REG - Town Centre Secs. - Final Results <Origin Href="QuoteRef">TOWNT.L</Origin> - Part 2
14/09/2016 07:06
- Part 2: For the preceding part double click ID:nRSN7526Ja
Proceeds from non-current borrowings 4,247 17,475
Dividends paid to shareholders (5,550) (5,550)
Net cash (used in)/generated from financing activities (1,303) 11,925
Net (decrease)/increase in cash and cash equivalents (2,402) 3,360
Cash and cash equivalents at beginning of the year 1,515 (1,845)
Cash and cash equivalents at end of the year (887) 1,515
Cash and cash equivalents at year end are comprised of the following:
Cash - 1,515
Bank overdraft (887) -
(887) 1,515
Audited preliminary results announcements
The financial information for the year ended 30 June 2016 and the year ended
30 June 2015 does not constitute the company's statutory accounts for those
years.
Statutory accounts for the year ended 30 June 2015 have been delivered to the
Registrar of Companies. The statutory accounts for the year ended 30 June 2016
will be delivered to the Registrar of Companies following the Company's Annual
General Meeting.
The auditors' reports on the accounts for 30 June 2016 and 30 June 2015 were
unqualified, did not draw attention to any matters by way of emphasis, and did
not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
1. Segmental information Segment assets
2016 2015Restated
£000 £000
Property rental 360,422 351,016
Car park operations 26,692 24,346
387,114 375,362
Segmental results
2016 2015Restated
Property Car park Property Car park
rental operations Total rental operations Total
£000 £000 £000 £000 £000 £000
Gross revenue 16,147 10,118 26,265 15,844 6,870 22,714
Property expenses (1,818) (5,843) (7,661) (1,558) (3,690) (5,248)
Net revenue 14,329 4,275 18,604 14,286 3,180 17,466
Administrative expenses (4,690) (803) (5,493) (4,737) (584) (5,321)
Other income 594 5 599 1,452 16 1,468
Valuation movement on investment properties 3,018 - 3,018 15,577 - 15,577
Reversal of impairment/(impairment) of car parking assets - 500 500 - (786) (786)
Profit on disposal of investment properties 1,140 - 1,140 236 - 236
Loss on disposal of investment properties into joint ventures - - - (2,488) - (2,488)
Share of post-tax profits from joint ventures 1,400 - 1,400 5,109 - 5,109
Operating profit 15,791 3,977 19,768 29,435 1,826 31,261
Finance costs (7,847) - (7,847) (7,258) - (7,258)
Profit before taxation 7,944 3,977 11,921 22,177 1,826 24,003
Taxation - - - - - -
Profit for the year 7,944 3,977 11,921 22,177 1,826 24,003
All results are derived from activities conducted in the United Kingdom.
The results for the car park operations include the car park at the Merrion
Centre. As the value of the car park cannot be separated from the value of the
Merrion Centre as a whole, the full value of the Merrion Centre is included
within the assets of the property rental business.
The car park results also include car park income from sites that are held for
future development. The value of these sites has been determined based on
their development value and therefore the total value of these assets has been
included within the assets of the property rental business.
The net revenue at the Merrion Centre and development sites for the year ended
30 June 2016, arising from car park operations, was £3,052,000. After allowing
for an allocation of administrative expenses, the operating profit at these
sites was £2,201,000.
2. Administrative expenses
2016 2015
£000 £000
Employee benefits 3,479 3,479
Depreciation 205 176
Charitable donations 91 99
Other 1,718 1,567
5,493 5,321
3. Other income
2016 2015
£000 £000
Commission received 140 110
Dividends received 26 26
Management fees receivable 242 216
Dilapidations receipts and income relating to lease premiums 24 380
Other 167 736
599 1,468
4. Earnings per share (EPS)
The calculation of basic earnings per share has been based on the profit for the year, divided by the weighted average number of shares in issue. The weighted average number of shares in issue during the year was 53,161,950 (2015: 53,161,950).
