London & Associated Properties Regulatory News (LAS)

30 Apr 2012 07:05

FOR IMMEDIATE RELEASE

30 April 2012 LONDON & ASSOCIATED PROPERTIES PLC: RESULTS FOR 12 MONTHS TO 31 DECEMBER 2011 HIGHLIGHTS

- Major turnaround in operating profits of £0.89m against losses of £0.81m in 2010

- Operating profits before financing charges of £12.2m against £11.1m - 10% increase

- Group rental income grew by 2% on a like-for-like basis

- Despite difficult retailing environment voids continue to be low at under 2%

- Acquisition of new Joint Venture in partnership with Columbus Capital Management

- Under EPRA standards net assets were £67.9m and NAV per share of 80.9p

- Total group assets stand at £289m (2010: £289m)

- Growth of Group asset management business - London & Associated Management Services

"The economic environment continues to be challenging. Against thisbackground, we are pleased to report on another period of satisfactoryprogress for LAP. The quality of our portfolio, particularly our key shoppingcentres, when combined with our strategic management expertise has protectedus from the worst of the property recession," Michael Heller, Chairman andJohn Heller, Chief Executive.

Contact:

London & Associated Properties PLC Tel: 020 7415 5000John Heller, Chief ExecutiveRobert Corry, Finance DirectorBaron Phillips Associates Tel: 020 7920 3161

Baron Phillips

Chairman and Chief Executive's statement

The economic environment continues to be challenging. Against this background,we are pleased to report on another period of satisfactory progress for LAP.The quality of our portfolio, particularly our key shopping centres, whencombined with our strategic management expertise has protected us from theworst of the property recession.We are also pleased that operating profit after financing charges has shown amajor turnaround to a profit of £0.884 million for the 12 months to 31December 2011 from a loss of £0.812 million in 2010. We expect this trend tocontinue. We have sustained our rental income at £15.4 million (2010: £15.6million) on investment properties we still hold.As at 31 December 2011, our directly owned portfolio of shopping centres andother retail properties was independently valued at £194 million (2010: £195million). This followed the sale of Phelps Cottage in Islington during 2011for £0.9 million (against a book value of £0.6 million). Over the years wehave always managed our assets intensively and disposed of them when they aredeemed to have reached maturity.During 2011, we obtained vacant possession of a unit formerly let to Boots atWindsor. This has provided a major opportunity to re-configure the space andproduce an increased overall rent. On a like-for-like basis, Group rentalincome during the year grew by 2%, after adjusting for the Boots unit underdevelopment.2011 was a difficult year for retailers and there have been several majorretail insolvencies in the sector. We have not been immune, but our spread ofretail tenants within the portfolio has provided some protection. With theexception of one unit in Halifax, all the units affected have remained tradingunder their pre-pack arrangements with their successors taking new leases.Void levels, at under 2% of our portfolio by rental value, continue to remainlow notwithstanding these retailers' failures.

As mentioned in last year's statement we have looked at differing methods of funding new property opportunities. As part of this we acquired a shopping

centre at Langney, near Eastbourne in a new Joint Venture with a fund managed by Columbus Capital Management LLP, part of Schroders' real estate investment and asset management business. We have invested £887,500 for a 12.5% interest in the Joint Venture. Additionally London & Associated Management Services (LAMS), our asset management subsidiary, has been appointed to manage the property for an on-going management fee.

We report on our major centres as follows:

King Edward Court, Windsor

Following our programmes of disposing of mature assets, this centre accountsfor almost one half of the value of our portfolio. As already stated, during2011 we took back the Boots unit which we are in the process of dividing intothree separate retail units. New lettings have been agreed with Superdry (thefashion retailer) and Cotswold Outdoor (the outdoor clothing and equipmentspecialist). The third unit is currently being marketed and we have interestfrom a number of national retailers. We expect to be able to report furtherprogress on this unit in due course.Elsewhere in the centre Gatward the Jewellers, an existing tenant, has taken anew lease on the adjacent unit to their existing one and have opened a Rolexwatch franchise. We have also agreed with a Timberland franchisee anassignment of a lease formerly held by Early Learning Centre. This is part ofour continued policy to have an exciting mix of tenants at King Edward Court.

The car park continues to operate at the same high level as last year.

During 2012 a number of our major tenants will have rent reviews and we are confident that overall these units will show a significant increase in income.

Orchard Square, Sheffield

Orchard Square, Sheffield, continues to perform satisfactorily. A single unithas become available for the first time in several years and interest in ithas been encouraging. We continue to generate strong income from this centreand it continues to be otherwise fully let.

Kings Square, West Bromwich

In spite of the difficulties experienced in most West Midlands economies, ourcentre at West Bromwich (Kings Square) has the same high level of occupancy aslast year. Sandwell College, which will house some 11,000 students, has openedto the rear of our Centre and this has further increased footfall.

Bon March©, which has a substantial unit in the centre, wishes to continue to trade their unit and we have agreed terms for a new lease at the same rent.

Brixton Market

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

Although LAP had already established Brixton Village as a quality cafe and restaurant location, Groupe Geraud has built on our earlier success.

They have already made progress on an extensive scheme of redecoration and refurbishment. As a result both markets (Brixton Village and Market Row) are trading at unprecedented levels.

Our agreement with Groupe Geraud includes a base rent of £817,500 plus a 50% profit share, once income received exceeds a certain level. Current trading there exceeds that level by some margin.

Interestingly, several of the cafes and restaurants located within the markets now have their own websites and have been reviewed in the national papers.

Our arrangement with Groupe Geraud will establish a strong income stream together with a saving in our head office costs which we have already started to see.

HalifaxTrading at this centre, which we continue to own in a 50:50 joint venture withLloyds Banking Group (formerly HBoS), continues to be strong, despite the lossof a single tenant which went into administration. Interest in the empty unithas been very encouraging, and we are now under offer to let the unit to anational retailer.

We are also pleased to report that Tesco has re-geared its lease for a further 10 years with an uplift in rent of some 33% being achieved.

We have also entered into negotiations with the Council as tenant of most ofthe upper parts, to adjust their lease and create a greater period of incomecertainty. These negotiations are almost finalised and should have a positiveimpact on values.

Commentary on reported results

International Financial Reporting Standards (IFRS)

We prepare our accounts under International Financial Reporting Standards(IFRS). Unfortunately these Standards require a rigid approach to hedginginstruments. In order to provide certainty over the maximum level of ourinterest payments (which are a significant element of our expenses) we enteredinto a swap arrangement the effect of which is that we pay interest at a fixedrate (see note 17). Even though we do not trade these swaps, there is norequirement for us to settle them early and the interest cost is expensed asincurred, the Standards require us to recognise the theoretical impact of"marking to market value" the hedging instrument at each balance sheet date.This market to market valuation is highly volatile and is a direct reflectionof the low levels of term interest rates. We show below under both IFRS andthe standards of the European Real Estate Association (EPRA) our net assets.

Net assets £'000 2011 2010

Exclude swap valuation 70,779 69,388

As disclosed with swap valuation 39,929 55,761

Under EPRA, which is used by most property companies, our net assets stood at£67.9 million in December 2011 compared to £72.1 million in December 2010.Under EPRA net asset per share is now 80.9p compared to 87.5p a year ago. Thedetail of this calculation is shown in the Finance Director's Report.Operating profit before financing charges, on a management adjusted basis,grew to £12.2 million compared with £11.1 million in 2010. This excludes theimpact of property valuations and the effect of marking to market the hedginginstruments.

London & Associated Management Services

Our management company, LAMS, is already building a good reputation in theasset management sector. We have taken on further work from administrators andbanks by managing shopping centres on their behalf. For this we are paid anon-going management fee with a further success fee payable on the finaldisposal of the centres. This has produced extra revenue for the Group and isa growing area of our business during these difficult times.

Total Group assets, including those of Bisichi Mining PLC, our associate company, and Dragon Retail Properties, our joint venture with Bisichi, stand at £289 million (2010: £289 million).

Bisichi Mining PLC

Bisichi Mining PLC, in the second half of 2011, enjoyed the benefit of highercoal prices and achieved a significant turnaround in profitability compared

tothe first half of the year.Banking

Our £44.1 million Revolving Credit Facility with RBS expires in September thisyear. Discussions on the renewal of this facility have commenced and we willreport more fully when these discussions are concluded but we are confident atthis stage that we will reach a satisfactory result.

Dividends

The Board has taken the decision not to pay a final dividend. This means the total dividend for the year is 0.75p per share. This is necessary to retain cash in the business and adopt a cautious approach during this period of economic uncertainty although we hope to resume a dividend in 2012.

Finally we have sub-let our office space at St James's Square and have moved to new premises at 24 Bruton Place, London W1. This will save the business £0.4 million per annum.

We would like to thank all of the directors, staff and advisors who have contributed to our progress in what has been a very demanding 12 months during 2011.

Michael Heller John HellerChairman Chief Executive20 April 2012

FINANCE DIRECTOR'S REPORT

During 2011 management of our cash flow remained a vital priority for the Group since the provision of new finance for property companies remains restricted.

As mentioned elsewhere in this report, our new joint venture with ColumbusCapital Management LLP, part of Schroders real estate investment and assetmanagement business, purchased a shopping centre in Langney, Eastbourne. Ourinvestment for a 12.5% interest was £887,500. Our management subsidiary,London & Associated Management Services, is managing this property on behalfof the Joint Venture. We have also been instructed to manage various shoppingcentres on behalf of administrators and banks which is producing a very usefulfurther revenue stream into the Group.

Cash flow

Our only disposal during 2011 was of Phelps Cottage in Islington for £0.9 million. The proceeds were used to pay down borrowings.

During the year term debt remained at the same level of £136.8 million (2010£136.8 million). We paid down the Revolving Credit Facility ("RCF") by £0.9million to reduce it to £44.1 million and we also converted an overdraftfacility into a new 4 year term debt which is being amortised over the term.We have cancelled the remaining undrawn balance of the RCF. As mentioned abovethe RCF is due to expire in September this year and is being refinanced. Weare currently in discussions which are on-going with the bank and we willreport more fully when appropriate but we are confident at this stage thatthey will reach a satisfactory result.The utilisation of the cash over the year is shown in the bar chart below:

Income statement

The income statement has been presented in a different format this year tobetter illustrate the performance of the various activities of the group. Ascan be seen, the Group has made an operating profit after financing charges,of £0.884 million, representing a considerable improvement on the loss of theprevious year of £0.812 million. This has been achieved primarily as a resultof a reduction in Group overheads of some £1.1 million and interest savings of£0.6 million.

Total rental income in the year was £16.4 million (2010: £16.0 million). An analysis of the rental income during the year is as follows:

2011 2010 £'000 £'000

Annual rental income from properties still held 15,420 15,550 Surrenders

943 -Income from properties sold 16 435Revenue as per income statement 16,379 15,985At the start of the year Boots surrendered its lease in Windsor which reducedthe annual rental by £400,000. This has now been sub-divided into 3 separateunits, two of which have been pre-let to Superdry and Cotswold Outdoor. Incomefrom these three units will exceed that previously achieved and if this isadded back to the annual rental from properties still held, this shows agrowth in group income in the year of almost 2%, a very creditable performancein this difficult trading period.

Overheads are constantly under review and we are trying to reduce them wherever we can. In this regard we are relocating our head office in London which should save a further £0.4 million per annum on an annualised basis.

The revaluation and other movements, associates and joint ventures in theincome statement show the distortion caused by valuing the hedging instrumentsat a theoretical market value. A series of swaps were contracted in 2007 toremove the risk to our cash flow of higher interest rates. We are required toshow the Net Present Value of the estimated future difference between the longterm cost of our fixed rate instrument and the current interest rate. Clearlythis is only relevant if the swap has to be cancelled but does not give a truepicture of the ultimate liability or the financial position of the business.As these rates have fluctuated substantially in recent years, this has led tolarge and volatile movements in the IFRS calculation of the Group's netassets. Since the year end the movement in rates has reduced this negativemovement by some £3.8 million before tax with a corresponding increase in theIFRS net assets.

The tax charge in the year is a credit of £3.7 million. This relates to deferred tax as there is no current tax in the year. The deferred tax too has arisen as a result of the movement in derivatives giving a credit of £7.7 million offset by other timing differences including the revaluation of properties and movements in capital allowances.

Balance Sheet

The underlying assets of the Group on a management adjusted basis are shown inthe table below: 2011 EPRA Per IFRS Mark-to-market balance Deferred of interest Head Adjusted sheet tax swaps leases net assets £'000 £'000 £'000 £'000 £'000Investment properties 222,409 (28,661) 193,748Other fixed assets 2,482 2,482Investments inassociate and jointventures 9,050 9,050Other assets 8,614 (2,841) 5,773Other liabilities (68,964) 30,850 28,661 (9,453)Net debt (133,662) (133,662)Net assets 39,929 (2,841) 30,850 - 67,938

Adjusted NAV per share 47.5p

80.9p 2010 Per IFRS Mark-to-market balance Deferred of interest Head Adjusted sheet tax swaps leases net assets £'000 £'000 £'000 £'000 £'000Investment properties 223,610 (28,664) 194,946Other fixed assets 2,558 2,558Investments inassociate and jointventures 8,646 8,646Other assets 4,809 2,607 7,416Other liabilities (52,377) 64 13,627 28,664 (10,022)Net debt (131,485) (131,485)Net assets 55,761 2,671 13,627 - 72,059

Adjusted NAV per share 66.7p 87.5pGroup net assets under IFRS were £39.9 million (2010: £55.8 million), but,under EPRA, the figure we consider to be more meaningful shows net assets of£67.9 million, equivalent to 80.9p per share. The EPRA NNNAV reduced to 47.5pper share (2010: 66.7p) having taken into account the mark-to-market value ofthe derivatives and tax.

