TIDMTOWN
RNS Number : 3614N
Town Centre Securities PLC
24 September 2019
Tuesday 24 September 2019
TOWN CENTRE SECURITIES PLC
('TCS' or the 'Company')
Final results for the year ended 30 June 2019
Delivering in an uncertain market
Town Centre Securities PLC, the Leeds, Manchester, Scotland, and
London property investment, development and car parking company,
today announces its audited final results for the year ended 30
June 2019.
Financial performance
-- Dividends:
o Full year, fully covered, dividend maintained at 11.75p (2018:
11.75p)
o TCS has now held or improved its dividend every year for the
past 59 years
-- Net assets:
o EPRA net assets per share down 7.8% to 354p (2018: 384p)
o Devaluation of like for like investment portfolio limited to
3.8%
-- Profits and earnings per share:
o EPRA profit before tax down 7.9% to GBP6.4m (2018: GBP6.9m),
driven by various factors including investments, the short-term
effect of retail CVAs, and a one-off dilapidation benefit in the
prior year
o EPRA earnings per share down 7.9% to 12.0p (2018: 13.0p)
o Statutory loss before tax GBP12.5m (2018: profit of GBP18.4m)
and statutory loss per share 23.5p (2018: profit of 34.6p),
primarily reflect the unrealised GBP18.3m valuation movement on our
investment properties
-- Financing:
o Headroom of over GBP26m at period end, following Merrion House
financing
o Loan to value of 49.3% as at 30 June 2019 (2018: 47.5%),
driven by the unrealised valuation movement
o Net cash borrowing at its lowest level for over three
years
Operational performance
-- Robust underlying operational performance with like for like
passing rent up 2.6% (2018: 4.1%) driven by the redevelopment at
Milngavie
-- Overall occupancy level increased to 96% (2018: 95%)
-- Retail and Leisure exposure reduced to below 50% from 70% in 2016
-- Investment portfolio (including Joint Ventures) initial yield
at 6.0%, with reversionary yield at 6.8%
Actively managing our assets
Our long-standing strategy has been to build a portfolio of
assets that have opportunity for income and capital growth
following active management and redevelopment. In the year this
included:
-- Conversion of the retail unit in Milngavie vacated by
Homebase, creating two units let to Aldi and Home Bargains, driving
an 8% increase in rent and a net 23% increase in value
-- Purchase of The Cube in Leeds and Ducie House in Manchester,
both presenting significant opportunities for growth with
redevelopment schemes underway in both buildings
-- Continued strengthening of our portfolio and responding
quickly to changes in physical retailing enabled TCS to weather the
current market challenges of retail CVAs and administrations:
o Eight tenants either went into administration or launched a
CVA during the year
o Of those eight units, four have been re-let to new tenants and
a further three have seen the incumbent retailer choose to remain
at the same rent
o One unit now void and in the process of being re-let. This
unit represent just 0.4% of the total rent roll.
-- Our CitiPark business continued to grow and contribute a
diversified source of earnings with net revenues up 8.2% year on
year, and operating profit up 9.7% year on year
Maximising available capital
A conservative capital structure, with a mix of short and
long-term secure financing, has always underpinned our approach.
During the year:
-- TCS completed the innovative financing of Merrion House with
Leeds City Council resulting in a cash advance of GBP26.4m in July
2018
-- We continue to dispose of ex-growth assets, most notably
selling Rochdale Retail Park in January for GBP13.2m
Investing in our development pipeline
Our development pipeline, with an estimated GDV of over GBP600m,
is a valuable and strategic point of difference for TCS which we
continue to progress and improve. Notably in the past year:
-- We have completed construction of our 91-unit PRS scheme
Burlington House in Manchester in joint venture with Highgrove
Group. The scheme is already 99% let and is ahead of our rental
expectations
-- We achieved planning approval for a 17-storey office tower
above the Merrion Centre, adding to immediate value, and further
improving the value of our development pipeline
Acquiring investment assets to diversify our portfolio
We continue to seek out diversification opportunities through
the acquisition of investment assets that offer the opportunity for
growth. In the year:
-- Reduced exposure to Retail. The proportion of Retail &
Leisure assets by value within the portfolio fell to below 50%,
from 55% last year and 70% in 2016
-- More specifically, when excluding Leisure tenants, the pure
Retail proportion represents only 36% of the portfolio
-- In October 2018 we acquired The Cube in Leeds for GBP12m. The
asset has provided valuable income in the year. We have re-let 20%
of the office space, and are now in the process of redeveloping the
remaining space for improved longer-term return
Commenting on the results, Chairman and Chief Executive Edward
Ziff, said:
"We have delivered a robust underlying performance, whilst
continuing to re-position the portfolio for the long-term and
maintaining our 59-year dividend record, despite a challenging
retail sector context and ongoing economic uncertainty.
"Short-term fluctuations in valuations do not shake our
confidence in our business model and conservative management
approach. The strength of our portfolio and the quality of our
development pipeline substantiate the potential for long-term
growth. Although we see an ongoing role for the type of retail
assets that we own in the areas we know intimately, we continue to
increase our exposure to non-retail sectors.
"Given the current sector challenges and the growing gap between
our share price and the underlying value of the business, we
continue to look at our potential strategic options. We believe it
is appropriate to accelerate the disposal of ex-growth retail
properties, which despite the potential short-term impact to
income, will de-risk the portfolio and free up capital to
re-invest. We are in the process of reviewing priorities within our
development pipeline where we see latent value, whilst the
opportunity for an earnings and NAV enhancing share buy-back given
our deeply discounted share price is also under consideration."
-Ends-
For further information, please contact:
Town Centre Securities PLC www.tcs-plc.co.uk / @TCS PLC
Edward Ziff, Chairman and Chief Executive 0113 222 1234
Mark Dilley, Group Finance Director
MHP Communications 0203 128 8572
Reg Hoare / Alistair de Kare-Silver tcs@mhpc.com
Chairman and Chief Executive's Statement
We remain committed to pursuing our strategy for long-term value
creation, despite market fluctuations.
Delivering in an uncertain market
Against a challenging retail sector context and ongoing economic
uncertainty, we have delivered a robust underlying performance,
whilst importantly continuing to re-position the portfolio for the
long-term, and maintaining our long-standing dividend record.
Overall occupancy reached 96% (2018: 95%), and like-for-like
passing rent increased by 2.6% relative to a year ago. The value of
our portfolio stands at GBP394m, with less than 50% of the
portfolio comprising Retail and Leisure assets, which compares to
55% a year ago, and 70% three years ago. To have generated these
results against such a backdrop is testament to the hard work of
the TCS team.
The like for like valuation of our portfolio reduced by 3.8% in
the year (FY18: up 3.2%). This reduction has been driven by the
continued pressure on retail valuations. However, in comparison to
some of our peers, we believe the combination of the quality of our
assets alongside the reducing proportion of retail assets in our
portfolio, has played an important role in limiting the level of
devaluation.
EPRA earnings in the year were GBP6.4m (FY18: GBP6.9m) resulting
in EPRA EPS of 12.0p (FY18: 13.0p). As discussed in more detail in
the Finance section the year on year reduction was driven by a
number of factors including the effect of Retail CVAs and
administrations, legal and professional fees, and a one-off
dilapidation credit in the prior year.
We report a statutory loss for the year of GBP12.5m (FY18:
Profit of GBP18.4m), which is as a result of the unrealised
devaluation of our investment properties of GBP18.3m.
We continue to benefit from a secure mix of debt funding, which
was strengthened last year following the renewal or extension of
our bank facilities, and further improved at the beginning of this
financial year by the completion of the innovative Merrion House
financing arrangement with Leeds City Council. Following a number
of years of reporting reducing levels of leverage, we have this
year seen our Loan to Value level increase to 49.3% (FY18: 47.5%).
However, this is completely driven by the reduction in value of our
like for like investment portfolio, and we have seen absolute
borrowing levels drop to GBP182m (FY18: GBP193m).
In tough times such as these it is important that we stick to
our strategy and ethos of focusing on long-term income and capital
gain, even if this means riding out short-term challenges:
-- Actively managing our assets to optimise income and capital growth;
-- Maximising available capital by selling sites that no longer
meet our growth criteria and maintaining conservative financing,
with the aim of reducing gearing over the longer term;
-- Investing in our development pipeline, continuing to unlock
existing opportunities and create new ones;
-- Acquiring investment assets to diversify our portfolio across
sectors, with a focus on Leeds and Manchester.
Actively managing our assets
The travails of the retail sector are well documented, with long
established household names struggling for survival and Company
Voluntary Arrangements (CVAs) increasingly common as a means of
reducing retailers' rental liabilities. Although we have not been
immune to the surge of retail CVAs, our agile approach to intensive
asset management has mitigated their ongoing impact. During the
financial year, eight of our tenants entered into administration or
CVAs. By June four units had been re-let to new tenants and a
further three have seen the incumbent retailer remain, such that,
on average, we have generated rents of at least the previous level.
The remaining unit represents only 0.4% of the total rent roll.
An example of this is the former Mothercare site on the Holloway
Road in north London, where the terms of the CVA resulted in a rent
reduction to 30% of the contracted amount. We gave notice to
Mothercare, re-let the outlet to The Works and are converting the
upper storey to residential use, such that the total rent for the
property will be 24% greater than it was with our former tenant.
Similarly, when Poundworld, one of our Merrion Centre tenants, went
into administration we re-let the site to Iceland at the same rent
as part of a new, 10-year lease. These cases underline our strongly
held belief that retail assets acquired in the right locations at
the right price have a valuable role in our portfolio, although we
monitor tenant performance and outlook to ensure we act swiftly to
manage risk.
New schemes to generate growth have been identified at The Cube
and Vicar Lane in Leeds, and Ducie House in Manchester. Again,
further detail of our active asset management approach, including
lease restructures and rent reviews, is provided in our Portfolio
Review.
Maximising available capital
A conservative capital structure, with a mix of short- and
long-term secure financing, has always underpinned our approach.
During the year we completed the innovative financing of the
Merrion House office complex, following the most recent part of the
last decade's redevelopment and letting to Leeds City Council.
Under the agreement, the Council paid all of the base rent due for
the term of the 25-year lease. The resulting net cash injection of
GBP26.4 million allowed us to complete the acquisition of The Cube,
an office, leisure and residential property in Leeds, ahead of
selling our Rochdale Retail Park asset, thereby protecting income.
In addition to the financial flexibility Merrion House has given
us, it is gratifying to have turned a tired, 1970s office block
into a vibrant, successful building occupied by a long-term tenant
with more than 2,200 employees.
We continue to proactively dispose of ex-growth assets in order
to provide capital to invest in future growth. Since FY14 we have
sold over GBP101m of assets representing almost a third of our
current investment property portfolio, including most recently
Rochdale Retail Park for GBP13.2m.
Investing in our development pipeline
Over the years we have established a high quality pipeline of
development opportunities, reflected in ongoing increases in
valuation. Centred on Piccadilly Basin in Manchester, and Whitehall
Road and Merrion in Leeds, our pipeline has an estimated Gross
Development Value of over GBP600m, and comprises predominantly
office and residential assets.
Most of the developments are part of local authority approved
Strategic Planning Frameworks or have detailed planning permission.
We have an abundance of opportunity within our development
pipeline, but with the economic environment as challenging and
unsettled as it currently is, it is important that we take our time
and ensure we take the most appropriate next steps. Following the
appointment of Lynda Shillaw as Group Property Director in
November, we have been reviewing our development assets to evaluate
the scope to create even more value than the current plans deliver.
As a result, we are in the process of reviewing the prioritisation
of the development pipeline.
We recognise that further capital is required to unlock the
latent value in the development pipeline and we continue to look at
all options, but this is not a time to hurry and we will proceed
when the time is right to create long-term value for
shareholders.
Acquiring investment assets to diversify our portfolio
Although it is important to differentiate between segments of
the retail sector, the overall market context validates our
strategy to diversify our portfolio to maximise returns. Retail and
Leisure now accounts for 50% of our portfolio value, down from 70%
in 2016. Capital recycling has been key to this strategic
repositioning, with divestment of ex-growth assets, targeted
acquisitions and the ongoing unlocking of our development pipeline
all playing a part.
Half of the value of our retail portfolio relates to the Merrion
Centre, our longest held and largest single asset that continues to
generate attractive income following a GBP70m investment programme
over the last decade. This year we celebrated the Merrion Centre's
55(th) year, its longevity and success a testament of the long-term
focus and vision of the Company. In the last year occupancy was 96%
and we collected record levels of rent. Around 50% of income from
this 1m sq ft mixed use site relates to retail and leisure. Of
this, Morrisons accounts for half, and the majority of our other
retail tenants operate in discount and convenience, the more
resilient segments of the market.