2016 2015
Earnings Earnings
Earnings per share Earnings per share
£000 p £000 p
Profit for the year 11,921 22.4 24,003 45.1
Valuation movement on investment properties (3,018) (5.7) (15,577) (29.3)
(Reversal of impairment)/impairment of car parking assets (500) (0.9) 786 1.4
Valuation movement on properties held in joint ventures (668) (1.3) (5,013) (9.4)
Profit on disposal of investment and development properties (1,140) (2.1) (236) (0.4)
Loss on disposal of investment properties into joint ventures - - 2,488 4.7
EPRA earnings and earnings per share 6,595 12.4 6,451 12.1
5. Dividends
2016 2015
£000 £000
2014 final paid: 7.34p per 25p share - 3,902
2015 interim paid: 3.10p per 25p share - 1,648
2015 final paid: 7.34p per 25p share 3,902 -
2016 interim paid: 3.10p per 25p share 1,648 -
5,550 5,550
An interim dividend in respect of the year ended 30 June 2016 of 3.1p per
share was paid to shareholders on 24 June 2016. This dividend was paid
entirely as a Property Income Distribution (PID).
A final dividend in respect of the year ended 30 June 2016 of 7.90p per share
is proposed. This dividend, based on the shares in issue at 14 September 2016,
amounts to £4.2m which has not been reflected in these accounts and will be
paid on 4 January 2017 to shareholders on the register on 2 December 2016.
This dividend will comprise an ordinary dividend of 4.00p per share and a PID
of 3.90p.
6. Non-current assets
(a) Investment properties
Freehold Longleasehold Development Total
£000 £000 £000 £000
Valuation at 1 July 2014 - restated 274,497 5,199 27,778 307,474
Additions at cost 8,042 13,361 729 22,132
Other capital expenditure 10,490 87 - 10,577
Interest capitalised 501 - - 501
Disposals (27,319) (1,460) (5,245) (34,024)
Transfer to assets held for sale (3,450) - - (3,450)
Surplus on revaluation 11,986 3,413 178 15,577
Finance lease adjustments - 1,176 - 1,176
Movement in tenant lease incentives 178 - - 178
Valuation at 30 June 2015 - restated 274,925 21,776 23,440 320,141
Additions at cost 6,314 - - 6,314
Other capital expenditure 4,647 118 2,643 7,408
Interest capitalised 56 - - 56
Disposals (11,460) - (2,000) (13,460)
(Deficit)/surplus on revaluation (3,308) 807 5,519 3,018
Movement in tenant lease incentives 1,836 - - 1,836
Valuation at 30 June 2016 273,010 22,701 29,602 325,313
(b) Freehold and leasehold properties - car park activities
Freehold Longleasehold Total
£000 £000 £000
Valuation at 1 July 2014 - restated 2,500 14,815 17,315
Additions - 312 312
Impairment charge - (786) (786)
Valuation at 30 June 2015 - restated 2,500 14,341 16,841
Additions - 3,291 3,291
Depreciation - (57) (57)
Surplus on revaluation - 500 500
(Impairment)/reversal of impairment (500) 1,000 500
Valuation at 30 June 2016 2,000 19,075 21,075
The historical cost of freehold and leasehold properties relating to car park
activities is £21,747,000.
The Company occupies an office suite in part of the Merrion Centre. The
Directors do not consider this element to be material.
The fair value of the Group's investment and development properties has been
determined principally by independent, appropriately qualified external
valuers CBRE, Jones Lang LaSalle and Sanderson Weatherall. The remainder of
the portfolio has been valued by the Property Director.
Valuations are performed bi-annually and are performed consistently across the
Group's whole portfolio of properties. At each reporting date appropriately
qualified employees verify all significant inputs and review computational
outputs. The external 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 also been valued by appropriately qualified external valuers
Sanderson Weatherall, taking into account the income from car parking and an
assessment of their realisable value in their existing state and condition
based on market evidence of comparable transactions.
Property income, values and yields have been set out by category in the table
below.
