9th Mar 2006 07:01
Town Centre Securities PLC09 March 2006 For Immediate Release Thursday, 9 March 2006 TOWN CENTRE SECURITIES PLC Interim results for the six months ended 31 December 2005 Town Centre Securities PLC, the Leeds based property investment and developmentcompany, today announces its interim results, for the six months ended 31December 2005, the first prepared under International Financial ReportingStandards (IFRS). Highlights: • Profit before tax was £4.5m (2004: £4.4m) after a profit on disposal of investment properties of £0.2m (2004: £0.3m) • Underlying* profit before tax of £4.3m (2004: £4.1m) in line with expectations • Basic earnings per share increased 25% to 7.9p (2004: 6.3p) • Underlying* earnings per share increased 12% to 5.8p (2004: 5.2p) • Interim dividend increased by 5.3% to 2.0p per share (2004: 1.9p) • Retail development of approx 11,000 sq m in Manchester handed over for tenant fit out in December 2005 • Office development of approx 12,000 sq m in Leeds, over 80% pre-let, due to complete in Spring 2006 • Re-entered the car park business with a newly constructed multi-storey car park in Manchester • Bought back a total of 0.7m shares at a cost of £2.9m • Net assets per share are unchanged compared to the previous financial year end at 368p (30 June 2005: 368p), and up 20.7% compared to a year ago (31 December 2004: 305p) • Underlying net assets per share** 447p (30 June 2005: 448p) *excluding investment property disposals and changes in revaluation ofinvestment properties**excluding deferred taxOn 9 March 2006, the Group published via the Stock Exchange and on its website (www.tcs-plc.com) a "transition statement on the adoption of IFRS" ('transitionstatement'). This transition statement described the likely impact of thetransition from UK GAAP to IFRS on the Group's equity, net income and cashflows, as well as providing each of the reconciliations required by IFRS 1. Theinterim report should be read in conjunction with the transition statement. Commenting on the interim results, Chairman and Chief Executive Edward Ziff,said: "Investment yields for the portfolio remain very strong and with the completionof the developments noted above I remain confident that we can continue todeliver long-term growth in shareholder value, which is defined as the increasein net asset value per share plus dividends. "I expect therefore to report a satisfactory performance for the year as awhole." For further information, please contact: Town Centre Securities PLC www.tcs-plc.com -----------------Edward Ziff, Chairman and Chief Executive 0113 222 1234John Sutcliffe, Finance Director Smithfield 0207 360 4900Reg Hoare / Katie Hunt Notes to editors: It is not the Company's practice to revalue properties at the half year. Theinvestment property portfolio is revalued once a year by independent externalvaluers. The next portfolio valuation will take place in June 2006, and will beannounced at the time of the Company's preliminary results. Chairman and Chief Executive's Statement I am pleased to report to shareholders the Group's results for the half yearended 31 December 2005 together with an update on the progress made within ourinvestment and development portfolios. These are the first results to be presented in accordance with InternationalFinancial Reporting Standards (IFRS) which are now obligatory for all listedcompanies. IFRS will result in much greater volatility in reported results asthe change arising from the annual revaluation of the investment portfolio(undertaken at the 30 June each year) will be reported in the income statement.The main change to the balance sheet is the recognition of a deferred taxliability, excluding any benefit from indexation allowances on buildings, basedon the valuation of the investment portfolio at the balance sheet date. We alsoprovide information to show the underlying profit and net asset value per shareto allow shareholders to compare these results with those previously disclosed. Results Gross revenue in the period was £11.9m (2004: £11.7m) with the increaseresulting from higher rents received in the period. Profit before tax was £4.5m(2004: £4.4m); of which sales of investment properties generated a profit of£0.2m (2004: £0.3m). Underlying profit before tax, which excludes the effect ofinvestment property disposals and the revaluation of investment properties, was£4.3m (2004: £4.1m). Basic earnings per share increased 25% to 7.9p (2004: 6.3p)helped by the release of deferred tax from property disposals. Underlyingearnings