Other assets acquired and developed during the year enhanced our
position in non-retail sectors, with our network of contacts and
entrepreneurial mindset allowing us to capitalise on attractive
opportunities as they have arisen. The completion of Burlington
House in May signals our first material participation in the
purpose built, private rented sector and this is now 99% let. We
are advancing other residential projects, with Eider House being
the likely next phase of our Piccadilly Basin development to
commence, and our development pipeline is skewed towards office and
residential uses. More detail is available in the Portfolio Review.
Our car parking activities are also a core part of our
diversification strategy. They are discussed in a dedicated section
below.
We operate in geographical areas that have been less exposed to
the more extreme swings of the property cycle seen in the South
East. 77% of our portfolio is in Leeds and Manchester, both of
which are thriving. In Leeds, the plans for Channel 4 to open
offices and the consolidation of HMRC's satellite tax offices into
a building opposite one of our sites serve to drive up values in
the city centre, as does the heightened interest from institutional
investors looking beyond London. In the longer term, if both
Northern Powerhouse Rail (HS3) and HS2 go ahead, the economies of
both Leeds and Manchester would benefit significantly.
Growing CitiPark
This area of our business has continued to grow, with revenue up
by 8.2% and profitability by 9.7%. Accounting for 28% of Group
revenues and 31% of operating profits, CitiPark is an important
source of value creation for TCS. Well invested branches with
technological innovations to enhance the customer experience and
our operational efficiency have been central to our growth
strategy. Customers of our strategic branches benefit from online
booking, and barrier and cash-less systems enabled by automatic
number plate recognition. We recently launched a mobile app to
further facilitate customer interaction, with strong early take-up.
Electric vehicle charging is available in all branches, and we
recently installed a 50kW rapid charger in the Merrion Centre, the
first of its type in Leeds City Centre.
We also continue to work closely with Yourparkingspace.co.uk,
which matches drivers with available spaces across the country via
its website and mobile app. We own a 15% stake in the business,
which is in the process of undertaking a new round of fundraising
to further its ambitions.
Aside from our strategic car parking facilities, CitiPark has
provided a valuable means of generating income from areas of our
property development portfolio that otherwise would be unutilised
as they await investment.
Investing in 'PropTech'
Sparked by our work with Yourparkingspace.co.uk, in recent years
we have evaluated opportunities to invest in property-related
technology companies. During the year we made a US$0.5m equity
investment in WiredScore, a US based company that provides a
commercial real estate rating system that empowers landlords to
understand, improve, and promote their buildings' digital
infrastructure. We also have a GBP25,000 investment in GetRntr, a
start--up company that provides data--driven technology solutions
to simplify property licensing in the PRS space.
Creating long-term value for shareholders
Our objective has always been to generate value for our
shareholders, with a particular emphasis on income and dividend,
and we are very proud of our unbroken, 59-year history of
maintaining or increasing dividends. A source of frustration in
recent times has been the disconnect between our share price and
net asset value per share. We firmly believe that our long history
of value creation combined with our material development pipeline
should present an excellent investment opportunity for
investors.
GBP1,000 invested in TCS shares 50 years ago would today be
worth circa GBP580,700 on a total return basis, equivalent to a
CAGR of 13.6% per annum (Source: Datastream). Furthermore, again
over the last 50 years, the TCS share price has increased in value
by an average annual rate of 9.1%, compared to the FTSE All Share
at 7.0% (As at 9/8/19)
Despite a tough year, the Board is pleased to recommend a final
dividend of 8.50p per share. With the interim dividend of 3.25p per
share, this gives a total of 11.75p per share (2018: 11.75p). Of
the final dividend of 8.50p, 4.50p will be made up of a Property
Income Distribution, and will be paid on 7 January 2020 to
shareholders on the register on 6 December 2019.
Operating responsibly
Contributing to our local areas through fundraising activities,
volunteering and events has always been an important part of our
ethos. We support a wide range of not-for-profit organisations, and
helped raise a total of over GBP150,000 for charities in the past
year. We are also proud of the role we play in developing
attractive spaces for our tenants and creating thriving
communities.
We strive to minimise our impact on the environment. Our newly
developed and refurbished properties are fitted to achieve
efficient energy performance, we operate solar farms on three of
our sites, and use electric hybrid vehicles in our fleet.
Looking ahead
We have delivered a robust underlying performance, whilst
continuing to re-position the portfolio for the long-term and
maintaining our 59-year dividend record, despite a challenging
retail sector context and ongoing economic uncertainty.
Short-term fluctuations in valuations do not shake our
confidence in our business model and conservative management
approach. The strength of our portfolio and the quality of our
development pipeline substantiate the potential for long-term
growth. Although we see an ongoing role for the type of retail
assets that we own in the areas we know intimately, we continue to
increase our exposure to non-retail sectors.
Given the current sector challenges and the growing gap between
our share price and the underlying value of the business, we
continue to look at our potential strategic options. We believe it
is appropriate to accelerate the disposal of ex-growth retail
properties, which despite the potential short-term impact to
income, will de-risk the portfolio and free up capital to
re-invest. We are in the process of reviewing priorities within our
development pipeline where we see latent value, whilst the
opportunity for an earnings and NAV enhancing share buy-back given
our deeply discounted share price is also under consideration.
Strategy in action
Acquiring investment assets: The Cube
In October 2018 we acquired The Cube from Aviva for GBP12m, at a
net initial yield of over 12.5%. Originally a 1960s office
building, The Cube has been refurbished and extended, and now
comprises 22,000 sq ft of ground floor leisure units together with
50,000 sq ft of offices over three floors.
This acquisition is a great example of our strategic approach to
improving the portfolio by acquiring stock for growth in locations
where we already have a strong presence.
-- Location: Leeds City Centre, in close proximity to the Merrion Centre
-- Yield: extremely attractive yield, primarily due to the
office leases coming to an end by the end of 2019
-- Diversification: Largely office space, the acquisition helps
reduce the Company's exposure to Retail
-- Growth potential: With intensive asset management and
possible capital investment, there is significant opportunity for
long-term capital growth and maintenance of strong levels of
income
The Cube is typical of the assets that TCS looks to invest in,
where the lot size and the building's need for intensive asset
management puts off larger buyers, giving TCS the opportunity to
acquire attractive assets at a competitive price. At the purchase
date, GBP1.25m (77% of the income) was generated through two leases
to the Government and to Capita, with both leases due to expire in
2019. It was clear that Capita, the largest tenant, would seek to
leave by September 2019.
Consistent with our strategy of delivering for the long term, we
expect income levels and value to dip whilst the tenant change and
capital investment are delivered, with the aim of securing long
term income and creating capital growth.
Actions so far:
We have now:
-- Replaced GBP180k of at-risk income with a renewed five-year
lease with the Secretary of State for 10k sq ft
-- The 2(nd) floor, 3(rd) floor and half the 1(st) floor are
currently being marketed, with strong interest
To secure the final lettings and to optimise value from the
asset, we are investing capital to:
-- Reconfigure and improve the remaining office space
-- Improve communal and reception space
We are also looking at opportunities to:
-- Repurpose some of the ground floor leisure space
-- Create flexible co-working space
We believe that once the building is fully let, we will be ahead
of our initial investment case. As we progress with the expected
tenant changes and invest in the space, we do expect FY20 income to
drop year on year.
Actively managing assets: Milngavie
One of our properties in Milngavie, an upmarket commuter town
outside of Glasgow, was previously let to Homebase, who exited
having settled our dilapidations claim in December 2017.
Having sub-divided and improved this 36,500 sq ft unit, it was
let to Aldi and Home Bargains. This change created a significant
opportunity for TCS. Through actions aligned to our strategic
drivers, we unlocked value through:
-- Intensive asset management: The change allowed for investment
in the building and dividing it into two, improving rental levels
and valuation
-- Diversification: Whilst the new tenants are also retailers,
we have been able to significantly improve the covenants. In
addition, the development will include two EV chargers in the car
park as part of our CitiCharge initiative
-- Growth potential: The development work has also
future-proofed the site infrastructure, enabling c. 9k sq ft of
additional usable land which will be able to deliver further new
rental income in the future
Whilst impacting on income as a result of the building being
vacant for c. 18 months, we have created significant value:
Before:
Expired poor covenant Homebase lease delivering c. GBP560k rent
pa, valued at GBP7.8m.
After:
Two new high-quality leases to Aldi and Home Bargains,
delivering 8% more rent and valued at GBP11.1m, following a GBP1.5m
net capital investment.
Looking forward:
We have an option to purchase and develop a sizable site which
sides adjacent to this unit giving future development opportunities
for TCS
Investing in our development pipeline and maximising available
capital: Burlington House
Burlington House is our first dedicated Private Rented Sector
(PRS) property. Located in our Piccadilly Basin development site in
Manchester, the 91-unit property has now achieved practical
completion, is being actively marketed and is 99% let already.
Completion of Burlington House highlights the potential of TCS's
development pipeline and underlines how we continue to
strategically unlock value from the pipeline:
-- Invest in development pipeline: The latest development under
the Strategic Planning Framework at Piccadilly Basin, Burlington
House is an iconic building that will form the centre of our PRS
investment in Manchester
-- Maximise available capital: The investment was undertaken in
50/50 joint venture with Highgrove Group, with c. 60% development
finance being provided by the Greater Manchester Housing Fund,
thereby minimising the capital required by TCS to unlock the
scheme
-- Diversification: This investment in PRS seeks to benefit from
the strong demand for residential property in Manchester, whilst
helping to effectively reduce the proportion of retail within the
portfolio
In detail:
-- 91-unit luxury waterfront scheme designed by acclaimed
architects SimpsonHaugh incorporates 29 one-bed, 56 two-bed, and 6
three-bed apartments in the heart of Manchester
-- GBP22.7m asset created (100% of the asset), valued on a PRS
basis (value for vacant sale estimated at over GBP26m), for the
joint venture, for which TCS invested GBP5.3m including the value
attributed to the land
-- Estimated mature net income of GBP1.1m yielding circa 5%
return on cost, albeit TCS's return on cash spent is significantly
higher
-- Development finance in the process of being replaced with longer term secured financing
-- Belgravia Living branding established for further PRS rollout
in Piccadilly Basin - the next planned PRS unit being Eider House,
with the potential for 128 units
Portfolio Review
We continually strive to enhance our high quality portfolio
through active asset management and capital recycling.
With good quality assets and development land at the heart of
two key regional cities, TCS's portfolio is both resilient and
adaptable to meet market conditions. The strategy to reposition the
portfolio away from retail over the last few years has enabled us
to diversify our income streams by adding more office, hotel and
PRS assets. The Merrion Estate has been a key asset in our
portfolio for 55 years and one that we continue to evolve, most
recently securing planning permission for a new 180,000 sq ft
office tower.
We believe that our focus on the cities of Leeds and Manchester
(77% of our portfolio) creates a point of strategic difference. The
economies of both cities go from strength to strength, and, from a
property perspective, while northern regional cities don't achieve
the same highs, there is less volatility through the cycle than
seen in London and the South East. Our existing portfolio, combined
with the scale of opportunity within our development pipeline,
gives TCS a significant strategic advantage.
TCS prides itself on the active management of our property
portfolio, and we have a long history of active property selling
and buying in order to maintain returns. Whilst the Merrion Estate
has long played a key role and material role in our portfolio,
beyond Merrion we have made significant changes to the portfolio in
recent years.
Since FY14 we have sold over GBP101m of the portfolio,
representing over 30% of the property portfolio. This has resulted
in a material diversification of assets in recent years, with the
proportion of Retail & Leisure within the overall portfolio
reducing to 50% from over 80% ten years ago.
In addition, whilst we are long-term owners of the Merrion
Centre, our continued investment in the asset has ensured it has
moved with the times and remains as relevant today as it was when
it opened 55 years ago. We celebrated the Merrion Centre's 55(th)
birthday this year and highlighted its transition to a mixed-use
investment asset.
Sales and Purchases
It has been an important year in terms of sales and purchases.
The most significant transactions were the acquisition of The Cube
in Leeds for GBP12.0m in October 2018 and the sale of Rochdale
Retail Park for GBP13.2m in January 2019. In addition, we disposed
of a retail property on Shandwick Place in Edinburgh for GBP0.8m,
and acquired two retail properties in London and Glasgow for
GBP1.6m and GBP2.4m respectively.
As the table indicates, the combined acquisitions and sales of
over GBP75m have substantially altered the mix of properties in our
portfolio.
