Final Results

RNS Number : 7184T

London & Stamford Property Ltd

11 June 2009

 



LONDON AND STAMFORD PROPERTY LIMITED

Registration No. 47816

Registered Office:

2 ND FLOOR, REGENCY COURT, GLATEGNY ESPLANADE, ST. PETER PORT,

GUERNSEY, GY1 3NQ.

___________________________

TELEPHONE: + 44 1481 720321

FACSIMILE: + 44 1481 716117

e-mail:  [e-mail]

11 June 2009

LONDON & STAMFORD PROPERTY LIMITED

PRELIMINARY RESULTS FOR THE YEAR TO 31 MARCH 2009

London & Stamford Property Limited ('London & Stamford Property' or 'the Company') (AIM: LSP), a closed-ended investment company based in Guernsey, today announce results for the year to 31 March 2009.

Financial Highlights

	Audited Year to 31 March 2009		Audited Five Months to 31 March 2008
Net income	£3.1m		£0.6m
Profit for the year/period	£24.0m		£0.4m
Investment properties	£127.1m		£49.4m
Share of associates	£62.8m		-
Cash deposits	£169.9m		£243.6m
Bank debt	£69.6m		£21.8m
Net assets	£291.7m		£277.9m
NAV per share	102.3p		97.5p
Earnings per share	8.4p		0.14p
Adjusted earnings per share	9.5p		0.96p
Dividend per share	4.0p		1.6p

Increase in NAV of 5% to 102.3p (2008 - 97.5p)

• Profit for the year of £24.0 million (2008 - £0.4 million)

• First acquisitions since IPO, representing outstanding value

• One Fleet Place, EC4 on 29 January 2009 for £74.0 million

• Together with our joint venture partner Green Park (formerly Cavendish Limited), acquisition of one half of the Meadowhall Shopping Centre, Sheffield on 11 February 2009 - valuing Meadowhall at £1.175 billion 

• Completed the acquisition of No 1 Whitehall Riverside, Leeds on 8 May 2009 for £37.62 million

• Exchanged contracts to acquire Racecourse Retail Park, Aintree for £60.9 million and the Somerfield Distribution Unit, Wellingborough for £19.6 million

• We are intending to secure debt funding for the acquisitions we have exchanged on this week, outside of our HBoS facility and also to refinance our existing HBOS fundings

• At the conclusion of these steps, we hope to have approximately £90 million of our own equity and £150 million of undrawn HBoS bank facilities at our disposal

• As a result of the positive deal flow and our belief that we can continue to source new deals, we would then intend to raise further equity

• The Board recommends a final dividend of 2.0p per share in respect of the year to 31 March 2009 (payable 27 July 2009). Taken together with the interim dividend of 2.0p per share paid on 22 December 2008, the dividend for the year to 31 March 2009 amounts to 4.0p per share

Raymond Mould, the Non-executive Chairman of London & Stamford Property, said: 

'I believe these acquisitions represent outstanding value for London & Stamford and justify our caution since the IPO in waiting for the right opportunities despite an economic recession, characterised by falling property values, restricted debt availability and increasing occupational risk in the property market. We have been able to secure income benefits well ahead of our expectations at the time of the IPO.

We believe that property values may well weaken where or because they are exposed to tenant risk, lease expiry or default. In common with most commentators, we feel that risk is still growing. We also believe that the high point in yields may already have been reached where income is seen as secure and sustainable. As a result of this, in the last months we have seen increasing signs of competition for this type of investment product, indicating an increasing stability in the market.

The availability of good quality assets will persist as vendors acknowledge that attempted disposals of secondary assets will not be sufficient to satisfy their needs for liquidity and we firmly believe that our access to equity and debt and evidence of our ability to execute deals swiftly will allow us to continue to take advantage of weakness in the market and deliver shareholder value.'

For further information contact:
London & Stamford Property Limited	Tel: [phone]
Mandy Trotter, Butterfield Fulcrum Group (Guernsey) Ltd Company Secretary
KBC Peel Hunt	Tel: [phone]
Capel Irwin
Kreab Gavin Anderson	Tel: [phone]
Richard Constant / James Benjamin / Anthony Hughes

Notes to Editors

London & Stamford Property is advised by LSI Management LLP ('LSIM') which has a highly experienced management team. The principal partners of LSIM include Raymond Mould, Patrick Vaughan and Humphrey Price. Raymond Mould and Patrick Vaughan are also non-executive directors of London & Stamford Property.

In October 2007, London & Stamford Property acquired London & Stamford Investments Ltd, which had been founded in 2005 by Raymond Mould, Patrick Vaughan and Humphrey Price together with the General Electric Pension Trust ('GEPT'), as their exclusive commercial property vehicle. All three founders have been involved in the property sector for over 30 years and have a strong track record of anticipating and exploiting opportunities that arise from cycles in the property market. The three founders have been involved in two listed and one unlisted property companies and in a number of funds during this period, including the development and flotation of their former, highly successful businesses, Arlington Securities PLC and Pillar Property PLC.

London & Stamford Property is listed on AIM (LSP.L). Further information on London & Stamford Property is available from the Company's website www.londonandstamford.com.

  Chairman's statement

I am delighted to report London and Stamford's first acquisitions since our initial listing (IPO) in 2007.

We have commenced investing our equity as we believe that, at long last property values are becoming more realistic.

In the last quarter of the year under review, we have bought One Fleet Place, EC4 and, together with our joint venture partner Green Park (formerly Cavendish Limited), half of the Meadowhall Shopping Centre from British Land. Since the year end we have completed the acquisition of No 1 Whitehall Riverside, Leeds and have exchanged contracts to acquire the Racecourse Retail Park, Aintree and the Somerfield Distribution Unit, Wellingborough. I believe these acquisitions represent outstanding value for London & Stamford and justify our caution since the IPO in waiting for the right opportunities despite an economic recession, characterised by falling property values, restricted debt availability and increasing occupational risk in the property market. We have been able to secure income benefits well ahead of our expectations at the time of the IPO.

Raymond Mould 

Chairman

Results

The Group generated a profit for the year of £24.0 million (2008: £0.4 million).

Profit adjusted for the revaluation of investment properties, deferred taxation and the fair value of derivatives would be £27.0 million (2008: £2.7 million), comprising as follows:

	£m
Profit for the Year	24.0
Revaluation of Investment Properties	5.6
Deferred Taxation	(3.9)
Fair Value of Derivatives	1.3
	27.0

Net Assets at 31 March 2009 were £291.7 million (2008: £277.9 million), equivalent to 102.3p per share (2008: 97.5p).

The Board recommends a final dividend of 2.0p per share in respect of the year to 31 March 2009, which, when taken with the interim dividend of 2.0p per share paid on 22 December 2008, will produce a total dividend for the year of 4.0p per share (period ended 31 March 2008: 1.6p).

