REG - Town Centre Secs. - Final Results <Origin Href="QuoteRef">TCSC.L</Origin> - Part 1
RNS Number : 3085ZTown Centre Securities PLC17 September 2015
For immediate release
Thursday 17 September 2015
TOWN CENTRE SECURITIES PLC
Final results for the year ended 30 June 2015
STRONG RETURNS DELIVERED THROUGH INTENSIVE ASSET MANAGEMENT
Town Centre Securities PLC ("TCS"), the Leeds based property investment and car parking company, today announces its audited final results for the year ended 30 June 2015.
Financial highlights
Net assets per share up 11.7% at 344p(2014: 308p)
Dividend 1.16 times covered, total dividend per share 10.44p (2014: 10.44p); proposed final dividend unchanged at 7.34p (2014: 7.34p)
Statutory profit before tax of 24.0m (2014: 27.4m) and statutory earnings per share of 45.1p (2014: 51.6p)
Underlying profit before tax*of 6.5m (2014: 7.6m) following planned disposals as part of capital recycling programme
Underlying earnings per share* of 12.1p (2014: 14.4p)
Total shareholder return of 19.1% (2014: 49.3%) and total property return of 12.2% (2014: 14.1%)
New 35m bank facility agreed at 50bp reduction in margin
*Excluding valuation movement and property disposal profits
Operating Performance
Total property return of 12.2% (2014: 14.1%) has out-performed IPD in all comparable categories
Like for like passing rent up 2.5% to 18.3m
Estimated Rental Value ('ERV') up 8% to 21.6m mainly due to Merrion House deal and acquisitions
Like for like ERV up 2.8%
Like for like property valuation increase of 7.1% (2014: 10.0%); initial yield of 5.8% (2014: 6.7%) and reversionary yield of 6.8% (2014: 7.4%)
Occupancy remains high at 96% (2014: 97%)
Operational highlights
Active capital recycling through
o Sales of properties at Apperley Bridge and Victoria Gate for total consideration of 9.7m, exit yield 3.3%
o Four property acquisitions at a net initial yield of 5.1% for a total cost of 11.3m
o Sale of Goodramgate, York for 3.55m completed in August 2015, exit yield 6.24%
Good progress with Merrion Centre enhancements
o Morrisons re-fit and extension nearing completion, trading well
o Merrion House 50/50 JV with Leeds City Council now established and property transferred
o Merrion Hotel Franchise agreements signed with Ibis Styles and Marco Pierre White
o Arena Quarter now 80% let
Waitrose, Milngavie development completed and open for trading with 3.3m development surplus
Completed the redevelopment of Albion Place, Leeds replacing Austin Reed with a Sainsbury's store
Marketing a 91 unit residential scheme in Piccadilly basin, Manchester
Purchased, refurbished and let a retail/office investment in Duke Street, London
Added five new branches to our Citipark car parking portfolio, increasing total spaces by 81% to 5,200
Two new Non-executive Directors, Ian Marcus and Paul Huberman appointed 1 January 2015 and Ben Ziff appointed 17 September 2015
Commenting on the results, Chairman and Chief Executive Edward Ziff, said:
"Retail valuations have continued to rise in the regions and we expect this to continue as the economic backdrop continues to improve. The letting market remains competitive but we continue to find opportunities to increase income in all areas of our portfolio and over the next couple of years our income will benefit from the transactions we have already concluded. This is particularly so in the Merrion Centre where the Merrion House deal is now underway. We intend to increase portfolio sales and purchase activity this year.
We will continue our car park acquisitions programme as we have already seen this contributing positively to our profits.
We will also complete our bank facility renewal; the banking panel has improved and we expect to achieve a reduced margin and subsequent reduction in average borrowing cost.
Overall we look forward with confidence and are encouraged by the many profitable opportunities that we have to deliver attractive shareholder returns".
For further information, please contact:
Town Centre Securities PLC www.tcs-plc.com
Edward Ziff, Chairman and Chief Executive 0113 222 1234
Duncan Syers, Finance Director
MHP Communications
Reg Hoare / Gina Bell 020 3128 8100
Chairman and Chief Executive's Statement
We have had another good year with Total Shareholder Return of 19% and our property portfolio has produced a Total Property Return of 12% which has out-performed IPD in all comparable categories
Portfolio performance
The like for like increase in the value of our investment property portfolio this year has been 7.1% (2014: 10%) which reflects a reversionary yield of 6.8% (2014: 7.4%). The total property return of 12.2% is ahead of IPD with excellent performances from the completed Waitrose development at Milngavie, Glasgow and Merrion House which was transferred into a JV with Leeds City Council in May 2015.