GBPm Sales Purchases
% Retail % Retail
& Leisure & Leisure
FY17 22.3 88% 4.0 46%
FY18 10.1 95% 9.0 0%
FY19 14.0 100% 16.0 25%
46.4 91% 29.0 20%
Rochdale Retail Park was sold to Rochdale Council for GBP13.2m.
The park totalled 70,000 sq ft with current tenants Argos,
Halfords, Matalan and Poundstretcher, all with relatively short
leases. Through its prior ownership of the Rochdale Canal Company,
TCS actively managed a number of developments around Central Retail
Park. As a result, the park was strongly let at an average of
GBP16.50 per sq ft, which was ahead of current market rents. At the
time of sale, the property was valued on our balance sheet at
GBP14.0m, but for TCS the asset was ex growth and the decision to
sell was to avoid further declines in value.
Details on the acquisition of The Cube can be found in the
Strategy in Action section above.
Valuation
These are uncertain times for property investors, with
valuations, particularly in the retail sphere, coming under
significant pressure. As of the June 2019 year end our overall
portfolio valuation decreased by 4.6%. The key drivers of this
movement are:
-- A like for like decrease in the portfolio of 3.8% - this is
all driven by devaluations of retail assets
-- A reduction in value of non like for like assets, mainly
Ducie House in Manchester which had dropped by GBP2.0m at the half
year, as the purchase price included the value of a right of light
claim the building had over our Piccadilly Basin development
site.
TCS has a strategy of investing in core Leeds and Manchester,
providing diversification into the portfolio through investments in
Scotland and London and creating value through intensive asset
management and development of assets. In a difficult market our
performance has been steady. The fall in value across our portfolio
has largely been driven by the stresses in the market on high
street retail which, while part of our core asset base, accounts
for 36% of our assets by value (our portfolio is 50% retail and
leisure by value). The resilience of our portfolio in the current
market comes from the mixed-use nature of the majority of our
investments and our lack of exposure to brands such as Arcadia
Group, BHS, Debenhams and House of Fraser and other high street
fashion retailers.
Retail
The retail sector has had a turbulent 12 months. Major high
street brands have experienced trading difficulties attributable
largely to structural change in consumer trends, oversized
portfolios and the impact of wider economic uncertainties such as
the devalued pound and increased costs.
Pressure has been felt by landlords as tenants have gone into
administration and entered into CVAs or opened up a dialogue on
rent affordability in the current trading climate. Where rents have
been rebased through CVAs for some tenants, others who have
stronger balance sheets and have typically managed their real
estate growth more effectively are beginning to seek some level of
equilibrium in rents with their CVA competitors. This will stall
rental growth/recovery over the short to medium term for all but
the super prime retail stock.
Due to stresses in the trading environment the valuation of the
retail elements of our portfolio deteriorated by 2.7% during the
second half of the year and 5.6% overall year on year. This
relatively robust performance is largely down to the active asset
management and targeted investment across the estate and the
mixed-use nature of much of our portfolio where our strategy has
been to invest in and develop assets which have diversity of uses.
That said within our overall portfolio we have also seen some
significant shifts in value on an asset by asset basis.
Merrion Estate
At the northern edge of Leeds city centre Merrion is the
original mixed-use development and consists of retail and leisure,
office and car parking assets. Adjacent to Leeds Arena and very
much at the centre of a growing student community from both
existing student developments and c 3,500 new student beds under
construction around the centre.
The Merrion valuation (including the hotel) is down by GBP8.6m
year on year, with the equivalent yield moving out from 7.79% to
7.91%. While the fall in valuation continues to reflect the
softening of retail yields much of the second half drop (GBP3.6m)
is attributable to a reduction in the value of the hotel,
reflecting the performance of the restaurant where it has taken us
some time to find the correct format.
The underlying performance of Merrion minus the hotel was
reasonably stable compared to the market with a 5.9% (GBP7.0m) fall
in value over the year reflecting yield shift rather than a decline
in income. As with other landlords we experienced a number of CVAs
and administrations over the year from tenants such as Poundworld,
Crawshaws and Smoke BBQ, but we do not have any exposure to tenants
such as Debenhams, Arcadia Group and House of Fraser where their
CVA actions have had a major impact on shopping centres. The void
rate in Merrion is currently 3.5% and where we have experienced
vacancies we have re-let much of what has come back to us at the
same (or improved) rent levels to tenants such as Iceland and
Ramshaws.
The diversity of our offer has also been maintained as we
continue to curate a good mix of independent and national food and
beverage operators at the centre concluding lettings to Pizza
Express, Starbucks, Chatime and Blue Sakura - which has proved to
be highly popular in particular with the surrounding student
population. We have also continued to invest in Merrion with a
redevelopment of the Wade Lane Mall, securing new leases from
existing tenants and by securing a planning consent for 100MC, a 17
storey, 180,000 square foot office tower.
TCS Retail Overview
Scotland - The cornerstones of our Scottish portfolio are the
prime Glasgow retail assets and our investment in Milngavie. Yield
shift and the Berkertex CVA at our Bath Street asset were the
primary factors in declines in value. Where Bath Street is
concerned the location of the asset is fundamentally strong and
following the tenant CVA we moved quickly to refresh and market the
asset and now have lettings in solicitors' hands in line with
previous rent levels. Any declines in value in our Scottish
portfolio have been more than offset by the redevelopment of the
former Homebase in Milngavie and the conclusion of the lettings to
Aldi and Home Bargains, adding GBP3.7m of value year on year.
In London our investments (cGBP8.7m) are in good quality
secondary high street locations and consist of primarily retail and
residential mixed-use assets, providing geographical diversity into
our portfolio through the cycle. However, yield shift particularly
in the retail elements of these assets has driven some of the
steepest declines in value year on year (-8% to -26%), coupled with
lack of competition from retailers for sites at this point in the
cycle we are seeing rents rebalancing to lower levels with a
corresponding impact on valuation.
Leeds - The valuation of the Vicar Lane retail asset fell by c
22% year on year (GBP2.45m) through a combination of yield shift
and the remaining terms of the occupational leases / current voids.
With an existing tenant wishing to expand their premises and three
new lettings in solicitors' hands, we anticipate some recovery in
value in 2020. Situated in the heart of the new retail area of
Leeds between Hammerson's Victoria Gate development and Victoria
Quarter investment this asset has strong development potential and
we are working up a longer-term scheme to drive value
In Harrogate, 8-10 West Park saw a 16.7% decline in value to
GBP3m through a combination of yield shift and the timing of lease
renewals to existing tenants. Once the current negotiations are
concluded we expect the value to recover.
The value of our Urban Exchange asset in Manchester, fell by
2.6% year on year to GBP17.1m. All of this reduction was in the
first half of the year and largely attributable to yield shift. No
further outward yield movement was seen in the second half of the
year due primarily to the opportunity for future rental growth
driven by the significant amount of development activity in and
around Piccadilly Basin, including the completion of our Burlington
House scheme.
Offices
Our key office holdings are in Leeds and Manchester and are a
mixture of new developments (Merrion House) and secondary assets,
located close to our strategic sites with short-term asset
management opportunities. Office values across our portfolio held
steady year on year, largely underpinned by Merrion House at
GBP34.7m. Carvers Warehouse in Manchester saw a 7% uplift in value
reflecting that it is fully let and that we have successfully moved
rents on.
The office markets in both Leeds and Manchester are strong and
there is a shortage of Grade A and good quality secondary stock in
both cities with much of the development pipeline over the next 18
months pre-let. During the year we acquired Ducie House, adjacent
to our Piccadilly Basin development and The Cube, adjacent to
Merrion in the first half of the year.
Our acquisitions are typical of where we see an opportunity to
drive value. Both had known voids / voids pending and require
investment to reposition them and drive rents on. We have seen dips
in value against purchase price in both assets, reflecting tenant
exits and have worked up investment schemes to reposition the
asset. Both are delivering rents ahead of business plan and we are
on site with the works to Ducie House and ready to go at The Cube
once the exiting tenant hands the space back. Once our works and
the new lettings complete, we expect to see the value of the assets
increase in line with our investment case.
Development
The market for both residential and commercial development in
Leeds and Manchester remains robust with relatively strong growth
forecast for both cities over the next five years fuelled by tech
sector growth and north-shoring.
Our two main development sites are in prime central Leeds and
Manchester and both have licences to operate as car parks in
advance of development which is brought forward in phases for
residential, or as we secure a pre-let on a commercial element of
the scheme.
Development site valuations were slightly up year on year at
GBP36.45m, reflecting the execution of our masterplan in Piccadilly
Basin and the increasingly prime nature of the Whitehall Riverside
site as MEPC build out their adjacent scheme.
We completed the development of Burlington House, a 91-unit
residential scheme in joint venture with GMI during the second half
of the year and our share in the joint venture is now held as an
investment asset.
Our top tenants
We believe we have a high quality tenant base, which has
continued to play an important role in mitigating some of the
current challenges, particularly in the Retail space.
Key statistics include:
Our top 15 tenants represent 51% of total rental income
These tenants are:
Leeds City Council 9%
Waitrose 7%
Wm Morrison 7%
Pure Gym 4%
Premier Inn 4%
Aldi Stores 4%
StepChange 3%
Home Bargains 3%
Dune 2%
Go Outdoors 2%
The Deltic Group 2%
Flannels 1%
First Secretary
of State 1%
Carphone Warehouse 1%
The Works 1%
51%
Looking forward
Intensive asset management:
We will continue to intensively manage our existing portfolio,
looking to create additional value and income. In particular we are
currently working through schemes for The Cube, The Merrion Centre
and Vicar Lane in Leeds. We are already underway with improvements
to Ducie House and Carvers Warehouse in Manchester.
We expect overall LFL income levels to reduce in FY20 as we
invest in The Cube and Ducie House, ahead of reletting the improved
space, driving future rental growth.
We work closely with our tenants to understand how we can help
them get the most out of the space they rent from us, and how
creating place and community in our key locations can add value for
our tenants.
Asset sales:
We constantly review our portfolio with the aim of disposing of
properties that become ex-growth. In the current retail climate
this exercise is more important than ever, and we dedicate
significant management time to reviewing our options in this
space.
Investment purchases:
We are continually looking for opportunities to create value
through the purchase of investment assets, both retail and
non-retail. In particular we look to purchase assets at competitive
prices due to the need for tenant and asset management, and / or
that have development opportunities. Examples include the recently
acquired assets Ducie House and The Cube.
Development:
Our development pipeline has substantial potential, with an
estimated Gross Development Value of over GBP600m. There is a
significant capital requirement to unlock this value, and we
continue to evaluate funding options. With our focus on long-term
value creation we are not under pressure to develop, and we manage
our risk and exposure by ensuring that the timing is right to bring
an asset forward.
Given the changing needs within the cities in which we operate,
we are reviewing the planned timing for the next phase of
developments including George Street, Eider House and 100MC and the
scope for our Masterplans to be developed further and rephased to
create more value for the business.
Portfolio Overview:
Passing
rent ERV Value % of Valuation Initial Reversionary
GBPm GBPm GBPm portfolio incr/(decr) yield yield
Retail & Leisure 3.7 4.2 62.7 16% -13.0% 5.6% 6.3%
Merrion Centre
(ex offices) 7.1 7.8 92.5 23% -6.6% 7.3% 7.9%
Offices 5.5 6.0 80.4 20% -3.7% 6.5% 7.1%
Hotels 1.2 1.6 25.8 7% -5.0% 4.3% 6.0%
Out of town retail 1.8 2.5 41.8 11% 3.6% 4.0% 5.6%
Distribution 0.4 0.4 6.1 2% 6.8% 6.3% 6.6%
Residential 1.2 1.3 21.8 6% -4.0% 5.1% 5.7%
20.9 23.8 331.0 84% -5.6% 6.0% 6.8%
-------- -------------
Development property 2.1 2.1 36.5 9% -0.1%
Other Car parks 1.5 1.5 26.7 7% 3.8%
-------- ------ ------ ----------- -------------
Let portfolio 24.5 27.4 394.2 100% -4.6%
-------- ------ ------ ----------- -------------
Note: The above table includes Merrion House within Offices and
Burlington House within Residential and therefore differs to the
table in note 12 of the accounts.
Location Value %
Leeds 236.9 60%
Manchester 68.2 17%
Scotland 56.4 14%
London 31.2 8%
Other 1.6 0%
------ -----
394.2 100%
Sector Value %
Retail/leisure 196.9 50%
Hotels 25.8 7%
Office 80.4 20%
Car parking 26.7 7%
Distribution 6.1 2%
Residential 21.8 6%
Development 36.5 9%
------ -----
394.2 100%
Lease Expiries Value %
0-5 years 11.2 54%
5-10 years 3.4 16%
Over 10 years 6.3 30%
------ -----
20.9 100%
CASE STUDY: Challenges in the Retail sector
Stories of retailer in distress have been rife and appear to be
on-going, and TCS has not been immune from the effects of these
challenges. CVAs seem now to be the retailers' tool of choice to
reduce their cost base and attempt to re-invent their customer and
economic models in the face of the continued growth in internet
retailing.