Accounting judgements and going concern

The most significant judgements made in preparing these accounts relate to thecarrying values of the properties, investments and the hedge instruments,which are stated at open market value. The Group uses external professionalvaluers to determine the values of its properties. Interest rate hedges (asexplained above) are stated at net present value of the extra costs arising tomaturity compared to current market rates.The Directors exercise their commercial judgements when reviewing the Group'scash flow forecasts and the underlying assumptions on which they are based.The Group's business activities, together with the factors likely to affectits future development, are set out in the Chairman's and Chief Executive'sStatement and in this Report. The Directors have also considered the on-goingdiscussions with RBS on the renewal of the current £44.1 million RCF asreferred to above. In addition the Directors considered the information innote 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; itsexposure to credit risk and liquidity risk.With a quality portfolio comprising a majority of long leases and suitablefinancial arrangements, the Directors believe the company is well placed tomanage its business risks successfully despite the continuing uncertaineconomic climate. The directors therefore have a reasonable expectation thatthe company has adequate resources to continue in operational existence forthe foreseeable future. Thus they continue to adopt the going concern basis ofaccounting in preparing the annual financial statements.

Dividends

The company is not proposing a final dividend so the total dividend for the year will remain at 0.75p paid at the half year. This will preserve cash within the Group whilst we see how the year develops.

Our associated company Bisichi Mining PLC, in which we hold a 42% stake, had adifficult first half to the year and suffered losses although it returned toprofitability in the second half. The annual loss after taxation was £0.5million. This figure is after a revaluation deficit under IFRS of £42,000.

I am confident that the continued policy of prudently managing the Group's cash resources will benefit us as we continue to face this period of economic uncertainty.

Robert Corry,Finance Director20 April 2012Directors & AdvisorsDIRECTORSEXECUTIVE DIRECTORSMichael A Heller MA FCA (Chairman)John A Heller LLB MBA (Chief Executive)Robert J Corry BA FCA (Finance Director)

NON-EXECUTIVE DIRECTORS

†Howard D Goldring BSC (ECON) 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 ManagementLimited which manages investment portfolios and provides global assetallocation advice to private clients, family offices and pension funds. From1997-2003 he was consultant director on global asset allocation to LiverpoolVictoria Asset Management Limited.

#†Clive A Parritt FCA CF FIIA

Clive A Parritt joined the board on 1 January 2006. He is a charteredaccountant with over 30 years experience of providing strategic, financial andcommercial advice to businesses. He is chairman of Baronsmead VCT 2 plc,DiGiCo Europe Limited, ASL Technology Holdings Limited and BG Consulting GroupLimited as well as being a director of F&C US Smaller Companies plc. Clive iscurrently the President of the Institute of Chartered Accountants in Englandand Wales. 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 officeHeather A Curtis ACIS24 Bruton Place,London W1J 6NEDirector 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 RegistrarsShareholder ServicesThe Registry34 Beckenham RoadBeckenhamKentBR3 4TUTelephone 0871 664 0300

(Calls cost 10p per minute + network extras, lines are open Mon-Fri 8.30am to5.30pm)

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.ukE-mailadmin@lap.co.ukDIRECTORS' REPORT

The directors submit their report and the audited accounts, for the year ended 31 December 2011.

Activities

The principal activities of the Group during the year were property investment and development, as well as investment in joint ventures and an associated company. The associated company is Bisichi Mining PLC in which the company holds a 42 per cent interest. Bisichi Mining PLC is listed on the London Stock Exchange and operates in England and South Africa with subsidiaries which are involved in overseas mining and mining investment.

Business ReviewReview of the group's development and performanceThe Chairman and Chief Executive's Statement and Finance Director's Report onthe preceding pages 3 to 12 provide a comprehensive review and assessment ofthe Group's activities during the year as well as its position at the year endand prospects for the forthcoming year.Property 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 themaintainable income from each property by careful tenant management supportedby sympathetic and revenue enhancing development. Whilst income may beadversely affected by the inability of tenants to pay their rent, rentcollection and tenant quality are monitored carefully. Risk is also minimisedby a diversified tenant base, which should limit the impact of the failure ofany individual tenant.

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

- Financing costs - the exposure of the Group to interest rate movements is managed by the use of swap arrangements (see note 17 on page 41 for full details of the contracts in place). These swap arrangements are designed to ensure that our interest costs are fixed and always covered by anticipated rental income. Once put in place we intend that such swaps are generally retained until maturity. Details of key estimates adopted are contained in the accounting policies note on page 51.

- Property valuations - market sentiment and economic conditionshave a direct effect on property valuations, which can vary significantly(upwards or downwards) over time. Bearing in mind the long-term nature of theGroup's business, valuation changes have little direct effect on the ongoingactivities or the income and expenditure of the Group. Tenants generally havelong-term leases, so rents are unaffected by short-term valuation changes.Borrowings are secured against property values and if those values fall verysignificantly, this could limit the ability of the Group to develop thebusiness using external borrowings. The risk is minimised by trying to ensurethat there is adequate cover to allow for fluctuations in value on ashort-term basis.

It continues to be the policy of the Group to realise property assets when the valuation of those assets reaches a level at which the directors consider that the long-term rental yield has been reached. The Group also seeks to acquire additional property investments on an opportunistic basis when the potential rental yields offer scope for future growth.

Investment 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, which involvesrenting premises to retail businesses. We seek to provide those tenants withgood quality premises from which they can operate in an efficient andenvironmentally friendly manner. Wherever possible, improvements, repairs andreplacements are made in an environmentally efficient manner and wastere-cycling arrangements are in place at all of the company's locations.

Employment

The Group's policy is to attract staff and motivate employees by 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 Key Performance Indicator of the Group is the Net Asset per Share value shown at the foot of the Balance Sheet on page 29 and as discussed in the Finance Director's Report. Cash flow is shown on page 31.

Dividend Policy

An interim dividend for 2011 of 0.75p was paid on 20 January 2012 (2010: Interim dividend 0.75p paid on 22 January 2011). The directors are not recommending payment of a final dividend for 2011 (2010: 0.4p).

The company's ordinary shares held in treasuryDuring 2011 the company issued 714,136 of its own shares from Treasury at anaverage price of 46.15p per ordinary share. The company also purchased 295,000of its own ordinary shares of 10p each for treasury (being 0.35% of the issuedordinary shares). The effect of these combined transactions is shown in thetable on page 15. At 31 December 2011 1,538,398 (2010:1,957,534) ordinaryshares were held in Treasury with a market value of £403,829 (2010:£822,164).At the Annual General Meeting (AGM) in June 2011 members renewed the authorityfor the company to purchase up to 10 per cent of its issued ordinary shares.The company will be asking members to renew this authority at the next AGM

inMay 2012.Movements in Treasury Transaction Number ofshares during the year: price sharesTreasury shares held at 1 January 2011 1,957,53428 February 2011 - Issue of Treasuryshares in lieu of directors and staffbonuses 41.75p (674,839)21 September 2011 - Purchase of own sharesfor Treasury 34.00p 295,00012 October 2011 - Issue of Treasury sharesin lieu of a staff bonus 30.5p (12,897)12 October 2011 - Issue of Treasury sharesin connection with the HMRC approved shareincentive plan 30.5p (26,400)Treasury shares held at 31 December 2011 1,538,398

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 subsidiaries were revalued as at 31 December 2011 by external professional firms of chartered surveyors - Allsop LLP, London (49.11 per cent of the portfolio), Jones Lang LaSalle Limited (48.81 per cent), and BNP Paribas, Leeds (2.08 per cent). The valuations, which are reflected in the financial statements, amount to £193.7 million (2010: £194.9 million).

Taking account of prevailing market conditions, the valuation ofGroup properties at 31 December 2011 resulted in a reduction of £1million(2010: increase of £1.6 million). This has been reflected in the incomestatement in accordance with the requirements of IFRS. The impact of propertyrevaluations on the company's joint ventures (Analytical Ventures Limited,Dragon Retail Properties Limited and Langney Shopping Centre Unit Trust) andthe associate company (Bisichi Mining PLC) was a reduction of £0.5 million(2010: increase of £1.4 million). The proportion of this revaluationattributable to the Group (net of taxation) is reflected in the incomestatement and the consolidated balance sheet.

Financial instruments

Note 17 to the financial statements sets out the risks in respectof financial instruments. The board reviews and agrees overall treasurypolicies, delegating appropriate authority for applying these policies to theChief Executive and Finance Director. Financial instruments are used to managethe financial risks facing the Group - speculative transactions areprohibited. Treasury operations are reported at each board meeting and aresubject to weekly internal reporting. Hedging arrangements are in place forthe company, its subsidiaries and joint ventures in order to limit the effectof higher interest rates upon the Group.

Directors

M A Heller, J A Heller, R J Corry, H D Goldring, C A Parritt were directors ofthe company for the whole of 2011. M C Stevens was a director until he retiredon 30 April 2011.

R J Corry, H D Goldring, J A Heller and C A Parritt are retiring by rotation at the Annual General Meeting in 2012 and offer themselves for re-election.

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

Robert Corry has been Finance Director since 1993. He has acontract of employment determinable upon six months notice. Robert Corry is achartered accountant and has worked in the retail and real estate sectors formuch of his career.Howard Goldring has been a director since 1992 and has a contractof service determinable upon three months notice. He is a member of the audit,remuneration and nomination committees. Howard Goldring is a charteredaccountant and global asset allocation specialist. He is executive chairman ofDelmore Asset Management Limited which specialises in the management ofinvestment portfolios and the provision of asset allocation advice for privateclients, family offices and pension funds. The board has considered there-appointment of Howard Goldring and recommends his re-election as adirector. His specialised economic knowledge and broad business experience areof significant benefit to the business.

John Heller has been a director since 1998 and was appointed Chief Executive in September 2001. He has a contract of service determinable upon twelve months notice.

Clive Parritt has been a director since January 2006 and has a contract of service determinable at three months notice and is the Senior Independent Director and chairman of the audit, nomination and remuneration committees. He is a chartered accountant with over 30 years experience in providing strategic, financial and commercial advice to business. The board has considered the re-appointment of Clive Parritt and recommends his re-election as a director. His financial knowledge and broad commercial experience are of significant benefit to the business.

Directors' interests

The interests of the directors in the ordinary shares of thecompany, including family and trustee holdings, where appropriate, were asfollows: Non-beneficial Beneficial interests interests 31 Dec 11 1 Jan 11 31 Dec11 1 Jan 11M A Heller 6,304,002 6,016,577 19,277,931 19,277,931R J Corry 998,355 962,527 - -H D Goldring 19,819 19,819 - -J A Heller 1,630,649 1,923,320 †14,073,485 †14,073,485C A Parritt 36,166 36,166 - -M C Stevens* - 922,326 - +1,163,088

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

+The non-beneficial interest of M C Stevens at 1 January 2011 arose by reason of his being a director of London & Associated Securities Limited, a company which acts as a trustee.

* M C Stevens retired from his executive duties on 30 April 2011.

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 20 to the financial statements and the remuneration report).

Between 1 January 2012 and the date of this report there were no changes in the directors' holdings as detailed above.

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

Substantial shareholdings

At 31 December 2011 M A Heller and his family had an interest in47.5 million shares of the company, representing 56.6 per cent of the issuedshare capital net of treasury shares (2010: 47.4 million shares representing56.7 per cent) and Cavendish Asset Management Limited had an interest in5,667,134 shares representing 6.75 per cent of the issued share capital of thecompany (2010: 5,186,065 shares representing 6.2 per cent).

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 2012 and the date of this report.

Takeover Directive

The company has one class of share capital, namely ordinary shares.Each ordinary share carries one vote. All the ordinary shares rank pari passu.There are no securities issued in the company which carry special rights withregard to control of the company.

The identity of all significant direct or indirect holders of securities in the company and the size and nature of their holdings is shown in "Substantial shareholdings" above.

The rights of the ordinary shares to which 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 ofordinary shares in the company, save in respect of Treasury Shares. The rulesgoverning the appointment and replacement of directors, alteration of thearticles of association of the company and the powers of the company'sdirectors accord with usual English company law provisions. Each director isre-elected at least every three years. The company has requested authorityfrom shareholders to buy back its own ordinary shares and there will be aresolution to renew the authority at this year's AGM (Resolution 11).

The company is not party to any significant agreements that take effect, alter or terminate upon a change of control of the company following a takeover bid. The company is not aware of any agreements between holders of its ordinary shares that may result in restrictions on the transfer of its ordinary shares or on voting rights.

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

Statement as to disclosure of information to the auditorThe directors in office on 31 December 2011 have confirmed that, so far asthey are aware, there is no relevant audit information of which the auditor isunaware. Each of the directors has confirmed that they have taken all thesteps that they ought to have taken as a director in order to make them awareof any relevant audit information and to establish that it has beencommunicated to the auditor.Corporate governanceThe Company has adopted the Guidance for Smaller Quoted Companies (SQC)published by the Quoted Companies Alliance. The Alliance provides guidance toSQC and their guidance covers the implementation of The UK CorporateGovernance Code for SQC. The paragraphs below set out how the company hasapplied this guidance during the year. The company has complied with theQuoted Companies Alliance guidance throughout the year, except insofar thatnon-executive directors are not appointed for fixed terms (section A.7.2).Principles of corporate governanceThe board promotes good corporate governance in the areas of risk managementand accountability as a positive contribution to business prosperity. Theboard endeavours to apply corporate governance principles in a sensible andpragmatic fashion having regard to the circumstances of the business. The keyobjective is to enhance and protect shareholder value.Board structureDuring the year the board comprised the chairman, the chief executive, twoother executive directors and two non-executive directors, (one of theexecutive directors retired on 30 April 2011). Their details appear on page13. The board is responsible to shareholders for the proper management of theGroup.The directors' responsibility statement in respect of the accountsis set out on page 25. The non-executive directors have a particularresponsibility to ensure that the strategies proposed by the executivedirectors are fully considered. To enable the board to discharge its duties,all directors have full and timely access to all relevant information andthere is a procedure for all directors, in furtherance of their duties, totake independent professional advice, if necessary, at the expense of theGroup. The board has a formal schedule of matters reserved to it and normallyhas eleven regular meetings scheduled each year. Additional meetings are heldfor special business when required.

