REG - Town Centre Secs. - Half year results
16/03/2022 07:00
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RNS Number : 8931E Town Centre Securities PLC 16 March 2022
16 March 2022
TOWN CENTRE SECURITIES PLC
('TCS' or the 'Company')
Half year results for the six months ended 31 December 2021
Town Centre Securities PLC, the Leeds, Manchester, Scotland, and London
property investment, development, hotel and car parking company, today
announces its results for the six months ended 31 December 2021.
Financial performance
· Net assets:
o Like for like portfolio valuation up 2.4% from June 2021
o Statutory net assets of £165.1m or 313p per share up 6.2% (FY21:
£155.4m, 292p). EPRA net tangible assets ('NTA')($) measure at £160.7m or
305p per share (FY21 equivalent: £151.0m, 284p)
· Profit and earnings per share (HY21 comparatives significantly
affected by an estimated £3.2m COVID-19 impact):
o Statutory profit before tax of £10.5m (HY21: loss of £3.5m) and
statutory earnings per share of 19.8p (HY21: loss of 6.6p)
o EPRA Earnings($) before tax of £2.6m (HY21: £0.0m)
o EPRA earnings per share($) of 5.0p (HY21: 0.0p)
· Shareholder returns:
o Interim dividend of 2.5p (HY21: 1.75p) reflecting the strong bounce back
in earnings
o Earnings and NAV enhancing share buy back commenced in 2021 and continued
in 2022 (631,351 shares bought back up to 11 February 2022)
Protecting shareholder value whilst continuing to reset and reinvigorate the
business for the future
We have made meaningful progress in resetting and reinvigorating the business
in the past six months. Progress delivered under the four key strategic
initiatives is as follows:
Actively managing our assets
· The proportion of retail and leisure assets in the portfolio has
reduced to 30% from 40% in June 2020, and down from 60% in 2016, following the
sale of over £80m of assets since March 2020
· Pure retail now represents only 22% of the total portfolio of which
53% is in the resilient Merrion Estate
· 34 new lettings and lease renewals across the Group's portfolio in
the period
· Only one tenant entered into a CVA during the period reflecting our
resilient tenant portfolio
Maximising available capital
· Three properties sold during the six months (in Harrogate, Leeds and
London)
o aggregate proceeds of £22.5m crystalising a profit on disposal of £1.2m
o three further properties sold in the first quarter of 2022 at prices in
aggregate above book value (two of which were categorised as assets held for
sale on the balance sheet of the Company at 31 December 2021) for a total
consideration of £15m
· Loan to value headroom over our bank facilities of £7.9m based on 31
December 2021 borrowings and valuations, rising to over £21m following the
three sales made after the period end and the inclusion of the Hampstead
property within the banking security pool
· Loan to value* reduced to 50.0% (FY21 equivalent 51.3%). Following
the above three further sales this reduces to 47.7%
· Following the period end, we have agreed to buy back for cancellation
£3.4m of our £99.5m 2031 5.375% debenture stock for a total consideration of
£3.74m including accrued interest, helping to reduce debt and average
interest
Acquiring and improving investment assets to diversify our portfolio
· Completed during the period the £7m acquisition of 58-62 Heath
Street, Hampstead, London, a prime mixed-use property
· Opportunity to redevelop, repurpose and modernise our Wade House
office (having been vacated by StepChange Debt Charity), the third of our four
Merrion Estate offices, a potentially valuable opportunity given the level of
new development in the surrounding area
Investing in our development pipeline
· Our development pipeline, with an estimated GDV of over £600m, is a
valuable and strategic point of difference which we continue to progress and
improve
($ )Additional EPRA measures are described in greater detail further on in
these half year results with EPRA earnings and earnings per shares detailed,
defined and reconciled within note 5 of these half year results
* Loan to value is calculated as the amount of financial liabilities less cash
and cash equivalents (including overdrafts) as a percentage of total assets
less cash and cash equivalents
Commenting on the results, Chairman and Chief Executive, Edward Ziff, said:
"We have seen a good recovery across all three segments of the business in the
past six months with good momentum continuing into the early part of 2022. We
also believe today's results evidence the success of our new strategic
direction, to reset and reinvigorate the business for the future."
"Our level of rent receipts has been resilient throughout the Covid-19 period,
and has now recovered back to pre-pandemic levels, an indicator of the
diversified strength of our property portfolio, combined with the relative
strength of, and our long-term relationships with, our tenants."
"Our shareholder returns initiatives have been bolstered by continuing
property sales, and by our confidence in the potential of, and progress
within, our £600m development pipeline."
"Over the coming months the effect the Ukraine conflict will have on the wider
economy will hopefully become clearer. The impact of inflationary pressures on
our business will include changes to consumer spending, increased property and
other expenses, increased construction costs and rent affordability for
tenants."
"Notwithstanding the macro-economic and geopolitical environment, we remain
committed to delivering on our accelerated four pillar strategy of: actively
managing our assets, maximising available capital, investing in our
development pipeline and acquiring and improving investment assets to
diversify our portfolio."
-Ends-
For further information, please contact:
Town Centre Securities
PLC www.tcs-plc.co.uk
(http://www.tcs-plc.co.uk/) / @TCS PLC
Edward Ziff, Chairman and Chief
Executive
0113 222 1234
Stewart MacNeill, Group Finance Director
MHP
Communications 020
3128 8572
Reg Hoare / Matthew Taylor / Pauline
Guenot
tcs@mhpc.com (mailto:tcs@mhpc.com)
Chairman and Chief Executive's Statement
Resetting and reinvigorating the business for the future
We have seen a good recovery across all three segments of the business in the
past six months and are hopeful this will continue. We believe the first half
results evidence the success of our new strategic direction, to reset and
reinvigorate the business for the future. Our aim is to create a business
that:
- Has lower levels of absolute debt and leverage
- Is diversified with a much-reduced level of retail property
- Is diversified with a capital light, profitable car park business
- Has rebased and has significant growth opportunities as a result
of our valuable development pipeline and asset management opportunities
During the six months three further properties have been sold; two of which
were secured within the Company's debenture facility and as such the majority
of the proceeds have been ring-fenced within the security pool of the
debenture. We are currently exploring a number of ways to unlock these funds,
primarily through the substitution of other properties into the security pool.
Our level of rent receipts within the property business has been resilient
throughout the Covid-19 period and has now recovered back to pre-pandemic
levels. This is an indicator of the diversified strength of our property
portfolio, the relative strength of the majority of our tenants, and most
importantly, the quality of relationships built with tenants over the
long-term.
Rent Collections as at 10 March 2022:
March 20 - December 21* % Latest Quarter** % Cumulative %
Total billed £42.0m £4.6m £46.6m
Total collected £39.1m 93% £4.5m 99% £43.6m 94%
Agreed to be deferred*** £0.1m 0% £0.0m 0% £0.1m 0%
Agreed total £39.2m 93% £4.5m 99% £43.7m 94%
*English & Scottish quarters, and monthly billings (collections from 25
March 2020)
**English quarter (collections due on 29 December and 1 January)
*** Agreed to be deferred and still outstanding
As highlighted as part of our FY21 year end results we have continued the
execution of our detailed strategic and operational plan which includes:
- Accelerating our asset disposal programme rapidly and reducing the
size of our retail portfolio. Since the start of the COVID-19 pandemic, we
have now sold over £80m of assets, the majority of which has been retail
- Working closely with all our tenants to support wherever we can,
agreeing to share the financial cost of closure where appropriate and doing
our best to ensure that following the disruption as many of our tenants as
possible are able to bounce back strongly
- Supporting our employees, where home working has been necessary,
and where employees and their families have been impacted either directly by
the virus or by associated consequences of it
Results
The statutory profit for the six months ended 31 December 2021 was £10.5m
(HY21: loss of £3.5m) giving earnings per share of 19.8p (HY21: loss per
share of 6.6p). The key drivers for this profit were the valuation gains on
investment properties of £6.4m and the recovery seen across each of the
property, car park and hotel segments of the business. Highlighting the
diversified and intensively managed nature of our assets, the like for like
portfolio increased in value by 2.4%.