improved 12% to 5.8p (2004: 5.2p) in part as a result of the lowernumber of shares in issue. Total investment property assets were £365m, compared to £364m as at 30 June2005. Net assets were £204m (30 June 2005: £205m) with the addition of retainedearnings being offset by dividends paid of £3.5m and the £2.9m cost of acquiringshares for cancellation. Under revised IFRS reporting, net asset value (NAV) pershare remained the same at 368p (30 June 2005: 368p). Compared to previouslyreported NAV per share at 30 June 2005 of 431p, the key change is the IFRSdeferred tax provision of £43.7m. Adjusting net assets for the £43.7m (30 June2005: £44.8m) deferred tax provision gives a NAV per share of 447p (30 June 2005: 448p). Total borrowings of £162m result in gearing of 79%,compared to borrowings of £141m and gearing of 68% at 30 June 2005. The increasereflects our investment in developments under construction, propertyacquisitions, the purchase of equity investments and share buy backs. In linewith our policy these interim results do not include a property revaluation,which is carried out annually at 30 June. Dividends I am pleased to declare a 5.3% increase in the interim dividend to 2.0p pershare (2004: 1.9p). The dividend will be paid on 30 June 2006 to shareholdersregistered on 2 June 2006. Review of activities Property sales and acquisitions During the period we sold two investment properties for £2.4m, realising a netgain after disposal costs of £0.2m. In addition the property held for trading byour joint venture in Scotland was sold realising a post tax gain after all costsof £0.3m. Our principal acquisitions in the period were 27 and 29 ShandwickPlace, Edinburgh, costing together £2.9m, where we took the opportunity to addadjoining properties to our existing holding. Other, smaller purchases, weremade to facilitate the potential redevelopment of Central Retail Park, Rochdaleand at the Eastgate/Harewood Quarter, Leeds. Asset Management Occupancy rates remained in excess of 98% throughout the period and we continueto conclude rent reviews ahead of expectations. We received planning consent forthe redevelopment of our ownership in Wrexham which will take approximately ayear to complete. Development projects Our two mixed use development projects at Whitehall Riverside, Leeds andPiccadilly Basin, Manchester continue to make good progress. The first officebuilding at Whitehall Riverside is due to complete in the spring of 2006comprising a net floor area of approximately 12,000 sq m (128,000 sq ft). Duringthe construction process we have added a pre-letting to accountancy practiceGrant Thornton to agreements already reached with Cobbetts and Russell Mellon.In total over 80% of the building is pre-let. At Piccadilly Basin, we handed over the pre-let retail unit comprising 11,150 sqm (120,000 sq ft) at the beginning of December in order for ILVA to commencetheir fit out. It is anticipated that trading will commence in the summer of2006. Our development arrangement, with Hammerson plc, in Leeds is progressingsatisfactorily towards the submission of a planning application in the latespring of this year. Car Parking Through Town Centre Car Parks Limited we have re-entered the car parks business.At the end of December we completed a 242 space multi-storey car park inManchester adjoining the retail development for ILVA and will be operating thisfacility ourselves. By the end of June 2006 we will have increased the number ofspaces under management to over 1,300. Share buy backs During the period we acquired a total of 724,117 shares at a cost of £2.9m.Shareholders renewed the authority to continue this process at the AnnualGeneral Meeting in November 2005. Outlook Investment yields for the portfolio remain very strong and with the completionof the developments noted above I remain confident that we can continue todeliver long-term growth in shareholder value, which is defined as the increasein net asset value per share plus dividends. I expect therefore to report a satisfactory performance for the year as a whole. Edward ZiffChairman and Chief Executive9 March 2006 Unaudited Consolidated Income Statementhalf year ended 31 December 2005 Half year Half year Year ended ended ended 31 31 30 December December June 2005 2004 2005 Restated Restated Notes £000 £000 £000Continuing operations------------------------- ------ ---------- ----------- ---------Gross revenue 11,869 11,716 23,865Property expenses (717) (673) (1,151)------------------------- ------ ---------- ----------- ---------Net revenue 