Property owners of retail units are facing their own commercial
challenge as a result. TCS has a clear strategy to do all it can to
mitigate this effect, focusing on three key elements:
1. Continue to divest of weak retail assets and reinvest in more diversified assets
2. Where we are confident in the quality of our retail assets,
continue to invest and develop multi-use destinations
3. Prioritise tenants that are largely convenience, discount,
grocery, or high-volume leisure focused
TCS does not have any exposure to the large retail names such as
Debenhams, House of Fraser or Arcadia, and as a result have managed
to avoid significant impact. In the year ended 30 June 2019 TCS was
impacted by tenant CVAs and Administrations by GBP228k. When the
impact of the vacant ex-Homebase property in Milngavie, Scotland is
included this impact rises to GBP800k.
In the year the Company experienced 8 new tenants either going
into administration or launching a CVA. Of those 8 new impacts 4
have been re-let to new tenants and a further 3 have seen the
incumbent retailer choose to remain, leaving 1 unit now void and in
the process of being re-let.
Across those 8 properties, once re-let or where occupancy has
continued, we have actually seen a modest 1% increase in base rent.
Clearly there is a cost to the Company in the form of void periods
and new tenant incentives, however the continued speed with which
we ensure that the units are occupied is a testament to the quality
of our portfolio. Key examples are:
-- Despite Cotswold Outdoors (Harrogate) and Select (Merrion
Centre) launching CVAs both retailers remain in occupation paying
full rent and service charge
-- Following the administration of Berkertex, the bridal
retailer, and their departure from our unit in Glasgow, we split
and re-let the unit to a successful local beautician and the Scotch
Malt Whiskey Society, with total rent increasing 8%
We have previously highlighted the success in the Merrion Centre
where Poundworld went into administration and we successfully
re-let the unit with only 7 weeks lost rent to Iceland on a new
10-year lease at the same level of rent as paid by Poundworld. This
clearly reaffirms the strength of the footfall making the mixed-use
Merrion Centre a destination for members of the public.
Creating Places in Leeds
Leeds portfolio overview
Value %
GBPm
Merrion Morrisons 18.1 8%
Merrion Offices 54.1 23%
Merrion Retail & Leisure 49.2 21%
Merrion Car Park 25.2 11%
ibis Styles Hotel 10.3 4%
------ -----
Total Merrion 156.9 66%
Other Leeds assets:
Retail & Leisure 18.3 8%
Offices 12.4 5%
Hotels 15.5 7%
Residential 3.9 2%
Industrial 6.1 3%
Car Parks 10.3 4%
Development 13.5 6%
------ -----
TOTAL LEEDS 236.9 100%
LEEDS AS % OF TOTAL 60%
Key achievements in the year
-- Despite increased CVA activity we continued to re-let
properties on average at or above previous rent levels. In the
Merrion Centre, particular successes include the arrival of Iceland
and Ramshaws.
-- The strong attraction of the Arena Quarter section of the
Merrion Estate (facing the Leeds Arena) continued, with new
lettings to a number of food and beverage tenants including
PizzaExpress, Starbucks, Blue Sakura, and Union Square.
-- We completed a refurbishment of our TCS office in Town Centre
House (part of the Merrion Centre), allowing us to move to a single
floor and release a floor that has been let to PureGym.
-- We acquired The Cube for GBP12m in October, and subsequently
renewed the lease to the Secretary of State - see Strategy in
Action
Market context
Leeds is part of the fourth largest conurbation in the UK, with
the city itself having a population of almost 770,000, and a work
force of almost 2 million. With three universities, a millennial
population of close to 200,000 and 24% of employees educated to
degree level or higher, the city is attracting investment, with
more than 9,000 professional jobs set to be added in the centre
over the next decade and forecast economic growth of 8.3% over the
next five years (5.7% over the last five). The relocation of the
Channel 4 headquarters has increased the profile of the city. Leeds
is also recognised as the 4(th) best shopping destination in the
UK, with over 660,000 people claiming the city as their primary
shopping destination.
Demand for space
Private sector office-based employment within the region has
grown by 15% over the last five years and is forecast to grow by a
further 7.9% over the next five. The 10-year average office take-up
was exceeded in 2018 by 34%, with developments largely being
pre-let or fully let prior to completion. Prime yields remain at
4.75%. Availability of office space in Leeds has been gradually
falling since 2015, with 2018 seeing a reduction of 31% in total
office supply and a 9% decrease in Grade A space. Overall vacancy
stood at 6.96%. Rents are expected to continue to grow through to
2020, with Leeds still offering the lowest rents among the big six
regional cities.
As a fast-growing city Leeds has a supply shortfall in housing,
particularly in the city centre. Typically, residential values are
lower in Leeds than York and Harrogate, which has generally meant
that regardless of a number of sites capable of delivering a total
of in excess of 10,000 units, other property asset classes where
there are also supply constraints drive better returns. 2019 has
seen a shift, against a backdrop of strong demand rents, and
capital values are forecast to grow by in excess of 3% per annum.
The city currently has a 1300-unit pipeline under construction for
investors such as with MODA Living, CEG, Legal & General and
Aberdeen Asset Management.
Opportunities for TCS
Our development site at Whitehall Riverside is one of the last
prime sites for office development in the city, sitting opposite
Hermes/MEPC's Wellington Place at the heart of the new West End
business district and 5 minutes away from the city's train station
and the rapidly developing South Bank. Whitehall Riverside will
deliver a minimum of 340,000 sq ft of new grade A office space. The
planning consent has already been implemented for the 180,000 sq ft
No2 building and the 524 space multi storey car park, making the
development one of the most immediately deliverable in the
city.
Adjacent to the Merrion Estate significant development of
student accommodation (3500+ beds) is underway, much of which is
planned to be available for the September 2019 and 2020 academic
years. This will bring a fresh influx of students into the estate
and create opportunities to enhance our retail and food &
beverage offers and unlock the next phase of development. The
estate's immediate neighbours, the Universities and Leeds General
Infirmary both have significant masterplans to bring forward a
pipeline of c GBP750m GDV, including a new children's hospital,
commercial and residential buildings and the landmark new Nexus
Development, providing rentable offices, research and innovation
space. All of this will increase footfall to the area, further
strengthening our existing offer and improving our development
opportunities.
Source: Savills - UK Market in Minutes - Leeds Offices February
2019, CBRE - Tech Cities Research 2019
CASE STUDY: The Merrion Estate
With a total combined value of GBP157m the Merrion Estate is our
largest single asset and has significant further development
potential.
Development of the Leeds Arena and the growth of the
universities have already brought significant investment and
regeneration to the Merrion Estate. We have invested significantly
in recent years to develop the Arena Quarter, ibis Styles and
Merrion House, and undertaken extensive refurbishment of the
CitiPark car park and the retail mall.
The Merrion Estate has been pivotal in providing new offerings
and amenity to the city centre, supporting both the vibrant
nightlife of the city and the growing commercial community.
Our vision for the Merrion Estate is to continue to evolve what
we offer, delivering greater choice and enhancing the mix of uses
across the estate, and the recently approved planning proposal to
develop a 17-storey office tower above the existing centre
demonstrates this intention.
Our continuing investment in the Merrion Centre has materially
reinvented the whole of the asset creating a unique mixed-use
property in the heart of Leeds that now includes:
- 283,000 sq ft of offices including Merrion House, the main
public facing office for Leeds City Council
- 950 spaces of car parking
- A strongly trading 60,000 sq ft Morrisons superstore with 20
years of their lease remaining, accounting for a third of the total
retail rent in the Centre
- A 134 bedroom ibis Styles hotel with restaurant
Since 2012 we have invested GBP42m in the Centre, and despite
recent retail valuation pressures valuation is still up GBP55m over
the same period, and income up over 20%. Our most recent investment
was the extension and improvement to the Wade Lane section of the
retail mall. This comprised:
- Capital spend of GBP0.7m
- Increasing chargeable space by 500 sq ft, and agreeing new leases with incumbent tenants
- The new leases with higher rents, the new space added for
existing tenants, and the refurbishment of a void unit combined to
increase income by over GBP75,000 pa
- With the investment ensuring the renewed commitment from
quality tenants such as The Works and Max Spielman, the total
amount of rent secured was GBP162,000 pa with a WAULT of 8.25
years.
Creating Places in Manchester
Manchester portfolio overview
Value %
GBPm
MANCHESTER Retail &
Leisure 17.1 25%
MANCHESTER Offices 13.1 19%
MANCHESTER Residential 11.3 17%
MANCHESTER Car Parks 3.8 5%
MANCHESTER Development 23.0 34%
------ -----
TOTAL MANCHESTER 68.2 100%
MANCHESTER AS % OF
TOTAL 17%
Key achievements in the year
-- Carvers Warehouse - Through active management of the tenant
base and continued investment in the asset we have been able to
improve rental levels, with the most recent lease at GBP19 per sq
ft, up from GBP14. The ERV of this asset improved by 13% since
commencing the improvement plan.
-- Ducie House - following last year's acquisition of Ducie
House, we commenced physical improvement of the asset, which will
drive lettings and income. In addition, we are reviewing architect
plans for the development of office space on the car park and are
looking to progress to planning shortly.
-- Burlington House - we have now completed and fully let our
first dedicated Private Rented Sector (PRS) asset - see Strategy in
Action.
Market context
Manchester is part of the second largest conurbation in the UK,
with over 7 million people within one hour's drive of the city and
a primary retail catchment of 1.6m people. The centre has a
population of over 550,000, and more than 105,000 students attend
the city's five universities. As the leading professional and
business service centre outside of London, the city has clusters of
life sciences, manufacturing, creative, media and digital
industries, with the BBC and ITV having a key presence. Around 50%
of Manchester's graduates stay in the city for work, a rate second
only to London in the UK. There are plans to develop a minimum of
25,000 new homes in Manchester over the next 10 years.
Greater Manchester's economy is forecast to grow at a rate of
14% over the next five years, well ahead of the UK average of 11%,
with 110,000 jobs expected to be created in the next 5 years.
Demand for space
Vacancy rates for grade A office stock are relatively low, and
rents have risen steadily over the last five years. With a lack of
new build space, the city is also seeing significant growth in the
Grade B refurbishment market, as these buildings offer an
attractive alternative to new developments, evidenced by the
narrowing gap between rents for top-class refurbishments and new
build space.
Manchester's city centre residential market is set to expand
significantly over the next couple of years to support the rapid
growth of the city centre population. With more than 30 schemes
underway, there are some 12,000 units currently under construction
to be delivered into the market over the next few years. Manchester
has seen the perfect storm of increases in the pricing of new build
residential property and increasing rents/ returns for investors as
a relative lack of new development and an increase in city centre
living have put pressure on available stock. It has become the go
to city outside of London for investors in the Build To Rent
sector, while also seeing a significant amount of stock built for
sale. The wave of units coming onto the market during 2019/20 may
see rental growth slow until the market has absorbed the supply.
Beyond this the fundamentals look good for residential investment
in the city.
Opportunities for TCS
Piccadilly Basin is well located to capitalise on the burgeoning
demand for office space and city living residential homes. Our
Carver's Warehouse and Ducie House sites offer 55,000 sq ft of
office space, and our development masterplan includes a further
180,000 sq ft of Grade A space. It also includes over 600
residential units.
The area is positioned for investment and growth, with much of
the land surrounding Piccadilly Railway Station the subject of
Strategic Regeneration Frameworks (SRF), and the planned HS2
station integral to the Mayfield site. The schemes will bring in
excess of 15,000 homes into Piccadilly, East Manchester and the
Northern Gateway. Mayfield and North Campus are expected to jointly
deliver in excess of 2.5m sq ft of new commercial space, and
Manchester City Council's acquisition of Central Retail Park will
bring forward a commercial led mixed use scheme and new car
parking, immediately opposite TCS's Piccadilly Basin
development.
Piccadilly Basin is unique among the SRFs with its mix of
heritage, water frontage and proximity to Manchester's vibrant
Northern Quarter and major transport hub. The Piccadilly Basin SRF
gives TCS the opportunity to create a best in class city centre
neighbourhood with a mix of office, residential, retail and leisure
accommodation. With the early developments soon to be complemented
by Burlington House and the Dakota Hotel, and the next building
Eider House (residential) having planning consent, Piccadilly Basin
will cement itself as a destination and an area where a new
community is rapidly establishing itself. This momentum puts TCS in
a position ahead of much of the proximate competition as we
continue to deliver the remainder of the masterplan.