EPRA earnings for the six months ended 31 December 2021 were £2.6m (HY21:
£0.0m) giving EPRA earnings per share of 5.0p (HY21: 0.0p). The improvement
reflects the recoveries seen in both our car park and hotel operations, in
addition to the resilience of the rental collections.
Statutory Net Assets of £165.1m (30 June 2021: £155.4m) increased by 6.2%
from the year end. Net assets per share increased to 313p (30 June 2021:
292p).
EPRA Net Tangible Assets (EPRA NTA); which in the case of TCS reduces
statutory net assets by the £4.4m of reported Goodwill, for the half year is
£160.7m compared to £151.0m at FY21, up 6.4%. EPRA NTA per share is 305p
(FY21 comparable 284p). The full breakdown of the EPRA net asset measures are
detailed later.
Borrowings
Net borrowings, which includes lease liabilities, have increased marginally by
0.3% over the six months from £175.6m to £176.1m.
Our loan to value level reduced 130 bps from the June year end to 50.0%.
Following the three property disposals after the year end, this has reduced
further to 47.7%.
On 14 March 2022 the Company agreed to buyback for cancellation £3.4m of its
£99.5m 2031 5.375% debenture stock. This will result in an additional one-off
finance cost of £0.3m in the remaining six months of FY22.
Dividends
An interim dividend of 2.5p per share (HY21 1.75p) will be paid on the 24 June
2022 to shareholders registered on 20 May 2022; a property income distribution
amounting to £1.3m in total. The final dividend for 2021 of 1.75p was paid on
the 21 January 2022.
It is pleasing to note that we have increased the interim dividend, which
reflects the recovery of our car parks and hotel and also the strengthening of
the balance sheet following the assets sales completed - and that it
represents 50% of EPRA earnings.
We hope to return to paying a higher dividend in the coming years, however
with the general economic uncertainty we cannot guarantee this. It is also
worth noting that our traditional approach of paying a relatively smaller
interim dividend followed by a larger final dividend may also change.
Portfolio Performance
The value of investment properties, developments, joint ventures and car parks
at the half-year stood at £314.8m (June 2021: £322.1m) both taking into
account assets held for sale.
On a like for like basis the whole portfolio increased in value by 2.4% since
June (FY21: 0.3% increase) accounting for a £6.4m like for like increase in
value (investment, development, car park and joint venture assets).
The results of the latest valuation continue to highlight three key factors
that differentiate our portfolio:
- The resilience of our portfolio; its diversified regional nature,
strong loyal tenants, and the reducing exposure to retail and leisure
- The strength of our asset management and capital investment
activities adding value and further growth potential
- The growing potential in our significant development pipeline
The proportion of retail and leisure assets within the portfolio has further
reduced to 30%, down from 40% in June 2020, and of that, pure retail
represents only 21% of the overall portfolio. The retail and leisure element
of the Merrion Estate represents 53% of all retail and leisure, and it was
pleasing to see its value rebound since June. Our focus on convenience,
discount and grocery retailing as well as our heritage of forming long term
supportive relationships with our tenants are key attributes to preserving
value.
Our development pipeline value increased by £1.0m or 2.4% driven by the
result of rising market value in the underlying land.
Passing rent ERV Value % of portfolio Valuation incr/(decr) Initial yield Reversionary yield
Retail & Leisure 1.5 2.0 24.7 8% 0.3% 5.7% 7.5%
Merrion Centre (ex offices) 4.7 5.5 58.6 18% 2.3% 7.6% 8.8%
Offices 4.4 6.4 91.7 28% 0.7% 4.6% 6.6%
Hotels 0.5 1.0 9.0 3% 4.6% 5.2% 9.9%
Out of town retail 1.0 1.2 14.5 5% 0.0% 6.7% 7.5%
Distribution 0.5 0.5 10.0 3% 54.0% 4.5% 5.1%
Residential 1.5 1.5 20.9 6% 1.9% 6.9% 6.9%
14.2 18.0 229.4 71% 2.9% 5.8% 7.4%
Development property 42.6 13% 2.4%
Car parks 49.9 16% -1.0%
Portfolio 321.9 100% 2.4%
The following table reconciles the above table to that set out in Note 6.
HY22
£m
Portfolio as per Note 6 286.1
50% Share in Merrion House 36.1
50% Share in Burlington House 11.5
Goodwill - Car Parks - Property Specific only 4.0
Assets Held for Sale 11.5
Less - IFRS 16 Right-of-Use Car Parks (27.3)
As per the table above 321.9
Note - the IFRS 16 Right-of-Use car parks (£27.3m) are excluded in the
portfolio analysis above as the Directors do not believe it is appropriate to
include these assets where there is less than 50 years remaining on their
lease and the Group does not have full control over them.
Maximising available capital
In the past six months we have continued our non-core asset disposal
programme. Between July and December 2021, we have sold three properties for a
total consideration of £22.5m.
The properties disposed of included:
- Our Premier Inn hotel investment in Leeds
- All of our retail interest in Harrogate
- An office building in Duke Street, London
The sales were in aggregate £1.2m above the 30 June 2021 book values of these
properties. The proceeds from the sale of Duke Street were used to repay debt,
whilst the proceeds for the sale of the other two properties are currently
within the debenture security pool. As at 31 December 2021 the total amount of
funds secured against the debenture security pool was £18.705m (30 June 2021:
£1.225m), as these funds are ring fenced and not immediately available to the
Group they are included within Trade and other receivables.
Three further assets were sold after the period end, again marginally above
the 31 December 2021 valuation, and we continue to market a number of other
retail properties and intend to complete further non-core sales over the
coming months. The proceeds from these sales have been used in part to repay
bank borrowings.
Net borrowings at 31 December 2021 were £176.1m (30 June 2021: £175.6m). The
Loan to value (LTV) ratio is 50.0% (30 June 2021: 51.3%). LTV is calculated
as total assets (less cash) as a percentage of net borrowings. Headroom at 31
December 2021 was £7.9m (FY21: £12.8m).
The total borrowings comprise of £99.4m (net of £0.1m unamortised lease
incentives) of 5.375% First Mortgage Debenture Stock 2031, £47.2m of bank
debt and £29.1m of lease liabilities. There were a further £47.8m of undrawn
revolving credit facilities at the half-year.
As mentioned previously, after the period end we agreed to buyback for
cancellation £3.4m of our debenture stock, reducing the nominal value
outstanding to £96.1m. Assuming we have surplus funds, we would look to
buyback further amounts of what is our most expensive borrowings.
Actively managing our assets
We have completed or renewed 34 leases in the period. This letting activity
has been across the entire portfolio, with a broad mix ranging from small
independent retailers up to the large national multiples, especially within
the Merrion Centre and in our two key offices investments in Manchester
(Carvers Warehouse and Ducie House). It is particularly encouraging to see
more tenants wanting to both extend their lease terms and/or expand their
demises: where we can, we will always look accommodate this demand.
The proportion of retail and leisure assets in the portfolio has reduced to
30% from 40% in June 2020, and down from 60% in 2016. Pure retail now
represents only 22% of the total portfolio, of which 53% is in the resilient
Merrion Estate.
Acquiring investment assets
Heath Street, Hampstead
We have acquired for £7.0m a 12,600 sq.ft mixed-use property, located in a
prime retail pitch adjacent to Hampstead tube station, which currently
comprises four multi-level units let to Wagamama, Knight Frank and Cass Arts -
a London based arts and craft retailer. Following the period end we have
secured a letting for the final vacant unit with a national operator.