2 11,152 11,043 22,714Administrative expenses (2,101) (1,742) (5,707)Other income 375 284 411Profit on disposal of investmentproperties 222 348 2,306Valuation movement on investmentproperties - - 42,703------------------------- ------ ---------- ----------- ---------Operating profit 9,648 9,933 62,427Interest payable (5,421) (5,599) (11,338)Interest receivable 52 4 48Share of post tax profits from jointventures 263 70 364------------------------- ------ ---------- ----------- ---------Profit before taxation 4,542 4,408 51,501Taxation 3 (140) (701) (11,952)------------------------- ------ ---------- ----------- ---------Profit for the period 4,402 3,707 39,549------------------------- ------ ---------- ----------- --------- All profit for the period is attributable toequity shareholders. Earnings per ordinary share of 25peach: 4 Basic 7.9p 6.3p 69.5p Diluted 7.8p 6.3p 68.7p Dividend declared per ordinary shareof 25p each 5 2.0p 1.9p 8.2p------------------------- ------ ---------- ----------- --------- Unaudited Consolidated Statement of Recognised Income and Expensehalf year ended 31 December 2005 Half year Half year Year ended ended ended 31 December 31 December 30 June 2005 2004 2005 Restated Restated £000 £000 £000----------------------------- ---------- ----------- ---------Profit for the period 4,402 3,707 39,549 Revaluation gains on other investments 518 21 580----------------------------- ---------- ----------- ---------Total recognised income for the period 4,920 3,728 40,129----------------------------- ---------- ----------- --------- All recognised income for the period is attributable to the equity shareholders. Unaudited Consolidated Balance Sheethalf year ended 31 December 2005 31 December 31 December 30 June 2005 2004 2005 Restated Restated Notes £000 £000 £000------------------------- ------ ---------- ---------- ---------- Non-current assetsInvestment properties 6 365,363 345,161 363,640Property, plant and equipment 6 45,503 18,009 29,100Investments in joint ventures 1,684 1,203 2,815Prepaid operating lease payments 262 230 255Deferred tax assets 717 48 717------------------------- ------ ---------- ---------- ----------Total non-current assets 413,529 364,651 396,527------------------------- ------ ---------- ---------- ---------- Current assetsInvestments 8,802 549 4,902Trade and other receivables 3,262 3,304 4,795------------------------- ------ ---------- ---------- ----------Total current assets 12,064 3,853 9,697------------------------- ------ ---------- ---------- ----------Total assets 425,593 368,504 406,224------------------------- ------ ---------- ---------- ---------- Current liabilitiesBank overdrafts (4,483) (6,528) (5,579)Trade and other payables (15,331) (14,888) (14,636)------------------------- ------ ---------- ---------- ----------Total current liabilities (19,814) (21,416) (20,215)------------------------- ------ ---------- ---------- ----------Net current liabilities (7,750) (17,563) (10,518)Non-current liabilitiesBorrowings (157,163) (142,227) (135,196)Deferred tax liabilities (44,482) (33,582) (45,492)------------------------- ------ ---------- ---------- ----------Total non-current liabilities (201,645) (175,809) (180,688)------------------------- ------ ---------- ---------- ----------Total liabilities (221,459) (197,225) (200,903)------------------------- ------ ---------- ---------- ----------Net assets 204,134 171,279 205,321------------------------- ------ ---------- ---------- ---------- Shareholders' equityCalled up share capital 7 13,856 14,050 13,963Share premium account 1,064 718 818Other reserves 20,329 20,275 20,396Retained earnings 168,885 136,236 170,144------------------------- ------ ---------- ---------- ----------Total equity 8 204,134 171,279 205,321------------------------- ------ ---------- ---------- ---------- Net assets per share 368p 305p 368p------------------------- ------ ---------- ---------- ---------- Unaudited Consolidated Cash Flow Statementhalf year ended 31 December 2005 Half year Half year ended ended 31 Year ended 31 December December 30 June 2005 2004 2005 Restated Restated £000 £000 £000 £000 £000 £000 ------------------- ------- ------- ------- -------- ------- ---------Cash flows from operatingactivitiesCash generatedfrom operations 12,050 10,590 17,654Interest paid (5,282) (5,507) (11,413)Interest received 52 4 29Tax paid (372) (718) (1,463)------------------- ------- ------- ------- -------- ------- ---------Cash generatedfrom operations 6,448 4,369 4,807------------------- ------- ------- ------- -------- ------- --------- Cash