

Book Fair 2012 2011 value value Fair value Fair Value £'000 £'000 adjustment adjustment £'000 £'000 Debenture stocks (21,700) (28,611) (6,911) (7,921) Tax at 23 per cent (2011: 25 per cent) 1,590 1,980 Post tax fair value adjustment (5,321)

(5,941)

Post tax fair value adjustment - basic (8.23)p (6.79)ppence per share

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

The fair values were calculated by the directors as at 31 December 2012 andreflect the replacement value of the financial instruments used to manage theGroup's exposure to adverse rate movements.

The fair values of the debentures are based on the net present value at therelevant gilt interest rate of the future payments of interest on thedebentures. The bank loans and overdrafts are at variable rates and there is nomaterial difference between book values and fair values.

18. Deferred tax 2012 2011 £'000 £'000 Deferred tax (asset)/liability balance at 1 January (3,678) 64 Transfer to consolidated income statement 354 (3,742) Balance at 31 December (3,324) (3,678) The deferred tax balance comprises the following: Revaluation of investment properties 4,177

2,406

Accelerated capital allowances 1,896

3,263

Fair value of interest derivatives (7,805) (7,712) Short-term timing differences 1,069 1,209 (663) (834) Loss relief (2,661) (2,844) Deferred tax asset provision at end of period (3,324)

(3,678)

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. 19. Share capital Number of Number of 2012 2011 ordinary ordinary £'000 £'000 10p 10p shares shares 2012 2011

Authorised: Ordinary shares of 10p each 110,000,000 110,000,000 11,000 11,000

Allotted, issued and fully paid 85,542,711 85,542,711 8,554

8,554

Ordinary shares of 10p - issued during the - - - -year Share capital 85,542,711 85,542,711 8,554 8,554 Less: held in Treasury (see below) (1,538,398) (1,538,398) (154)

(154)

"Issued share capital" for reporting 84,004,313 84,004,313 8,400 8,400purposes

The company has one class of ordinary shares which carry no right to fixedincome. Treasury shares Number of ordinary Cost/issue 10p shares value 2012 2011 2012 2011 £'000 £'000

Shares held in Treasury at 1 January 1,538,398 1,957,534 1,421 2,078

Issued to meet directors bonuses (Feb 11 - (538,203) - (571)-106.18p) Issued to meet staff bonuses (Feb 11 - (57,751) - (61)-106.18p) Issued for new share incentive plan (Feb 11 - (78,885) - (84)-106.18p) Purchase of shares (Sep 11) - 295,000 - 101 Issued for new share incentive plan (Oct 11 - (26,400) - (28)-106.18p) Issued to meet staff bonuses (Oct 11 - (12,897) - (14)-106.18p)

Shares held in Treasury at 31 December 1,538,398 1,538,398 1,421 1,421

Share Option Schemes

Employees' share option scheme (Approved scheme)

At 31 December 2012 the following options to subscribe for ordinary shares wereoutstanding, 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 approvedby Her Majesty's Revenue and Customs (HMRC).

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

A summary of the shares allocated and options issued under the scheme up to 31December 2012 is as follows: Changes during the year At 1 Options Options Options At 31 January Exercised granted lapsed December 2012 2012 Shares issued to date 2,367,604 - - - 2,367,604 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 3,987,559 - - - 3,987,559employees 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 2012there were no options to subscribe for ordinary shares outstanding.

The exercise of options under the Unapproved scheme is subject to thesatisfaction of objective performance conditions specified by the remunerationcommittee which conforms to institutional shareholder guidelines and bestpractice provisions.

A summary of the shares allocated and options issued under the scheme up to 31December 2012 is as follows: Changes during year Changes during the year At 1 Options Options Options At 31 January Exercised granted lapsed December 2012 2012 Shares issued to date 450,000 - - - 450,000 Shares allocated over which options 550,000 - - - 550,000have not yet been granted

