TOWN Town Centre Securities Plc

20 March 2024

 

TOWN CENTRE SECURITIES PLC

('TCS' or the 'Company')

 

Half year results for the six months ended 31 December 2023

  

Resilient performance given macro-economic conditions

 

Town Centre Securities PLC, the Leeds, Manchester, Scotland, and London property investment, development, hotel and car parking company, today announces its results for the six months ended 31 December 2023.

 

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

"We have benefitted from the last three years' disposal and asset management programmes and reduction in borrowings, which positioned us well to contend with the ongoing macro-economic challenges in the six month period ending 31 December 2023. During the first half we were able to use our strengthened financial position to launch and complete a successful NAV per share accretive tender offer."

"Our property rental business, car park and hotel operations continue to deliver resilient underlying revenues and earnings against challenging macro-economic conditions. These conditions have led to movements in the underlying yields and a further valuation reduction of our property portfolio, in particular with our office investments. Expectations are that inflation may fall to the Government's target of 2 percent by the end of Q2 2024, and that the Bank of England may then start lowering interest rates, which may lead to an improvement in liquidity in the property investment markets and result in valuations stabilising. However, with continued low levels of variable interest rate bank debt, I am confident that we are in a strong position in these uncertain times."

"Rising costs, interest rate increases and the ongoing geopolitical conflicts are affecting all stakeholders and we remain committed to supporting them, in particular our dedicated employees. We continue to focus on maintaining good landlord-tenant relationships, with open dialogue and collaboration the cornerstones of our approach."

"Our attention is now focussing on investing in our development programme over the coming years. However we remain cautious and ever mindful that taking advantage of potentially accretive opportunities needs to be balanced against retaining robust finances."

"Overall, the business has now been reset, with a more diverse portfolio of assets, lower levels of gearing and more importantly historically low levels of variable rate borrowings - and is now looking predominantly at bringing forward our development pipeline."

Financial performance

·    Net assets per share - successful tender offer offset valuation decline:

o  Like for like portfolio valuation down 4.4% from June 2023:

§ similar to the MSCI/IPD All Property Capital Index which fell by 3.9% over the period

§ reduction primarily due to market sentiment around the macro-economic outlook adversely impacting valuation yields - in particular in the office sector

o  Statutory net assets of £124.0m or 294p per share (FY23: £141.1m, 291p). EPRA net tangible assets ('NTA')^* measure at £120.6m or 286p per share (FY23 equivalent: £137.7m, 284p)

·    Statutory results - loss reflects valuation reduction:

o  Statutory loss before tax of £9.7m (HY23: loss of £19.1m)

o  Statutory loss per share of 15.3p (HY23: loss of 38.4p)

·    EPRA results - relative stability in underlying earnings:

o  EPRA earnings^* of £3.8m (HY23: £1.7m) include the benefit of £1.7m of taxation credit - with the recognition of a deferred tax asset arising from brought forward trading losses

o  EPRA earnings per share^* of 7.9p (HY23: 3.5p)

·    Loan to Value** increased in the period from 45.6% to 50.3% following a small increase in borrowings coupled with the reduction in portfolio value

·    Shareholder returns:

o  Proposed interim dividend of 2.5p, (HY23: 2.5p) reflecting the relative stability in underlying earnings once the effect of the one-off taxation credit is excluded

o  NAV per share enhancing tender offer completed in December 2023 (6,292,920 shares bought back in for cancellation at 150p per share including transaction costs compared to a 30 June 2023 NTA measure of 286p per share - representing 13.0% of the issued share capital of the Company at that time)

o  As expected, the tender offer resulted in the Company leaving the REIT regime, with the entire profits of the business now subject to corporation tax and the recognition of deferred tax assets and liabilities.

 

* Alternative performance measures are detailed, defined and reconciled within Note 4 and the financial review section of this announcement

** LTV Calculation includes finance lease assets and liabilities

Protecting shareholder value whilst safeguarding the business for the future 

Progress delivered under the four key strategic initiatives is as follows:

Actively managing our assets                                       

Our long-standing strategy of active management and redevelopment, to drive income and capital growth, has continued:

·    We now have a well diversified portfolio comprising: 30% invested in retail and leisure; 29% offices; 16% car parks; 13% residential; 8% developments; and 4% hotels

·    The void rate across our portfolio had reduced to 4.5% at 31 December 2023 (5.5% at 30 June 2023)

·    Strong rent collection for the period of 99.2% (FY23: 99.1%)

·   Nine new commercial lettings and lease renewals at ERV across the portfolio in the period totalling £0.3m of rental income per annum

·    Wilko, who previously traded from a 6,000 sq ft store on the edge of the Merrion Centre, were the only tenant to enter into a CVA during the period

·   Rolling out our own car park management system across our car park portfolio which will ultimately give us both operational and financial efficiencies

 

Maximising available capital

A conservative capital structure, with a mix of short and long-term secure financing, has always underpinned our approach:

·   The first element of deferred consideration arising from the sale of our investment in YourParkingSpace Limited was received in July 2023 (£4.4m) with further receipts due in the next six months totalling £5.3m

·   Comfortable loan to value headroom over our bank facilities of £20.0m based on 31 December 2023 borrowings and valuations

·    Loan to value* increased to 50.3% following revaluation decreases and impairments in the period and a slight increase in borrowings (FY23: 45.8%)

Investing in our development pipeline

Our development pipeline, with an estimated GDV of over £400m, is a valuable and strategic point of difference for TCS which we continue to progress and enhance. Notably, in the past six months:

·   In December 2023 a planning application was submitted for student accommodation as part of the Merrion Centre's evolution. This application incorporates a 1,110 new bed purpose built student accommodation scheme based on the redevelopment of Wade House and the adjacent 100MC site

·    Following the securing of a planning consent at Whitehall Riverside back in May 2023 we continue to move forward with both build contractors/professional teams and potential tenants for all phases of the development

 

Acquiring and improving investment assets to diversify our portfolio

We continue to improve investment assets, with a stable portfolio of diverse properties:

·    During the period we:

o  Acquired a city centre car park investment property leased to NCP in Wellington Street, Sheffield for £1.5m

o Two new car park management agreements won in the period, increasing the number of car parks operated under the CitiPark brand to 20

 

Outlook

·    Resilient trading performance has continued into the second half of FY24:

o  Rent collections remain robust with over 99% of amounts invoiced in the last quarter of the year now collected

o  Car parks recovery momentum continues, other than for those reliant on office workers such as Merrion MSCP

o  Significant headroom of £20m on existing revolving credit facilities

o  Only 12.5% of borrowings at the period end subject  to variable interest rates, with £82.4m of debenture fixed until 2031 and £14.2m of property specific debt fixed until 2029

o  Weighted average cost of borrowings at period end 5.3%

 

-Ends-

For further information, please contact:

 

Town Centre Securities PLC                                                                        www.tcs-plc.co.uk / @TCS PLC

Edward Ziff, Chairman and Chief Executive                                                                          0113 222 1234

Stewart MacNeill, Group Finance Director       

 

MHP                                                                                                                                           020 3128 8100

Reg Hoare / Matthew Taylor                                                                                                 tcs@mhpgroup.com

Chairman and Chief Executive's Statement

Resetting and reinvigorating the business for the future

We have seen a stable performance across all three operational segments of the business in the past six months. Our property and car park portfolio has reduced in value by 4.4% like for like over the six months. We believe the reduction reflects the general market as opposed to any real concerns around our portfolio.