flows from investingactivitiesPurchases of investmentproperties (3,873) (11,661) (13,159)Purchases of property,plant and equipment (16,519) (3,414) (14,646)Purchase ofinvestments (3,883) (227) (4,116)Proceeds from sale ofinvestment properties 2,372 3,867 31,529Proceeds from sale ofproperty, plant andequipment 33 50 107Proceeds from sale ofinvestments 545 93 238Dividends received fromjoint venture 75 - -Loan to joint venture forpurchase of investmentproperty - - (1,318)------------------- ------- ------- ------- -------- ------- ---------Cash outflow from investingactivities (21,250) (11,292) (1,365)------------------- ------- ------- ------- -------- ------- --------- Cash flows from financingactivitiesProceeds from issue of sharecapital 320 268 398Consideration paid forpurchase of own shares - - (40)Proceeds from othernon-current borrowings 22,000 16,000 9,000Repurchase of share capital (2,930) (10,253) (11,699)Dividends paid toshareholders (3,492) (2,305) (3,365)------------------- ------- ------- ------- -------- ------- ---------Cash inflow/(outflow) from financingactivities 15,898 3,710 (5,706)------------------- ------- ------- ------- -------- ------- --------- Net increase/(decrease) in cash and cashequivalents 1,096 (3,213) (2,264)Cash and cashequivalents at1 July (5,579) (3,315) (3,315)------------------- ------- ------- ------- -------- ------- ---------Cash and cashequivalents atthe period end (4,483) (6,528) (5,579)------------------- ------- ------- ------- -------- ------- --------- The Cash Flow Statement should be read in conjunction with Note 9. Notes to the Unaudited Interim Statementhalf year ended 31 December 2005 1. Accounting policies Town Centre Securities PLC ('the Group'), along with all other European listedentities on recognised exchanges, is required to prepare consolidated financialstatements in accordance with International Accounting Standards ('IAS') andInternational Financial Reporting Standards ('IFRS'), hereafter referred toindividually and collectively as 'IFRS', as endorsed by the European Union('EU') for years beginning on or after 1 January 2005. The Group is applying IFRS for the year ending 30 June 2006, and will prepareone year of comparative figures under IFRS. Accordingly the Group's date oftransition to IFRS is 1 July 2005 and its first reporting period under IFRS isthe half-year ended 31 December 2005. On 9 March 2006, the Group published via the Stock Exchange and on its website (www.tcs-plc.com) a "transition statement on the adoption of IFRS" ('transitionstatement'). This transition statement described the likely impact of thetransition from UK GAAP to IFRS on the Group's equity, net income and cashflows, as well as providing each of the reconciliations required by IFRS 1. Theinterim report should be read in conjunction with the transition statement. The financial information presented in this interim statement does notconstitute a set of statutory accounts and is unaudited. Basis of preparation The financial information in this interim report has been prepared on the basisof all IFRS's that had been published by 30 June 2005 and apply to accountingperiods beginning on or after 1 January 2005. During 2006 further standards and interpretations may be issued that will beapplicable for financial years beginning on or after 1 July 2005 or that areapplicable to later accounting periods but may be adopted early. The Group'sfirst IFRS financial statements may, therefore, be presented in accordance withsome different accounting policies from the financial information presented inthe interim report. The accounting policies followed in the preparation of this interim report wereset out in full in the transition statement and have been consistently appliedto all the years presented except for those relating to the classification andmeasurement of financial instruments. The Group has made use of the exemptionavailable under IFRS 1 to only apply IAS 32 and IAS 39 from 1 July 2005. The comparative figures for the financial year ended 30 June 2005 are not theGroup's statutory accounts for the financial year. Those accounts, which wereprepared under UK GAAP in accordance with the Companies Act 1985, have beenreported on by the Company's auditors and delivered to the registrar ofCompanies. The report of the auditors was unqualified and did not containstatements under section 237(2) or (3) of the Companies Act 1985. Investment properties Investment properties comprise mainly retail units and offices and are