In accordance with IFRS, the final dividend will be accounted for, following its approval, in the first half of the financial year ending 31 March 2010 and will be paid on 27 July 2009, to shareholders on the register on 19 June 2009.

  Portfolio

Our property advisor, LSI Management LLP, continues to seek out new investment opportunities on our behalf and to actively manage our expanding portfolio which at the date of this report comprises the following:

New Acquisitions	Ownership
One Fleet Place, EC4	100%	Offices
Meadowhall Shopping Centre, Sheffield	15.7%	Shopping Centre
No 1 Whitehall Riverside, Leeds	100%	Offices

Original Portfolio at IPO	Ownership
Campbell Road, Stoke-on-Trent	100%	Industrial Warehouse
Elm Park Court & Forest House, Crawley	100%	Offices
Barracks Road, Newcastle-under-Lyme	100%	Retail Warehouse
Copse Road, Yeovil	100%	Mixed Use Development Site
Gillingham Business Park, Kent	100%	Mixed Use Development Site
Glaisedale Parkway, Nottingham	100%	Industrial Warehouse

The acquisition of our interest in Meadowhall valued the shopping centre at £1.175 billion and is net of £835 million of debt in the form of a securitised bond.

The purchase price to the joint venture, LSP Green Park Property Trust (LSPG) inclusive of costs and after the deduction of accrued rents for the period up to 31 March 2009, amounted to £169 million. The purchase price is split into two tranches; £122 million was paid on completion and a further amount of £47 million is payable when Meadowhall achieves certain additional income from new lettings and rent reviews.

London & Stamford's interest in LSPG is 31.4% of the joint venture, giving us an effective interest in Meadowhall of 15.7%. Our share of the cost was £39.2 million on completion and £14.8 million on payment of the deferred amounts.

We consider the acquisition of our interest to be an outstanding acquisition for our shareholders.

The carrying value of our interest in Meadowhall at the year end is £62.8 million.

We have recognised our share of the excess of the fair value of the net assets acquired over the consideration paid of £20.5 million in the income statement as required under IFRS. A further £3.1 million, our share of the profits arising from the joint venture since acquisition, including a surplus on revaluation is also included in the income statement.

Our other acquisition in the year was an office building at One Fleet Place, London EC4, for a consideration of £74 million, a high quality development, well let on a long lease at current market rent; providing a very good cash on equity return for us. We have recognised a surplus on revaluation of One Fleet Place since acquisition of £7.6 million.

Since the year end we have acquired a further office development at No 1 Whitehall Riverside, Leeds, for £37.6 million, with similar characteristics of build quality, lease length and current market rent, providing further evidence of our focus on very good income returns on our equity investment.

This week, we have exchanged contracts to acquire two further assets: The 292,000 square feet Racecourse Retail Park, Aintree for a consideration of £61 million; and the Somerfield Distribution Unit, Wellingborough for £19.6 million let to the Co-op for an unexpired term of 18.4 years.  Borrowings

At the year end, borrowings amounted to £69.6 million, drawn down from our £150 million facility with HBoS. The increase in the year reflects the debt funding attached to the acquisition of One Fleet Place.

Since the year end, we have secured new debt financing for our purchase of No 1 Whitehall Riverside, Leeds from Deutsche Postbank.

It is our intention to continue to seek cost effective debt funding in the market where and so long as it remains available, and preserve, or indeed increase, the undrawn balance of our HBoS facility to be ready for future utilisation alongside our undrawn equity.

Cash Management

The careful management of our unutilised cash remains a priority.

The cash balance at the year end amounted to £169.9 million (2008: £243.6 million).

The performance benchmark for our cash is the one month London Inter Bank Deposit Rate (LIBID).

Over the year the average level for one month LIBID was 3.92%. The average return on our cash during the year was 4.31%. The security of our cash, as much as the return, is a key priority. We have maintained a constant surveillance of our counterparties during the year and altered the diversification and weightings as appropriate as market risk and risk attaching to specific counterparties has altered. In order to ensure that we are in a position to execute transactions without delay, we continually review the duration of our deposits. This cautious approach and need for quick access to our capital as well as falling interest rates, has led to very low returns on cash balances.

The Board

On 7 April 2009, Humphrey Price retired from the Board. He remains a partner of the Company's adviser, LSI Management LLP. Martin McGann, a former colleague at Pillar Property plc and also a partner of LSI Management LLP has joined the Board, also effective from 7 April 2009.

Current Trading

We are intending to secure debt funding for the acquisitions we have exchanged on this week, outside of our HBoS facility and also to refinance our existing HBoS fundings. 

At the conclusion of these steps we hope to have approximately £90 million of our own equity and £150 million of undrawn HBoS bank facilities at our disposal.

As a result of the positive deal flow referred to above and our belief that we can continue to source new deals, we would then intend to raise further equity.

We will also keep under review the opportunity, at an appropriate future time, and subject to assessing the benefits of and meeting listing and conversion requirements to move to the Main Market of the London Stock Exchange and to convert into a UK Real Estate Investment Trust.

Outlook

The outlook for the economy remains very difficult to predict, but it seems likely that the impact of the global credit crunch and economic recession in the UK will persist in the short and medium term.

There is much debate in the market that property values may continue to fall. We believe that values may well weaken where or because they are exposed to tenant risk, lease expiry or default. In common with most commentators, we feel that risk is still growing. Our own due diligence on purchases bears this out very strongly. We also believe that the high point in yields may already have been reached where income is seen as secure and sustainable. As a result of this, in the last months we have seen increasing signs of competition for this type of investment product, indicating an increasing stability in the market.

The availability of good quality assets will persist as vendors acknowledge that attempted disposals of secondary assets will not be sufficient to satisfy their needs for liquidity and we firmly believe that our access to equity and debt and evidence of our ability to execute deals swiftly will allow us to continue to take advantage of weakness in the market and deliver shareholder value.

H R Mould 

Chairman

11 June 2009

Group and Company Income Statements

For the year/5 month period ended 31 March	Note	Group 2009 £000	Group 2008 £000	Company 2009 £000	Company 2008 £000
Gross rental income		2,654	808	-	-
Other income	2	1,000	-	-	-
Property outgoings		(572)	(183)	-	-
Net income		3,082	625	-	-
Administrative expenses - general		(5,987)	(3,364)	(2,053)	(1,111)
Administrative expenses - goodwill impairment	9	(2,745)	-	-	-
Loss on revaluation of investment properties	8	(4,938)	(2,964)	-	-
Profit/(loss) on sale of investment properties		36	(36)	-	-
Loss on sale of subsidiaries	19	-	(17)	-	-
Share of profits of associates	10	23,599	-	-	-
Operating profit/(loss)	3	13,047	(5,756)	(2,053)	(1,111)
Finance income	4	10,613	5,772	10,619	5,679
Finance costs	4	(2,296)	(874)	-	(20)
Change in fair value of
derivative financial investments	4	(1,270)	(181)	-	-
Profit/(loss) before tax		20,094	(1,039)	8,566	4,548
Taxation	5	3,949	1,444	-	-
Profit for the year/period		24,043	405	8,566	4,548
Earnings per share
Basic and diluted	7	8.4p	0.14p

All amounts relate to continuing activities.