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

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

- The nomination committee is chaired by C A Parritt and comprises 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 a maximum of every three years.

- The remuneration committee is responsible for makingrecommendations to the board on the company's framework of executiveremuneration and its cost. The committee determines the contract terms,remuneration and other benefits for each of the executive directors, includingperformance related bonus schemes, pension rights and compensation payments.The board itself determines the remuneration of the non-executive directors.The committee comprises the non-executive directors and it is chaired by C AParritt. The executive chairman of the board is normally invited to attend.The directors' remuneration report is set out on pages 21 to 23.

- The audit committee comprises the non-executive directors and is chaired by C A Parritt. The audit committee report is set out on page 24.

Board and board committee meetings held in 2011

The number of regular meetings during the year and attendance was as follows: Meetings Meetings held attendedR J Corry Board 11 11 Audit committee 2 2H D Goldring Board 11 10 Audit committee 2 2 Nomination committee 1 1 Remuneration committee 1 1M A Heller Board 11 11 Nomination committee 1 1 Remuneration committee 1 1J A Heller Board 11 11 Audit committee 2 2C A Parritt Board 11 11 Audit committee 2 2 Nomination committee 1 1 Remuneration committee 1 1M C Stevens * Board 3 2 Audit committee 2 2 Nomination committee 1 1

* M C Stevens retired on 30 April 2011

Performance evaluation - board, board committees and directors

The performance of the board as a whole and of its committees andthe non-executive directors is assessed by the chairman and the chiefexecutive and is discussed with the senior independent director. Theirrecommendations are discussed at the nomination committee prior to proposalsfor re-election being recommended to the board. The performance of executivedirectors is discussed and assessed by the remuneration committee. The seniorindependent director meets regularly with the chairman, executive andnon-executive directors individually outside of formal meetings. The directorswill take outside advice in reviewing performance but have not found this tobe 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 feepaying basis. H D Goldring's association with Delmore and the length of hisservice on the board mean that the criteria for independence set out in the UKCorporate Governance Code are not met.However, the board considers that the independence of H D Goldringis not impaired either because he has served on the board for more than nineyears or because of his association with Delmore. The board therefore regardsH D Goldring as being independent.

The independent directors regularly meet prior to and 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 reasonableassurance that assets are safeguarded, that transactions are authorised andproperly recorded and that material errors and irregularities are eitherprevented or would be detected within a timely period. However, no system ofinternal control can eliminate the risk of failure to achieve businessobjectives or provide absolute assurance against material misstatement orloss. The key elements of the control system in operation are:

- The board meets regularly with a formal schedule of matters reserved for its decision and has put in place an organisational structure with clearly defined lines of responsibility and with appropriate delegation of authority;

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

- The departmental heads are required annually to undertake a fullassessment process to identify and quantify the risks that face theirdepartments and functions, and assess the adequacy of the prevention,monitoring and modification practices in place for those risks. In addition,regular reports about significant risks and associated control and monitoringprocedures are made to the executive directors. The process adopted by theGroup accords with the guidance contained in the document "Internal ControlGuidance for Directors on the Combined Code" issued by the Institute ofChartered Accountants in England and Wales. The audit committee receivesreports from external auditors and from executive directors of the group.During the period, the audit committee has reviewed the effectiveness of thesystem of internal control as described above. The board receives periodicreports 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 reportand financial statements for the year ended 31 December 2011. Up to the dateof approval of this report and the financial statements, the board has notbeen required to deal with any related material internal control issues. Thedirectors confirm that the board has reviewed the effectiveness of the systemof internal control as described during the period.

Risk assessment

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

Description of Risk Description of Impact MitigationAsset Management: Tenant failure Financial loss Initial and subsequent assessment of tenant covenant strength combined with an active credit control function.Leases not renewed Financial loss Lease expiries regularly reviewed. Experienced in house teams with strong tenant and market knowledge who manage appropriate tenant mix.Asset illiquidity (size Assets may be illiquid and Regular reporting ofand geographical location) affect flexing of balance current and projected sheet position to the Board with efficient treasury management.People: Retention and recruitment Unable to retain and attract Nomination Committeeof staff the best people for the key and senior staff roles. review skills gaps and succession planning. Loss of knowledge and key Training and skills. development offered.Reputation:Business interruption Loss in revenue. Documented Recovery Plan in place. Impact on footfall. General and terrorism Adverse publicity. insurance policies in place and risks Potential for criminal/civil monitored by trained proceedings. security staff. Health and Safety policies in place. CCTV in centres.Financing: Fluctuation in property Impact on covenants and Secure income flows.values other loan and other loan agreement obligations. Regular monitoring of LTV and IC covenants and other obligations. Focus on quality assets.Reduced availability of Insufficient funds to meet Efficient treasuryborrowing facilities existing debts/interest management. payments and operational payments. Loan facilities extended where possible. Regular reporting of current and projected position to the Board.Loss of cash and deposits Financial loss Only use a spread of banks and financial institutions which have a strong credit rating.Fluctuation of interest Uncertainty of interest rate Manage derivativerates costs contracts to achieve a balance between hedging interest rate exposure and minimising potential cash calls. Communication with shareholdersPrompt communication with shareholders is given high priority. Extensiveinformation about the Group and its activities is provided in the AnnualReport. In addition, a half-year report and two interim management statementsare produced for each financial year and published on the company's website.The company's website www.lap.co.uk is promptly updated with announcements andAnnual Reports upon publication. Copies from previous years are also availableon the website.

The company's share price is published daily in the Financial Times. The share price history and market information can be found at http://www.londonstockexchange.com/prices-and-markets/markets/prices.htm. Our code is LAS.

There is a regular dialogue with the company's stockbrokers and institutional investors. Enquiries from individuals on matters relating to their shareholdings and the business of the group are dealt with promptly and informatively.

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

The Bribery Act 2010

The Bribery Act 2010 came into force on 1 July 2011. Since that date alldirectors and staff have been asked to complete an e-learning training course.The company is committed to acting ethically, fairly and with integrity in allits endeavours and compliance of the code is closely monitored. A copy of thecompany's new Anti-Bribery Policy will be circulated in due course.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 withthose terms, provided that suppliers also comply with all relevant terms andconditions. Trade creditors outstanding at the year-end represent 15.8 daysannual trade purchases (2010: 5.4 days).

Donations

No political donations were made during the year (2010: £Nil). Donations for charitable purposes amounted to £2,000 (2010: £250).

Going concernThe Group's business activities, together with the factors likely to affectits future development are set out in the Chairman and Chief Executive'sStatement on the preceding pages 3 and 6. The Finance Director's Report onpages 7 to 12 sets out the financial position of the company, its cash flows,liquidity position and borrowing facilities. The Directors have alsoconsidered the impact of the renewal of the £44.1 million Revolving CreditFacility with RBS which expires in September 2012, as has been set out in boththe Chairman and Chief Executives Statement and the Finance Directors Report.In addition Note 17 to the financial statements gives details of the group'sfinancial instruments and interest rate risk, and maturity and hedgingprofile.The Group has sufficient financial resources together with longterm leases with the majority of the tenants of its property portfolio. As aconsequence, the directors believe that the company is well placed to manageits business risks successfully despite the current uncertain economicoutlook.

The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Annual General Meeting

The Annual General Meeting will be held at the Company's offices atthe Royal Automobile Club, 89 Pall Mall, London SW1Y 5HS on Wednesday 30 May2012 at 10.30 a.m. Items 1 to 9 will be proposed as ordinary resolutions. Morethan 50 per cent of shareholders' votes must be in favour for theseresolutions to be passed. Items 10 to 12 will be proposed as specialresolutions. At least 75 per cent of shareholders' votes must be in favour forthese resolutions to be passed. The directors consider that all of theresolutions to be put to the meeting are in the best interests of the companyand its shareholders as a whole and accordingly the board unanimouslyrecommends that shareholders vote in favour of all of the resolutions, as thedirectors intend to do in respect of their own beneficial holdings of ordinaryshares. Please note that the following paragraphs are only summaries ofcertain of the resolutions to be proposed at the Annual General Meeting andnot the full text of the resolutions. You should therefore read this sectionin conjunction with the full text of the resolutions contained in the noticeof Annual General Meeting.

Ordinary Resolutions

1. Resolution 9 - Authority to allot securities

Paragraph 9.1.1 of Resolution 9 would give the directors theauthority to allot shares in the company and grant rights to subscribe for orconvert any security into shares in the company up to an aggregate nominalvalue of £2,797,344. This represents approximately 33.3 per cent of theordinary share capital of the company in issue (excluding treasury shares) asat 17 April 2012 (being the last practicable date prior to the publication ofthis Directors' Report).In line with guidance issued by the Association of British Insurers('ABI') paragraph 9.1.2 of Resolution 9 would give the directors the authorityto allot shares in the company and grant rights to subscribe for or convertany security into shares in the company up to a further aggregate nominalvalue of £2,797,344, 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) as at 17 April 2012 (being the lastpracticable date prior to the publication of this Directors' Report).

The directors' authority will expire at the conclusion of the next Annual General Meeting. The directors do not currently intend to make use of this authority. However, if they do exercise the authority, the directors intend to follow best practice as recommended by the ABI regarding its use (including as regards the directors standing for re-election in certain cases).,.

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

Resolution 10 - Disapplication of pre-emption rights

Under company law, when new shares are allotted or treasury sharesare sold for cash (otherwise than pursuant to an employee share scheme) theymust first be offered to existing shareholders in proportion to their existingshareholdings. This special resolution gives the directors authority, for theperiod ending on the date of the next Annual General Meeting to be held in2013, to: (a) allot shares of the company and sell treasury shares for cash inconnection with a rights issue or other pre-emptive offer; and (b) otherwiseallot shares of the company, or sell treasury shares, for cash up to anaggregate nominal value of £420,021 representing in accordance withinstitutional investor guidelines, approximately 5 per cent of the totalordinary share capital in issue as at 17 April 2012 (being the lastpracticable date prior to the publication of this Directors' Report) in eachcase as if the pre-emption rights in company law did not apply.

Save in respect of issues of shares in respect of employee share schemes and share dividend alternatives, the directors do not currently intend to make use of these authorities. The board intends to adhere to the provisions in the Pre-emption Group's Statement of Principles not to allot shares for cash on a non-pre-emptive basis in excess of an amount equal to 7.5% of the company's ordinary share capital within a rolling three-year period without prior consultation with shareholders.

Resolution 11 - Purchase of own ordinary shares

The effect of Resolution 11 would be to renew the directors'current authority to make limited market purchases of the company's ordinaryshares of 10 pence each. The power is limited to a maximum aggregate number of8,554,271 ordinary shares (representing approximately 10 per cent of thecompany's issued share capital as at 17 April 2012 (being the latestpracticable date prior to publication of this Directors' Report). The minimumprice (exclusive of expenses) which the company would be authorised to pay foreach ordinary share would be 10 pence (the nominal value of each ordinaryshare). The maximum price (again exclusive of expenses) which the companywould be authorised to pay for an ordinary share is an amount equal to thehigher of (i) 105% of the average market price for an ordinary share for thefive business days preceding any such purchase and (ii) the higher of the lastindependent trade for an ordinary share and the highest current independentbid for an ordinary share as derived from the trading venue where the purchaseis carried out. The authority conferred by Resolution 11 will expire at theconclusion of the company's next Annual General Meeting to be held in 2013 or15 months from the passing of the resolution, whichever is the earlier. Anypurchases of ordinary shares would be made by means of market purchase throughthe London Stock Exchange.If granted, the authority would only be exercised if, in theopinion of the directors, to do so would result in an increase in earnings pershare or asset values per share and would be in the best interests ofshareholders generally. In exercising the authority to purchase ordinaryshares, the directors may treat the shares that have been bought back aseither cancelled or held as treasury shares (shares held by the companyitself). No dividends may be paid on shares which are held as treasury sharesand no voting rights are attached to them.As at 17 April 2012 (being the last practicable date prior to thepublication of this Directors' Report) options were outstanding to subscribefor a total of 70,000 ordinary shares representing 0.08% of the company'sissued share capital. If the authority to make new market purchases soughtunder Resolution 11 is ever used in full, such options would representapproximately 0.09% of the reduced issued share capital of the company (basedon the share capital as at 17 April 2012).Other mattersBaker Tilly UK Audit LLP has expressed its willingness to continue in officeas auditor. A proposal will be made at the Annual General Meeting forreappointment.By order of the boardHeather CurtisSecretary20 April 201224 Bruton PlaceLondonW1J 6NERemuneration Report

The remuneration committee is pleased to present its report for the year ended 31 December 2011.

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 todetermine, on behalf of the board, the remuneration and other benefits of theexecutive directors and senior executives, including pensions, share optionsand service contracts. The company's policy is designed to attract, retain andmotivate individuals of a calibre who will ensure the successful leadershipand management of the company. Remuneration packages are designed to rewardthe executive directors and senior executives fairly for their contributionswhilst remaining within the range of benefits offered by similar companies inthe sector. The emoluments of each executive director comprise basic salary, abonus at the discretion of the remuneration committee, provision of a car;premiums paid in respect of individual defined-contribution pensionarrangements, health insurance premium and share options. The remuneration ofnon-executive directors is determined by the board, and takes into accountadditional remuneration for services outside the scope of the ordinary dutiesof non-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.

The remuneration committee receives updates on pay and employment conditions applying to other Group employees. These are taken into consideration when setting executive directors' remuneration consistent with the group's general aim of seeking to reward all employees

fairly according to the nature of their role, their performance and market forces."