Including acquisitions, developments, joint ventures and leasehold car parks the portfolio value at the year end stood at 355.4m (2014: 326.8m).
Results
Net assets at 30 June 2015 were 182.9m, representing 344 pence per share (2014: 163.9m, 308 pence per share). Adjusted net asset value was 183.0m, representing 344 pence per share (2014: 170.4m, 320 pence per share) reflecting the fact that long term interest rates are in line with the coupon on our Debenture Stock.
We report a statutory profit for the year of 24.0m (2014: 27.4m) which includes the property revaluation surplus of 14.8m this year (2014 19.8m).
Our underlying profit before tax of 6.5m (2014: 7.6m) (excluding property revaluation and property disposals) is in line with expectations but behind last year due to planned disposals as part of our capital recycling programme. The car park business was ahead of the prior year on a like for like basis.
Statutory earnings per share (including property revaluation and property disposals) were 45.1p (2014: 51.6p). Underlying earnings per share were 12.1p (2014: 14.4p).
Dividend
The Board is recommending a final dividend of 7.34 pence per share, which, together with the interim dividend of 3.1 pence per share, provides an unchanged total dividend of 10.44 pence per share. The final dividend comprises a Property Income Distribution of 2.16 pence and an ordinary dividend of 5.18 pence per share. The final dividend will be paid on 5 January 2016 to shareholders on the register on 4 December 2015.
Funding
Net debt at 30 June 2015 amounted to 174.6m (2014: 160.5m). This comprised 106.1m of 5.375% First Mortgage Debenture Stock 2031 and 70.0m of revolving credit facilities, net of 1.5m cash. The increase in the level of net debt is principally due to capital expenditure (37.6m) exceeding property disposal proceeds (26.8m). Borrowings represent 49% of property values (2014: 49%).
The group is in the process of renewing its bank facilities. We have completed the renewal of our 3 year revolving credit facility with Handelsbanken increasing the facility from 20m to 35m and reducing the average margin by over 50 basis points. We shall renew the other bank facilities over the next few months.
Capital recycling
A key part of our property strategy is continually to refresh the portfolio through a combination of selective sales of properties where we can no longer add value and purchases of properties which give opportunities to grow income and value.
As part of this process in 2013/14 we sold five properties in Scotland for 8.9m. The income from these properties was 512,000 in 2013/14. We also sold Park Row, Leeds for 7.5m at the beginning of this year with income of 630,000. While the recycling programme continues to refresh and improve the portfolio these disposals have reduced income by 1.14m with an associated interest benefit of 400,000.
Our capital recycling in 2014/15 has been as follows:
Purchased Duke Street, London for 3.1m, rental value 196,700
Purchased Princes Street, Edinburgh for 2.4m, income 147,500
Purchased Wood Green, London for 1.3m, income 72,000
Purchased an industrial park in Stourton, Leeds for 4.5m, income 325,000
Sold Apperley Bridge, Leeds for 5.0m, income 121,000
Sold our interest in the Victoria Gate development in Leeds for 4.7m, income 200,000
The full year income gain from these transactions is 420,000 while the net interest increase is only 40,000.
We also agreed terms to sell Goodramgate, York in June 2015 with completion in August 2015; we received 3.55m and the exit yield was 6.24%.
Active property management
This is the time of year when we look back and review what we have achieved; the range and scope of our management activities is illustrated in the following pages. Our focus is on finding and generating income growth against a backdrop of a competitive retail rental market. Set out below is a summary of the projects we have been working on over the last couple of years which in total have added over 20m to net assets.
Merrion Centre
Arena Quarter
This redevelopment began with the Pure Gym letting in 2012, 20,600 sq ft at 8.50 psf.
Building work on all units created a total of 80,700 sq ft of retail space and was completed in 2014 at a cost of 5.6m. It is currently 80% let with a total rental value of 831,600. The current valuation is 8.1m which has therefore added 2.5m to net assets.
During the year we took a surrender of a lease to restaurant operator Cosmo as the tenant was unable to fit out; we received 150,000 in respect of the surrender, the existing lease was at 12.61 psf and we have been letting recently at 20 psf. This unit, along with all the remaining units in the scheme, is being actively marketed.
Morrisons
We completed a surrender and lease renewal with Morrisons in June 2014 which added 20% to their floorspace and 500,000 to rental income. The fit out is well underway and has already had a beneficial impact on the main mall. This deal alone added 5m to net assets.
