REG - Town Centre Secs. - Half-year Results
20/03/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240320:nRST5025Ha&default-theme=true
RNS Number : 5025H Town Centre Securities PLC 20 March 2024
20 March 2024
TOWN CENTRE SECURITIES PLC
('TCS' or the 'Company')
Half year results for the six months ended 31 December 2023
Resilient performance given macro-economic conditions
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 2023.
Commenting on the half year results, Chairman and Chief Executive Edward Ziff,
said:
"We have benefitted from the last three years' disposal and asset management
programmes and reduction in borrowings, which positioned us well to contend
with the ongoing macro-economic challenges in the six month period ending 31
December 2023. During the first half we were able to use our strengthened
financial position to launch and complete a successful NAV per share accretive
tender offer."
"Our property rental business, car park and hotel operations continue to
deliver resilient underlying revenues and earnings against challenging
macro-economic conditions. These conditions have led to movements in the
underlying yields and a further valuation reduction of our property portfolio,
in particular with our office investments. Expectations are that inflation may
fall to the Government's target of 2 percent by the end of Q2 2024, and that
the Bank of England may then start lowering interest rates, which may lead to
an improvement in liquidity in the property investment markets and result in
valuations stabilising. However, with continued low levels of variable
interest rate bank debt, I am confident that we are in a strong position in
these uncertain times."
"Rising costs, interest rate increases and the ongoing geopolitical conflicts
are affecting all stakeholders and we remain committed to supporting them, in
particular our dedicated employees. We continue to focus on maintaining good
landlord-tenant relationships, with open dialogue and collaboration the
cornerstones of our approach."
"Our attention is now focussing on investing in our development programme over
the coming years. However we remain cautious and ever mindful that taking
advantage of potentially accretive opportunities needs to be balanced against
retaining robust finances."
"Overall, the business has now been reset, with a more diverse portfolio of
assets, lower levels of gearing and more importantly historically low levels
of variable rate borrowings - and is now looking predominantly at bringing
forward our development pipeline."
Financial performance
· Net assets per share - successful tender offer offset valuation
decline:
o Like for like portfolio valuation down 4.4% from June 2023:
§ similar to the MSCI/IPD All Property Capital Index which fell by 3.9% over
the period
§ reduction primarily due to market sentiment around the macro-economic
outlook adversely impacting valuation yields - in particular in the office
sector
o Statutory net assets of £124.0m or 294p per share (FY23: £141.1m, 291p).
EPRA net tangible assets ('NTA')(*) measure at £120.6m or 286p per share
(FY23 equivalent: £137.7m, 284p)
· Statutory results - loss reflects valuation reduction:
o Statutory loss before tax of £9.7m (HY23: loss of £19.1m)
o Statutory loss per share of 15.3p (HY23: loss of 38.4p)
· EPRA results - relative stability in underlying earnings:
o EPRA earnings(*) of £3.8m (HY23: £1.7m) include the benefit of £1.7m of
taxation credit - with the recognition of a deferred tax asset arising from
brought forward trading losses
o EPRA earnings per share(*) of 7.9p (HY23: 3.5p)
· Loan to Value** increased in the period from 45.6% to 50.3% following
a small increase in borrowings coupled with the reduction in portfolio value
· Shareholder returns:
o Proposed interim dividend of 2.5p, (HY23: 2.5p) reflecting the relative
stability in underlying earnings once the effect of the one-off taxation
credit is excluded
o NAV per share enhancing tender offer completed in December 2023 (6,292,920
shares bought back in for cancellation at 150p per share including transaction
costs compared to a 30 June 2023 NTA measure of 286p per share - representing
13.0% of the issued share capital of the Company at that time)
o As expected, the tender offer resulted in the Company leaving the REIT
regime, with the entire profits of the business now subject to corporation tax
and the recognition of deferred tax assets and liabilities.
* Alternative performance measures are detailed, defined and reconciled within
Note 4 and the financial review section of this announcement
** LTV Calculation includes finance lease assets and liabilities
Protecting shareholder value whilst safeguarding the business for the future
Progress delivered under the four key strategic initiatives is as follows:
Actively managing our
assets
Our long-standing strategy of active management and redevelopment, to drive
income and capital growth, has continued:
· We now have a well diversified portfolio comprising: 30% invested in
retail and leisure; 29% offices; 16% car parks; 13% residential; 8%
developments; and 4% hotels
· The void rate across our portfolio had reduced to 4.5% at 31 December
2023 (5.5% at 30 June 2023)
· Strong rent collection for the period of 99.2% (FY23: 99.1%)
· Nine new commercial lettings and lease renewals at ERV across the
portfolio in the period totalling £0.3m of rental income per annum
· Wilko, who previously traded from a 6,000 sq ft store on the edge of
the Merrion Centre, were the only tenant to enter into a CVA during the period
· Rolling out our own car park management system across our car park
portfolio which will ultimately give us both operational and financial
efficiencies
Maximising available capital
A conservative capital structure, with a mix of short and long-term secure
financing, has always underpinned our approach:
· The first element of deferred consideration arising from the sale of
our investment in YourParkingSpace Limited was received in July 2023 (£4.4m)
with further receipts due in the next six months totalling £5.3m
· Comfortable loan to value headroom over our bank facilities of £20.0m
based on 31 December 2023 borrowings and valuations
· Loan to value* increased to 50.3% following revaluation decreases and
impairments in the period and a slight increase in borrowings (FY23: 45.8%)
Investing in our development pipeline
Our development pipeline, with an estimated GDV of over £400m, is a valuable
and strategic point of difference for TCS which we continue to progress and
enhance. Notably, in the past six months:
· In December 2023 a planning application was submitted for student
accommodation as part of the Merrion Centre's evolution. This application
incorporates a 1,110 new bed purpose built student accommodation scheme based
on the redevelopment of Wade House and the adjacent 100MC site
· Following the securing of a planning consent at Whitehall Riverside
back in May 2023 we continue to move forward with both build
contractors/professional teams and potential tenants for all phases of the
development
Acquiring and improving investment assets to diversify our portfolio
We continue to improve investment assets, with a stable portfolio of diverse
properties:
· During the period we:
o Acquired a city centre car park investment property leased to NCP in
Wellington Street, Sheffield for £1.5m
o Two new car park management agreements won in the period, increasing the
number of car parks operated under the CitiPark brand to 20
Outlook
· Resilient trading performance has continued into the second half of
FY24:
o Rent collections remain robust with over 99% of amounts invoiced in the
last quarter of the year now collected
o Car parks recovery momentum continues, other than for those reliant on
office workers such as Merrion MSCP
o Significant headroom of £20m on existing revolving credit facilities
o Only 12.5% of borrowings at the period end subject to variable interest
rates, with £82.4m of debenture fixed until 2031 and £14.2m of property
specific debt fixed until 2029
o Weighted average cost of borrowings at period end 5.3%
-Ends-
For further information, please contact:
Town Centre Securities
PLC www.tcs-plc.co.uk
(https://tcs-plc.co.uk/) / @TCS PLC
Edward Ziff, Chairman and Chief
Executive
0113 222 1234
Stewart MacNeill, Group Finance Director
MHP
020 3128 8100
Reg Hoare / Matthew
Taylor
tcs@mhpgroup.com
Chairman and Chief Executive's Statement
Resetting and reinvigorating the business for the future
We have seen a stable performance across all three operational segments of the
business in the past six months. Our property and car park portfolio has
reduced in value by 4.4% like for like over the six months. We believe the
reduction reflects the general market as opposed to any real concerns around
our portfolio.