Passing rent ERV Value Initial yield Reversionary yield
£000 £000 £000 % %
Retail and Leisure 5,027 5,398 88,961 5.3% 5.7%
Merrion Centre (excluding offices) 6,831 7,063 105,300 6.1% 6.3%
Offices 2,194 2,381 29,244 7.1% 7.7%
Out of town retail 3,258 3,560 55,700 5.5% 6.0%
Distribution 297 406 4,830 5.8% 7.9%
Residential 544 588 10,500 4.9% 5.3%
18,151 19,396 294,535 5.8% 6.2%
Development property 29,602
Car parks 17,771
Finance lease adjustments 4,480
346,388
The effect on the valuation of applying a different yield and a different ERV
would be as follows:
Valuation in the Consolidated Financial Statements at an initial yield of 6.8%
- £304.2m, Valuation at 4.8% - £409.4m.
Valuation in the Consolidated Financial Statements at a reversionary yield of
7.2% - £306.6m, Valuation at 5.2% - £404.5m.
Property valuations can be reconciled to the carrying value of the properties
in the balance sheet as follows:
Investment Properties Freehold and Leasehold Properties Total
£000 £000 £000
Externally valued by CBRE 203,065 - 203,065
Externally valued by Jones Lang LaSalle 94,625 14,250 108,875
Externally valued by Sanderson Weatherall 25,575 - 25,575
Investment properties valued by the Property Director 872 - 872
Finance lease obligations capitalised 1,176 3,304 4,480
Leasehold improvements - 3,521 3,521
325,313 21,075 346,388
Leasehold improvements primarily relate to expenditure incurred on the
refurbishment of three car parks in Watford that are held under operating
leases.
All investment properties measured at fair value in the consolidated balance
sheet are categorised as level 3 in the fair value hierarchy as defined in
IFRS13 as one or more inputs to the valuation are partly based on unobservable
market data. In arriving at their valuation for each property (as in prior
years) both the independent valuers and the Property Director have used the
actual rent passing and have also formed an opinion as to the two significant
unobservable inputs being the market rental for that property and the yield
(i.e. the discount rate) which a potential purchaser would apply in arriving
at the market value. Both these inputs are arrived at using market comparables
for the type, location and condition of the property.
(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
At 1 July 2015 4,143 2,929
Additions 1,496 -
Disposals (1,266) (1,234)
Depreciation - 527
At 30 June 2016 4,373 2,222
Net book value at 30 June 2016 2,151
7. Investments in joint ventures
2016 2015
£000 £000
At the start of the year 19,344 1,748
Additions - 12,487
Investments in joint ventures 4,916 -
Dividends and other distributions received in the year (567) -
Share of profits after tax 1,400 5,109
At the end of the year 25,093 19,344
Investments in joint ventures primarily relate to the Group's interest in the
partnership capital of Merrion House LLP. This joint venture owns a long
leasehold interest over a property that is let to the Group's joint venture
partner, Leeds City Council ('LCC'). The property is currently in the process
of a complete refurbishment. Under the arrangement LCC is required to
contribute a fixed amount in cash and the Group is required to contribute the
property and the balance of refurbishment cost. The net commitment from the
Group in relation to this arrangement that has not yet been incurred is
£8,890,000. The interest in the joint venture for each partner is an equal 50%
share, regardless of the level of overall contributions from each partner. The
investment property held within this partnership has been externally valued by
CBRE at each reporting date.
The share of profits after tax of £1.4m includes an adjustment of £2.5m in
respect of the property transferred to Merrion House LLP in the prior year,
less the share of losses in the current period of £1.2m.
The net assets of Merrion House LLP for the current and previous year are as
stated below:
2016 2015
£000 £000
Non-current assets 35,500 35,000
Current assets 929 -
Current liabilities (351) -
Net assets 36,078 35,000
The profits of Merrion House LLP for the current and previous year are as
stated below:
2016 2015
£000 £000
Income 1,400 65
Expenses (78) -
1,322 65
Valuation movement on investment properties (3,665) 10,025
Net (loss)/profit (2,343) 10,090
The Group's interest in other joint ventures are not considered to be
material.
The joint ventures have no significant contingent liabilities to which the
Group is exposed nor has the Group any significant contingent liabilities in
relation to its interest in the joint ventures.