measuredinitially at cost, including related transaction costs. These are held asinvestments to earn rental income and for capital appreciation and are stated atfair value at the balance sheet date. Investment property comprises freehold land, freehold buildings, land held underoperating lease and buildings held under finance lease. After initial recognition investment property is carried at fair value, based onmarket values and is determined annually by independent external valuers. Thesurplus or deficit arising from these valuations is included in the incomestatement. When an existing investment property is redeveloped for continuedfuture use as an investment property it remains an investment property whilst indevelopment. The fair value of investment property reflects, among other things, rentalincome from current leases and assumptions about rental income from futureleases in light of current market conditions. Subsequent expenditure is charged to the asset's carrying amount only when it isprobable that future economic benefits associated with the item will flow to theGroup and the cost of the item can be measured reliably. All other repairs andmaintenance costs are charged to the income statement during the financialperiod in which they are incurred. Property that is being constructed or developed for future use as an investmentproperty is classified as property, plant and equipment and stated at cost untilconstruction or development is complete, at which time it is reclassified andsubsequently accounted for as investment property. The gain or loss arising on the disposal of investment properties is determinedas the difference between the net sale proceeds and the carrying value of theasset at the beginning of the period and is recognised in the income statement. Investment properties have not been revalued as at 31 December 2005. Therefore,tangible assets comprise the 30 June 2005 valuation adjusted for additions anddisposals in the interim period. 2. Segmental analysis A business segment is a group of assets and operations engaged in providingproducts or services that are subject to risks and returns that are differentfrom those of other business segments. A geographical segment is engaged in providing products or services within aparticular economic environment that are subject to risks and returns that aredifferent from those of segments operating in other economic environments. The Group's primary segment is business and the Group operates in one businesssegment; comprising property investment and development. The Group's operationsare performed wholly in the United Kingdom. 3. Taxation Taxation has been calculated on profits based on an anticipated effective taxrate of 25.3% on headline earnings for the year to 30 June 2006. 31 December 31 December 30 June 2005 2004 2005 £000 £000 £000--------------------- ------------- ------------- -------------Current tax 1,150 704 728Deferred tax (1,010) (3) 11,224--------------------- ------------- ------------- ------------- 140 701 11,952--------------------- ------------- ------------- ------------- 4. Earnings per share Half year ended Half year ended Year ended 31 December 31 December 30 June 2005 2004 2005 ------------ ----------- ------------ Earnings Earnings Earnings Earnings per Earnings per Earnings per share share share £000 Pence £000 Pence £000 Pence--------------------- ------- -------- ------- -------- ------- ---------Earnings and earnings per share 4,402 7.9 3,707 6.3 39,549 69.5Post tax profit ondisposal of investmentproperties (155) (0.3) (244) (0.4) (4,129) (7.3)Post tax exceptionalpension costs - - - - 1,400 2.5Revaluation movement oninvestment propertiesreported in incomestatement - - - - (42,703) (75.1)Revaluation movement oninvestment properties injoint ventures reported in income statement - - - - (290) (0.5)Deferred tax on revaluation of investment propertiesreported in incomestatement (1,010) (1.8) (455) (0.7) 12,507 22.0--------------------- ------- -------- ------- -------- ------- ---------Underlying earnings and earnings pershare 3,237 5.8 3,008 5.2 6,334 11.1--------------------- ------- -------- ------- -------- ------- --------- The earnings per share is calculated on the weighted average of 55.8m ordinaryshares in issue (31 December 2004: 58.3m, 30 June 2005: 56.9m). The dilutedearnings per share as at 31 December 2005 is: 7.8p per share and underlying:5.8p (31 December 2004 is: 6.3p, underlying: 5.1p, 30 June 2005 is: 68.7p,underlying: 11.0p). 