CASE STUDY: Ducie House
Ducie House is a 33,000 sq ft office converted from a former
petticoat factory and is located on the boundary of TCS's
Piccadilly Basin site. The property is a multi-tenanted office,
occupied predominantly by technology and creative industry
companies. The variety of product provides a wide choice for
tenants, as well as the flexibility for businesses to expand within
the building as they grow.
TCS bought the site in July 2018 for GBP9.0m as a strategic
acquisition, in part to eliminate the potential rights of light
claim (valued at GBP1.5 - GBP2m) on our Eider House development and
also to increase land holdings around Piccadilly Basin. The
acquisition produces income and has the opportunity to be grown
organically. In addition, there is capacity for a future office
development in the rear car park.
The current valuation is GBP7.5m, revalued from the purchase
price as there is no longer a right of light claim as TCS owns the
asset. Current income levels are below ERV primarily as a result of
us having vacated tenants out of the areas identified for
improvement and reconfiguration in advance of extensive
refurbishment in order to better position the asset in the local
office market place. We expect completion of this work to increase
both income and value.
The development strategy for the Ducie House building is split
into two phases including essential repairs, refurbishment of
common parts and creating some larger office spaces. We have
undertaken an initial feasibility exercise on the redevelopment of
the car park to provide an interlinking 7 storey office premises of
60,000 sq ft. An indicative appraisal has been prepared yielding a
profit on cost of nearing 25%, with an ERV of GBP1,340,000 and
delivering an end value of GBP21,300,000. This further strengthens
our development pipeline.
Creating Places in Scotland & London
Scotland and London portfolio overview
22% of our portfolio is located outside of Leeds and Manchester.
We have had a long-standing presence in Scotland, however following
disposals over the past couple of years we have sold the majority
of our Edinburgh assets and now focus solely on Retail and
Residential assets in Glasgow and its close commuter town of
Milngavie.
In London our investments are in good quality secondary high
street locations and primarily consist of retail and residential
mixed-use assets.
Our assets in Scotland and London offer a level of geographical
diversity in our portfolio away from our Leeds and Manchester focus
and provide balance through the cycle. Similar to Leeds and
Manchester, London and Glasgow have strong local economies and
growing populations.
Value %
GBPm
SCOTLAND & LONDON Retail
& Leisure 67.5 77%
SCOTLAND & LONDON Offices 0.8 1%
SCOTLAND & LONDON Residential 6.6 8%
SCOTLAND & LONDON Car Parks 12.8 15%
TOTAL SCOTLAND & LONDON 87.6 100%
SCOTLAND & LONDON AS %
OF TOTAL 22%
Key achievements in the year
-- Bath Street, Glasgow - Following the CVA of bridal retailer
Berkertex, we secured two lettings to replace them on both floors
they occupied. The new tenants are the Scotch Malt Whiskey Society
and a local beautician and income levels have been increased by 8%
compared to previous levels.
-- Milngavie - Since the exit of Homebase in December 2018 we
have now completed the conversion of the unit into two, with both
Aldi and Home Bargains now trading. As a result of this conversion
we have seen valuation increase by a net 23% and income increase by
8% compared to the pre-Homebase exit levels. Read more about our
Strategy in Action.
-- Holloway Road, London - Following the CVA from Mothercare
which reduced rent by around one third, we re-let the lower floors
to The Works and converted the upper floors to residential, giving
a total increase in rent of 24% compared to the pre-CVA Mothercare
income.
-- In August 2018 we acquired a retail unit on Gordon Street,
Glasgow, adjoining units we already own on Buchanan Street / Gordon
Street. The purchase price was GBP2.4m with a Net Initial Yield
(NIY) of 5.3%.
-- In July 2018 we acquired a retail and residential unit on
Chiswick High Road, London for GBP1.6m with a Net Initial Yield of
4.7%.
Building a strong development pipeline
Our substantial development pipeline gives us a clear path to
grow over time, subject to financing.
We own a significant development pipeline, totalling an
estimated gross development value ('GDV') of over GBP600m. The
pipeline comprises multi-sector assets in Leeds and Manchester,
much of which have either strategic or detailed planning approval.
We are in the process of reviewing our plans to ensure that we
direct our resources in the optimal manner, but the most sizeable
components of our pipeline are:
-- Piccadilly Basin, Manchester: Mixed residential, commercial,
and car parking with a total estimated GDV of over GBP300m.
-- Whitehall Road, Leeds: Office, car parking, and potentially
leisure provision with a total estimated GDV of over GBP150m.
-- Merrion, Leeds: Office and residential towers with a total estimated GDV of over GBP100m.
Maximising value from these opportunities will require capital,
and we continue to explore how we might fund these future
developments, including through joint ventures where
appropriate.
Key achievements in the year
-- Burlington House - 91-unit PRS building in Manchester completed (see Strategy in Action).
-- 100 MC - in April 2019 we achieved planning approval for a
17-storey office tower above the Merrion Centre, replacing a cinema
which had been empty for decades.
-- Whitehall Riverside, Leeds - we are in detailed discussions
with a number of potential tenants for our main No2 WHR 167,000 sq
ft office building with the aim of achieving a material pre-let
commitment. In addition, we are in the process of reviewing the
Strategic Planning Framework for this site to ensure we maximise
value.
-- Ducie House, Manchester - we are in the process of reviewing
the first set of designs for a new office block on the car park of
our relatively newly acquired Ducie House at Piccadilly Basin.
-- Brownsfield Mill, Manchester - this building has been sold
for development to Urban Splash, with TCS set to receive 12.5%
proceeds on all sales. The full year results for FY19 include
GBP263k of income from the share of proceeds in the year.
-- Eider House, Manchester - our likely next PRS scheme in
Piccadilly Basin. We have planning consent for a 128-unit scheme
and are reviewing options to increase expected value and returns.
We are in the process of determining if a new planning approval
will be required and with an eye on the volume of residential stock
being delivered into the Manchester market and the success of our
Burlington development, determining the right time to start on
site.
CitiPark, CitiCharge, and PropTech
CitiPark is delighted to have delivered another successful year
of revenue and profit growth, whilst further accelerating our
technological advancements and launching new sources of income
generation.
CitiPark operates over 6,800 spaces across 15 branches. Of those
branches:
3 are freehold dedicated multi-storey car parks (MSCPs)
7 are leasehold dedicated MSCPs with lease lengths ranging from
22 years to 31 years
4 are property development sites being operated as car parks in
order to monetise vacant land
1 is operated by CitiPark under a management contract
arrangement (John Lewis Cheltenham)
CitiPark performance continues to go from strength to strength,
with net revenue of GBP5.4m, up 8.2% year on year, and operating
profit of GBP4.4m, up 9.7% year on year.
Three branches drove the vast majority of the improvement in
both income and profit in the year. Those were:
- Merrion Centre, Leeds - increased occupancy following the
completion and occupation of Merrion House, combined with
improvements in tariffs
- Whitehall Road, Leeds - reduced competitor supply, in
particular due to the development of the MEPC site directly
opposite which had formally been run as a car park, drove occupancy
and rate improvements
- Clipstone Street London - improved occupancy levels combined
with a sublet of part of the space to a storage company drove
income
Furthermore, the strong growth in revenue, combined with
on-going operational efficiency programmes, have allowed us to
leverage our cost base, lowering costs as a proportion of income,
and therefore driving profit growth ahead of revenue growth.
We continue to see technology as a point of difference for this
part of the business, whether that be car parking, EV charging,
energy production, or "PropTech" investments. Key achievements in
year include:
-- We launched CitiCharge, a new initiative looking to provide
electric vehicle charging across our locations and beyond. The
first example of this is in the form of a 50kW rapid charger at the
Merrion Centre, the first of its kind in central Leeds. We are
developing plans to offer EV charging capability as a B2B and B2C
service in the parking, retail and commercial sectors.
-- We have grown our internal EV network by 25% - new EV bay
locations include 7 Whitehall Road, Leeds, Rickmansworth, and
further increased our provision in Clipstone Street, London
branch.
-- CitiPark launched its own mobile app available on both iOS
and Android. Developed fully in house and directly integrated with
our parking management systems throughout the portfolio. The app
brings ease and convenience to our customers, allowing them to
either pay for their parking or pre-book a space.
-- We continue to invest in our pre-booking system, creating a
new customer account portal, allowing customers to amend, cancel
and refund their bookings all online, in real time, without the
need for our customer service team to action this on their behalf.
Improving service and generating cost saving to the business.
-- The commencement of the John Lewis car park management contract for the new Cheltenham store.
-- We continue to uphold the highest standards expected for our
brand and parking standards by achieving Park Mark status for both
Rickmansworth and the John Lewis, Cheltenham branches, meaning that
all of our branches now have this status
-- Increased investment in PropTech
- We made a $500k equity investment in WiredScore, a US based
company that provides a commercial real estate rating system that
empowers landlords to understand, improve and promote their
buildings' digital infrastructure.
- We currently hold a 15% equity stake in
YourParkingSpace.co.uk, an internet and app-based business that
matches customers to available car parking spaces across the UK.
The company is in the process of a further round of fundraising
that could see TCS convert an element of its debt funding to the
business to new equity, increasing our share to over 20% (read more
in the Finance Review).
-- We continue to look for innovative ways to be environmentally
responsible and recently ran a programme in Leeds exchanging
plastic bottles for recycling for parking discounts.
CASE STUDY: John Lewis management contract
In October 2018, CitiPark partnered with leading UK retailer,
John Lewis, to manage a fully renovated car park in Cheltenham
serving their new flagship store.
The CitiPark-run car park has 345 spaces, spread across
5-storeys. As part of the renovations, the car park was fully
rebranded with the CitiPark branding, which includes updated
wayfinding, internal and external signage. There are 12 'Click and
Collect' parking bays which entitles John Lewis customers free
parking to collect online orders. This is managed through our
digital validation system, which is directly integrated with our
parking management system.
The car park employs the latest smart solutions such as ANPR
(Automatic Number Plate Recognition) technology to ensure the
customer journey is as quick and hassle-free as possible. Shoppers
are also able to pre-book and pay for their parking at the
Cheltenham branch via the CitiPark app, further improving customer
satisfaction for both CitiPark and the retailer. The branch boasts
round-the-clock customer support, either on-site or remotely via
our 'Engine Room' in Leeds. Other products and services offered
include season tickets, YourParkingSpace.co.uk integration, permits
and discounted partnership parking for JL&P staff.
This is a significant new venture for CitiPark and represents an
excellent way to expand the CitiPark presence, offering the best of
our technology innovation and management capability to retailers
and other parties.
Whilst we manage the car park and employ the staff, all costs
plus our management fee are recharged back to John Lewis. In
addition, we have a revenue sharing agreement in place once the
operation reaches set revenue thresholds.
We see this as a significant opportunity for future growth and
are currently pursuing other live opportunities.
Financial Review
The Company has continued to strengthen its underlying financial
position.
We made progress towards our aim of reducing our exposure to the
retail sector and unlocking future growth through our development
pipeline. TCS has a proud history of focusing and delivering on
long-term shareholder return, and - consistent with this - the
activity of the past year was undertaken with long-term value
creation in mind.
EPRA Earnings in the year were 7.9% lower than last year.
Despite that we continued to deliver a fully covered dividend,
proud of our 59-year history of maintaining or improving the
dividend. This year we propose holding the dividend constant at
11.75 pence, delivering a 6.4% yield based on the share price as at
13 September 2019.
The table below highlights the key financial measures over the
past 5 years. It is clear that 2019 was a challenging year for the
Company financially driven by the unrealised devaluation of our
retail assets. In addition, it is disappointing to see Total
Shareholder Return at such a level for the year. This is all driven
by the significant, and in our minds unfounded, deterioration in
our share price. Our fully covered dividend, our well-funded
balance sheet, our development pipeline, and the fact that we
continue to invest in the long-term future of TCS are testament to
the underlying strength of the business.
GBPm 2015 2016 2017 2018 2019
Gross Revenue GBPm 22.7 26.3 27.5 30.2 31.2
EPRA Profit GBPm 6.5 6.6 7.0 6.9 6.4
Statutory Profit after Revaluation
GBPm 24.0 11.9 6.7 18.4 -12.5
NAV per Share p 344 357 359 384 354
Total Property Return 12.2% 7.8% 6.0% 9.4% 1.3%
Total Shareholder Return 19.1% -3.9% 9.6% 3.2% -25.0%
Loan to Value 49.7% 49.2% 49.3% 47.5% 49.4%
Gearing 95.5% 95.0% 96.5% 92.1% 92.5%
Absolute Borrowing GBPm 179.1 185.8 188.9 192.6 182.0
Income Statement
EPRA Earnings for the year ended 30 June 2019 were GBP6.4m, down
on the prior year profit of GBP6.9m.