Service and employment contracts

All executive directors have full-time contracts of employment withthe company. Non-executive directors have contracts of service. No directorhas a contract of employment or contract of service with the company, itsjoint venture or associated companies with a fixed term which exceeds twelvemonths. All directors' contracts, as amended from time to time, have run fromthe date of appointment. Details of the directors standing for re-election areprovided under `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 periodExecutive directorsM A Heller 01-Jan-71 Continuous 6 monthsJ A Heller 01-May-03 Continuous 12 monthsR J Corry 01-Sep-92 Continuous 6 months Non-executive directorsH D Goldring 01-Jul-92 Continuous 3 monthsC A Parritt 01-Jan-06 Continuous 3 months

The following information has been audited

Directors' Remuneration for the year ended 31 December 2011

2011 total 2010 totalbefore before Salary Bonus Bonus pension Pension pension Pension And in in Other contrib-

contrib- Total contrib- contrib- Total

fees cash shares benefits utions

utions 2011 utions utions 2010

£'000 £'000 £'000 £'000 £'000 £'000 £'000­ £'000 £'000 £'000Executive directorsM A Heller* 7 - - 44 51 - 51 251 - 251J A Heller 300 300 - 41 641 30 671 547 30 577R J Corry 167 - - 22 189 33 222 260 33 293M C Stevens†31 - - 20 51 3 54 116 23 139 505 300 - 127 932 66 998 1,174 86 1,260Non-executive directorsH D Goldring* 43 - - 4 47 - 47 51 - 51C A Parritt * 33 - - - 33 - 33 37 - 37 76 - - 4 80 - 80 88 - 88Total remuneration for

directors' service during year 581 300 - 131 1,012

66 1,078 1,262 86 1,348

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

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

†M C Stevens retired 30 April 2011

Pension schemes and incentives

Three (2010: three) directors have benefits under money purchase pensionschemes. Contributions in 2011 were £66,000 (2010: £86,000) 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,details of which are set out below. Bonuses are awarded by the remunerationcommittee when merited. In assessing the performance of the executive teamand, in particular to determine whether bonuses are merited the remunerationcommittee takes account of the overall performance of the business. Specificareas addressed include: enhancement of the asset base by effectivedevelopment; changes in rental income generated; quality and risk profile ofthe tenant base; voids; timely acquisitions and disposals; security of fundingarrangements; and overall teamwork. Bonuses were awarded by the remunerationcommittee to one executive director during 2011 (2010: four) and nonon-executive directors (2010: nil).

Directors

Although M A Heller receives reduced remuneration in respect of his servicesto the Group, the Group does supply office premises, property management,general management accounting and administration services for a number ofcompanies in which M A Heller has an interest. The board estimates that thevalue of these services, if supplied to a third party, would have been£275,000 (2010: £275,000) for the year. Further details of these services areset 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.

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

Share option scheme

The company has an HMRC approved scheme (Approved Scheme) was set up in 1986in accordance with HMRC rules to gain HMRC approved status which gave themembers certain tax advantages. No director has any options outstanding underthe Approved Scheme.

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

A share option scheme known as the "Non-approved Executive Share Option Scheme" (Unapproved Scheme) which does not have HMRC approval was set up during 2000. At 31 December 2011 there were no options to subscribe for ordinary shares outstanding. The exercise of options under the unapproved scheme is subject to the satisfaction of objective performance conditions specified by the remuneration committee which conforms to institutional shareholder guidelines and best practice provisions. No options under the unapproved scheme were exercised, granted or lapsed during the year to 31 December 2010. Further details of this scheme are set out in Note 19 "Share Capital" to the financial statements

The bid market price of London & Associated Properties PLC ordinary shares at 31 December 2011 was 26.25p (2010: 42.0p). During the year the share mid-market price ranged between 26.25 and 42.0p.

Share incentive plan

Following a recommendation of the remuneration committee the directors set upan HMRC approved share incentive plan (SIP) in May 2006. The purpose of theplan, which is open to all eligible LAP head office, based executive directorsand staff is to enable them to acquire shares in the company to give them acontinuing stake in the group. The SIP comprises four types of share - (1)free shares under which the company may award shares up to the value of £3,000each year, (2) partnership shares, under which members may save up to £1,500per annum 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 28 February 2011, 76,397 free shares up to the annualmaximum of £3,000 per member were awarded at 41.75p (2010: nil shares awarded)Free shares awarded: Number of members Number of shares Value of shares 2011 2010 2011 2010 2011 2010 £ £Directors: R J Corry 1 0 7,185 0 3,000 0J A Heller 0 0 0 0 0 0M C Stevens†1 0 7,185 0 3,000 0Staff 11 0 62,027 0 25,896 0Total at 31 December 13 0 76,397 0 31,896 0

2. Partnership shares: No partnership shares were issued between November 2010 and October 2011.

Partnership shares issued: Number of members Number of shares Value of shares 2011 2010 2011 2010 2011 2010 £ £Directors:R J Corry 0 1 0 3,947 0 1,500J A Heller 0 1 0 3,947 0 1,500M C Stevens†0 1 0 3,947 0 1,500Staff 0 9 0 35,523 0 13,500Total at 31 December 0 12 0 47,364 0 18,000 3. Matching shares: The partnership share agreements for the year to 31October 2011 provide for two matching shares to be awarded free of charge foreach partnership share acquired. No partnership shares were acquired in 2011(2010: 87,809 shares). Matching shares will usually be forfeited if a memberleaves employment in the group within 5 years of their grant.

Matching shares granted:

Number of members Number of shares Value of shares 2011 2010 2011 2010 2011 2010 £ £Directors:R J Corry 0 1 0 7,894 0 3,000J A Heller 0 1 0 7,894 0 3,000M C Stevens†0 1 0 7,894 0 3,000Staff 0 9 0 64,127 0 27,000Total at 31 December 0 12 0 87,809 0 36,000

4. Dividend shares: Dividends on shares acquired under the SIP will be utilised to acquire additional shares. Accumulated dividends received on shares in the SIP to 31 December 2011 amounted to £5,775 (2010: £6,088).

Dividend shares issued:

Number of members Number of shares Value of shares 2011 2010 2011 2010 2011 2010 £ £Directors:R J Corry 1 1 2,423 1,783 739 660J A Heller 1 1 2,329 1,783 710 660M C Stevens†0 1 0 1,783 0 660Staff 15 17 21,648 18,353 6,603 6,790Total at 31 December 17 20 26,400 23,702 8,052 8,770

†M C Stevens retired 30 April 2011

The SIP is set up as an employee benefit trust - The trustee is London & Associated Securities Limited, a wholly owned subsidiary of LAP, and all 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 broadequity market index over a five year period. Performance is measured by totalshareholder return. The directors have chosen the FTSE All Share - TotalReturn Index as a suitable index for this comparison as it gives an indicationof performance against a large spread of quoted companies.C A ParrittChairman - Remuneration Committee20 April 2012

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 of whom are Chartered Accountants.

The audit committee's prime tasks are to:

- review the scope of external audit, to receive regular reports from Baker Tilly UK Audit LLP and to review the half-yearly and annual accounts before they are presented to the board, focusing in particular on accounting policies and 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;

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

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

- advise the board on the appointment of the external auditor, the rotation ofthe audit partner every five years and on their remuneration for both auditand non-audit work; discuss the nature and scope of their audit work andundertake a formal assessment of the auditor's independence each year, whichincludes:

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

ii) discussion with the auditor 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 auditor's 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 auditor 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 auditor and approved their fees for both audit and non-audit services as set out in note 2 to the financial statements.

- in accordance with the rules for rotation of audit partners, reviewed and approved the proposals from the external auditor to introduce a new senior audit partner to lead the audit.

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

External AuditorBaker Tilly UK Audit LLP held office throughout the period under review. Inthe United Kingdom London & Associated Properties PLC provides extensiveadministration and accounting services to Bisichi Mining PLC, which has itsown audit committee and employs PKF (UK) LLP, a separate and independent firmof registered auditor.C A ParrittChairman - Audit Committee20 April 2012

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 EU to present fairly the financial position and performance of the Group; the Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the company and of the profit or loss of the Group 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. for the Group financial statements, state whether they have been prepared in accordance with IFRSs adopted by the EU and for the company financial statements state 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 accountingrecords that are sufficient to show and explain the Group's and the company'stransactions and disclose with reasonable accuracy at any time the financialposition of the Group and the company and enable them to ensure that thefinancial statements and the Directors' Remuneration Report comply with theCompanies Act 2006 and, as regards the Group financial statements, Article 4of the IAS Regulations. They are also responsible for safeguarding the assetsof the Group and the company and hence for taking reasonable steps for theprevention and detection of 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 loss of the company and the undertakings included in the consolidation taken as a whole; and

b. the Directors report contained 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.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the London & Associated Properties PLC website.

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

VALUERS' CERTIFICATES To the Directors of London & Associated Properties PLC

In accordance with your instructions we have carried out a valuation of the freehold and leasehold property interests held as at 31 December 2011 by the company as detailed in our Valuation Report dated 27 January 2012.

Having regard to the foregoing, we are of the opinion that the open market value as at 31 December 2011 of these interests was:

£'000Freehold 73,035Leasehold 22,120 95,155

27 Soho Square, London W1D 3AY Allsop LLP 27 January 2012 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 and leasehold property interests held as at 31 December 2011 by the company as detailed in our Valuation Report as at 11 January 2012.

Having regard to the foregoing, we are of the opinion that the open market value as at 31 December 2011 of these interests was:

£'000 Freehold 2,610Leasehold 91,950 94,560 22 Hanover Square London W1S 1JA Jones Lang LaSalle Limited Regulated by Royal Institution of11 January 2012 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 2011 by the company as detailed in our Valuation Report dated 2 February 2012.

Having regard to the foregoing, we are of the opinion that the open market value as at 31 December 2011 of these interests was:

£'000 4,033

Freehold

Capitol House, Russell Street,Leeds LS1 5SP BNP Paribas Real Estate Advisory and Property Management UK Limited Regulated by Royal Institution of2 February 2012 Chartered Surveyors

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF London & Associated Properties PLC

We have audited the Group and parent company financial statements("the financial statements") on pages 28 to 57. The financial reportingframework that has been applied in the preparation of the group financialstatements is applicable law and International Financial Reporting Standards(IFRSs) as adopted by the European Union. The financial reporting frameworkthat has been applied in the preparation of the parent company financialstatements is applicable law and United Kingdom Accounting Standards (UnitedKingdom Generally Accepted Accounting Practice).This report is made solely to the company's members, as a body, inaccordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit workhas been undertaken so that we might state to the company's members thosematters we are required to state to them in an auditor's report and for noother purpose. To the fullest extent permitted by law, we do not accept orassume responsibility to anyone other than the company and the company'smembers as a body, for our audit work, for this report, or for the opinions wehave formed.

Respective responsibilities of directors and auditor

As more fully explained in the Directors' ResponsibilitiesStatement set out on page 25, the directors are responsible for thepreparation of the financial statements and for being satisfied that they givea true and fair view. Our responsibility is to audit and express an opinion onthe financial statements in accordance with applicable law and InternationalStandards on Auditing (UK and Ireland). Those standards require us to complywith 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/private.cfm

Opinion on 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 2011 and of the Group's loss 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;

- 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 19, in relation to going concern;

- the part of the Corporate Governance Statement relating to the company's compliance with the nine provisions of the UK Corporate Governance Code specified for our review; and

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

Euan Banks (Senior Statutory Auditor)

For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory Auditor

Chartered Accountants25 Farringdon Street,London, EC4A 4AB20 April 2012Consolidated income statementfor the year ended 31 December 2011 2011 2010 Notes £'000 £'000 Gross rental income

Group and share of joint ventures 16,990 16,503Less: joint ventures - share of rental income

(611) (518)Revenue 1 16,379 15,985Direct property expenses (1,819) (1,839)Overheads (2,700) (3,780)Property overheads 1 (4,519) (5,619)Net rental income 1 11,860 10,366

Listed investments held for trading 3 24 43Profit on sale of investment properties 310 637Operating profit before financing charges 1

12,194 11,046Finance income 5 34 64Finance expenses 5 (11,344) (11,922)

Operating profit/(loss) after financing charges 884 (812)Revaluation and other movements,associates and joint ventures Net (decrease)/increase on revaluation of (1,021) 1,569investment propertiesNet (decrease)/increase in value of investments (104) 89held for tradingShare of profit/(loss) of joint ventures, after tax 10 10 (233)Share of loss of associate, after tax 11 (189) (505)Interest rate derivative break cost 17 (920) (3,515)Adjustment to the Net Present Value of 17 (17,223) (7,280)interest rate derivativeLoss including revaluation and other movements (18,563) (10,687)Income tax 6 3,742 7,192Loss for the year attributable to

(14,821) (3,495)the owners of the parent Basic loss per share 8 (17.63)p (4.24)pDiluted loss per share 8 (17.63)p (4.24)p

Operating profit/(loss) after financing 8 1.05p (0.99)pcharge per share

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

As more fully explained in the accounting policies comparative information,the consolidated income statement has been re-presented to better reflect the nature of the business.consolidated balance sheetat 31 December 2011 2011 2010 Notes £'000 £'000Non-current assetsMarket value of properties attributable to Group 193,748 194,946Present value of head leases 28,661 28,664Property 9 222,409 223,610Plant and equipment 9 484 612Investments in joint ventures 10 2,039 1,163Investments in associated company 11 7,011 7,483Held to maturity investments 12 1,998 1,946Deferred tax 18 3,678 - 237,619 234,814 Current assetsTrade and other receivables 13 4,301 4,092Financial assets-investments held for trading 14 635 717Cash and cash equivalents 6,464 8,584 11,400 13,393Total assets 249,019 248,207 Current liabilitiesTrade and other payables 15 (9,453) (10,022)Financial liabilities-borrowings 16 (48,012) (3,863) (57,465) (13,885) Non-current liabilitiesFinancial liabilities-borrowings 16 (92,114)

(136,206)

Interest rate derivatives 17 (30,850)

(13,627)

Present value of head leases on properties (28,661) (28,664)Deferred tax 18 - (64) (151,625) (178,561)Total liabilities (209,090) (192,446)Net assets 39,929 55,761 Equity attributable to the owners of the parentShare capital 19 8,554

8,554

Share premium account 4,866

4,866

Translation reserve in associate (216)