 Our strategy over the last three years has been to create a business that:

-      Has lower levels of absolute debt and leverage

-      Is diversified with a much-reduced level of retail property following £120m of property sales during the period

-    Works closely with all our tenants to support wherever we can and doing our best to ensure that following the disruption of the last few years as many of our tenants as possible are able to bounce back strongly

-      Is diversified with a capital light, profitable car park business

-    Has rebased and has significant growth opportunities as a result of our valuable development pipeline and asset management opportunities

-      Has supported our employees and their families who have been impacted by the ongoing cost of living crisis

 

Results

The statutory loss for the six months ended 31 December 2023 was much reduced at £7.3m (HY23: loss of £19.1m) giving a loss per share of 15.3p (HY23: loss per share of 38.4p). The key drivers for this loss were the valuation decreases on investment properties of £8.3m, valuation decreases on joint venture investment properties (TCS Share) of £2.5m and the impairment of car parking assets totalling £1.1m. The like for like portfolio decreased in value by 4.4% over the six months under review as a result of market sentiment around the UK's economic outlook.

EPRA earnings for the six months ended 31 December 2023 were £3.8m (HY23: £1.7m) giving EPRA earnings per share of 7.9p (HY23: 3.5p). Underlying this increase in EPRA earnings is the recognition on 1 July 2023 and subsequent part release of a deferred tax asset resulting from the Company exiting the REIT regime - the net effect in the period was to increase EPRA earnings by £1.7m or 3.5p.

Statutory Net Assets of £124.0m (30 June 2023: £141.1m) decreased by 12.1% from the year end. Net assets per share however increased marginally in the six months to 294p (30 June 2023: 291p) highlighting the accretive nature of the tender offer completed in the period when coupled with the statutory loss resulting in the period.

EPRA Net Tangible Assets (EPRA NTA); which in the case of TCS reduces statutory net assets by the £3.4m of reported Goodwill (FY23 comparable £3.4m), for the half year is £120.6m compared to £137.7m at FY23, down 12.4%. EPRA NTA per share is 286p (FY23 comparable 284p). The full breakdown of the EPRA net asset measures are detailed later. 

Borrowings

Net borrowings, which includes lease liabilities, have increased by 6% over the six months from £129.9m to £138.1m. The increase in borrowings were used to fund the tender offer.

The increase in borrowings and the valuation reductions we have seen in our property portfolio have resulted in our loan to value level increasing by 450 bps from the June year end to 50.3%.

Dividends

A maintained interim dividend of 2.5p per share (HY23 2.5p) will be paid on the 14 June 2024 to shareholders registered on 24 May 2024; amounting to £1.1m in total. The final dividend for 2023 of 2.5p was paid on the 4 January 2024. The ex-dividend date for the interim dividend will be 23 May 2024.

The maintenance of the interim dividend at 2.5p reflects the resilience of the underlying earnings of our core business and also the strengthening of the balance sheet following the asset sales completed over the last 3 years - this dividend represents 31% of EPRA earnings (57% of EPRA earnings before tax).

Portfolio Performance

The value of investment properties, developments, joint ventures and car parks at the half-year stood at £255.6m (June 2023: £264.7m).

The following table provides an overview of the performance of the portfolio, including our share of joint venture assets, in the six months ended 31 December 2023 highlighting the balance of the Company's portfolio in light of our strategy of reducing exposure to retail and leisure and also the underlying current and potential future value of our development pipeline.

	Passing rent	ERV		Value	% of portfolio	Valuation incr/(decr)		Initial yield	Reversionary yield
	£m	£m		£m
Retail & Leisure	1.1	1.3		13.8	5%	-4.8%		7.8%	8.9%
Merrion Centre (ex offices)	4.5	4.9		51.6	20%	-0.4%		8.3%	8.9%
Offices	5.0	6.4		74.0	29%	-11.7%		6.3%	8.2%
Hotels	0.9	0.9		9.5	4%	0.0%		8.6%	8.6%
Out of town retail	1.0	1.1		12.1	5%	-6.9%		8.1%	8.4%
Residential	1.3	1.6		32.0	13%	3.3%		3.9%	4.7%
	13.8	16.2		193.0	76%	-5.2%		6.8%	7.9%
Development property				20.85	8%	-2.7%
Car parks				41.75	16%	-1.2%
Portfolio				255.6	100%	-4.4%

 

 

The following table reconciles the above analysis to that set out in Note 6.

	£m
Portfolio - as per note 6	248.3
50% Share in Merrion House	28.2
Goodwill - Car Parks	3.0
Less - IFRS 16 Right-to-Use Car Parks	(23.9)
As per the table above	255.6

 

Note - the IFRS 16 Right-of-Use car parks (£23.9m) are excluded in the portfolio analysis above as the Directors do not believe it is appropriate to include these assets where the Group does not have full control over them.

On a like for like basis the whole portfolio decreased in value by 4.4% since June 2023 (FY23: 12.6% reduction) accounting for a £10.9m like for like decrease in value (investment, development, car park and joint venture assets). This reduction has been driven by investor and market sentiment in particular within the office sector, where we have seen an 11.7% like for like declines in value in the six months.

Maximising available capital

In the past six months we have sold a single non-core investment property for £200k, above its £160k book value.

In July 2023, the Company received £4.4m; the first tranche of deferred consideration due following the sale of its investment in YourParkingSpace in July 2022. A further £5.3m is due to be received in the next six months representing the final two receipts in relation to this very successful transaction.

Net borrowings as at 31 December 2023 are £138.1m - comprising of £82.3m (net of £0.1m unamortised loan issue costs) of 5.375% First Mortgage Debenture Stock 2031, £26.8m of bank debt (net of cash) and £29.0m of lease liabilities. There were a further £79.2m of undrawn revolving credit facilities at the half-year.

Actively managing our assets

We have completed or renewed nine commercial leases in the period representing annual rental income of £0.3m in aggregate.

In addition to the further roll-out of CitiCharge EV charging in our car parks we have added two further car parks under management to the CitiPark portfolio, bringing the total to 20.

Investing in our development pipeline

TCS owns a significant development pipeline which gives the Company a clear and material opportunity for future growth. The current pipeline has an estimated gross development value (GDV) of over £400m, with the majority of the developments already being part of the relevant local government approved strategic planning frameworks or actually in possession of detailed planning permission.

We take a conservative approach to development to ensure we never over-commit ourselves. Alongside this, the Company has a successful track record in obtaining planning and delivering strategic developments.

The key components of the development pipeline include:

·   Piccadilly Basin, Manchester. Mixed residential, commercial, and car-parking with a total estimated GDV of circa £170m

·    Whitehall Riverside, Leeds. Office, car-parking, and potentially leisure provision with a total estimated GDV of over £290m

·    Merrion Estate, Leeds. Office and residential towers with a total estimated GDV of over £90m

Piccadilly Basin

Our Dale and Burlington Street surface car parks are key components of the Piccadilly Basin Strategic Regeneration Framework ('SRF'). We are currently looking at refreshing this SRF to bring it up to date and relevant in order to unlock the potential of this truly unique part of the city centre.

Whitehall Riverside

Having secured detailed planning consent for both the No5 Whitehall Riverside office building and neighbouring Multi-Storey Car Park we are progressing with both the detailed design and potential tenants.

Merrion Estate

In December 2023 a planning application was submitted for student accommodation as part of the Merrion Centre's evolution. For the first time, the Merrion Centre is looking to introduce residential accommodation to its ever changing, dynamic offering that has been proudly part of the retail, office and leisure landscape of Leeds for the last 60 years.