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

20. Related party transactions

Cost Amounts Cash recharged Owed advanced to/(by) (to)/by to/(by) related related related party party party £'000 £'000 £'000 Related party: Analytical Ventures Limited Current Account 61 41 - Dragon Retail Properties Limited Current account (61) (61) (19) Loan account - (3,205) (2,000) Langney Shopping Centre Unit Trust Current account 90 (ii) 28 - Bisichi Mining PLC Current account 192 (i) 109 - Directors and key management M A Heller and J A Heller 7 (ii) 15 - H D Goldring (Delmore Asset Management (25) (iii) - - Limited) C A Parritt (17) (iv) - - Totals at 31 December 2012 247 (3,073) (2,019) Totals at 31 December 2011 472 (702) 19

Nature of costs recharged - (i) Management fees (ii) Property management fees(iii) Portfolio management fees (iv) Consultancy fees. The related partycompanies above are the associate and joint ventures and are treated as noncurrent asset investments - details are shown in Note 10 and 11.

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 £1.2 million deposit is currentlyinterest free. During the year Dragon loaned £2m to the company at an interestrate of 6.875 per cent.

Langney Shopping Centre Unit Trust (joint venture)

Langney Shopping centre Unit Trust (Langney) is owned 12.5 per cent by thecompany and 12.5 per cent by Bisichi Mining PLC. The remaining 75 per cent isowned by Columbus Capital Management LLP.

The company provides office premises, property management, general management,accounting and administration services for both Analytical Ventures and Dragonand property management services to Langney.

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 Sir Michael Heller and J A Hellerhave an interest. Under an agreement with Sir Michael Heller no charge is madefor these services on the basis that he reduces by an equivalent amount thecharge for his services to London & Associated Properties PLC. The boardestimates that the value of these services, if supplied to a third party, wouldhave been £275,000 for the year (2011: £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 £10,000 (2011: £30,000) forwork done for two charitable foundations, the Michael & Morven HellerCharitable 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.

Sir Michael Heller is a director of Bisichi Mining PLC, the associated companyand received a salary from that company of £75,000 (2011: £75,000) forservices.

The directors are considered to be the only key management personnel and theirremunerations including employers national insurance for the year were £883,000(2011: £1,208,000). All other disclosures required including interest in shareoptions in respect of those directors are included within the remunerationreport.

21. Employees

The average number of employees, including directors, of the Group during theyear involved in management and administration was 28 (2011: 31).

2012 2011 £'000 £'000 Staff costs during the year were as follows: Salaries and other costs 1,427 1,713 Social security costs 181 220 Pension costs 338 350 1,946 2,283 22. Capital Commitments 2012 2011 £'000 £'000

Commitments to capital expenditure contracted for at the year end - 735

The Group's share of capital commitments of joint ventures at the year endamounted to £Nil (2011: £Nil).

23. Commitments under operating and finance leases

Operating leases on land and buildings

At 31 December 2012 the Group had commitments under non-cancellable operatingleases on land and buildings as follows:

2012 2011 £'000 £'000 Within one year 600 390 In the second to fifth years inclusive 324 714 924 1,104

Operating lease payments represent rentals payable by the Group for its officepremises.

The leases are for an average term of 5 years and rentals are fixed for anaverage of one year.

Present value of head leases on properties

Minimum lease Present value of minimum payments lease payments 2012 2011 2012 2011 £'000 £'000 £'000 £'000 Amounts payable under finance leases: Within one year 1,821 1,821 1,821 1,821 In the second to fifth years inclusive 7,285 7,285 6,770 6,770 After five years 225,472 227,293 20,066 20,070 234,578 236,399 28,657 28,661

Future finance charges on finance leases (205,921) (207,738) - -

Present value of finance lease liabilities 28,657 28,661 28,657 28,661

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 leasedasset revert to the lessor in the event of default.

Future aggregate minimum rentals receivable

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

2012 2011 £'000 £'000 Within one year 12,706 12,369 In the second to fifth years inclusive 46,628 44,283 After five years 66,579 59,524 125,913 116,176 24. Contingent Liabilities

There were no contingent liabilities at 31 December 2012 (2011: £Nil), exceptas disclosed in Note 17.