GBP'000s FY19 FY18 YOY
--------- --------- --------
Gross Revenue 31,189 30,178 3.4%
Property Expenses (11,600) (10,896) 6.5%
Net Revenue 19,589 19,282 1.6%
--------- --------- --------
Other Income /
JV Profit 1,649 2,084 (20.9%)
Administrative
Expenses (6,857) (6,574) 4.3%
Operating Profit 14,382 14,792 (2.8%)
--------- --------- --------
Finance Costs (8,025) (7,887) 1.7%
EPRA Earnings 6,356 6,905 (7.9%)
--------- --------- --------
Segmental FY19 FY18 YOY
------- ------- --------
Property
Net Revenue 13,970 13,850 0.9%
Operating Profit 9,725 10,307 (5.6%)
CitiPark
Net Revenue 5,388 4,979 8.2%
Operating Profit 4,425 4,032 9.7%
ibis Styles Hotel
Net Revenue 231 453 (49.0%)
Operating Profit 231 453 (49.0%)
There were six key drivers of the reduction in profit year on
year:
-- Retail CVAs, administrations and bad debt write offs:
GBP0.4m. During the year eight tenants entered into CVAs or
administration.
-- Investing in our assets: GBP0.2m. During the year we saw a
level of income reduction as we took the opportunity of leases
coming to an end to invest in and improve our assets. In the short
term this had the effect of reducing rental levels, but will create
future value. Milngavie in Scotland is the most significant
example.
-- ibis Hotel and Restaurant: GBP0.2m. Whilst the hotel room
performance was robust, we were disappointed by the performance of
the rebranded restaurant. We have now launched a new more
mass-market offer, with a focus on the bar facilities.
-- Admin expenses: GBP0.3m. On top of inflationary cost rises we
experienced a number of one-off costs, primarily for professional
services relating to financing costs and renewing old certificates
of title for our development land.
-- Other income: GBP0.4m. This was lower year on year due to a
significant one-off dilapidation payment from Homebase in the prior
year, and also the interest effect of the new Merrion House
financing agreement, which is consolidated into our accounts within
other income.
-- LIBOR increase: GBP0.2m.
These reductions were partly offset by the timing benefit of
purchasing The Cube ahead of selling Rochdale Retail Park.
Gross Revenue:
Gross revenue was up GBP1.0m or 3.4% year on year, with key
drivers being:
-- Acquisitions including The Cube in Leeds and Ducie House in
Manchester, ahead of the sale of Rochdale Retail Park in January,
gave a net benefit of GBP1.1m, accounting for 3.7% points of the
increase.
-- Organic growth of GBP0.6m or 5.5% in CitiPark, accounting for
2.1% points of the increase.
-- These increases were partly offset by the impact of CVAs and
bad debt of GBP0.4m year on year.
-- In addition, the effect of the former Homebase property in
Milngavie being vacant for almost the whole year further reduced
income by GBP0.2m year on year.
Property Expense:
At a total Company level property expenses were up 6.5% or
GBP0.7m year on year. Key drivers of this underlying increase
were:
-- Property: our recent acquisition, Ducie House, has a higher
level of operating expense than the rest of our portfolio. Due to
the nature of the property most leases have historically been fully
inclusive of costs with no service charge. This accounted for
GBP0.3m or 3.0% points of the increase.
-- CitiPark: greater operating expenses accounted for 2.2%
points of the increase, although these rose below the level of
revenue growth, improving cost leverage.
-- ibis Hotel: operating expenses were GBP0.1m higher year on
year, driven primarily by the change in restaurant operation, part
of which was a one-off payment to terminate our agreement with
Marco Pierre White's operating company. This accounted for 0.7%
points of the increase.
Other / JV Income:
Total Other / JV income was down 20.9% or GBP0.4m year on year.
This is explained by two key items:
-- Income from joint ventures was down GBP0.1m year on year
driven by the onset of the financing agreement in respect of
Merrion House, where our share of income is reduced by the
effective interest cost.
-- Last year we received GBP0.3m of income from Homebase as a
result of dilapidations charges following their vacating our
property in Milngavie, which was understandably not repeated in
FY19.
Administrative Expenses:
Administrative costs were up 4.3% or GBP0.3m year on year. The
increase was primarily driven by staff costs, where the combination
of annual pay awards, the joining of our new Property Director and
a provision release in the prior year drove costs up GBP0.4m year
on year. This was partially offset by the halving of the bonus
accrual to GBP0.25m as a result of performance.
In addition, professional costs were circa GBP0.1m higher year
on year, driven primarily by additional legal work required to
renew Certificates of Title for some of our development land,
following last year's renewal of our bank loan facilities.
Finance Costs:
Finance costs were 1.7% or GBP0.1m higher year on year. Despite
the receipt of GBP26.4m following the Merrion House refinancing,
the combination of purchasing The Cube ahead of selling our
Rochdale Retail Park asset and the increase in LIBOR drove higher
interest costs in the year.
Balance Sheet
Our total non-current assets (including JVs) of GBP370.2m (2018:
GBP407.2m) include GBP337.9m of investment properties (2018:
GBP376.1m) and GBP30.7m of non-current car parking assets (2018:
GBP29.6m). The Merrion Centre car park is included in the
investment property asset value. The car parking assets include
GBP4m (2018: GBP4m) of goodwill arising on business
combinations.
It is worth noting that the largest single factor that reduced
the value of our non-current assets was the financing of Merrion
House. Previously the Investment in Joint Ventures value reflected
the full value of our share of the Merrion House joint venture
vehicle. The reduction in value of GBP27.3m is due to the
distribution received from the joint venture following Leeds City
Council's forward payment of 25 years of discounted rent.
We continued to invest in our properties with a total of GBP3.7m
of capital expenditure during the year, including GBP1.3m into the
Merrion Centre and GBP1.5m net into the redevelopment of our
property in Milngavie. We also invested GBP0.4m into our Burlington
House Joint Venture. Capital recycling comprised GBP14.0m of sales
and GBP17.0m of purchases. Along with other cash movements this
resulted in a decrease in borrowings from GBP192.6m to
GBP181.9m.
The property and car parking balances reflect valuation losses
of GBP18.3m in respect of the investment and development
properties, no movement in respect of joint ventures and gains of
GBP0.7m in respect of car parks (which includes a gain of GBP0.5m
which is shown in the Statement of Changes in Equity as other
comprehensive income).
Borrowings:
As reported in last year's Annual Report, we extended or renewed
all of our banking facilities in 2018. There have been no changes
since that point meaning that we remain with three RCF facilities
as follows:
-- Lloyds: A GBP35m three-year facility with the opportunity for
two one-year extensions, with the three-year element expiring in
June 2021. We also have a GBP5m overdraft facility.
-- NatWest/RBS: A GBP33m three-year facility expiring in April 2021.
-- Handelsbanken: A GBP35m five-year facility expiring in June 2023.
These facilities, combined with a GBP106m long-term debenture
scheduled to expire in 2031, give the Company a good level of
certainty over its funding over a long time frame.
In addition, again as reported in last year's annual report, we
finalised a funding arrangement with Leeds City Council whereby
they paid upfront their 25 years of rental payments at a discount
for their occupation of Merrion House. TCS received GBP26.4m in
July 2018.
We have sought to lower our Loan to Value (LTV) levels in recent
years, making good progress whilst still investing in our
portfolio. It is disappointing to see LTV increase to 49.3% at the
30 June 2019. This was unfortunately fully due to the reduction in
valuation of the portfolio seen in the last year. The like for like
reduction in valuation of GBP13.8m in the year had a 3.7% point
impact on LTV levels, which would otherwise have shown a continuing
reduction in leverage. Looking at cash debt levels in the above
summary table it can be seen that, at GBP182m, net borrowing levels
were lower than in any of the past three years.
Case Study: Protecting income through flexibility
Demonstrating:
Innovative financing arrangement enabling portfolio
flexibility.
Snap shot:
TCS raised GBP26.4m leveraging Merrion House, enabling the
acquisition of The Cube in Leeds ahead of selling Rochdale Retail
Park, thereby protecting income in the year.
The background:
Following the completion of the redevelopment of Merrion House
in Leeds, in joint venture with Leeds City Council (LCC), LCC took
occupation of the building in early 2018, using the building as
their main public facing office building on a new 25-year lease,
with built in 5-yearly CPI uplifts.
In order to leverage the asset TCS entered into an innovative
financing arrangement with LCC where they effectively advanced 25
years of discounted base rent in July 2018, providing TCS with
GBP26.4m of working capital. The inflationary rental increases will
still apply, providing TCS with further cash funds from year 5
onwards.
The problem to be solved:
TCS was keen to sell Rochdale Retail Park, a strongly rented but
ex-growth asset where valuation was coming under pressure. However,
yielding income of GBP1.15m per annum, the business wanted to
ensure this income was suitably replaced, with little or no loss of
income in the year.
The solution:
The working capital provided by the Merrion House financing
allowed TCS to purchase The Cube for GBP12.0m (see Strategy in
Action) three months ahead of selling Rochdale for GBP13.2m.
This positive timing resulted in a positive net revenue effect
of over GBP0.6m in the year, as well as the disposal of an
ex-growth asset and the purchase of a strategically important
one.
Future financial considerations
A number of commercial and accounting considerations are
currently being assessed by the Company that are worthy of
comment:
Yourparkingspace.co.uk (YPS)
The business currently owns a 15% stake in YPS, and accounts for
it as an investment. We hold no significant influence over the
company at the reporting date. We review the value of our
investment for balance sheet purposes, and from an income
perspective look at dividends paid. To date, we have determined
that the value of our investment remains consistent with our
quantum invested, and with no dividends paid we have not reflected
any income.
However, YPS is in the process of undergoing a potential further
fundraising, and as part of our existing arrangement with YPS we
have the ability to increase our equity stake on the basis of the
original valuation. We also have the ability to convert part or
potentially all of our loan to YPS into equity on the basis of the
new fund raise valuation. These two possibilities may increase our
equity share to more than 20%. This would require us to account for
the investment on an equity basis. Should this fundraising be
successful, we would envisage it having a positive effect on our
balance sheet valuation given the expectation that the new
fundraising exercise will highlight a significant increase in value
of the company. However, at the year end, this outcome remains
uncertain and the current carrying value is management's best
estimate of fair value. We also however expect this accounting
approach to depress EPRA Earnings in the near term as a result of
the current loss-making status of this start up. None of this
affects the FY19 accounts, but it is possible in the future that we
will need to report on an adjusted EPRA Earnings figure to enable
investors to understand performance of the underlying Company on a
like for like basis.
IFRS16
We will have to apply IFRS16 (lease accounting) for the year
ended June 2020. We have a small number of leased operational car
parks. We are in the process of finalising our review of the impact
of IFRS16.
Future P&L events
As highlighted elsewhere in this report, we have not escaped the
impact of CVAs and administrations from retail tenants, and, given
the current climate, it is prudent to assume that this risk will
continue. Our experience to date suggests that the strength and
diversity of our assets will enable re-letting with minimal or no
medium-term income loss, although we would expect continued
short-term impacts to income and value.
The situation with regards to the uncertainty around retail
property reinforces our intention to continue to recycle retail
assets and to identify the most appropriate use of the proceeds.
Whilst we have been able to protect the income line this year with
the purchase of The Cube ahead of the sale of our Rochdale Retail
Park site, it is unlikely that we will be able to continue to
repeat this, and therefore it is likely that we will see income
impacted as we work our way through a continued sale of retail
assets.
Going concern and headroom
One of the most critical judgements for the Board is the
headroom in the Group's bank facilities. This is calculated as the
maximum amount that could be borrowed, taking into account the
properties secured to the funders and the facilities in place. The
total headroom at the end of June 2019 was GBP26.1m (2018:
GBP10.6m), which was considered to be sufficient to support our
going concern conclusion.
Total shareholder return and total property return
Total shareholder return of minus 25.0% (2018: +3.2%) was
calculated as the total of dividends paid during the financial year
of 11.75p (2018: 11.50p) and the movement in the share price
between 30 June 2018 (288p) and 30 June 2019 (205p), assuming
reinvestment of dividends. This compares with the FTSE All Share
REIT index at minus 5.2% (2018: +9.8%) for the same period.
Despite the long-term improvement in dividend payments, the
material reduction in share price in the past 12 months has
significantly impacted our reported total shareholder return in the
year and in the 5 and 10 year reported figure.