In a bid to address the burgeoning demand for accommodation in the area, this planning application introduces two new buildings within the Merrion Centre. These structures are designed to deliver 1,110 student bedrooms, comprising a range of studios and cluster bedrooms. The student accommodations will be complemented across both buildings with a range of amenities, including residents' lounges, co-working spaces, meeting spaces, cinema, gym, karaoke room, secure cycle spaces and external terraces.

CitiPark recovering well, capital light growth continuing with a further two car parks under management

Our underlying car park business is resilient and the addition of two further car park management agreements brings the number of car parks operated under the CitiPark brand to 20.

Over the last 18 months we have been developing our own CitiPark barrierless car park management system which we are now rolling out across all branches, which will enable the car park business to benefit from both operational and financial efficiencies over the coming years.

Our CitiCharge division continues to grow and now has 51 EV chargers with a further 8 installs in the pipeline across the Group's car park portfolio. In addition we manage a further 77 EV chargers with NHS, commercial and retail partners.

ESG and business responsibility

 

Building on the success of previous initiatives, including the interaction with local communities, the solar farms and the roll-out of CitiCharge EV charging facilities, the Company continues to look at ways to improve the overall responsibility of the business. We have maintained our key partnerships with First Give (helping local schools to inspire young people to make a change in society) and the Leeds Hospitals Charity both in the form of donations but also in helping with fundraising events. In November 2023 we supported the Yorkshire Children's Charity with a fundraising event held at DriftStop within the Merrion Centre which brought together business leaders, professionals and community members for the evening.

As at 31 December 2023 the number of vehicles operated through the Company's electric vehicle salary sacrifice scheme had increased to five with a further order currently in the pipeline.

Following its inception in 2022, the Sustainability and Climate Change committee have been working to develop and implement the sustainability strategy of the Company.  Since the year end, formal terms of reference have been approved and adopted by the Board for the committee.

Tender Offer

We launched a tender offer for the Company's shares in November 2023 which successfully bought in for cancellation 6,292,920 shares in the Company at 145p per share. The transaction costs in connection with this tender, which was on top of the 145p per share, amounted to £315,000 or 5.0p per share bought in for cancellation.   This reflected the Board's belief that share buybacks are an appropriate means of returning value, whilst maximising sustainable long-term growth for shareholders, given the enhancement to NAV per share that results from reducing the number of shares in issue. This is particularly the case given the significant discount that the tender offer price was relative to reported net asset value.

Following the tender offer, the percentage of ordinary shares in the Company held beneficially by the public fell below the 35% threshold required for the Company not to be considered a 'close company' for UK taxation purposes. As such, the Company automatically lost its REIT status with effect from 30 June 2023. The loss in REIT status will result in the Group's profits and gains being subject to corporation tax, from 1 July 2023, at the standard corporation taxation rate of 25%.

Further information regarding the close company condition and the implications and consequences of the loss of REIT status, were set out in Part IV (Risk Factors) and in Section B (the UK REIT Regime and UK Taxation) of Part VI of the 8 November 2023 circular to shareholders.

Outlook

The trading performance reported in the six months ended 31 December 2023 is continuing into the opening months of 2024.

Overall, the business has now been reset, with a more diverse portfolio of assets, lower levels of gearing and more importantly historically low levels of variable rate borrowings and we are now looking predominantly at bringing forward our development pipeline

EPRA Net Asset reporting

The below table reconciles IFRS net assets to Net Tangible Assets (NTA), and the other EPRA measures.

There are three EPRA Net Asset Valuation metrics, namely EPRA Net Reinstatement Value (NRV), EPRA Net Tangible Assets (NTA) and EPRA Net Disposal Value (NDV). The EPRA NRV scenario, aims to represent the value required to rebuild the entity and assumes that no selling of assets takes place. The EPRA NTA is focused on reflecting a company's tangible assets. EPRA NDV aims to represent the shareholders' value under an orderly sale of business, where, for example, financial instruments are calculated to the full extent of their liability. All three NAV metrics share the same starting point, namely IFRS Equity attributable to shareholders.

					HY24		FY23
£m	HY24		FY23		p per share		p per share
IFRS reported NAV	124.0		141.1		294		291
Purchasers Costs 1	16.1		19.3
EPRA Net Reinstatement Value	140.1		160.4		332		331
Remove Purchasers Costs	(16.1)		(19.3)
Remove Goodwill 2	(3.4)		(3.4)
EPRA Net Tangible Assets	120.6		137.7		286		284
Fair value of fixed interest rate debt 3	7.3		14.2
EPRA Net Disposal Value	127.9		151.9		303		313

 

¹Estimated purchasers' costs including fees and stamp duty and related taxes

²Removal of goodwill as per the IFRS Balance Sheet - relates predominantly to goodwill paid to acquire two long term car park leaseholds in London

³Represents the adjustment to fair value (market price) of the 2031 5.375% debenture

Responsibility statement of the directors

The directors confirm that, to the best of their knowledge, these condensed consolidated interim financial statements have been prepared in accordance with IAS 34 as adopted in the United Kingdon. The interim management report includes a fair review of the information required by DTR 4.2.4, namely:

·    an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

·    material related party transactions in the first six months of the financial year and any material changes in the related party transactions described in the last Annual Report and Accounts.

A list of current directors is maintained on the Town Centre Securities PLC Group website: www.tcs-plc.co.uk.

 

Principal risks and uncertainties

The group set out on page 52 of its annual report and accounts 2023 the principal risks and uncertainties that could impact its performance; these remain largely unchanged since the annual report was published. The group operates a structured risk management process, which identifies and evaluates risks and uncertainties and reviews mitigation activity.

The key underlying property risks facing the business continue to relate to tenant strength, particularly in the retail arena, portfolio valuation and the related funding headroom which is driven by portfolio valuation.

Systems risk related to the increasing level of cyber security threats and GDPR risk and the need to carefully control the use of personal data continue to demand vigilance from all staff.

TCS continues to operate in a conservative manner with processes and procedures in place to ensure risk management is central to all business planning and decision making. These processes and procedures remain as detailed in the 2023 annual report.

Forward-looking statements

Certain statements in this half year report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.

The group undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

 

Edward Ziff OBE DL                                         Stewart MacNeill

Chairman and Chief Executive                    Group Finance Director

19 March 2024

 

 

Consolidated condensed income statement

for the six months ended 31 December 2023

		Six months	Six months	Year
		ended	ended	ended
		31 December	31 December	30 June
		2023	2022	2023
		Unaudited	Unaudited	Audited
Notes		£000	£000	£000
Gross revenue (excl. service charge income)		14,496	14,282	27,631
Service charge income		1,633	1,404	2,732
Gross revenue		16,129	15,686	30,363
Provision for impairment of debtors		(58)	80	-
Service charge expenses		(2,056)	(1,924)	(3,991)
Property expenses		(5,908)	(5,911)	(11,560)
Net revenue		8,107	7,931	14,812
Administrative expenses		(3,668)	(3,624)	(6,780)
Other income		553	519	880
Impairment of car parking assets	7(b)	(1,086)	(2,659)	(10,467)
Impairment of goodwill	8	-	(624)	(991)
Valuation movement on investment properties	7(a)	(8,310)	(14,192)	(21,033)
Profit/(loss) on disposal of investment properties		39	(182)	4,123
Valuation movement on investments		190	-	1,162
Loss on disposal of investments		(122)	(803)	(777)
Share of post tax losses from joint ventures	9	(2,014)	(1,927)	(4,066)
Operating loss		(6,311)	(15,561)	(23,137)
Finance costs	3	(3,486)	(3,821)	(6,948)
Finance income	3	82	304	594
Loss before taxation		(9,715)	(19,078)	(29,491)
Taxation                                                                                          4		2,460	-	-
Loss for the period		(7,255)	(19,078)	(29,491)
All losses for the period are attributable to equity shareholders.
(Losses)/earnings per share	6
Basic and Diluted		(15.3p)	(38.4p)	(60.1p)
EPRA (non-GAAP measure)		7.9p	3.5p	6.2p