Main mall
We continue to improve the tenant line up and rental income in what remains a competitive retail market. Demand is strong for the main mall units and where units come available they let quickly. The tenant mix remains strong with a number of new lettings, renewals, re-locations and reviews including Superdrug, Ethel Austin, Holland & Barrett, 3store, O2, Peacocks, Claires Accessories, Greggs, Poundworld and Home Bargains and we have increased the rental income and the average lease length during the year.
NHS clinic
This letting uses space which was previously used as the centre management office, along with balcony units and office space which were difficult to let with a low rental value. This 5,543 sq ft letting is to a NHS funded clinic at 100,000 pa and has already generated demand for the other balcony units in complementary uses. This refurbishment has also allowed us to create a block of kiosk units with a rental value of 55,000 pa.
Merrion Hotel
The Merrion Centre Hotel is currently vacant and we have now signed management contracts and franchise agreements with Ibis Styles (3 star) and Marco Pierre White restaurants to create a 134 bed hotel and 4,000 sq ft restaurant. The estimated build cost is 7.5m and is expected to generate an initial profit of 600,000 rising to 1m over five years. The start on site will be Autumn 2015 subject to finalising the detailed planning permission. This provides an excellent return on the investment for space that has been vacant for over two years.
Merrion House
The Merrion House redevelopment has now entered the contractual stage; the property was transferred into a 50/50 joint venture with Leeds City Council in May 2015. The book value of property was 25m and had rental income of 1.4m pa. The redevelopment will add 50,000 sq ft of state of the art office space and refit the existing 120,000 sq ft; the total cost estimate is 31m with 28m funded by sale of the 50% stake to Leeds City Council. The completed redevelopment has an expected value of 70m (we have a 50% share) and will generate total income of 3.3m pa (indexed in line with CPI) from a new 25 year lease to Leeds City Council.
Other properties
Whitehall Riverside, Leeds
This area is rapidly becoming the prime office location in Leeds with three substantially speculative office buildings under construction on the sites adjoining Whitehall Riverside. There is an established demand for grade A space at 28 psf and we are currently marketing for pre-let on our site a 170,000 sq ft office building and we are also in detailed negotiations regarding a 128 bedroom hotel. The masterplan also includes a 500 space multi-storey car park along with a further 150,000 sq ft of offices.
Albion Place, Leeds
This deal is typical of the way we continue to generate increases in value in a competitive retail market; we took surrender of a short lease to Austin Reed, pre-let 5,125 sq ft to Sainsburys for 15 years at 157,500 pa and have also configured the building to allow for a future residential development of 3,886 sq ft. The resultant revaluation gain was 800,000 less the cost of works of 200,000.
Vicar Lane, Leeds
Our property forms one side of the main entrance to the Victoria Gate development which includes a John Lewis store and associated retail/leisure units with a total of 450,000 sq ft of new space scheduled to open in autumn 2016. Our property is let to a number of tenants including Flannels and High & Mighty. We have benefitted from an increase in value due to its proximity to the scheme and we propose to further capitalise on this by reconfiguring the unit to maximise rental value.
Apperley Bridge, Bradford
The former Barratts head office was purchased in July 2012 for 2.4m. A total of 600,000 was spent on demolition and site preparation and achieving a residential planning consent. The site was sold unconditionally for 5m in December 2014.
Urban Exchange, Manchester
This retail warehouse unit comprises 160,000 sq ft of space on two levels plus a basement. It became vacant in 2008 and since then we have worked to rebuild value through lettings to Aldi, M&S, Pure Gym and Go Outdoors. These lettings were on turnover and stepped rents and the growth over the last five years has been 400%.
Piccadilly Basin, Manchester
The planning agenda on the Northern side of our five acre site has changed over the last year and there is a move towards residential development in this part of Manchester. We have refocused the master plan which now includes capacity for 850 apartments with a potential end value of over 240m. As part of this plan we have detailed consent for 91 canal-side units and we are finalising a pre-sale agreement.
The remaining site is zoned for commercial development and includes space for a 750 space multi-storey car park. The site continues to trade successfully as a surface car park along with the existing MSCP at Tariff Street.
Empire House, Glasgow
This actively managed property comprises nine shop units on Sauchiehall Street and four floors of multi-let offices above. We have obtained change of use for one unit this year from shop to restaurant, let the unit to Bella Italia and increased the rent by 65,000 pa.