30

Capital redemption reserve 47

47

Retained earnings (excluding treasury shares) 28,099 44,342Treasury shares 19 (1,421) (2,078)Retained earnings 26,678 42,264Total shareholders' equity 39,929 55,761 Net assets per share 8 47.53p 66.71pDiluted net assets per share 8 47.53p 66.69p

These financial statements were approved by the board of directors and authorised for issue on 20 April 2012 and signed on its behalf by:

M A Heller R J CorryDirector Director

Company Registration No. 341829

Consolidated statement of changes in shareholders' equity for the year ended 31 December 2011

Retained earnings retained earnings Translation Capital excluding Share Share reserves in

redemption Treasury treasury Total

capital premium associate reserve shares shares equity £'000 £'000 £'000 £'000 £'000 £'000 £'000Balance at 1 January 2010 8,392 5,042 (284) 47 (4,558) 50,465 59,104Loss for year - - - - - (3,495) (3,495)Other comprehensive income:Currency translation in associate - - 314 - - - 314Total other comprehensive income - - 314 - - - 314Total comprehensive income - - 314 - - (3,495) (3,181)Transactions with owners:Equity share options in associate - - - - - 2 2Minority interest on sharedisposal in associate - - - - - (199) (199)Issue of own shares and expenses 162 (176) - - - - (14)Disposal of own shares - - - - 973 - 973Loss on transfer of own shares - - - - 1,507 (1,507) -Dividends paid - - - - - (924) (924)Transactions with owners 162 (176) - - 2,480 (2,628) (162)Balance at 31 December 2010 8,554 4,866 30 47 (2,078) 44,342 55,761Loss for year - - - - - (14,821) (14,821)Other comprehensive income:Currency translation in associate - - (246) - - - (246)Total other comprehensive income - - (246) - - - (246)Total comprehensive income - - (246) - - (14,821) (15,067)Transaction with owners:Equity share options in associate - - - - - 6 6Aquisition of own shares and expenses - - - - (101) - (101)Disposal of own shares - - - - 294 - 294Loss on transfer of own shares - - - - 464 (464) -Dividends paid - - - - - (964) (964)Transactions with owners - - - - 657 (1,422) (765)Balance at 31 December 2011 8,554 4,866 (216) 47 (1,421) 28,099 39,929All the above are attributable to the owners of the parent.

Consolidated statement of comprehensive income

for the year ended 31 December 2011

2011 2010 £'000 £'000Loss for the year (14,821) (3,495)Other comprehensive income:

Currency translation in associate (246)

314

Other comprehensive income for the year net of tax (246)

314

Total comprehensive income for the periodattributable to owners of the parent (15,067)

(3,181)

Consolidated cash flow statement

for the year ended 31 December 2011

2011 2010 £'000 £'000Operating activities

Operating profit before financing charges 12,194

11,046

Depreciation 158

197

Loss/(profit) on disposal of non-current assets 9

(3)

Profit on sale of investment properties (310)

(637)

Increase in net current assets (1,160)

(1,019)

Cash generated from operations 10,891

9,584

Income tax repaid -

111

Cash inflows from operating activities 10,891

9,695

Investing activitiesInvestment in shares and loan stock in joint ventures (940)

(141)

Investment in shares in associate (131)

-

Property acquisitions and improvements (298)

(754)

Sale of properties 910

21,302

Purchase of office equipment and motor vehicles (70)

(78)

Sale of office equipment and motor vehicles 33

86

Interest received 34

64

Dividends received from associate and joint ventures 181

173

Cash (outflows)/inflows from investing activities (281)

20,652Financing activitiesIssue expenses - (14)Purchase of treasury shares (101) -Sale of treasury shares 294 973Equity dividends paid (964) (924)Interest paid (10,926) (12,010)

Interest rate derivatives break costs paid (920)

(3,515)

Repayment of short term loan (910)

-

Payment/(repayment) of medium term bank loan 943

(11,575)

Cash outflows from financing activities (12,584)

(27,065)

Net (decrease)/increase in cash and cash equivalents (1,974)

3,282

Cash and cash equivalents at beginning of year 4,721

1,439

Cash and cash equivalents at end of year 2,747

4,721

Cash and cash equivalents

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

2011

2010

£'000

£'000

Cash and cash equivalents (before bank overdrafts) 6,464

8,584

Bank overdrafts (3,717)

(3,863)

Cash and cash equivalents at end of year 2,747

4,721Group accounting policies

The following are the principal group accounting policies:

Basis of accounting

The group financial statements for the year ended 31 December 2011 are prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The company has elected to prepare the parent company's financial statementsin accordance with UK GAAP, as applied in accordance with the provisions ofthe Companies Act 2006 and these are presented in note 25. The financialstatements are prepared under the historical cost convention, except for therevaluation of freehold and leasehold properties and financial assets held fortrading and fair value of interest derivatives. The group financial statementsare presented in Pounds Sterling and all values are rounded to the nearestthousand pounds (£'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. They have also considered the impact of the renewal of its bankingfacilities. The Group's business activities, together with the factors likelyto affect its future development, are set out in the Chairman and ChiefExecutive's Statement and Finance Director's Report. In addition the Directorsconsidered note 17 of the financial statements which includes the company'sobjectives, policies and processes for managing its capital; its financialrisk management objectives; details of its financial instruments and hedgingactivities; 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 Group is well placed to manage its businessrisks despite the current uncertain economic outlook. The Directors thereforehave a reasonable expectation that the Group has adequate resources tocontinue in operational existence for the foreseeable future. Thus theycontinue to adopt the going concern basis of accounting in preparing theannual financial statements.

Comparative information

The Directors consider `revaluation and other movements, associates and jointventures' require separate disclosure from the `operating profit before andafter financing charges', in the Consolidated Income Statement as theDirectors consider this is a more appropriate presentation for theunderstanding of the business and the Group's results. As a result the prioryear is re-presented in the Consolidated Income Statement.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:

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

The following standards and interpretations have been issued and adopted by the EU but are not effective for the year ended 31 December 2011 and have not been adopted early:

IFRS 7 Financial Instruments: Disclosures (amendment)

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

Basis of consolidationThe Group accounts incorporate the accounts of London & Associated

Properties PLC and all of its subsidiary undertakings, together with the

Group's share of the results and net assets of its joint ventures and

associate.

Subsidiaries

Subsidiaries are those entities controlled by the Group. Control is assumed when the Group has the power to govern the financial and operating policies of an entity or business and to economically benefit

from its activities. Subsidiaries acquired during the year are consolidated using the acquisition method. 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 acquiredentity over the Group's interest in the fair value of the assets andliabilities acquired. Goodwill is carried at cost less accumulated impairmentlosses. Goodwill arising from the difference in the calculation of deferredtax for accounting purposes and fair value in negotiations is judged not to bean asset and is accordingly impaired on completion of the relevantacquisition.RevenueRental income

Rental income arises from operating leases granted to tenants. An operatinglease is a lease other than a finance lease. A finance lease is one wherebysubstantially all the risks and rewards of ownership are passed to the lessee.Rental income is recognised in the group income statement on a straight-linebasis over the term of the lease. This includes the effect of lease incentivesto tenants, which are normally in the form of rent free periods. Contingentrents, being the difference between the rent currently receivable and theminimum lease payments, are recognised in property income in the periods inwhich they are receivable. Rent reviews are recognised when such reviews havebeen agreed with tenants.

Reverse surrender premiums Payments received from tenants to surrender their lease obligations 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 revenue Revenue in respect of listed investments held for trading represents investment dividends received and profit or loss recognised on realisation. Dividends are recognised in the income statement when the dividend is received.

Property operating expenses Property operating expenses are expensed as incurred and any property operating expenditure not recovered from tenants through service charges is charged to the income statement.

Employee benefits

Share 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-term incentive plan and the options granted under the share option scheme isdetermined at the date of grant. This fair value is then expensed on astraight-line basis over the vesting period, based on an estimate of thenumber of shares that will eventually vest. At each

reporting date, the fair value of the non-market based performance criteria of the long-term incentive plan is recalculated 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.

Group accounting policies continued

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 asto achieve 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 raterisk associated 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 andthe market 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 thegain or loss on the derivative that is an effective hedge is recogniseddirectly in equity. When the forecast transaction subsequently results in therecognition of a financial asset or a financial liability, the associatedgains or losses that were recognised directly in equity are reclassified intothe income statement in the same period or periods during which the assetacquired or liability assumed affects the income statement i.e. when interestincome or expense is recognised.The gain or loss arising from any adjustment to the fair value to the businesscalculation is recognised immediately in the group income statement when thecriteria set out in IAS 32 allowing the movements to be shown in equity havenot been met.Ordinary SharesShares are classified as equity when there is no obligation to transfer cashor other assets. Incremental costs directly attributable to the issue of newshares are shown in equity as a deduction, net of tax, from the proceeds.Treasury SharesWhen the Group's own equity instruments are repurchased, consideration paid isdeducted from equity as treasury shares until they are cancelled.

When such shares are subsequently sold or reissued, any consideration received is included in equity.

or for capital appreciation or both, including those that are undergoing redevelopment. They are reported on the Group balance sheet at fair value, being the amount for which an investment property could be

exchanged between knowledgeable and willing parties in an arm's lengthtransaction. The valuation is undertaken by independent valuers who holdrecognised and relevant professional qualifications and have recent experiencein the locations and categories of properties being valued. Surpluses ordeficits resulting from changes in the fair value of investment property arereported in the Group income 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,or for that part of the development costs financed out of borrowings thecapitalised interest is calculated on the basis of the average rate ofinterest paid 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

business segments distinguishable by economic activity. The Group's only business segments are investment properties and other investments.

Investment properties

Valuation

Investment properties are those that are held either to earn rental income

.

These business segments are subject to risks and returns that are different from those of other business segments and are the primary basis

on which the Group reports its segment information. This is consistent with the way the Group is managed and with the format of the Group's internal financial reporting.

Notes to the financial statementsfor the year ended 31 December 2011

1. Segmental analysis

Operating Segments are based on the internal reporting and operationalmanagement of the Group. The Group is organised into Property and otherinvestments.Business segments 2011 2010 Other Other Property investments Total Property investments Total £'000 £'000 £'000 £'000 £'000 £'000Rental income 16,379 - 16,379 15,985 - 15,985Property overheads (4,519) - (4,519) (5,619) - (5,619)Net rental income 11,860 - 11,860 10,366 - 10,366Listed investment income - 24 24 - 43 43Profit on sale of investment properties 310 - 310 637 - 637Operating profit before financing charges* 12,170 24 12,194 11,003 43 11,046Total assets (excluding investments in associate and joint ventures) 237,336 635 237,971 237,023 717 237,740Total liabilities (excluding borrowingsand current tax) (68,964) - (68,964) (52,377) - (52,377)Borrowings (140,126) - (140,126) (140,194) - (140,194)Net assets 28,246 635 28,881 44,452 717 45,169Investments in joint ventures:non segmental (notes 10 and 12) 4,032 3,104Investments in associate:non segmental (note 11) 7,011 7,483Investments in unlisted companies 5 5Net assets as per balance sheet 39,929 55,761Other segment items:Net (decrease)/increase on revaluationof investment properties (1,021) - (1,021) 1,569 - 1,569Net (decrease)/increase on revaluation - (104) (104) - 89 89of investments held for tradingFinance income 34 - 34 64 - 64Finance expenses 11,344 - 11,344 11,992 - 11,992Depreciation 158 - 158 197 - 197Capital expenditure 493 - 493 567 - 567Rental income Joint Ventures Group Langney exclude: Dragon Shopping Group joint Analytical Retail Centre Share ventures Ventures Properties Unit Trust Total 2011 2010 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Rental income 16,379 866 191 662 18,098 16,990 16,503Direct property expenses (1,819) (31) (33) (74) (1,957) (1,860) (1,874)Overheads (2,700) (236) (117)

(150) (3,203) (2,895) (3,960)

11,860 599 41 438 12,938 12,235 10,669Less: attributable to joint ventures (375) (303)Net rental income 11,860 10,366*Operating profit before financing charges is defined as profit before tax andexcludes the share of profit & losses of joint ventures and associate, financeincome and expenses, movement on revaluation of investment properties andinvestrments held for trading and the movement of interest rate derivatives.

Geographical segments

At net rental income level, the Group operates in the United Kingdom only. 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 (2010: none).

notes to the financial statements

for the year ended 31 December 2011

2. Loss before taxation 2011 2010

£'000 £'000 Loss before taxation is arrived at after charging/(crediting): Staff costs (note 21)

2,283 2,631Depreciation on tangible fixed assets - owned assets 158 197Operating lease rentals - land and buildings 375 375Loss/(profit) on disposal of motor vehicles and office equipment

10 (3) Amounts payable to the auditor in respect of both audit and non-audit services

Audit services:Statutory - company and consolidation

63 84- subsidiaries 32 41Further assurance services 3 6Other services 8 9

106 140 Staff costs and depreciation of tangible fixed assets are included in overheads.

3. Listed investments held for trading

2011 2010 £'000 £'000Investment sales - 119Dividends receivable 24 15 24 134Cost of sales - (86) 24 48Attributable overheads - (5)

Net income from listed investments 24 43

4. Directors' emoluments 2011 2010 £'000 £'000Emoluments 1,011 1,262

Defined contribution pension scheme contributions 66 86 1,077 1,348

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

5. Finance income and expenses

2011 2010 £'000 £'000Finance income 34 64Finance expenses

Interest on bank loans and overdrafts (2,518) (2,164)Other loans (2,103) (2,134)Interest on derivatives adjustment (4,743) (5,575)Interest on obligations under finance leases (1,980) (2,049)Total finance expenses (11,344) (11,922) (11,310) (11,858)

notes to the financial statements

for the year ended 31 December 2011

6. Income tax 2011 2010 £'000 £'000Current tax

Corporation tax on loss of the period - -Adjustments in respect of previous periods - (861)Total current tax - (861)Deferred taxOrigination and reversal of timing differences (381) (1,578)Revaluation of investment properties (547) (2,781)Accelerated capital allowances 1,045 97Fair value of interest derivatives (3,897) (2,038)Adjustments in respect of previous periods 38 (31)Total deferred tax (note 18) (3,742) (6,331)Tax on loss on ordinary activities (3,742) (7,192)

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 26.5 per cent (2010: 28 per cent). The differences are explained below:

Loss on ordinary activities before taxation (18,563) (10,687)Taxation on ordinary activitiesat 26.5 per cent (2010: 28%) (4,919) (2,992) Effects of: Other differences 951 (3,265)Joint ventures and associate (41) (43)Deferred tax rate adjustment 229 -

Adjustment in respect of prior years 38 (892)Tax credit for the period (3,742) (7,192)

The main component of other differences in the reconciliation relates to potential indexation for capital gains of £0.8 million (2010: indexation allowance £3.2 million).