 

Consolidated condensed statement of comprehensive income

for the six months ended 31 December 2023

Six months		Six months	Year
ended		ended	ended
31 December		31 December	30 June
2023		2022	2023
Unaudited		Unaudited	Audited
£000		£000	£000
Loss for the period	(7,255)	(19,078)	(29,491)
Items that will not be subsequently reclassified to profit or loss
Revaluation gains on car parking assets                                     7(b)	865	-	929
Revaluation gains on hotel assets                                               7(c)	121	121	642
Revaluation (losses)/gains on other investments                          10	(138)	997	16
Deferred tax on revaluation gains	(213)	-	-
Total other comprehensive income	635	1,118	1,587
Total comprehensive loss for the period	(6,620)	(17,960)	(27,904)

All recognised income for the period is attributable to equity shareholders.

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

Consolidated condensed balance sheet

as at 31 December 2023

		31 December	31 December	30 June
		2023	2022	2023
		Unaudited	Unaudited	Audited
Notes		£000	£000	£000
Non-current assets
Property rental
Investment properties	7	179,012	174,361	183,801
Investments in joint ventures	9	5,109	16,225	7,123
		184,121	190,586	190,924
Car park activities
Freehold and right of use properties	7	59,759	68,607	60,791
Goodwill and intangible assets	8	3,551	4,165	3,674
		63,310	72,772	64,465
Hotel operations
Freehold properties	7	9,500	9,100	9,500
		9,500	9,100	9,500
Fixtures, equipment and motor vehicles	7	1,178	1,007	1,269
Investments	10	4,590	8,427	7,503
Deferred tax assets	12	2,736	-	-
Total non-current assets		265,435	281,892	273,661
Current assets
Investments	10	5,234	5,148	6,436
Trade and other receivables		3,776	2,190	3,264
Cash and cash equivalents		23,593	15,188	23,320
Total current assets		32,603	22,526	33,020
Total assets		298,038	304,418	306,681
Current liabilities
Trade and other payables		(11,862)	(11,197)	(12,387)
Bank overdrafts		(22,812)	(10,801)	(21,700)
Financial liabilities                                                                  11		(4,220)	(5,131)	(4,665)
Total current liabilities		(38,894)	(27,129)	(38,752)
Non-current liabilities
Financial liabilities                                                                  11		(134,681)	(125,045)	(126,841)
Deferred tax liabilities	12	(489)	-	-
Total liabilities		(174,064)	(152,174)	(165,593)
Net assets		123,974	152,244	141,088
Equity attributable to owners of the Parent
Called up share capital	13	10,540	12,113	12,113
Share premium account		200	200	200
Capital redemption reserve		3,309	1,736	1,736
Revaluation reserve		3,557	1,334	2,784
Retained earnings		106,368	136,861	124,255
Total equity		123,974	152,244	141,088
Net asset value per share	15	294p	314p	291p

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

Consolidated condensed statement of changes in equity

for the six months ended 31 December 2023

		Share	Capital
Share		premium	redemption	Revaluation	Retained	Total
capital		account	reserve	Reserve	earnings	equity
£000		£000	£000	£000	£000	£000
Balance at 1 July 2022	13,132	200	717	1,213	164,042	179,304
Comprehensive loss for the year
Loss for the period	-	-	-	-	(19,078)	(19,078)
Other comprehensive income	-	-	-	121	997	1,118
Total comprehensive loss for the period	-	-	-	121	(18,081)	(17,960)
Contributions by and distributions to owners
Arising on purchase and cancellation of own shares	(1,019)	-	1,019	-	(7,889)	(7,889)
Dividends relating to the year ended 30 June 2022	-	-	-	-	(1,211)	(1,211)
Balance at 31 December 2022	12,113	200	1,736	1,334	136,861	152,244
Balance at 1 July 2023	12,113	200	1,736	2,784	124,255	141,088
Comprehensive loss for the year
Loss for the period	-	-	-	-	(7,255)	(7,255)
Other comprehensive income/(loss)	-	-	-	773	(138)	635
Total comprehensive loss for the period	-	-	-	773	(7,393)	(6,620)
Contributions by and distributions to owners
Arising on purchase and cancellation of own shares	(1,573)	-	1,573	-	(9,440)	(9,440)
Dividends relating to the year ended 30 June 2023	-	-	-	-	(1,054)	(1,054)
Balance at 31 December 2023	10,540	200	3,309	3,557	106,368	123,974

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

Consolidated condensed cash flow statement

for the six months ended 31 December 2023

		Six months ended		Six months ended		Year ended
		31 December 2023		31 December 2022		30 June 2023
		Unaudited		Unaudited		Audited
	Notes	£000	£000	£000	£000	£000	£000
Cash flows from operating activities
Cash generated from operations	14	4,400		7,108		13,769
Interest received		-		-		415
Interest paid		(2,894)		(3,232)		(6,149)
Net cash generated from operating activities			1,506		3,876		8,035
Cash flows from investing activities
Purchases and construction of investment properties		(1,544)		(7,532)		(7,526)
Refurbishment of investment properties		(1,092)		(295)		(1,145)
Purchases of fixtures, equipment and motor vehicles		(80)		(157)		(576)
Proceeds from sale of investment properties		199		39,016		51,723
Proceeds from sale of investments incl. loan repayments		4,377		11,566		11,195
Payments for investments		(250)		-		-
Investments in joint ventures		-		-		(3,500)
Purchase of subsidiary, net of cash acquired		-		-		887
Net cash generated from investing activities			1,610		42,598		51,058
Cash flows from financing activities
Proceeds from borrowings		9,750		5,000		16,000
Repayment of borrowings		(3,431)		(37,107)		(60,241)
Principle element of lease payments		(834)		(828)		(1,657)
Re-purchase of own shares		(9,440)		(7,888)		(7,888)
Dividends paid to shareholders		-		-		(2,423)
Net cash used in financing activities			(3,955)		(40,823)		(56,209)
Net (decrease)/increase in cash and cash equivalents			(839)		5,651		2,884
Cash and cash equivalents at beginning of period			1,620		(1,264)		(1,264)
Cash and cash equivalents at end of period			781		4,387		1,620
Cash and cash equivalents at the year-end are comprised of the following:
Cash balances			23,593		15,188		23,320
Overdrawn balances			(22,812)		(10,801)		(21,700)
			781		4,387		1,620

 

The Consolidated Cash Flow Statement should be read in conjunction with Note 14.

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

 Notes to the consolidated interim financial information

1. Financial information

General information

Town Centre Securities PLC (the "Company") is a public limited company domiciled in the United Kingdom. Its shares are listed on the main market of the London Stock Exchange. The address of its registered office is Town Centre House, The Merrion Centre, Leeds LS2 8LY. The principal activities of the group during the period remained those of property investment, development and trading and the provision of car parking.

This interim financial information was approved by the board on 19 March 2024.

The comparative financial information for the year ended 30 June 2023 in this half-yearly report does not constitute statutory accounts for that year as defined in section 434 of the Companies Act 2006. The statutory accounts for the year ended 30 June 2023 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

Basis of preparation

These condensed consolidated financial statements have been prepared in accordance with IAS 34, "Interim Financial Reporting", in accordance with UK adopted international accounting standards. They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the accounts for the year ended 30 June 2023. The financial information for the six months ended 31 December 2023 and 31 December 2022 is unaudited.