Shandwick Place, Edinburgh
This is a substantial block of mixed retail and office space at the end of Princes Street in Edinburgh. We recently concluded a deal with Ask restaurants; we obtained possession from two former tenants, put two units together and let to Ask at 150,000 pa, an increase of 70,000 pa on previous rent. The valuation has increased by 1.1m while the cost of works was 400,000. Overall the income from this block is up 246,000 on last year.
Waitrose Milngavie, Glasgow
The land for this development adjoins our existing ownership of the Homebase in Milngavie. We acquired the land for 3m and construction costs were 7m to create a 36,000 sq ft store let to Waitrose under a 25 year lease at an initial rent of 644,000 pa; the year end valuation was 13.3m.
Duke Street, London
We completed the acquisition of this property in July 2014 at a cost of 3.1m from an LPA receiver. Although not fully occupied there were two existing leases with a total rent of 90,000 pa. We negotiated the surrender of the leases, completely refurbished the interior and exterior and at the same time regularised the legal and planning status of the ownership. The ground, first floor and basement is now let to Titan Black at a rent of 122,000 pa and we have occupied the second and third floor offices which have a combined rental value of 60,000 pa. The total refurbishment cost was 350,000 and it is valued at the year end at 4.25m.
Car parking
We have been extremely active in the car park business as well. Following the acquisition of the Ilford multi-storey last June we have added five new sites to our portfolio in London and Watford; bringing the total to 5,200 spaces. These acquisitions all comprise leasehold sites and we have also negotiated lease extensions with the landlords. These operations are currently being fitted out in CitiPark branding and will generate turnover of approximately 10m in 2015/16.
Our cloud based management system has been installed in Ilford and Manchester with further installations currently underway at our Central London and Watford branches. Our Engine Room (central control room) became fully operational in August this year and we are now able to deal with all day to day operational matters remotely. This will allow us to rationalise staff levels at our branches.
The rebranding of the business to CitiPark was successfully completed during the year. All our branches will have a consistent brand and it will apply to surface and multi-storey operations. The rebrand will help give a clear modern identity and will emphasise the message that the business is at the forefront of technology and customer service. We are confident that the rebrand will increase our customer base and give the branches a cleaner look and feel.
Outlook
Retail valuations have continued to rise in the regions as the economic backdrop improves. The letting market remains competitive but we continue to find opportunities to increase income in all areas of our portfolio and over the next couple of years our income will benefit from the transactions we have already concluded. This is particularly so in the Merrion Centre where the Merrion House deal is now underway. We intend to increase portfolio sales and purchase activity this year.
We will continue our car park acquisitions programme as we have already seen this contributing positively to our profits.
We shall also complete our bank facility renewal; the banking panel has improved and we expect to achieve a reduced margin and subsequent reduction in average borrowing cost.
Overall we look forward with confidence and are encouraged by the many profitable opportunities that we have to deliver attractive shareholder returns.
Board changes
During the year we have appointed two new non-executive directors, Ian Marcus and Paul Huberman, and Howard Stanton has retired. We appointed Ben Ziff to the Board on 17 September 2015; he is the Managing Director of CitiPark.
Ian and Paul bring immense experience and expertise in the finance and property sector which will be invaluable to us in years to come. Ben has been extremely successful with the development of the car park business which is becoming an increasingly important part of the group and his appointment is well-deserved.
I would like to pay tribute to Howard Stanton. Howard joined us in April 2009 when we were facing some of the most challenging financial conditions the market has known and he has been a continuing support through those difficult times. He played a major role in the tender offer and exchange of our mortgage debenture which has been one of the most significant deals for the success of the group over the last 10 years. He has chaired our audit committee throughout his six year term and has done an excellent job with our finance team and our auditors. Finally and most importantly I would like to thank Howard for his personal support in steering the group through the last six turbulent years.
As ever I would also like to thank our loyal and dedicated staff for their commitment and support over the last 12 months.
Edward Ziff
Chairman and Chief Executive
17 September 2015
Detailed Portfolio Performance
The value of our investment property portfolio including acquisitions, developments, joint ventures, leasehold car parks and assets held for sale now stands at 355.4m with a gross income of 19.8m and an occupancy rate, based upon income (rather than square footage), of 96%. The external valuation of our investment portfolio as at 30 June 2015 on a like for like basis showed an increase of 7.1% (2014: 10.0%) and reflects an initial yield of 5.8% (2014: 6.4%) and a reversionary yield of 6.8% (2014: 7.4%).