  Group and Company Balance Sheets

As at 31 March	Note	Group  2009 £000	Group  2008  £000	Company  2009  £000	Company  2008  £000
Non-current assets
Investment properties	8	127,147	49,370	-	-
Investments in subsidiaries	9	-	-	37,664	34,919
Investments in equity accounted associates	10	62,844	-	-	-
Deferred tax assets	5	5,172	1,190	-	-
Loan to subsidiary	14	-	-	75,995	-
		195,163	50,560	113,659	34,919
Current assets
Trade and other receivables	11	1,386	8,036	182	4,999
Other financial assets		-	61,500	-	61,500
Cash and cash equivalents	12	169,856	182,112	166,252	180,467
		171,242	251,648	166,434	246,966
Total assets		366,405	302,208	280,093	281,885
Current liabilities
Trade and other payables	13	3,429	1,364	142	240
		3,429	1,364	142	240
Non-current liabilities
Borrowings	14	69,634	21,825	-	-
Derivative financial instruments	14	1,451	181	-	-
Provisions	15	210	940	-	-
		71,295	22,946	-	-
Total liabilities		74,724	24,310	142	240
Net assets		291,681	277,898	279,951	281,645
Equity
Called up share capital	16	28,500	28,500	28,500	28,500
Special reserve		248,597	248,597	248,597	248,597
Retained earnings		14,584	801	2,854	4,548
Total equity		291,681	277,898	279,951	281,645
Net asset value per share	21	102.3p	97.5p

The financial statements were approved and authorised for issue by the Board of Directors on 11 June 2009 and were signed on its behalf by:

L R H Grant    M F McGann
Director        Director

  Group and Company Statements of Changes in Equity

Group

	Note	Share  capital  £000	Special reserve  £000	Retained earnings  £000	Total  £000
At 31 March 2008		28,500	248,597	801	277,898
Profit for the period and total recognised
income and expense		-	-	24,043	24,043
Dividends paid	6	-	-	(10,260)	(10,260)
At 31 March 2009		28,500	248,597	14,584	291,681

Company

	Note	Share  capital  £000	Special reserve  £000	Retained earnings  £000	Total  £000
At 31 March 2008		28,500	248,597	4,548	281,645
Profit for the period and total recognised
income and expense		-	-	8,566	8,566
Dividends paid	6	-	-	(10,260)	(10,260)
At 31 March 2009		28,500	248,597	2,854	279,951

Group

	Share  capital  £000	Share  premium account  £000	Special reserve  £000	Retained earnings  £000	Total  £000
Profit for the period and total recognised  income and expense	-	-	-	405	405
Issue of ordinary share capital	28,500	248,597	-	-	277,097
Cancellation of share premium	-	(248,597)	248,597	-	-
Share-based payment	-	-	-	396	396
At 31 March 2008	28,500	-	248,597	801	277,898

Company

	Share  capital  £000	Share premium account  £000	Special  reserve  £000	Retained earnings  £000	Total  £000
Profit for the period and total recognised  income and expense	-	-	-	4,548	4,548
Issue of ordinary share capital	28,500	248,597	-	-	277,097
Cancellation of share premium	-	(248,597)	248,597	-	-
Share-based payment	-	-	-	-	-
At 31 March 2008	28,500	-	248,597	4,548	281,645

  Group and Company Cash Flow Statements

For the year/period ended 31 March	Group  2009 £000	Group  2008 £000	Company  2009 £000	Company  2008 £000
Cash flows from operating activities
Profit/(loss) before tax	20,094	(1,039)	8,566	4,548
Adjustments for non-cash items:
Loss on revaluation of investment properties	5,667	3,589	-	-
(Profit)/loss on sale of investment properties	(36)	36	-	-
Share of post-tax profit of associates	(23,599)	-	-	-
Loss on sale of subsidiaries	-	17	-	-
Share-based payment	-	396	-	-
Net finance income	(7,047)	(4,717)	(10,619)	(5,659)
Cash flows from operations before changes in working capital	(4,921)	(1,718)	(2,053)	(1,111)
Change in trade and other receivables	3,473	(1,358)	(2)	(26)
Change in trade and other payables	1,954	(779)	(98)	240
Change in provisions	(730)	(625)	-	-
Cash flows from operations	(224)	(4,480)	(2,153)	(897)
Interest received	12,740	3,544	12,693	3,451
Interest paid	(1,616)	(667)	-	(20)
Financial arrangement fees paid	(496)	(145)	-	-
Cash flows from operating activities	10,404	(1,748)	10,540	2,534
Investing activities
Purchase of subsidiary undertakings net of cash acquired	-	1,284	-	(231)
Purchase of investment properties	(77,531)	-	-	-
Capital expenditure on investment properties	(4,854)	(1,469)	-	-
Sale of subsidiary undertakings net of cash disposed of	-	21,866	-	-
Sale of investment property	-	(27)	-	-
Cash outflow to associates	(39,245)	-	-	-
Sale/(purchase) of short-term financial deposits	61,500	(61,500)	61,500	(61,500)
Cash flows from investing activities	(60,130)	(39,846)	61,500	(61,731)
Financing activities
Proceeds from share issue	-	239,664	-	239,664
Dividends paid	(10,260)	-	(10,260)	-
New borrowings	47,730	22,820	-	-
Repayment of borrowings	-	(38,778)	-	-
Loans to subsidiaries	-	-	(75,995)	-
Cash flows from financing activities	37,470	223,706	(86,255)	239,664
Net (decrease)/increase in cash and cash equivalents	(12,256)	182,112	(14,215)	180,467
Opening cash and cash equivalents	182,112	-	180,467	-
Closing cash and cash equivalents	169,856	182,112	166,252	180,467

  Notes forming part of the Financial Statements
For the year to 31 March 2009

1 Accounting policies

a) General information

London and Stamford Property Limited (the 'Company') is a closed-ended, limited liability investment company, incorporated and domiciled in Guernsey. The address of its registered office is Regency Court, Glategny Esplanade, St Peter Port, Guernsey.

The information included in this preliminary announcement is an extract from the Company's Annual Report and Financial Statements for the year ended 31 March 2009, which has been prepared in accordance with International Reporting Standards ('IFRS') and upon which an unqualified audit report has been given.

b) Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS').

c) Basis of preparation

The functional and presentational currency of the Group and Company is sterling. The financial statements are prepared on the historical cost basis except that investment and development properties and derivative financial instruments are stated at fair value.