Our strategy over the last three years has been to create a business that:
- Has lower levels of absolute debt and leverage
- Is diversified with a much-reduced level of retail property
following £120m of property sales during the period
- Works closely with all our tenants to support wherever we can and
doing our best to ensure that following the disruption of the last few years
as many of our tenants as possible are able to bounce back strongly
- 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
- Has supported our employees and their families who have been
impacted by the ongoing cost of living crisis
Results
The statutory loss for the six months ended 31 December 2023 was much reduced
at £7.3m (HY23: loss of £19.1m) giving a loss per share of 15.3p (HY23: loss
per share of 38.4p). The key drivers for this loss were the valuation
decreases on investment properties of £8.3m, valuation decreases on joint
venture investment properties (TCS Share) of £2.5m and the impairment of car
parking assets totalling £1.1m. The like for like portfolio decreased in
value by 4.4% over the six months under review as a result of market sentiment
around the UK's economic outlook.
EPRA earnings for the six months ended 31 December 2023 were £3.8m (HY23:
£1.7m) giving EPRA earnings per share of 7.9p (HY23: 3.5p). Underlying this
increase in EPRA earnings is the recognition on 1 July 2023 and subsequent
part release of a deferred tax asset resulting from the Company exiting the
REIT regime - the net effect in the period was to increase EPRA earnings by
£1.7m or 3.5p.
Statutory Net Assets of £124.0m (30 June 2023: £141.1m) decreased by 12.1%
from the year end. Net assets per share however increased marginally in the
six months to 294p (30 June 2023: 291p) highlighting the accretive nature of
the tender offer completed in the period when coupled with the statutory loss
resulting in the period.
EPRA Net Tangible Assets (EPRA NTA); which in the case of TCS reduces
statutory net assets by the £3.4m of reported Goodwill (FY23 comparable
£3.4m), for the half year is £120.6m compared to £137.7m at FY23, down
12.4%. EPRA NTA per share is 286p (FY23 comparable 284p). The full breakdown
of the EPRA net asset measures are detailed later.
Borrowings
Net borrowings, which includes lease liabilities, have increased by 6% over
the six months from £129.9m to £138.1m. The increase in borrowings were used
to fund the tender offer.
The increase in borrowings and the valuation reductions we have seen in our
property portfolio have resulted in our loan to value level increasing by 450
bps from the June year end to 50.3%.
Dividends
A maintained interim dividend of 2.5p per share (HY23 2.5p) will be paid on
the 14 June 2024 to shareholders registered on 24 May 2024; amounting to
£1.1m in total. The final dividend for 2023 of 2.5p was paid on the 4 January
2024. The ex-dividend date for the interim dividend will be 23 May 2024.
The maintenance of the interim dividend at 2.5p reflects the resilience of the
underlying earnings of our core business and also the strengthening of the
balance sheet following the asset sales completed over the last 3 years - this
dividend represents 31% of EPRA earnings (57% of EPRA earnings before tax).
Portfolio Performance
The value of investment properties, developments, joint ventures and car parks
at the half-year stood at £255.6m (June 2023: £264.7m).
The following table provides an overview of the performance of the portfolio,
including our share of joint venture assets, in the six months ended 31
December 2023 highlighting the balance of the Company's portfolio in light of
our strategy of reducing exposure to retail and leisure and also the
underlying current and potential future value of our development pipeline.
Passing rent ERV Value % of portfolio Valuation incr/(decr) Initial yield Reversionary yield
£m £m £m
Retail & Leisure 1.1 1.3 13.8 5% -4.8% 7.8% 8.9%
Merrion Centre (ex offices) 4.5 4.9 51.6 20% -0.4% 8.3% 8.9%
Offices 5.0 6.4 74.0 29% -11.7% 6.3% 8.2%
Hotels 0.9 0.9 9.5 4% 0.0% 8.6% 8.6%
Out of town retail 1.0 1.1 12.1 5% -6.9% 8.1% 8.4%
Residential 1.3 1.6 32.0 13% 3.3% 3.9% 4.7%
13.8 16.2 193.0 76% -5.2% 6.8% 7.9%
Development property 20.85 8% -2.7%
Car parks 41.75 16% -1.2%
Portfolio 255.6 100% -4.4%
The following table reconciles the above analysis to that set out in Note 6.
£m
Portfolio - as per note 6 248.3
50% Share in Merrion House 28.2
Goodwill - Car Parks 3.0
Less - IFRS 16 Right-to-Use Car Parks (23.9)
As per the table above 255.6
Note - the IFRS 16 Right-of-Use car parks (£23.9m) are excluded in the
portfolio analysis above as the Directors do not believe it is appropriate to
include these assets where the Group does not have full control over them.