The investment property portfolio has out-performed IPD in all comparable categories.
Total property returns
TCS
IPD
Retail All
12.0%
11.3%
Retail shopping centres
12.3%
12.1%
Retail Warehouses
12.6%
11.1%
Retail rest of UK standard shops
10.2%
9.4%
Offices Rest of UK
23.5%
17.2%
The most notable gains are in Merrion House (17.5m compared to 12.8m), Waitrose at Milngavie (13.3m compared to total cost of 10m), the London suburban shops at 16.3% (2015 value 3.1m) and Albion Place, Leeds at 10.3% (2015 value 5.4m).
Merrion Centre has again out-performed IPD in each of the last 5 years.
Total property return
2011
2012
2013
2014
2015
Merrion Centre
13.6%
0.4%
6.7%
16.4%
12.3%
IPD shopping centres index
8.1%
(0.5)%
(0.8)%
12.3%
12.1%
PORTFOLIO ANALYSIS
Passing rent
ERV
Value
% of portfolio
Valuation incr/(decr)
Initial yield
Reversionary yield
m
m
m
Retail & leisure
5.1
5.7
90.1
25%
5.1%
5.4%
6.0%
Merrion Centre (excl offices)*
6.1
7.2
112.6
32%
7.1%
6.4%
7.1%
Offices
3.0
4.5
48.0
14%
11.1%
5.9%
8.8%
Out of town retail
3.4
3.5
59.7
17%
7.4%
5.4%
5.5%
Industrial
0.2
0.4
4.4
1%
-
5.0%
7.8%
Residential
0.5
0.5
9.5
3%
4.7%
4.6%
4.6%
18.3
21.6
324.3
91%
7.1%
5.8%
6.8%
Development property (car park income)
0.9
1.4
13.5
4%
-
Car parks
0.6
1.2
17.6
5%
-5.6%
Let portfolio
19.8
24.2
355.4
100%
6.5%
Voids (4%)
0.8
25.0
Portfolio income analysis
Passing rent
ERV
2015
2014
2015
2014
m
m
m
m
Merrion excluding Merrion House
7.5
7.6
8.6
8.2
Merrion House
0.7
1.4
1.7
1.4
Waitrose Milngavie
0.7
-
0.7
-
Park Row Leeds (sold July 2014)
-
0.7
-
0.7
Property acquisitions 2015
0.5
-
0.8
-
Other
8.9
8.4
9.8
9.7
18.3
18.1
21.6
20.0
Location
Value
%
Leeds
190.9
56%
Manchester
47.2
14%
Scotland
82.3
24%
London
21.5
6%
341.9
100%
Sector
Value
%
Retail/leisure
262.4
77%
Office
48.0
14%
Car parking
17.6
5%
Industrial
4.4
1%
Residential
9.5
3%
341.9
100%
Development sites
13.5
355.4
Lease Expiries
Value
%
0-5 years
5.9
33%
5+ years
6.9
37%
10+ years
5.5
30%
18.3
100%
Consolidated income statement
for the year ended 30 June 2015
2015
2014
Notes
000
000
Gross revenue
22,714
22,633
Property expenses
(5,248)
(3,679)
Net revenue
17,466
18,954
Administrative expenses
2
(5,068)
(4,679)
Other income
3
1,451
852
Valuation movement on investment and development properties
14,791
19,805
Operating profit
28,640
34,932
Finance costs
(7,258)
(7,585)
Loss on disposal of investment properties into joint ventures
(2,488)
-
Share of post tax profits from joint ventures
7
5,109
87
Profit before taxation
24,003
27,434
Taxation
-
-
Profit for the year attributable to owners of the Parent
24,003
27,434
Earnings per ordinary share of 25p each
Basic and diluted
4
45.1p
51.6p
Underlying (non-GAAP measures)
4
12.1p
14.4p
Dividends per ordinary share
Paid during the year
5
10.44p
10.44p
Proposed
5
7.34p
7.34p
Consolidated statement of comprehensive income
for the year ended 30 June 2015
2015
2014
000
000
Profit for the year
24,003
27,434
Other comprehensive income
Revaluation gain on cash flow hedges
-
298
Revaluation gains on other investments
228
112
Total comprehensive income for the year
24,231
27,844
All recognised income for the year is attributable to owners of the Parent.