The accounting policies have been applied consistently in all material respects.

i) Estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant items subject to such assumptions and estimates include the fair value of investment properties, the measurement and recognition of provisions, the recognition of deferred tax assets and liabilities for potential corporation tax and the fair value of derivative financial instruments. The most critical accounting polices in determining the financial condition and results of the Group are those requiring the greatest degree of subjective or complex judgements. These relate to property valuation, business combinations and goodwill, investment in associates, derivative financial instruments, share-based payments, provisions and taxation and these are discussed in the policies below. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period. If the revision affects both current and future periods, the change is recognised over those periods.

ii) Adoption of new and revised standards
Standards and interpretations effective in the current period

Three interpretations issued by the International Financial Reporting Interpretations Committee are effective for the current period. These are IFRIC 12, IFRIC 13 and IFRIC 14. The adoption of these interpretations has not led to any changes in the Group's accounting policies.

  1 Accounting policies (continued)

Standards and interpretations in issue not yet adopted

The International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee have issued the following standards and interpretations that are mandatory for later accounting periods and which have not been adopted early. These are:

		Effective date
IAS 1	Presentation of financial statements amendment	01/01/2009
IFRS 8	Operating Segments	01/01/2009
IAS 23	Borrowing costs amendment	01/01/2009
IAS 32	Financial Instruments: Presentation amendment	01/01/2009
IFRS 2	Share-based payments amendment	01/01/2009
IFRS 3	Business Combinations amendment and complementary amendments to IAS 27 Consolidated and Separate Financial Statements Improvements in IFRS's	01/07/2009 01/07/2009
IAS 39	Financial Instruments: Recognition and Measurement;  Eligible hedged items amendments	01/07/2009
IFRS 5	Non-current assets held for sale and discontinued operations amendment	01/01/2010
IAS 7	Statement of cash flows amendment	01/01/2010
IAS 18	Revenue amendment	01/01/2010
IAS 36	Impairment of assets amendment	01/01/2010
IAS 38	Intangible assets amendment	01/01/2010

The majority of amendments made as part of the IASB's Annual Improvements programme affect accounting periods beginning on or after 1 January 2009. Included within the amendments is a change in the accounting treatment for development properties. Currently, such properties are accounted for under IAS 16, but they will in future be accounted for under IAS 40. This change will mean that revaluation surpluses and deficits on development properties will in future be recognised in the income statement rather than equity.

The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group's financial statements in the period of initial application, other than on presentation and disclosure.

The IASB has also issued IFRIC 15, agreements for the construction of real estate, IFRIC 16, hedges of a net investment in a foreign operation, IFRIC 18, transfers of assets from customers and IFRIC 17, distribution of non-cash assets to owners, all of which are not relevant to the operations of the Company or Group.

d) Basis of consolidation

i) Subsidiaries

The consolidated accounts include the accounts of the Company and all subsidiaries (the 'Group') using the purchase method. 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 to gain benefits from its activities. In the consolidated balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair value at the acquisition date. The results of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

  1 Accounting policies (continued)

i) Subsidiaries (continued)

Where properties are acquired through corporate acquisitions and there are no significant assets or liabilities other than property, the acquisition is treated as an asset acquisition, in other cases the purchase method is used.

ii) Associates

Associates are those entities over whose activities the Group is in a position to exercise significant influence but does not have the power to jointly control.

Associates are accounted for under the equity method, whereby the consolidated balance sheet incorporates the Group's share of the net assets of its associates. The consolidated income statement incorporates the Group's share of associate profits after tax.

Accounting practices of subsidiaries and associates which differ from Group accounting policies are adjusted on consolidation.

iii) Goodwill

Any excess of the purchase price of business combinations over the fair value of the assets, liabilities and contingent liabilities acquired and resulting deferred tax thereon is recognised as goodwill. This is recognised as an asset and is reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement within administration expenses and is not subsequently reversed.

Any excess of the fair value of the assets, liabilities and contingent liabilities acquired and resulting deferred tax thereon over the purchase price of business combinations is recognised immediately in the income statement.

Goodwill in respect of overseas subsidiaries denominated in a foreign currency is retranslated at each balance sheet date using the closing rate of exchange. The resulting foreign exchange differences are taken to the translation reserve.

e) Property portfolio

i) Investment properties

Investment properties are properties owned or leased by the Group which are held for long-term rental income and for capital appreciation. Investment property is initially recognised at cost and subsequently revalued at the balance sheet date to fair value as determined by professionally qualified external valuers on the basis of market value.

Gains or losses arising from changes in the fair value of investment property are recognised in the income statement of the period in which they arise. Depreciation is not provided in respect of investment properties including integral plant.

When the Group redevelops an existing investment property for continued future use as an investment property, the property remains an investment property measured at fair value and is not reclassified.

For leasehold properties that are classified as investment properties, the associated leasehold obligations are at peppercorn rents and are not considered to be material.

Any surplus or deficit arising on revaluing investment properties or investment properties being redeveloped is recognised in the income statement.

  1 Accounting policies (continued)

ii) Development properties

Properties acquired with the intention of redevelopment are classified as development properties and stated initially at cost and then subsequently remeasured at fair value. Changes in fair value above cost are recognised in equity in accordance with IAS 16, and changes in fair value below cost are recognised in the income statement.

All costs directly associated with the purchase and construction of a development property including interest are capitalised. When development properties are completed, they are reclassified as investment properties and any accumulated revaluation surplus or deficit is transferred to retained earnings.

iii) Tenant leases

Management has exercised judgement in considering the potential transfer of the risks and rewards of ownership in accordance with IAS 17 for all properties leased to tenants and has determined that such leases are operating leases.

iv) Net rental income

Revenue comprises rental income.

Rental income from investment property leased out under an operating lease is recognised in the income statement on a straight-line basis over the lease term.

Contingent rents, such as turnover rents, rent reviews and indexation, are recorded as income in the periods in which they are earned. Rent reviews are recognised when such reviews have been agreed with tenants.

Where a rent free period is included in a lease, the rental income foregone is allocated evenly over the period from the date of lease commencement to the lease termination date.

Lease incentives and costs associated with entering into tenant leases are amortised over the lease term.

Revenue from the sale of trading properties is recognised in the period within which there is an unconditional exchange of contracts.

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.

v) Surplus on sale of investment and development properties

Surpluses on sales of investment and development properties are calculated by reference to the carrying value at the previous balance sheet date, adjusted for subsequent capital expenditure.

f) Financial assets and financial liabilities

Financial assets and financial liabilities are recognised on the Group and Company balance sheets when the Group or Company becomes a party to the contractual terms of the instrument. Unless otherwise indicated, the carrying amounts of the Group and Company financial assets and liabilities are a reasonable approximation of their fair values.