On a like for like basis the whole portfolio decreased in value by 4.4% since
June 2023 (FY23: 12.6% reduction) accounting for a £10.9m like for like
decrease in value (investment, development, car park and joint venture
assets). This reduction has been driven by investor and market sentiment in
particular within the office sector, where we have seen an 11.7% like for like
declines in value in the six months.
Maximising available capital
In the past six months we have sold a single non-core investment property for
£200k, above its £160k book value.
In July 2023, the Company received £4.4m; the first tranche of deferred
consideration due following the sale of its investment in YourParkingSpace in
July 2022. A further £5.3m is due to be received in the next six months
representing the final two receipts in relation to this very successful
transaction.
Net borrowings as at 31 December 2023 are £138.1m - comprising of £82.3m
(net of £0.1m unamortised loan issue costs) of 5.375% First Mortgage
Debenture Stock 2031, £26.8m of bank debt (net of cash) and £29.0m of lease
liabilities. There were a further £79.2m of undrawn revolving credit
facilities at the half-year.
Actively managing our assets
We have completed or renewed nine commercial leases in the period representing
annual rental income of £0.3m in aggregate.
In addition to the further roll-out of CitiCharge EV charging in our car parks
we have added two further car parks under management to the CitiPark
portfolio, bringing the total to 20.
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 £400m, 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. Alongside this, the Company has a successful track record in
obtaining planning and delivering strategic developments.
The key components of the development pipeline include:
· Piccadilly Basin, Manchester. Mixed residential, commercial, and
car-parking with a total estimated GDV of circa £170m
· Whitehall Riverside, Leeds. Office, car-parking, and potentially
leisure provision with a total estimated GDV of over £290m
· Merrion Estate, Leeds. Office and residential towers with a total
estimated GDV of over £90m
Piccadilly Basin
Our Dale and Burlington Street surface car parks are key components of the
Piccadilly Basin Strategic Regeneration Framework ('SRF'). We are currently
looking at refreshing this SRF to bring it up to date and relevant in order to
unlock the potential of this truly unique part of the city centre.
Whitehall Riverside
Having secured detailed planning consent for both the No5 Whitehall Riverside
office building and neighbouring Multi-Storey Car Park we are progressing with
both the detailed design and potential tenants.
Merrion Estate
In December 2023 a planning application was submitted for student
accommodation as part of the Merrion Centre's evolution. For the first time,
the Merrion Centre is looking to introduce residential accommodation to its
ever changing, dynamic offering that has been proudly part of the retail,
office and leisure landscape of Leeds for the last 60 years.
In a bid to address the burgeoning demand for accommodation in the area, this
planning application introduces two new buildings within the Merrion Centre.
These structures are designed to deliver 1,110 student bedrooms, comprising a
range of studios and cluster bedrooms. The student accommodations will be
complemented across both buildings with a range of amenities, including
residents' lounges, co-working spaces, meeting spaces, cinema, gym, karaoke
room, secure cycle spaces and external terraces.
CitiPark recovering well, capital light growth continuing with a further two
car parks under management
Our underlying car park business is resilient and the addition of two further
car park management agreements brings the number of car parks operated under
the CitiPark brand to 20.
Over the last 18 months we have been developing our own CitiPark barrierless
car park management system which we are now rolling out across all branches,
which will enable the car park business to benefit from both operational and
financial efficiencies over the coming years.
Our CitiCharge division continues to grow and now has 51 EV chargers with a
further 8 installs in the pipeline across the Group's car park portfolio. In
addition we manage a further 77 EV chargers with NHS, commercial and retail
partners.
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 CitiCharge EV
charging facilities, the Company continues to look at ways to improve the
overall responsibility of the business. We have maintained our key
partnerships with First Give (helping local schools to inspire young people to
make a change in society) and the Leeds Hospitals Charity both in the form of
donations but also in helping with fundraising events. In November 2023 we
supported the Yorkshire Children's Charity with a fundraising event held at
DriftStop within the Merrion Centre which brought together business leaders,
professionals and community members for the evening.
As at 31 December 2023 the number of vehicles operated through the Company's
electric vehicle salary sacrifice scheme had increased to five with a further
order currently in the pipeline.
Following its inception in 2022, the Sustainability and Climate Change
committee have been working to develop and implement the sustainability
strategy of the Company. Since the year end, formal terms of reference have
been approved and adopted by the Board for the committee.
Tender Offer
We launched a tender offer for the Company's shares in November 2023 which
successfully bought in for cancellation 6,292,920 shares in the Company at
145p per share. The transaction costs in connection with this tender, which
was on top of the 145p per share, amounted to £315,000 or 5.0p per share
bought in for cancellation. This reflected 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
per share that results from reducing the number of shares in issue. This is
particularly the case given the significant discount that the tender offer
price was relative to reported net asset value.
Following the tender offer, the percentage of ordinary shares in the Company
held beneficially by the public fell below the 35% threshold required for the
Company not to be considered a 'close company' for UK taxation purposes. As
such, the Company automatically lost its REIT status with effect from 30 June
2023. The loss in REIT status will result in the Group's profits and gains
being subject to corporation tax, from 1 July 2023, at the standard
corporation taxation rate of 25%.
Further information regarding the close company condition and the implications
and consequences of the loss of REIT status, were set out in Part IV (Risk
Factors) and in Section B (the UK REIT Regime and UK Taxation) of Part VI
of the 8 November 2023 circular to shareholders.
Outlook
The trading performance reported in the six months ended 31 December 2023 is
continuing into the opening months of 2024.
Overall, the business has now been reset, with a more diverse portfolio of
assets, lower levels of gearing and more importantly historically low levels
of variable rate borrowings and we are now looking predominantly at bringing
forward our development pipeline
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.
