Half Yearly Report

24 February 2010

TOWN CENTRE SECURITIES PLC

Interim results for the six months ended 31 December 2009

Town Centre Securities PLC, the Leeds based property investment and development company, today announces its interim results, for the six months ended 31 December 2009.

Financial highlights:

·; Profit before tax £31.5m (2008: loss of £72.9)

·; Net asset value per share 257p (30 June 2009: 202p)

·; Surplus on revaluation of investment property of £19.7m (2008: deficit of £76.6m)

·; Earnings per share 59.3p (2008: loss 137.4p)

·; Proposed interim dividend of 3.02p per share (2008: 2.75p)

·; £9.0m profit on repurchase of debenture stock

·; Gross borrowings at 31 December 2009 were £146.7m (30 June 2009: £185.3m) following the repurchase of debenture stock and property sales

Operational highlights:

·; Occupancy levels improved to 93% (30 June 2009: 92%)

·; Merrion Centre's resilient performance continues

·; Sale of properties totalled £17m in the period

·; Consistent performance from Car Parking - intention to grow this business

Commenting on the interim results, Chairman and Chief Executive Edward Ziff, said:

"Our close attention to balance sheet management has left us in a robust position and we look, selectively, for opportunities to acquire stock that fits into our longer term strategy. Nevertheless, we continue to regard 2010 with caution and are ready for any change in market conditions that may occur.

"I am delighted we have reinforced the long-term financing of the Company. With focussed in-house management our rationalised portfolio has proved resilient, particularly the Merrion Centre, with its substantial exposure to "value for money" retailing, which has stood us in good stead."

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Notes to editors:

Town Centre Securities PLC is a property investment and development company. We aim to maximiseshareholder returns over the long-term through the acquisition and active management of investments and developments, with secure and growing income in good and improving locations.

Chairman and Chief Executive's Report

I am pleased to report that we are seeing evidence of a slight improvement in market conditions in the property sector. There have been increases in values and signs of activity in the investment market during the period under review. I am delighted to be able to report a rise in the value of our investment portfolio together with a strong income performance and a reduction in voids.

We have continued our strategy of property disposals in the first half of the year both to rationalise the portfolio and to protect our balance sheet. This strategy has inevitably led to a reduction in net income although we can report an ongoing growth in the like-for-like rent roll and a continuation of the reduction of our administrative costs. We continue to take a prudent approach to development and investment acquisition in an uncertain market.

Overall, our debt position is much improved, assisted by the successful tender offer in August 2009 to buy part of our 2031 debenture stock. This has given us the confidence to make our first property purchases for some time, acquiring two shops in North London in established retail areas where we believe there is room for both capital and income growth from 2009 levels. Further investments that are not over rented and where we believe we can add value will be sought but, like many other investors, we are experiencing a shortage of stock in the market place of the type we are seeking to purchase.

Results

Like-for-like underlying property rents have increased by approximately 2% on an annualised basis. Similarly underlying car park profits, compared to the same period last year, have also increased by approximately 2%. Focus on controlling overheads has reduced administrative expenses by 11% since 2008. The impact of one-off irrecoverable costs during the period under review has resulted in an increase in property expenses of 4%.

Profit before tax for the period is £31.5m (2008: £72.9m loss) to which the largest contributors are the £19.7m surplus on revaluation of our property portfolio and £9.0m profit arising on the repurchase of debenture stock.

Underlying profit before tax for the period is £2.5m (2008: £4.4m) and with the benefit of REIT status we are not expecting trading to result in a tax charge. The fall in profits largely reflects the loss of income as a consequence of property disposals, resulting in underlying earnings per share of 4.8p (2008: 8.2p). I should comment that the annual reduction in finance costs flowing from the debenture stock cancellation and the expiry of our interest swap contract on 19 October 2009 is not fully reflected in the charge for the period. These savings will be in full effect in the second half of the year, which will also benefit from the non-recurrence of the one-off irrecoverable costs incurred in the period under review.

Net assets rose by 27.4% to £136.6m at 31 December 2009 (257p per share) from £107.2m (202p per share) at 30 June 2009.

Dividends

I am pleased to declare a 10% increase in the interim dividend to 3.02p per share, which will be paid as a Property Income Distribution ("PID") on 25 March 2010 to shareholders registered on 5 March 2010.

The Board aspire at least to hold the final dividend for 2010 at the same level as last year. This will depend on the outturn for the second half of the year, and will comprise both PID and ordinary dividend.