  1 Accounting policies (continued)

i) Loans and receivables

These are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. In the case of the Company and its Group, loans and receivables comprise trade and other receivables, intra-group loans and cash and cash equivalents. Loans and receivables are initially recognised at fair value, plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

ii) Other financial assets

These comprise deposits held with banks where the original maturity was more than three months.

iii) Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

iv) Other financial liabilities

Other financial liabilities include interest bearing loans, trade payables (including rent deposits and retentions under construction contracts) and other short-term monetary liabilities. Trade payables and other short-term monetary liabilities are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method. Interest bearing loans are initially recorded at fair value net of direct issue costs, and subsequently carried at amortised cost using the effective interest method. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis to the profit and loss account using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

v) Derivative financial instruments

The Group uses derivative financial instruments to hedge its exposure to interest rate risks.

Derivative financial instruments are recognised initially at fair value, which equates to cost and subsequently remeasured at fair value, with changes in fair value being included in the income statement.

vi) Provisions

A provision is recognised when a legal or constructive obligation exists as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle that obligation at the balance sheet date, and are discounted to present value if the effect is material.

g) Finance costs

Net finance costs include interest payable on borrowings, net of interest capitalised and finance costs amortised.

h) Finance income

Finance income includes interest receivable on funds invested, measured at the effective rate of interest on the underlying sum invested.

  1 Accounting policies (continued)

i) Capitalisation of interest

Interest is capitalised if it is directly attributable to the acquisition, construction or production of development properties or the redevelopment of investment properties. Capitalisation commences when the activities to develop the property start and continues until the property is substantially ready for its intended use. Capitalised interest is calculated with reference to the actual rate payable on borrowings for development purposes or, for that part of the development cost financed out of general funds, to the average rate.

j) Dividends

Dividends on equity shares are recognised when they become legally payable. In the case of interim dividends, this is when paid. In the case of final dividends, this is when approved by the shareholders at the Annual General Meeting.

k) Tax

Tax is included in the income statement except to the extent that it relates to items recognised directly in equity, in which case the related tax is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, together with any adjustment in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases.

The following differences are not provided for:

The initial recognition of goodwill;

Goodwill for which amortisation is not tax deductible;

The initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

Investments in subsidiaries, associates and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

The amount of deferred tax provided is based on the expected manner or realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.

  1 Accounting policies (continued)

Tax status of the Company and its subsidiaries

The Company has obtained exempt company status in Guernsey under the terms of the Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 so that it is exempt from Guernsey taxation on income arising outside Guernsey and on bank interest receivable in Guernsey. The Directors intend to conduct the Company's affairs such that it continues to remain eligible for exemption.

During the period, the Group's properties have been held in various subsidiaries and associates, the majority of which are subject to UK income tax. In each instance any tax due is computed after deduction of debt financing costs and other allowances as appropriate.

l) Foreign currency

i) Foreign currency transactions

Transactions in foreign currencies are translated into sterling at exchange rates approximating to the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to sterling at the exchange rate ruling at that date and differences arising on translation are recognised in the income statement.

ii) Financial statements of foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated into sterling at the exchange rates ruling at the balance sheet date. The operating income and expenses of foreign operations are translated into sterling at the average exchange rate for the period. All resulting exchange differences are recognised as a separate component of equity.

iii) Net investment in foreign operations

On consolidation exchange differences arising from the translation of the net investment in foreign operations are taken to shareholders' equity. They are released to the income statement upon disposal of the foreign operation, as part of the gain or loss at sale.

m) Share-based payments

The cost of equity settled transactions is measured by reference to the fair value at the date which they are granted and is recognised as an expense over the vesting period, which ends on the date which the relevant individuals become fully entitled to the award. In valuing equity-settled transactions, no account is taken of any vesting conditions, other than market conditions.

n) Segmental reporting

A business segment is a distinguishable component of the Group that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business segments. A geographical segment is a distinguishable component of the Group that is engaged in providing products or services within a particular economic environment and that is subject to risks and returns that are different from those of components operating in other economic environments.

During the period the Group had only one business activity being property investment and development and operated in the United Kingdom.

  1 Accounting policies (continued)

o) Capital management policy

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. 

In managing its capital, the Group's primary objective is to ensure its continued ability to provide a consistent return for its equity shareholders through a combination of capital growth and distributions. In order to achieve this objective, the Group seeks to maintain a gearing ratio that balances risks and returns at an acceptable level and also maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve these aims, either through altering its dividend policy, new share issues, or the reduction of debt, the Group considers not only its short-term position but also its long-term operational and strategic objectives.

2 Other income

A surrender premium of £1 million was received during the year in respect of a lease on Barracks Road, Newcastle-under-Lyme.

3 Profit/(loss) from operations

For the year/period to 31 March	Group  2009 £000	Group  2008 £000	Company 2009 £000	Company 2008  £000
This has been arrived at after charging:
Property advisor management fees	4,754	1,932	1,337	580
Property advisor performance fees	443	-	443	-
Directors' fees	165	83	165	83
Share-based payment expense	-	758	-	-
Auditors' remuneration:
Audit of the Group and Company Financial Statements	75	83	65	40
Fees payable to the Company's auditors for  other services to the Group:
- Statutory audit of subsidiary accounts	20	15	-	-
- IFRS conversion advice	-	15	-	15
- Taxation advice	36	61	-	-
- Taxation compliance work	25	22	-	-
- Fees in connection with the Company's admission      to AIM and acquisition of the existing group	-	140	-	140

Fees are paid to certain non-executive Directors who are not members of LSI Management LLP, the Property Advisor to the Group. The Company has no employees.

  4 Finance income and costs

For the year/period to 31 March	Group  2009 £000	Group  2008 £000	Company 2009 £000	Company 2008  £000
Finance income
Interest on short-term deposits	10,613	5,772	10,567	5,679
Interest on loans to subsidiaries	-	-	52	-
	10,613	5,772	10,619	5,679
Finance costs
Interest on bank loans	1,721	757	-	20
Amortisation of loan issue costs	575	117	-	-
Fair value loss on derivative financial instruments	1,270	181	-	-
	3,566	1,055	-	20

5 Taxation 

Group only

For the year/period to 31 March	Group  2009  £000	Group  2008 £000
The tax credit comprises:
Current tax
UK corporation tax on profit/(loss)	33	-
	33	-
Deferred tax
Change in deferred tax	(3,982)	(1,444)
	(3,949)	(1,444)

The tax assessed for the period varies from the standard rate of corporation tax in the UK. The differences are explained below:

For the year/period to 31 March	Group  2009  £000	Group  2008 £000
Profit/(loss) before tax	20,094	(1,039)
Profit/(loss) at the standard rate of corporation tax in the UK of 28%	5,626	(290)
Effects of:
Expenses not deductible for tax purposes	1,428	119
Tax effect of income not subject to tax	(4,519)	(1,273)
Share of post tax profit of associate	(751)	-
Excess of fair value of net assets acquired over consideration paid	(5,733)	-
Total tax credit	(3,949)	(1,444)

  5 Taxation (continued)

Deferred tax asset/(liability)

	Revaluation deficit	Other temporary  and deductible differences	Losses	Total
At 31 March 2008	(581)	40	1,731	1,190
Credited during the year in the income statement	2,932	334	716	3,982
At 31 March 2009	2,351	374	2,447	5,172

Deferred tax on the revaluation deficit is calculated on the basis of the capital losses that would crystallise on the sale of the investment property portfolio as at 31 March 2009. 