HY24 FY23
£m HY24 FY23 p per share p per share
IFRS reported NAV 124.0 141.1 294 291
Purchasers Costs (1) 16.1 19.3
EPRA Net Reinstatement Value 140.1 160.4 332 331
Remove Purchasers Costs (16.1) (19.3)
Remove Goodwill (2) (3.4) (3.4)
EPRA Net Tangible Assets 120.6 137.7 286 284
Fair value of fixed interest rate debt (3) 7.3 14.2
EPRA Net Disposal Value 127.9 151.9 303 313
(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 in the United Kingdon. The interim management report
includes a fair review of the information required by DTR 4.2.4, 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 52 of its annual report and accounts 2023 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 property 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 2023 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
19 March 2024
Consolidated condensed income statement
for the six months ended 31 December 2023
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2023 2022 2023
Unaudited Unaudited Audited
Notes £000 £000 £000
Gross revenue (excl. service charge income) 14,496 14,282 27,631
Service charge income 1,633 1,404 2,732
Gross revenue 16,129 15,686 30,363
Provision for impairment of debtors (58) 80 -
Service charge expenses (2,056) (1,924) (3,991)
Property expenses (5,908) (5,911) (11,560)
Net revenue 8,107 7,931 14,812
Administrative expenses (3,668) (3,624) (6,780)
Other income 553 519 880
Impairment of car parking assets 7(b) (1,086) (2,659) (10,467)
Impairment of goodwill 8 - (624) (991)
Valuation movement on investment properties 7(a) (8,310) (14,192) (21,033)
Profit/(loss) on disposal of investment properties 39 (182) 4,123
Valuation movement on investments 190 - 1,162
Loss on disposal of investments (122) (803) (777)
Share of post tax losses from joint ventures 9 (2,014) (1,927) (4,066)
Operating loss (6,311) (15,561) (23,137)
Finance 3 (3,486) (3,821) (6,948)
costs
Finance income 3 82 304 594
Loss before taxation (9,715) (19,078) (29,491)
Taxation 2,460 - -
4
Loss for the period (7,255) (19,078) (29,491)
All losses for the period are attributable to equity shareholders.
(Losses)/earnings per share 6
Basic and Diluted (15.3p) (38.4p) (60.1p)
EPRA (non-GAAP measure) 7.9p 3.5p 6.2p
Consolidated condensed statement of comprehensive income
for the six months ended 31 December 2023
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2023 2022 2023
Unaudited Unaudited Audited
£000 £000 £000
Loss for the period (7,255) (19,078) (29,491)
Items that will not be subsequently reclassified to profit or loss
Revaluation gains on car parking 865 - 929
assets
7(b)
Revaluation gains on hotel 121 121 642
assets
7(c)
Revaluation (losses)/gains on other (138) 997 16
investments 10
Deferred tax on revaluation gains (213) - -
Total other comprehensive income 635 1,118 1,587
Total comprehensive loss for the period (6,620) (17,960) (27,904)
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 2023
31 December 31 December 30 June
2023 2022 2023
Unaudited Unaudited Audited
£000 £000 £000
Notes
Non-current assets
Property rental
Investment properties 7 179,012 174,361 183,801
Investments in joint ventures 9 5,109 16,225 7,123
184,121 190,586 190,924
Car park activities
Freehold and right of use properties 7 59,759 68,607 60,791
Goodwill and intangible assets 8 3,551 4,165 3,674
63,310 72,772 64,465
Hotel operations
Freehold properties 7 9,500 9,100 9,500
9,500 9,100 9,500
Fixtures, equipment and motor vehicles 7 1,178 1,007 1,269
Investments 10 4,590 8,427 7,503
Deferred tax assets 12 2,736 - -
Total non-current assets 265,435 281,892 273,661
Current assets
Investments 10 5,234 5,148 6,436
Trade and other receivables 3,776 2,190 3,264
Cash and cash equivalents 23,593 15,188 23,320
Total current assets 32,603 22,526 33,020
Total assets 298,038 304,418 306,681
Current liabilities
Trade and other payables (11,862) (11,197) (12,387)
Bank overdrafts (22,812) (10,801) (21,700)
Financial (4,220) (5,131) (4,665)
liabilities
11
Total current liabilities (38,894) (27,129) (38,752)
Non-current liabilities
Financial (134,681) (125,045) (126,841)
liabilities
11
Deferred tax liabilities 12 (489) - -
Total liabilities (174,064) (152,174) (165,593)
Net assets 123,974 152,244 141,088
Equity attributable to owners of the Parent
Called up share capital 13 10,540 12,113 12,113
Share premium account 200 200 200
Capital redemption reserve 3,309 1,736 1,736
Revaluation reserve 3,557 1,334 2,784
Retained earnings 106,368 136,861 124,255
Total equity 123,974 152,244 141,088
Net asset value per share 15 294p 314p 291p
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 2023
Share Capital
Share premium redemption Revaluation Retained Total
capital account reserve Reserve earnings equity
£000 £000 £000 £000 £000 £000
Balance at 1 July 2022 13,132 200 717 1,213 164,042 179,304
Comprehensive loss for the year
Loss for the period - - - - (19,078) (19,078)
Other comprehensive income - - - 121 997 1,118
Total comprehensive loss for the period - - - 121 (18,081) (17,960)
Contributions by and distributions to owners
Arising on purchase and cancellation of own shares (1,019) - 1,019 - (7,889) (7,889)
Dividends relating to the year ended 30 June 2022 - - - - (1,211) (1,211)
Balance at 31 December 2022 12,113 200 1,736 1,334 136,861 152,244
12,113 200 1,736 2,784 124,255 141,088
Balance at 1 July 2023
Comprehensive loss for the year
Loss for the period - - - - (7,255) (7,255)
Other comprehensive income/(loss) - - - 773 (138) 635
Total comprehensive loss for the period - - - 773 (7,393) (6,620)
Contributions by and distributions to owners
Arising on purchase and cancellation of own shares (1,573) - 1,573 - (9,440) (9,440)
Dividends relating to the year ended 30 June 2023 - - - - (1,054) (1,054)
Balance at 31 December 2023 10,540 200 3,309 3,557 106,368 123,974
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 2023
Six months ended Six months ended Year ended
31 December 2023 31 December 2022 30 June 2023
Unaudited Unaudited Audited
Notes £000 £000 £000 £000 £000 £000
Cash flows from operating activities
Cash generated from operations 14 4,400 7,108 13,769
Interest received - - 415
Interest paid (2,894) (3,232) (6,149)
Net cash generated from operating activities 1,506 3,876 8,035
Cash flows from investing activities
Purchases and construction of investment properties (1,544) (7,532) (7,526)
Refurbishment of investment properties (1,092) (295) (1,145)
Purchases of fixtures, equipment and motor vehicles (80) (157) (576)
Proceeds from sale of investment properties 199 39,016 51,723
Proceeds from sale of investments incl. loan repayments 4,377 11,566 11,195
Payments for investments (250) - -
Investments in joint ventures - - (3,500)
Purchase of subsidiary, net of cash acquired - - 887
Net cash generated from investing activities 1,610 42,598 51,058
Cash flows from financing activities
Proceeds from borrowings 9,750 5,000 16,000
Repayment of borrowings (3,431) (37,107) (60,241)
Principle element of lease payments (834) (828) (1,657)
Re-purchase of own shares (9,440) (7,888) (7,888)
Dividends paid to shareholders - - (2,423)
Net cash used in financing activities (3,955) (40,823) (56,209)
Net (decrease)/increase in cash and cash equivalents (839) 5,651 2,884
Cash and cash equivalents at beginning of period 1,620 (1,264) (1,264)
Cash and cash equivalents at end of period 781 4,387 1,620
Cash and cash equivalents at the year-end are comprised of the following:
Cash balances 23,593 15,188 23,320
Overdrawn balances (22,812) (10,801) (21,700)
781 4,387 1,620
The Consolidated Cash Flow Statement should be read in conjunction with Note
14.