A 34-space basement level car park, prime office space on the first to third
floors and eleven residential dwellings also form part of the scheme that was
originally designed by influential architect, Ted Levy.
This strategic purchase forms part of our ongoing strategy to continue to
diversify their portfolio and generate long term capital growth.
Investing in our development pipeline
TCS owns a significant development pipeline which gives the Company a clear
and material opportunity for future growth. The current pipeline has an
estimated gross development value (GDV) of over £600m, with the majority of
the developments already being part of the relevant local government approved
strategic planning frameworks or actually in possession of detailed planning
permission.
We take a conservative approach to development to ensure we never over-commit
ourselves, which has proven crucial following the COVID-19 crisis. Alongside
this, the Company has a successful track record in obtaining planning and
delivering strategic developments. In the last five years, the Company has
delivered Merrion House office, let to Leeds City Council, two new hotels in
Leeds, and the Burlington House PRS scheme in Manchester. In addition, over
that time frame, we have secured planning permission for a 17-storey office
tower above the Merrion Estate and at Eider House, our second BTR scheme in
Manchester.
It is expected that Eider House will constitute our next development and
having carried out works in January 2021 to implement the planning consent, we
are currently redesigning the scheme to deliver an evolution and complimentary
development to relate to the successful Burlington House situated opposite.
The key components of the development pipeline include:
· Piccadilly Basin, Manchester. Mixed residential, commercial, and
car-parking with a total estimated GDV of circa £300m
· Whitehall Riverside, Leeds. Office, car-parking, and potentially
leisure provision with a total estimated GDV of over £200m
· Merrion Estate, Leeds. Office and residential towers with a total
estimated GDV of over £100m
Piccadilly Basin
We have sold (subject to detailed planning) a part of our Piccadilly Basin
development site to the Select Property Group, it is expected that this sale
will be unconditional during Summer of 2022.
Whitehall Riverside
We are working with a partner to bring forward a new masterplan which will
provide a unique, riverside mixed-use scheme in one of the city's most
strategic locations just three minutes' walk from Leeds train station.
Plans have been submitted to Leeds City Council for a development comprising
215,000 sq. ft. of grade A office space across two buildings, a 478 space
CitiPark multi-storey car park and travel hub, and a 108 key aparthotel.
A separate, detailed planning application is proposed by Glenbrook for up to
532 apartments across two buildings of 15 and 18 stories with ground floor
commercial units. The proposals include extensive residents' amenities split
across the ground floor and mezzanine with terrace garden overlooking the
River Aire.
New landscaping and public realm will improve connectivity to, and further
complement the existing riverside environment with a series of interlinked
pedestrian and cycling routes to support health and well-being whilst also
attracting new residents and visitors to the scheme.
The new Whitehall Riverside proposals offer a revitalised masterplan relevant
for the demand of today designed with flexibility in mind to adapt to the
changing requirements of workspace, residential, electric vehicles and visitor
economy.
Merrion Estate
The Arena Quarter, where the Merrion Estate is located, has been transformed
in recent years with the development of the first direct Arena and substantial
investment by Leeds' two largest universities, a brand-new Head Office for
Leeds City Council and further investment in hotels, leisure units and over
8,000 new residential and student residential units. These new developments,
on and adjacent to the Merrion Estate, including the tallest building in Leeds
(IQ Altus), have transformed the area.
This now presents the Company with an opportunity to redevelop or refurbish
Wade House on the back of the new demand. Wade House represents the last of
the four main office buildings that form part of the Merrion Estate, and one
that is now in need of investment. Having already redeveloped Town Centre
House and Merrion House, it is time to improve Wade House. We have received
speculative interest in the building and have been working up various plans
for some time. We are in detailed discussions with potential partners and are
confident in delivering on this new opportunity.
CitiPark recovering well, capital light growth continuing with a further
acquisition
Car park occupancy levels have recovered well in the first five months of the
period, although this recovery was temporarily stalled with the Omicron
variant and government advice to work from home at the end of 2021. Across our
portfolio we are however seeing some regional variances in the strength of
this recovery; for example Leeds, where our car parks are more reliant on
office workers, the recovery is slower than compared to our Manchester and
London car parks.
As a business we are continuing to look at ways to innovate further through
technology as well as looking at alternative uses for under-utilised space
within our existing car parks. Although a small part of the current business,
our CitiCharge division is growing and we are pleased to announce that the
installation of 34 EV charging bays (including an option to increase to 82)
with the Warwickshire NHS Trust has been completed and these have now been
fully commissioned and are available to NHS staff.
We have continued the expansion of the enforcement business with a further
acquisition in the period. Our previous acquisitions have shown steady revenue
growth and are proving to be good investments, although the proposed parking
bill, when it is formally brought in, will have an impact on revenue for the
non-residential car parks enforced.
ESG and business responsibility
Building on the success of previous initiatives, including the interaction
with local communities, the solar farms and the roll-out of EV charging
facilities, the Company continues to look at both macro and micro ways to
improve the responsibility of the business. Examples in the current period
range from the phasing out of traditional business cards and implementing a QR
code approach, updating the 'work from home' policy for all employees to the
larger continual programme of improving the EPC performance of the Company's
property portfolio.
In addition, the Company is implementing a policy of measuring and
benchmarking the social benefit of future decisions, primarily in relation to
any future development contracts.
Share buy back programmes
We launched a share buy back programme in June 2021, reflecting the Board's
belief that share buybacks are an appropriate means of returning value, whilst
maximising sustainable long term growth for shareholders, given the
enhancement to NAV and earnings per share that results from reducing the
number of shares in issue. This is particularly the case given the significant
discount that the Company's shares trade at relative to its reported net asset
value, and reflects the highly successful share buy-back programme the company
undertook in the early 2000's, which significantly enhanced shareholder
returns in subsequent years.
During the period, a total of 386,973 shares were purchased as part of this
programme, returning £533,271 to shareholders.
On 6 January 2022, a new share buy back programme was launched which ran until
11 February 2022, during which time a total of 244,378 shares were purchased,
returning £385,206 to shareholders.
Outlook
The recovery seen in the six months ended 31 December 2021 is continuing into
the opening months of 2022. Rent collections remain robust with 99% of the
amounts invoiced at the last quarter date now collected. Our programme of
non-core asset disposals has continued and we are now looking at investment
acquisitions and bringing forward sections of our development pipeline.
Our car parks are continuing to recover and we are hoping to build on this
momentum as we move through 2022. One of the key challenges will be around the
ever-evolving way people work. For the CitiPark branches that are more reliant
on office workers, we expect the recovery to be slower.
The ibis Styles Leeds City Centre Arena hotel has recovered well, mainly due
to the significant increase in demand for UK staycations. We are expecting
this demand to be tempered as more people look to travel overseas, however as
the midweek corporate market rebounds, we do not envisage a significant drop
in average occupancy.
Both the car park and hotel businesses were temporarily impacted by the
Omicron variant in both December 2021 and January 2022 (which historically are
always quieter months). It is now reassuring to see the recovery recommencing
from February 2022.
Overall, we remain committed to delivering on our accelerated four pillar
strategy of: actively managing our assets, maximising available capital,
investing in our development pipeline and acquiring and improving investment
assets to diversify our portfolio.
Russia-Ukraine Conflict
We continue to wake up to the horrifying news and the potential impact of the
Russia-Ukraine conflict. The Company does not have any direct exposure in any
of its business segments to either of these countries, nor from the conflict
itself. This situation will clearly have an impact on the world economy over
the coming months and years, an economy that has yet to fully recover from the
COVID-19 pandemic.
We are already starting to see inflationary pressures coming through and this
will be exacerbated as a result of this conflict and over the coming months
the impact on consumer spending, property and other expenses, construction
costs and rental levels should become clearer.
