REG - Local Shopping REIT - Final Results <Origin Href="QuoteRef">LSR.L</Origin> - Part 3
18/12/2014 07:26
- Part 3: For the preceding part double click ID:nRSR1156Ab
- 100%
LSR Gresham Asset Advisers Limited - in members' voluntary liquidation United Kingdom 100% 100%
LSR Gresham Investments Limited - in members' voluntary liquidation United Kingdom 100% 100%
Jointly controlled entities
Gracechurch Commercial Investments Limited* United Kingdom 50% 50%
* In members' voluntary liquidation since year end
Subsidiaries
25. Discontinued operations
In July 2013 as part of the reconstruction following the strategic review, the company disposed of its interests in Local
Parade Investments LLP and LSR Asset Services Limited. In addition it ceased its asset management activities being carried
on by LSR Asset Management Limited and LSR Gresham Asset Advisors Limited.
The results of the discontinued operations, which have been included in the consolidated income statement, were as
follows:
2014 2013
£000 £000
Joint venture in Local Parade Investments LLP
Share of revenue - 544
Share of expenses - (357)
Share of profit/(loss) - 187
Asset management
Revenue - 702
Expenses - (44)
Profit - 658
Profit before tax - 845
Taxation -
- 845
Loss on disposal of discontinued operations - (500)
Net profit attributable to discontinued operations (attributable to equity holders of the company) - 345
Basic and diluted earnings per share - 0.4p
2014 2013
£000 £000
Cash flows from (used in) discontinued operation
Net cash from (used in) operating activities - 960
Net cash used in investing activities - 364
Net cash from financing activities - (1,239)
Net cash flows for the year - 85
On 7 August 2014 LSR plc disposed of its shareholdings in NOS 2 and NOS 3. Management have considered the criteria of IFRS
5 and have concluded that they are not applicable to this transaction.
26. Significant contracts
With effect from 22 July 2013 the Company entered into a management agreement with Internos Global Investors Limited
("Internos"). Under this agreement the Company pays to Internos:
· An annual management fee of 0.70% of the gross asset value of the portfolio, subject to a minimum fee of £1m in each
of the first two years, £0.95m for the third year and £0.9m for the fourth year.
· An annual performance fee of 20% of the recurring operating profits above a pre-agreed target recurring profit.
· Fees for property sales as follows:
Up to £50m nil
£50m-£150m 0.5% of sales
Over £150m 1.5% of sales
· A terminal fee of 5.7% of cash returned to the Company's shareholders in excess of 36.1 pence per share from the
Effective Date outside of dividend payments (the "Terminal Fee Hurdle"). The Terminal Fee Hurdle rises by 8% per annum
after the first year but reduces on a pro-rata daily basis each time equity is returned to shareholders outside of dividend
payments from recurring operating profits.
Under the terms of the agreement Internos received fees of £1,318,539 (2013:£291,967) during the year. In addition Internos
received a one off fee in 2013 of £50,000 for work carried out in renegotiating the HSBC loan facilities.
Company Balance Sheet as at 30 September 2014
2014 2013
Note £000 £000 £000 £000
Fixed assets
Investments C5 70,418 84,334
70,418 84,334
Current assets
Debtors C6 2,460 2,927
Cash 10,108 1,764
12,568 4,691
Creditors: Amounts falling due within one year C7 (46,261) (49,284)
Net current liabilities (33,693) (44,593)
Total assets less current liabilities 36,725 39,741
Creditors: Amounts falling due after one year - -
Net assets 36,725 39,741
Capital and reserves
Share capital C8 18,334 18,334
Reserves C8 3,742 3,742
Capital redemption reserve C8 1,764 1,764
Profit and loss account C8 12,885 15,901
Shareholders' funds 36,725 39,741
Notes to the Financial Statements
C1. Accounting Policies
The following accounting policies have been applied consistently in dealing with items which are considered material in
relation to the Company's financial statements.
Basis of Preparation
The financial statements have been prepared in accordance with applicable UK Accounting Standards and under the historical
cost accounting rules.
Cash Flow Statement
Under FRS 1, the Company is exempt from the requirement to prepare a cash flow statement on the grounds that the Company is
included in its own published consolidated financial statements.
Related Party Transactions
The Company has taken advantage of the exemption in FRS 8 - Related Party Transactions and has not disclosed transactions
or balances with entities which form part of the Group as these consolidated financial statements include the results of
these entities.
Financial Instruments
The Company has adopted the requirements of FRS 29 - Financial Instruments Disclosures and has taken the exemption under
that standard from disclosure on the grounds that the Group financial statements contain disclosures in compliance with
IFRS 7.
Investments
Investments in subsidiary undertakings are stated at historic cost less provisions for impairment.
Tangible Fixed Assets
Following the termination of the Company's office lease in 2013, all tangible assets were written off in that year.
Taxation
The charge for taxation is based on the result for the period and takes into account taxation deferred because of timing
differences between the treatment of certain items for taxation and accounting purposes. Deferred tax is recognised,
without discounting, in respect of all timing differences between the treatment of certain items for taxation and
accounting purposes, which have arisen, but not reversed by the balance sheet date, except as otherwise required by FRS
19.
Pensions
The Company operates a defined contribution pension plan. Contributions payable by the Company in respect of defined
contribution pension plans are charged to administrative expenses as incurred.
Share-Based Payments
There were no material share-based payment arrangements during the period.
Employee Benefit Trust
The Company operates an Employee Benefit Trust in order to hedge its obligations under the CSOP and LTIP schemes. The
Company either purchases its own shares directly or it funds the trust to acquire shares in the Company. Transactions of
the Employee Benefit Trust are treated as being those of the Company and are reflected in the Company's financial
statements.