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 19 March 2024.
The comparative financial information for the year ended 30 June 2023 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 2023 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 2023. The financial information for the six months ended 31
December 2023 and 31 December 2022 is unaudited.
Significant accounting policies
The accounting policies adopted are consistent with those of the previous
financial year, although as the Group left the REIT regime with effect from 1
July 2023 the accounting policy on taxation has been expanded to provide
additional disclosure specifically around the transition out of the REIT
regime. Further details around this policy are detailed below.
The group's financial performance is not seasonal.
In the current environment, the directors consider 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
Rent receivables recognised are subject to impairment (refer to the Trade and
Other Related Party receivables policy in the financial statements of the
Company for the year ended 30 June 2023).
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.
Taxation
The Group's tax expense comprises both current tax and deferred tax expense.
Current tax is the expected tax payable on taxable profit for the year and is
calculated using tax rates and laws substantively enacted at the balance sheet
date.
A deferred tax asset represents a tax deduction that is expected to arise in a
future period. It is only recognised to the extent that it is probable that
the tax deduction will be capable of being offset against taxable profits and
gains in future periods. A deferred tax liability represents taxes which will
become payable in a future period as a result of a current or prior year
transaction. Deferred tax assets and liabilities are netted off on the balance
sheet. The tax rates used to determine deferred tax are those enacted or
substantively enacted at the balance sheet date that are expected to apply
when the deferred tax asset or liability are realised.
Current tax and deferred tax are recognised in the consolidated income
statement except when it relates to items recognised in other comprehensive
income or directly in equity, in which case it is credited or charged to other
comprehensive income or directly to equity respectively.
In the period from 2 October 2007 to 30 June 2023 the Company elected for
Group REIT status. During this period the Group did not recognise any deferred
tax assets as there was insufficient evidence to support that there would be
any future taxable profits in the Group.
The Group left the REIT regime with effect from 1 July 2023 and the profits of
the Group are now all subject to corporation tax. This has resulted in the
recognition of a deferred tax asset relating to trading losses from previous
periods where there is sufficient evidence that they will be offset against
future taxable profits.
Use of estimates and judgements
With the exception of taxation, 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.
Taxation
Significant judgment is required in determining the provision for income tax
and the calculation of any deferred tax balances. The Group recognises
liabilities for anticipated tax based on estimates of whether additional taxes
will be due. Where the final tax outcome of these matters is different from
the amounts initially recorded, such differences impact the income tax and
deferred tax provisions in the period in which such determination is made.
Some subsidiaries have generated or generate tax losses. Often these can be
used to offset taxable gains of subsequent periods. The Group monitors the
development of such tax loss situations. Based on the business plans of the
Group, the recoverability of such tax losses is determined. In the case that a
tax loss is deemed to be recoverable, the recognition of a deferred tax asset
for such a tax loss is then decided. This judgement resulted in the
recognition of a deferred tax asset as at 1 July 2023 of £2,429,000.
Going concern
The financial information for the six months ended 31 December 2023 have been
prepared on a going concern basis. In light of the current macro-economic
environment 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 created,
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 risks concern the
impact on the valuation of the property portfolio and our ability to meet bank
loan and debenture 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 valued at £3.8m at 31 December 2023 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
2023 2022 2023
£000 £000 £000
Property rental 215,827 212,712 212,249
Car park activities 62,887 69,031 64,993
Hotel operations 9,500 9,100 9,500
Investments 9,824 13,575 19,939
Total assets 298,038 304,418 306,681
Segmental results
Six months ended Six months ended
31 December 2023 31 December 2022
Property Car park Hotel Invest- Property Car park Hotel Invest-
rental activities operations ments Total rental activities operations ments Total
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Gross revenue (excl. service charge income) 6,176 6,626 1,694 14,496 5,873 6,748 1,661 14,282
- -
Service charge income 1,633 - - - 1,633 1,404 - - - 1,404
Gross revenue 7,809 6,626 1,694 - 16,129 7,277 6,748 1,661 - 15,686
Provision for impairment of debtors (58) - - - (58) 80 - - - 80
Service charge expenses (2,056) - - - (2,056) (1,924) - - - (1,924)
Property expenses (818) (3,766) (1,324) - (5,908) (482) (4,056) (1,373) - (5,911)
Net revenue 4,877 2,860 370 - 8,107 4,951 2,692 288 - 7,931
Administrative expenses (2,921) (747) - - (3,668) (2,998) (626) - - (3,624)
Other income 553 - - - 553 515 4 - - 519
Share of post tax profits from joint ventures before valuation movements 511 - - 511 423 - - 423
- -
Operating profit before valuation movements 3,020 2,113 5,503 2,891 2,070 5,249
370 - 288 -
Valuation movement on investment properties (8,310) - (8,310) (14,192) - (14,192)
- - - -
Impairment of car parking assets - (1,086) - - (1,086) - (2,659) - - (2,659)
Impairment of goodwill - - - - - - (624) - - (624)
Profit/(loss)on disposal of investment properties 39 - 39 (182) - (182)
- - - -
Valuation movement on investments - - - 190 - - - -
190 -
Loss on disposal of investments - - - (122) (122) - - - (803) (803)
Valuation movement on joint venture properties (2,525) - - (2,525) (2,350) - - (2,350)
- -
Operating loss (7,776) 1,027 370 68 (6,311) (13,833) (1,213) 288 (803) (15,561)
Finance costs (3,486) (3,821)
Finance income 82 304
Loss before taxation (9,715) (19,078)
Taxation 2,460 -
Loss for the period (7,255) (19,078)
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
2023, arising from car park operations, was £1,018,000. After allowing for an
allocation of administrative expenses, the operating profit at these sites was
£674,000.
