14 October 2022
TOWN CENTRE SECURITIES PLC
(‘TCS’ or the ‘Company’)
Final results for the year ended 30 June 2022
Further progress in resetting and reinvigorating the business
Town Centre Securities PLC, the Leeds, Manchester, Scotland, and London property investment, development, hotel and car parking company, today announces its audited final results for the year ended 30 June 2022.
Commenting on the results, Chairman and Chief Executive Edward Ziff, said:
“It has been another year of recovery for the business, with robust rent collection and significant improvements in both our car park and hotel operations. Further successes after the year end, including the significantly accretive sale of our investment in YourParkingSpace (YPS), have helped to further reset TCS’s financial position and enabled shareholders to benefit from this uplift, with the completion of a tender offer for 4 million of the Company’s own shares. Further development site sales, will enable us to continue to strengthen the balance sheet through lowering our level of absolute debt and leverage, whilst also investing in our exciting development pipeline.”
“Looking forward, the Russia‐Ukraine conflict and the unpredictability resulting from the situation has led to inflationary and other economic pressures on our business and those of our tenants including changes to consumer spending, increased property and other expenses, interest rate rises, a weakening sterling exchange rate, increased construction costs and rent affordability.”
“Against this background, we remain focused on enhancing value for our shareholders and continue to consider further opportunistic disposals, the proceeds of which will be used to reduce debt. Unless there are acquisitions offering significant opportunities to increase value we are not envisaging any further property investments until there is stability in the real estate sector and wider economy.”
“Overall, we remain committed to continuing to reset and reinvigorate TCS by 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.”
Financial performance
· Net assets:
o Statutory net assets of £179.3m or 341p per share up 15.3% on prior year (2021: £155.4m, 292p), including a significant revaluation of the YPS investment ahead of its sale in July 2022
o EPRA net tangible assets* measure at £174.9m or 333p per share (2021: £151.0m or 284p)
o Revaluation increase and reversal of impairment uplifts on property portfolio, hotel, car parks and TCS share of properties held in Joint Ventures in the year of £4.2m (2021: Increase of £1.4m)
o Revaluation gain on other investments (principally YPS) during the year of £15.3m (2021: £2.8m)
· Profits and earnings per share:
o Statutory profit before tax of £11.0m (2021: loss of £0.6m) and statutory earnings per share of 20.9p (2021: loss of 1.1p)
o EPRA earnings*, profit of £3.3m (2021: £0.3m)
o EPRA earnings per share* of 6.2p (2021: 0.6p)
· Financing strengthened:
o Headroom of £18.5m at the year-end based on June 2022 borrowings and valuations (2021: £12.1m). This now stands at £24.7m as at 12 October 2022 following the sale of the investment in YPS and a tender offer
o Seven properties were sold during the year, generating aggregate proceeds of £37.9m
o Net debt (excluding finance leases liabilities) reduced by 6.7% to £135.1m (FY21: £145.6m), with LTV** reducing to 46.4% (FY21: 51.3%) Net debt now stands at under £120m as at 12 October 2022 following the sale of the investment in YPS and a tender offer
· Dividends increased and partially restored to pre-covid levels:
o Final dividend of 2.5p proposed, following interim dividend of 2.5p
o Total dividend for the year of 5.0p, fully covered by earnings (2021: 3.5p)
* 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
Resetting and reinvigorating the business for the future
It has been a year of recovery with a continued focus on resetting and reinvigorating the business, in particular with the disposal and debt reduction programme. Progress against the strategy is detailed below:
Actively managing our assets
Our long-standing strategy of active management and redevelopment, to drive income and capital growth, has continued:
· The proportion of retail and leisure assets in the portfolio remains low at 31%, down from 40% in June 2020, and from 60% in 2016. Pure retail now represents only 23% of the total portfolio and of that, 55% is in the resilient Merrion Estate
· We disposed of seven assets in the year, following completed asset management initiatives.
· The exposure to tenants either entering administration or CVAs represented less than 1% of income (two tenants; no exposure to any high-profile retail failures)
· 39 new lettings were completed in the year, key highlights being significant individual lettings in Glasgow and Hampstead, and the near full occupancy of Ducie House in Manchester following its refurbishment during the pandemic
Maximising available capital
A conservative capital structure, with a mix of short and long-term secure financing, has always underpinned our approach:
· £10.7m of disposal proceeds from the sale of investment properties in the year were used to part repay Group borrowings
· Bought back for cancellation £3.4m of our £99.5m 2031 5.375% debenture
· We are in the process of renewing our existing Lloyds and Handelsbanken bank facilities. These both expire at the end of June 2023. Our existing NatWest bank facility expires in September 2024, but with the option of two further one-year extensions
· During the year we sold, subject to planning, our Port Street, Manchester surface car parks. Completion of the sale is expected to occur in December 2022, with the proceeds of £13.0m being applied to further reduce Group borrowings
Investing in our development pipeline
Our development pipeline, with an estimated GDV of over £740m, is a valuable and strategic point of difference for TCS which we continue to progress and improve. Notably, in the past year:
· In April 2022 we submitted the Whitehall Riverside Masterplan in conjunction with Glenbrook. This includes detailed planning applications for a 500 unit ‘Build to Rent’ scheme; a 12-storey office building; a 478-space multi-storey car park and an outline for further hotel/office buildings on the remainder of the site
· In June 2022 we submitted a pre-application presentation to Leeds City Council in relation to the existing consented 100MC office building and a three-storey vertical extension to Wade House, both at the Merrion Centre, with a view to delivering a further 1,078 student accommodation units
Acquiring and improving investment assets to diversify our portfolio
We continue to improve investment assets, and will consider new acquisition opportunities that offer the opportunity for both diversification and growth:
· Completed the £7.1m acquisition of a mixed use prime retail site in Hampstead
Post year end events
The resetting and reinvigoration of the business for the future has continued:
· In July 2022, we announced the significant disposal of the Company’s investment in YourParkingSpace for total cash consideration of up to £20.7m
· In August 2022, we completed a Tender Offer of 4 million shares at a price of 185p per share for a total cost of £7.4m, representing approximately 7.61% of the issued share capital, delivering a positive impact on net asset value per share and earnings per share for the benefit of continuing shareholders
-Ends-