REG - Local Shopping REIT - Final Results - Replacement <Origin Href="QuoteRef">LSR.L</Origin> - Part 4
17/12/2015 18:40
- Part 4: For the preceding part double click ID:nRSQ3420Jc
64,806 64,806
Finance lease liabilities - 672 672 672
Derivative financial instruments 4,022 - 4,022 4,022
Trade payables - 399 399 399
Other payables - 830 830 830
Accruals - 936 936 936
4,022 67,643 71,665 71,665
For all classes of financial liabilities, other than the fixed rate loan, the carrying amount is a reasonable approximation
of fair value.
The fair value of the fixed rate element of the interest bearing loan disclosed above has been valued by the Group's
bankers.
The maturity profiles of the Group's financial liabilities are as follows:
30 September 2015
Contractual Within One Two Three Four Over
Carrying Cash One to Two to Three to Four to Five Five
Value Flows Year Years Years Years Years Years
£000 £000 £000 £000 £000 £000 £000 £000
Interest bearing loans and borrowings 55,689 59,444 2,429 2,542 54,473 - - -
Finance lease liabilities 659 4,727 48 48 48 48 48 4,487
Derivative financial instruments 2,294 2,718 2,321 397 - - - -
Trade payables 521 521 521 - - - - -
Other payables 540 540 540 - - - - -
Accruals 918 918 918 - - - - -
60,621 68,868 6,777 2,987 54,521 48 48 4,487
30 September 2014
Contractual Within One Two Three Four Over
Carrying Cash One to Two to Three to Four to Five Five
Value Flows Year Years Years Years Years Years
£000 £000 £000 £000 £000 £000 £000 £000
Interest bearing loans and borrowings 64,806 72,292 2,794 2,749 2,696 64,053 - -
Finance lease liabilities 672 4,732 47 47 47 47 47 4,497
Derivative financial instruments 4,022 4,575 2,388 1,982 205 - - -
Trade payables 399 399 399 - - - - -
Other payables 830 830 830 - - - - -
Accruals 936 936 936 - - - - -
71,665 83,764 7,394 4,778 2,948 64,100 47 4,497
Contractual cash flows include the undiscounted committed interest cash flows and, where the amount payable is not fixed,
the amount disclosed is determined by reference to the conditions existing at the year end.
19. Operating Lease Arrangements
a) Leases as Lessee
The company has no leases where it is a lessee
b) Leases as Lessor
The investment properties are let under operating leases. Future minimum lease payments receivable by the Group under
non-cancellable operating leases are receivable as follows:
2015 2014
£000 £000
Less than one year 1,907 2,169
Between one and five years 2,519 2,520
More than five years 3,126 3,226
7,552 7,915
20. Capital Commitments
At 30 September 2015 the Group had contracted capital expenditure for which no provision has been made in these financial
statements of £24,000 (2014: £78,000).
21. Related Parties
Transactions with Key Management Personnel
The only transactions with key management personnel relate to remuneration which is set out in the Remuneration Report.
The key management personnel of the Group for the purposes of related party disclosures under IAS 24 comprise all executive
and non-executive directors.
See also Note 23: Significant Contracts.
22. Group Entities
Country of Ownership Interest*
Incorporation 2015 2014
NOS Limited - in members' voluntary liquidation United Kingdom 100% 100%
NOS 2 Limited - disposed of during year United Kingdom - 100%
NOS 3 Limited - disposed of during year United Kingdom - 100%
NOS 4 Limited United Kingdom 100% 100%
NOS 5 Limited United Kingdom 100% 100%
NOS 6 Limited United Kingdom 100% 100%
Palladium Investments Limited United Kingdom 100% 100%
NOS 8 Limited - in members' voluntary liquidation United Kingdom 100% 100%
Gilfin Property Holdings Limited United Kingdom 100% 100%
LSR Asset Management Limited - in members' voluntary liquidation United Kingdom 100% 100%
NOS Residential Limited - in members' voluntary liquidation United Kingdom 100% 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%
Joint Ventures
Gracechurch Commercial Investments Limited - Liquidated during the year United Kingdom 50% 50%
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.
23. 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 £1,016,461 (2014:£1,318,539) during the year.
Company Balance Sheet
as at 30 September 2015
2015 2014
Note £000 £000 £000 £000
Fixed assets
Investments C5 29,754 70,418
29,754 70,418
Current assets
Debtors C6 149 2,460
Cash 7,475 10,108
7,624 12,568
Creditors: Amounts falling due within one year C7 (582) (46,261)
Net current assets\(liabilities) 7,042 (33,693)
Total assets less current liabilities 36,796 36,725
Creditors: Amounts falling due after one year - -
Net assets 36,796 36,725
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 12,956 12,885
Shareholders' funds 36,796 36,725
These financial statements were approved by the Board of directors on xx December 2015 and were signed on its behalf by:
Steven Faber
Director
The registered number of the Company is 05304743.
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.
Profit 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 profit for the year was £71,000 (2014: loss (£3,016,000))
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 2014 108,605 108,605
Disposals - -
At 30 September 2015 108,605 108,605
Provisions
At 30 September 2014 38,187 38,187
Impairment charge for year 40,664 40,664
Disposals - -
At 30 September 2015 78,851 78,851
Net book value
At 30 September 2015 29,754 29,754
At 30 September 2014 70,418 70,418
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 were 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 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 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
2015 2014
£000 £000
Amounts owed by Group undertakings - 801
Other debtors 105 1,369
Other taxation and social security 2 274
Prepayments 42 16
149 2,460
C7. Creditors
2015 2014
£000 £000
Trade creditors 305 227
Amounts owed to Group undertakings - 45,663
Other taxation and social security 3 5
Other creditors 4 132
Accruals 270 234
582 46,261
C8. Reconciliation of Shareholders' Funds
Share Capital
2015 2014
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 2013 3,742 1,764 15,901 21,407
Loss for the financial year - - (3,016) (3,016)
At 30 September 2014 3,742 1,764 12,885 18,391
Profit for the financial year - - 71 71
At 30 September 2015 3,742 1,764 12,956 18,462
Investment in Own Shares
At 30 September 2015, 9,164,017 shares were held in treasury (2014: 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
No dividends were paid during the current and previous year:
C9. Disposal of shares in subsidiaries
During the preceding 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)
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.
