London & Associated Properties Regulatory News (LAS)

30 Apr 2010 07:00

FOR IMMEDIATE RELEASE

30 April 2010 LONDON & ASSOCIATED PROPERTIES PLC: RESULTS FOR 12 MONTHS TO 31 DECEMBER 2009

London & Associated Properties Plc is a fully listed UK shopping centre and Central London retail property specialist that owns and manages £239m of retail investments.

HIGHLIGHTS

* Wholly owned property portfolio valued at £213.6m - a like-for-like rise of

4.6% compared to an IPD index of retail property values decline of 4.3% * NAV increased 46.6% to £59.1m from £40.3m * EPRA adjusted NNNAV increased 41% to 74.2p a share from 52.7p * Rental income over period advanced to £17.1m from £16.8m * Final dividend of 0.4p a share plus a share issue of 0.8p per share

proposed making a total for year of 1.95p a share equivalent - the same as

2008

* £21.9m of properties sold during year showing aggregate £0.9m surplus over

book values - total sales over last four years amount to £159.8m

* 95% of rents collected within two weeks of December 2009 quarter day * Vacant units only account for 2.2% by rental value of total portfolio " Our performance in 2009 has been positive. I am satisfied that our policy ofupgrading and investing in the quality of our portfolio has insulated us fromthe worst of the economic downturn. I remain reasonably optimistic that we arewell placed to cope with what is likely to be another challenging year forproperty companies," Michael Heller, Chairman.

Contacts:

London & Associated Properties PLC Tel: 020 7415 5000

John Heller, Chief Executive or Robert Corry, Finance Director

Baron Phillips Associates Tel: 020 7920 3161

Baron Phillips

CHAIRMAN'S STATEMENT

I am pleased to report on a year of satisfactory progress. Once again thequality of our property portfolio, coupled with successful strategic managementof our properties during the year, have contributed to this creditableperformance. The harsh economic conditions of 2008 continued into the firsthalf of 2009; however the second half of the year saw some improvement invalues with the final quarter witnessing strong demand for quality propertieswith stable income streams. A significant proportion of our portfolio meetsthese criteria, and our year end valuation reflects this improvement.Our property portfolio was valued at £213.6 million at 31st December 2009. Thisrepresents an increase of 4.6% on a like-for-like basis which comparesfavourably with the Investment Property Databank (IPD), the property industry'svaluation index, which showed retail property capital values had fallen by 4.3%over the same period.Over the year we also grew our rental income from £16.8 million per annum to £17.1 million. This has been achieved during a difficult period across theproperty market, which has witnessed substantial rental declines and a rise invacant properties. Our estimated rental value now stands at £17.4 million perannum.A number of key factors have been responsible for this performance: First ofall, we have suffered relatively low levels of tenant default. From September2008, when the property recession commenced in earnest, to date, we have lost £681,000 of rental income due to tenant failure. This figure is somewhatdistorted by the failure of Zavvi, the music retailer, who occupied a primeunit at Orchard Square, Sheffield, and who were paying £368,000 per annum. Thisunit has since been re-let to Republic at a base rent of £400,000 per annum.Republic is a fashion retailer with a more dynamic retail offer and a widercustomer audience. To date we have completed lettings with an aggregate rentalincome of 108% of the previously passing rent in the vacated units mentionedabove. This has been achieved notwithstanding the fact that three of theseunits are still to be re-let.Secondly, we obtained planning and listed building consents to redevelop ourproperties at King's Road, Chelsea and at Upper Street, Islington. Wesuccessfully carried out developments at both of these properties during theyear and this work has added significantly to their respective values. Both ofthese developments had been pre-let.Thirdly, we pre-let three units at King Edward Court, Windsor at rents inexcess of £115 zone A. This represents a higher rate per square foot than hadbeen previously achieved in this part of the centre and underscores theresilience of this shopping centre during the current recession. In fact, bothour larger shopping centres at Windsor and Sheffield, which together accountfor rental income approaching £11 million per annum, have continued todemonstrate rental growth and are fully let, with the exception of one smallunit at Sheffield which forms part of a future redevelopment site.Finally, we took advantage of the market for prime property and sold, orexchanged contracts to sell, three properties during the year for a combinedvalue of £21.9 million. These disposals show an aggregate surplus over bookvalue of £0.9 million. Total disposals over the last 4 years have now reachedsome £159.8 million.Under the International Financial Reporting Standards (IFRS), the net assets ofthe company grew in 2009 by some 47% from £40.3 million to £59.1 million. Thesefigures are distorted by the requirement to mark to market the interest ratederivatives that we have in place to hedge our interest payments. Over the yearthe gap between the prevailing swap rate and the level at which we startedthese contracts has closed substantially. This has led to a write back of £13.3million to the net assets.During the year under the more appropriate and generally accepted standards ofthe European Real Estate Association (EPRA), our EPRA adjusted net assets pershare grew by 11.5% to 91.5p. When looked at on an EPRA Triple NAV basis, ourNNNAV per share has risen by some 41% over the period to 74.2p from 52.7p,taking account of the requirement to mark to market the value of our interestrate derivatives.On a management adjusted basis, as detailed in the Finance Director's report,and without capitalising interest we made a loss before tax of £2.5 million.This was mainly due to the expected reduction in income from our developmentsites, at Kings Road, Islington and Windsor during construction. This year weexpect to move back into profit following the successful completion of ourdevelopment programme.The last few years have seen intensive management of our property portfolio aswe have reconfigured and improved our Centres to increase rental values anddrive forward cash flows. These capital intensive projects have now drawn to asuccessful conclusion. Over the last 4 years we have invested £49.3 millioninto our portfolio. This includes a gross investment of £30.7 million into KingEdward Court Windsor, which at the time was held in a joint venture with theBank of Scotland. The remaining £18.6 million of investment has been fundedfrom our existing cash resources. LAP still has some £5 million in unencumberedcash available to exploit opportunities as they arise.While property values have shown considerable improvements over the last twoquarters and our experience on tenant failure has been below average, the Boardremains cautious about the strength and durability of the current recovery. Inview of this the Board feels that the Group should continue to conserve cash inthe business. Therefore, the Board has taken the decision to maintain thedividend at the same level as last year. This will be a final cash dividend of0.4p per share and a capitalisation issue of new shares worth 0.8p per share.

The total assets of the Group, including those of Bisichi Mining PLC, our associate company, and Dragon Retail Properties, our joint venture with Bisichi, now stand at £306.4 million.

Bisichi had another successful year and generated a profit before tax of £5.0 million.

Given the backdrop of a testing occupational market, our performance in 2009has been positive. I am satisfied that our policy of upgrading and investing inthe quality of our portfolio has insulated us from the worst of the economicdownturn. Although it is too early to say with certainty that we are throughthe worst of this recession, I remain reasonably optimistic that we are wellplaced to cope with what is likely to be another challenging year for propertycompanies.Michael Heller, Chairman16 April 2010CHIEF EXECUTIVE'S REPORT2009 was again a challenging year for the property sector. The difficult timesexperienced in 2008 when the credit markets effectively collapsed, continuedinto the first half of 2009. Retail property values, as measured by IPD, fellfrom peak to trough by some 45%, and no property portfolio seemed immune fromthis general markdown. The investment market, however, started to stabiliseover the summer and a return of good demand from cash rich buyers meant therewas a surge in value for properties that fulfilled certain criteria towards theend of the year.Buyers that have been most active in the investment market recently aregenerally looking for stable bond-like income from property during this periodof historically low interest returns. Therefore, those properties whichattracted the interest of the investment market have needed strong cash flowsfrom quality covenants.LAP's property investment portfolio was valued at £213.6 million at 31 December2009. Our top three properties accounted for 73% of this figure. All of theseproperties are fully let, with the exception of one small unit within a futuredevelopment site at our centre in Sheffield. They also have long single leasesto strong covenants or are multi-let but with rental income that has increasedover the last 12 months.Gross rental income from our property portfolio has increased to £17.1 millionduring 2009 from £16.8 million the previous year. This is a significantachievement in the current environment and demonstrates the strength of ourproperties and of our rent roll. Our top 50 tenants plus the income from thecar park at King Edward Court, Windsor account for 80% of our gross income.Almost all of these tenants are household names and some 74% by value of ourleases have more than 5 years to run.We collected 95% of cash owed to us within 2 weeks of the December 2009 quarterday. Within our portfolio, vacant units account for just 2.2% by rental value,0.7% of units are let to tenants on a temporary basis, while 3.4% of our rentalincome has moved from being received on a quarterly basis to being received ona monthly basis. In 2009 ten tenants went into some form of insolvencyaccounting for £681,000 per annum. Of these, 7 leases with a rental value of £739,000 per annum have been re-let. In 2010, to date, we have lost one furthertenant accounting for £26,000.During the year we invested £3.5 million into developing and improving ourproperty portfolio. These developments were all carried out with pre-lets inplace, and have led to an incremental income of £858,000, which represents anannual return on investment of some 25%.We sold or exchanged contracts to sell three properties during the year, ofwhich two completed in the financial year. In all three cases, we felt that theassets in question would demonstrate minimal rental or capital growth over themedium term. The first property to be sold was a block of shops in Solihull forwhich we received £11.5 million. We had carried out two recent lettings therethat had enhanced the rental value of the block, and we felt the property wouldbe unlikely to show further rental growth for some time.The other two properties sold were both in Islington. They had been acquired aspart of the London Portfolio in 2006. The Mall, which is the larger property,was sold for £6.6 million. During the year we had successfully appealed anearlier refusal for consent to convert the Mall from an antiques arcade to asingle shop. The application was made after pre-letting the entire building toJack Wills, the fashion retailer, at £367,500 per annum. The cost of theamalgamation works and associated fees was £0.8 million and the property washanded over to the tenant on time and on budget in October 2009. The propertywas disposed of in December to show a profit over book value of £1.6 million.The third property was a single shop adjacent to The Mall which was let toFoxtons, the estate agency. We achieved £3.8 million for the freehold of thebuilding which equated to a net initial yield of 5.75%. This showed a profitover book value of £0.6 million. This sale was completed in January 2010.Following these disposals our estimated rental income still stands at £17.4million per annum.WindsorAt King Edward Court in Windsor, the Centre returned to full occupancy havinglost two retailers to some form of insolvency in December 2008. The two unitsthat became vacant were on either side of Robert Gatward, a chain of upmarketjewellers who had recently taken over an existing jewellery business within theCentre. This presented an opportunity to extend and amalgamate all three unitsto create better configured space with more visible frontage.We obtained planning consent for the works during the year and pre-let thelarger of the shops to Robert Gatward, who have significantly increased theirretail space. Another unit has been let to Fat Face, the fashion chain, whilethe remaining space has been taken by Mystique Lingerie.The combined rent of the three units is £295,000 per annum, a 42% increase overthe previous passing rent. In addition we have managed to increase Zone A rentsto over £115 for the shops fronting onto the principal mall, a record for thispart of the Centre. The total cost of the deal, including all tenantincentives, has been approximately £0.5 million.

The total income for King Edward Court now stands at a record £7.8 million per annum, an increase over the year of 6.8%.

Sheffield

Orchard Square continues to trade well following the significant developments that we have carried out at this centre over the last few years. The shops remain fully let with the exception of one small unit that forms part of a future development site.

The income from this centre reached £3.0 million per annum in 2009 compared to£2.8 million the previous year, and 78% of the leases have more than 5 years torun. We have previously reported to shareholders that during 2009 we let aprime shop fronting Fargate to Republic, the fashion retailer, at a record rentper square foot for the city.

The London Portfolio

We successfully completed the transformation of the Antiquarius building froman antiques arcade to a large single unit with approximately 16,000 square feetof retail space. The entire building has been let to Anthropologie, the USfashion chain, at a rent of £1.1 million per annum. The apartment to the rearof the building which we refurbished in 2007 has also been let at a further £50,000 per annum.The development required listed building and freeholder consents, which wereobtained in April. The total cost of the development has been £1.96 million,and the net incremental rent is £592,000. Anthropologie took possession of thebuilding in October 2009 and has recently commenced trading following anextensive period of fitting-out.At our markets in Brixton, South London, we have focused over the last year onimproving occupancy and increasing the footfall across both of the markets thatwe own there. This has been particularly the case with those units in BrixtonVillage, one of the two markets, that have historically been hard to let awayfrom the main pedestrian flows. We have enjoyed some success through theintroduction of flexible leases for an initial 3 month trial period. These haveonly been available for retailers who we believe will add substantially to thequality of the tenant mix.The result of this initiative is that Market Row, the more successful of themarkets, remains effectively fully let while Brixton Village now has 90%occupancy for the first time. Of the 17 tenants that commenced trading onflexible leases, 10 have now converted to full leases at a market rent. As aresult the rental income for these two properties has increased by 9.4% overthe last 12 months.Remainder of our portfolio

The remainder of our portfolio continues to trade well in the current difficult economic environment.

In addition to those properties mentioned above, our portfolio has beendeliberately concentrated into locations where value retailing and day-to-dayshopping is prevalent. We are confident that these locations will continue totrade at an acceptable level regardless of wider economic difficulties as theyare less dependent on discretionary spending.

Outlook

The UK economic recovery continues to be fragile with a large rise in consumer savings and a low level of confidence. In addition there is less credit available for consumers, small businesses and property companies. We do not expect bank lending to return to the levels of 18 months ago in the near future.

Consequently, we expect the polarisation already apparent between prime and secondary properties to continue to widen. Given the nature of our portfolio, of which 73% is in three high quality properties that can all demonstrate strong cash flows, we remain cautiously optimistic going forward.

John Heller, Chief Executive16 April 2010FINANCE DIRECTOR'S REPORTIn the challenging economic circumstances we faced in the year, we prioritisedthe management of our cash flow and our cash resources. We have now completedthe capital expenditure relating to our development programme and thoseproperties are all income producing. LAP has remained fully covenant compliantthroughout this period.In the challenging economic circumstances we faced in the year, we prioritisedthe management of our cash flow and our cash resources. We have now completedthe capital expenditure relating to our development programme and thoseproperties are all income producing. LAP has remained fully covenant compliantthroughout this period.Cash Flow

The Group remains in a satisfactory cash flow positive position.

During the year we sold Solihull and The Mall, Islington for a combined £18.1million. We also exchanged contracts to sell the Foxtons unit in Islington,North London for £3.8 million, and completed the disposal in January 2010. Theproceeds from these sales therefore were £21.9 million of which £15.1 millionwas used to pay down our Revolving Credit Facility with the Royal Bank ofScotland. The total amount drawn as at March 2010 stands at £54.4 million.