25. Company financial statements

Company balance sheet at 31 December 2012

Notes 2012 2011 £'000 £'000 Fixed assets Tangible assets 25.3 76,972 85,282 Other investments: Associated company 25.4 489 489 Subsidiaries and others 25.4 46,196 47,371 25.4 46,685 47,860 123,657 133,142 Current assets Debtors 25.5 24,287 24,911 Investments 25.6 20 635 Bank balances 6,022 4,540 30,329 30,086 Creditors Amounts falling due within one year 25.7 (97,083) (89,796) Net current liabilities (66,754) (59,710) Total assets less current liabilities 56,903 73,432 Creditors Amounts falling due after more than one year 25.8 (30,985) (34,887) Net assets 25,918 38,545 Capital and reserves Share capital 25.10 8,554 8,554 Share premium account 25.11 4,866 4,866 Capital redemption reserve 25.11 47 47 Revaluation reserve 25.11 6,853 12,059 Treasury shares 25.10 (1,421) (1,421) Retained earnings 25.11 7,019 14,440 Shareholders' funds 25,918 38,545

These financial statements were approved by the board of directors andauthorised for issue on 18 April 2013 and signed on its behalf by:

Sir Michael Heller R J CorryDirector Director

Company Registration No. 341829

25.1. Company

Accounting policies

The following are the main accounting policies of the company:

Basis of accounting

The financial statements have been prepared under the historical 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 2006 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 2006 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 25.3.Depreciation or amortisation is only one of the many factors reflected in theannual revaluation and the amount that might otherwise have been shown cannotbe separately identified or quantified. The financial statements have been prepared on a going concern basis. Furtherdetails of which are contained in Group accounting policies on page 34 and inthe Finance Director's report and Directors' report.

Revenue

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

Dividends receivable

Dividends are credited to the profit and loss account when the dividend isreceived.

Tangible fixed assets a) Investment properties An 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 2011 prepared by theRoyal Institution of Chartered Surveyors.

The cost of improvements includes attributable interest.

b) Other tangible fixed assets

Other 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 vehicles - 20 per cent per annum, on a straight line basis.

Investments

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

a) Investments held as fixed assets

These comprise investments in subsidiaries and investments in AnalyticalVentures Limited, Dragon Retail Properties Limited and Langney Shopping CentreUnit Trust (unlisted joint ventures), Bisichi Mining PLC (listed associate),and in unlisted companies which are all held for the long term. Provision ismade for any impairment in the value of fixed asset investments.

b) Investments held as current assets

Investments held for trading are included in current assets and are revalued 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 in which they arise. Financial Instruments Bank loans and overdrafts

Bank 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 derivatives

The 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 current market rate of interest assuming that this rate isapplied for the remainder of the hedge. Where a derivative is designated as a hedge of the variability of a highlyprobable forecast transaction e.g. 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 e.g. when interest income orexpense is recognised.

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

Debtors

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

Creditors

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

Joint ventures

Investments in joint ventures, being those entities over whose activities theGroup has joint control as established by contractual agreement, are includedat cost. Deferred taxation Deferred 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 obligations

All 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 benefits For 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.

25.2. Loss for the financial year

The company's loss for the year was £6,791,000 (2011: £7,557,000). Inaccordance with the exemption conferred by Section 408 of the Companies Act2006, the company has not presented its own profit and loss account.

25.3. Tangible assets Investment Properties Office Total Freehold Long Short Equipment £'000 £'000 leasehold leasehold and motor £'000 £'000 vehicles £'000

Cost or valuation at 1 January 2012 86,188 62,678 21,670 450

1,390 Additions 37 - - - 37 Disposals (245) - - - (245) Impairment (2,880) (2,449) (431) - - Decrease on revaluation (5,206) (3,672) (1,384) (150) -

Cost or valuation at 31 December 2012 77,894 56,557 19,855 300

1,182

Representing assets stated at: Valuation 76,712 56,557 19,855 300 - Cost 1,182 - - - 1,182 77,894 56,557 19,855 300 1,182

Depreciation at 1 January 2012 906 - - -

906 Charge for the year 188 - - - 188 Disposals (172) - - - (172)

Depreciation at 31 December 2012 922 - - -

922

Net book value at 1 January 2012 85,282 62,678 21,670 450

484

Net book value at 31 December 2012 76,972 56,557 19,855 300

260

The freehold and leasehold properties were valued as at 31 December 2012 byexternal professional firms of chartered surveyors. The valuations were made atopen market value on the basis of existing use. The decrease in book value wastransferred from revaluation reserve. 2012 2011 £'000 £'000 Allsop LLP 72,535 80,765 BNP Paribas Real Estate 4,177 4,033 76,712 84,798