Review of Activities

Sales totalled £17m and generated a small profit above the June 2009 valuation. The major disposals were in Wrexham and Manchester. Wrexham comprised a mixture of some short leases, considerably over rented shops and a high percentage of risk of voids. Manchester was an office building let to a single tenant. Particularly pleasing was the sale of our newly completed residential apartments and town houses in Harrogate for a total consideration of £2.5m. The total impact, of these sales on an annualised basis, is to reduce surplus cashflow by £0.9m. We do however consider that until we are able to find replacement properties, reducing debt is a more advantageous short-term strategic direction for the company.

Occupancy levels continue to remain satisfactory with an improvement to 93% (30 June 2009: 92%), although the efforts made in reducing our voids have to some extent been offset by the sale of fully occupied investments. Aldi are now occupying and trading from our Piccadilly Basin retail store and a further retail unit is under offer. The remaining space at Piccadilly Basin represents 50% of total voids. We have made excellent progress in the letting of the refurbished offices at Town Centre House having let a total 28,000 sq ft with 12,500 sq ft remaining and under offer. Fluctuations in occupancy levels due to tenant Administrations and Company Voluntary Arrangements have continued to be well managed. Those which have occurred in the period have resulted in lettings at higher than the passing rental levels.

I can report that rental income on a like-for-like basis has grown, with once again the Merrion Centre proving resilient and attracting new occupiers such as Brighthouse in the main mall and the Consumer Credit Counselling Service expanding its office occupation in Wade House.

Rent collection has again been maintained at a satisfactory level with 96% collected by the due dates and with very modest bad debts. The broad spread of our tenants (TCS has no tenants with more than three premises) and our focus on the value for money retail sector continues to insulate us from the worst of the operational problems that are likely to continue to face the retail property sector.

Our in-house management and asset management team has been recognised by our appointment to manage a shopping centre on behalf of an LPA Receiver. This will provide fee income and, in due course, a return from its appreciation in value. We are seeking to develop this area of the business and are pursuing similar asset management opportunities.

Car Parking

We are re-establishing our car parking operations and the first half of the current financial year was a period of consistent performance and modest income growth. Whitehall Road, Leeds has performed ahead of budget and our other car park operations at Clarence Dock, Leeds and Piccadilly Basin, Manchester have performed in line with our expectations. This is an area of the business that the Board has identified to grow both organically and through the acquisition of both freehold and leasehold sites and car park management opportunities.

Financing

Total gross borrowings at 31 December 2009 were £146.7m, (£185.3m at 30 June 2009). Borrowings comprise £106m of the 5.375% debenture stock expiring in 2031 with the balance representing drawings against bank facilities due for renewal in 2012 and 2014.

Shortly following the commencement of this financial year and as previously reported, The Royal Bank of Scotland plc ("RBS"), at the Company's request, made a tender offer to buy in part of our 2031 mortgage debenture stock. The offer was completed on 4 August 2009 when RBS sold the £43.8m of debenture stock it had acquired in the tender, at an average price of 77.6p, to the Company at a cost of £34.0m. The purchase was funded from our existing banking facilities and the debenture stock was immediately cancelled. Subsequently in December 2009 the Company made a small further purchase by private treaty of £200,000 of the debenture stock at a price of 77 pence. The stock was cancelled following purchase.

The impact of the tender (net of expenses) was to reduce the Company's debt, and increase its net asset value by £9.0m (17p per share) without recourse to dilutive equity funding. There are also the additional benefits of a reduced interest cost in the future, substantially extended headroom in the Company's loan to value covenants and a debt structure with far greater flexibility to fund the business going forward.

Valuation

The valuation of our investment properties was £276.5m at 31 December 2009, of which £272.2m was externally valued by Jones Lang LaSalle and CB Richard Ellis and £4.3m was valued by the directors. The valuation comprised a like-for-like increase from 30 June 2009 of £21.2m, disposals of £17m (of which £11.7m had been reclassified as non-current assets at 30 June 2009), refurbishment expenditure and purchases of £3.6m and an increase in value of £19.7m, of which £0.3m related to acquisitions during the period.

The initial yield on the investment portfolio was 7.3% (30 June 2009; 7.9%).

Board

On November 30 2009, Bob Bigley, our Finance Director, left the Company to pursue other career opportunities. The Board considers that Bob's input created and added significant value to the Company during a period of unprecedented trading conditions for the property sector and wishes him well for the future. The Board is actively seeking to recruit a new Finance Director.

