Town Centre Regulatory News (TOWN)

17 February 2011

TOWN CENTRE SECURITIES PLC

Half year results for the six months ended 31 December 2010

Town Centre Securities PLC, the Leeds based property investment and development company, today announces its results for the six months ended 31 December 2010.

Financial Highlights:

·; Underlying profit after tax £4.4m (2009: £2.5m)

·; Underlying earnings per share 8.3p per share (2009: 4.8p)

·; Proposed interim dividend of 3.10p per share (2009: 3.02p)

·; Net asset value per share 277p (30 June 2010: 269p)

·; Profit after tax £7.8m (2009: profit of £31.5m including £9m profit on repurchase of debenture stock).

·; Earnings per share 14.7p (2009: 59.3p)

·; Surplus on revaluation of investment property of £3.2m (2009: surplus of £19.7m)

·; Gross borrowings at 31 December 2010 were £144.6m (30 June 2010: £141.8m)

Operational Highlights:

·; Improvement in occupancy levels to 95.6% (30 June 2010: 93.2%)

·; Merrion Centre continues to benefit from active management- income growth of 4.7% and voids of less than 2.5%

·; Consistent performance from car parking - 4,000 spaces (30 June 2010: 2,900 spaces).

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

'We have reported a significant improvement in our underlying profitability. This follows continued focus on reducing occupancy voids and the rebasing of our operating costs and interest charges.

'We are confident that our focus on value for money retailing will drive our future income generation and continue to under pin the strength of the business and sustain our dividend.

'In 2010 TCS was the best performing REIT, based on total shareholder returns of 30.9% (including dividend reinvestment).'

Chairman and chief executive's statement

In 2011, Town Centre Securities celebrates the 50th anniversary of its listing on the stock market. We are particularly proud of the long term total shareholder returns achieved.

The first half of this financial year has seen us continue to focus on managing our existing portfolio of investment properties and car parks. We have reported a significant improvement in our underlying profitability. This follows the continued focus on reducing occupancy voids and the rebasing of our operating costs and interest charges. Our investment portfolio has demonstrated continued stability with an increase in value of 1.6%. We have also seen income growth of 1.8% on our current portfolio due to increased occupancy. This is particularly pleasing, demonstrating the quality and resilience of our property portfolio and the expertise of our in-house management team. Our total shareholder return (including dividend reinvestment) for 2010 was 30.9% making TCS the best performing REIT (source: Arbuthnot Securities).

Results

Underlying profit before tax for the six months ended 31 December 2010 amounted to £4.4m (2009: £2.5m) and the valuation movement on investment properties was £3.2m (2009: £19.7m). Underlying earnings amounted to 8.3p per share (2009: 4.8p). Profit before tax amounted to £7.8m (2009: £31.5m including £9m profit on repurchase of debenture stock and valuation movement of £19.7m)

Rental income from investment property for the six month period was unchanged at £8.9m (2009: £8.9m). This reflects our efforts to reduce voids in the last twelve months and, excluding disposed properties, total rental income has increased by 1.8%. Income from car parks was also unchanged at £2.4m (2009: £2.4m) despite increased competition from former development sites.

Property expenses reduced to £2.0m (2009: £2.4m) largely due to the reduction in void property costs. Administrative expenses reduced to £2.0m (2009: £2.5m) reflecting a significant reduction in staff costs as the benefit of last year's rationalisation has come through.

Net finance costs amounted to £3.3m (2009: £4.3m). In 2009 interest costs were higher prior to the debenture buy-back in August 2009 and the expiry of an interest rate swap in October 2009.

Net assets are now £147.0m, an increase of 2.9% compared to 30 June 2010 when they amounted to £142.9m. Net assets per share are 277p (2009: 257p; 30 June 2010: 269p).

Dividends

The interim dividend, which will be paid as a Property Income Distribution ("PID"), has been increased to 3.10 pence per share (3.02 pence per share). The dividend will be paid on 30 June 2011 to shareholders registered on 3 June 2011. We anticipate that the overall dividend for the full year will be at least the same as last year.

Review of activities

Our portfolio remains largely unchanged. We sold two properties in Bradford and Kings Lynn for net proceeds of £1.5m, realising a small profit. The management of our existing portfolio has been our principal focus. Through letting our void properties, rental income has increased by 1.8%. The Merrion Centre had income growth of 4.7%.

I am delighted that our voids are now only 4.4%, of which 3% relates to Urban Exchange at Piccadilly Basin in Manchester. As previously reported we have entered into an agreement to lease with Go Outdoors for 55,000 sq ft on the whole first floor of this property, opening for trade in April 2011. Two of the three remaining units are under offer. Our Merrion Centre retail void level is 3% compared with 12% for the whole of Leeds as reported in a recent Drivers Jonas Deloitte Survey. Rent collections throughout the period were strong and, for the recent December quarter day collections, over 98% of rentals due were collected within five days of the due date. We have a very balanced spread of tenants with only one tenant with four tenancies, two tenants with three and seven with two.

Car parking

On 1 July 2010 we took back the management of the Merrion Centre Multi-Storey car park. We have introduced our Town Centre Car Park branding and instigated a number of marketing initiatives. These have increased parking volumes thus increasing the overall footfall in the Merrion Centre.