The historical cost of investment properties, including total capitalisedinterest of £1,222,000 (2011: £1,222,000) was as follows:

Freehold Long Short £'000 Leasehold Leasehold £'000 £'000 Cost at 1 January 2012 54,620 17,293 785 Additions - - - Disposals - - - Cost at 31 December 2012 54,620 17,293 785

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

Contracts were exchanged in December 2012 to sell for £6.3million the companyproperty in Chesterfield. The sale is expected to be completed by May 2013.

25.4. Other investments

Cost Total Shares in Loan stock Shares Loan

Shares in Unlisted

in in stock £'000 subsidiary associate shares subsidiary joint in joint companies £'000 £'000 companies ventures ventures £'000 £'000 £'000 £'000

At 1 January 2012 47,860 40,663 3,658 1,052 1,993 489

5 Additions - - - - - - - Repayments (85) - - - (85) - - Impairment (1,090) - - - (1,090) - -

At 31 December 2012 46,685 40,663 3,658 1,052 818 489

5

Subsidiary companies

The company owns 100 per cent of the ordinary share capital of the followingcompanies that are trading, all of which are registered in England and Wales: Activity % Held by % Held by company Group LAP Ocean Holdings Limited Property investment 100 100 Antiquarius Limited Property investment - 100 Brixton Village Limited Property investment - 100 Market Row Limited Property investment - 100 Ski Investments Limited Property investment - 100 Analytical Properties Holdings Property investment 100 100 Limited Analytical Properties Limited Property investment - 100 Analytical Properties (St Property investment - 100Helens) Limited London & Associated Management Property Management 100 100Services Limited Services

In the opinion of the directors the value of the investment in subsidiaries isnot less than the amount shown in these financial statements.

Details of the associate and joint ventures are set out in notes 10 and 11. 25.5. Debtors 2012 2011 £'000 £'000 Trade debtors 903 851 Amounts due from subsidiary companies 17,008

17,431

Amounts due from associate and joint ventures 164

402

Deferred tax asset (note 25.9) 4,644 4,550 Other debtors 187 56 Prepayments and accrued income 1,381 1,621 24,287 24,911 25.6. Investments 2012 2011 £'000 £'000 Market value of the listed investment portfolio 20 635 Unrealised deficit of market value over cost (3) (499) Listed investment portfolio at cost 23 1,134

All investments are listed on the London Stock Exchange.

25.7. Creditors: Amounts falling due within one year

2012 2011 £'000 £'000 Bank overdrafts (unsecured) 3,275 3,717 Bank loans (secured) 44,144 44,069 Bank loans (unsecured) 247 226

£5 million First Mortgage Debenture Stock 2013 at 11.3 per cent 5,000

-

Amounts owed to subsidiary companies 35,974

35,256

Amounts owed to joint ventures 3,266

1,144

Other taxation and social security costs 726 693 Other creditors 747 450 Accruals and deferred income 3,704 4,241 97,083 89,796

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

2012 2011 £'000 £'000 Interest rate derivatives 13,988 12,660 Term Debenture stocks:

£5 million First Mortgage Debenture Stock 2013 at 11.3 per cent - 5,000

£1.7 million First Mortgage Debenture Stock 2016 at 8.67 per cent 1,700 1,700

£5 million First Mortgage Debenture Stock 2018 at 11.6 per cent 5,000 5,000

£10 million First Mortgage Debenture Stock 2022 at 8.109 per cent 9,837 9,821* 16,537 21,521 Bank loans: Repayable after more than one year 460 706 30,985 34,887

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

Details of terms and security of overdrafts, loans and loan renewal anddebentures are set out in note 16.

Repayment of borrowings: Bank loans and overdrafts: Repayable within one year 47,666 48,012 Repayable between two and three years 460 706 48,126 48,718 Debentures: Repayable within one year 5,000 - Repayable between three and five years 1,700

5,000

Repayable in more than five years 14,837 16,521 69,663 70,239 Hedge profile

There is a hedge to cover the £47 million revolving credit facility, whichcurrently covers the full £44 million drawn.