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
2023 2022 2023
£000 £000 £000
Interest on debenture loan stock 2,215 2,583 4,819
Interest payable on bank borrowings 679 649 1,330
Amortisation of arrangement fees 131 115 230
Gain on repurchase of debenture stock - - (379)
Interest expense on lease liabilities 461 474 948
Total finance costs 3,486 3,821 6,948
Interest receivable on loans to joint ventures - (136) (245)
Other interest receivable (82) (168) (349)
Total finance income (82) (304) (594)
Net finance costs 3,404 3,517 6,354
4. Taxation
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2023 2022 2023
£000 £000 £000
Current tax
- Current year - - -
- Adjustments in respect of prior years - - -
- - -
Deferred tax
- Recognition of carried forward trading losses (2,613) - -
- Utilisation of trading losses 938 - -
- Origination and reversal of timing differences (785) - -
- Adjustments in respect of prior periods - - -
(2,460) - -
(2,460) - -
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2023 2022 2023
£000 £000 £000
Loss before taxation (9,715) (19,078) (29,491)
Loss on ordinary activities multiplied by the rate of corporation tax of 25%
(2022: 19%)
(2,429) (3,625) (5,603)
Effects of
- Unrecognised DTA on investment properties valuation losses
2,168 - -
- Recognition of carried forward trading losses (2,613) - -
- Expenses not deductible for tax purposes 414 - -
- United Kingdom REIT tax exemption on net income before revaluations
- (329) (582)
- United Kingdom REIT tax exemption on revaluations
- 3,954 6,185
(2,460) - -
The Company left the REIT regime with effect from 1 July 2023, therefore the
profits of the Company are now subject to corporation tax.
5. Dividends
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2023 2022 2023
£000 £000 £000
2022 final dividend: 2.5p per 25p share - 1,211 1,212
2023 interim dividend: 2.5p per 25p share - - 1,212
2023 final dividend: 2.5p per 25p share 1,054 - -
1,054 1,211 2,424
A final dividend in respect of the year ended 30 June 2023 of 2.5p per share
was approved at the company's annual general meeting (AGM) on 1 December 2023
and was paid to shareholders on 4 January 2024. The entire dividend was paid
as an ordinary dividend.
An interim dividend in respect of the year ending 30 June 2024 of 2.5p per
share is proposed. This dividend, based on the shares in issue at 19 March
2024, amounts to £1.054m which has not been reflected in these interim
accounts and will be paid on 14 June 2024 to shareholders on the register on
24 May 2024. This dividend will be paid entirely as an Ordinary Dividend.
6. Earnings per share
The calculation of basic earnings per share has been based on the loss for the
period, divided by the number of shares in issue. The weighted average number
of shares in issue during the period was 47,532,181 (2022: 49,685,860).
Six months ended Six months ended Year ended
31 December 2023 31 December 2022 30 June 2023
Earnings Earnings per share Earnings Earnings Earnings Earnings
per share per share
£000 Pence £000 Pence £000 Pence
Basic earnings and earnings per share (7,255) (15.3) (19,078) (38.4) (29,491) (60.1)
Valuation movement on investment properties 8,310 17.5 14,192 28.6 21,033 42.9
Deferred tax on valuation movements (785) (1.6) - - - -
Impairment of car parking assets 1,086 2.3 2,659 5.4 10,467 21.3
Impairment of goodwill - - 624 1.3 991 2.0
(Profit)/loss on disposal of investment properties (39) (0.1) 182 0.3 (4,123) (8.4)
Valuation movement on properties held in joint ventures 4,950 10.1
2,525 5.3 2,350 4.7
Loss on disposal of investments 122 0.2 803 1.6 777 1.6
Valuation movement on investments (190) (0.4) - - (1,162) (2.4)
Profit on repurchase of debenture stock - - - - (379) (0.8)
EPRA earnings and earnings per share 3,774 7.9 1,732 3.5 3,063 6.2
EPRA earnings for the 6 months ended 31 December 2023 includes a tax credit
£1,675,000 relating to the recognition of a deferred tax asset for historical
trading losses.
There is no difference between basic and diluted earnings per share.
There is no difference between basic and diluted EPRA earnings per share.
7. Tangible fixed assets
(a) Investment properties - property rental business
Right of use asset
Freehold Development Total
£000 £000 £000 £000
Valuation at 1 July 2022 156,230 2,250 42,626 201,106
Additions at cost 7,526 - - 7,526
Held in subsidiaries acquired 23,400 - 706 24,106
Other capital expenditure 735 31 395 1,161
Disposals (7,645) - (21,250) (28,895)
Valuation movement (19,376) (31) (1,626) (21,033)
Movement in tenant lease incentives (170) - - (170)
Valuation at 1 July 2023 160,700 2,250 20,851 183,801
Additions at cost - 2,860 - 2,860
Capital expenditure 529 - 556 1,085
Disposals (160) - - (160)
Valuation movement (7,760) 6 (556) (8,310)
Movement in tenant lease incentives (264) - - (264)
Valuation at 31 December 2023 153,045 5,116 20,851 179,012
(b) Freehold and right of use properties - car park activities
Right of use
Freehold asset Total
£000 £000 £000
Book Value at 1 July 2022 29,200 43,026 72,226
Additions 6 - 6
IFRS16 adjustment - (95) (95)
Depreciation (312) (1,496) (1,808)
Valuation movement 929 - 929
Impairment (4,713) (5,754) (10,467)
Book Value at 1 July 2023 25,110 35,681 60,791
Additions 7 - 7
IFRS16 adjustment - (48) (48)
Depreciation (136) (634) (770)
Valuation movement 865 - 865
Reversal of impairment/(impairment) 504 (1,590) (1,086)
Book Value at 31 December 2023 26,350 33,409 59,759
The historical cost of freehold properties and right-of-use assets relating to
car park activities is £30,153,000 (30 June 2023: £30,153,000).