Consolidated balance sheet
as at 30 June 2015
2015
2014
Notes
000
000
Non-current assets
Investment properties
6
328,249
317,697
Lease premiums
6
4,311
-
Investments in joint ventures
7
19,344
1,748
Fixtures, equipment and motor vehicles
6
1,214
1,112
Unamortised tenant lease incentives
3,966
3,788
Total non-current assets
357,084
324,345
Current assets
Non-current assets held for sale
3,450
7,500
Investments
1,962
1,734
Trade and other receivables
6,871
4,705
Cash and cash equivalents
1,515
-
Total current assets
13,798
13,939
Total assets
370,882
338,284
Current liabilities
Trade and other payables
(11,857)
(13,908)
Financial liabilities - borrowings
(38,668)
(1,845)
Total current liabilities
(50,525)
(15,753)
Net current liabilities
(36,727)
(1,814)
Non-current liabilities
Financial liabilities - borrowings
(137,479)
(158,660)
Total non-current liabilities
(137,479)
(158,660)
Total liabilities
(188,004)
(174,413)
Net assets
182,878
163,871
Equity attributable to the owners of the Parent
Called up share capital
8
13,290
13,290
Share premium account
200
200
Capital redemption reserve
559
559
Retained earnings
168,829
149,822
Total equity
182,878
163,871
Net assets per share
344p
308p
Consolidated statement of changes in equity
as at 30 June 2015
Called up share capital
Share
premium account
Hedging reserve
Capital redemption reserve
Retained earnings
Total equity
000
000
000
000
000
000
Balance at 1 July 2013
13,290
200
(298)
559
128,152
141,903
Profit for the year
-
-
-
-
27,434
27,434
Other comprehensive income:
- Revaluation gains on cash flow hedges
-
-
298
-
-
298
- Revaluation gains on other investments
-
-
-
-
112
112
Total comprehensive income for the year ended 30 June 2014
-
-
298
-
27,546
27,844
Final dividend relating to the year ended 30 June 2013 paid in January 2014
-
-
-
-
(3,902)
(3,902)
Interim dividend relating to the year ended 30 June 2014 paid in June 2014
-
-
-
-
(1,648)
(1,648)
Other adjustments
-
-
-
-
(326)
(326)
Balance at 30 June 2014
13,290
200
-
559
149,822
163,871
Profit for the year
-
-
-
-
24,003
24,003
Other comprehensive income:
- Revaluation gains on other investments
-
-
-
-
228
228
Total comprehensive income for the year ended 30 June 2015
-
-
-
-
24,231
24,231
Final dividend relating to the year ended 30 June 2014 paid in January 2015
-
-
-
-
(3,902)
(3,902)
Interim dividend relating to the year ended 30 June 2015 paid in June 2015
-
-
-
-
(1,648)
(1,648)
Other adjustments
-
-
-
-
326
326
Balance at 30 June 2015
13,290
200
-
559
168,829
182,878
Consolidated cash flow statement
for the year ended 30 June 2015
2015
2014
Notes
000
000
000
000
Cash flows from operating activities
Cash generated from operations
9
9,950
15,664
Interest paid
(7,759)
(7,823)
Net cash generated from operating activities
2,191
7,841
Cash flows from investing activities
Purchase and construction of investment properties
(22,132)
(4,803)
Refurbishment of investment properties
(10,602)
(8,174)
Acquisition of leasehold property
(4,311)
-
Purchases of fixtures, equipment and motor vehicles
(532)
(490)
Proceeds from sale of investment properties
16,821
8,802
Proceeds from sale of Merrion House to joint venture
10,000
-
Proceeds from sale of listed investments
-
241
Net cash used in investing activities
(10,756)
(4,424)
Cash flows from financing activities
Proceeds from non-current borrowings
17,475
676
Dividends paid to shareholders
(5,550)
(5,550)
Net cash generated from/(used in) financing activities
11,925
(4,874)
Net increase/(decrease) in cash and cash equivalents
3,360
(1,457)
Cash and cash equivalents at 1 July
(1,845)
(388)
Cash and cash equivalents at 30 June
1,515
(1,845)
1. Segmental information
The chief operating decision-maker has been identified as the Board. The Board reviews the Group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports.