The Group does not have unprovided deferred tax assets (2008: nil).

6 Dividends

For the year/period to 31 March	Group  2009  £000	Group  2008 £000	Company  2009  £000	Company  2008 £000
Ordinary dividends
Amounts recognised as distributions to equity holders	10,260	-	10,260	-
Proposed final dividend of 2p per share  (31 March 2008:1.6p)	5,700	4,560	5,700	4,560

The proposed final dividend is subject to approval at the Annual General Meeting on 22 July 2009 and, in accordance with International Financial Reporting Standards has not been included as a liability in these financial statements. The final dividend is payable on 27 July 2009 to ordinary shareholders on the register at the close of business on 19 June 2009 and will be recognised as an appropriation of retained earnings in 2010.

7 Earnings per share

Earnings per share is calculated on a weighted average of 285,000,000 (2008: 285,000,000) ordinary shares of 10p each in issue throughout the year and is based on profits attributable to ordinary shareholders of £24,043,000 (2008: £405,000).

There are no potentially dilutive or anti-dilutive share options in the year.

Adjusting earnings for the effects of revaluing investment properties, deferred taxation and fair value of derivatives results in attributable profits of £27,031,000 or 9.5p per share (2008: £2,731,000 or 0.96p per share).  8 Investment properties

Group only

			2009				2008
	Long  Freehold  £000	Long leasehold  £000	Total  £000		Long  Freehold  £000	Long  leasehold  £000	Total  £000
At 31 March valuation	40,940	8,430	49,370		-	-	-
Acquisitions	77,531	-	77,531		62,111	12,627	74,738
Other capital expenditure	4,848	6	4,854		1,351	118	1,469
Disposals	-	1,059	1,059		(19,978)	(3,270)	(23,248)
Revaluation movement	(4,013)	(1,654)	(5,667)		(2,544)	(1,045)	(3,589)
At 31 March valuation	119,306	7,841	127,147		40,940	8,430	49,370

At 31 March 2009, certain of the Group's investment properties were externally valued by CB Richard Ellis Limited, Chartered Surveyors at £120.6 million. The valuations were undertaken in accordance with the Royal Institution of Chartered Surveyors' Appraisal and Valuation Standards on the basis of market value, which recognises continuing increased risk under current market conditions. Market value represents the estimated amount for which a property would be expected to exchange at the date of valuation between a willing buyer and willing seller in an arm's-length transaction. A deduction is made to reflect purchasers' acquisition costs. The lack of liquidity in the property market increases the risk attaching to property valuations.

The remaining investment properties were valued by the Directors at £6.5 million.

Included in disposals in the year is an adjustment to reinstate a disposal recognised in the previous period which did not complete.

Included in the loss on revaluation of £4,938,000 (31 March 2008: £2,964,000) recognised in the income statement, is a credit of £730,000 (31 March 2008: £625,000) which represents the movement in the provision for enhanced management fees payable to third parties on future disposals, and is based on the carrying values of properties at the balance sheet date.

The historical cost of all of the Group's investment properties at 31 March 2009 was £136,403,000 (2008: £52,959,000).

9 Investment in subsidiary undertakings

Company only

	Subsidiary undertakings £000
At 31 March 2008	34,919
Acquisition of subsidiary - adjustment to cost	2,745
At 31 March 2009	37,664

  9 Investment in subsidiary undertakings (continued)

In the previous period the Company issued 37.5 million £1 ordinary shares to acquire 100% of London & Stamford Investments Limited. At 31 March 2008 2,812,500 ordinary shares issued were subject to a claw back based on the valuation of investment property owned by the Group. The affected shareholders entered into a contractual obligation to contribute cash in the event of a valuation shortfall and the shortfall outstanding at 31 March 2008 of £2.745 million was reflected as a receivable. In the year to 31 March 2009 the valuation on the property was achieved as planning permission was granted. Under IFRS 3, this represents a contingent event that requires an adjustment to the cost of the acquisition. The fair value of the assets at acquisition remains unchanged as the value enhancing event, being the granting of planning permission, did not exist at that date. This gives rise to goodwill on acquisition of £2.745 million which has been fully impaired in the year and is reflected in the income statement.

The Company is the ultimate holding company of the Group and has the following principal subsidiary undertakings all of which are consolidated in these financial statements:

	Country of incorporation or registration	Proportion of voting  rights held (by way of  share capital or units held)	Nature of business
London & Stamford Investments Limited	England	100%	Intermediate holding company
LSI (Investments) Limited*	England	100%	Property investment
LSI Developments Limited*	England	100%	Property investment and development
LSI Europe Limited*	England	100%	Intermediate holding company
LSI Belgium Limited*	England	100%	Intermediate holding company
London & Stamford Property  Subsidiary Limited	Guernsey	100%	Intermediate  holding company
London & Stamford  Offices Limited	Guernsey	100%	Intermediate  holding company
London & Stamford Offices  Unitholder 2 Limited	Guernsey	100%	Intermediate  holding company
London & Stamford Offices Trust*	Guernsey	100%	Property investment

*Undertakings held indirectly by the Company. 

All of the undertakings listed above operate in their country of incorporation. All shares held are ordinary shares.

  10 Investment in associate

Group only

	Associates £000
At 31 March 2008	-
Additions - cost of acquisition of associate	39,245
Excess of fair value of net assets acquired over consideration paid	20,476
Share of profit for the year	3,123
At 31 March 2009	62,844

On 23 April 2008 the Group entered into a new joint venture arrangement with Green Park Investments Limited, a wholly-owned subsidiary of a major Gulf institution. The Group has a 31.4% interest in this entity, LSP Green Park Property Trust, which is equity accounted for by the Group as an associate. On 11 February 2009 LSP Green Park Property Trust acquired a 50% interest in the Meadowhall Shopping Centre from The British Land Company PLC.  The cost of acquisition of associate includes net costs borne by the Company of £0.9 million.

The goodwill credit represents the excess of the fair value of net assets acquired over the consideration paid.

The Group's 31.4% share of the profit after tax and net assets of its associate at 31 March 2009 is as follows:

	31 March  2009  £000
Summarised income statement
Net rental income	1,715
Administration expenses	(475)
Excess of fair value of net assets acquired over consideration paid	20,476
Surplus on revaluation of investment properties	3,063
Net finance costs	(1,120)
Tax	(60)
Profit after tax	23,599
Summarised balance sheet
Property assets	187,599
Current assets	4,540
Current liabilities	(5,730)
Borrowings	(106,557)
Other non-current assets	(17,008)
Net assets	62,844

The investment properties were valued on an open market value basis by CB Richard Ellis Limited, Chartered Surveyors, as at 31 March 2009 in accordance with the Royal Institution of Chartered Surveyors Appraisal and Valuation Standards.