In addition, we have grown the contract income from our other major multi-storey car park at Clarence Dock, although this has been partly offset by declining short-term revenues as local retail and leisure offerings have reduced.

Overall, parking revenues are comparable to last year whilst underlying profits are marginally lower.

Financing

Total gross borrowings at 31 December 2010 were £144.6m (31 December 2009: £147.0m; 30 June 2010: £141.8m). Borrowings comprise £106.0m of debenture stock which expires in 2031 and £38.6m of borrowings against bank facilities which expire in 2012 and 2014. We retain unutilised facilities amounting to £61.4m.

Valuation

The valuation of our investment properties was £280.6m as at 31 December 2010. £276.8m was externally valued by Jones Lang LaSalle and CB Richard Ellis. The like for like increase in the valuation is £4.3m, an increase of 1.6%. The remaining £3.8m was valued by the Directors. Our development properties are held at a directors' valuation of £13.3m.

The initial yield on the investment portfolio is 7.2% (30 June 2010: 7.3%).

Outlook

We retain a prudent approach to the market. Whilst we do not expect significant value or rental growth in the short term our property portfolio is well let and provides secure income.

The Merrion Centre remains at the heart of our business and our asset management plans will add long-term value for shareholders.

Opportunities to further develop other existing assets are progressing whilst we have maintained our ability to fund acquisitions.

We are confident that our focus on value for money retailing will drive our future income generation and continue to underpin the strength of the business and sustain our dividend.

E M ZIFF

Chairman and Chief Executive

17 February 2011

Consolidated income statement

for the six months ended 31 December 2010

The Directors have approved an interim dividend of 3.10p per share (2009: 3.02p). The 2010 final dividend was £3.9m (for the six months ended 31 December 2009: £2.9m).

Consolidated statement of comprehensive income

for the six months ended 31 December 2010

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

Consolidated balance sheet

as at 31 December 2010

Consolidated statement of changes in equity

for the six months ended 31 December 2010

1 Other reserves on the balance sheet consist of the hedging reserve and capital redemption reserve in the table above.

Consolidated cash flow statement

for the six months ended 31 December 2010

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

Notes to the consolidated interim financial information

1. Basis of preparation

General information

Town Centre Securities PLC ("the Company") is a public limited company domiciled in the United Kingdom. Its shares are listed on the London Stock Exchange. The Consolidated Financial Statements of the Company for the year ended 30 June 2010 comprise the Company and its subsidiaries (together referred to as the "Group"). The address of its registered office is Town Centre House, The Merrion Centre, Leeds LS2 8LY.

This interim financial information was approved for issue on 17 February 2011.

This interim financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 June 2010 were approved by the Board of Directors on 14 September 2010 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.

This interim financial information has not been reviewed nor audited.

Basis of preparation

This interim financial information for the half year ended 31 December 2010 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim financial reporting', as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 30 June 2010, which have been prepared in accordance with IFRSs as adopted by the European Union.

Principal risks and uncertainties

The Group set out on page 12 of its Annual Report and Accounts 2010 the principal risks and uncertainties that could impact its performance; these remain 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.

Our key risks relate to property valuations, availability of finance, occupancy levels and future income. Property values are currently stable and we have sufficient bank facilities and headroom in place. The Group has no over reliance on any one tenant or sector and has a skilled and experienced team of asset managers dealing with day-to-day management of our portfolio.

2. Revenue and underlying profit before taxation

1 Excluding non-recurring items - see Note 4.

2 Excluding non-recurring items - see Note 5.

Notes to the consolidated interim financial information continued

3. Segmental information

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

Segment assets

Segmental results

Notes to the consolidated interim financial information continued 

4. Property expenses

5. Administrative expenses

6. Dividends

A final dividend in respect of 2010 of 7.34p per share was approved at the Company's Annual General Meeting on 18 November 2010 and paid to shareholders on 5 January 2011. This dividend comprised an ordinary dividend of 0.11p per share and a Property Income Distribution ("PID") of 7.23p per share.

An interim dividend in respect of 2011 of 3.10p per share is proposed. This amounts to an estimated dividend of £1.6m which has not been reflected in this report and will be paid on 30 June 2011 to shareholders on the register on 3 June 2011.

This dividend will be paid entirely as a PID.

Notes to the consolidated interim financial information continued 

7. Earnings per share

The diluted earnings per share as at 31 December 2010 is 14.7p per share and underlying is 8.3p (2009: 59.3p, underlying: 4.8p; 30 June 2010: 74.6p, underlying: 14.8p).

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

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

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

Notes to the consolidated interim financial information continued 

8. Tangible fixed assets

a) Investment properties

b) Development properties

c) Fixtures, equipment and motor vehicles

9. Investments in joint ventures

10. Called up equity share capital

Authorised

164,879,000 (30 June 2010: 164,879,000) ordinary shares of 25p each.

Issued and fully paid

Notes to the consolidated interim financial information continued 

11. Cash flow from operating activities

Responsibility statement of the directors

for the six months ended 31 December 2010

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 by the European Union. The interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:

The Directors of Town Centre Securities PLC are listed in the Annual Report for 30 June 2010. A list of current directors is maintained on the Town Centre Securities PLC Group website: www.tcs-plc.co.uk

Edward Ziff

Chairman and Chief Executive

Chris Kelly

Finance Director

17 February 2011