Income Statement

The Group's profit before tax as reported under IFRS was £21.4 million (2008: £57.3 million loss). This figure includes £9.4 million of movement in ourproperty revaluation reserve and £13.3 million of movement on the marking tomarket of our interest derivatives, as well as certain other non-cash items.These adjustments can lead to considerable volatility in the reporting of ourresults. The table below does, though, show the underlying performance of theGroup on a management adjusted basis.The average cost of debt has reduced to 5.97% for the year (2008: 6.10%). Weclosely monitor all interest rate hedging and regularly explore options forreducing the total interest payable in the future. The interest rate hedges inplace were taken out as a management tool for the business to ensure stabilityand security of our cash flows in the medium to long term. It is important tous that the costs of funds are at a known level. This strategy means thatshould interest rates increase in the future we will be protected. We do nottrade in the swaps.We have again valued the interest rate swaps on the basis of the net presentvalue of the additional cost of the interest payable over the terms of thehedging arrangements against the prevailing rates of interest as at 31 December2009. The Directors consider this to be the most appropriate method ofvaluation of these products. This valuation is based on the assumption (asrequired by IFRS) that we had to "unwind" these contracts at the balance sheetdate. This is, of course, an unrealistic assumption since the hedges aredesigned to provide certainty for our interest costs and are not a traded item.The tax charge for the year is £2.4 million. This figure includes a corporationtax credit of £1.2 million and an increase in the deferred tax provision of £3.6 million. This deferred tax provision has arisen because of the increase inthe value of the property portfolio. Cash Non-cash 2009 Cash Non-cash 2008 items items Per items items Per income income statement statement £'000 £'000 £'000 £'000 £'000 £'000 Net rental income 9,517 - 9,517 8,958 - 8,958 Income and gains on 148 - 148 298 - 298investments held for trading Profit on sale of 14 - 14 897- - 897investment properties Net change on revaluation - 9,422 9,422 - (33,125) (33,125)of investment properties Net increase/(decrease) - 178 178 - (1,530) (1,530)in value of investments held for trading Operating profit/(loss) 9,679 9,600 19,279 10,153 (34,655) (24,502) Share of joint ventures 131 1,078 1,209 131 (547) (416)and associates Interest rate derivative - 13,269 13,269 - (21,063) (21,063) Net interest (12,350) - (12,350) (11,285) - (11,285) (Loss)/profit before (2,540) 23,947 21,407 (1,001) (56,265) (57,266)taxation Balance Sheet

The value of the overall property portfolio was £238.6 million. This includes the properties owned by Bisichi Mining PLC, Dragon Retail Properties and Analytical Ventures. On a like-for-like basis this shows an increase of 4.0%.

The underlying net assets of the Group on a similar management adjusted basis are shown in the table below.

The net assets of the Group under IFRS have increased to £59.1 million in theyear, a rise of 46.6% and an increase of 21.5 pence per share. The moremeaningful EPRA figure shows the net assets to be £72.8 million equivalent to91.5 pence per share, a rise of 11.5%. The EPRA triple NAV increased by 41%over the period to 74.2p per share.

Accounting judgments and going concern

The most significant judgements made in preparing these accounts relate to thecarrying value of the properties and investments which are stated at openmarket value. The Group uses external professional valuers to determine thevalues of our properties. Interest rate hedges (as explained above) are statedat net present value of the extra costs arising to maturity as compared withcurrent market rates.The Directors exercised their commercial judgements when reviewing the cashflow forecasts of the Group and the underlying assumptions on which they arebased. The Group's business activities, together with the factors likely toaffect its future development, are set out in the Chairman's Statement, theChief Executive's Report and this Report. In addition the directors considerednote 17 to the financial statements which includes the company's objectives,policies and processes for managing its capital; its financial risk managementobjectives; details of its financial instruments and hedging activities; aswell as its exposure to credit risk and liquidity risk. Per IFRS Deferred Mark-to- Head EPRA tax market of leases Adjusted interest net swaps assets 2009 £'000 £'000 £'000 £'000 £'000 Investment properties 243,109 (29,485) 213,624 Other fixed assets 2,621 2,621 Investments in associate 9,440 9,440and joint ventures Other net assets 4,678 4,678 Other non-current (54,395) 7,393 6,347 29,485 (11,170)liabilities Net debt (146,349) (146,349) Net assets 59,104 7,393 6,347 - 72,844 Adjusted EPRA NAV per 91.5pshare 2008 Investment properties 245,770 (27,238) 218,532 Other fixed assets 2,722 2,722 Investments in associate 8,360 8,360and joint ventures Other net assets 810 810 Other non-current (49,662) 2,843 19,616 27,238 35liabilities Net debt (167,694) (167,694) Net assets 40,306 2,843 19,616 62,765 Adjusted EPRA NAV per 82.1pshare With sound financial resources and long term leases in place with the tenants,the directors believe that the company is well placed to manage its businessrisks despite the current uncertain economic outlook. The directors thereforehave a reasonable expectation that the company has adequate resources tocontinue in operational existence for the foreseeable future. Thus theycontinue to adopt the going concern basis of accounting in preparing the annualfinancial statements.Dividends

The Directors are again proposing the same final dividend as in 2008. The company is proposing to pay 1.2p, payable to shareholders on 2nd July 2010. This makes a total for the year of 1.95p - the same as in 2008. In current conditions this will be a final dividend of 0.4p per share and a capitalisation issue of new shares worth 0.8p per share.

Our associated company Bisichi Mining PLC, in which we hold a 41.7% stake, hada strong year and produced profit before taxation of £5.0 million. This figureis after a revaluation surplus under IFRS of £0.1 million.

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

Robert Corry,Finance Director16 April 2010Directors & AdvisorsDIRECTORSEXECUTIVE DIRECTORS

*Michael A Heller MA FCA (Chairman)

John A Heller LLB MBA (Chief executive)

Robert J Corry BA FCA (Finance Director)

Michael C Stevens FCA

NON-EXECUTIVE DIRECTORS

†Howard D Goldring BSC (ECON) ACA

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

#†Clive A Parritt FCA CF FIIA

Clive A Parritt joined the board on 1 January 2006. He is a charteredaccountant with over 30 years experience of providing strategic, financial andcommercial advice to businesses. He is chairman of Barronsmead VCT 2 plc,DiGiCo Europe Limited and BG Consulting Group Limited as well as being adirector of F&C US Smaller Companies plc. He is Vice President of the Instituteof Chartered Accountants in England and Wales and is a non-executive member ofits Board. 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 officeMichael C Stevens FCACarlton House, 22a St James's SquareLondon SW1Y 4JHDirector of propertyMike J Dignan FRICSAuditorBaker Tilly UK Audit LLPPrincipal bankersHSBC Bank PLCLloyds Banking Group PLCNational Westminster Bank PLCRoyal Bank of Scotland PLCSolicitorsOlswang LLPPinsent Masons LLPStockbrokerOriel Securities LimitedRegistrars & transfer officeCapita Registrars,Northern HouseWoodsome ParkFenay BridgeHuddersfieldW.YorkshireHD8 0GATelephone 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.com

Email: ssd@capitaregistrars.com

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

The directors submit their report and the audited accounts, for the year ended 31 December 2009.

ActivitiesThe principal activities of the group during the year were property investmentand development, as well as investment in joint ventures and an associatedcompany. The associated company is Bisichi Mining PLC in which the companyholds a 42 per cent interest. Bisichi Mining PLC is listed on the London StockExchange and operates in England and South Africa with subsidiaries which areinvolved in overseas mining and mining investment.Business ReviewReview of the group's development and performanceThe Chairman's Statement, Chief Executive's Report and Finance Director'sReport on the preceding pages 2 to 17 provide a comprehensive review andassessment of the group's activities during the year as well as its position atthe year end and prospects for the forthcoming year.Property activitiesThe group is a long-term investor in property. It acquires retail properties,actively manages those assets to improve rental income and thus enhance thevalue of its properties over time. In reviewing performance, the principalareas regularly monitored by the group include:• Rental income - the aim of the group is to maximise the maintainable incomefrom each property by careful tenant management supported by sympathetic andrevenue enhancing development. Income may be affected adversely by theinability of tenants to pay their rent. Rent collection and tenant quality aremonitored carefully. This risk is minimised as a result of the diversifiedtenant base, which should limit the impact of the failure of any individualtenant.

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

• Financing costs - the exposure of the group to interest rate movements ismanaged by the use of swap arrangements (see note 17 on page 47 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 38.• Property valuations - market sentiment and economic conditions have a directeffect on property valuations, which therefore can vary significantly (upwardsor downwards) over time. Bearing in mind the long-term nature of the group'sbusiness, valuation changes have little direct effect on the ongoing activitiesor the income and expenditure of the group. Tenants generally have long-termleases, so rents are unaffected by short-term valuation changes. Borrowings aresecured against property values and if those values fall very significantly,this could limit the ability of the group to develop the business usingexternal borrowings. The risk is minimised by trying to ensure that there isadequate cover to allow for fluctuations in value on a short-term basis.It continues to be the policy of the group to realise property assets when thevaluation of those assets reaches a level at which the directors consider thatthe long-term rental yield has been reached. The group also seeks to acquireadditional property investments on an opportunistic basis when the potentialrental yields offer scope for future growth.Investment activitiesThe investments in joint ventures and the associate are for the long term.

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

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

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

Employment

The group's policy is to attract staff and motivate employees by offering competitive terms of employment. The group provides equal opportunities to all employees and prospective employees including those who are disabled.

Performance indicatorsOur success is principally measured in terms of net asset value per share andtrading cash flow (where we aim over a period of time to deliver a positivecash return) and net asset value per share after adjusting for valuationvolatility and excluding IFRS adjustments. The directors consider that the KeyPerformance Indicator of the Group is the Net Asset per Share value shown atthe foot of the Balance Sheet on page 35 and as discussed in the FinanceDirector's Report. Cash flow is shown on page 37.

Dividend Policy and Capitalisation Issue

An interim dividend for 2009 of 0.75p was paid on 22 January 2010 (2008:Interim dividend 0.75p paid on 23 January 2009). The directors recommendpayment of a final dividend for 2009 of 0.40p per ordinary share of 10 penceeach (the Final Dividend and Ordinary Share respectively). In addition to theFinal Dividend the directors propose to issue Ordinary Shares in lieu of thefull final dividend that would otherwise have been paid, by issuing to existingshareholders new Ordinary Shares (the Capitalisation Issue) with an aggregatevalue equal to 0.80p (the Capitalisation Amount) for each Ordinary Share heldby them.Subject to shareholder approval, the total dividend per Ordinary Share for 2009will be 1.15p per Ordinary Share. When added to the Capitalisation Amount, thisresults in an equivalent nominal amount of 1.95p per Ordinary Share (2008:Equivilentnominal amount of 1.95p per Ordinary Share).

The Final Dividend of 40p per Ordinary Share will be payable on 2 July 2010 to shareholders registered at the close of business on 4 June 2010. The Capitalisation Issue will take effect on 2 July 2010 to shareholders registered at the close of business on 4 June 2010.

The Capitalisation Issue is conditional on, amongst other things, shareholders'approval at the AGM of the company to be held on 7June 2010 of the granting ofauthority to the directors to allot and issue Ordinary Shares in connectionwith the Capitalisation Issue (the Capitalisation Issue Shares). TheCapitalisation Issue also requires shareholders to authorise the capitalisationof reserves to allow the Capitalisation Issue Shares to be issued.

Further details concerning the Capitalisation Issue (including certain general taxation considerations in respect of the Capitalisation Issue) are set out below and a summary and explanation of the resolution to be proposed at the Annual General Meeting in respect of the Capitalisation Issue is set out on page 27 of this Directors' Report.

The Capitalisation Issue

Reason for Dividend Policy and Capitalisation Issue

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

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

Entitled Shareholders

Holders of Ordinary Shares on the register as at 4 June 2010 will be entitledto receive Capitalisation Issue Shares. Accordingly, the last date transferswill be accepted for registration to participate in the Capitalisation Issuewill be 4 June 2010 (the Capitalisation Issue Record Date).

Entitlement to Capitalisation Issue Shares

Each shareholder's entitlement to Capitalisation Issue Shares will becalculated by taking the Capitalisation Amount per Ordinary Share multiplied bythe number of Ordinary Shares held by that shareholder at the CapitalisationIssue Record Date and dividing that amount by the Capitalisation Issue Price.The Capitalisation Issue Price will be the average of the middle marketquotations for Ordinary Shares for the three dealing days starting on, andincluding, 2 June 2010, the day when the Ordinary Shares are first quoted``ex-dividend'', as derived from the Official List of the UK Listing Authority.The Capitalisation Issue Price, once fixed, will also be notified on thecompany's website at www.lap.co.uk.

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

The Capitalisation Issue Shares

The company will apply to the UK Listing Authority for the Capitalisation IssueShares to be admitted to the Official List and to the London Stock Exchange forthe Capitalisation Issue Shares to be admitted to trading on its market forlisted securities on 2 July 2010. Subject to the applications being successful,the Capitalisation Issue Shares are expected to be allotted on and dealings inCapitalisation Issue Shares are expected to begin on or around 2 July 2010.The Capitalisation Issue Shares will be issued fully paid and will rank paripassu in all respects with the existing Ordinary Shares, including the right toreceive all dividends or other distributions declared, made or paid after thedate of their issue (but excluding for the avoidance of doubt the FinalDividend).

Subject to the Capitalisation Issue becoming effective:

(a) (a) In respect of Ordinary Shares held in certificated form on theCapitalisation Issue Record Date, share certificates will be issued in respectof Capitalisation Issue Shares and posted to shareholders as soon as reasonablypracticable after the Capitalisation Issue becomes effective; and(b) (b) In respect of Ordinary Shares held in uncertificated form (i.e. CREST)on the Capitalisation Issue Record Date, prior to the commencement of dealingsin the Capitalisation Issue Shares on the London Stock Exchange, theappropriate stock account in CREST of the relevant shareholder will be creditedwith such person's entitlement to Capitalisation Issue Shares. TheCapitalisation Issue Shares are expected to be eligible to be traded throughthe CREST system with effect from the date of commencement of dealings on theLondon Stock Exchange.Dividends

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

Share Plans

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

UK tax treatment of the Capitalisation Issue

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

Overseas Shareholders

It is the responsibility of overseas shareholders to ensure that all relevantlaws and regulations in overseas jurisdictions applicable to them or theirshareholdings (for example, exchange control laws or regulations) are compliedwith and that they obtain any permissions or consents required to be obtained,or make any filings required to be made by them. Shareholders should consulttheir professional advisers if they are not sure whether any formalities mustbe observed in order to receive Capitalisation Issue Shares. It is theresponsibility of any person resident outside the UK wishing to receiveCapitalisation Issue Shares to be satisfied as to full observance of the lawsof the relevant territory, including obtaining any government or other consentswhich may be required and observing other formalities in such territories.