EPRA Net Asset reporting
The below table reconciles IFRS net assets to Net Tangible Assets (NTA), and
the other EPRA measures.
There are three EPRA Net Asset Valuation metrics, namely EPRA Net
Reinstatement Value (NRV), EPRA Net Tangible Assets (NTA) and EPRA Net
Disposal Value (NDV). The EPRA NRV scenario, aims to represent the value
required to rebuild the entity and assumes that no selling of assets takes
place. The EPRA NTA is focused on reflecting a company's tangible assets. EPRA
NDV aims to represent the shareholders' value under an orderly sale of
business, where, for example, financial instruments are calculated to the full
extent of their liability. All three NAV metrics share the same starting
point, namely IFRS Equity attributable to shareholders.
HY22 FY21 HY22 FY21
£m £m p per share p per share
IFRS reported NAV 165.1 155.4 313 292
Purchasers Costs(1) 20.2 21.1
EPRA Net Reinstatement Value 185.3 176.5 351 337
Remove Purchasers Costs (20.2) (21.1)
Remove Goodwill(2) (4.4) (4.4)
EPRA Net Tangible Assets 160.7 151.0 305 284
Fair value of fixed interest rate debt(3) (7.9) (10.2)
EPRA Net Disposal Value 152.8 140.8 290 265
(1)Estimated purchasers' costs including fees and stamp duty and related taxes
(2)Removal of goodwill as per the IFRS Balance Sheet - relates predominantly
to goodwill paid to acquire two long term car park leaseholds in London
(3)Represents the adjustment to fair value (market price) of the 2031 5.375%
debenture
Responsibility statement of the directors
The directors confirm that, to the best of their knowledge, these condensed
consolidated interim financial statements have been prepared in accordance
with IAS 34 as adopted by the European Union. The interim management report
includes a fair review of the information required by DTR 4.2.7R and DTR
4.2.8R, namely:
· an indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year; and
· material related party transactions in the first six months of the
financial year and any material changes in the related party transactions
described in the last Annual Report and Accounts.
A list of current directors is maintained on the Town Centre Securities PLC
Group website: www.tcs-plc.co.uk (http://www.tcs-plc.co.uk) .
Principal risks and uncertainties
The group set out on page 48 of its annual report and accounts 2021 the
principal risks and uncertainties that could impact its performance; these
remain largely unchanged since the annual report was published. The group
operates a structured risk management process, which identifies and evaluates
risks and uncertainties and reviews mitigation activity.
The key underlying risks facing the business continue to relate to tenant
strength, particularly in the retail arena, portfolio valuation and the
related funding headroom which is driven by portfolio valuation. Systems risk
related to the increasing level of cyber security threats and GDPR risk and
the need to carefully control the use of personal data continue to demand
vigilance from all staff.
TCS continues to operate in a conservative manner with processes and
procedures in place to ensure risk management is central to all business
planning and decision making. These processes and procedures remain as
detailed in the 2021 annual report.
Forward-looking statements
Certain statements in this half year report are forward-looking. Although the
Group believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that these expectations
will prove to have been correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements.
The group undertakes no obligation to update any forward-looking statements
whether as a result of new information, future events or otherwise.
Edward Ziff OBE
DL
Stewart MacNeill
Chairman and Chief Executive Group
Finance Director
15 March 2021
Consolidated condensed income statement
for the six months ended 31 December 2021
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2021 2020 2021
Unaudited Unaudited and restated Audited
Notes £000 £000 £000
Gross revenue (excl. service charge income) 12,939 10,436 18,703
Service charge income 1,415 1,301 2,726
Gross revenue 14,354 11,737 21,429
Provision for impairment of debtors 392 (22) 788
Service charge expenses (2,154) (1,808) (3,656)
Property expenses (4,929) (3,872) (7,489)
Net revenue 7,663 6,035 11,072
Administrative expenses (2,953) (2,780) (5,585)
Other income 1,302 462 1,989
Impairment of car parking assets 6 (340) (496) (111)
Reversal of impairment of hotel assets 6 121 - -
Valuation movement on investment properties 6 6,433 (3,146) 63
Profit/(loss) on disposal of investment properties 1,194 (1,100) (2,320)
Share of post tax profits from joint ventures 8 924 1,787 2,461
Operating profit 14,344 762 7,569
Finance 3 (3,880) (4,293) (8,145)
costs
Profit/(loss) before taxation 10,464 (3,531) (576)
Taxation - - -
Profit/(loss) for the period 10,464 (3,531) (576)
All losses for the period are attributable to equity shareholders.
Earnings per share 5
Basic and Diluted 19.8p (6.6p) (1.1p)
EPRA (non-GAAP measure) 5.0p 0.0p 0.6p
Consolidated statement of comprehensive income
for the six months ended 31 December 2021
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2021 2020 2021
Unaudited Unaudited and restated Audited
£000 £000 £000
Profit/(loss) for the period 10,464 (3,531) (576)
Items that will not be subsequently reclassified to profit or loss
Revaluation gains on hotel assets 400 - -
Revaluation gains on other investments 213 930 2,795
Total other comprehensive income 613 930 2,795
Total comprehensive income/(loss) for the period 11,077 (2,601) 2,219
All recognised income for the period is attributable to equity shareholders.
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
Consolidated condensed balance sheet
as at 31 December 2021
31 December 31 December 30 June
2021 2020 2021
Unaudited Unaudited and restated Audited
£000 £000 £000
Notes
Non-current assets
Property rental
Investment properties 6 203,870 233,904 218,909
Investments in joint ventures 8 17,136 15,538 16,212
221,006 249,442 235,121
Car park activities
Freehold and right of use properties 6 73,213 75,086 74,502
Goodwill and intangible assets 7 4,996 4,144 4,841
78,209 79,230 79,343
Hotel operations
Freehold properties 6 9,030 - 8,630
9,030 - 8,630
Fixtures, equipment and motor vehicles 6 928 1,058 955
Investments 9 9,367 7,352 9,217
Total non-current assets 318,540 337,082 333,266
Current assets
Assets held for sale 11,515 - 3,850
Trade and other 22,343 5,121 5,311
receivables
10
Cash and cash equivalents 18,157 17,842 21,670
Total current assets 52,015 22,963 30,831
Total assets 370,555 360,045 364,097
Current liabilities
Trade and other payables (11,247) (12,849) (11,499)
Financial (55,144) (49,284) (63,373)
liabilities
11
Total current liabilities (66,391) (62,133) (74,872)
Non-current liabilities
Financial (139,112) (146,365) (133,830)
liabilities
11
Total liabilities (205,503) (208,498) (208,702)
Net assets 165,052 151,547 155,395
Equity attributable to owners of the Parent
Called up share capital 12 13,193 13,290 13,282
Share premium account 200 200 200
Capital redemption reserve 656 559 567
Revaluation reserve 500 500 500
Retained earnings 150,503 136,998 140,846
Total equity 165,052 151,547 155,395
Net asset value per share 14 313p 285p 292p
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
Consolidated condensed statement of changes in equity
for the six months ended 31 December 2021
Share Capital
Share premium redemption Revaluation Retained Total
capital account reserve Reserve earnings equity
£000 £000 £000 £000 £000 £000
Balance at 1 July 2020 13,290 200 559 500 140,529 155,078
Comprehensive income/(loss) for the year
Loss for the period - - - - (3,531) (3,531)
Other comprehensive income - - - - 930 930
Total comprehensive income for the period - - - - (2,601) (2,601)
Contributions by and distributions to owners
Dividends relating to the year ended 30 June 2020 - - - - (930) (930)
Balance at 31 December 2020 13,290 200 559 500 136,998 151,547
13,282 200 567 500 140,846 155,395
Balance at 1 July 2021
Comprehensive income for the year
Profit for the period - - - - 10,464 10,464
Other comprehensive income - - - - 613 613
Total comprehensive loss for the period - - - - 11,077 11,077
Contributions by and distributions to owners
Arising on purchase and cancellation of own shares (89) - 89 - (496) (496)
Dividends relating to the year ended 30 June 2021 - - - - (924) (924)
Balance at 31 December 2021 13,193 200 656 500 150,503 165,052
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
Consolidated condensed cash flow statement
for the six months ended 31 December 2021
Six months ended Six months ended Year ended
31 December 2021 31 December 2020 30 June 2021
Unaudited Unaudited Audited
Notes £000 £000 £000 £000 £000 £000
Cash flows from operating activities
Cash generated from operations 13 6,551 2,329 4,644
Interest paid (3,274) (3,523) (6,920)
Net cash generated from/(used in) operating activities 3,277 (1,194) (2,276)
Cash flows from investing activities
Purchases and construction of investment properties (7,424) - -
Refurbishment of investment properties (590) (2,033) (2,637)
Purchases of fixtures, equipment and motor vehicles (102) (126) (198)
Proceeds from sale of investment properties 5,044 40,789 48,049
Payments for business acquisitions (189) - (874)
Acquisition of non-listed investments - (258) (258)
Net cash (used in)/generated from investing activities (3,261) 38,372 44,082
Cash flows from financing activities
Proceeds from borrowings 4,086 - 4,000
Repayment of borrowings (3,721) (36,174) (44,091)
Principle element of lease payments (824) (820) (1,659)
Re-purchase of own shares (496) - -
Dividends paid to shareholders - - (1,860)
Net cash used in financing activities (955) (36,994) (43,610)
Net (decrease)/increase in cash and cash equivalents (939) 184 (1,804)
Cash and cash equivalents at beginning of period 557 2,361 2,361
Cash and cash equivalents at end of period (382) 2,545 557
Cash and cash equivalents at the year-end are comprised of the following:
Cash balances 18,157 17,841 21,670
Overdrawn balances (18,539) (15,296) (21,113)
(382) 2,545 557
The Consolidated Cash Flow Statement should be read in conjunction with Note
13.