Factors that may affect future tax charges:

Based on current capital expenditure plans, the Group expects to continue tobe able to claim capital allowances in excess of depreciation in future years,but at 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 2011 2010 Per share £'000 Per share £'000Dividends paid during the yearrelating to the prior period 1.15p 964 1.15p 924Dividends to be paid:Interim dividend for 2011 paidon 20 January 2012 0.75p 630 0.75p 627Proposed final dividend - - 0.40p 337 0.75p 630 1.15p 964notes to the financial statements

for the year ended 31 December 2011

8. Loss per share and net assets per share

Loss per share have been calculated as follows: 2011

2010

Loss for the year for the purposes of basic anddiluted loss per share (£'000) (14,821)

(3,495)

Weighted average number of ordinary shares inissue for the purpose of basic loss per share ('000) 84,074 82,389Basic loss per share (17.63)p

(4.24)p

Weighted average number of ordinary shares inissue for the purpose of diluted loss per share ('000) 84,074 82,389Fully diluted loss per share (17.63)p (4.24)p

Weighted average number of shares in issue is calculated after excluding treasury shares of 1,538,398 (2010: 1,957,534).

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

Operating profit after financing charge per share of 1.05p (loss 2010: (0.99)p) is based on the operating profit after financing charges of £884,000 (2010: operating loss after financing charges £812,000) divided by the weighted average number of ordinary shares in issue of 84,074,000 (2010: 82,389,000).

Net assets per share have been calculated as follows:

Net assets Shares in issue Net assets per share 2011 2010 2011 2010 2011 2010 £'000 £'000 `000 `000 Pence PenceBasicAt 31 December 39,929 55,761 84,004 83,585 47.53 66.71 Dilution adjustments for sharessubject to option agreements:Issue of outstanding share options 28 28 70 70Diluted 39,957 55,789 84,074 83,655

47.53 66.69

9. Property and plant and equipment

Investment Properties Office Leasehold Leasehold equipment over under and motor Total Freehold 50 years 50 years vehicles £'000 £'000 £'000 £'000 £'000Cost or valuation at 1 January 2011 223,610 82,973 140,131 506 1,586Additions 423 - 423 - 70Disposals (600) (600) - - (312)

Decrease in present value of head leases (3) - (3) - -(Decrease)/increase on revaluation (1,021) (2,695) 1,724 (50) -Cost or valuation at 31 December 2011 222,409 79,678 142,275 456 1,344 Representing assets stated at:Valuation 193,748 79,678 113,620 450 -Present value of head leases 28,661 - 28,655 6 -Cost - - - - 1,344 222,409 79,678 142,275 456 1,344

Depreciation at 1 January 2011 - - -

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

Depreciation at 31 December 2011 - - - - 860Net book value at 1 January 2011 223,610 82,973 140,131 506 612Net book value at 31 December 2011 222,409 79,678 142,275 456 484notes to the financial statementsfor the year ended 31 December 2011

9. Property and plant and equipment continued

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

Cost or valuation at 1 January 2010 243,109 83,598 159,511

- 1,734Reclassification - - (576) 576 -Additions 489 - 489 - 78Disposals (20,736) (3,736) (17,000) - (226)

Decrease in present value of head leases (821) - (821) - -Increase/(decrease) on revaluation 1,569 3,111 (1,472) (70) -Cost or valuation at 31 December 2010 223,610 82,973 140,131 506 1,586 Representing assets stated at:Valuation: 194,946 82,973 111,473 500 -Present value of head leases 28,664 - 28,658 6 -Cost - - - - 1,586 223,610 82,973 140,131 506 1,586

Depreciation at 1 January 2010 - - -

- 918Charge for the year - - - - 197Disposals - - - - (141)

Depreciation at 31 December 2010 - - - - 974Net book value at 1 January 2010 243,109 83,598 159,511

- 816 Net book value at 31 December 2010 223,610 82,973 140,131 506 612

The leasehold and freehold properties, excluding the present value of head leases, were valued as at 31 December 2011 by external professional firms of chartered surveyors. The valuations were made at open market value.

2011 2010 £'000 £'000Allsop LLP 95,155 96,750BNP Paribas Real Estate 4,033 4,196Jones Lang LaSalle 94,560 -King Sturge LLP - 94,000 193,748 194,946Add: Present value of headleases 28,661 28,664 222,409 223,610

The historical cost of investment properties, including total capitalised interest of £6,051,000 (2010: £6,051,000) was as follows:

2011 2010 Leasehold Leasehold Over 50 Short Over 50 Short Freehold years Leasehold Freehold years Leasehold £'000 £'000 £'000 £'000 £'000 £'000

Cost at 1 January 76,308 121,466 785 80,608 133,462 - Reclassification - - - - (785) 785Additions - 423 - - 489 -Disposals (175) - - (4,300) (11,700) -Cost at 31 December 76,133 121,889 785 76,308 121,466 785notes to the financial statementsfor the year ended 31 December 2011

10. Investment in joint ventures

2011 2010 £'000 £'000Group share of:Turnover 611 518Loss before tax (15) (226)Taxation 25 (7)Profit/(loss) after tax 10 (233)Non-current assets 8,268 6,333Current assets 1,586 1,500Current liabilities (443) (3,712)Non-current liabilities (7,372) (2,958)Net assets 2,039 1,163Analytical Ventures Limited (Analytical Ventures) - unlisted propertyinvestment company. The company owns 50 per cent of the issued share capitaland £1,992,897 of loan stock of Analytical Ventures. The remaining 50 per centis owned by Uberior Ventures Limited. Analytical Ventures is incorporated andoperates in England and Wales and has issued share capital of 7,558,000ordinary shares (2010:7,558,000 ordinary shares of £1 each). AnalyticalVentures is managed by a board of directors with neither party having overallcontrol.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 (2010:500,000 ordinary shares of £1 each).Dragon is managed by a board of directors with neither party having overallcontrol.

Langney Shopping Centre Unit Trust (Langney) - unlisted property investment unit trust.

The company acquired 12.50 per cent of the total ordinary units in issue inJune 2011. A further 12.50 per cent is owned by Bisichi Mining PLC.Theremaining 75 per cent is owned by Columbus Capital Management LLP. Langney isincorporated in Jersey and has 7,100 total ordinary units in issue of £1,000each. The company has a management contract to manage the property for Langneyand accordingly has a significant influence in Langney. It is a single assetunit trust.Shares in joint ventures: 2011 2010 £'000 £'000At 1 January 1,163 1,396Share of profit/(loss) after tax 10 (233)Dividend received (22) -Investment in shares 888 - 876 (233)At 31 December 2,039 1,163

11. Investments in associated company

Associate 2011 2010 £'000 £'000Bisichi Mining PLC - listed mining andproperty investment company Group share of:Turnover 12,551 13,681Loss before tax (568) (725)Taxation 379 220Loss after tax (189) (505)Non-current assets 10,383 10,718Current assets 5,083 4,811Current liabilities (7,071) (4,162)Non-current liabilities (1,324) (3,720)Minority interest (60) (164)Net assets 7,011 7,483notes to the financial statementsfor the year ended 31 December 2011 continued

11. Investments in associated company continued

2011 2010 £'000 £'000Share in associate:At 1 January 7,483 8,044Share of loss after tax (189) (505)Investment in shares 131 -Equity share options 6 2Currency translation (246) 314Dividend received (174) (173)Minority interest - (199) (472) (561)At 31 December 7,011 7,483The company owns 42 per cent (2010: 42 per cent) of the issued share capitalof Bisichi Mining PLC (Bisichi), a company registered in England and Wales.Bisichi has an issued share capital of 10,556,839 (2010: 10,451,506) ordinaryshares of 10p each, and its principal countries of operation are the UnitedKingdom (property investment) and South Africa (coal mining). Bisichi is anassociated undertaking because London & Associated Properties PLC has aparticipating interest. Bisichi has an independent board of directors whichcontrols its operating and financial policies.The market (bid) value of this investment at 31 December 2011 was £6,206,000(2010: £8,700,000). No impairment is necessary as the Directors consider themarket value deficit temporary.

12. Held to maturity investments

Loan Loan Stock Stock 2011 Unlisted in joint 2010 Unlisted in joint Total Shares ventures Total Shares ventures £'000 £'000 £'000 £'000 £'000 £'000CostAt 1 January 1,946 5 1,941 1,805 5 1,800Loan stock issue 220 - 220 180 - 180Repayments (168) - (168) (39) - (39)At 31 December 1,998 5 1,993 1,946 5 1,941

13. Trade and other receivables

2011 2010 £'000

£'000

Trade receivables 1,100 1,089Amounts due from associate and joint ventures 442 328Other receivables 191 206Prepayments and accrued income 2,568 2,469 4,301 4,092

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

14. Investments held for trading

2011

2010

£'000

£'000

Market bid value of the listed investment portfolio 635

717

Unrealised deficit of market value over cost (499)

(395)

Listed investment portfolio at cost 1,134

1,112

All investments are listed on the London Stock Exchange.

15. Trade and other payables

2011 2010 £'000 £'000Trade payables 426 256Amounts owed to joint ventures 1,144 1,133Other taxation and social security costs 954 981Other payables 725 801Accruals and deferred income 6,204 6,851 9,453 10,022

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

notes to the financial statementsfor the year ended 31 December 2011 continued

16. Borrowings

Current borrowings - amounts falling due within one year

2011 2010 £'000 £'000Bank overdrafts (secured) 3,717 3,863

£1 million term bank loan repayable by 2015 (unsecured)

226 - £47 million revolving credit facility repayable in 2012*+ (secured) 44,069 -

48,012 3,863

Non-current borrowings - amounts falling due after more than one yearTerm borrowingsDebenture stocks:£5 million First Mortgage Debenture Stock 2013 at 11.3 per cent 5,000 5,000£1.7 million First Mortgage Debenture Stock 2016 at 8.67 per cent 1,700 1,700£5 million First Mortgage Debenture Stock 2018 at 11.6 per cent 5,000 5,000£10 million First Mortgage Debenture Stock 2022 at 8.109 per cent* 9,821 9,804 21,521 21,504Term bank loans:£1 million term bank loan repayable by 2015 706 -£47 million revolving credit facility repayable in 2012*+ - 44,855£70 million term bank loan repayable in 2014* 69,887 69,847 70,593 114,702 92,114 136,206

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

+The £47 million facility was reduced from £60 million.

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 £47million bank revolving credit facility repayable in September 2012 and thelong term £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 £191.0 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 exposureto interest risk and to refinancing risk. In effect the Group seeks to borrowfor as 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.

notes to the financial statements

for the year ended 31 December 2011 continued

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 2-5 Over 5 2011 1 year years years Total £'000 £'000 £'000 £'000Bank overdrafts (floating) 3,717 - - 3,717Debentures (fixed) - 6,700 15,000 21,700Bank loans (floating)* 44,420 70,706 - 115,126

Trade and other payables (non-interest) 9,453

- - 9,453 57,590 77,406 15,000 149,996 Less than 2-5 Over 5 2010 1 year years years Total £'000 £'000 £'000 £'000Bank overdrafts (floating) 3,863 - - 3,863Debentures (fixed) - 5,000 16,700 21,700Bank loans (floating)* - 115,104 - 115,104Trade and other payables (non-interest) 10,022

- - 10,022

13,885

120,104 16,700 150,689

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 carryingamount of each financial asset in the balance sheet. The Group only depositssurplus cash with well-established financial institutions of high qualitycredit standing.

Borrowing facilities

At 31 December 2011 London & Associated Properties PLC was within its bankborrowing facilities and was not in breach of any of the covenants. Overdraftsare renewable annually. Term loan repayments are as set out below. Details ofother financial liabilities are shown in notes 15 and 16.The Group has undrawn facilities of £3,089,000 (2010: £16,033,000) as follows: 2011 2010 £'000 £'000Overdrafts 283 1,137Term facilities expiring in one year 2,806 -Term facilities expiring in two to five years - 14,896 3,089 16,033

Hedge profile

a) There is a hedge to cover the £47 million revolving credit facility, whichcurrently covers the full £44 million drawn. It consists of a 20 year swap for£10.4 million (2010: £15.4 million) with a 7 year call option in favour of thebank, taken out in November 2007, at 4.76 per cent and a 20 year swap for £40million with a 7 year call option in favour of the bank, taken out in December2007, at 4.685 per cent.b) There is a hedge to cover the £70 million term bank loan drawn. It consistsof a 20 year swap for £70 million with a 7 year call option in favour of thebank, taken out in November 2007, at 4.76 per cent.

At the year end the amount recognised was £23,137,000 deficit (2010: £9,811,000 deficit) being the estimated financial effect of the fair value to the business of these hedging instruments less the deferred tax thereon.

During the year the Company broke £5 million (2010: £19.6 million) of the 4.76 per cent swap at a cost of £920,000 (2010: £3.515 million).