Significant accounting policies

The accounting policies adopted are consistent with those of the previous financial year, although as the Group left the REIT regime with effect from 1 July 2023 the accounting policy on taxation has been expanded to provide additional disclosure specifically around the transition out of the REIT regime. Further details around this policy are detailed below.

The group's financial performance is not seasonal.

In the current environment, the directors consider revenue to be of particular importance and therefore we set out below our revenue policy in respect of rental income:

Rental income

Revenue includes rental income net of VAT.

Most of the Group's rental income is billed either monthly or quarterly in advance. A receivable and deferred income is recognised at the date payment is due

Rent receivables recognised are subject to impairment (refer to the Trade and Other Related Party receivables policy in the financial statements of the Company for the year ended 30 June 2023).

Any lease incentives are spread on a straight-line basis across the period of the lease.

Rental income is recognised as revenue (to the extent it is considered collectible) as follows:

i)          Fixed rental income is recognised on a straight-line basis over the term of the lease;

ii)          turnover rents are based on underlying turnover and are recognised in the period to which the turnover relates;

iii)         rent reviews are recognised in the period to which they relate providing they have been agreed or otherwise on agreement; and

iv)         Where rent concessions have been granted that reduce the payments due under a lease in future periods, the total revised consideration (plus any prepaid or accrued lease payments) is spread over the remaining lease term from the date the concession is granted.

Taxation

The Group's tax expense comprises both current tax and deferred tax expense.

Current tax is the expected tax payable on taxable profit for the year and is calculated using tax rates and laws substantively enacted at the balance sheet date.

A deferred tax asset represents a tax deduction that is expected to arise in a future period. It is only recognised to the extent that it is probable that the tax deduction will be capable of being offset against taxable profits and gains in future periods. A deferred tax liability represents taxes which will become payable in a future period as a result of a current or prior year transaction. Deferred tax assets and liabilities are netted off on the balance sheet. The tax rates used to determine deferred tax are those enacted or substantively enacted at the balance sheet date that are expected to apply when the deferred tax asset or liability are realised.

Current tax and deferred tax are recognised in the consolidated income statement except when it relates to items recognised in other comprehensive income or directly in equity, in which case it is credited or charged to other comprehensive income or directly to equity respectively.

In the period from 2 October 2007 to 30 June 2023 the Company elected for Group REIT status. During this period the Group did not recognise any deferred tax assets as there was insufficient evidence to support that there would be any future taxable profits in the Group.

The Group left the REIT regime with effect from 1 July 2023 and the profits of the Group are now all subject to corporation tax. This has resulted in the recognition of a deferred tax asset relating to trading losses from previous periods where there is sufficient evidence that they will be offset against future taxable profits.

Use of estimates and judgements

With the exception of taxation, there have been no changes in the method of applying appropriate accounting estimates in the period.  Any difference between the receivables previously recognised and the cash subsequently collected has been disclosed in the income statement. There have been no other estimates of amounts reported in prior periods which have a material impact on the current half year period.

Taxation

Significant judgment is required in determining the provision for income tax and the calculation of any deferred tax balances. The Group recognises liabilities for anticipated tax based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts initially recorded, such differences impact the income tax and deferred tax provisions in the period in which such determination is made. Some subsidiaries have generated or generate tax losses. Often these can be used to offset taxable gains of subsequent periods. The Group monitors the development of such tax loss situations. Based on the business plans of the Group, the recoverability of such tax losses is determined. In the case that a tax loss is deemed to be recoverable, the recognition of a deferred tax asset for such a tax loss is then decided. This judgement resulted in the recognition of a deferred tax asset as at 1 July 2023 of £2,429,000.

Going concern

The financial information for the six months ended 31 December 2023 have been prepared on a going concern basis. In light of the current macro-economic environment the Directors have considered various downside scenarios to the Group's financial forecasts in assessing its ability to continue as a going concern. Despite the negative economic impacts and the uncertainty created, the scenarios reviewed confirm the appropriateness of preparing these financial statements on a going concern basis. The Group is currently in compliance with all of its covenants. The most material risks concern the impact on the valuation of the property portfolio and our ability to meet bank loan and debenture covenants, although the Group does have potential mitigants at its disposal to address these uncertainties which include, but are not limited to, further disposals of assets, pledging as additional security ungeared properties valued at £3.8m at 31 December 2023 and seeking lender consent to an extension of financial covenant waivers to cover extended periods of disruption.

 

2. Segmental information

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

Segmental assets

31 December		31 December	30 June
2023		2022	2023
£000		£000	£000
Property rental	215,827	212,712	212,249
Car park activities	62,887	69,031	64,993
Hotel operations	9,500	9,100	9,500
Investments	9,824	13,575	19,939
Total assets	298,038	304,418	306,681

 

Segmental results

		Six months ended 31 December 2023									Six months ended  31 December 2022
	Property		Car park	Hotel	Invest-		Property		Car park	Hotel		Invest-
	rental		activities	operations	ments	Total	rental		activities	operations		ments	Total
	£000		£000	£000	£000	£000	£000		£000	£000		£000	£000
Gross revenue (excl. service charge income)	6,176		6,626	1,694	-	14,496	5,873		6,748	1,661		-	14,282
Service charge income	1,633		-	-	-	1,633	1,404		-	-		-	1,404
Gross revenue	7,809		6,626	1,694	-	16,129	7,277		6,748	1,661		-	15,686
Provision for impairment of debtors	(58)		-	-	-	(58)	80		-	-		-	80
Service charge expenses	(2,056)		-	-	-	(2,056)	(1,924)		-	-		-	(1,924)
Property expenses	(818)		(3,766)	(1,324)	-	(5,908)	(482)		(4,056)	(1,373)		-	(5,911)
Net revenue	4,877		2,860	370	-	8,107	4,951		2,692	288		-	7,931
Administrative expenses	(2,921)		(747)	-	-	(3,668)	(2,998)		(626)	-		-	(3,624)
Other income	553		-	-	-	553	515		4	-		-	519
Share of post tax profits from joint ventures before valuation movements	511		-	-	-	511	423		-	-		-	423
Operating profit before valuation movements	3,020		2,113	370	-	5,503	2,891		2,070	288		-	5,249
Valuation movement on investment properties	(8,310)		-	-	-	(8,310)	(14,192)		-	-		-	(14,192)
Impairment of car parking assets	-		(1,086)	-	-	(1,086)	-		(2,659)	-		-	(2,659)
Impairment of goodwill	-		-	-	-	-	-		(624)	-		-	(624)
Profit/(loss)on disposal of investment properties	39		-	-	-	39	(182)		-	-		-	(182)
Valuation movement on investments	-		-	-	190	190	-		-	-		-	-
Loss on disposal of investments	-		-	-	(122)	(122)	-		-	-		(803)	(803)
Valuation movement on joint venture properties	(2,525)		-	-	-	(2,525)	(2,350)		-	-		-	(2,350)
Operating loss	(7,776)		1,027	370	68	(6,311)	(13,833)		(1,213)	288		(803)	(15,561)
Finance costs						(3,486)							(3,821)
Finance income						82							304
Loss before taxation						(9,715)							(19,078)
Taxation						2,460							-
Loss for the period						(7,255)							(19,078)

All results are derived from activities conducted in the United Kingdom.

The car park results include car park income from sites that are held for future development. The value of these sites has been determined based on their development value and therefore the total value of these assets has been included within the assets of the property rental business.