The company's ordinary shares held in treasury

During 2009 the company issued 1,580,814 of its own shares from Treasury for anaverage price of 33.5p which increased the "issued share capital"by the samenumber of shares. Details of the issue of these shares is shown in the table below.At 31 December 2009 4,293,051 (2008: 5,873,865) shares were held in treasury with a market value of £1,856,745 (2008:£1,468,466). At the Annual General Meeting (AGM) in June 2009members renewed the authority for the company to purchase up to 10 per cent ofits issued ordinary shares. The company will be asking members to renew thisauthority at the next AGM in June 2010.

Movements in Treasury shares during the year:

Transaction Number of price shares Treasury shares held at 1 January 2009

5,873,865

9 February 2009 - Issue of Treasury shares in lieu of 31.25p (1,214,400)directors bonuses 12 February 2009 - Issue of Treasury shares following 25.66p (50,000)the exercise of share options March 2009 - Purchase by the Trustee of the SIP for 29.50p (21,780)issue of Dividend Shares May 2009 - Issue of Treasury shares in lieu of senior 38.00p (96,261)staff bonuses

December 2009 - Issue of Treasury shares in connection with the HMRC approved share incentive plan 43.00p

(198,373)

Treasury shares held at 31 December 2009

4,293,051

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

Investment properties

The freehold and long leasehold properties of the company and its subsidiarieswere revalued as at 31 December 2009 by external professional firms ofchartered surveyors - Allsop LLP, London (98.1 per cent of the portfolio), andBNP Paribas, Leeds (1.9 per cent). The valuations, which are reflected in thefinancial statements, amount to £213.6 million (2008: £218.5 million).Taking account of prevailing market conditions, the valuation of groupproperties at 31 December 2009 resulted in a increase of £9.4 million (2008:reduction of £33.1 million). 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 and Dragon RetailProperties Limited) and the associate company (Bisichi Mining PLC) was areduction of £0.2 million (2008 reduction of £4.2 million). The proportion ofthis revaluation attributable to the Group (net of taxation) is reflected inthe income statement and the consolidated balance 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 have been put in place in the company,subsidiaries and joint ventures in order to limit the exposure to interest raterisk.

Directors

M A Heller, J A Heller, R J Corry, H D Goldring, C A Parritt and M C Stevens were directors of the company for the whole of 2009.

M A Heller and H D Goldring, are retiring by rotation at the Annual General Meeting in 2010 and offer themselves for re-election. Brief details of the directors offering themselves for re-election are as follows:

Michael Heller is executive chairman and has been a director since 1971. He hasa contract of employment determinable at six months notice. Michael Heller is achartered accountant and a member of the nomination committee. He is executivechairman of Bisichi Mining PLC, our associated company.Howard Goldring has been a director since 1992 and has a contract of servicedeterminable at three months notice. He is a member of the audit, remunerationand nomination committees. Howard Goldring is a chartered accountant and globalasset allocation specialist. He is executive chairman of Delmore AssetManagement Limited which specialises in the management of investment portfoliosand the provision of asset allocation advice for private clients, familyoffices and pension funds. The board has considered the re-appointment ofHoward Goldring and recommends his re-election as a director. His specialisedeconomic knowledge and broad business experience are of significant benefit

tothe business.Directors' interests

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

Beneficial Non-beneficial interests interests 31 Dec 09 1 Jan 09 31 Dec 09 1 Jan 09 M A Heller 5,450,109 4,871,757 18,902,994 18,520,634 R J Corry 661,879 359,110 - - H D Goldring 11,309 11,080 - - J A Heller 1,310,652 1,153,971 ††13,779,769 13,520,634 C A Parritt 24,867 24,364 - - M C Stevens 756,747 492,267 +988,140 +777,534

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

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

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

Between 1 January 2010 and the date of this report the interests of a number ofdirectors in the ordinary shares of the company have increased to the followingtotals: Beneficial Non-beneficial M A Heller 5,878,681 18,902,994 R J Corry 930,450 - J A Heller 1,872,557 13,779,769 M C Stevens 891,032 988,140

No other changes in the directors' holdings took place between 1 January 2010 and the date of this report. However, the interests of M A Heller and his family company interests also increased in this period and are shown in the "Substantial shareholdings" paragraph below.

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

Substantial shareholdingsAt 31 December 2009 M A Heller and his family had an interest in 44.8 millionshares of the company, representing 56.23 per cent of the issued share capitalnet of treasury shares (2008: 43.09 million shares representing 56.4 per cent).Cavendish Asset Management Limited has an interest in 4,810,873 sharesrepresenting 6.04 per cent of the issued share capital of the company (2008:3,470,351 shares representing 4.54 per cent).

Between 1 January 2010 and the date of this report the following changes occurred:

The interest of M A Heller and his family increased to 46.44 million shares in the company, representing 56.78 per cent of the issued share capital net of Treasury shares.

The company is not aware of any other holdings exceeding 3 per cent of the issued share capital and no relevant changes have occurred between 1 January 2010 and the date of this report.

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 the company and the size and nature of their holdings is shown in "Substantial shareholdings" above.

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

There are no restrictions on voting rights or on the transfer of ordinaryshares in the company, save in respect of Treasury Shares. The rules governingthe appointment and replacement of directors, alteration of the articles ofassociation of the company and the powers of the company's directors accordwith usual English company law provisions. Each director is re-elected at leastevery three years. The company has requested authority from shareholders to buyback its own ordinary shares and there will be a resolution to renew theauthority at this year's AGM.The company is not party to any significant agreements that take effect, alteror terminate upon a change of control of the company following a takeover bid.The company is not aware of any agreements between holders of its ordinaryshares that may result in restrictions on the transfer of its ordinary sharesor on voting rights.

There are no agreements between the company and its directors or employees providing for compensation for loss of office or employment that occurs because of a takeover bid.

Statement as to disclosure of information to the auditorThe directors in office on 31 December 2009 have confirmed that, as far as theyare aware, there is no relevant audit information of which the auditor isunaware. All of the directors have confirmed that they have taken all the stepsthat they ought to have taken as directors in order to make themselves aware ofany relevant audit information and to establish that it has been communicatedto the auditor.Corporate governanceThe company has adopted the Guidance for Smaller Quoted Companies (SQC's)published by the Quoted Companies Alliance (QCA). The QCA provides guidance toSQC's. The QCA's guidance covers the implementation of the Revised CombinedCode on Corporate Governance for SQC's and the paragraphs below set out how thecompany has applied this guidance during the year. The company has compliedwith the QCA's guidance throughout the year, except insofar that non-executivedirectors are not appointed for fixed terms (section A.7.2).Principles of corporate governanceThe board promotes good corporate governance in the areas of accountability andrisk management as a positive contribution to business prosperity. The boardendeavours to apply corporate governance principles in a sensible and pragmaticfashion having regard to the circumstances of the business. The key objectiveis to enhance and protect shareholder value.

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

A directors' responsibility statement in respect of the accounts is set out onpage 32. The non-executive directors have a particular responsibility to ensurethat the strategies proposed by the executive directors are fully considered.To enable the board to discharge its duties, all directors have full and timelyaccess to all relevant information and there is a procedure for all directors,in furtherance of their duties, to take independent professional advice, ifnecessary, at the expense of the group. The board has a formal schedule ofmatters reserved to it and normally has eleven regular meetings scheduled eachyear. Additional meetings are held for special business as required.

The board is responsible for overall group strategy, approval of major capital expenditure and consideration of significant financial and operational matters.

The board committees, which have written terms of reference, deal with specific aspects of the group's affairs:

• The nomination committee is chaired by C A Parritt and comprises the non-executive directors and the executive chairman. The committee is responsible for proposing candidates for appointment to the board, having regard to the balance and structure of the board. In appropriate cases recruitment consultants are used to assist the process. All directors are subject to re-election at least every three years.

• The remuneration committee is responsible for making recommendations to theboard on the company's framework of executive remuneration and its cost. Thecommittee determines the contract terms, remuneration and other benefits foreach of the executive directors, including performance related bonus schemes,pension rights and compensation payments. The board itself determines theremuneration of the non-executive directors. The committee comprises thenon-executive directors and it is chaired by C A Parritt. The executivechairman of the board is normally invited to attend. The directors'remuneration report is set out on pages 28 to 30.

• The audit committee comprises the non-executive directors and is chaired by C A Parritt. The audit committee report is set out on page 31.

Board and board committee meetings held in 2009

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 3 3 H D Goldring Board 11 11 Audit committee 3 3 Nomination 1 1 committee 2 2 Remuneration committee M A Heller Board 11 11 Nomination 1 1 committee 2 2 Remuneration committee J A Heller Board 11 10 Audit committee 3 2 C A Parritt Board 11 11 Audit committee 3 3 Nomination 1 1 committee 2 2 Remuneration committee M C Stevens Board 11 11 Audit committee 3 2 Nomination 1 1 committee

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 directorsThe senior independent non-executive director is C A Parritt. The otherindependent non-executive director is H D Goldring. Delmore Asset ManagementLimited (Delmore) is a company in which H D Goldring is a majority shareholderand director. Delmore provides consultancy services to the company on a feebasis. H D Goldring's association with Delmore and the length of his service onthe board mean that the criteria for independence set out in the Combined Codeof Corporate Governance are not met.

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

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

Directors and officers liability insurance The group maintains directors and officers insurance, which is reviewed annually and is considered to be adequate by the company and its insurance advisers.

Internal controlThe directors are responsible for the group's system of internal control andfor reviewing its effectiveness at least annually, 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 key elements of the control system in operation are:

• The board meets regularly with a formal schedule of matters reserved for itsdecision and has put in place an organisational structure with clearly definedlines of responsibility and with appropriate delegation of authority;

• There are established procedures for planning, approval and monitoring of capital expenditure and information systems for monitoring the group's financial performance against approved budgets and forecasts;

• The departmental heads are required annually to undertake a full assessmentprocess to identify and quantify the risks that face their departments andfunctions, and assess the adequacy of the prevention, monitoring andmodification practices in place for those risks. In addition, regular reportsabout significant risks and associated control and monitoring procedures aremade to the executive directors. The process adopted by the group accords withthe guidance contained in the document "Internal Control Guidance for Directorson the Combined Code" issued by the Institute of Chartered Accountants inEngland and Wales. The audit committee receives reports from external auditorsand from executive directors of the group. During the period, the auditcommittee has reviewed the effectiveness of the system of internal control asdescribed above. The board receives periodic reports from all committees;

• There are established procedures for the presentation and review of the financial statements and the Group has in place an organisational structure with clearly defined lines of responsibility and with appropriate delegation of authority.

There are no internal control issues to report in the annual report andfinancial statements for the year ended 31 December 2009 and 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.Communication with shareholdersCommunications with shareholders are given high priority. Extensive informationabout the group and its activities is provided in the Annual Report and online.The company's website www.lap.co.uk is also updated with all announcements andreports promptly when they are issued. There is a regular dialogue with thecompany's stockbrokers and institutional investors. Enquiries from individualson matters relating to their shareholdings and the business of the group aredealt with promptly and informatively .

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

Payments to suppliersThe company and the group agree the terms of contracts when orders are placed.It is group policy that payments to suppliers are made in accordance with thoseterms, provided that suppliers also comply with all relevant terms andconditions. Trade creditors outstanding at the year end represent 17.8 daysannual trade purchases (2008: 17.3 days).

Donations

No political donations were made during the year (2008: £Nil). Donations for charitable purposes amounted to £1,525 (2008: £250).

Going concernThe group's business activities, together with the factors likely to affect itsfuture development are set out in the Chairman's Statement on the precedingpages 2 to 5, Chief Executive's Report on pages 8 to 11. The Finance Director'sReport on pages 15 to 17 sets out the financial position of the company, itscash flows, liquidity position and borrowing facilities. In addition Note 17 tothe financial statements gives details of the group's financial instruments andinterest rate risk, and maturity and hedging profile.The group has considerable financial resources together with long term leaseswith the majority of the tenants of its property portfolio. As a consequence,the directors believe that the company is well placed to manage its businessrisks successfully 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 MeetingThe Annual General Meeting will be held at the RAC Club, 89 Pall Mall, LondonSW1Y 5HS on Monday 7June 2010 at 10.30 a.m. Items 1 to 9 will be proposed asordinary resolutions. More than 50 per cent of shareholders' votes must be infavour for these resolutions to be passed. Items 10 and 11 will be proposed asspecial resolutions. At least 75 per cent of shareholders' votes must be infavour for these resolutions to be passed. The directors consider that theCapitalisation Issue and all of the resolutions to be put to the meeting are inthe best interests of the company and its shareholders as a whole andaccordingly the board unanimously recommends that shareholders vote in favourof all of the resolutions, as the directors intend to do in respect of theirown beneficial holdings of ordinary shares. Please note that the followingparagraphs are only summaries of certain of the resolutions to be proposed atthe Annual General Meeting and not the full text of the resolutions. You shouldtherefore read this section in conjunction with the full text of theresolutions contained in the notice of Annual General Meeting.

Ordinary Resolutions

1. Resolution 8 - Directors' authority to allot securities

Paragraph 8.1.1 of Resolution 8 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 £2,726,200. Thisrepresents approximately 33.3 per cent. of the ordinary share capital of thecompany in issue (excluding treasury shares) at 16 April 2010 (being the lastpracticable date prior to the publication of this Directors' Report).In line with recent guidance issued by the Association of British Insurers('ABI') paragraph 8.1.2 of Resolution 8 would give the directors the authorityto allot shares in the company and grant rights to subscribe for or convert anysecurity into shares in the company up to a further aggregate nominal value of£2,726,200 , in connection with a rights issue. This amount representsapproximately 33.3 per cent. of the ordinary share capital of the company inissue (excluding treasury shares) at 16 April 2010 (being the last practicabledate prior to the publication of this Directors' Report).The directors' authority will expire at the conclusion of the next AnnualGeneral Meeting. The directors have no present intention to make use of thisauthority. However, if they do exercise the authority, the directors intend tofollow emerging best practice as regards its use (including as regards thedirectors standing for re-election in certain cases), as recommended by theABI.

2. Resolution 9 - the Capitalisation Issue

In order to enable the directors to effect the Capitalisation Issue the following ordinary resolution will be proposed at the Annual General Meeting:

(a) To give the directors the authority to issue new Ordinary Shares in lieu of paying cash dividends of an amount equivalent to 0.8p per Ordinary Share

Paragraph 9.1 of Resolution 9 will grant the directors authority to capitalisesuch amount of the company's share premium account as the directors maydetermine up to £672,000 and to apply such sum in paying up the CapitalisationIssue Shares.