The Directors have estimated the financial effect of the fair value to thebusiness of these hedging instruments. This has been calculated as the NetPresent Value of the difference between the 16 year interest rate, which was2.74 per cent at 31 December 2011 against the rate payable under the specifichedge. This has given a liability at 31 December 2011 of £30,850,000 (2010:£13,627,000) as shown in the balance sheet and this value changes byapproximately £1,600,000 for each 0.1% change in interest rate. The banks owninitial quotation at 31 December 2011 to close each of the hedges was£37,039,000 (2010: £16,236,000). It is not the company's intention tocrystallise the derivatives.Under IAS 39 the hedges are not deemed to be eligible for hedge accounting andany movement in the value of the hedges is therefore charged directly to theconsolidated income statement. The banks have an option to cancel the hedgesin November 2014 and January 2015. The cost to the Group to exit theinstruments before November 2014 and January 2015 has been attributed a costby the bank of £1,280,000 (2010: £5,679,000). It is not the intention of theDirectors to exit the instruments and this cost has not been recognised.notes to the financial statementsfor the year ended 31 December 2011 continued

17. Financial instruments continued

Fair value of financial instrumentsFair value estimation

Effective 1 January 2009, the Group adopted the amendment to IFRS 7 for financial instruments that are measured in the balance sheet at fair value, this requires disclosure of fair value measurements by level of the following fair value hierarchy:

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

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

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

2011 Gain/(loss) to income Level 1 Level 2 Level 3 Total statement £'000 £'000 £'000 £'000 £'000Financial assetsOther financial assets held for tradingQuoted equities 635 - - 635

(104)

Financial liabilitiesDerivative financial instrumentsInterest rate swaps - - 30,850 30,850 (17,223) 2010 Gain/(loss) to income Level 1 Level 2 Level 3 Total statement £'000 £'000 £'000 £'000 £'000Financial assetsOther financial assets held for tradingQuoted equities 717 - - 717

15

Financial liabilitiesDerivative financial instrumentsInterest rate swaps - - 13,627 13,627

(7,280)

Capital structure

The Group sets the amount of capital in proportion to risk. It ensures thatthe capital 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 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. During2011 this decreased to 188.8 per cent (2010: 189.5 per cent) which wascalculated as follows: 2011 2010 £'000 £'000Total debt 140,126 140,069Less cash and cash equivalents (6,464) (8,584)Net debt 133,662 131,485 Total equity 70,779 69,388 188.8% 189.5%

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

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 financialinstruments is limited because the counterparties are banks with high creditratings assigned by international credit-rating agencies. The Group's creditrisk is primarily attributable to its trade receivables. The amounts presentedin the balance sheet are net of allowances for doubtful receivables, estimatedby the Group's management based on prior experience and the current economicenvironment. notes to the financial statementsfor the year ended 31 December 2011 continued

17. Financial instruments continued

Financial assets maturity

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

2011 2010 £'000 £'000Cash at bank and in hand 6,464 8,584

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

Financial liabilities maturity

Repayment of borrowings 2011 2010 £'000 £'000Bank loans and overdrafts:Repayable on demand or within one year 48,012 3,863Repayable between two and five years 70,593 114,702 118,605 118,565

Debentures:

Repayable between two and five years 6,700 5,000Repayable in more than five years 14,821 16,504 140,126 140,069

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

Group undrawn banking facilitieswhich expire within one year 3,089 1,137which expire in two to five years - 14,896 3,089 16,033

Interest rate risk and hedge profile

2011 2010 £'000 £'000Fixed rate borrowings 21,700 21,700 Floating rate borrowings- Subject to interest rate swap 120,400 125,400- Excess hedge (6,206) (10,296) 135,894 136,804Average fixed interest rate 9.69% 9.69%Weighted average swapped interest rate 6.00% 5.57%Weighted average cost of debt onoverdrafts, bank loans and debentures 6.48% 6.12%

Average period for which borrowing

rate is fixed 7.5 years 8.5 yearsAverage period for whichborrowing rate is swapped 15.9 years 16.9 yearsThe swapped interest ratehave calls by the bank 2.9 years 3.9 years

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

notes to the financial statements

for the year ended 31 December 2011 continued

17. Financial instruments continued

Total financial assets and liabilities

The Group's financial assets and liabilities and their fair values are asfollows: 2011 2010 Fair Carrying Fair Carrying value value Value value £'000 £'000 £'000 £'000

Cash and cash equivalents 6,464 6,464 8,584 8,584Financial assets - investments 635

635 717 717held for tradingOther assets 4,302 4,302 4,092 4,092Derivative liabilities (30,850) (30,850) (13,627) (13,627)Bank overdrafts (3,717) (3,717) (3,863) (3,863)Bank loans (115,126) (114,888) (115,104) (114,702)Present value of head leases on properties (28,661) (28,661) (28,664) (28,664)Other liabilities (9,453) (9,453) (10,022) (10,022)Total financial liabilities before debentures (176,406) (176,168) (157,887) (157,485)Fair value of debenture stocksFair value of the Group'sdebenture liabilities:

2011 2010 Book Fair Fair value Fair Value value value adjustment adjustment £'000 £'000 £'000 £'000Debenture stocks (21,700) (29,621) (7,921) (4,889)Tax at 25 per cent (2010: 28 per cent) 1,980 1,369Post tax fair value adjustment (5,941) (3,520)Post tax fair value adjustment - basic pence per share

(6.79)p (4.21)p

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 2011 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.

notes to the financial statementsfor the year ended 31 December 2011 continued18. Deferred tax 2011 2010 £'000 £'000Balance at 1 January 64 6,395Transfer to consolidated income statement (3,742)

(6,331)

Balance at 31 December (3,678)

64

The deferred tax balance comprises the following:Revaluation of investment properties 2,406

2,953

Accelerated capital allowances 3,263

2,213

Fair value of interest derivatives (7,712) (3,815)Short-term timing differences 1,209 1,320 (834) 2,671Loss relief (2,844) (2,607)Provision at end of period (3,678) 64

The directors consider the temporary differences arising in connection with the interests in associate and joint ventures are insignificant. There is no time limit in respect of the Group tax loss relief.

19. Share capital Number of Number of ordinary 10p ordinary 10p shares shares 2011 2010 2011 2010 £'000 £'000

Authorised: Ordinary shares of 10p each 110,000,000 110,000,000 11,000 11,000Allotted, issued and fully paid 83,922,029 83,922,029 8,392 8,392Ordinary shares of 10p - issued during the year 1,620,682 1,620,682 162 162Share capital 85,542,711 85,542,711 8,554 8,554Less: held in Treasury (see below) (1,538,398) (1,957,534) (154) (196)"Issued share capital" for reporting purposes 84,004,313

83,585,177 8,400 8,358

The company has one class of ordinary shares which carry no right to fixedincome.Treasury shares Number of ordinary 10p shares Cost/issue value 2011 2010 2011 2010 Price Date excl. £'000 £'000 costs

Shares held in Treasury at 1 January 1,957,534 4,293,051 2,078 4,558Issued to meet directors bonuses(Jan 10 -106.18p) Feb-11 106.18p (538,203) (2,069,524) (571) (2,198)Issued to meet staff bonuses(Jan 10 -106.18p) Feb-11 106.18p (57,751) (88,021) (61) (93)Issued for new share incentive plan Feb-11 106.18p (78,885) - (84) -Purchase of shares Sep-11 295,000 - 101 -Issued to meet directors' bonuses(Oct 10-106.18p) - (19,097) - (20)Issued for new share incentive plan Oct-11 106.18p (26,400) (23,702) (28) (25)Issued to meet staff bonuses Oct-11 106.18p (12,897) - (14) -Issued for new share incentive plan(Dec 10 -106.18p) - (135,173) - (144)Shares held in Treasury at 31 December

1,538,398 1,957,534 1,421 2,078

notes to the financial statementsfor the year ended 31 December 2011 continued

19. Share capital continued

Share Option Schemes

Employees' share option scheme (Approved scheme)

At 31 December 2011 the following options to subscribe for ordinary shareswere outstanding, issued under the terms of the Employees' Share OptionScheme:Number of shares Date of grant Option Price Normal Exercise Date70,000 14 October 2003 39.5p 14 October 2006 to 13 October 2013

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

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

A summary of the shares allocated and options issued under the scheme up to 31December 2011 is as follows: Changes during the year At At 1 January Options Options Options 31 December 2011

Exercised granted lapsed 2011

Shares issued to date 2,367,604 - - - 2,367,604Options granted which have 70,000 - - - 70,000not been exercisedShares allocated over which options 1,549,955 - - - 1,549,955have not been grantedTotal shares allocated for issue to 3,987,559 - - - 3,987,559employees under the scheme

Non-approved Executive Share Option Scheme (Unapproved scheme)

A share option scheme known as the "Non-approved Executive Share Option Scheme" which does not have HMRC approval was set up during 2000. At 31 December 2011 there were no options to subscribe for ordinary shares outstanding.

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

A summary of the shares allocated and options issued under the scheme up to 31 December 2011 is as follows:

Changes during year Changes during the year At At 1 January Options Options Options 31 December 2011

Exercised granted lapsed 2011

Shares issued to date 450,000 - - - 450,000Options granted which have not been exercised - - - - -Shares allocated over which optionshave not yet been granted 550,000 - - - 550,000Total shares allocated for issue toemployees under the scheme 1,000,000 - - - 1,000,000notes to the financial statements

for the year ended 31 December 2011 continued

20. Related party transactions

Cost Amounts Cash recharged Owed advanced to(by) (to) by to (by) related related related party party party £'000 £'000 £'000Related party:Analytical Ventures LimitedCurrent Account 74 20 -Dragon Retail Properties LimitedCurrent account 43 61 19Loan account - (1,205) -Langney Shopping Centre Unit TrustCurrent account 51 (ii) 55 -Bisichi Mining PLCCurrent account 328 (i) 367 -Directors and key managementM A Heller and J A Heller 18 (ii) - -H D Goldring

(Delmore Asset Management Limited) (25) (iii)

- -C A Parritt (17) (iv) - -Totals at 31 December 2011 472 (702) 19Totals at 31 December 2010 433 (803) -

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

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 wasdeposited equally with London & Associated Properties PLC and Bisichi MiningPLC. The deposit is currently interest free. Langney Shopping Centre UnitTrust (joint venture)

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

The company provides office premises, property management, general management,accounting and administration services for both Analytical Ventures and Dragonand property management services to Langney.Bisichi Mining PLC (associate)The company provides office premises, property management, general management,accounting and administration services for Bisichi Mining PLC and itssubsidiaries.

Directors

London & Associated Properties PLC provides office premises, propertymanagement, general management, accounting and administration services for anumber of private property companies in which M A Heller and J A Heller havean interest. 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 (2010: £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 £30,000 (2010: £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 (2010: £75,000) for services.

The directors are considered to be the only key management personnel and their remunerations including employers national insurance for the year were £1,208,000 (2010: £1,504,000). All other disclosures required including interest in share options in respect of those directors are included within the remuneration report.

21. Employees

The average number of employees, including directors, of the Group during the year involved in management and administration was 31 (2010: 36).

2011 2010 £'000

£'000

Staff costs during the year were as follows:Salaries and other costs 1,713 1,873Social security costs 220 386Pension costs 350 372 2,283 2,631notes to the financial statementsfor the year ended 31 December 2011 continued

22. Capital Commitments

2011 2010 £'000 £'000Commitments to capital expenditurecontracted for at the year end 735 -

The Group's share of capital commitments of joint ventures at the year end amounted to £Nil (2010: £Nil).

23. Commitments under operating and finance leases

Operating leases on land and buildings

At 31 December 2011 the Group had commitments under non-cancellable operating leases on land and buildings as follows:

2011 2010 £'000 £'000Within one year 390 399

In the second to fifth years inclusive 714 1,197

1,104 1,596

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

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

Present value of head leases on properties

Minimum Present value lease of minimum payments lease payments 2011 2010 2011 2010 £'000 £'000 £'000 £'000Amounts payable under finance leases:Within one year 1,821 1,821 1,821 1,821In the second to fifth years inclusive 7,285 7,285

6,770 6,970After five years 227,293 229,114 20,070 20,073 236,399 238,220 28,661 28,864

Future finance charges on finance leases (207,738) (209,556) - -

Present value of finance lease liabilities 28,661 28,664

28,661 28,864

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:

2011 2010 £'000 £'000Within one year 10,446 11,811In the second to fifth years inclusive 36,772 40,537After five years 38,321 41,273 85,539 93,621

24. Contingent Liabilities

There were no contingent liabilities at 31 December 2011 (2010: £Nil), except as disclosed in Note 17.

notes to the financial statementsfor the year ended 31 December 2011 continued

25. Company financial statements

Company balance sheet at 31 December 2011

2011 2010 Notes £'000 £'000Fixed assetsTangible assets 25.3 85,282 86,758Other investments:Associated company 25.4 489 358Subsidiaries and others 25.4 47,371 46,431 25.4 47,860 46,789 133,142 133,547 Current assetsDebtors 25.5 24,911 22,553Investments 25.6 635 717Bank balances 4,540 5,966 30,086 29,236Creditors

Amounts falling due within one year 25.7 (89,796) (42,416)Net current liabilities (59,710) (13,180)Total assets less current liabilities 73,432 120,367

CreditorsAmounts falling due aftermore than one year 25.8 (34,887) (72,146)Net assets 38,545 48,221 Capital and reservesShare capital 25.10 8,554 8,554Share premium account 25.11 4,866 4,866Capital redemption reserve 25.11 47 47Revaluation reserve 25.11 12,059 13,407Treasury shares 25.10 (1,421) (2,078)Retained earnings 25.11 14,440 23,425Shareholders' funds 38,545 48,221

These financial statements were approved by the board of directors and authorised for issue on 20 April 2012 and signed on its behalf by:

M A Heller R J CorryDirector Director

Company Registration No. 341829

notes to the financial statementsfor the year ended 31 December 2011 continued

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,"Accounting for Investment Properties", which provides that these should notbe subject to periodic depreciation charges, but should be shown at openmarket value. This is contrary to the Companies Act 2006 which states that,subject to any provision for depreciation or diminution in value, fixed assetsare normally to be stated at purchase price or production cost. Current costaccounting or the revaluation of specific assets to market value, asdetermined at the date of their 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 itis the current value of these investments, and changes in that current value,which are of prime importance. Consequently, for the proper appreciation ofthe financial position, the accounting treatment required by SSAP 19 isconsidered appropriate for investment properties. Details of the current valueand historical cost information for investment properties are set out in note25.3. Depreciation or amortisation is only one of the many factors reflectedin the 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 2011 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 vehicles - 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 assetsThese comprise investments in subsidiaries and investments in AnalyticalVentures Limited, Dragon Retail Properties Limited and Langney Shopping CentreUnit Trust (unlisted joint ventures), Bisichi Mining PLC (listed associate),and in unlisted companies which are all held for the long term. Provision ismade for any impairment in the value of fixed asset investments.b) Investments held as current assetsInvestments held for trading are included in current assets and are revaluedto fair value. For listed investments, fair value is the bid market listedvalue at the balance sheet date. Realised and unrealised gains or lossesarising from changes in fair value are included in the income statement of theperiod in which 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 thegain or loss on the derivative that is an effective hedge is recogniseddirectly in equity. When the forecast transaction subsequently results in therecognition of a financial asset or a financial liability, the associatedgains or losses that were recognised directly in equity are reclassified intothe income statement in the same period or periods during which the assetacquired or liability assumed affects the income statement i.e. when interestincome or expense 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 rightto pay 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 havebeen enacted or substantially enacted by the balance sheet date. Deferred taxis measured on a non-discounted basis.