The net revenue at the development sites for the six months ended 31 December 2023, arising from car park operations, was £1,018,000. After allowing for an allocation of administrative expenses, the operating profit at these sites was £674,000.

Revenue received within the car park and hotel segments, along with service charge income from the property rental segment, is the only revenue recognised on a contract basis under IFRS 15. All other revenue within the property segment comes from rental lease agreements.

 

3. Finance costs

Six months		Six months	Year
ended		ended	ended
31 December		31 December	30 June
2023		2022	2023
£000		£000	£000
Interest on debenture loan stock	2,215	2,583	4,819
Interest payable on bank borrowings	679	649	1,330
Amortisation of arrangement fees	131	115	230
Gain on repurchase of debenture stock	-	-	(379)
Interest expense on lease liabilities	461	474	948
Total finance costs	3,486	3,821	6,948
Interest receivable on loans to joint ventures	-	(136)	(245)
Other interest receivable	(82)	(168)	(349)
Total finance income	(82)	(304)	(594)
Net finance costs	3,404	3,517	6,354

 

 

4. Taxation

Six months		Six months	Year
ended		ended	ended
31 December		31 December	30 June
2023		2022	2023
£000		£000	£000
Current tax
-     Current year	-	-	-
-     Adjustments in respect of prior years	-	-	-
	-	-	-
Deferred tax
-     Recognition of carried forward trading losses	(2,613)	-	-
-     Utilisation of trading losses	938	-	-
-     Origination and reversal of timing differences	(785)	-	-
-     Adjustments in respect of prior periods	-	-	-
	(2,460)	-	-
	(2,460)	-	-

 

 

Six months		Six months	Year
ended		ended	ended
31 December		31 December	30 June
2023		2022	2023
£000		£000	£000
Loss before taxation	(9,715)	(19,078)	(29,491)
Loss on ordinary activities multiplied by the rate of corporation tax of 25% (2022: 19%)	(2,429)	(3,625)	(5,603)
Effects of
-     Unrecognised DTA on investment properties valuation losses	2,168	-	-
-     Recognition of carried forward trading losses	(2,613)	-	-
-     Expenses not deductible for tax purposes	414	-	-
-     United Kingdom REIT tax exemption on net income before revaluations	-	(329)	(582)
-     United Kingdom REIT tax exemption on revaluations	-	3,954	6,185
	(2,460)	-	-

 

The Company left the REIT regime with effect from 1 July 2023, therefore the profits of the Company are now subject to corporation tax.

 

5. Dividends

Six months		Six months	Year
ended		ended	ended
31 December		31 December	30 June
2023		2022	2023
£000		£000	£000
2022 final dividend: 2.5p per 25p share	-	1,211	1,212
2023 interim dividend: 2.5p per 25p share	-	-	1,212
2023 final dividend: 2.5p per 25p share	1,054	-	-
	1,054	1,211	2,424

 

A final dividend in respect of the year ended 30 June 2023 of 2.5p per share was approved at the company's annual general meeting (AGM) on 1 December 2023 and was paid to shareholders on 4 January 2024. The entire dividend was paid as an ordinary dividend.

An interim dividend in respect of the year ending 30 June 2024 of 2.5p per share is proposed. This dividend, based on the shares in issue at 19 March 2024, amounts to £1.054m which has not been reflected in these interim accounts and will be paid on 14 June 2024 to shareholders on the register on 24 May 2024. This dividend will be paid entirely as an Ordinary Dividend.

6. Earnings per share

The calculation of basic earnings per share has been based on the loss for the period, divided by the number of shares in issue. The weighted average number of shares in issue during the period was 47,532,181 (2022: 49,685,860).

	Six months ended 31 December 2023		Six months ended 31 December 2022		Year ended 30 June 2023
	Earnings	Earnings    per share	Earnings	Earnings per share	Earnings	Earnings per share
	£000	Pence	£000	Pence	£000	Pence
Basic earnings and earnings per share	(7,255)	(15.3)	(19,078)	(38.4)	(29,491)	(60.1)
Valuation movement on investment properties	8,310	17.5	14,192	28.6	21,033	42.9
Deferred tax on valuation movements	(785)	(1.6)	-	-	-	-
Impairment of car parking assets	1,086	2.3	2,659	5.4	10,467	21.3
Impairment of goodwill	-	-	624	1.3	991	2.0
(Profit)/loss on disposal of investment properties	(39)	(0.1)	182	0.3	(4,123)	(8.4)
Valuation movement on properties held in joint ventures	2,525	5.3	2,350	4.7	4,950	10.1
Loss on disposal of investments	122	0.2	803	1.6	777	1.6
Valuation movement on investments	(190)	(0.4)	-	-	(1,162)	(2.4)
Profit on repurchase of debenture stock	-	-	-	-	(379)	(0.8)
EPRA earnings and earnings per share	3,774	7.9	1,732	3.5	3,063	6.2

 

EPRA earnings for the 6 months ended 31 December 2023 includes a tax credit £1,675,000 relating to the recognition of a deferred tax asset for historical trading losses.

There is no difference between basic and diluted earnings per share.

There is no difference between basic and diluted EPRA earnings per share.

 

7. Tangible fixed assets

(a) Investment properties - property rental business

Freehold		Right of use asset		Development		Total
£000		£000		£000		£000
Valuation at 1 July 2022	156,230	2,250		42,626		201,106
Additions at cost	7,526	-		-		7,526
Held in subsidiaries acquired	23,400	-		706		24,106
Other capital expenditure	735	31		395		1,161
Disposals	(7,645)	-		(21,250)		(28,895)
Valuation movement	(19,376)	(31)		(1,626)		(21,033)
Movement in tenant lease incentives	(170)	-		-		(170)
Valuation at 1 July 2023	160,700	2,250		20,851		183,801
Additions at cost	-	2,860		-		2,860
Capital expenditure	529	-		556		1,085
Disposals	(160)	-		-		(160)
Valuation movement	(7,760)	6		(556)		(8,310)
Movement in tenant lease incentives	(264)	-		-		(264)
Valuation at 31 December 2023	153,045	5,116		20,851		179,012

 

 (b) Freehold and right of use properties - car park activities

Freehold		Right of use asset		Total
£000		£000		£000
Book Value at 1 July 2022	29,200	43,026		72,226
Additions	6	-		6
IFRS16 adjustment	-	(95)		(95)
Depreciation	(312)	(1,496)		(1,808)
Valuation movement	929	-		929
Impairment	(4,713)	(5,754)		(10,467)
Book Value at 1 July 2023	25,110	35,681		60,791
Additions	7	-		7
IFRS16 adjustment	-	(48)		(48)
Depreciation	(136)	(634)		(770)
Valuation movement	865	-		865
Reversal of impairment/(impairment)	504	(1,590)		(1,086)
Book Value at 31 December 2023	26,350	33,409		59,759

 

The historical cost of freehold properties and right-of-use assets relating to car park activities is £30,153,000 (30 June 2023: £30,153,000).

 

(c) Freehold properties - hotel operations

Freehold
£000
Valuation at 30 June 2022	9,100
Depreciation	(242)
Valuation movement	642
Valuation at 1 July 2023	9,500
Depreciation	(121)
Valuation movement	121
Valuation at 31 December 2023	9,500

 

The fair value of the Group's investment and development properties, freehold car parks, hotel operations and assets held for sale have been determined principally by independent, appropriately qualified external valuers CBRE and Jones Lang LaSalle. The remainder of the portfolio has been valued by the Property Director.