The accompanying notes are an integral part of these condensed consolidated
interim financial statements.
Notes to the consolidated interim financial information
1. Financial information
General information
Town Centre Securities PLC (the "Company") is a public limited company
domiciled in the United Kingdom. Its shares are listed on the main market of
the London Stock Exchange. The address of its registered office is Town Centre
House, The Merrion Centre, Leeds LS2 8LY. The principal activities of the
group during the period remained those of property investment, development and
trading and the provision of car parking.
This interim financial information was approved by the board on 14 March 2022.
The comparative financial information for the year ended 30 June 2021 in this
half-yearly report does not constitute statutory accounts for that year as
defined in section 434 of the Companies Act 2006. The statutory accounts for
the year ended 30 June 2021 have been delivered to the Registrar of Companies.
The auditors' report on those accounts was 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.
Basis of preparation
These condensed consolidated financial statements have been prepared in
accordance with IAS 34, "Interim Financial Reporting", in accordance with UK
adopted international accounting standards. They do not include all
disclosures that would otherwise be required in a complete set of financial
statements and should be read in conjunction with the accounts for the year
ended 30 June 2021. The financial information for the six months ended 31
December 2021 and 31 December 2020 is unaudited.
Significant accounting policies
The accounting policies adopted are consistent with those of the previous
financial year.
The group's financial performance is not seasonal.
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual earnings.
In the current environment, the directors consider the revenue to be of
particular importance and therefore we set out below our revenue policy in
respect of rental income:
Rental income
Revenue includes rental income net of VAT.
Most of the Group's rental income is billed either monthly or quarterly in
advance. A receivable and deferred income is recognised at the date payment is
due providing the Directors consider the amount to be collectible. The
Covid-19 pandemic has increased the level of uncertainty as to whether amounts
will be collectible for some leases and as such no receivable (or a reduced
receivable) has been recognised in the current and prior year where amounts
have been billed and are due for payment if payment is not considered
probable. If the Directors consider an unrecognised amount is collectible
subsequent to its due date, then the receivable is recognised at that date.
Rent receivables recognised are subject to impairment (refer to the Trade and
Other Related Party receivables policy above).
Any lease incentives are spread on a straight-line basis across the period of
the lease.
Rental income is recognised as revenue (to the extent it is considered
collectible) as follows:
i) Fixed rental income is recognised on a straight-line
basis over the term of the lease;
ii) turnover rents are based on underlying turnover and are
recognised in the period to which the turnover relates;
iii) rent reviews are recognised in the period to which they
relate providing they have been agreed or otherwise on agreement; and
iv) Where rent concessions have been granted that reduce the
payments due under a lease in future periods the total revised consideration
(plus any prepaid or accrued lease payments) is spread over the remaining
lease term from the date the concession is granted.
Use of estimates and judgements
There have been no changes in the method of applying appropriate accounting
estimates in the period. Any difference between the receivables previously
recognised and the cash subsequently collected has been disclosed in the
income statement. There have been no other estimates of amounts reported in
prior periods which have a material impact on the current half year period.
Going concern
The financial information for the six months ended 31 December 2021 have been
prepared on a going concern basis. In light of the recent COVID-19 pandemic
and recovery the Directors have considered various downside scenarios to the
Group's financial forecasts in assessing its ability to continue as a going
concern. Despite the negative economic impacts and the uncertainty in respect
of the timeline for recovery, the scenarios reviewed confirm the
appropriateness of preparing these financial statements on a going concern
basis. The Group is currently in compliance with all of its covenants. The
most material risk concerns the impact of the COVID-19 pandemic on the
valuation of the property portfolio and our ability to meet gearing covenants,
although the Group does have potential mitigants at its disposal to address
these uncertainties which include, but are not limited to, further disposals
of assets, pledging as additional security ungeared properties currently
valued at £11.7m million at 31 December 2021 and seeking lender consent to an
extension of financial covenant waivers to cover extended periods of
disruption.
2. 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. The board has determined the operating segments based
on these reports.
Segmental assets
31 December 31 December 30 June
2021 2020 2021
£000 £000 £000
Property rental 287,980 272,629 275,661
Car park activities 73,545 78,788 79,658
Hotel operations 9,030 8,630 8,778
Total assets 370,555 360,047 364,097
Segmental results
Six months ended Six months ended
31 December 2021 31 December 2020
Property Car park Hotel Property Car park Hotel
rental activities operations Total rental activities operations Total
£000 £000 £000 £000 £000 £000 £000 £000
Gross revenue (excl. service charge income) 5,763 5,733 1,443 12,939 6,573 3,504 359 10,436
Service charge income 1,415 - - 1,415 1,301 - - 1,301
Gross revenue 7,178 5,733 1,443 14,354 7,874 3,504 359 11,737
Provision for impairment of debtors 392 - - 392 (22) - - (22)
Service charge expenses (2,154) - - (2,154) (1,808) - - (1,808)
Property expenses (454) (3,318) (1,157) (4,929) (607) (2,802) (463) (3,872)
Net revenue 4,962 2,415 286 7,663 5,437 702 (104) 6,035
Administrative expenses (2,422) (531) - (2,953) (2,229) (551) - (2,780)
Other income 1,302 - - 1,302 462 - - 462
Share of post tax profits from joint ventures 494 - - 494 477 - - 477
Operating profit before valuation movements 4,336 1,884 286 6,506 4,147 151 (104) 4,194
Valuation movement on investment properties 6,433 - - 6,433 (3,146) - - (3,146)
Impairment of car parking assets - (340) - (340) - (496) - (496)
Reversal of impairment of hotel assets - - 121 121 - - - -
Profit/(loss) on disposal of investment properties 1,194 - - 1,194 (1,100) - - (1,100)
Valuation movement on joint venture properties 430 - - 430 1,310 - - 1,310
Operating profit/(loss) 12,393 1,544 407 14,344 1,211 (345) (104) 762
Finance costs (3,880) (4,293)
Profit/(loss) before taxation 10,464 (3,531)
Taxation - -
Profit/(loss) for the period 10,464 (3,531)
All results are derived from activities conducted in the United Kingdom.