Leased assets and obligations All leases are "Operating Leases" and the annual rentals are charged to the profit and loss account on a straight line basis over the lease term. Rent free periods or other incentives received for entering into a lease are accounted for over the period of the lease so as to spread the benefit received over the lease 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.notes to the financial statementsfor the year ended 31 December 2011 continued

25.2. Loss for the financial year

The company's loss for the year was £7,557,000 (loss 2010: £6,182,000). 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 Equipment Long Short and motor Total Freehold leasehold leasehold vehicles £'000 £'000 £'000 £'000 £'000

Cost or valuation at 1 January 2011 87,778 63,123 22,523

500 1,632Additions 70 - - - 70Disposals (312) - - - (312)Decrease on revaluation (1,348) (445) (853) (50) -

Cost or valuation at 31 December 2011 86,188 62,678 21,670

450 1,390

Representing assets stated at:Valuation 84,798 62,678 21,670 450 -Cost 1,390 - - - 1,390 86,188 62,678 21,670 450 1,390

Depreciation at 1 January 2011 1,020 - -

- 1,020Charge for the year 158 - - - 158Disposals (272) - - - (272)

Depreciation at 31 December 2011 906 - - - 906Net book value at 1 January 2011 86,758 63,123 22,523 500 612Net book value at 31 December 2011 85,282 62,678 21,670

450 484

The freehold and leasehold properties were valued as at 31 December 2011 byexternal professional firms of chartered surveyors. The valuations were madeat open market value on the basis of existing use. The decrease in book valuewas transferred from revaluation reserve. 2011 2010 £'000 £'000Allsop LLP 80,765 81,950BNP Paribas Real Estate 4,033 4,196 84,798 86,146

The historical cost of investment properties, including total capitalised interest of £1,222,000 (2010: £1,222,000) was as follows:

Short Long Freehold Leasehold Leasehold £'000 £'000 £'000Cost at 1 January 2011 54,620 17,293 785Reclassification - - -Additions - - -Disposals - - -Cost at 31 December 2011 54,620 17,293 785

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

notes to the financial statementsfor the year ended 31 December 2011 continued25.4. Other investments Loan Loan Shares in stock in Shares in stock subsidiary subsidiary joint in joint Shares in Unlisted Total companies companies ventures ventures associate sharesCost £'000 £'000 £'000 £'000 £'000 £'000 £'000At 1 January 2011 46,789 40,663 3,658 164 1,941 358 5Additions 1,239 - - 888 220 131 -Repayments (168) - - - (168) - -At 31 December 2011 47,860 40,663 3,658 1,052 1,993 489 5Subsidiary 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 company by GroupLAP Ocean Holdings Limited Property investment 100 100Antiquarius Limited Property investment - 100Brixton Village Limited Property investment - 100Market Row Limited Property investment - 100Ski Investments Limited Property investment - 100

Analytical Properties Holdings Limited Property investment 100

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

100London & Associated Property Management Services 100 100Management Services 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 2011 2010 £'000 £'000Trade debtors 851 639

Amounts due from subsidiary companies 17,431 17,525Amounts due from associate and joint ventures 402 328Deferred tax asset (note 25.9) 4,550 2,657Other debtors 56 41Prepayments and accrued income 1,621 1,363

24,911 22,55325.6. Investments 2011 2010 £'000 £'000

Market value of the listed investment portfolio 635 717Unrealised deficit of market value over cost (499) (395)Listed investment portfolio at cost 1,134 1,112

All investments are listed on the London Stock Exchange.

notes to the financial statementsfor the year ended 31 December 2011 continued

25.7. Creditors: Amounts falling due within one year

2011 2010 £'000 £'000Bank overdrafts (unsecured) 3,717 3,863Bank loans (secured) 44,069 -Bank loans (unsecured) 226 -

Amounts owed to subsidiary companies 35,256 31,659Amounts owed to joint ventures 1,144 1,133Other taxation and social security costs 693 649Other creditors 450 328Accruals and deferred income 4,241 4,784 89,796 42,416

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

2011 2010 £'000 £'000Interest rate derivatives 12,660 5,787Term Debenture stocks:£5 million First Mortgage Debenture Stock 2013 at 11.3 per cent 5,000 5,000£1.7 million First Mortgage Debenture Stock 2016 at 8.67 per cent 1,700 1,700£5 million First Mortgage Debenture Stock 2018 at 11.6 per cent 5,000 5,000£10 million First Mortgage Debenture Stock 2022 at 8.109 per cent* 9,821 9,804 21,521 21,504Bank loans:Repayable after more than two years*+ 706 44,855 34,887 72,146

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

+The £47 million facility was reduced from £60 million.

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 48,012 3,863

Repayable between two and three years 706 44,855 48,718 48,718

Debentures:

Repayable between three and five years 5,000 5,000Repayable in more than five years 16,521 16,504 70,239 70,222

Hedge profile

There is a hedge to cover the £47 million revolving credit facility, whichcurrently covers the full £44 million drawn. It consists of a 20 year swap for£10.4 million (2010: £15.4 million) with a 7 year call option in favour of thebank, taken out in November 2007, at 4.76 per cent and a 20 year swap for £40million with a 7 year call option in favour of the bank, taken out in December2007, at 4.685 per cent.

At the year end the amount recognised was £9,495,000 deficit (2010: £4,166,000 deficit) being the estimated financial effect of the fair value to the business of 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 16 year interest rate, which was2.74 per cent at 31 December 2011 against the rate payable under the specifichedge. This has given a liability at 31 December 2011 of £12,660,000 (2010:£5,787,000) as shown in the balance sheet. The banks own initial quotation at31 December 2011 to close each of the hedges was £15,416,000 (2010:£7,180,000).The hedges are not deemed to be eligible for hedge accounting, as the bankshave an option to cancel the hedge in January 2015, to which they separatelyattribute a cost of £600,000 (2010: £2,511,000), even though this is after theexpiry of the term loans and the level of the hedges closely equate to theamount of the loans outstanding. Any movement in the value of the hedges hastherefore to be charged directly to the profit and loss account. It is not theintention of the Directors to exit the instruments and this cost has not beenrecognised.

During the year the company broke £5.0 million (2010: £19.6 million) of the 4.76 per cent swap at a cost of £920,000 (2010: £3.515 million).

notes to the financial statementsfor the year ended 31 December 2011 continued

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

Fair value of financial instruments

Fair value estimation

Effective 1 January 2009, the Group adopted the amendment to FRS29 for financial instruments that are measured in the balance sheet at fair value, this requires disclosure of fair value measurements by level of the following fair value hierarchy:

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

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

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

2011 Gain/(loss) to profit and loss Level 1 Level 2 Level 3 Total account £'000 £'000 £'000 £'000 £'000Financial assetsOther financial assets held for tradingQuoted equities 635 - - 635

(104)

Financial liabilitiesDerivative financial instrumentsInterest rate swaps - - 12,660 12,660 (6,873) 2010 Gain/(loss) to profit and loss Level 1 Level 2 Level 3 Total account £'000 £'000 £'000 £'000 £'000Financial assetsOther financial assets held fortradingQuoted equities 717 - - 717

15

Financial liabilitiesDerivative financial instrumentsInterest rate swaps - - 5,787 5,787

(2,705)

notes to the financial statementsfor the year ended 31 December 2011 continued

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 Over 2011 1 year 2-5 years 5 years Total £'000 £'000 £'000 £'000Bank overdrafts (floating) 3,717 - - 3,717Debentures (fixed) - 6,700 15,000 21,700Bank loans (floating)* 44,420 706 - 45,126

Trade and other payables (non-interest) 41,784 - -

41,784 89,921 7,406 15,000 112,327 Less than Over 2010 1 year 2-5 years 5 years Total £'000 £'000 £'000 £'000Bank overdrafts (floating) 3,863 - - 3,863Debentures (fixed) - 5,000 16,700 21,700Bank loans (floating)* - 45,104 - 45,104

Trade and other payables (non-interest) 38,553 - -

38,553 42,416 50,104 16,700 109,220

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: 2011 2010 Carrying Fair Carrying Fair value value value value £'000 £'000 £'000 £'000Cash and cash equivalents 4,540 4,540 5,966 5,966Investments 635 635 717 717Other assets 24,911 24,911 22,553 22,553Bank overdrafts (3,717) (3,717) (3,863) (3,863)Bank loans (45,126) (45,001) (45,104) (44,855)Derivative liabilities (12,660) (12,660) (5,787) (5,787)Other liabilities (41,784) (41,784) (38,553) (38,553)Before debentures (73,201) (73,076) (64,071) (63,822)

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

notes to the financial statementsfor the year ended 31 December 2011 continued

25.9. Provisions for liabilities and charges

2011 2010 £'000 £'000Deferred TaxationBalance at 1 January (2,657) (267)

Transfer to profit and loss account (1,893) (2,390) Balance at 31 December

(4,550) (2,657)No provision has been made for the approximate taxation liability at 26.5 percent (2010: 28 per cent) of £545,000 (2010: £992,000) which would arise if theinvestment properties were sold at the stated valuation.

The deferred tax balance comprises the following:

Accelerated capital allowances 1,140 1,243Fair value of interest derivatives (3,165) (1,620)Short-term timing differences 170 153Losses (2,695) (2,433)Provision at end of period (4,550) (2,657)25.10. Share capitalDetails of share capital, treasury shares and share options are set out innote 19.25.11. Reserves Share Capital Premium redemption Revaluation Retained Account reserve reserve Earnings Total £'000 £'000 £'000 £'000 £'000Balance at 1 January 2011 4,866 47 13,407 23,425 41,745Decrease on valuation ofinvestment properties - - (1,348) - (1,348)Retained loss for year - - - (7,557) (7,557)Dividends paid in year - - - (964) (964)

Loss on disposal of Treasury Shares - - - (464) (464)Balance at 31 December 2011 4,866 47 12,059 14,440 31,41225.12. 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 2011 2010 £'000 £'000

Commitments to capital expenditure contracted for at the year end -

-

25.14. Commitments under operating leases

At 31 December 2011 the company had annual commitments under non-cancellable operating leases on land and buildings as follows:

2011 2010 £'000 £'000Expiring in more than one yearbut less than five years 390 390

In addition, the company has an annual commitment to pay ground rents on its leasehold investment properties which amount to £354,000 (2010: £344,000).

25.15. Contingent liabilities

There were no contingent liabilities at 31 December 2011 (2010: £Nil), exceptas disclosed in Note 25.8.Five year financial summary 2011 2010 2009 2008 2007 £m £m £m £m £mPortfolio sizeInvestment properties-Group^ 194 195 214 219 248

Investment properties-joint ventures 29 13 13 13 3Investment properties-associate 12 12

12 12 15 235 220 239 244 266 Portfolio activity £m £m £m £m £mAcquisitions - - - 9.18 112.71Disposals (0.60) (20.74) (17.79) (15.33) (41.37)Capital Expenditure 0.42 0.49 3.46 9.73 9.15 (0.18) (20.25) (14.33) 3.58 80.49 Consolidated income statement £m £m £m £m £m

Rental income - Group and share of joint ventures 16.99 16.50 17.07 16.77 14.26Less: attributable to joint venture partners (0.61) (0.52) (0.52) (0.27) (1.23)Group rental income 16.38 15.98 16.55 16.50 13.03Profit/(loss) before interest and tax 10.89 11.97 20.49 (24.91) (16.59)Profit/(loss) before tax (18.56) (10.69) 21.41 (57.27) (23.89)Taxation 3.74 7.19 (2.36) 9.81 11.38Profit/(loss) attributable to shareholders (14.82) (3.50) 19.05 (47.46) (12.51)Earnings/(loss) per share - basic (17.63)p (4.24)p 24.32p (62.30)p (16.40)pEarnings/(loss) per share - fully diluted (17.63)p (4.24)p

24.32p (62.30)p (16.40)pDividend per share 0.75p 1.15p 1.15p 1.15p 1.95p Consolidated balance sheet £m £m £m £m £m Shareholders' funds 39.93 55.76 59.10 40.30 88.99Net borrowings 133.03 130.77 145.65 157.17 147.54Net assets per share - basic 47.53p 66.71p 74.22p 52.73p 116.86p- fully diluted 47.53p 66.69p 74.19p 52.70p 116.73p Consolidated cash flow statement £m £m £m £m £m Cash generated from operations 10.89 9.58 12.18 12.02 3.97Capital investment and financial investment (0.50) 20.42

13.94 (6.09) 9.84

Note: ^Excluding the present value of head leases