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

Paragraph 9.2 of Resolution 9 will grant the directors the authority to allotauthorised but unissued Ordinary Shares in the share capital of the company. IfResolutions 8 and 9 are passed, the maximum aggregate amount the directors areauthorised to allot represents 41.55 per cent. of the total issued ordinaryshare capital of the company (excluding treasury shares) as at 16 April 2010(being the latest practicable date prior to the date of this Directors'Report). The authority given by paragraph 9.1 of Resolution 9 shall expire atthe conclusion of the company's Annual General Meeting to be held in 2011.

The directors at present intend to use the authority conferred by paragraph 9.2 of Resolution 9 to allot the Capitalisation Issue Shares.

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

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

1. Resolution 10 - 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 2011, 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£419,610 representing in accordance with institutional investor guidelines,approximately 5 per cent. of the total ordinary share capital in issue as at 16April 2010 (being the last practicable date prior to the publication of thisDirectors' Report in each case as if the pre-emption rights in company lawdid not apply.Save in respect of issues of shares in respect of employee share schemes andshare dividend alternatives, the directors have no present intention to makeuse of 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% of the company'sordinary share capital within a rolling three-year period without priorconsultation with shareholders.

2. Resolution 11 - purchase of own Ordinary Shares

The effect of Resolution 11 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 8,392,203 ordinaryshares (representing approximately 10 per cent of the company's issued sharecapital as at 16 April 2010 (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 the higher of (i) 105% of the averagemarket price for an ordinary share for the five business days preceding anysuch purchase and (ii) the higher of the last independent trade for an ordinaryshare and the highest current independent bid for an ordinary share as derivedfrom the trading venue where the purchase is carried out. The authorityconferred by Resolution 11 will expire at the conclusion of the company's nextAnnual General Meeting to be held in 2011 or 15 months from the passing of theresolution, whichever is the earlier. Any purchases of ordinary shares would bemade by means of market purchase through the London Stock 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 16 April 2010 (being the last practicable date prior to the publication of this Directors' Report) the total number of options to subscribe for new ordinary shares in the company as at 31 December 2009 was 70,000 shares representing 0.09% of the company's issued share capital as at 31 December 2009. Such number of options to subscribe for new ordinary shares would represent approximately 0.09% of the reduced issued share capital of the company assuming full use of the authority to make market purchases sought under Resolution 11.

Other mattersBaker Tilly UK Audit LLP have expressed their willingness to continue in officeas auditor. A proposal will be made at the Annual General Meeting for their

reappointment.By order of the boardMichael Stevens,Secretary16 April 2010Carlton House22a St James's SquareLondon SW1Y 4JHRemuneration Report

The remuneration committee is pleased to present its report for the year ended 31 December 2009.

The remuneration committee is a formally constituted committee of the board and is 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 the longer term development of the group.

Service and employment contracts

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

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

Summary of directors' terms

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

The following information has been audited

Directors' Remuneration for the year ended 31 December 2009

Salary Bonus Bonus Other Total Pension Total Total

Pension Total

And in in benefits before contrib 2009 before

contrib 2008

fees cash shares Pension utions Pension utions contrib- contrib utions utions £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Executive directors M A Heller* 7 - 300 50 357 - 357 204 - 204 J A Heller 300 200 406 46 952 30 982 658 30 688 R J Corry 206 25 6 24 261 146 407 221 118 339 M C Stevens 90 - 6 19 115 65 180 136 67 203 603 225 718 139 1,685 241 1,926 1,219 215 1,434 Non-executive directors H D Goldring* 40 - - 4 44 - 44 38 - 38 C A Parritt 30 - - - 30 - 30 25 - 25 70 - - 4 74 - 74 63 - 63 Total 673 225 718 143 1,759 241 2,000 1,282 215 1,497remuneration for directors' service during year

* See "Directors" below and Note 20 "Related party transactions".

Other benefits include the provision of car, health and other insurance and subscriptions.

Pension schemes and incentives

Three (2008: three) directors have benefits under money purchase pensionschemes. Contributions in 2009 were £241,000 (2008: £215,000) as set out in thetable above. Directors are not entitled to benefits under any bonus orincentive schemes apart from the share option and share incentive plan, detailsof which are set out below. Bonuses are awarded by the remuneration committeewhen merited. In assessing the performance of the executive team and, inparticular to determine whether bonuses are merited the remuneration committeetakes account of the overall performance of the business. Specific areasaddressed include: enhancement of the asset base by effective development;changes in rental income generated; quality and risk profile of the tenantbase; voids; timely acquisitions and disposals; security of fundingarrangements; and overall teamwork. Bonuses were awarded by the remunerationcommittee to four executive directors during 2009 (2008: four).

Directors

Although M A Heller receives reduced remuneration in respect of his services tothe group, the group does supply office premises, property management, generalmanagement accounting and administration services for a number of companies inwhich M A Heller has an interest. The board estimates that the value of theseservices, if supplied to a third party, would have been £275,000 (2008: £275,000) for the year. Further details of these services are set out in Note 20"Related party transactions" to the financial statements.

H D Goldring's company, Delmore Asset Management Limited provides consultancy services to the group. This is dealt with in Note 20 to the financial statements.

Share option schemes

The company has two share option schemes:

1. The HMRC approved scheme (Approved Scheme) was set up in 1986 in accordancewith HMRC rules to gain HMRC approved status which gave the members certain taxadvantages. No director has any options outstanding under the Approved Scheme.2. The non HMRC approved scheme (Unapproved Scheme) was set up in 1998 and isnot subject to HMRC rules for approval. One executive director had options in2009 to subscribe for ordinary shares under the Unapproved Scheme as follows: Number of share options Option 1 31 from Exercised price January Exercised Granted December on 2009 2009 in 2009 2009 Unapproved Scheme: M C Stevens 25.66p 50,000 (50,000) - 8 Mar 02 7 Mar 09

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

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. The exercise of options under the Unapproved Scheme is subject tothe satisfaction of objective performance conditions specified by theremuneration committee, which conform to institutional shareholder guidelinesand best practice provisions. These performance conditions have been achieved.The bid market price of London & Associated Properties PLC ordinary shares at31 December 2009 was 43.3p (2008: 25.0p). During the year the share mid-marketprice ranged between 52.50p and 26.00p.

Share incentive plan

Following a recommendation of the remuneration committee the directors set up anHMRC approved share incentive plan (SIP) in May 2006. The purpose of the plan,which is open to all eligible LAP head office based executive directors andstaff is to enable them to acquire shares in the company to give them acontinuing stake in the group. The SIP comprises four types of share - (1) freeshares under which the company may award shares up to the value of £3,000 eachyear, (2) partnership shares, under which members may save up to £1,500 perannum to acquire shares, (3) matching shares through which the company mayaward up to two shares for each share acquired as a partnership share, and (4)dividend shares acquired from dividends paid on shares within the SIP.1. Free shares On 22 December 2009 (2008: 17 November) free shares of up to theannual maximum of £3,000 per member were awarded at 43.00p (2008: 44.00p)

pershare as follows:Free shares awarded: Number of members Number of shares Value of shares 2009 2008 2009 2008 2009 2008 £ £ Directors: R J Corry 1 1 6,977 6,818 3,000 3,000 J A Heller 1 1 6,977 6,818 3,000 3,000 M C Stevens 1 1 6,977 6,818 3,000 3,000 Staff 17 19 72,792 80,682 31,300 35,500 Total at 31 December 20 22 93,723 101,136 40,300 44,500

2. Partnership shares On 17 November 2009 (2008: 17 November) directors and staff were invited to complete partnership share agreements and commence saving for partnership shares over the period November 2009 to October 2010. At 31 December 2009 three directors and seven staff had saved a total of £5,250 towards the cost of partnership shares to be acquired in November 2010. The shares will be acquired at the prevailing market price on the day of acquisition.

Partnership shares issued: Number of members Number of shares Value of shares 2009 2008 2009 2008 2009 2008 Directors: £ £ R J Corry 1 1 3,488 3,409 1,500 1,500 J A Heller 1 1 3,488 3,409 1,500 1,500 M C Stevens 1 1 3,488 3,409 1,500 1,500 Staff 7 19 24,416 53,955 10,500 23,740 Total at 31 December 10 22 34,880 64,182 15,000 28,2403. Matching shares The partnership share agreements for the year to 31 October2009 provide for two matching shares to be awarded free of charge for eachpartnership share acquired in December 2009. On 22 December 2009 69,770matching shares were allocated (2008: 128,364). Matching shares will usually beforfeited if a member leaves employment in the group within 5 years of theirgrant.Matching shares granted: Number of members Number of shares Value of shares 2009 2008 2009 2008 2009 2008 £ £ Directors: R J Corry 1 1 6,977 6,818 3,000 3,000 J A Heller 1 1 6,977 6,818 3,000 3,000 M C Stevens 1 1 6,977 6,818 3,000 3,000 Staff 7 19 48,839 107,910 21,000 47,480 Total at 31 December 10 22 69,770 128,364 30,000 56,4804. 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 2009 amounted to £6,547 (2008: £6,833).Dividend shares issued: Number of members Number of shares Value of shares 2009 2008 2009 2008 2009 2008 £ £ Directors: R J Corry 1 1 1,573 - 464 - J A Heller 1 1 1,573 - 464 - M C Stevens 1 1 1,573 - 464 - Staff 17 19 17,061 - 5,033 - Total at 31 December 20 22 21,780 - 6,425 -

The SIP is set up as an employee benefit trust - The trustee is London & Associated Securities Limited, a wholly owned subsidiary of LAP, and all shares and dividends acquired under the SIP will be held by the trustee until transferred to members in accordance with the rules of the SIP.

The following information is unauditedThe graph illustrates the company's performance as compared with a broad equitymarket index over a five year period. Performance is measured by totalshareholder return. The directors have chosen the FTSE All Share - Total ReturnIndex as a suitable index for this comparison as it gives an indication ofperformance against a large spread of quoted companies.C A ParrittChairman - Remuneration Committee16 April 2010

Audit Committee Report

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

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

The audit committee's prime tasks are to:

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

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

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

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

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

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

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

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

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

Meetings

The committee meets at least twice prior to the publication of the annual results and discusses and considers the half year results prior to their approval by the board. The audit committee meetings are attended by the external audit partner, chief executive, finance director and company secretary. Prior to monthly board meetings the members of the committee meet on an informal basis to discuss any relevant matters which may have arisen. Additional formal meetings may be held as necessary.

During the past year the committee:

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

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

• considered and approved the annual review of internal controls.

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

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

• the chairman of the audit committee has had separate meetings with the external audit partner.

External AuditorBaker Tilly UK Audit LLP held office throughout the period under review. In theUnited Kingdom London & Associated Properties PLC provides extensiveadministration and accounting services to Bisichi Mining PLC, which has its ownaudit committee and employs PKF (UK) LLP, a separate and independent firm ofregistered auditors.C A ParrittChairman - Audit Committee16 April 2010

Directors' responsibility statement

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

Company law requires the directors to prepare group and company financial statements for each financial year. The directors are required under the Listing Rules of the Financial Services Authority to prepare group financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") and have elected under company law to prepare the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards 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 andthe company for that period.

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

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

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

c. state for the group financial statements, whether they have been prepared

in accordance with IFRSs adopted by the EU and for the company financial

statements whether applicable UK accounting standards have been

followed, subject to any material departures disclosed and explained in the

company financial statements;

d. prepare the financial statements on the going concern basis unless it is

inappropriate to presume that the group and the company will continue in

business.

The directors are responsible for keeping 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 Regulations. 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 21 confirm that, to the best of each person's knowledge:

a. the financial statements, prepared in accordance with the applicable set of

accounting standards, give a true and fair view of the assets, liabilities,

financial position and profit of the company and the undertakings included

in the consolidation taken as a whole; and

b. the management reportcontained in the Annual Report includes a fair review

of the development and performance of the business and the position of the

company and the undertakings included in the consolidation taken as a

whole, together with a description of the principal risks and uncertainties

that they face. Valuers' certificates

To the Directors of London & Associated Properties PLC

In accordance with your instructions we have carried out a valuation of the freehold and leasehold property interests held as at 31 December 2009 by the company as detailed in our Valuation Report dated 22 February 2010.

Having regard to the foregoing, we are of the opinion that the open market value as at 31 December 2009 of these interests was:

£'000 Freehold 78,209 Leasehold 127,656 205,865

27 Soho Square, London W1D 3AY Allsop LLP

22 February 2010 Property Consultants 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 the freehold property interests held as at 31 December 2009 by the company as detailed in our Valuation Report dated 24 February 2010.

Having regard to the foregoing, we are of the opinion that the open market value as at 31 December 2009 of these interests was:

£'000 Freehold 4,023

Capitol House, Russell Street, BNP Paribas Real Estate

Advisory and Property Leeds LS1 5SP Management UK Limited 24 February 2010 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") on pages 34 to 62. The financial reporting frameworkthat has been applied in the preparation of the group financial statements isapplicable law and International Financial Reporting Standards (IFRSs) asadopted by the European Union. The financial reporting framework that has beenapplied in the preparation of the parent company financial statements isapplicable law and United Kingdom Accounting Standards (United KingdomGenerally 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 auditors

As more fully explained in the Directors' Responsibilities Statement set out onpage 32, 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 the financial statements in accordance withapplicable law and International Standards on Auditing (UK and Ireland). Thosestandards require us to comply with the Auditing Practices Board'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 on the APB's website at www.frc.org.uk/apb/scope/UKP.

Opinion on the financial statements

In our opinion

* the financial statements give a true and fair view of the state of the

group's and of the parent company's affairs as at 31 December 2009 and of

the group's profit for the year then ended;

* the group financial statements have been properly prepared in accordance

with IFRSs as adopted by the European Union;

* the parent company financial statements have been properly prepared in

accordance with United Kingdom Generally Accepted Accounting Practice; and

* the financial statements have been prepared in accordance with the

requirements of the Companies Act 2006 and, as regards the group financial

statements, 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 been

properly prepared in accordance with the Companies Act 2006; and

* the information given in the Directors' Report for the financial year for

which the financial statements are prepared is consistent with the

financial statements.

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 our opinion:

* adequate accounting records have not been kept by the parent company, or

returns adequate for our audit have not been received from branches not visited by us; or * the parent company financial statements and the part of the Directors'

Remuneration Report to be audited are not in agreement with the accounting

records 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

our audit.

Under the Listing Rules we are required to review:

* the directors' statement, set out on page 32, in relation to going concern;

and

* the part of the Corporate Governance Statement relating to the company's

compliance with the nine provisions of the June 2008 Combined Code

specified for our review.