It consists of a 20 year swap for £10.4 million (2011: £10.4 million) with a 7year call option in favour of the bank, taken out in November 2007, at 4.76 percent and a 20 year swap for £40 million with a 7 year call option in favour ofthe bank, taken out in December 2007, at 4.685 per cent. At the year end the amount recognised was £10,771,000 deficit (2011: £9,495,000deficit) 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 15 year interest rate, which was2.47 per cent at 31 December 2012 against the rate payable under the specifichedge. This has given a liability at 31 December 2012 of £13,988,000 (2011: £12,660,000) as shown in the balance sheet. The banks own initial quotation at31 December 2012 to close each of the hedges was £16,398,000 (2011: £15,416,000). The hedges are not deemed to be eligible for hedge accounting, as the bankshave an option to cancel the hedge in January 2015, to which they separatelyattribute a cost of £182,000 (2011: £600,000), 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 profit and loss account. It is not theintention of the Directors to exit the instruments and this cost has not beenrecognised.

During the year the company broke £Nil (2011: £5.0 million) of the 4.76 percent swap at a cost of £Nil (2011: £0.920 million).

Fair value of financial instruments

Fair value estimation

The Group has adopted the amendment to FRS29 for financial instruments that aremeasured in the balance sheet at fair value, this requires disclosure of fairvalue measurements by level of the following fair value hierarchy:

- Quoted prices (unadjusted) in active markets for identical assets orliabilities (level 1).

- Inputs other than quoted prices included within level 1 that are observablefor the asset or liability, either directly (that is, as prices) or indirectly(that is, derived from prices) (level 2).

- Inputs for the asset or liability that are not based on observable marketdata (that is unobservable inputs) (level 3).

Level Level Level Total 2012 1 2 3 £'000 Gain/ £'000 £'000 £'000 (loss) to profit and loss account £'000 Financial assets Other financial assets held for trading Quoted equities 20 - - 20 4 Financial liabilities Derivative financial instruments Interest rate swaps - - 13,988 13,988 (1,328) Level Level Level Total 2011 1 2 3 £'000 Gain/ £'000 £'000 £'000 (loss) to profit and loss account £'000 Financial assets Other financial assets held for trading Quoted equities 635 - - 635 (104) Financial liabilities Derivative financial instruments Interest rate swaps - - 12,660 12,660 (6,873) Liquidity

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

Less than 2-5 years Over 2012 1 year £'000 5 years Total £'000 £'000 £'000 Bank overdrafts (floating) 3,275 - - 3,275 Debentures (fixed) 5,000 1,700 15,000 21,700 Bank loans (floating)* 44,441 460 - 44,901 Trade and other payables 44,416 - - 44,416(non-interest) 97,132 2,160 15,000 114,292 Less than 2-5 years Over 2011 1 year £'000 5 years Total £'000 £'000 £'000 Bank overdrafts (floating) 3,717 - - 3,717 Debentures (fixed) - 6,700 15,000 21,700 Bank loans (floating)* 44,420 706 - 45,126 Trade and other payables (non-interest) 41,784 - - 41,784 89,921 7,406 15,000 112,327

The company would normally expect that sufficient cash is generated in theoperating cycle to meet the contractual cash flows as disclosed above througheffective cash management.

\* The bank loans are fully hedged with appropriate interest derivatives. Detailsof the hedges are shown above.

Total financial assets and liabilities

The company's financial assets and liabilities and their fair values are asfollows: Fair 2012 Fair 2011 value Carrying value Carrying £'000 value £'000 value £'000 £'000 Cash and cash equivalents 6,022 6,022 4,540 4,540 Investments 20 20 635 635 Other assets 24,287 24,287 24,911 24,911 Bank overdrafts (3,275) (3,275) (3,717) (3,717) Bank loans (44,441) (44,395) (45,126) (45,001) Derivative liabilities (13,988) (13,988) (12,660) (12,660) Other liabilities (44,416) (44,416) (41,784) (41,784) Before debentures (75,791) (75,745) (73,201) (73,076)

Additional details of borrowings and financial instruments are set out in notes16 and 17.