Outlook

Our close attention to balance sheet management has left us in a robust position and we look, selectively, for opportunities to acquire stock that fits into our longer term strategy. Nevertheless, we continue to regard 2010 with caution and are ready for any change in market conditions that may occur.

I am delighted we have reinforced the long-term financing of the Company. With focussed in-house management our rationalised portfolio has proved resilient, particularly the Merrion Centre, with its substantial exposure to "value for money" retailing, which has stood us in good stead.

Edward Ziff

Chairman and Chief Executive

24 February 2010

Consolidated income statement

For the six months ended 31 December 2009

The Directors have approved an interim dividend of 3.02p per share (2008: 2.75p).The 2009 final dividend paid in this period is £2.9m (for the six months ended 31 December 2008: £2.9m).

Consolidated statement of comprehensiveincomefor the six months ended 31 December 2009

All recognised income/(expense) for the period is attributable to equity shareholders.

Consolidated balance sheet

As at 31 December 2009

Statement of changes in equity

For the six months ended 31 December 2009

Consolidated cash flow statement

For the six months ended 31 December 2009

The Consolidated Cash Flow Statement should read in conjunction with Note 11.

Notes to the consolidated interim financial information

1. Basis of preparation

This interim financial information was approved for issue on 24 February 2010.

This interim financial information has been prepared under the historical cost convention as modified by the revaluation of land and buildings, available-for-sale investments, financial assets and liabilities held for trading and share-based payments. The principal accounting policies followed in the preparation of this interim financial information are set out in the Group's Annual Report and Accounts for the year ended 30 June 2009 on pages 34 to 40.

The interim financial information for the six months ended 31 December 2009 does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006 and is unaudited. The comparative figures for the six months ended 31 December 2008 were also unaudited. Statutory accounts for the year ended 30 June 2009 were approved by the Board of Directors on 9 September 2009 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

This interim financial information for the six months ended 31 December 2009 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 'Interim financial reporting' as adopted by the European Union.

2. Revenue and underlying profit before taxation

1 Excluding non-recurring items - See Note 4.

Notes to the consolidated interim financial information continued

3. Segmental information

The chief operating decision-maker has been identified as the Board. The Board reviews the Group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports.

Segment assets

Segmental results

Notes to the consolidated interim financial information continued

4. Property expenses

5. Taxation credit

6. Dividends

A final dividend in respect of 2009 of 5.4p per share was approved at the Company's Annual General Meeting on 19 November 2009 and paid to shareholders on 4 January 2010. This dividend comprised an ordinary dividend of 1.3p per share and a Property Income Distribution ("PID") of 4.1p per share.

An interim dividend in respect of 2010 of 3.02p per share is also proposed. This amounts to an estimated dividend of £1.6m which has not been reflected in this report and which will be paid on 25 March 2010 to shareholders on the register on 5 March 2010.

Notes to the consolidated interim financial information continued

7. Earnings/(loss) per share

The diluted earnings/(loss) per share as at 31 December 2009 is 59.3p per share and underlying is 4.8p (31 December 2008: (137.4p), underlying: 8.2p; 30 June 2009: (210.2p), underlying: 14.8p).

Underlying earnings and earnings per share have been disclosed in order that the effects of disposal profits and losses, revaluation movements and non-recurring items can be fully appreciated.

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average of ordinary shares in issue during the year, excluding those held in the employee share trust which are treated as cancelled.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume the conversion of all dilutive potential ordinary shares. The group has three classes of dilutive potential ordinary shares: those under the Executive Share Option Plan, the Share Incentive Plan and the Save As You Earn Scheme.

Notes to the consolidated interim financial information continued

8.Tangible fixed assets

a) Investment properties

b) Property, plant and equipment

Development properties

Fixtures, equipment and motor vehicles

9. Investments in joint ventures

Notes to the consolidated interim financial information continued

10. Called up equity share capital

Authorised

164,879,000 (30 June 2009: 164,879,000) ordinary shares of 25p each.

Issued and fully paid

11. Cash flow from operating activities

Responsibility statement of the Directors

For the six months ended 31 December 2009

The directors confirm that this condensed consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

·; an indication of important events that have occurred during the first six months and their impact on the condensed interim financial information, 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 and any material changes in the related-party transactions described in the last annual report.

Edward Ziff

Chairman and Chief Executive

Richard Lewis

Group Property Director

24 February 2010