Nigel Tristem (Senior Statutory Auditor)

For and on behalf of BAKER TILLY UK AUDIT LLP,

Chartered Accountants2 Bloomsbury StreetLondon WC1B 3ST19 April 2010Consolidated income statementfor the year ended 31 December 2009 2009 2008 Notes £'000 £'000 Gross rental income Group and share of joint ventures 17,067

16,775

Less: joint ventures - share of rental income (519) (272) Revenue 1 16,548 16,503 Direct property expenses (2,166) (3,137) Overheads (4,865) (4,408) Property overheads 1 (7,031) (7,545) Net rental income 1 9,517 8,958

Listed investments held for trading 3 148

298

Profit on sale of investment properties 14

897

Net increase/(decrease) on revaluation of 9,422 (33,125)investment properties Net increase/(decrease) in value of investments 178 (1,530)held for trading Operating profit/(loss) 1 19,279 (24,502)

Share of loss of joint ventures after tax 10 (276) (588)

Share of profit of associate after tax 11 1,485

172

Profit/(loss) before interest and taxation 20,488 (24,918) Interest rate derivatives 17 13,269 (21,063) Finance income 5 90 681 Finance expenses 5 (12,440) (11,966) Profit/(loss) before taxation 21,407 (57,266) Income tax 6 (2,355) 9,812 Profit/(loss) for the year attributable to the 19,052 (47,454)owners of the parent Basic profit/(loss) per share 8 24.32p (62.30)p Diluted profit/(loss) per share 8 24.32p

(62.30)p

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

consolidated balance sheetat 31 December 2009 2009 2008 Notes £'000 £'000 Non-current assets Market value of properties attributable 213,624 218,532to Group Present value of head leases 29,485 27,238 Property 9 243,109 245,770 Plant and equipment 9 816 917 Investments in joint ventures 10 1,396 1,793 Investments in associated company 11 8,044 6,567 Held to maturity investments 12 1,805 1,805 255,170 256,852 Current assets Trade and other receivables 13 3,976 3,974 Financial assets-investments held for 14 702 2,330trading Cash and cash equivalents 8,655 8,191 13,333 14,495 Total assets 268,503 271,347 Current liabilities Trade and other payables 15 (11,427) (11,268) Financial liabilities - borrowings 16 (7,216) (7,277) Current tax liabilities (741) (2,417) (19,384) (20,962) Non-current liabilities Financial liabilities-borrowings 16 (147,788) (160,417) Interest rate derivatives 17 (6,347) (19,616) Present value of head leases on (29,485) (27,238)properties Deferred tax 18 (6,395) (2,808) (190,015) (210,079) Total liabilities (209,399) (231,041) Net assets 59,104 40,306

Equity attributable to the owners of the

parent Share capital 19 8,392 8,232 Share premium account 5,042 5,236 Translation reserve in associate (284) (504) Capital redemption reserve 47 47 Retained earnings (excluding treasury 50,465 33,532shares) Treasury shares 19 (4,558) (6,237) Retained earnings 45,907 27,295 Total shareholders' equity 59,104 40,306 Net assets per share 8 74.22p 52.73p Diluted net assets per share 8 74.19p 52.70p

These financial statements were approved by the board of directors and authorised for issue on 16 April 2010 and signed on its behalf by:

M A Heller R J Corry

Director Director

Company Registration No. 341829

Consolidated statement of changes in shareholders' equity

for the year ended 31 December 2009

Retained earnings Translation Fair Capital Treasury Retained Total Share Share reserves value redemption

Earnings equity

capital premium reserve reserve shares excluding * treasury shares £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 January 8,232 5,236 (530) 1,001 47 (6,549) 81,554 88,9912008 Loss for year - - - - - - (47,454) (47,454) Other comprehensive income: Reclassification of - - - (1,001) - - 1,001 -fair value of interest derivatives Currency translation - - 26 - - - - 26in associate Total other - - 26 (1,001) - - 1,001 26comprehensive income Total comprehensive - - 26 (1,001) - - (46,453) (47,428)income Transactions with owners: Equity share options - - - - - - 99 99in associate Disposal of own shares - - - - - 129 - 129 Loss on transfer of - - - - - 183 (183) -own shares Dividends paid - - - - - - (1,485) (1,485) Transactions with - - - - - 312 (1,569) (1,257)owners Balance at 31 December 8,232 5,236 (504) - 47 (6,237) 33,532 40,3062008 Profit for year - - - - - - 19,052 19,052 Other comprehensive income: Currency translation - - 220 - - - - 220in associate Total other - - 220 - - - - 220comprehensive income Total comprehensive - - 220 - - - 19,052 19,272income Transaction with owners: Equity share options - - - - - - (76) (76)in associate Issue of own shares 160 (194) - - - - - (34)and expenses Disposal of own shares - - - - - 521 - 521 Loss on transfer of - - - - - 1,158 (1,158) -own shares Dividends paid - - - - - - (885) (885) Transactions with 160 (194) - - - 1,679 (2,119) (474)owners Balance at 31 December 8,392 5,042 (284) - 47 (4,558) 50,465 59,1042009 * Interest rate derivatives

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

Consolidated statement of comprehensive income

for the year ended 31 December 2009

2009 2008 £'000 £'000 Profit/(loss) for the year 19,052 (47,454) Other Comprehensive income:

Currency translation in associate 220 26 Other comprehensive income for the year 220 26 Total comprehensive income for the period 19,272 (47,428)attributable to owners of the parent

Consolidated cash flow statement

for the year ended 31 December 2009

2009 2008 £'000 £'000 Operating activities Profit/(Loss) before interest and taxation 20,488 (24,918) Depreciation 210 200

Profit on disposal of non-current assets (3)

(2)

Profit on sale of investment properties (14)

(897)

Net (increase)/decrease on revaluation of investment (9,422) 33,125properties Share of (profit)/loss of joint ventures and associate (178) 416after tax Net (increase)/decrease in value of investments held for (1,209) 1,530trading Decrease in net current assets 2,303

2,566

Cash generated from operations 12,175 12,020 Income tax (paid)/repaid (444) 104 Cash inflows from operating activities 11,731 12,124 Investing activities Investment in shares and loan stock in joint ventures -

(2,300)

Property acquisitions and improvements (3,763) (19,788) Sale of properties 17,805 16,229 Purchase of office equipment and motor cars (133)

(294)

Sale of office equipment and motor cars 27

61 Interest received 90 681

Dividends received from associates and joint ventures 273

131

Cash inflows/(outflows) from investing activities 14,299 (5,280) Financing activities Issue expenses (34) - Sale of treasury shares 521 129 Equity dividends paid (885) (1,485) Interest paid (12,132) (12,210)

Repayment of short term loan from joint ventures (225)

(7)

Repayment of medium term bank loan (12,750)

(2,571)

Cash outflows from financing activities (25,505)

(16,144)

Net increase/(decrease) in cash and cash equivalents 525

(9,300)

Cash and cash equivalents at beginning of year 914

10,214

Cash and cash equivalents at end of year 1,439

914

Cash and cash equivalentsFor the purpose of the cash flow statement, cash and cash equivalents comprisethe following balance sheet amounts: 2009 2008 £'000 £'000 Cash and cash equivalents (before bank overdrafts) 8,655 8,191 Bank overdrafts (7,216) (7,277)

Cash and cash equivalents at end of year 1,439

914

£0.6m of cash deposits at 31 December 2009 was charged as security to Axa Annuity Company.

Consolidated cash flow statement

for the year ended 31 December 2009

2009 2008 £'000 £'000 Operating activities Profit/(Loss) before interest and taxation 20,488 (24,918) Depreciation 210 200

Profit on disposal of non-current assets (3)

(2)

Profit on sale of investment properties (14)

(897)

Net (increase)/decrease on revaluation of investment (9,422) 33,125properties Share of (profit)/loss of joint ventures and associate (178) 416after tax Net (increase)/decrease in value of investments held for (1,209) 1,530trading Decrease in net current assets 2,303

2,566

Cash generated from operations 12,175 12,020 Income tax (paid)/repaid (444) 104 Cash inflows from operating activities 11,731 12,124 Investing activities Investment in shares and loan stock in joint ventures -

(2,300)

Property acquisitions and improvements (3,763) (19,788) Sale of properties 17,805 16,229 Purchase of office equipment and motor cars (133)

(294)

Sale of office equipment and motor cars 27

61 Interest received 90 681

Dividends received from associates and joint ventures 273

131

Cash inflows/(outflows) from investing activities 14,299 (5,280) Financing activities Issue expenses (34) - Sale of treasury shares 521 129 Equity dividends paid (885) (1,485) Interest paid (12,132) (12,210)

Repayment of short term loan from joint ventures (225)

(7)

Repayment of medium term bank loan (12,750)

(2,571)

Cash outflows from financing activities (25,505)

(16,144)

Net increase/(decrease) in cash and cash equivalents 525

(9,300)

Cash and cash equivalents at beginning of year 914

10,214

Cash and cash equivalents at end of year 1,439

914

Cash and cash equivalentsFor the purpose of the cash flow statement, cash and cash equivalents comprisethe following balance sheet amounts: 2009 2008 £'000 £'000 Cash and cash equivalents (before bank overdrafts) 8,655 8,191 Bank overdrafts (7,216) (7,277)

Cash and cash equivalents at end of year 1,439

914

£0.6m of cash deposits at 31 December 2009 was charged as security to Axa Annuity Company.

Group accounting policies

The following are the principal group accounting policies:

Basis of accounting

The group financial statements for the year ended 31 December 2009 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 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.The Directors exercised their commercial judgements when reviewing the cashflow forecasts of the Group and the underlying assumptions on which they arebased. The Group's business activities, together with the factors likely toaffect its future development, are set out in the Chairman's Statement, theChief Executive's Report and Finance Director's Report. In addition theDirectors considered note 17 of the financial statements which include thecompany's objectives, policies and processes for managing its capital; itsfinancial risk management objectives; details of its financial instruments andhedging activities; its exposure to credit risk and liquidity risk.With sound financial resources and long term leases in place with the tenants,the Directors believe that the company is well placed to manage its businessrisks despite the current uncertain economic outlook. The Directors thereforehave a reasonable expectation that the company has adequate resources tocontinue in operational existence for the foreseeable future. Thus theycontinue to adopt the going concern basis of accounting in preparing the annualfinancial statements.Key judgements and estimatesThe preparation of the financial statements requires management to makeassumptions and estimates that may affect the reported amounts of assets andliabilities and the reported income and expenses, further details of which areset out below. Although management believes that the assumptions and estimatesused are reasonable, the actual results may differ from those estimates.Further details of which are contained in the Directors' Report.

International Accounting Standards (IAS/IFRS)

At the date of approval of these financial statements, the following new Standards and interpretations which have been applied in these Financial statements, were in issue:

IAS 1 (amended) Presentation of financial statements

IAS 23 (amended) Borrowing costs.

IAS 27 (revised) Consolidated and separate financial statements.

IAS 39 (amended) Eligible hedged items.

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

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

IFRS 3 (revised) Business combinations.

IFRS 7 (amended) Financial instruments.

IFRS 8 Operating segments.

IFRIC 9 (amended) Reassessment of Embedded Derivatives.

IFRIC 15 Agreements for the construction of real estate.

IFRIC 17 Distributions of non-cash assets to owners.

Other than additional disclosure, there is no effect on reported income or net assets.

The directors anticipate that the adoption of the standards and interpretationsin issue but not yet effective in future periods will have no material impacton the financial statements of the Group.Basis of consolidationThe Group accounts incorporate the accounts of London & Associated PropertiesPLC and all of its subsidiary undertakings, together with the Group's share ofthe results and net assets of its joint ventures and associate.

Subsidiaries

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

All intra group transactions, balances, income and expenses are eliminated on consolidation. Details of Group trading subsidiary companies are set out in note 25.4.

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

Associates

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

Goodwill

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

Revenue

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

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

Dilapidations

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

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

Pensions

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

Financial instruments

Investments

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

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

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

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

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

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

Disposal

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

Depreciation and amortisationIn applying the fair value model to the measurement of investment properties,depreciation and amortisation are not provided in respect of investmentproperties.Plant and equipmentOther non-current assets, comprising motor vehicles and office equipment, aredepreciated at a rate of between 10% and 33% per annum which is calculated towrite off the cost, less estimated residual value of the assets, on a straightline basis over their expected useful lives.Income taxesThe charge for current taxation is based on the results for the year asadjusted for disallowed or non-assessable items. Tax payable upon realisationof revaluation gains recognised in prior periods is recorded as a current taxcharge with a release of the associated deferred tax. Deferred tax is the taxexpected to be payable or recoverable on differences between the carryingamounts of assets and liabilities in the financial statements and thecorresponding tax bases used in the tax computations, and is accounted forusing the balance sheet liability method. Deferred tax liabilities aregenerally recognised for all taxable temporary differences and deferred taxassets are recognised to the extent that it is probable that taxable profitswill be available against which deductible temporary differences can beutilised. In respect of the deferred tax on the revaluation surplus, this iscalculated on the basis of the chargeable gains that would crystallise on thesale of the investment portfolio as at the reporting date. The calculationtakes account of indexation on the historic cost of properties and anyavailable capital losses. Deferred tax is calculated at the tax rates that areexpected to apply in the period when the liability is settled or the asset isrealised. Deferred tax is charged or credited in the group income statement,except when it relates to items charged or credited directly to equity, inwhich case it is also dealt with in equity.Cash and cash equivalentsCash comprises cash in hand and on demand deposits, net of bank overdrafts.Cash equivalents comprise short-term, highly liquid investments that arereadily convertible to known amounts of cash and which are subject to aninsignificant risk of changes in value and original maturities of three monthsor less.Segmental ReportingFor management reporting purposes, the Group is organised into businesssegments distinguishable by economic activity. The Group's only businesssegments are investment properties and other investments. These businesssegments are subject to risks and returns that are different from those ofother business segments and are the primary basis on which the Group reportsits segment information. This is consistent with the way the Group is managedand with the format of the Group's internal financial reporting.Notes to the financial statementsfor the year ended 31 December 2009

1. Segmental analysis

Following the adoption of IFRS 8 during the year, Operating Segments are basedon the internal reporting and operational management of the Group. The Group isorganised into Property and other investments.Business segments 2009 2008 Property Listed Property Listed investments Total investments Total £'000 £'000 £'000 £'000 £'000 £'000 Rental income 16,548 - 16,548 16,503 - 16,503 Property overheads (7,031) - (7,031) (7,545) - (7,545) Net rental income 9,517 - 9,517 8,958 - 8,958 Listed investment - 148 148 - 298 298income Profit on sale of 14 - 14 897 - 897

investment properties Net increase/ 9,422 - 9,422 (33,125) - (33,125)(decrease) on revaluation of investment properties Net increase/ - 178 178 - (1,530) (1,530)(decrease) on revaluation of investments held for trading Operating profit/ 18,953 326 19,279 (23,270) (1,232) (24,502)(loss)* Total assets 256,556 702 257,258 258,857 2,330 261,187(excluding investments in associate and joint ventures) Total liabilities (53,654) - (53,654) (60,930) - (60,930)(excluding borrowings and current tax) Borrowings (155,004) - (155,004) (167,694) - (167,694) Net assets 47,898 702 48,600 30,233 2,330 32,563 Current tax (741) (2,417)liabilities: non segmental Investments in joint 3,196 3,588ventures: non segmental (notes 10 and 12) Investments in 8,044 6,567associate: non segmental (note 11) Investments in 5 5unlisted companies Net assets as per 59,104 40,306balance sheet Other segment items: Depreciation 210 - 210 200 - 200 Capital expenditure 3,594 - 3,594 19,208 - 19,208 Rental income Dragon Group Property Analytical Retail Share Ventures Properties 2009 Total Total 2008 £'000 £'000 £'000 £'000 £'000 £'000 Rental income 16,548 818 220 17,586 17,067 16,775 Direct property expenses (2,166) (57) (13) (2,236) (2,201) (3,156) Overheads (4,865) (222) (70) (5,157) (5,011) (4,563) 9,517 539 137 10,193 9,855 9,056 Less: attributable to (338) (98)joint ventures Net rental income 9,517 8,958

*Operating profit is defined as profit before tax and excludes the share of profit & losses of joint ventures and associate, Finance income and expenses, and the movement of interest rate derivatives.