Glossary
Adjusted Net Asset Value ("Adjusted NAV") per share
Adjusted NAV is calculated as shareholders' funds, adjusted by the fair value of the derivative financial instruments held
on the Balance Sheet, divided by the number of shares in issue at the year end, excluding treasury shares.
Earnings Per Share ("EPS")
EPS is calculated as profit attributable to shareholders divided by the weighted average number of shares in issue in the
year.
Equivalent Yield
Equivalent yield is a weighted average of the initial yield and reversionary yield and represents the return a property
will produce based upon the timing of the income received. In accordance with usual practice, the equivalent yields (as
determined by the Group's external valuers) assume rent received annually in arrears and on gross values including
prospective purchasers' costs (including stamp duty, and agents' and legal fees).
Funds From Operations ("FFO")
FFO is a term adopted by the National Association of Real Estate Investment Trusts. It is calculated as net income adjusted
for depreciation of investment properties and gains/losses on sales of investment properties.
Head Lease
A head lease is a lease under which the Group holds an investment property.
Initial Yield
Initial yield is the annualised net rent generated by a property expressed as a percentage of the property valuation. In
accordance with usual practice the property value is grossed up to include prospective purchasers' costs.
Interest Cover
Interest cover can be calculated in a number of ways. The Group interest cover given in the Finance Review is based on the
percentage of times gross rental income covers financing
expenses.
Actual and Forecast Interest Cover Test (ICR)
The ICRs given in the Finance Review are calculated as defined in the loan facility agreements. Each bank loan has a
charge on a specific pool of property and the ICRs are calculated based on the gross rental income, less an adjustment for
unrecoverable costs compared to the interest charged on that loan for that particular pool of assets.
Interest Rate Swap
An interest rate swap is a financial instrument where two parties agree to exchange an interest rate obligation for a
predetermined amount of time. These are used by the Group to convert floating rate debt to fixed rates.
Investment Property Databank Ltd ("IPD")
IPD produces an independent benchmark of property returns.
Initial Public Offering ("IPO")
An IPO is the first sale of shares by a privately owned company on a Stock Exchange. LSR issued its shares for sale on 2
May 2007.
London Interbank Offered Rate ("LIBOR")
LIBOR is the interest rate charged by one bank to another bank for lending money.
Loan-to-value ("LTV")
Loan-to-value is the ratio of debt, excluding any mark-to-market adjustments, to the value of investment properties.
Market Value
Market value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer
and willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably,
prudently and
without compulsion.
Market Rent
Market rent is the estimated amount for which a property should lease on the date of valuation between a willing lessor and
a willing lessee on appropriate lease terms, in an arm's length transaction, after proper marketing wherein the parties had
each acted knowledgeably, prudently and without compulsion.
Net Asset Value ("NAV") per share
NAV per share is calculated as shareholders' funds divided by the number of shares in issue at the year end excluding
treasury shares.
Real Estate Investment Trust ("REIT")
A REIT is a listed property company which qualifies for and has elected into a tax regime, which exempts qualifying UK
property rental income and gains on investment property disposals from corporation tax. LSR converted to REIT status on 11
May 2007.
Recurring Profit
Recurring profit is calculated by adjusting the statutory IFRS reported result for: the movement in the fair value of the
property portfolio; the movement in the fair value of financial derivatives held; any profit or loss realised on the sale
of properties or other fixed assets; and other one-off, non-recurring income or costs incurred which are not considered to
be sustainable or of a recurring nature.
Rent Roll
Rent roll is the total contractual annualised rent receivable from the portfolio net of any head rent payments.
Reversionary Yield
Reversionary yield is the annualised net rent that would be generated by a property if it were fully let at market rent
expressed as a percentage of the property valuation. In accordance with usual practice the property value is grossed up to
include prospective purchasers' costs.
Shareholder Information
Registered Office
The Local Shopping REIT plc
INTERNOS GLOBAL INVESTORS
65 Grosvenor Street
London, W1K 3JH
Telephone: +44 (0)20 7355 8800
Registration number: 05304743
Website: www.localshoppingreit.co.uk
Directors
Stephen East
Steven Faber
Nicholas Vetch
Company Secretary
William Heaney
Finance Advisers
JP Morgan Cazenove
25 Bank Street
London, E14 5JP
Investment Adviser
INTERNOS Global Investors Ltd
65 Grosvenor Street
London, W1K 3JH
Solicitors
Eversheds LLP
One Wood Street
London, EC2V 7WS
Olswang LLP
90 High Holborn
London, WC1V 6XX
DWF Biggart Baillie LLP
No. 2 Lochrin Square
96 Fountainbridge
Edinburgh, EH3 9QA
Auditors
KPMG LLP
One Snowhill
Snow Hill Queensway
Birmingham, B4 6GH
Valuers
Allsop LLP
33 Wigmore Street
London, W1U 1BZ
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing, BN99 6QQ
Principal Bankers
HSBC Bank plc
8 Canada Square
London, E14 5HQ
The Royal Bank of Scotland plc
Level 8
280 Bishopsgate
London, EC2M 4RB
This information is provided by RNS
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