5. Dividends paid Pence Half year ended Half year ended Year ended per 31 December 31 December 30 June Share 2005 2004 2005 £000 £000 £000 ------------------- -------- ---------- ----------- -------------2004 final 4.1 - 2,428 2,4282005 interim 1.9 - - 1,0612005 final 4.3 2,402 - -2005 special 2.0 1,118 - -Over provision (28) (123) (124)------------------- -------- ---------- ----------- ------------- 3,492 2,305 3,365------------------- -------- ---------- ----------- ------------- A final dividend in respect of 2005 of 4.3p per share, and a special dividend of2.0p per share amounting to a total dividend of £3,492,000, were approved at thecompany's Annual General Meeting on 23 November 2005 and were paid on 3 January2006. An interim dividend in respect of 2006 of 2.0p per share, amounting to a totaldividend of £1,108,000, was declared by the directors. The interim report doesnot reflect the 2006 interim dividend payable. The dividend will be paid on 30June 2006 to shareholders on the register on 2 June 2006. 6. Tangible fixed assets Investment properties Long Freehold leasehold Total £000 £000 £000--------------------- ------------- ------------ -------------Valuation at 1 July 2005 342,700 20,940 363,640Additions 3,585 288 3,873Disposals (2,150) - (2,150)--------------------- ------------- ------------ -------------Balance at 31 December 2005 344,135 21,228 365,363--------------------- ------------- ------------ ------------- Property, plant and equipment Development properties £000------------------------------------------- ------------Cost at 1 July 2005 28,726Additions 16,278------------------------------------------- ------------Balance at 31 December 2005 45,004------------------------------------------- ------------ Fixtures, equipment and motor vehicles £000------------------------------------------- ------------Net book value at 1 July 2005 374Additions 241Disposals (26)Depreciation (90)------------------------------------------- ------------Balance at 31 December 2005 499------------------------------------------- ------------Total property, plant and equipment at 31 December 2005 45,503------------------------------------------- ------------ 7. Called up equity share capital Authorised 164,879,000 (30 June 2005: 164,879,000) ordinary shares of 25p each. Issued and fully paid Number Nominal of shares Value 000 £000--------------------------------- -------------- ----------At 1 July 2005 55,856 13,963Buy back of own shares (724) (181)Issued on take-up of options 291 74--------------------------------- -------------- ----------At 31 December 2005 55,423 13,856--------------------------------- -------------- ---------- 8. Statement of changes in shareholders' equity Half year Half year Year ended ended ended 31 December 31 December 30 June 2005 2004 2005 £000 £000 £000---------------------------- ---------- ---------- ----------Profit for the period 4,402 3,707 39,549Dividends (3,492) (2,305) (3,365)---------------------------- ---------- ---------- ---------- 910 1,402 36,184Arising on purchase and cancellation ofown shares (2,930) (10,253) (11,699)New share capital subscribed 320 268 398Surplus on revaluation of investments 518 21 580Consideration paid for purchase of ownshares (held in trust) (5) (53) (36)---------------------------- ---------- ---------- ----------Net (decrease)/increase inshareholders' equity (1,187) (8,615) 25,427Opening shareholders' equity 205,321 179,894 179,894---------------------------- ---------- ---------- ----------Closing shareholders' equity 204,134 171,279 205,321---------------------------- ---------- ---------- ---------- 9. Cash flow from operating activities Half year Half year Year ended ended Ended 31 December 31 December 30 June 2005 2004 2005 £000 £000 £000---------------------------- --------- ----------- ----------Profit for the period 4,402 3,707 39,549Adjustments for:Tax 140 701 11,952Depreciation 90 98 186Profit on disposal of investmentproperties (222) (348) (2,306)Realised gains on disposal of property,plant and equipment and listedinvestments (50) (18) (72)Interest received (52) (4) (48)Interest expense 5,421 5,599 11,338Share of joint venture profit after tax (263) (70) (364)Movement in revaluation of investmentproperties - - (42,703)Operating lease incentives and IFRS 2adjustments - - (16)Movement in working capital 2,584 925 138---------------------------- --------- ----------- ----------Cash generated from operations 12,050 10,590 17,654---------------------------- --------- ----------- ---------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Town Centre