The car park results 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 development sites for the six months ended 31 December
2021, arising from car park operations, was £957,000. After allowing for an
allocation of administrative expenses, the operating profit at these sites was
£747,000.
Revenue received within the car park and hotel segments, along with service
charge income from the property rental segment, is the only revenue recognised
on a contract basis under IFRS 15. All other revenue within the property
segment comes from rental lease agreements.
3. Finance costs
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2021 2020 2021
£000 £000 £000
Interest on debenture loan stock 2,674 2,787 5,575
Interest payable on bank borrowings 600 735 1,345
Amortisation of arrangement fees 120 160 212
Loss on repurchase of debenture stock - 114 -
Interest expense on lease liabilities 486 497 1,013
3,880 4,293 8,145
4. Dividends
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2021 2020 2021
£000 £000 £000
2020 final dividend: 1.75p per 25p share - 930 930
2021 interim dividend: 1.75p per 25p share - - 930
2021 final dividend: 1.75p per 25p share 930 - -
930 930 1,860
A final dividend in respect of the year ended 30 June 2021 of 1.75p per share
was approved at the company's annual general meeting (AGM) on 29 December
2021 and was paid to shareholders on 21 January 2022. The entire dividend was
paid as an ordinary dividend.
An interim dividend in respect of the year ending 30 June 2022 of 2.5p per
share is proposed. This dividend, based on the shares in issue at 14 March
2022, amounts to £1.3m which has not been reflected in these interim accounts
and will be paid on 24 June 2022 to shareholders on the register on 20 May
2022. This dividend will be paid entirely as a PID.
5. Earnings per share
The calculation of basic earnings per share has been based on the profit for
the period, divided by the number of shares in issue. The weighted average
number of shares in issue during the period was 52,945,786 (2020: 53,161,950).
Six months ended Six months ended Year ended
31 December 2021 31 December 2020 30 June 2021
Earnings Earnings per share Earnings Earnings Earnings Earnings
per share per share
£000 Pence £000 Pence £000 Pence
Basic earnings and earnings per share 10,464 19.8 (3,531) (6.6) (576) (1.1)
Valuation movement on investment properties (6,433) (12.1) 3,146 5.9 (63) (0.1)
Impairment of car parking assets 340 0.6 496 0.9 111 0.2
Reversal of impairment of hotel assets (121) (0.2) - - - -
(Profit)/loss on disposal of investment properties (1,194) (2.3) 1,100 2.1 2,320 4.4
Valuation movement on properties held in joint ventures (1,310) (2.5) (1,488) (2.8)
(430) (0.8)
Loss on repurchase of debenture stock - - 114 0.2 - -
EPRA earnings and earnings per share 2,626 5.0 15 0.0 304 0.6
There is no difference between basic and diluted earnings per share.
There is no difference between basic and diluted EPRA earnings per share.
6. Tangible fixed assets
(a) Investment properties - property rental business
Right of use asset
Freehold Development Total
£000 £000 £000 £000
Valuation at 1 July 2020 210,125 6,138 37,751 254,014
Capital expenditure 2,146 - 22 2,168
Disposals (26,319) - - (26,319)
Transfer to hotel operations (8,630) - - (8,630)
Transfer to assets held for sale - (3,850) - (3,850)
Valuation movement (4,095) 480 3,678 63
Movement in tenant lease incentives 1,463 - - 1,463
Valuation at 1 July 2021 174,690 2,768 41,451 218,909
Additions at cost 7,424 - - 7,424
Capital expenditure 424 - 166 590
Disposals (17,480) (518) - (17,998)
Transfer to assets held for sale (11,515) - - (11,515)
Valuation movement 5,424 - 1,009 6,433
Movement in tenant lease incentives 27 - - 27
Valuation at 31 December 2021 158,994 2,250 42,626 203,870
(b) Freehold and right of use properties - car park activities
Right of use
Freehold asset Total
£000 £000 £000
Valuation at 1 July 2020 30,650 45,863 76,513
IFRS16 adjustment - (95) (95)
Depreciation (329) (1,476) (1,805)
(Impairment)/reversal of impairment (421) 310 (111)
Valuation at 1 July 2021 29,900 44,602 74,502
IFRS16 adjustment - (48) (48)
Depreciation (160) (741) (901)
Impairment (340) - (340)
Valuation at 31 December 2021 29,400 43,813 73,213
(c) Freehold properties - hotel operations
Freehold
£000
Valuation at 30 June 2020 -
Transfer from investment properties 8,630
Valuation at 1 July 2021 8,630
Depreciation (121)
Valuation movement 521
Valuation at 31 December 2021 9,030
The fair value of the Group's investment and development properties, freehold
car parks, hotel operations and assets held for sale have been determined
principally by independent, appropriately qualified external valuers CBRE and
Jones Lang LaSalle. 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 Jones
Lang LaSalle, taking into account an assessment of their realisable value in
their existing state and condition based on market evidence of comparable
transactions and residual value calculations.
Leasehold (right-of-use) car park properties are accounted for using the cost
model including an assessment of the future value of the minimum lease
payments and are amortised on a straight line basis over the remaining term of
the lease or useful economic live if deemed to be shorter.
Property income, values and yields have been set out by category in the table
below.
Initial Reversionary yield
Passing rent ERV Value yield
£'000 £'000 £000 % %
Retail and leisure 1,355 1,845 23,104 5.5% 7.6%
Merrion Centre (excluding offices) 4,728 5,474 58,604 7.6% 8.8%
Offices 2,771 4,704 55,661 4.7% 8.0%
Hotels 500 950 9,030 5.2% 9.9%
Out of town retail 1,021 1,155 14,500 6.7% 7.5%
Residential 506 516 9,375 5.1% 5.2%
10,881 14,644 170,274 6.0% 8.1%
Development property 42,626
Car parks 73,213
286,113
Investment properties (freehold and right of use) and hotel operations
The effect on valuation (excluding development property and car parks) of
applying a different yield and a different ERV would be as follows:
Valuation at an initial yield of 7.0% - £146.1m, Valuation at 5.0% - £204.0m
Valuation at a reversionary yield of 9.1% - £151.6m, Valuation at 7.1% -
£194.1m
Investment properties (development properties)
The key unobservable inputs in the valuation of one of the Group's development
properties of £27.6m is the assumed per acre or per unit land value. The
effect on the development property valuation of applying a different assumed
per acre or per unit land value would be as follows:
Valuation in the Consolidated Financial Statements if a 5% increase in the per
acre or per unit value - £29.0m, 5% decrease in the per acre or per unit
value - £26.2m.
The other key development property in the Group is valued on a per acre
development land value basis, the effect on the development property valuation
of applying reasonable sensitivities would not create a material impact.
Freehold car park activities
The effect on the total valuation of the Group's freehold car park properties
of £29.4m in applying a different yield/discount rate would be as follows:
Valuation in the Consolidated Financial Statements based on a 1% decrease in
the yield/discount rate - £34.7m, 1% increase in the yield/discount rate -
£25.5m
Property valuations can be reconciled to the carrying value of the properties
in the balance sheet as follows:
Investment Freehold and Leasehold
Properties Properties
Total
£000 £000 £000
Externally valued by CB Richard Ellis 108,174 33,030 141,204
Externally valued by Jones Lang LaSalle 95,645 5,400 101,045
Investment and development properties valued by the Directors
51 - 51
Right-of-Use Assets - 43,813 43,813
At 31 December 2021 203,870 82,243 286,113
All investment properties, freehold properties held in property plant and
equipment, hotel operations and assets held for sale are measured at fair
value in the consolidated balance sheet and 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 external
valuers and the Directors 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.