The Group's joint ventures, which are registered in England and operate in the
United Kingdom, are as follows:
Beneficial Interest Activity
%
Buckley Properties (Leeds) Limited 50 Property Investment
Merrion House LLP 50 Property investment
Belgravia Living Group Limited 50 Property Investment
Bay Sentry Limited 50 Software Development
8. Called up share capital
Authorised
The authorised share capital of the company is 164,879,000 (2015: 164,879,000)
ordinary shares of 25p each. The nominal value of authorised share capital is
£41,219,750 (2015: £41,219,750).
Issued and fully paid up
Number of shares Nominal value
000 £000
At 30 June 2015 and 30 June 2016 53,162 13,290
The Company has only one type of ordinary share class in issue. All shares
have equal entitlement to voting rights and dividend distributions.
The Company has no share option schemes in current operation and there are no
unexercised options outstanding at 30 June 2016.
9. Cash flow from operating activities
2016 2015
£000 £000
Profit for the financial year 11,921 24,003
Adjustments for:
Depreciation 585 302
Profit on disposal of fixed assets (21) -
Profit on disposal of investment properties (1,140) (236)
Finance costs 7,847 7,258
Loss on disposal of investment properties into joint ventures - 2,488
Share of post tax profits from joint ventures (1,400) (5,109)
Movement in valuation of investment properties (3,018) (15,577)
Movement in lease incentives (1,836) (178)
(Reversal of impairment)/impairment of car parking assets (500) 786
Decrease/(increase) in receivables 1,483 (2,167)
Decrease in payables (362) (1,620)
Cash generated from operations 13,559 9,950
10. EPRA net asset value per share
The Basic and EPRA net asset values are the same, as set out in the table
below.
2016 2015
£000 £000
Net assets at 30 June 189,857 182,878
Shares in issue (000) 53,162 53,162
Basic and EPRA net asset value per share 357p 344p
11.Restatement of prior year figures
As reported in our interim report, a detailed review has recently been
performed to ensure all of the Group's accounting policies are being applied
appropriately. This review has identified certain areas that have previously
not been accounted for in accordance with those accounting policies. These
areas are summarised as follows:
a) Unamortised lease incentives have historically been recognised as a
separate asset within the balance sheet. An adjustment of £4.0m has been made
to the previously reported figures to de-recognise this asset and offset the
movement in lease incentives against the valuation surplus on investment
properties in each period.
b) Two of the properties held under long leasehold agreements have
historically not been recognised as finance leases. The discounted value of
rents payable on these leases amounting to £4.5m has now been recognised
within financial liabilities with a corresponding increase in the fair value
of long leasehold properties within investment properties.
c) The Group's development land assets have previously not been
recognised at fair value. These assets have therefore been revalued based on
fair value, resulting in an increase of £4.0m to the valuation at 30 June
2015.
d) Previously, three properties used in the car park business have been
classified within investment properties. The fair value of these assets at 30
June 2015 of £13.3m has been re-classified from investment properties to
freehold and leasehold properties.
e) Consideration paid for the acquisition of two car park businesses has
previously been recognised within tangible fixed assets as lease premiums.
These acquisitions are considered to be Business Combinations under IFRS3
(revised). The consideration is considered to represent goodwill on
acquisition and £4.0m at 30 June 2015 has therefore been reclassified
accordingly.
The impact on total assets and total liabilities as a result of the accounting
adjustments arising from the above is set out in the table below. There has
been no impact on the net assets or earnings per share as a result of these
adjustments.
As at 30 June2015£000
Total assets as previously reported 370,882
a) Unamortised lease incentives adjustment (3,966)
b) Finance lease accounting adjustment 4,480
c) Value adjustment relating to development land 3,966
Total Assets - restated at 30 June 2015 375,362
Total liabilities as previously reported (188,004)
b) Finance lease accounting adjustment (4,480)
Total Liabilities - restated at 30 June 2015 (192,484)
Net Assets 182,878
Net Assets as previously reported 182,878
This information is provided by RNS
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