Total shareholder returns
% (CAGR)
Total shareholder returns 1 Year 5 Years 10 Years
Town Centre Securities (25.0%) (0.6%) 9.9%
FTSE All Share REIT
index (5.2%) 4.5% 10.9%
Total property returns
TCS MSCI Quarterly index
Retail (1.7) (4.0)
Retail Warehouses 5.6 (5.5)
Shopping Centres (3.4) (8.8)
Offices 3.1 4.6
All Property 1.3 3.1
(12 months ending June 2019)
Total Property Return is calculated as the net operating profit
and gains / losses from property sales and valuations as a
percentage of the opening investment properties.
Total Property Return for the business for the reported 12
months was 1.3% (2018: 9.4%). This compared to the MSCI/IPD market
return of 3.1% (2018: 9.3%).
A key driver of the All Property MSCI index being higher that
TCS is due to the strong market performance of Industrial property
of which TCS has only a small amount of.
Mark Dilley
Group Finance Director
Consolidated income statement
for the year ended 30 June 2019
2019 2018
Notes GBP000 GBP000
--------------------------------------------- ------ --------- ---------
Gross revenue 31,189 30,178
Property expenses (11,600) (10,896)
--------------------------------------------- ------ --------- ---------
Net revenue 19,589 19,282
Administrative expenses 2 (6,857) (6,574)
Other income 3 574 888
Valuation movement on investment properties (18,308) 5,932
Reversal of impairment of car parking
assets 200 1,300
(Loss)/profit on disposal of investment
properties (709) 1,677
Share of post tax profits from joint
ventures 1,067 3,757
--------------------------------------------- ------ --------- ---------
Operating (loss)/profit (4,444) 26,262
Finance costs (8,025) (7,887)
--------------------------------------------- ------ --------- ---------
(Loss)/profit before taxation (12,469) 18,375
Taxation - -
--------------------------------------------- ------ --------- ---------
(Loss)/profit for the year attributable
to owners of the Parent (12,469) 18,375
--------------------------------------------- ------ --------- ---------
Earnings per share
Basic and diluted 4 (23.4)p 34.6p
EPRA (non-GAAP measure) 4 12.0p 13.0p
--------------------------------------------- ------ --------- ---------
Dividends per share
Paid during the year 5 11.75p 11.50p
Proposed 5 8.5p 8.5p
--------------------------------------------- ------ --------- ---------
Consolidated statement of comprehensive income
for the year ended 30 June 2019
2019 2018
GBP000 GBP000
------------------------------------------------------- ----------- --------
(Loss)/profit for the year (12,469) 18,375
Items that may be subsequently reclassified
to profit or loss
Revaluation gains/(losses) on car parking
assets 500 (350)
Items that will not be subsequently
reclassified to profit or loss
Revaluation gains on other investments 2,341 1,136
-------------------------------------------------------- ----------- --------
Total other comprehensive income 2,841 786
-------------------------------------------------------- ----------- --------
Total comprehensive (loss)/income for
the year (9,628) 19,161
-------------------------------------------------------- ----------- --------
All profit and total comprehensive income for the year is attributable
to owners of the Parent.
Consolidated balance sheet
as at 30 June 2019
2019 2018
Notes GBP000 GBP000
------------------------------------------------- ------ ---------- ----------
Non-current assets
Property rental
Investment properties 6 324,500 336,311
Investments in joint ventures 7 13,387 39,742
337,887 376,053
------------------------------------------------- ------ ---------- ----------
Car park activities
Freehold and leasehold properties 6 24,194 23,423
Goodwill 4,024 4,024
Investments 2,510 2,125
------------------------------------------------- ------ ---------- ----------
30,728 29,572
------------------------------------------------- ------ ---------- ----------
Fixtures, equipment and motor vehicles 1,609 1,544
------------------------------------------------- ------ ---------- ----------
Total non-current assets 370,224 407,169
------------------------------------------------- ------ ---------- ----------
Current assets
Investments 5,871 3,530
Trade and other receivables 5,354 6,288
Cash and cash equivalents 23,692 23,149
------------------------------------------------- ------ ---------- ----------
Total current assets 34,917 32,967
------------------------------------------------- ------ ---------- ----------
Total assets 405,141 440,136
------------------------------------------------- ------ ---------- ----------
Current liabilities
Trade and other payables (34,739) (37,954)
Total current liabilities (34,739) (37,954)
------------------------------------------------- ------ ---------- ----------
Non-current liabilities
Financial liabilities (182,152) (198,057)
------------------------------------------------- ------ ---------- ----------
Total liabilities (216,891) (236,011)
------------------------------------------------- ------ ---------- ----------
Net assets 188,250 204,125
------------------------------------------------- ------ ---------- ----------
Equity attributable to the owners of the Parent
Called up share capital 8 13,290 13,290
Share premium account 200 200
Capital redemption reserve 559 559
Revaluation reserve 250 250
Retained earnings 173,951 189,826
------------------------------------------------- ------ ---------- ----------
Total equity 188,250 204,125
------------------------------------------------- ------ ---------- ----------
Net asset value per share 10 354p 384p
------------------------------------------------- ------ ---------- ----------
Consolidated statement of Changes in Equity
as at 30 June 2019
Share capital Share Capital Revaluation Retained Total equity
premium account redemption reserve earnings
reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
Balance at 30
June 2017 13,290 200 559 600 176,429 191,078
Comprehensive
income for the
year
Profit for the
year - - - - 18,375 18,375
Other
comprehensive
income - - - (350) 1,136 786
-------------- ---------------- --------------- ---------------- ---------------- -------------
Total
comprehensive
income for the
year - - - (350) 19,511 19,161
Contributions
by and
distributions
to owners
Final dividend
relating to
the year ended
30 June 2017 - - - - (4,386) (4,386)
Interim
dividend
relating to
the year ended
30 June 2018 - - - - (1,728) (1,728)
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
Balance at 30
June 2018 13,290 200 559 250 189,826 204,125
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
Comprehensive
income for the
year
Loss for the
year - - - - (12,469) (12,469)
Other
comprehensive
income - - - - 2,841 2,841
-------------- ---------------- --------------- ---------------- ---------------- -------------
Total
comprehensive
loss for the
year - - - - (9,628) (9,628)
Contributions
by and
distributions
to owners
Final dividend
relating to
the year ended
30 June 2018 - - - - (4,519) (4,519)
Interim
dividend
relating to
the year ended
30 June 2019 - - - - (1,728) (1,728)
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
Balance at 30
June 2019 13,290 200 559 250 173,951 188,250
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
Consolidated cash flow statement
for the year ended 30 June 2019
2019 2018
-------------------- -------------------
Notes GBP000 GBP000 GBP000 GBP000
------------------------------------------ ------ --------- --------- -------- ---------
Cash flows from operating activities
Cash generated from operations 9 11,090 14,235
Interest paid (7,678) (7,595)
------------------------------------------ ------ --------- --------- -------- ---------
Net cash generated from operating
activities 3,412 6,640
------------------------------------------ ------ --------- --------- -------- ---------
Cash flows from investing activities
Purchase and construction of investment
properties (25,517) (900)
Refurbishment of investment properties (3,740) (1,806)
Payments for leasehold property
improvements (255) (153)
Purchases of fixtures, equipment
and motor vehicles (814) (340)
Proceeds from sale of investment
properties 17,089 7,534
Proceeds from sale of fixed assets 23 -
Payments for acquisition of non-listed
investments (385) (175)
Investments in joint ventures (723) (8,809)
Distributions received from joint
ventures 28,145 676
------------------------------------------ ------ --------- --------- -------- ---------
Net cash generated from/(used in)
investing activities 13,823 (3,973)
------------------------------------------ ------ --------- --------- -------- ---------
Cash flows from financing activities
(Repayment of)/proceeds from non-current
borrowings (16,252) 5,796
Dividends paid to shareholders (6,247) (6,114)
------------------------------------------ ------ --------- --------- -------- ---------
Net cash used in financing activities (22,499) (318)
------------------------------------------ ------ --------- --------- -------- ---------
Net (decrease)/increase in cash
and cash equivalents (5,264) 2,349
Cash and cash equivalents at beginning
of the year 5,473 3,124
------------------------------------------ ------ --------- --------- -------- ---------
Cash and cash equivalents at end
of the year 209 5,473
------------------------------------------ ------ --------- --------- -------- ---------
Cash and cash equivalents at the year end are comprised
of the following:
Cash balances 23,692 23,149
Overdrawn balance (23,483) (17,676)
209 5,473
------------------------------------------ ------ --------- --------- -------- ---------
Audited preliminary results announcements
The financial information for the year ended 30 June 2019 and
the year ended 30 June 2018 does not constitute the company's
statutory accounts for those years.
Statutory accounts for the year ended 30 June 2018 have been
delivered to the Registrar of Companies. The statutory accounts for
the year ended 30 June 2019 will be delivered to the Registrar of
Companies following the Company's Annual General Meeting.
The auditors' reports on the accounts for 30 June 2019 and 30
June 2018 were 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.
1. Segmental information
Segmental assets 2019 2018
GBP000 GBP000
--------------------- -------- --------
Property rental 363,375 397,577
Car park activities 31,466 30,659
Hotel operations 10,300 11,900
--------------------- -------- --------
405,141 440,136
--------------------- -------- --------
Segmental results 2019 2018
---------------------------------------------- ----------------------------------------------
Property Car park Hotel Property Car park Hotel
rental activities operations Total rental activities operations Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------ --------- ----------- ----------- --------- --------- ----------- ----------- ---------
Gross revenue 16,408 12,154 2,627 31,189 15,891 11,516 2,771 30,178
Service charge
income 2,976 - - 2,976 2,556 - - 2,556
Service charge
expenses (3,990) - - (3,990) (3,387) - - (3,387)
Property expenses (1,424) (6,766) (2,396) (10,586) (1,210) (6,537) (2,318) (10,065)
------------------ --------- ----------- ----------- --------- --------- ----------- ----------- ---------
Net revenue 13,970 5,388 231 19,589 13,850 4,979 453 19,282
------------------ --------- ----------- ----------- --------- --------- ----------- ----------- ---------
Administrative
expenses (5,889) (968) - (6,857) (5,627) (947) - (6,574)
Other income 569 5 - 574 888 - - 888
Share of post-tax
profits from
joint ventures 1,075 - - 1,075 1,196 - - 1,196
------------------ --------- ----------- ----------- --------- --------- ----------- ----------- ---------
Operating profit
before valuation
movements 9,725 4,425 231 14,381 10,307 4,032 453 14,792
------------------ --------- ----------- ----------- --------- --------- ----------- ----------- ---------
Valuation
movement
on investment
properties (18,308) - - (18,308) 5,932 - - 5,932
Reversal of
impairment
of car parking
assets - 200 - 200 - 1,300 - 1,300
(Loss)/profit
on disposal of
investment
properties (709) - - (709) 1,677 - - 1,677
Valuation
movement
on joint venture
properties (8) - - (8) 2,561 - - 2,561
Operating
(loss)/profit (9,300) 4,625 231 (4,444) 20,477 5,332 453 26,262
Finance costs (8,025) (7,887)
------------------ --------- ----------- ----------- --------- --------- ----------- ----------- ---------
(Loss)/profit
before taxation (12,469) 18,375
------------------ --------- ----------- ----------- --------- --------- ----------- ----------- ---------
Taxation - -
------------------ --------- ----------- ----------- --------- --------- ----------- ----------- ---------
(Loss)/profit
for the year (12,469) 18,375
------------------ --------- ----------- ----------- --------- --------- ----------- ----------- ---------
All results are derived from activities conducted in the United
Kingdom.
The results for the car park activities include the car park at
the Merrion Centre. As the value of the car park cannot be
separated from the value of the Merrion Centre as a whole, the full
value of the Merrion Centre is included within the assets of the
property rental business.
The car park results also 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 Merrion Centre and development sites for
the year ended 30 June 2019, arising from car park operations, was
GBP3,961,000. After allowing for an allocation of administrative
expenses, the operating profit at these sites was GBP3,249,000.
Revenue received within the car park and hotel segments is the
only revenue recognised on a contract basis under IFRS 15. All
other revenue within the Property segment comes from rental lease
agreements.
2. Administrative expenses
2019 2018
GBP000 GBP000
------------------------------ ------- -------
Employee benefits 4,240 3,919
Depreciation 339 339
Charitable donations 92 116
Other 2,186 2,200
------------------------------ ------- -------
6,857 6,574
------------------------------ ------- -------
3. Other income
2019 2018
GBP000 GBP000
----------------------------------------------- ------------------------------------ ---------
Commission received 172 142
Dividends received 33 29
Management fees receivable 207 198
Dilapidations receipts and income
relating to lease premiums 85 438
Other 77 81
----------------------------------------------- ------------------------------------ ---------
574 888
----------------------------------------------- ------------------------------------ ---------
4. Earnings per share (EPS)
The calculation of basic earnings per share has been based on
the profit for the period, divided by the weighted average number
of shares in issue. The weighted average number of shares in
issue during the period was 53,161,950 (2018: 53,161,950).