Segment assets
2015
2014
000
000
Property rental
349,840
323,048
Car park operations
21,042
15,236
370,882
338,284
Segmental results
2015
2014
Property
Car park
Property
Car park
rental
operations
Total
rental
operations
Total
000
000
000
000
000
000
Gross revenue
15,844
6,870
22,714
17,532
5,101
22,633
Property expenses
(1,558)
(3,690)
(5,248)
(1,634)
(2,045)
(3,679)
Net revenue
14,286
3,180
17,466
15,898
3,056
18,954
Administrative expenses
(4,484)
(584)
(5,068)
(4,259)
(420)
(4,679)
Other income
1,435
16
1,451
852
-
852
Property valuation movement
15,577
(786)
14,791
20,155
(350)
19,805
Operating profit
26,814
1,826
28,640
32,646
2,286
34,932
Finance Income/costs
(7,258)
-
(7,258)
(7,585)
-
(7,585)
Loss on disposal of investment properties into joint ventures
(2,488)
-
(2,488)
-
-
-
Share of post tax profits from joint ventures
5,109
-
5,109
87
-
87
Profit before taxation
22,177
1,826
24,003
25,148
2,286
27,434
Taxation charge
-
-
-
-
-
-
Profit for the year
22,177
1,826
24,003
25,148
2,286
27,434
All results are derived from the UK.
2. Administrative expenses
2015
2014
000
000
Employee benefits
3,479
3,086
Depreciation
176
203
Charitable donations
99
108
Other
1,314
1,282
5,068
4,679
3. Other income
2015
2014
000
000
Commission received
110
113
Dividends received
26
26
Management fees receivable
216
259
Profit/(loss) on disposal of investment properties
236
(59)
Profit on disposal of listed investments
-
101
Dilapidations receipts and income relating to lease premiums
380
207
Other
483
205
1,451
852
4. Underlying profit/earnings per share (EPS)
To assist shareholders in understanding the underlying results and compare to those results in previous accounting periods, adjustments made to the profit after taxation are:
2015
2014
Weighted
Weighted
average
average
number of
Earnings
number of
Earnings
Earnings
shares
per share
Earnings
shares
per share
000
p
000
p
Basic and diluted profit/EPS
24,003
53,162
45.1
27,434
53,162
51.6
Valuation surplus on investment and development properties
(14,791)
-
(27.8)
(19,805)
-
(37.2)
Valuation surplus on joint venture investment properties
(5,013)
-
(9.4)
-
-
-
Profit on disposal of investment properties
(236)
-
(0.4)
-
-
-
Loss on disposal of investment properties into joint ventures
2,488
-
4.6
-
-
-
Underlying profit/EPS
6,451
53,162
12.1
7,629
53,162
14.4
5. Dividends
2015
2014
000
000
2013 final paid: 7.34p per 25p share
-
3,902
2014 interim paid: 3.10p per 25p share
-
1,648
2014 final paid: 7.34p per 25p share
3,902
-
2015 interim paid: 3.10p per 25p share
1,648
-
5,550
5,550
The Directors are proposing a final dividend in respect of the financial year ended 30 June 2015 of 7.34p per share, which will absorb anestimated 3,902,000 of shareholders' funds. This dividend will comprise an ordinary dividend of 5.18p per share and a Property Income distribution (PID) of2.16p per share and will be paid on 5 January 2016 to shareholders who are on the Register of Members on 4 December 2015.
6. Non-current assets
(a) Investment properties
Long
Freehold
leasehold
Development
Total
000
000
000
000
Valuation at 1 July 2014
283,218
15,921
18,558
317,697
Additions
29,038
3,468
729
33,235
Disposals
(27,319)
(1,460)
(5,245)
(34,024)
Transfer of Assets held for sale
(3,450)
-
-
(3,450)
Transfer
242
326
(568)
-
Valuation movement
14,996
(205)
-
14,791
Valuation at 30 June 2015
296,725
18,050
13,474
328,249
The fair value of the group's investment and development properties has been determined principally by independent, appropriately qualified external valuers Jones Lang LaSalle (in respect of 114,915,000 of investment properties and 3,450,000 shown in assets held for sale) and CB Richard Ellis (in respect of 199,015,000 of investment properties). The remainder of the portfolio (14,319,000) has been valued by the Property Director.
Valuations are performed bi-annually and are performed consistently across all properties in the group's portfolio. At each reporting date appropriately qualified employees verify all significant inputs and review computational outputs. Valuers submit and present summary reports to the Property Director and the Board on the outcome of each valuation round.
Valuations take into account tenure, lease terms and structural condition. The inputs underlying the valuations include market rents or business profitability, incentives offered to tenants, forecast growth rates, market yields and discount rates and selling costs including stamp duty.
The development properties principally comprise land in Leeds and Manchester; these have been valued taking into account the income from car parking and the Property Director's assessment of their realisable value in their existing state and condition based on market evidence of comparable transactions.