Ordinary Share Capital
External costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds.
Shares which have been repurchased are classified as treasury shares and shown in retained earnings. They are recognised at
the trade date for the amount of consideration paid, together with directly attributable costs. This is presented as a
deduction from total equity. Shares held by the Employee Benefit Trust are treated as being those of the Company.
The nominal value of shares cancelled has been taken to a capital redemption reserve.
Loss for the Financial Year
The Company has taken advantage of Section 408 of the Companies Act 2006 and has not included its own profit and loss
account in these financial statements. The Company's loss for the year was £3,016,000 (2013: £50,011,000).
C2. Remuneration of Directors
The detailed information concerning directors' emoluments, shareholdings and share options is shown in the Remuneration
Report.
All directors of the Company are directors of the Group.
C3. Remuneration of Auditors
The detailed information concerning Auditors' remuneration is shown in note 3 to the Group financial statements.
C4. Staff Numbers, Costs and Share Option Schemes
The detailed information concerning staff numbers, costs and share option schemes is shown in note 3 to the Group financial
statements.
C5. Fixed Asset Investments
Shares in Group
Undertakings Total
£000 £000
Cost
At 30 September 2013 155,355 155,355
Disposals (46,750) (46,750)
At 30 September 2014 108,605 108,605
Provisions
At 30 September 2013 71,021 71,021
Impairment charge for year 2,332 2,332
Disposals (35,166) (35,166)
At 30 September 2014 38,187 38,187
Net book value
At 30 September 2014 70,418 70,418
At 30 September 2013 84,334 84,334
An impairment review of the carrying value of the Company's investments in its subsidiary undertakings has been performed.
In carrying out this review, the directors had due regard to the nature of the property investments held, which is
commensurate with the funding arrangements in place. On the basis of this review which included a review of the underlying
assets of the individual subsidiaries the directors have written down the value of investments in subsidiary undertakings
to their estimated realisable value.
The companies in which the Company's interests at the year end are more than 20% are as follows:
Nature of business Ownership Interest*
NOS Limited - in members' voluntary liquidation Dormant 100%
NOS 4 Limited Property Investment 100%
NOS 5 Limited Property Investment 100%
NOS 6 Limited Property Investment 100%
Palladium Investments Limited Property Investment 100%
NOS 8 Limited - in members' voluntary liquidation since year end Property Investment 100%
Gilfin Property Holdings Limited Property Investment 100%
LSR Asset Management Limited - in members' voluntary liquidation Property Management 100%
NOS Residential Limited - in members' voluntary liquidation since year end Property Investment 100%
LSR Gresham Asset Advisers Limited - in members' voluntary liquidation Property Management 100%
LSR Gresham Investments Limited - in members' voluntary liquidation Property Investment 100%
* All interests are in Ordinary Shares
All of the above companies are incorporated in Great Britain
C6. Debtors
2014 2013
£000 £000
Amounts owed by Group undertakings 801 2,722
Other debtors 1,369 --
Other taxation and social security 274 125
Prepayments 16 80
2,460 2,927
C7. Creditors
2014 2013
£000 £000
Trade creditors 227 93
Amounts owed to Group undertakings 45,663 48,721
Other taxation and social security 5 130
Other creditors 132 -
Accruals 234 340
46,261 49,284
C8. Reconciliation of Shareholders' Funds
Share Capital
2014 2013
Ordinary 20p Shares Ordinary 20p Shares
Number Amount Number Amount
000 £000 000 £000
Allotted, called up and fully paid 91,670 18,334 91,670 18,334
Reserves
Capital Profit and
Redemption Loss Account
Reserves Reserve - Total
£000 £000 £000 £000
At 1 October 2012 3,742 1,764 67,540 73,046
Dividend - - (1,628) (1,628)
Share-based payments - - - -
Loss for the financial year - - (50,011) (50,011)
At 30 September 2013 3,742 1,764 15,901 21,407
Dividend - - - -
Loss for the financial year - - (3,016) (3,016)
At 30 September 2014 3,742 1,764 12,885 18,391
Investment in Own Shares
At 30 September 2014, 9,164,017 shares were held in treasury (2013: 9,164,017).
Reserves
The value of shares issued to purchase Gilfin Property Holdings Limited in excess of their nominal value has been shown as
a separate reserve in accordance with the Companies Act 2006.
Capital Redemption Reserve
The capital redemption reserve arose in prior years on the cancellation of 8,822,920 Ordinary 20p Shares.
Dividends
The following dividends were paid during the current and previous year:
Dividend Total payment Classification
Date paid per share £000 of dividend
31-Dec-12 2.0 pence 1,628 PID
Under the REIT legislation, the Company's dividends are divided into two components, known as Property Income Distributions
("PID") and non-Property Income Distributions ("non-PID").
C9. Disposal of shares in subsidiaries
During the year the Company disposed of two subsidiaries, NOS 2 Limited and NOS 3 Limited by the sale of their entire share
capital.
The profit on sale included in the profit and loss account was calculated as follows:
£000's
Sale proceeds 11,100
Deduct
Carrying cost of investments 11,584
Less:
Assets not disposed of (1,369)
10,215
Fees and other costs 817
11,032
Profit 68
The difference between the profit\(loss) on disposal in the Company accounts and the consolidated accounts is due to
differences between the net assets of NOS 2 and NOS 3 at the date of disposal and the carrying costs of the investments in
The Local Shopping REIT plc.
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