  11 Trade and other receivables

As at 31 March	Group  2009 £000	Group  2008 £000	Company 2009 £000	Company 2008  £000
Current assets
Trade receivables	61	275	-	-
Amounts receivable on property sales	-	1,050	-	-
Called up share capital issued but unpaid  on acquisition of subsidiary	-	2,745	-	2,745
Interest receivable	101	2,228	154	2,228
Prepayments and accrued income	636	871	28	26
Other receivables	588	867	-	-
	1,386	8,036	182	4,999

All amounts fall due for payment in less than one year.

As explained in note 9, the share capital issued in the previous period that was subject to a clawback arrangement and classified as a debtor at 31 March 2008, was reclassified as an adjustment to the cost of the acquisition of the London & Stamford Investments Limited group in the year.

At 31 March 2009 there were no amounts which were overdue and no amounts which were impaired. There is no provision for impairment of trade receivables as at 31 March 2009 as the risk of impairment of the amounts outstanding is not considered to be significant.

12 Cash and cash equivalents

Cash and cash equivalents include £2,454,000 (2008: £1,012,000) retained in rent and restricted accounts which are not readily available to the Group for day-to-day commercial purposes.

13 Trade and other payables

As at 31 March	Group  2009 £000	Group  2008 £000	Company 2009 £000	Company 2008  £000
Trade payables	751	263	-	-
Rent received in advance	1,394	281	-	-
Accrued interest	510	405	-	-
Other payables	31	45	-	-
Other accruals and deferred income	710	370	142	240
Corporation tax payable	33	-	-	-
	3,429	1,364	142	240

The Group has financial risk management policies in place to ensure that all payables are paid within the credit time frame.

  14 Financial assets and financial liabilities

a) Non-current financial assets

Company only

As at 31 March	2009  £000	2008 £000
Loans to subsidiary companies	75,995	-
	75,995	-

£7.5 million of the loans are unsecured, bear interest at 2% above LIBOR and are repayable by 31 March 2012. A further £29.25 million of the loans are unsecured, interest free and are repayable on demand with a backstop date of 31 March 2012. The remaining £39.245 million of loans are unsecured, interest free and repayable on demand. As the loans are for the purpose of long-term financing of the subsidiaries, the Directors do not intend to request repayment of the loans within one year and accordingly these loans have been classified as non-current loans to subsidiary companies.

b) Non-current financial liabilities

Group only

As at 31 March	2009  £000	2008 £000
Secured bank loans	70,550	22,820
Unamortised finance costs	(916)	(995)
	69,634	21,825

The bank loan is secured by fixed charges over certain of the Group's investment properties and can be extended a further two years at the initial maturity date of October 2012.

c) Financial risk management

Financial risk factors

The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. The Group uses derivative financial instruments to hedge certain risk exposures. The policies of the Company are the same as those of the Group.

The Group's operations and debt financing expose it to a variety of financial risks. The exposure to each risk, how it arises and the policy for managing each risk is summarised below:

i) Credit risk

Credit risk is the risk of financial loss to the Group if a client or counterparty to a financial instrument fails to meet its contractual obligations.

The Group's principal financial assets are cash balances and deposits and trade and other receivables. The Group's credit risk is primarily attributable to its cash deposits and trade receivables. 

The trade receivable amounts presented in the balance sheet are net of allowances for doubtful receivables. An allowance for impairment is made where there is objective evidence that the Group will not be able to collect amounts due according to the original terms of the receivables concerned. The balance is low relative to the scale of the balance sheet and therefore the credit risk of trade receivables is considered to be low.

  14 Financial assets and financial liabilities (continued)

i) Credit risk (continued)

Cash is placed on deposit with a number of different reputable banks with strong credit ratings and for varying periods of time, thereby spreading risk.

The credit risk on liquid funds and derivative financial instruments is limited due to the Group's policy of monitoring counterparty exposures with a maximum exposure equal to the carrying amount of these instruments. The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties.

ii) Liquidity risk

Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.

The Group actively maintains a mixture of long-term and short-term committed facilities that are designed to ensure that the Group has sufficient available funds for operations and committed investments. The Group's undrawn committed borrowing facilities are monitored against projected cash flows. The Group prepares annual budgets and working capital forecasts to assess future cash requirements. 

The Group had available but undrawn bank loan facilities of £79,450,000 at 31 March 2009 (2008: £127,180,000), maturing between two and five years.

iii) Market risk

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

iv) Interest rate risk

The Group is exposed to interest rate risk from long-term borrowings at a variable rate. It is Group policy that a reasonable portion of external borrowings are at a fixed interest rate.

The Group uses interest rate swaps to manage its interest rate exposure and hedge future interest rate risk for the term of the bank loan. Although the Board accepts that this policy neither protects the Group entirely from the risk of paying rates in excess of current market rates nor eliminates fully the cash flow risk associated with interest payments, it considers that it achieves an appropriate balance of exposure to these risks.

At 31 March 2009 the Group had £70.5 million of hedges in place, and its debt was 100% fixed. Consequently, based on year end debt levels, a 1% change in interest rates would decrease or increase the Group's annual profit before tax by £176,000. The sensitivity has been calculated by applying the interest rate change to the variable rate borrowings, net of interest rate swaps, at the year end.

The average interest rate payable by the Group on all bank borrowings at 31 March 2009 net of undrawn facility commitment fees was 4.1% (31 March 2008: 6.4%).

  14 Financial assets and financial liabilities (continued)

v) Foreign exchange risk

Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the Group's functional currency.

The Group has not entered into any foreign currency transactions. Therefore the Group's foreign exchange risk is low.

vi) Capital risk management

The Group defines its equity as share capital, special reserves and retained earnings. The Group's objectives when maintaining capital are to safeguard the entity's ability to continue as a going concern so that it can provide returns to shareholders. The capital structure of the Group consists of debt, which includes borrowings, cash and cash equivalents and other financial assets, and equity comprising issued capital, reserves and retained earnings. The Group balances its overall capital structure through the payment of dividends, new share issues as well as the issue of new debt or the redemption of existing debt.

i) Categories of financial instruments

	Loans and receivables
As at 31 March	Group  2009 £000	Group  2008 £000	Company 2009 £000	Company 2008 £000
Non-current assets
Loans to subsidiaries	-	-	75,995	-
Current assets
Cash and cash equivalents	169,856	182,112	166,252	180,467
Trade receivables (note 11)	61	275	-	-
Amounts receivable on property sales (note 11)	-	1,050	-	-
Deferred consideration on acquisition of subsidiary (note 11)	-	2,745	-	2,745
Interest receivable (note 11)	101	2,228	154	2,228
Other receivables	82	501	-	-
Other financial assets	-	61,500	-	61,500
	170,100	250,411	166,406	246,940