(d) Fixtures, equipment and motor vehicles
Accumulated Net book
Cost depreciation value
£000 £000 £000
At 1 July 2020 4,483 3,370 1,113
Additions 198 - 198
On acquisition of subsidiaries 30 - 30
Depreciation - 386 (386)
At 1 July 2021 4,711 3,756 955
Additions 102 - 102
Depreciation - 129 (129)
At 31 December 2021 4,813 3,885 928
7. Goodwill and intangible assets
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2021 2020 2021
£000 £000 £000
Goodwill
At start of the period 4,436 4,024 4,024
On acquisition of subsidiaries - 120 412
4,436 4,144 4,436
Intangible assets
At start of period 405 - -
On acquisition of subsidiaries 250 - 442
Amortisation (95) - (37)
560 - 405
Total goodwill and intangible assets 4,996 4,144 4,841
Goodwill represents the difference between the fair value of the consideration
paid on the acquisitions of car park businesses and the fair value of the
assets and liabilities acquired as part of these business combinations.
Intangible assets represent short term customer contracts relating to car park
enforcement businesses acquired in the periods.
8. Investments in joint ventures
Six months Six months Year
ended ended Ended
31 December 31 December 30 June
2021 2020 2021
£000 £000 £000
Interest in joint ventures
At start of period 16,212 13,751 13,751
Share of profits after tax 432 1,787 863
Loan interest 62 - 110
Valuation movement 430 - 1,488
At end of period 17,136 15,538 16,212
Investments in joint ventures are broken down as follows:
31 December 31 December 30 June
2021 2020 2021
£000 £000 £000
Equity 11,238 9,961 10,376
Loans 5,898 5,577 5,836
17,136 15,538 16,212
Investments in joint ventures primarily relates to the Group's interest in the
partnership capital of Merrion House LLP and loan to Belgravia Living Group
Limited. The investment property held within these joint ventures has been
externally valued at each reporting date.
9. Investments
31 December 31 December 30 June
2021 2020 2021
£000 £000 £000
Listed investments 5,952 3,937 5,802
Non-listed investments 3,415 3,415 3,415
9,367 7,352 9,217
Listed investments
31 December 31 December 30 June
2021 2020 2021
£000 £000 £000
At start of the period 5,802 3,508 3,508
Disposals (63) - -
Increase in value of investments 213 429 2,294
At the end of the period 5,952 3,937 5,802
Listed investments relate to an equity shareholding in a company listed on the
London Stock Exchange. This is stated at market value in the table above and
has a historic cost of £882,300 (2020: £889,130).
Listed investments are measured at fair value in the consolidated balance
sheet and are categorised as level 1 in the fair value hierarchy as defined in
IFRS13 as the inputs to the valuation are based on quoted market prices.
The maximum risk exposure at the reporting date is the fair value of the other
investments.
Non-listed investments
31 December 31 December 30 June
2021 2020 2021
£000 £000 £000
At the start of the year 3,415 2,656 2,656
Additions - 258 258
Increase in value of investments - 501 501
3,415 3,415 3,415
Non-listed investments primarily relate to an equity shareholding and loans
advanced to YourParkingSpace Limited, a privately owned company incorporated
in the United Kingdom.
The fair value of YourParkingSpace Limited has been determined principally by
the directors based on an independent, appropriately qualified external
valuation produced by GlobalView Advisors. There are no other material
non-listed investments that require external valuation.
The loans are held at amortised cost and are assess for impairment under the
IFRS 9 expected credit loss model.
The assets are categorised as level 3 in the fair value hierarchy as defined
in IFRS 13 as the inputs to the valuation are based on unobservable inputs.
10. Trade and other receivables
Included with Trade and other receivables at 31 December 2021 are funds of
£18.705m which are secured against the Group's debenture stock (30 June 2021:
£1.225m). As these funds are ring fenced and not immediately available to the
Group, they are included within Trade and other receivables..
11. Financial liabilities
31 December 31 December 30 June
2021 2020 2021
£000 £000 £000
Current
Bank overdraft 18,539 15,296 21,113
Bank borrowings 34,956 32,330 40,601
Lease liabilities 1,649 1,658 1,659
55,144 49,284 63,373
Non-Current
Bank borrowings 12,293 18,387 6,170
Lease liabilities 27,426 28,596 28,273
5.375% First mortgage debenture stock 99,393 99,382 99,387
139,112 146,365 133,830
194,256 195,649 197,203
Bank overdrafts have previously been recognised within Trade and Other
Payables. Due to the nature of these liabilities the presentation of overdrawn
bank balances has been reviewed and it is considered presentation within
Financial Liabilities is more appropriate. The presentation has been amended
for each period as set out in the table above.
Fair value of current borrowings
The fair value of bank borrowings and overdrafts approximates to their
carrying value.
Fair value of non-current borrowings
31 December 2021 31 December 2020 30 June 2021
Book value Fair value Book value Fair value Book value Fair value
£000 £000 £000 £000 £000 £000
Debenture stock 99,393 107,311 99,382 115,159 99,387 109,574
Non-current bank borrowings 12,293 12,293 18,387 18,387 6,170 6,170
12. Called up equity share capital
Authorised
164,879,000 (30 June 2021: 164,879,000) ordinary shares of 25p each.
Issued and fully paid Number of shares Nominal
up
value
000 £000
At 1 July 2021 53,131 13,282
Purchase and cancellation of own shares (356) (89)
At 31 December 2021 52,775 13,193
13. Cash flows from operating activities
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2021 2020 2021
£000 £000 £000
Loss for the period 10,464 (3,531) (576)
Adjustments for:
Depreciation 1,151 1,064 2,191
Amortisation 95 - 37
(Profit)/loss on disposal of investment properties (1,194) 1,100 2,320
Finance costs 3,880 4,293 8,145
Share of joint venture profits after tax (924) (1,787) (2,461)
Movement in revaluation of investment properties (6,433) 3,146 (63)
Movement in lease incentives (27) 98 (1,463)
Impairment/(reversal of impairment) of car parking assets 340 496 111
Reversal of impairment of hotel assets (121) - -
Decrease/(increase) in receivables 524 (1,576) (2,675)
Decrease in payables (1,204) (974) (922)
Cash generated from operations 6,551 2,329 4,644
14. Net asset value per share
Net asset value per share is calculated as the net assets of the Group
attributable to shareholders at each balance sheet date, divided by the number
of shares in issue at that date.
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2021 2020 2021
Net asset value (£'000) 165,052 151,960 155,395
Number of ordinary shares in issue 52,774,977 53,161,950 53,131,035
Net asset value per share (pence) 313p 286p 292p
15. Related party information
There have been no material changes in the related party transactions
described in the 2021 Accounts.
16. Restatement of prior year figures
During the prior year the Directors identified that a number of the Group's
accounting policies were either not in compliance with the relevant accounting
standard or where not applied correctly. For this reason prior year figures
have been restated and the details are summarised below:
1) Classification of owner-occupied assets
The Group operates a number of car parks on freehold land owned by the Group.
Under the relevant accounting standards these owner-occupied car parks are
required to be classified as Property, Plant and Equipment. During the period
two car parks were identified that were misclassified as Investment Property.
The prior year comparatives have been restated to:
· Reclassify investment property as Freehold and Leasehold
Properties (car park activities) within the Consolidated balance sheet, the
amount being £25,950,000 at 31 December 2020.