Valuations are performed bi-annually and are performed consistently across the Group's whole portfolio of properties. At each reporting date appropriately qualified employees verify all significant inputs and review computational outputs. The external valuers submit and present summary reports to the Property Director and the Board on the outcome of each valuation round.

Valuations take into account tenure, lease terms and structural condition. The inputs underlying the valuations include market rents or business profitability, incentives offered to tenants, forecast growth rates, market yields and discount rates and selling costs including stamp duty.

The development properties principally comprise land in Leeds and Manchester. These have also been valued by appropriately qualified external valuers Jones Lang LaSalle, taking into account an assessment of their realisable value in their existing state and condition based on market evidence of comparable transactions and residual value calculations.

Leasehold (right-of-use) car park properties are accounted for using the cost model including an assessment of the future value of the minimum lease payments and are amortised on a straight line basis over the remaining term of the lease or useful economic live if deemed to be shorter.

 

Property income, values and yields have been set out by category in the table below.

	Passing rent	ERV	Value	Initial yield	Reversionary yield
	£'000	£'000	£000	%	%
Retail and leisure	1,138	1,305	13,820	7.8	8.9
Merrion Centre (excluding offices)	4,544	4,883	51,602	8.3	8.9
Offices	3,116	4,725	45,773	6.4	9.8
Hotels	864	864	9,500	8.6	8.6
Out of town retail	1,041	1,070	12,100	8.1	8.4
Residential	1,306	1,601	32,000	3.9	4.7
	12,009	14,448	164,795	6.9	8.3
Development property			20,851
Car parks			62,625
			248,271

 

Investment properties (freehold and right of use) and hotel operations

The effect on valuation (excluding development property and car parks) of applying a different yield and a different ERV would be as follows:

Valuation at an initial yield of 5.9% - £192.8m, Valuation at 7.9% - £143.9m

Valuation at a reversionary yield of 7.3% - £187.4m, Valuation at 9.3% - £147.1m

 

Investment properties (development properties)

The key unobservable inputs in the valuation of one of the Group's development properties of £14.8m is the assumed per acre or per unit land value. The effect on the development property valuation of applying a different assumed per acre or per unit land value would be as follows:

Valuation in the Consolidated Financial Statements if a 5% increase in the per acre or per unit value - £15.5m, 5% decrease in the per acre or per unit value - £14.1m.

The other key development property in the Group is valued on a per acre development land value basis, the effect on the development property valuation of applying reasonable sensitivities would not create a material impact.

Freehold car park activities

The effect on the total valuation of the Group's freehold car park properties of £26.4m in applying a different yield/discount rate would be as follows:

Valuation in the Consolidated Financial Statements based on a 1% decrease in the yield/discount rate - valuation increase to £31.0m, 1% increase in the yield/discount rate - valuation decrease to £22.9m

Property valuations can be reconciled to the carrying value of the properties in the balance sheet as follows:

	Investment properties	Freehold and right of use Properties - car park activities	Hotel operations	Total
	£000	£000	£000	£000
Externally valued by CBRE	89,920	19,000	9,500	118,420
Externally value by Jones Lang LaSalle	87,725	7,350	-	95,075
Investment and development properties valued by the Directors	51	-	-	51
Right-of-Use Assets	1,316	33,409	-	34,725
At 31 December 2023	179,012	59,759	9,500	248,271

All investment properties, freehold properties held in property plant and equipment, hotel operations and assets held for sale are measured at fair value in the consolidated balance sheet and are categorised as level 3 in the fair value hierarchy as defined in IFRS13 as one or more inputs to the valuation are partly based on unobservable market data. In arriving at their valuation for each property (as in prior years) both the independent external valuers and the Directors have used the actual rent passing and have also formed an opinion as to the two significant unobservable inputs being the market rental for that property and the yield (i.e. the discount rate) which a potential purchaser would apply in arriving at the market value. Both these inputs are arrived at using market comparables for the type, location and condition of the property.

 

(d) Fixtures, equipment and motor vehicles

		Accumulated	Net book
	Cost	depreciation	value
	£000	£000	£000
At 1 July 2022	4,994	(4,018)	976
Additions	576	-	576
Depreciation	-	(283)	(283)
At 1 July 2023	5,570	(4,301)	1,269
Additions	80	-	80
Depreciation	-	(171)	(171)
At 31 December 2023	5,650	(4,472)	1,178

 

8. Goodwill and intangible assets

	Six months	Six months	Year
	ended	ended	ended
	31 December	31 December	30 June
	2023	2022	2023
	£000	£000	£000
Goodwill
At start of the period	3,445	4,436	4,436
Impairment	-	(624)	(991)
	3,445	3,812	3,445
Intangible assets
At start of period	229	476	476
Amortisation	(123)	(123)	(247)
	106	353	229
Total goodwill and intangible assets	3,551	4,165	3,674

 

Goodwill represents the difference between the fair value of the consideration paid on the acquisitions of car park businesses and the fair value of the assets and liabilities acquired as part of these business combinations.

Intangible assets represent short term customer contracts relating to car park enforcement businesses acquired in the periods.

9. Investments in joint ventures

	Six months	Six months	Year
	ended	ended	Ended
	31 December	31 December	30 June
	2023	2022	2023
	£000	£000	£000
Interest in joint ventures
At start of period	7,123	18,016	18,016
Investments in joint venture	-	-	3,500
Share of profits after tax	511	423	884
Loan interest	-	136	245
Valuation movement	(2,525)	(2,350)	(4,950)
Amounts eliminated on consolidation of subsidiary	-	-	(10,572)
At end of period	5,109	16,225	7,123

 

Investments in joint ventures are broken down as follows:
	31 December	31 December	30 June
	2023	2022	2023
	£000	£000	£000
Equity	5,109	9,764	7,123
Loans	-	6,461	-
	5,109	16,225	7,123

 

Investments in joint ventures relates to the Group's interest in the partnership capital of Merrion House LLP and as at 31 December 2022 a loan to Belgravia Living Group Limited. The investment properties held within these joint ventures have been externally valued at each reporting date.

10. Investments

31 December		31 December	30 June
2023		2022	2023
£000		£000	£000
Current Assets
Loan notes - Deferred Consideration	3,101	4,385	4,493
Loan notes - Contingent Consideration	2,133	763	1,943
	5,234	5,148	6,436
Non-Current Assets
Listed investments	3,930	5,063	4,068
Non-listed investments	660	410	410
Loan notes - Deferred Consideration	-	2,954	3,025
	4,590	8,427	7,503
	9,824	13,575	13,939

 

Listed investments

31 December		31 December	30 June
2023		2022	2023
£000		£000	£000
At start of the period	4,068	4,096	4,096
Disposals	-	(30)	(44)
(Decrease)/increase in value of investments	(138)	997	16
At the end of the period	3,930	5,063	4,068

 

Listed investments relate to an equity shareholding in a company listed on the London Stock Exchange. This is stated at market value in the table above and has a historic cost of £875,482 (2022: £877,755).

Listed investments are measured at fair value in the consolidated balance sheet and are categorised as level 1 in the fair value hierarchy as defined in IFRS 13 as the inputs to the valuation are based on quoted market prices.

The maximum risk exposure at the reporting date is the fair value of the other investments.

Non-listed investments

31 December		31 December	30 June
2023		2022	2023
£000		£000	£000
At the start and end of the year	410	410	410
Additions	250	-	-
	660	410	410

 

Loan Notes - Deferred Consideration

31 December		31 December	30 June
2023		2022	2023
£000		£000	£000
Current assets
At the start of the year	4,493	-	-
Transferred from non-current assets	3,025	-	-
Loan notes issued to the Company in the period	-	4,287	4,287
Loan interest	82	98	206
Loan notes repaid to the Company in the period	(4,499)	-	-
	3,101	4,385	4,493
Non-current assets
At the start of the year	3,025	-	-
Transferred to current assets	(3,025)	-	-
Loan notes issued to the Company in the period	-	2,888	2,888
Loan interest	-	66	137
	-	2,954	3,025

 

The interest earned on the deferred consideration loan notes is 5% per annum.