  14 Financial assets and financial liabilities (continued)

i) Categories of financial instruments (continued)

	Measured at amortised cost					Measured at fair value
As at 31 March	Group  2009 £000	Group  2008 £000	Company  2009 £000	Company  2008 £000		Group  2009 £000	Group  2008 £000	Company  2009 £000	Company  2008 £000
Non current liabilities
Borrowings (note 14b)	69,634	21,825	-	-		-	-	-	-
Current liabilities
Trade payables (note 13)	751	263	-	-		-	-	-	-
Accrued interest (note 13)	510	405	-	-		-	-	-	-
Other accruals (note 13)	267	370	142	240		-	-	-	-
Other payables (note 13)	31	45	-	-		-	-	-	-
Corporation tax payable (note 13)	33	-	-	-		-	-	-	-
Derivative financial instruments (see 14d(iii))	-	-	-	-		1,451	181	-	-
	71,226	22,908	142	240		1,451	181	-	-

ii) Fair values

To the extent financial assets and liabilities are not carried at fair value in the consolidated balance sheet, the Directors are of the opinion that book value approximates to fair value at 31 March 2009.

  14 Financial assets and financial liabilities (continued)

iii) Derivative financial instruments 

All derivative financial instruments are carried at fair value following a valuation as at 31 March 2009 by JC Rathbone Associates Limited.

Details of the fair value of the Group's derivative financial instruments that were in place at 31 March 2009 are provided below:

	Protected rate %	Expiry	Market value  31 March  2008 £000	Movement  recognised  in income  statement £000	Market value 31 March  2009 £000
£15 million cap	5.75	October 2008	9	(9)	-
£10 million swap	5.41	January 2009	(190)	190	-
£10 million swap	3.61	October 2012	-	(386)	(386)
£43 million swap  (reduces to £26.5 million 30/10/2012)	3.61	October 2014	-	(1,518)	(1,518)
£17.5 million cap  (increases to £26.5 million 30/10/2012)	4.00	October 2014	-	453	453
			(181)	(1,270)	(1,451)

All derivative financial instruments are non-current and are interest rate derivatives.

The market values of hedging products change with interest rate fluctuations, but the exposure of the Group to movements in interest rates is protected by way of the hedging products listed above. In accordance with accounting standards, fair value is calculated on a replacement basis using mid-market rates. The valuation therefore does not reflect the cost or gain to the Group of cancelling its interest rate protection at the balance sheet date, which is generally a marginally higher cost (or smaller gain) than a market valuation.

15 Provisions 

Group only

	Enhanced management fees  £000
At 31 March 2008	940
Credited to the income statement	(730)
At 31 March 2009	210

Under the terms of various management agreements, the Group has an obligation to pay an 'enhanced management fee' to third parties, following the disposal of its interests in certain investment properties, or the completion of defined property strategies for other investment properties.

  15 Provisions (continued)

Provision has been made in the consolidated balance sheet for the anticipated enhanced management fees to be paid by the Group, based on the carrying values of properties held at the balance sheet date. This is considered to be a reasonable and prudent basis on which to make provision for these obligations. Provision is made on a property by property basis and only arises in respect of properties that have been subject to upward revaluation movements above their historic cost.

The provisions are made in the relevant subsidiaries' financial statements that reflect the upward revaluation movements referred to above.

The movement in the year has been credited to revaluation movement in the income statement.

16 Share capital

Group and Company

	31 March  2009 Number	31 March  2009 £000	31 March  2008 Number	31 March  2008 £000
Authorised
Ordinary shares of 10p each	500,000,000	50,000	500,000,000	50,000

	31 March  2009 Number	31 March  2009 £000	31 March  2008 Number	31 March  2008 £000
Issued, called up and fully paid
Ordinary shares of 10p each	285,000,000	28,500	285,000,000	28,500

17 Reserves

The following describes the nature and purpose of each reserve within the Statement of Changes in Equity:
Share capital	The nominal value of shares issued.
Special reserve	In the previous period the Company applied to the Royal Court of Guernsey to reduce its capital by the cancellation of its share premium and the creation of a separate, special reserve, which is an additional distributable reserve to be used for all purposes permitted under Guernsey company law, including the buy back of shares and payment of dividends.
Retained earnings	The cumulative profits and losses after the payment of dividends.

  18 Related party transactions and balances

Group

Details of Directors' fees are given in note 3.

Mr H R Mould, Mr P L Vaughan, Mr H J M Price and Mr M F McGann are designated members of LSI Management LLP, the property advisor to the Group. The property advisor received £4.8 million (five months to 31 March 2008: £1.9 million) for the services of property management during the year. At 31 March 2009 and 31 March 2008, none of the fee remained outstanding.

LSI Management LLP is also entitled to receive £758,000 (2008: £nil) in performance fees for the year ended 31 March 2009 from both the LSP Green Park Property Trust, in which the Company has a 31.4% interest and the Company itself. The Company's share of the performance fee charge in its associate was £315,000 (2008: £nil) and £443,000 was charged direct to the Group. At 31 March 2009 all of this fee remained outstanding.

Mr P Firth is managing director of Butterfield Fulcrum Group (Guernsey) Limited the Company's administrator. Butterfield Fulcrum Group (Guernsey) Limited received £73,000 (five months to 31 March 2008: £29,000) in payment of administration services during the year. At 31 March 2009 £23,000 (31 March 2008: £18,000) remained outstanding and is reflected in the year end creditor balance.

Transactions between the Company and its subsidiaries which are related parties have been eliminated on consolidation.

Company

During the period the Company received nil by way of intra-group dividends and £52,000 in intra-group interest. Amounts advanced by the Company to subsidiary undertakings are unsecured and repayable on demand except for loans of £7.5 million which mature in March 2012.

19 Disposals

In the previous period the Group disposed of its Belgian subsidiary LSI Retail NV. The loss on disposal in the period was £17,000. Net assets disposed of amounted to £21,883,000 and consisted primarily of investment property value at £22,189,000, cash balances of £314,000 and other net liabilities of £620,000. The cash consideration received in full settlement amounted to £21,866,000.

20 Events after the balance sheet date

On 8 May 2009 the Group completed the acquisition of No. 1 Whitehall Riverside, Leeds for £37.6 million. The purchase was part financed with a new debt facility from Deutsche Postbank AG.

This week, the Group exchanged contracts for the purchase of Racecourse Retail Park, Aintree, for £61 million and the Somerfield Distribution Unit, Wellingborough for £19.6 million.

21 Net asset value

Net asset value per share is based on Group net assets at 31 March 2009 of £291,681,000 (31 March 2008: £277,898,000) and the number of ordinary shares in issue at that date of 285 million.

 

END

 

 

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