Geographical segments

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

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 (2008:none).

2. Profit/(loss) before taxation

2009 2008 £'000 £'000

Profit/(loss) before taxation is arrived at after charging/

(crediting): Staff costs (note 21) 3,361 2,829

Depreciation on tangible fixed assets - owned assets 210

200

Operating lease rentals - land and buildings 385

373

Profit on disposal of motor vehicles and office equipment (3)

(2)

Amounts payable to the auditor in respect of both audit and

non-audit services Audit services:

Statutory - company and consolidation 81

82 - subsidiaries 54 65 Further assurance services 10 11 Other services 8 8 153 166

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

3. Listed investments held for trading

2009 2008 £'000 £'000 Investment sales 1,948 1,603 Dividends receivable 60 141 2,008 1,744 Cost of sales (1,835) (1,421) 173 323 Attributable overheads (25) (25) 148 2984. Directors' emoluments 2009 2008 £'000 £'000 Emoluments 1,759 1,282

Defined contribution pension scheme contributions 241

215 2,000 1,497Details of directors' emoluments and share options are set out in theremuneration report.5. Finance costs 2009 2008 £'000 £'000 Finance income 90 681 Finance expenses Interest on bank loans and overdrafts (3,013) (9,575) Interest on other loans (2,108) (2,178)

Interest on derivatives adjustment (5,338)

1,614

Interest on obligations under finance leases (1,981) (1,989) Total borrowing costs (12,440) (12,128)

Amounts included in the cost of qualifying assets -

162 (12,440) (11,966) (12,350) (11,285)No interest payable (2008: £162,000) has been transferred to the cost ofinvestment properties (Note 9). The amounts capitalised represent the cost offunds forming part of the Group's borrowings which were used in financing majorcapital projects.6. Income tax 2009 2008 £'000 £'000 Current tax:

Corporation tax on profit/(loss) of the period -

299

Adjustments in respect of previous periods (1,232)

152 Total current tax (1,232) 451 Deferred tax

Origination and reversal of timing differences (1,052)

2,269

Revaluation of investment properties 658

(7,726)

Accelerated capital allowances 270

397

Fair value of interest derivatives 3,715

(5,898)

Adjustments in respect of previous periods (4)

695 Total deferred tax (note 18) 3,587 (10,263) Tax on profit/(loss) on ordinary activities 2,355

(9,812)

Factors affecting tax charge for the year

The corporation tax assessed for the year is different from that at the standard rate of corporation tax in the United Kingdom of 28 per cent (2008: 28.5 per cent). The differences are explained below:

Profit/(loss) on ordinary activities before taxation 21,407

(57,266)

Taxation on ordinary activities at 28 per cent (2008: 28.5%) 5,994 (16,321) Effects of:

Expenses not deductible for tax purposes 4

8 Other differences (2,059) 5,243 Joint ventures and associate (348) 119 Deferred tax rate adjustment - 292

Adjustment in respect of prior years (1,236)

847

Tax charge/(credit) for the period 2,355

(9,812)

The main component of other differences in the reconciliation relates to potential capital gains of £1.9 million (2008: indexation allowance £4.8 million).

Factors that may affect future tax charges:

Based on current capital expenditure plans, the Group expects to continue to beable to claim capital allowances in excess of depreciation in future years, butat a slightly lower level than in the current year.Deferred tax provision has been made for gains on revaluing investmentproperties. At present it is not envisaged that any tax will become payable inthe foreseeable future.7. Dividend 2009 2008 Per £'000 Per £'000 share share Dividends paid during the year relating to the 1.15p 885 1.95p 1,485prior period

Equivalent final dividend in ordinary shares 0.80p - issued during the year relating to prior period

1.95p 1.95p Dividends to be paid: Interim dividend for 2009 paid on 22 January 0.75p 597 0.75p 5712010

Proposed equivalent final dividend for 2009 1.20p 981 1.20p 933 (0.4p in cash and 0.8p in ordinary shares)

1.95p 1,578 1.95p 1,504

The proposed final dividend will be payable on 2 July 2010 to shareholders registered at the close of business on 4 June 2010.

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

Profit/(loss) per share have been calculated as follows: 2009 2008

Profit/(loss) for the year for the purposes of basic and 19,052 (47,454) diluted loss per share (£'000)

Weighted average number of ordinary shares in issue for the 78,345 76,172 purpose of basic profit/(loss) per share ('000)

Basic profit/(loss) per share 24.32p

(62.30)p

Weighted average number of ordinary shares in issue for the 78,345 76,172 purpose of diluted profit/(loss) per share ('000)

Fully diluted profit/(loss) per share 24.32p

(62.30)p

Weighted average number of shares in issue is calculated after excluding treasury shares of 4,293,051 (2008: 5,873,865).

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 issue Net assets per share 2009 2008 2009 2008 2009 2008 £'000 £'000 `000 `000 Pence Pence Basic At 31 December 59,104 40,306 79,629 76,443 74.22 52.73 Dilution adjustments for shares subject to option agreements: Issue of outstanding share 28 40 70 120 options Diluted 59,132 40,346 79,699 76,563 74.19 52.70

9. Property and plant and equipment

Investment Properties Office Leasehold equipment over and motor Freehold 50 years Total vehicles £'000 £'000 £'000 £'000 Cost or valuation at 1 95,272 150,498 245,770 1,682January 2009 Additions 1,450 2,011 3,461 133 Disposals (17,791) - (17,791) (81) Increase in present value of - 2,247 2,247 -head leases Increase on revaluation 4,667 4,755 9,422 - Cost or valuation at 31 83,598 159,511 243,109 1,734December 2009 Representing assets stated at: Valuation 83,598 130,026 213,624 - Present value of head leases - 29,485 29,485 - Cost - - - 1,734 83,598 159,511 243,109 1,734 Depreciation at 1 January - - - 7652009 Charge for the year - - - 210 Disposals - - - (57) Depreciation at 31 December - - - 9182009 Net book value at 1 January 95,272 150,498 245,770 9172009 Net book value at 31 December 83,598 159,511 243,109 8162009

9. Property and plant and equipment continued

Investment Properties Office Leasehold equipment over and motor Freehold 50 years Total vehicles £'000 £'000 £'000 £'000 Cost or valuation at 1 116,206 163,541 279,747 1,554January 2008 Additions 15,438 3,476 18,914 294 Disposals (15,333) - (15,333) (166)

Decrease in present value of - (4,433) (4,433) -

head leases Decrease on revaluation (21,039) (12,086) (33,125) - Cost or valuation at 31 95,272 150,498 245,770 1,682December 2008 Representing assets stated at: Valuation: 95,272 123,260 218,532 -

Present value of head leases - 27,238 27,238 -

Cost - - - 1,682 95,272 150,498 245,770 1,682 Depreciation at 1 January - - - 6732008 Charge for the year - - - 200 Disposals - - - (108)

Depreciation at 31 December - - - 7652008

Net book value at 1 January 116,206 163,541 279,747 881 2008

Net book value at 31 December 95,272 150,498 245,770 917 2008

The leasehold over fifty years and freehold properties, excluding the presentvalue of head leases, were valued as at 31 December 2009 by externalprofessional firms of chartered surveyors and Directors. The valuations weremade at open market value. 2009 2008 £'000 £'000 Allsop LLP 205,865 214,855 BNP Paribas Real Estate 4,023 3,677 Directors' valuation 3,736 - 213,624 218,532 Add: Present value of headleases 29,485 27,238 243,109 245,770

Upper Street, Islington, which was held at Directors' valuation at the balance sheet date, was sold in January 2010 for £3.8 million.

The historical cost of investment properties, including total capitalised interest of £6,051,000 (2008: £6,051,000) was as follows:

2009 2008 Leasehold Leasehold Freehold Over 50 Freehold Over 50 years years £'000 £'000 £'000 £'000 Cost at 1 January 96,308 131,451 94,957 127,975 Additions 1,450 2,011 15,438 3,476 Disposals (17,150) - (14,087) - Cost at 31 December 80,608 133,462 96,308 131,451

10. Investment in joint ventures

2009 2008 £'000 £'000 Group share of: Turnover 519 272 Loss before tax (242) (684) Taxation (34) 96 Loss after tax (276) (588) Non-current assets 6,565 6,712 Current assets 1,582 1,874 Current liabilities (3,871) (1,485) Non-current liabilities (2,880) (5,308) Net assets 1,396 1,793Analytical Ventures Limited (Analytical Ventures) - unlisted propertyinvestment company. The company owns 50 per cent of the issued share capitaland 50 per cent of the issued loan stock. The remaining 50 per cent is owned bythe Bank of Scotland. Analytical Ventures is incorporated and operates inEngland and Wales and has issued share capital of 7,558,000 ordinary shares(2008:7,558,000 ordinary shares of £1 each). Analytical Ventures is managed bya board of directors with neither party having overall control.Dragon Retail Properties Limited (Dragon) - unlisted property trading andinvestment company. The company owns 50 per cent of the issued share capital.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 (2008:500,000 ordinary shares of £1 each).Dragon is managed by a board of directors with neither party having overall

control.Shares in joint ventures: 2009 2008 £'000 £'000 At 1 January 1,793 1,881 Share of loss after tax (276) (588) Dividend received (121) - Investment valuation - 500 (397) (88) At 31 December 1,396 1,793

11. Investments in associated company

2009 2008 £'000 £'000

Bisichi Mining PLC - listed mining and property investment

company Group share of: Turnover 12,094 10,828 Profit before tax 2,039 929 Taxation (554) (757) Profit after tax 1,485 172 Non-current assets 9,971 9,573 Current assets 4,308 4,574 Current liabilities (4,345) (5,929) Non-current liabilities (1,890) (1,651) Net assets 8,044 6,567 2009 2008 £'000 £'000 Share in associate: At 1 January 6,567 6,401 Share of profit after tax 1,485 172 Equity share options (76) 99 Currency translation 220 26 Dividend received (152) (131) 1,477 166 At 31 December 8,044 6,567The company owns 42 per cent (2008: 42 per cent) of the issued share capital ofBisichi Mining PLC (Bisichi), a company registered in England and Wales.Bisichi has an issued share capital of 10,451,506 ordinary shares of 10p each,and its principal countries of operation are the United Kingdom (propertyinvestment) and South Africa (coal mining). Bisichi is an associatedundertaking by virtue that London & Associated Properties PLC has aparticipating interest. Bisichi has an independent board of directors whichcontrols its operating and financial policies.

The market (bid) value of this investment at 31 December 2009 was £7,611,000 (2008: £6,087,000).

12. Held to maturity investments

Loan Loan 2009 Unlisted Stock 2008 Unlisted Stock Total Shares in joint Total Shares in joint ventures ventures £'000 £'000 £'000 £'000 £'000 £'000 Cost At 1 January 1,805 5 1,800 5 5 - Loan stock issue - - - 1,800 - 1,800 At 31 December 1,805 5 1,800 1,805 5 1,800

13. Trade and other receivables

2009 2008 £'000 £'000 Trade receivables 736 966

Amounts due from associate and joint ventures 196

148 Other receivables 437 474 Prepayments and accrued income 2,607 2386 3,976 3,974

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

14. Investments held for trading

2009 2008 £'000 £'000 Market bid value of the listed investment 702 2,330portfolio Unrealised deficit of market value over cost (467)

(490)

Listed investment portfolio at cost 1,169

2,820

All investments are listed on the London Stock Exchange.

15. Trade and other payables

2009 2008 £'000 £'000 Trade payables 691 1,070 Amounts owed to joint ventures 1,165

1,454

Other taxation and social security costs 825

553 Other payables 789 874 Accruals and deferred income 7,957 7,317 11,427 11,268

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

16. Borrowings

Current borrowings - amounts falling due within one year

2009 2008 £'000 £'000 Bank overdrafts (unsecured) 7,216 7,277

Non-current borrowings - amounts falling due after more

than one year Term borrowings Debenture stocks: £5 million First Mortgage Debenture Stock 2013 at 11.3 per 5,000 5,000cent £1.7 million First Mortgage Debenture Stock 2016 at 8.67 1,700 1,700per cent £5 million First Mortgage Debenture Stock 2018 at 11.6 per 5,000 5,000cent £10 million First Mortgage Debenture Stock 2022 at 8.109 9,787 9,770per cent* 21,487 21,470 Term bank loans:

£90 million revolving credit facility repayable in 2011* 56,494 69,184

£70 million term bank loan repayable in 2014* 69,807 69,763 126,301 138,947 147,788 160,417

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

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

First Mortgage Debenture Stocks 2013, 2016, 2018 and 2022, the long term £90million bank revolving credit facility repayable in September 2011 and the longterm £70 million term bank loan repayable in November 2014 are secured onspecific freehold and leasehold properties which are included in the financialstatements at a value of £209.6 million.