The deferred consideration loan notes are accounted for using the amortised cost basis and are assessed for impairment under the IFRS 9 expected credit loss model.

 

Loan Notes - Contingent Consideration

31 December		31 December	30 June
2023		2022	2023
£000		£000	£000
At the start of the year	1,943	-	-
Loan notes issued to the Company in the period	-	743	743
Unwind of discount applied to contingent consideration	32	20	38
Valuation movement	158	-	1,162
	2,133	763	1,943

 

The contingent consideration loan notes were initially recognised at fair value, based on the estimated performance of YPS in the 14 month period ended October 2023. This is an estimate prepared by the Company. The contingent consideration loan notes are then accounted for using the fair value through profit and loss basis. Following completion of the sale of its investment in YPS, the Company does not have access to any current YPS management information. With its knowledge of the UK Car Parking market, together with the volume of business the Group is continuing to generate on its own car parks through the YPS platform, the Company does not believe the contingent consideration has suffered any impairment in the period.

These loan note assets are categorised as level 3 in the fair value hierarchy as defined in IFRS 13 as the inputs to the valuation are based on unobservable inputs.

The effect on the value of the contingent consideration at the period end of £2.1m of applying a different level of revenue for the period to October 2023:

Valuation in the Consolidated Financial Statements assuming net revenue 10% above anticipated - £2.6m, Valuation at 10% below anticipated - £1.7m.

11. Financial liabilities

31 December		31 December	30 June
2023		2022	2023
£000		£000	£000
Current
Bank borrowings	2,452	3,466	3,000
Lease liabilities	1,768	1,665	1,665
	4,220	5,131	4,665
Non-Current
Bank borrowings - revolving credit facilities	10,870	2,328	3,841
Bank borrowings - single asset facility	14,277	-	14,313
Lease liabilities	27,203	26,717	26,362
5.375% First mortgage debenture stock	82,331	96,000	82,325
	134,681	125,045	126,841
	138,901	130,176	131,506

 

Fair value of current borrowings

The fair value of bank borrowings and overdrafts approximates to their carrying value.

Fair value of non-current borrowings

	31 December 2023		31 December 2022		30 June 2023
	Book value	Fair value	Book value	Fair value	Book value	Fair value
	£000	£000	£000	£000	£000	£000
Debenture stock	82,331	75,095	96,000	83,782	82,325	68,169
Revolving credit facilities	10,870	10,870	2,328	2,328	3,788	3,788
Single asset facility	14,313	14,313	-	-	14,313	14,313

 

12. Deferred tax assets and liabilities

31 December		31 December	30 June
2023		2022	2023
£000		£000	£000
Assets
Carried forward losses	1,675	-	-
Leases	1,061	-	-
	2,736	-	-
Liabilities
Investment property revaluation gains	489	-	-
	489	-	-
Net deferred tax asset	2,247	-	-

 

The Company left the REIT regime with effect from 1 July 2023, therefore the profits of the Company are now subject to corporation tax. This has resulted in the recognition of a deferred tax asset, primarily relating to trading losses from previous periods that are available to offset taxation on future profits.

The Company also has various non-trading losses from previous periods, however these have not been recognised within the deferred tax asset as it is not certain when these will be available to offset further profits. The total value of losses not included within the deferred tax asset is £1,960,000.

The total net deferred tax balance as at 31 December 2023 includes the charge to the income statement of £2,460,000 less deferred tax liabilities arising in the period on revaluation gains recognised in the consolidated condensed statement of comprehensive income of £213,000 (30 June 2023 and 31 December 2022: £nil).

13. Called up equity share capital

Authorised

164,879,000 (30 June 2023: 164,879,000) ordinary shares of 25p each.

Issued and fully paid up		Number of shares	Nominal value
		000	£000
At 1 July 2023		48,456	12,113
Purchase and cancellation of own shares		(6,293)	(1,573)
At 31 December 2023		42,163	10,540

 

14. Cash flows from operating activities

	Six months	Six months	Year
	ended	ended	ended
	31 December	31 December	30 June
	2023	2022	2023
	£000	£000	£000
Loss for the period	(7,255)	(19,078)	(29,491)
Taxation credit	(2,460)	-	-
Depreciation	1,063	1,159	2,333
Amortisation	123	123	247
(Profit)/loss on disposal of investment properties	(39)	171	(4,123)
Profit on sale of fixed assets	-	(16)	(48)
Loss on sale of investments	122	814	795
Movement in valuation of investments	(190)	-	(1,162)
Finance costs	3,486	3,821	6,948
Finance income	(82)	(304)	(594)
Share of joint venture losses after tax	2,014	1,927	4,066
Movement in revaluation of investment properties	8,310	14,192	21,033
Movement in lease incentives	264	(15)	170
Impairment of car parking assets	1,086	2,659	10,467
Impairment of goodwill	-	624	991
(Increase)/decrease in receivables	(511)	813	(218)
(Decrease)/increase in payables	(1,531)	218	2,355
Cash generated from operations	4,400	7,108	13,769

15. Net asset value per share

Net asset value per share is calculated as the net assets of the Group attributable to shareholders at each balance sheet date, divided by the number of shares in issue at that date.

 

	Six months	Six months	Year
	ended	ended	ended
	31 December	31 December	30 June
	2023	2022	2023
Net asset value (£'000)	123,974	152,244	141,088
Number of ordinary shares in issue (000)	42,163	48,456	48,456
Net asset value per share (pence)	294p	314p	291p

 

16. Related party information

The only related party transactions that have taken place during the period relate to the remuneration of the Executive Directors, who are the key management personnel of the Group. Dividends paid to the Directors and their family members are also related party transactions although there were no dividends paid in the period.

Six months		Six months	Year
ended		ended	ended
31 December		31 December	30 June
2023		2022	2023
£000		£000	£000
Short-term employee benefits	1,305	1,330	2,590
Post-employment benefits	-	65	65
Dividends paid to the Ziff Concert Party	-	-	1,327
	1,305	1,395	3,982

 

The Ziff Concert Party includes Edward Ziff, Ben Ziff (Executive Directors) and Michael Ziff (Non Executive Director) together with their immediate family members, the estate of Edward Ziff and Michael Ziff's late mother,their sister and a number of trusts that Edward Ziff and Michael Ziff are not beneficiaries of but they do control.

 

INDEPENDENT REVIEW REPORT TO Town Centre Securities Plc

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2023 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2023 which comprises the consolidated condensed income statement, the consolidated condensed statement of comprehensive income, the consolidated condensed balance sheet, the consolidated condensed statement of changes in equity, the consolidated condensed cash flow statement and the notes to the consolidated interim financial information.

Basis for conclusion

We conducted our review in accordance with Revised International Standard on Review Engagements (UK) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410 (Revised)"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with UK adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting".

Conclusions relating to going concern.

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410 (Revised), however future events or conditions may cause the group to cease to continue as a going concern.

Responsibilities of directors

The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

In preparing the half-yearly financial report, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the review of the financial information

In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

Use of our report

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority and for no other purpose.  No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent.  Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

 

 

BDO LLP

Chartered Accountants

London, UK

Date   19 March 2024

 

 

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).