The valuation of investment properties includes 0.5m (2014: 0.2m) in respect of borrowing costs capitalised during the year.
Investment properties are analysed as follows:
2015
2014
000
000
Investment property (externally valued)
313,930
289,780
Development properties
13,474
18,558
Residential property acquired for potential development
-
3,804
Other
845
5,554
328,249
317,696
(b) Lease premiums
000
At 1 July 2014
-
Additions
4,311
At 30 June 2015
4,311
Lease premiums comprise upfront payments upon acquisition of leasehold car parks with a term of less than 50 years.
In December 2014 the group acquired a leasehold interest in a basement car park on Clipstone Street, London, in exchange for consideration of 800,000. The lease has an unexpired term of 18 years and has a passing rent of 331,000 per annum. Including professional fees and transaction costs, the total expenditure associated with this acquisition was 900,000.
Subsequently, in March 2015 the group acquired the leasehold interest in a basement car park on Bell Street, London, in exchange for consideration of 3 million. The lease has an unexpired term of 24 years and has a passing rent of 197,000 per annum. Including professional fees and transaction costs the total expenditure associated with this acquisition was 3,124,000.
In April 2015, the group was assigned leases for three multi-story car parks in Watford town centre. No premium was paid for the acquisition of these leases, however the group has provided a commitment to refurbish the car parks during the next financial year. Professional costs and transaction fees associated with the acquisition of these leases amounted to 287,000.
(c) Fixtures, equipment and motor vehicles
Accumulated
Cost
depreciation
000
000
At 1 July 2014
3,771
2,659
Additions
532
-
Disposals
(160)
(32)
Depreciation
-
302
At 30 June 2015
4,143
2,929
Net book value at 30 June 2015
1,214
7. Investments in joint ventures
2015
2014
000
000
Interest in joint ventures
Opening balance
1,748
1,661
Additions
12,487
-
Share of profits after tax
5,109
87
At 30 June
19,344
1,748
The Group's share of the joint ventures' net assets are as stated below:
2015
2014
000
000
Non-current assets
19,194
1,661
Current assets
182
154
Current liabilities
(32)
(65)
Non-current liabilities
-
(2)
At 30 June
19,344
1,748
The Group's share of the joint ventures' post tax profits are as stated below:
2015
2014
000
000
Income
138
223
Expenses
(31)
(125)
Tax
(11)
(11)
96
87
Increase in revaluation of investment properties
5,013
-
Share of post tax profits from joint ventures
5,109
87
8. Share capital
Authorised
The authorised share capital of the company is164,879,000 (2013: 164,879,000) ordinary shares of 25p each.
The nominal value of authorised share capital is 41,219,750 (2013: 41,219,750).
Issued and fully paid
Number of
Nominal
shares
value
Ordinary shares of 25p each
000
At 30 June 2014 and 30 June 2015
53,162
13,290
9. Cash flow from operating activities
2015
2014
000
000
Profit for the financial year
24,003
27,434
Adjustments for:
- Depreciation
302
282
- (Profit)/loss on disposal of investment properties
(236)
59
- Loss on disposal of investment properties into joint ventures
2,488
-
- Profit on disposal of listed investments
-
(140)
- Finance costs
7,258
7,585
- Share of post tax profits from joint venture
(5,109)
(87)
- Movement in valuation of investment and development properties
(14,791)
(19,805)
- Increase in receivables
(2,345)
(598)
- (Decrease)/increase in payables
(1,620)
934
Cash generated from operations
9,950
15,664
10. Adjusted net asset value per share
To assist shareholders in understanding the results, the table below shows how the adjusted net asset value was arrived at:
2015
2014
000
000
Net assets at 30 June
182,878
163,871
Less: debenture issue premium
(179)
(190)
Add: debenture mark to market after tax
305
6,737
183,004
170,418
Shares in issue (000)
53,162
53,162
Adjusted net asset value per share
344p
320p
This information is provided by RNSThe company news service from the London Stock ExchangeENDFR LFMRTMBJBBRA
Recent news on Town Centre Securities
See all newsREG - Town Centre Secs. - Purchase of TCS Shares by TCS Trustees Limited
AnnouncementREG - Town Centre Secs. - Purchase of TCS Shares by TCS Trustees Limited
AnnouncementREG - Town Centre Secs. - Director/PDMR Shareholding
AnnouncementREG - Town Centre Secs. - Director/PDMR Shareholding
AnnouncementREG - Town Centre Secs. - Half-year Results
Announcement