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

The Group's objectives when managing capital are:

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

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

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

Interest rate risk

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

Sensitivity analysis

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

Liquidity risk

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

17. Financial instruments continued

The table below analyses the Group's financial liabilities into maturity Groupings and also provides

details of the liabilities that bear interest at fixed, floating andnon-interest bearing rates. Less than Over 5 2009 1 year 2-5 years Total years £'000 £'000 £'000 £'000 Bank overdrafts (floating) 7,216 - - 7,216 Debentures (fixed) - 5,000 16,700 21,700 Bank loans (floating)* - 126,679 - 126,679 Trade and other payables 11,427 - - 11,427(non-interest) 18,643 131,679 16,700 167,022 Less 2-5 Over 5 2008 than years years Total 1 year £'000 £'000 £'000 £'000 Bank overdrafts (floating) 7,277 - - 7,277 Debentures (fixed) - 5,000 16,700 21,700 Bank loans (floating)* - 69,429 70,000 139,429 Trade and other payables 11,268 - - 11,268(non-interest) 18,545 74,429 86,700 179,674

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

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

Market price risk

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

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

Borrowing facilities

At 31 December 2009 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 £35,105,000 (2008: £22,544,000) as follows: 2009 2008 £'000 £'000 Overdrafts 1,784 1,973 Term facilities expiring in two to five years 33,321 20,571 35,105 22,544Hedge profilea) There is a hedge to cover part of the £90 million revolving credit facility,which currently covers the full £57 million drawn. It consists of a 20 yearswap for £35 million with a 7 year call option in favour of the bank, taken outin November 2007, at 4.76 per cent and a 20 year swap for £40 million with a 7year call option in favour of the bank, taken out in December 2007, at 4.685per cent.b) There is a hedge to cover the £70 million term bank loan drawn. It consistsof a 20 year swap for £70 million with a 7 year call option in favour of thebank, taken out in November 2007, at 4.76 per cent.At the year end the amount recognised was £4,570,000 deficit (2008: £14,146,000deficit) 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 18 year interest rate, which was4.38 per cent at 31 December 2009 against the rate payable under the specifichedge. This has given a liability at 31 December 2009 of £6,347,000 (2008: £19,616,000) as shown in the balance sheet and this value changes byapproximately £1,800,000 for each 0.1% change in interest rate. The banks owninitial quotations at 31 December 2009 to close each of the hedges were £9,918,000 (2008: £24,893,000). It is not the company's intention to crystallisethe 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.

Fair value of financial instruments

Fair value estimation

Effective 1 January 2009, the Group adopted amendment to IFRS 7 for financialinstruments that are measured in the balance sheet at fair value, this requiresdisclosure of fair value measurements by level of the following fair valuehierarchy:

* Quoted prices (unadjusted) in active markets for identical assets or

liabilities (level 1).

* Inputs other than quoted prices included within level 1 that are observable

for 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 market

data (that is unobservable inputs) (level 3).

2009 Level 1 Level 2 Level 3 Total Gain/ £'000 £'000 £'000 £'000 (loss) to income statement £'000 Financial assets

Other financial assets held for

trading Quoted equities 702 - - 702 178 Financial liabilities

Derivative financial instruments

Interest rate swaps - - 6,347 6,347 13,269 2008 Level 1 Level 2 Level 3 Total Gain/ £'000 £'000 £'000 £'000 (loss) to income statement £'000 Financial assets

Other financial assets held for

trading Quoted equities 2,330 - - 2,330 (1,530) Financial liabilities

Derivative financial instruments

Interest rate swaps - - 19,616 19,616 (21,063)Capital structure

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

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

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. During2009 this decreased to 221.6 per cent (2008: 266.2 per cent) which wascalculated as follows: 2009 2008 £'000 £'000 Total debt 155,004 167,694 Less cash and cash equivalents (8,655) (8,191) Net debt 146,349 159,503 Total equity 65,451 59,922 223.6% 266.2%The gearing reduced primarily due to the rise in the asset values in the year.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.

2009 2008 £'000 £'000 Cash at bank and in hand 8,655 8,191These funds are primarily invested in short term bank deposits maturing withinone year bearing interest at the bank's variable rates. £0.6 million (2008: £nil) of the cash is secured against the 2022 First Mortgage Debenture.

Financial liabilities maturity

Repayment of borrowings 2009 2008 £'000 £'000 Bank loans and overdrafts: Repayable on demand or within one year 7,216

7,277

Repayable between two and five years 126,301

69,184

Repayable after more than five years - 69,763 133,517 146,224 Debentures: Repayable between two and five years 5,000

5,000

Repayable in more than five years 16,487 16,470 155,004 167,694

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

Group undrawn banking facilities

which expire within one year 1,784 1,973 which expire in two to five years 33,321 20,571 35,105 22,544

Interest rate risk and hedge profile

2009 2008 £'000 £'000 Fixed rate borrowings 21,700 21,700 Floating rate borrowings - Subject to interest rate swap 145,000 145,000 - (Excess hedge) / Not hedged (11,105) 1,706 155,595 168,406 Average fixed interest rate 9.69% 9.69% Weighted average swapped interest rate 5.58%

5.59%

Weighted average cost of debt on overdrafts, bank loans 5.97% 6.10%and debentures Average period for which borrowing rate is fixed 9.5 years 10.5 years Average period for which borrowing rate is swapped 17.9 years 18.9 years The swapped interest rate have calls by the bank 4.9 years 5.9

years

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

Total financial assets and liabilities

The Group's financial assets and liabilities and their fair values are asfollows: 2009 2008 Fair Carrying Fair Carrying value value Value value £'000 £'000 £'000 £'000 Cash and cash equivalents 8,655 8,655 8,191 8,191 Financial assets - 702 702 2,330 2,330investments held for trading Other assets 3,976 3,976 3,974 3,974 Derivative liabilities (6,347) (6,347) (19,616) (19,616) Bank overdrafts (7,216) (7,216) (7,277) (7,277) Bank loans (126,679) (126,301) (139,429) (138,947) Present value of head (29,485) (29,485) (27,238) (27,238)leases on properties Other liabilities (12,168) (12,168) (11,268) (11,268) Before debentures (168,562) (168,184) (190,333) (189,851)

Fair value of debenture stocks

Fair value of the Group's Fair 2009 2008debenture liabilities: Book value Fair value Fair Value value adjustment adjustment £'000 £'000 £'000 £'000 Debenture stocks 21,700 29,183 (7,483) (7,579) Tax at 28 per cent (2008: 2,095 2,12228 per cent) Post tax fair value (5,388) (5,457)adjustment Post tax fair value (9.40)p (9.91)padjustment - basic pence per share

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

The fair values were calculated by the directors as at 31 December 2009 and reflect the replacement value of the financial instruments used to manage the Group's exposure to adverse rate movements.

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

18. Deferred tax 2009 2008 £'000 £'000 Balance at 1 January 2,808 13,071 Transfer to profit and loss account 3,587 (10,263) Balance at 31 December 6,395 2,808

The deferred tax balance comprises the

following: Revaluation of investment properties 5,733

5,075

Accelerated capital allowances 2,116

1,852

Fair value of interest derivatives (1,777) (5,493) Short-term timing differences 1,321 1,414 7,393 2,848 Loss relief (998) (40) Provision at end of period 6,395 2,808

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 ordinary ordinary 10p shares 10p shares 2009 2008 2009 2008 £'000 £'000 Authorised: Ordinary shares of 10p 110,000,000 110,000,000 11,000 11,000each

Allotted, issued and fully paid 82,316,972 82,316,972 8,232 8,232

Ordinary shares of 10p - issued 1,605,057 - 160

-during the year Less: held in Treasury (see below) (4,293,051) (5,873,865) (429) (588) "Issued share capital" for 79,628,978 76,443,107 7,963 7,644reporting purposes

The company has one class of ordinary shares which carry no right to fixed income.

The company issued a further 1,605,057 new ordinary shares of 10p each on 3 July 2009, from the amount standing to the credit of the Company's share premium account. The existing shareholders as at 5 June 2009 were entitled to the new Capitalisation Issue ordinary shares as authorised at the Annual General Meeting on 10 June 2009.

Treasury shares Number of ordinary 10p shares Cost/issue value Price. 2009 2008 2009 2008 excl. Date costs £'000 £'000 Shares held in Treasury at 5,873,865 6,167,545 6,237 6,5491 January Issued to meet directors Feb-09 106.18p (1,214,400) - (1,290) -bonuses Issued to meet share Feb-09 106.18p (50,000) - (53) -options exercised Issued for new share Mar-09 106.18p (21,780) - (23) -incentive plan Issued to meet staff May-09 106.18p (96,261) - (102) -bonuses Issued to meet directors - (293,680) - (312)and staff bonuses (Nov 08 - 106.18p) Issued for new share Dec-09 106.18p (198,373) - (211) -incentive plan Shares held in Treasury at 4,293,051 5,873,865 4,558 6,23731 December Share Option Schemes

Employees' share option scheme (Approved scheme)

At 31 December 2009 the following options to subscribe for ordinary shares were outstanding, issued under the terms of the Employees' Share Option Scheme:

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

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

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

A summary of the shares allocated and options issued under the scheme up to 31December 2009 is as follows: Changes during the year At Options Options Options At 1 January Exercised granted lapsed 31 2009 December 2009 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 - - - 3,987,559 employees under the scheme

Non-approved Executive Share Option Scheme (Unapproved scheme)

A share option scheme known as the "Non-approved Executive Share Option Scheme"which does not have HMRC approval was set up during 2000. At 31 December 2009there were no options to subscribe for ordinary shares outstanding.Number of shares Date of Grant Exercised Date Option Price 8 March 1999 50,000 25.66p 12 February 2009

The exercise of options under the Unapproved scheme is subject to the satisfaction of objective performance conditions specified by the remuneration committee which conforms to institutional shareholder guidelines and best practice provisions.

A summary of the shares allocated and options issued under the scheme up to 31December 2009 is as follows:Changes during year Changes during the year At Options Options Options At 1 January Exercised granted lapsed 31 2009 December 2009 Shares issued to date 400,000 50,000 - - 450,000

Options granted which have not 50,000 (50,000) - -

-been exercised

Shares allocated over which 550,000 - - - 550,000 options have not been granted

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

20. Related party transactions

Cost Amounts Owed Cash recharged to (to) by advanced to (by) related related party (by) related party party £'000 £'000 £'000 Related party: Analytical Ventures Limited Current Account 29 1 - Dragon Retail Properties Limited Current account 40 40 - Loan account - (1,205) 225 Bisichi Mining PLC Current account 348 (i) 143 - Directors and key management M A Heller and J A Heller 11 (ii) - - H D Goldring (Delmore Asset (22) (iii) - -Management Limited) Totals at 31 December 2009 406 (1,021) 225 Totals at 31 December 2008 302 (1,306) 7

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

The related party companies above are the associate and joint ventures and are treated as non current asset investments - details are shown in Note 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 company provides office premises, property management, general management,accounting and administration services for both joint ventures.Bisichi Mining PLC (associate)The company provides office premises, property management, general management,accounting and administration services for Bisichi Mining PLC and itssubsidiaries.

Directors

London & Associated Properties PLC provides office premises, propertymanagement, general management, accounting and administration services for anumber of private property companies in which M A Heller and J A Heller have aninterest. Under an agreement with M A Heller no charge is made for theseservices on the basis that he reduces by an equivalent amount the charge forhis services to London & Associated Properties PLC. The board estimates thatthe value of these services, if supplied to a third party, would have been £275,000 for the year (2008: £275,000).The companies for which services are provided are: Barmik Properties Limited,Cawgate Limited, Clerewell Limited, Cloathgate Limited, Ken-Crav InvestmentsLimited, London & South Yorkshire Securities Limited, Metroc Limited, PenrithRetail Limited, Shop.com Limited, South Yorkshire Property Trust Limited,Wasdon Investments Limited, Wasdon (Dover) Limited, and Wasdon (Leeds) Limited.

In addition the company received management fees of £40,000 (2008: £40,000) for work done for two charitable foundations,

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

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

M A Heller is a director of Bisichi Mining PLC, the associated company and received a salary of £75,000 (2008: £75,000) for services.

The directors are considered to be the only key management personnel and theirremunerations including employers national insurance for the year was £2,192,000 (2008: £1,656,000). All other disclosures required including interestin share options in respect of those directors are included within theremuneration report.

21. Employees

The average number of employees, including directors, of the Group during the year involved in management and administration was 37 (2008: 43).

2009 2008 £'000 £'000

Staff costs during the year were as follows:

Salaries and other costs 2,575 2,133 Social security costs 325 280 Pension costs 461 416 3,361 2,82922. Capital Commitments 2009 2008 £'000 £'000

Commitments to capital expenditure contracted for at 500

-

the year end

The Group's share of capital commitments of joint ventures at the year end amounted to £Nil (2008: £Nil).

23. Commitments under operating and finance leases

Operating leases on land and buildings

At 31 December 2009 the Group has total of future minimum commitments under non-cancellable operating leases on land and buildings as follows:

2009 2008 £'000 £'000 Within one year 390 392 In the second to fifth years inclusive 1,495 1,566 After five years - 325 1,885 2,283

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

The leases are for an average term of 6 years and rentals are fixed for an average of one year.

Present value of head leases on properties

Minimum lease Present value of minimum payments lease payments 2009 2008 2009 2008 £'000 £'000 £'000 £'000 Accounts payable under finance leases: Within one year 1,874 1,874 1,874 1,874 In the second to fifth years 7,497 7,497 6,967 6,925inclusive After five years 234,145 236,019 20,644 18,439 243,516 245,390 29,485 27,238 Future finance charges on (214,031) (218,152) - -finance leases Present value of finance 29,485 27,238 29,485 27,238lease liabilities Finance lease liabilities are in respect of leased investment property. Manyleases provide for contingent rent in addition to the rents above, usually aproportion of rental income.

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

Future aggregate minimum rentals receivable

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

2009 2008 £'000 £'000 Within one year 13,156 12,842 In the second to fifth years inclusive 48,079 46,793 After five years 67,808 65,613 129,043 125,24824. Contingent Liabilities

There were no contingent liabilities at 31 December 2009 (2008: £Nil).