2019 2018
------------------------ --------------------------
Earnings Earnings
Earnings per Earnings per
share share
GBP000 p GBP000 p
---------------------------------------------- --------- ------------ ----------- ---------
(Loss)/profit for the year
and earnings per share (12,469) (23.4) 18,375 34.6
----------------------------------------------- --------- ------------ ----------- ---------
Valuation movement on investment
properties 18,308 34.5 (5,932) (11.2)
Reversal of impairment of car
parking assets (200) (0.4) (1,300) (2.4)
Valuation movement on properties
held in joint ventures 8 0.0 (2,561) (4.8)
Loss/(profit) on disposal of
investment and development
properties 709 1.3 (1,677) (3.2)
EPRA earnings and earnings
per share 6,356 12.0 6,905 13.0
----------------------------------------------- --------- ------------ ----------- ---------
There is no difference between basic and diluted earnings per
share and EPRA earnings per share.
5. Dividends
2019 2018
GBP000 GBP000
-------------------------------- ------- -------
2017 final paid: 8.25p per 25p
share - 4,386
2018 interim paid: 3.25p per
25p share - 1,728
2018 final paid: 8.50p per 25p 4,519 -
share
2019 interim paid: 3.25p per 1,728 -
25p share
-------------------------------- ------- -------
6,247 6,114
-------------------------------- ------- -------
An interim dividend in respect of the year ended 30 June 2019 of
3.25p per share was paid to shareholders on 21 June 2019. This
dividend was paid entirely as a Property Income Distribution
(PID).
A final dividend in respect of the year ended 30 June 2019 of
8.5p per share is proposed. This dividend, based on the shares in
issue at 24 September 2019, amounts to GBP4.5m which has not been
reflected in these accounts and will be paid on 7 January 2020 to
shareholders on the register on 6 December 2019. This dividend will
comprise an ordinary dividend of 4.0p per share and a PID of
4.5p.
6. Non-current assets
(a) Investment properties
Freehold Long Development Total
leasehold
GBP000 GBP000 GBP000 GBP000
------------------------------------- --------- ----------- ------------ ---------
Valuation at 30 June 2017 276,861 22,609 27,301 326,771
Additions at cost 9,483 - - 9,483
Other capital expenditure 1,656 - 140 1,796
Disposals (9,507) (15) - (9,522)
(Deficit)/surplus on revaluation (3,326) (2) 9,260 5,932
Transfers 900 (900) - -
Movement in tenant lease incentives 1,851 - - 1,851
Valuation at 30 June 2018 277,918 21,692 36,701 336,311
------------------------------------- --------- ----------- ------------ ---------
Additions at cost 16,968 - - 16,968
Other capital expenditure 3,469 - 271 3,740
Disposals (14,290) - (500) (14,790)
Deficit on revaluation (17,879) (408) (21) (18,308)
Movement in tenant lease incentives 579 - - 579
------------------------------------- --------- ----------- ------------ ---------
Valuation at 30 June 2019 266,765 21,284 36,451 324,500
------------------------------------- --------- ----------- ------------ ---------
(b) Freehold and leasehold properties - car park activities
Freehold Long Total
leasehold
GBP000 GBP000 GBP000
------------------------------------- --------- ----------- --------
Valuation at 30 June 2017 2,000 20,495 22,495
Additions - 153 153
Depreciation - (175) (175)
Deficit on revaluation - (350) (350)
Reversal of impairment 1,000 300 1,300
------------------------------------- --------- ----------- --------
Valuation at 30 June 2018 3,000 20,423 23,423
------------------------------------- --------- ----------- --------
Additions - 255 255
Depreciation - (184) (184)
Surplus on revaluation 500 - 500
Reversal of impairment/(impairment) 250 (50) 200
----------- --------
Valuation at 30 June 2019 3,750 20,444 24,194
------------------------------------- --------- ----------- --------
The historical cost of freehold and leasehold properties
relating to car park activities is GBP22,425,000 (2018:
GBP22,425,000).
The Company occupies an office suite in part of the Merrion
Centre and also at 6 Duke Street in London. The Directors do not
consider this element to be material.
The fair value of the Group's investment and development
properties has 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
the income from car parking and an assessment of their realisable
value in their existing state and condition based on market
evidence of comparable transactions.
Property income, values and yields have been set out by category
in the table below.
Passing ERV Value Initial Reversionary
rent yield yield
GBP000 GBP000 GBP000 % %
--------------------------- -------- ------- -------- -------- -------------
Retail and Leisure 3,704 4,179 62,650 5.6% 6.3%
Merrion Centre (excluding
offices) 7,126 7,759 92,500 7.3% 7.9%
Offices 3,867 4,335 45,685 8.0% 9.0%
Hotels 1,180 1,630 25,800 4.3% 6.0%
Out of town retail 1,752 2,477 41,750 4.0% 5.6%
Distribution 411 427 6,140 6.3% 6.6%
Residential 617 636 10,500 5.6% 5.7%
--------------------------- -------- ------- -------- -------- -------------
18,657 21,443 285,025 6.2% 7.1%
--------------------------- -------- ------- -------- -------- -------------
Development property 36,451
Car parks 22,793
Finance lease adjustments 4,425
--------------------------- -------- ------- --------
348,694
--------------------------- -------- ------- --------
The effect on the valuation of applying a different yield and a
different ERV would be as follows:
Valuation in the Consolidated Financial Statements at an initial
yield of 7.2% - GBP309.1m, Valuation at 5.2% - GBP403.9m.
Valuation in the Consolidated Financial Statements at a
reversionary yield of 8.1% - GBP313.6m, Valuation at 6.1% -
GBP395.3m.
Property valuations can be reconciled to the carrying value of
the properties in the balance sheet as follows:
Investment Freehold
Properties and Leasehold Total
Properties
GBP000 GBP000 GBP000
--------------------------------------- ------------- ---------------- --------
Externally valued by CBRE 195,345 - 195,345
Externally valued by Jones Lang
LaSalle 127,780 17,000 144,780
Investment properties valued by
the Property Director 251 - 251
Finance lease obligations capitalised 1,124 3,301 4,425
Leasehold improvements - 3,893 3,893
--------------------------------------- ------------- ---------------- --------
324,500 24,194 348,694
--------------------------------------- ------------- ---------------- --------
Leasehold improvements primarily relate to expenditure incurred
on the refurbishment of three car parks in Watford that are held
under operating leases.
All investment properties measured at fair value in the
consolidated balance sheet 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 valuers and the Property Director 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.
(c) Fixtures, equipment and motor vehicles
Accumulated
Cost depreciation
GBP000 GBP000
--------------------------------------------- -------- -------------
At 1 July 2017 4,819 2,847
Additions 339 -
Disposals (1,526) (1,517)
Depreciation - 758
At 30 June 2018 3,632 2,088
--------------------------------------------- -------- -------------
Net book value at 30 June 2018 1,544
--------------------------------------------- -------- -------------
At 1 July 2018 3,632 2,088
Additions 814 -
Disposals (56) (42)
Depreciation - 735
At 30 June 2019 4,390 2,781
--------------------------------------------- -------- -------------
Net book value at 30 June 2019 1,609
--------------------------------------------- -------- -------------
7. Investments in joint ventures
2019 2018
GBP000 GBP000
-------------------------------------------- --------- -------
At the start of the year 39,742 27,852
Investments in joint ventures 723 8,809
Dividends and other distributions received
in the year (28,145) (676)
Share of profits after tax 1,067 3,757
-------------------------------------------- --------- -------
At the end of the year 13,387 39,742
-------------------------------------------- --------- -------
Investments in joint ventures are broken down as follows:
2019 2018
GBP000 GBP000
-------- ------- -------
Equity 7,792 34,650
Loans 5,595 5,092
-------- ------- -------
13,387 39,742
-------- ------- -------
Investments in joint ventures primarily relate to the Group's
interest in Merrion House LLP and Belgravia Living Group
Limited.
Merrion House LLP owns a long leasehold interest over a property
that is let to the Group's joint venture partner, Leeds City
Council ('LCC'). The interest in the joint venture for each partner
is an equal 50% share, regardless of the level of overall
contributions from each partner. The investment property held
within this partnership has been externally valued by CBRE at each
reporting date.
The net assets of Merrion House LLP for the current and previous
year are as stated below:
2019 2018
GBP000 GBP000
------------------------- --------- --------
Non-current assets 69,400 69,400
Current assets 1,178 1,754
Current liabilities (2,702) (1,374)
Non-current liabilities (52,080) -
------------------------- --------- --------
Net assets 15,796 69,780
------------------------- --------- --------
The profits of Merrion House LLP for the current and previous
year are as stated below:
2019 2018
GBP000 GBP000
--------------------------------------------- -------- -------
Revenue 3,328 2,134
Expenses (33) (92)
Finance costs (1,406) -
1,889 2,042
Valuation movement on investment properties (17) 5,691
--------------------------------------------- -------- -------
Net profit 1,872 7,733
--------------------------------------------- -------- -------
Belgravia Living Group Limited has recently completed
construction of a block of residential apartments in Piccadilly
Basin, Manchester. The Group's financial interest in this joint
venture is primarily in the form of a loan with a value as at 30
June 2019 of GBP5.5m (2018: GBP5.1m).
The net assets of Belgravia Living Group for the current and
previous year are as stated below:
2019 2018
GBP000 GBP000
------------------------- --------- --------
Non-current assets 22,736 10,466
Current assets 540 363
Current liabilities (23,355) (9,745)
Non-current liabilities - (1,129)
------------------------- --------- --------
Net liabilities (79) (45)
------------------------- --------- --------
The profits of Belgravia Living Group Limited for the current
and previous year are as stated below:
2019 2018
GBP000 GBP000
------------ ------- -------
Expenses (14) (32)
------------ ------- -------
Net profit (14) (32)
------------ ------- -------
The Group's interest in other joint ventures are not considered
to be material.
The joint ventures have no significant contingent liabilities to
which the Group is exposed nor has the Group any significant
contingent liabilities in relation to its interest in the joint
ventures.
A full list of the Group's joint ventures, which are all
registered in England and operate in the United Kingdom, is set out
as follows:
Beneficial Activity
Interest
%
------------------------------- ----------- ---------------------
Merrion House LLP 50 Property investment
Belgravia Living Group Limited 50 Property Investment
Bay Sentry Limited 50 Software Development
------------------------------- ----------- ---------------------
8. Share capital
Authorised
The authorised share capital of the company is 164,879,000
(2018: 164,879,000) ordinary shares of 25p each. The nominal value
of authorised share capital is GBP41,219,750 (2018:
GBP41,219,750).
Issued and fully paid up
Number Nominal
of shares value
000 GBP000
----------------------------- ----------- --------
At 30 June 2018 and 30 June
2019 53,162 13,290
----------------------------- ----------- --------
The Company has only one type of ordinary share class in issue.
All shares have equal entitlement to voting rights and dividend
distributions.
The Company has no share option schemes in current operation and
there are no unexercised options outstanding at 30 June 2019.
9. Cash flow from operating activities
2019 2018
GBP000 GBP000
----------------------------------------- --------- --------
(Loss)/profit for the financial year (12,469) 18,375
Adjustments for:
Depreciation 919 933
Profit on disposal of fixed assets (9) -
Loss/(profit) on disposal of investment
properties 709 (1,677)
Finance costs 8,025 7,887
Share of post tax profits from joint
ventures (1,067) (3,757)
Movement in valuation of investment
and development properties 18,308 (5,932)
Movement in lease incentives (579) (1,851)
Reversal of impairment of car parking
assets (200) (1,300)
(Increase)/decrease in receivables (2,074) 144
(Decrease)/increase in payables (473) 1,413
----------------------------------------- --------- --------
Cash generated from operations 11,090 14,235
----------------------------------------- --------- --------
10. EPRA net asset value per share
The Basic and EPRA net asset values are the same, as set out in
the table below.
2019 2018
GBP000 GBP000
-------------------------- -------- --------
Net assets at 30 June 188,250 204,125
Shares in issue (000) 53,162 53,162
Basic and EPRA net asset
value per share 354p 384p
-------------------------- -------- --------
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 or visit www.rns.com.
END
FR CKNDDABKDQCB
(END) Dow Jones Newswires
September 24, 2019 02:00 ET (06:00 GMT)
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