25.9. Provisions for liabilities and charges

2012 2011 £'000 £'000 Deferred Taxation Balance at 1 January (4,550) (2,657) Transfer to profit and loss account (94) (1,893) Balance at 31 December (4,644) (4,550) No provision has been made for the approximate taxation asset at 23 per cent(2011: 25 per cent) of £51,000 (liability 2011: £545,000) which would arise ifthe investment properties were sold at the stated valuation.

The deferred tax balance comprises the following:

Accelerated capital allowances 1,044

1,140

Fair value of interest derivatives (3,217) (3,165) Short-term timing differences 156 170 Losses (2,627) (2,695) Provision at end of period (4,644) (4,550) 25.10. Share capital Details of share capital, treasury shares and share options are set out in note19. 25.11. Reserves Share Capital Revaluation Retained Total Premium redemption reserve Earnings £'000 Account reserve £'000 £'000 £'000 £'000 Balance at 1 January 2012 4,866 47 12,059 14,440 31,412 Decrease on valuation of - - (5,206) - (5,206)investment properties Retained loss for year - - - (6,791) (6,791) Dividends paid in year - - - (630) (630) Balance at 31 December 2012 4,866 47 6,853 7,019 18,785

25.12. Related party transactions

Details of related party transactions are given in note 20.

As provided under Financial Reporting Standard 8: Related Party Disclosures,the company has taken advantage of the exemption from disclosing transactionswith other Group companies. 25.13. Capital commitments 2012 2011 £'000 £'000 Commitments to capital expenditure contracted for at the year end - -

25.14. Commitments under operating leases

At 31 December 2012 the company had annual commitments under non-cancellableoperating leases on land and buildings as follows:

2012 2011 £'000 £'000 Expiring in less than one year 210 - Expiring in more than one year but less than five years 390 390 600 390

In addition, the company has an annual commitment to pay ground rents on itsleasehold investment properties which amount to £354,000 (2011: £354,000).

25.15. Contingent liabilities

There were no contingent liabilities at 31 December 2012 (2011: £Nil), exceptas disclosed in Note 25.8. Five year financial summary 2012 2011 2010 2009 2008 £m £m £m £m £m Portfolio size Investment properties-Group^ 205 194 195 214 219

Investment properties-joint ventures 27 29 13 13 13

Investment properties-associate 12 12 12 12 12 244 235 220 239 244 Portfolio activity £m £m £m £m £m Acquisitions - - - - 9.18 Disposals - (0.60) (20.74) (17.79) (15.33) Capital Expenditure 0.97 0.42 0.49 3.46 9.73 0.97 (0.18) (20.25) (14.33) 3.58 Consolidated income statement £m £m £m £m £m Rental income - Group and share of joint 15.80 16.99 16.50 17.07 16.77ventures Less: attributable to joint venture (0.63) (0.61) (0.52) (0.52) (0.27)partners Group rental income 15.17 16.38 15.98 16.55 16.50 Profit/(loss) before interest and tax 18.93 10.89 11.97 20.49 (24.91) Profit/(loss) before tax 7.62 (18.56) (10.69) 21.41 (57.27) Taxation (0.35) 3.74 7.19 (2.36) 9.81

Profit/(loss) attributable to shareholders 7.27 (14.82) (3.50) 19.05 (47.46)

Earnings/(loss) per share - basic 8.65p (17.63) (4.24)p 24.32p (62.30) p p Earnings/(loss) per share - fully diluted 8.65p (17.63) (4.24)p 24.32p (62.30) p p Dividend per share - 0.75p 1.15p 1.15p 1.15p Consolidated balance sheet £m £m £m £m £m Shareholders' funds 46.46 39.93 55.76 59.10 40.30 Net borrowings 131.27 133.03 130.77 145.65 157.17 Net assets per share - basic 55.30p 47.53p 66.71p 74.22p 52.73p - fully diluted 55.29p 47.53p 66.69p 74.19p 52.70p Consolidated cash flow statement £m £m £m £m

£m

Cash generated from operations 12.72 10.89 9.58 12.18

12.02

Capital investment and financial (0.87) (0.50) 20.42 13.94 (6.09)investment

Note: ^Excluding the present value of head leases