25. Company financial statements

Company balance sheet at 31 December 2009

Notes 2009 2008 £'000 £'000 Fixed assets Tangible assets 25.3 87,333 98,101 Other investments: Associated company 25.4 358 358 Subsidiaries and others 25.4 46,290 46,400 25.4 46,648 46,758 133,981 144,859 Current assets Debtors 25.5 19,638 38,970 Investments 25.6 702 2,330 Bank balances 6,653 5,849 26,993 47,149 Creditors Amounts falling due within one year 25.7 (25,171) (39,387) Net current assets 1,822 7,762 Total assets less current liabilities 135,803 152,621 Creditors Amounts falling due after more than 25.8 (81,063) (100,580)one year Net assets 54,740 52,041 Capital and reserves Share capital 25.10 8,392 8,232 Share premium account 25.11 5,042 5,236 Capital redemption reserve 25.11 47 47 Revaluation reserve 25.11 13,779 10,549 Treasury shares 25.10 (4,558) (6,237) Retained earnings 25.11 32,038 34,214 Shareholders' funds 54,740 52,041

These financial statements were approved by the board of directors and authorised for issue on 16 April 2010 and signed on its behalf by:

M A Heller R J Corry

DirectorDirector

Company Registration No. 341829

25.1. Company

accounting policies

The following are the main accounting policies of the company:

Basis of accountingThe financial statements have been prepared under the historical costconvention as modified to include the revaluation of freehold and leaseholdproperties and fair value adjustments in respect of current asset investmentsand interest rate hedges and in accordance with applicable accountingstandards. All accounting policies applied are consistent with those of priorperiods.Investment properties are accounted for in accordance with SSAP 19, "Accountingfor Investment Properties", which provides that these should not be subject toperiodic depreciation charges, but should be shown at open market value. Thisis contrary to the Companies Act 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 inthe annual revaluation and the amount that might otherwise have been showncannot be separately identified or quantified.

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

Revenue

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

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

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

The cost of improvements includes attributable interest.

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

Investments

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

a) Investments held as fixed assets:These comprise investments in subsidiaries and investments in AnalyticalVentures Limited and Dragon Retail Properties Limited (unlisted jointventures), Bisichi Mining PLC (listed associate), and in unlisted companieswhich are all held for the long term. Provision is made for any impairment inthe 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 inwhich they arise.Financial InstrumentsBank loans and overdraftsBank loans and overdrafts are included in creditors on the company balancesheet at the amounts drawn on the particular facilities. Interest payable onthose facilities is expensed as a finance cost in the period to which itrelates.Interest rate derivativesThe company uses derivative financial instruments to hedge the interest raterisk associated with the financing of the company's business. No trading insuch financial instruments is undertaken. At each reporting date, theseinterest rate derivatives are recognised at their fair value to the business,being the Net Present Values of the difference between the hedged rate ofinterest and the rate of interest for the remaining period of the hedge.Where a derivative is designated as a hedge of the variability of a highlyprobable forecast transaction i.e. an interest payment, the element of the gainor loss on the derivative that is an effective hedge is recognised directly inequity. When the forecast transaction subsequently results in the recognitionof a financial asset or a financial liability, the associated gains or lossesthat were recognised directly in equity are reclassified into the incomestatement in the same period or periods during which the asset acquired orliability assumed affects the income statement i.e. when interest income orexpense is recognised.

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

Debtors

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

Creditors

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

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

25.2. Profit/(loss) for the financial year

The company's profit for the year was £1,613,000 (loss 2008: £11,212,000). In accordance with the exemption conferred by Section 408 of the Companies Act 2006, the company has not presented its own profit and loss account.

25.3. Tangible assets Investment Properties Office Long Total Freehold leasehold Equipment and motor vehicles £'000 £'000 £'000 £'000 Cost or valuation at 1 98,916 70,532 26,660 1,724January 2009 Additions 725 592 - 133 Disposals (12,831) (12,750) - (81) Increase/(decrease) on 1,484 4,304 (2,820) -revaluation Cost or valuation at 31 88,294 62,678 23,840 1,776December 2009 Representing assets stated at: Valuation 86,518 62,678 23,840 - Cost 1,776 - - 1,776 88,294 62,678 23,840 1,776 Depreciation at 1 January 815 - - 8152009 Charge for the year 203 - - 203 Disposals (57) - - (57) Depreciation at 31 December 961 - - 9612009 Net book value at 1 January 98,101 70,532 26,660 9092009 Net book value at 31 87,333 62,678 23,840 815December 2009 The freehold and long leasehold properties were valued as at 31 December 2009by external professional firms of chartered surveyors. The valuations were madeat open market value on the basis of existing use. The increase in book valuewas transferred to revaluation reserve. 2009 2008 £'000 £'000 Allsop LLP 82,495 93,515 BNP Paribas Real Estate 4,023 3,677 86,518 97,192

The historical cost of investment properties, including total capitalised interest of £1,222,000 (2008: £1,222,000) was as follows:

Freehold Long Leasehold £'000 £'000 Cost at 1 January 2009 68,526 18,080 Additions 592 - Disposals (14,496) - Cost at 31 December 2009 54,622 18,080

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

25.4. Other investments

Shares in Loan stock Shares Loan subsidiary in in stock companies subsidiary joint in joint Shares in Unlisted Total companies ventures ventures associate shares £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 2009 46,758 40,663 3,658 274 1,800 358 5 Impairment (110) - - (110) - - - At 31 December 46,648 40,663 3,658 164 1,800 358 52009 Subsidiary companiesThe 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 Property investment 100 100Holdings Limited

Analytical Properties Limited Property investment -

100 Analytical Properties (St Property investment - 100Helens) Limited

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

Details of the associate and joint ventures are set out in notes 10 and 11.

25.5. Debtors 2009 2008 £'000 £'000 Trade debtors 382 760 Amounts due from subsidiary companies 17,601

35,640

Amounts due from associate and joint ventures 196

148

Deferred tax asset (note 25.9) 267 1,350 Other debtors 25 92

Prepayments and accrued income 1,167

980 19,638 38,97025.6. Investments 2009 2008 £'000 £'000 Market value of the listed investment 702 2,330portfolio Unrealised deficit of market value over cost (467)

(490)

Listed investment portfolio at cost 1,169

2,820

All investments are listed on the London Stock Exchange.

25.7. Creditors: Amounts falling due within one year

2009 2008 £'000 £'000 Bank overdrafts (unsecured) 7,191 7,277 Amounts owed to subsidiary companies 9,729

22,817

Amounts owed to joint ventures 1,165 1,454 Corporation tax 741 1,824

Other taxation and social security costs 576

282 Other creditors 360 756 Accruals and deferred income 5,409 4,977 25,171 39,387

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

2009 2008 £'000 £'000 Interest rate derivatives 3,082 9,926 Term Debenture stocks: £5 million First Mortgage Debenture Stock 2013 at 11.3 5,000 5,000per cent £1.7 million First Mortgage Debenture Stock 2016 at 8.67 1,700 1,700per cent £5 million First Mortgage Debenture Stock 2018 at 11.6 5,000 5,000per cent £10 million First Mortgage Debenture Stock 2022 at 8.109 9,787 9,770per cent* 21,487 21,470 Term bank loans: Repayable after more than two years* 56,494 69,184 81,063 100,580

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

Details of terms and security of overdrafts, loans and debentures are set outin note 16.Repayment of borrowings: Bank loans and overdrafts: Repayable within one year 7,191 7,277 Repayable between two and three years 56,494 69,184 63,685 76,461 Debentures: Repayable between three and five years 5,000

5,000

Repayable in more than five years 16,487 16,470 85,172 97,931Hedge profileThere is a hedge to cover part of the £90 million revolving credit facility,which currently covers the full £56 million drawn.It consists of a 20 year swap for £35 million with a 7 year call option infavour of the bank, taken out in November 2007, at 4.76 per cent and a 20 yearswap for £40 million with a 7 year call option in favour of the bank, taken outin December 2007, at 4.685 per cent.At the year end the amount recognised was £2,219,000 deficit (2008: £7,147,000deficit) 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 18 year interest rate, which was4.38 per cent at 31 December 2009 against the rate payable under the specifichedge. This has given a liability at 31 December 2009 of £3,082,000 (2008: £9,926,000) as shown in the balance sheet. The banks own initial quotations at31 December 2009 to close each of the hedges were £9,565,000 (2008: £14,182,000).The hedges arenot deemed to be eligible for hedge accounting, as the banks havean option to cancel the hedge in January 2015, even though this is after theexpiry of the term loans and the level of the hedges closely equate to theamount of the loans outstanding. Any movement in the value of the hedges hastherefore to be charged directly to the Income Statement.

Fair value of financial instruments

Fair value estimation

Effective 1 January 2009, the Group adopted amendment to FRS29 for financialinstruments that are measured in the balance sheet at fair value, this requiresdisclosure of fair value measurements by level of the following fair valuehierarchy:

* Quoted prices (unadjusted) in active markets for identical assets or

liabilities (level 1).

* Inputs other than quoted prices included within level 1 that are observable

for 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 market

data (that is unobservable inputs) (level 3). 2009 Level 1 Level 2 Level 3 Total Gain/(loss) £'000 £'000 £'000 £'000 to income statement £'000 Financial assets Other financial assets held for trading Quoted equities 702 - - 702 178 Financial liabilities Derivative financial instruments Interest rate swaps - - 3,082 3,082 6,844 2008 Level 1 Level 2 Level 3 Total Gain/(loss) £'000 £'000 £'000 £'000 to income statement £'000 Financial assets Other financial assets held for trading Quoted equities 2,330 - - 2,330 (1,530) Financial liabilities Derivative financial instruments Interest rate swaps - - 9,926 9,926 (10,882)

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

Liquidity

The table below analyses the company's financial liabilities into maturity Groupings and also provides details of the liabilities that bear interest at

Fixed, floating and non-interest bearing rates.

Less than 2-5 years Over 2009 1 year 5 years Total £'000 £'000 £'000 £'000 Bank overdrafts (floating) 7,191 - - 7,191 Debentures (fixed) - 5,000 16,700 21,700 Bank loans (floating)* - 56,679 - 56,679 Trade and other payables 17,980 - - 17,980(non-interest) 25,171 61,679 16,700 103,550 Less than 1 2-5 years Over 5 2008 year years Total £'000 £'000 £'000 £'000 Bank overdrafts (floating) 7,277 - - 7,277 Debentures (fixed) - 5,000 16,700 21,700 Bank loans (floating)* - 69,429 - 69,429 Trade and other payables 32,110 - - 32,110(non-interest) 39,387 74,429 16,700 130,516

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

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

Total financial assets and liabilities

The company's financial assets and liabilities and their fair values are asfollows: Fair 2009 2008 value Carrying Fair Carrying value value value £'000 £'000 £'000 £'000 Cash and cash equivalents 6,653 6,653 5,849 5,849 Investments 702 702 2,330 2,330 Other assets 19,638 19,638 38,970 38,970 Bank overdrafts (7,191) (7,191) (7,277) (7,277) Bank loans (56,679) (56,494) (69,429) (69,184) Derivative liabilities (3,082) (3,082) (9,926) (9,926) Other liabilities (17,980) (17,980) (32,110) (32,110) Before debentures (57,939) (57,754) (71,593) (71,348)

Additional details of borrowings and financial instruments are set out in notes 16 and 17.

25.9. Provisions for liabilities and charges

2009 2008 £'000 £'000 Deferred Taxation Balance at 1 January (1,350) 1,337 Transfer to profit and loss account 1,083 (2,687) Balance at 31 December (267) (1,350)

No provision has been made for the approximate taxation liability at 28 per cent (2008: 28 per cent) of £992,000 (2008: £649,000) which would arise if the investment properties were sold at the stated valuation.

The deferred tax balance comprises the following:

Accelerated capital allowances 1,189 1,184 Fair value of interest derivatives (863) (2,779)

Short-term timing differences 233 285 Losses (826) (40) Provision at end of period (267) (1,350) 25.10. Share capitalDetails of share capital, treasury shares and share options are set out in note19.25.11. Reserves Share Capital Revaluation Total Premium redemption reserve Retained Account reserve Earnings £'000 £'000 £'000 £'000 £'000 Balance at 1 January 2009 5,236 47 10,549 34,214 50,046 Increase on valuation of - - 1,484 - 1,484investment properties Retained profit for year - - - 1,613 1,613 Dividends paid in year - - - (885) (885) Loss on disposal of - - - (1,158) (1,158)Treasury Shares Capitalisation issue of (194) - - - (194)new ordinary shares and expenses Transfer of realised - - 1,746 (1,746) -revaluation loss Balance at 31 December 5,042 47 13,779 32,038 50,9062009

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 2009 2008 £'000 £'000

Commitments to capital expenditure contracted for at the -

-

year end

25.14. Commitments under operating leases

At 31 December 2009 the company had annual commitments under non-cancellable operating leases on land and buildings as follows:

2009 2008 £'000 £'000

Expiring in more than five years 390

392

In addition, the company has an annual commitment to pay ground rents on itsleasehold investment properties which amount to £323,000 (2008: £326,000), theleases on which expire in more than fifty years.

25.15. Contingent liabilities

There were no contingent liabilities at 31 December 2009 (2008: £Nil).

Five year financial summary

2009 2008 2007 2006 2005 £m £m £m £m £m Portfolio size

Investment properties-Group^ 214 219 248 193 117

Investment properties-joint 13 13 3 91 140ventures Investment 12 12 15 17 15properties-associate 239 244 266 301 272 Portfolio activity £m £m £m £m £m Acquisitions - 9.18 112.71 50.70 2.72 Disposals at book value (17.79) (15.33) (41.37) (1.62) (6.70) Capital Expenditure 3.46 9.73 9.15 5.13 3.34 (14.33) 3.58 80.49 54.21 (0.64)

Consolidated income statement £m £m £m £m

£m Rental income - Group and 17.07 16.77 14.26 11.84 12.39share of joint ventures Less: attributable to joint (0.52) (0.27) (1.23) (3.95) (4.52)venture partners Group rental income 16.55 16.50 13.03 7.89 7.87 Profit/(loss) before interest 20.49 (24.91) (16.59) 21.76 21.48and tax Profit/(loss) before tax 21.41 (57.27) (23.89) 18.32 17.89 Taxation 2.36 (9.81) (11.38) 3.11 3.04 Profit/(loss) attributable to 19.05 (47.45) (12.50) 15.22 14.85shareholders Earnings/(loss) per share - 24.32p (62.30p) (16.40p) 20.00p 18.83pbasic Earnings/(loss) per share - 24.32p (62.30p) (16.40p) 19.97p 18.79pfully diluted Dividend per share 1.95p* 1.95p* 1.95p 1.85p 1.725p

Consolidated balance sheet £m £m £m £m

£m Shareholders' funds 59.10 40.30 88.99 101.86 88.34 Net borrowings 145.65 157.17 147.54 86.12 44.14 Net gearing 246.44% 390.01% 165.79% 84.55% 49.97% Net assets per share - basic 74.22p 52.73p 116.86p 133.62p 116.04p - fully diluted 74.19p 52.70p 116.73p 133.47p 115.88p Consolidated cash flow £m £m £m £m £mstatement Net cash inflow from 12.18 12.02 3.97 3.44 3.88operating activities Capital investment and 13.94 (6.09) 9.84 (26.86) 0.69financial investment

Notes: ^Excluding the present value of head leases

*Equivalent dividend includes new issue shares equal to 0.8p

vendor