· Recognise a depreciation charge of £144,000 within the
Consolidated income statement for the period ended 31 December 2020.
· Recognise an impairment of £806,000 on Freehold and Leasehold
Properties within the Consolidated income statement for the period ended 31
December 2020.
· Increase the valuation movement on investment properties in the
income statement by £950,000 for the period ended 31 December 2020.
The adjustment has no overall effect on the total net assets of the Group at
31 December 2020 or on the Group's loss for the period ended 31 December 2020.
2) Measurement of leasehold properties (car park activities)
The group operates a number of car parks from leasehold properties
(right-of-use assets). The Directors consider that the leased sites upon which
these car parks are operated fall into one class of asset because they are of
similar nature and use in the Group's operations. Accounting standards require
right-of-use assets within the same class of assets to be measured
consistently using either the cost model or the revaluation model.
In the prior year, leasehold properties were inconsistently split between two
classes of assets, being long leasehold and right-of-use assets. Within these
classes a mixed measurement approach was applied with two sites held at
valuation and the remaining held under the cost model.
The prior year comparative figures have been restated to present all leased
car park sites as right-of-use assets within note 6(B) and to consistently
apply the cost model to the entire class of assets. The effect of this
restatement is:
· A decrease in Freehold and leasehold properties of £559,000 at
31 December 2020
· Recognise an additional depreciation charge of £73,000 within
the Consolidated income statement for the year ended 31 December 2020
· Recognise an additional reversal of impairment of £60,000 on
Freehold and Leasehold Properties within the Consolidated income statement for
the year ended 31 December 2020
The adjustment results in a reduction in net assets of £559,000 at 31
December 2020. The adjustment also results in a £13,000 increase to the Group
loss for the period ended 31 December 2020.
3) Provisions / trade and other payables
In the prior year a provision of £146,000 was recognised in relation to
future anticipated repairs and maintenance costs on an Investment Property
owned by the Group. The provision was presented within trade and other
payables. The provision should not have been recognised as the amount relates
to a future operating cost of the Group. The prior year comparatives have been
restated to:
· Reduce trade and other payables within the Consolidated Balance
Sheet by £146,000 at 31 December 2020.
The adjustment results in an increase in net assets of £146,000 at 31
December 2020. The adjustment has no effect on the income statement for the
period ended 31 December 2020.
4) Classification of Investments
The Group owns shares in a company listed on the AIM market of the London
Stock Exchange. The total value of the investment at 31 December 2020 was
£3,937,000 and this was presented in the Consolidated balance sheet within
current asset investments. The investment should not have been classified as
current because on 31 December 2020 management did not expect to realise the
asset within twelve months of the reporting date.
The Group additionally holds shares in an unlisted company which were valued
at £3,415,000 at 30 December 2020. Previously this investment was presented
within car park activities as a non-current investment. This investment has
been re-classified outside of car park activities and presented with the
Group's listed investment in non-current assets.
The prior year comparatives have been restated to:
· Decrease current investments in the Consolidated balance sheet by
£3,937,000 at 31 December 2020
· Decrease non-current investments (car park activities) in the
Consolidated balance sheet by £3,415,000 at 31 December 2020
· Increase non-current investments in the Consolidated balance
sheet by £7,352,000 at 31 December 2020.
The adjustment has no overall effect on the total net assets of the Group at
31 December 2020 or on the Group's loss for the year ended 31 December 2020.
The above restatements do not have any tax implications as the Group's
activities are tax exempt due to its REIT status.
The impact on the Balance Sheet as at 31 December 2020 is as follows:
2020 (1) (2) (3) (4) 2020
Previously reported Car parking assets Leasehold properties Sinking fund provision Listed investments Restated
£000 £000 £000 £000 £000 £000
Non-current assets
Property rental
Investment properties 259,854 (25,950) - - - 233,904
Investments in joint ventures 15,538 - - - - 15,538
275,392 (25,950) - - - 249,442
Car park activities
Freehold and leasehold properties 49,695 25,950 (559) - - 75,086
Goodwill and intangible assets 4,144 - - - - 4,144
Investments 3,415 - - - (3,415) -
57,254 25,950 (559) - (3,415) 79,230
Fixtures, equipment and motor vehicles 1,058 - - - - 1,058
Investments - - - - 7,352 7,352
Total non-current assets 333,704 - (559) - 3,937 337,082
Current assets
Investments 3,937 - - - (3,937) -
Assets held for sale - - - - - -
Trade and other receivables 5,121 - - - - 5,121
Cash and cash equivalents 17,842 - - - - 17,842
Total current assets 26,900 - - - (3,937) 22,963
Total assets 360,604 - (559) - - 360,045
Current liabilities
Trade and other payables (12,995) - - 146 - (12,849)
Financial liabilities (49,284) - - - - (49,284)
Total current liabilities (62,279) - - 146 - (62,133)
Non-current liabilities
Financial liabilities (146,365) - - - - (146,365)
Total liabilities (208,644) - - 146 - (208,498)
Net assets 151,960 - (559) 146 - 151,547
Equity attributable to the owners of the Parent
Called up share capital 13,290 - - - - 13,290
Share premium account 200 - - - - 200
Capital redemption reserve 559 - - - - 559
Revaluation reserve 750 - (250) - - 500
Retained earnings 137,161 - (309) 146 - 136,998
Total equity 151,960 - (559) 146 - 151,547
The impact on the income statement is as follows:
2020 (1) (2) 2020
Previously reported Car parking assets Leasehold properties Restated
£000 £000 £000 £000
Gross revenue 10,436 - - 10,436
Service charge income 1,301 - - 1,301
Provision for impairment of debtors (22) - - (22)
Service charge expenses (1,808) - - (1,808)
Property expenses (3,655) (144) (73) (3,872)
Net revenue 6,252 (144) (73) 6,035
Administrative expenses (2,780) - - (2,780)
Other income 462 - - 462
Other expenses - - - -
Valuation movement on investment properties (4,096) 950 - (3,146)
Impairment of car parking assets 250 (806) 60 (496)
Profit on disposal of investment properties (1,100) - - (1,100)
Share of post-tax profits from joint ventures 1,787 - - 1,787
Operating loss 775 - (13) 762
Finance costs (4,293) - - (4,293)
Loss before taxation (3,518) - (13) (3,531)
Taxation - - - -
Loss for the year attributable to owners of the Parent (3,518) - (13) (3,531)
The impact on the cash flow statement is as follows:
2020 (1) (2)
Previously reported Car parking assets Leasehold properties 2020
Restated
£000 £000 £000 £000
Loss for the financial year (3,518) - (13) (3,531)
Adjustments for:
Depreciation 847 144 73 1,064
Profit on disposal of investment properties 1,100 - - 1,100
Finance costs 4,293 - - 4,293
Share of post tax profits from joint ventures (1,787) - - (1,787)
Movement in valuation of investment and development properties 4,096 (950) - 3,146
Movement in lease incentives 98 - - 98
(Reversal of impairment)/impairment of car parking assets (250) 806 (60) 496
Increase in receivables (1,576) - - (1,576)
Decrease in payables (974) - - (974)
Cash generated from operations 2,329 - - 2,329
INDEPENDENT REVIEW REPORT TO Town Centre Securities Plc
Conclusion
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
December 2021 which comprises the consolidated condensed income statement, the
consolidated condensed balance sheet, the consolidated condensed statement of
changes in equity, the consolidated condensed cash flow statement and the
notes to the financial information
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 December 2021 is not prepared, in
all material respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the group to
cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority and for
no other purpose. No person is entitled to rely on this report unless such a
person is a person entitled to rely upon this report by virtue of and for the
purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility
for this report to any other person or for any other purpose and we hereby
expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, UK
Date 15 March 2022
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
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