(c) Freehold properties - hotel operations
Freehold
£000
Valuation at 30 June 2022 9,100
Depreciation (242)
Valuation movement 642
Valuation at 1 July 2023 9,500
Depreciation (121)
Valuation movement 121
Valuation at 31 December 2023 9,500
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 1,138 1,305 13,820 7.8 8.9
Merrion Centre (excluding offices) 4,544 4,883 51,602 8.3 8.9
Offices 3,116 4,725 45,773 6.4 9.8
Hotels 864 864 9,500 8.6 8.6
Out of town retail 1,041 1,070 12,100 8.1 8.4
Residential 1,306 1,601 32,000 3.9 4.7
12,009 14,448 164,795 6.9 8.3
Development property 20,851
Car parks 62,625
248,271
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 5.9% - £192.8m, Valuation at 7.9% - £143.9m
Valuation at a reversionary yield of 7.3% - £187.4m, Valuation at 9.3% -
£147.1m
Investment properties (development properties)
The key unobservable inputs in the valuation of one of the Group's development
properties of £14.8m 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 - £15.5m, 5% decrease in the per acre or per unit
value - £14.1m.
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 £26.4m 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 - valuation increase to £31.0m, 1% increase in the
yield/discount rate - valuation decrease to £22.9m
Property valuations can be reconciled to the carrying value of the properties
in the balance sheet as follows:
Investment Freehold and right of use Hotel operations
properties Properties - car park activities
Total
£000 £000 £000 £000
Externally valued by CBRE 89,920 19,000 9,500 118,420
Externally value by Jones Lang LaSalle 87,725 7,350 - 95,075
Investment and development properties valued by the Directors 51 - - 51
Right-of-Use Assets 1,316 33,409 - 34,725
At 31 December 2023 179,012 59,759 9,500 248,271
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 2022 4,994 (4,018) 976
Additions 576 - 576
Depreciation - (283) (283)
At 1 July 2023 5,570 (4,301) 1,269
Additions 80 - 80
Depreciation - (171) (171)
At 31 December 2023 5,650 (4,472) 1,178
8. Goodwill and intangible assets
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2023 2022 2023
£000 £000 £000
Goodwill
At start of the period 3,445 4,436 4,436
Impairment - (624) (991)
3,445 3,812 3,445
Intangible assets
At start of period 229 476 476
Amortisation (123) (123) (247)
106 353 229
Total goodwill and intangible assets 3,551 4,165 3,674
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.
9. Investments in joint ventures
Six months Six months Year
ended ended Ended
31 December 31 December 30 June
2023 2022 2023
£000 £000 £000
Interest in joint ventures
At start of period 7,123 18,016 18,016
Investments in joint venture - - 3,500
Share of profits after tax 511 423 884
Loan interest - 136 245
Valuation movement (2,525) (2,350) (4,950)
Amounts eliminated on consolidation of subsidiary - - (10,572)
At end of period 5,109 16,225 7,123
Investments in joint ventures are broken down as follows:
31 December 31 December 30 June
2023 2022 2023
£000 £000 £000
Equity 5,109 9,764 7,123
Loans - 6,461 -
5,109 16,225 7,123
Investments in joint ventures relates to the Group's interest in the
partnership capital of Merrion House LLP and as at 31 December 2022 a loan to
Belgravia Living Group Limited. The investment properties held within these
joint ventures have been externally valued at each reporting date.
10. Investments
31 December 31 December 30 June
2023 2022 2023
£000 £000 £000
Current Assets
Loan notes - Deferred Consideration 3,101 4,385 4,493
Loan notes - Contingent Consideration 2,133 763 1,943
5,234 5,148 6,436
Non-Current Assets
Listed investments 3,930 5,063 4,068
Non-listed investments 660 410 410
Loan notes - Deferred Consideration - 2,954 3,025
4,590 8,427 7,503
9,824 13,575 13,939
Listed investments
31 December 31 December 30 June
2023 2022 2023
£000 £000 £000
At start of the period 4,068 4,096 4,096
Disposals - (30) (44)
(Decrease)/increase in value of investments (138) 997 16
At the end of the period 3,930 5,063 4,068
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 £875,482 (2022: £877,755).
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
IFRS 13 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
2023 2022 2023
£000 £000 £000
At the start and end of the year 410 410 410
Additions 250 - -
660 410 410
Loan Notes - Deferred Consideration
31 December 31 December 30 June
2023 2022 2023
£000 £000 £000
Current assets
At the start of the year 4,493 - -
Transferred from non-current assets 3,025 - -
Loan notes issued to the Company in the period - 4,287 4,287
Loan interest 82 98 206
Loan notes repaid to the Company in the period (4,499) - -
3,101 4,385 4,493
Non-current assets
At the start of the year 3,025 - -
Transferred to current assets (3,025) - -
Loan notes issued to the Company in the period - 2,888 2,888
Loan interest - 66 137
- 2,954 3,025
The interest earned on the deferred consideration loan notes is 5% per annum.
The deferred consideration loan notes are accounted for using the amortised
cost basis and are assessed for impairment under the IFRS 9 expected credit
loss model.
Loan Notes - Contingent Consideration
31 December 31 December 30 June
2023 2022 2023
£000 £000 £000
At the start of the year 1,943 - -
Loan notes issued to the Company in the period - 743 743
Unwind of discount applied to contingent consideration 32 20 38
Valuation movement 158 - 1,162
2,133 763 1,943
The contingent consideration loan notes were initially recognised at fair
value, based on the estimated performance of YPS in the 14 month period ended
October 2023. This is an estimate prepared by the Company. The contingent
consideration loan notes are then accounted for using the fair value through
profit and loss basis. Following completion of the sale of its investment in
YPS, the Company does not have access to any current YPS management
information. With its knowledge of the UK Car Parking market, together with
the volume of business the Group is continuing to generate on its own car
parks through the YPS platform, the Company does not believe the contingent
consideration has suffered any impairment in the period.
These loan note 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.
The effect on the value of the contingent consideration at the period end of
£2.1m of applying a different level of revenue for the period to October
2023:
Valuation in the Consolidated Financial Statements assuming net revenue 10%
above anticipated - £2.6m, Valuation at 10% below anticipated - £1.7m.
11. Financial liabilities
31 December 31 December 30 June
2023 2022 2023
£000 £000 £000
Current
Bank borrowings 2,452 3,466 3,000
Lease liabilities 1,768 1,665 1,665
4,220 5,131 4,665
Non-Current
Bank borrowings - revolving credit facilities 10,870 2,328 3,841
Bank borrowings - single asset facility 14,277 - 14,313
Lease liabilities 27,203 26,717 26,362
5.375% First mortgage debenture stock 82,331 96,000 82,325
134,681 125,045 126,841
138,901 130,176 131,506
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 2023 31 December 2022 30 June 2023
Book value Fair value Book value Fair value Book value Fair value
£000 £000 £000 £000 £000 £000
Debenture stock 82,331 75,095 96,000 83,782 82,325 68,169
Revolving credit facilities 10,870 10,870 2,328 2,328 3,788 3,788
Single asset facility 14,313 14,313 - - 14,313 14,313
12. Deferred tax assets and liabilities
31 December 31 December 30 June
2023 2022 2023
£000 £000 £000
Assets
Carried forward losses 1,675 - -
Leases 1,061 - -
2,736 - -
Liabilities
Investment property revaluation gains 489 - -
489 - -
Net deferred tax asset 2,247 - -
The Company left the REIT regime with effect from 1 July 2023, therefore the
profits of the Company are now subject to corporation tax. This has resulted
in the recognition of a deferred tax asset, primarily relating to trading
losses from previous periods that are available to offset taxation on future
profits.
The Company also has various non-trading losses from previous periods, however
these have not been recognised within the deferred tax asset as it is not
certain when these will be available to offset further profits. The total
value of losses not included within the deferred tax asset is £1,960,000.
The total net deferred tax balance as at 31 December 2023 includes the charge
to the income statement of £2,460,000 less deferred tax liabilities arising
in the period on revaluation gains recognised in the consolidated condensed
statement of comprehensive income of £213,000 (30 June 2023 and 31 December
2022: £nil).
13. Called up equity share capital
Authorised
164,879,000 (30 June 2023: 164,879,000) ordinary shares of 25p each.
Issued and fully paid Number of shares Nominal
up
value
000 £000
At 1 July 2023 48,456 12,113
Purchase and cancellation of own shares (6,293) (1,573)
At 31 December 2023 42,163 10,540
14. Cash flows from operating activities
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2023 2022 2023
£000 £000 £000
Loss for the period (7,255) (19,078) (29,491)
Taxation credit (2,460) - -
Depreciation 1,063 1,159 2,333
Amortisation 123 123 247
(Profit)/loss on disposal of investment properties (39) 171 (4,123)
Profit on sale of fixed assets - (16) (48)
Loss on sale of investments 122 814 795
Movement in valuation of investments (190) - (1,162)
Finance costs 3,486 3,821 6,948
Finance income (82) (304) (594)
Share of joint venture losses after tax 2,014 1,927 4,066
Movement in revaluation of investment properties 8,310 14,192 21,033
Movement in lease incentives 264 (15) 170
Impairment of car parking assets 1,086 2,659 10,467
Impairment of goodwill - 624 991
(Increase)/decrease in receivables (511) 813 (218)
(Decrease)/increase in payables (1,531) 218 2,355
Cash generated from operations 4,400 7,108 13,769
15. 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
2023 2022 2023
Net asset value (£'000) 123,974 152,244 141,088
Number of ordinary shares in issue (000) 42,163 48,456 48,456
Net asset value per share (pence) 294p 314p 291p
16. Related party information
The only related party transactions that have taken place during the period
relate to the remuneration of the Executive Directors, who are the key
management personnel of the Group. Dividends paid to the Directors and their
family members are also related party transactions although there were no
dividends paid in the period.
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2023 2022 2023
£000 £000 £000
Short-term employee benefits 1,305 1,330 2,590
Post-employment benefits - 65 65
Dividends paid to the Ziff Concert Party - - 1,327
1,305 1,395 3,982
The Ziff Concert Party includes Edward Ziff, Ben Ziff (Executive Directors)
and Michael Ziff (Non Executive Director) together with their immediate family
members, the estate of Edward Ziff and Michael Ziff's late mother,their sister
and a number of trusts that Edward Ziff and Michael Ziff are not beneficiaries
of but they do control.
INDEPENDENT REVIEW REPORT TO Town Centre Securities Plc
Conclusion
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 2023 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.
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 2023 which comprises the consolidated condensed income statement, the
consolidated condensed statement of comprehensive income, the consolidated
condensed balance sheet, the consolidated condensed statement of changes in
equity, the consolidated condensed cash flow statement and the notes to the
consolidated interim financial information.
Basis for conclusion
We conducted our review in accordance with Revised International Standard on
Review Engagements (UK) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410
(Revised)"). 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 (Revised), 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 19 March 2024
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FFFEIVAIALISRecent news on Town Centre Securities
See all newsREG - Town Centre Secs. - Purchase of TCS Shares by TCS Trustees Limited
AnnouncementREG - Town Centre Secs. - Purchase of TCS Shares by TCS Trustees Limited
AnnouncementREG - Town Centre Secs. - Director/PDMR Shareholding
AnnouncementREG - Town Centre Secs. - Director/PDMR Shareholding
AnnouncementREG - Town Centre Secs. - Half-year Results
Announcement