Town Centre Regulatory News (TOWN)

8 Mar 2007 07:01

Town Centre Securities PLC08 March 2007 For Immediate Release Thursday, 8 March 2007 TOWN CENTRE SECURITIES PLC Interim results for the six months ended 31 December 2006 Town Centre Securities PLC, the Leeds based property investment and developmentcompany, today announces its interim results, for the six months ended 31December 2006. Highlights: •Underlying* profit before tax of £4.4m (2005: £4.3m) •Statutory loss before tax of £28.5m (2005: profit £4.5m) is stated after debenture exchange cost and profit on sale of 128,000 sq ft Leeds office development €2021 10.5% Debenture exchanged for 2031 5.375% Debenture reducing interest cost by £2m per annum •Net assets per share 437p up 18.8% compared to 368p at 31 December 2005 •Interim dividend increased by 5% to 2.1p per share (2005: 2.0p) •Special dividend of 20p per share •Pre-let office development of 33,000 sq ft in Manchester due to complete in 2007 •Council resolution to grant outline planning consent obtained for Eastgate Quarters •Acquisition of Sheffield multi storey car park *excluding investment property disposals and impact of debenture exchange andother exceptional items Commenting on the interim results, Chairman and Chief Executive Edward Ziff,said: "It has been a remarkable six month period and I am delighted to have securedlong term financing for the company with the issue of the new debenture stock atattractive rates and to have successfully sold our office development at 1Whitehall Riverside. Our broad base of activity gives me every confidence thatwe will continue to deliver growth in the long term for shareholders". For further information, please contact: Town Centre Securities PLC www.tcs-plc.com -----------------Edward Ziff, Chairman and Chief Executive 0113 222 1234Karen Prior, Finance Director Smithfield 0207 360 4900Reg Hoare / Miranda Good Notes to editors:It is not the Company's practice to revalue properties at the half year. Theinvestment property portfolio is revalued once a year by independent externalvaluers. The next portfolio valuation will take place in June 2006, and will beannounced at the time of the Company's preliminary results. Town Centre Securities PLC is a property investment and development company. Weaim to maximise shareholder value over the long-term through the acquisition andactive management of investments and developments, with secure and improvingincome in good locations. Chairman and Chief Executive's Report I am delighted to report to shareholders results and events for the half yearended 31 December 2006. This has been one of the most significant periods in thedevelopment of the Group with the successful completion and sale of our officedevelopment at No. 1 Whitehall Riverside, Leeds and the refinancing of ourlong-term debt. ResultsHigher rents received and growth in our car park activities lead to grossrevenue in the period increasing to £12.8m (2005: £11.9m). Underlying profitbefore tax improved by 2% over the previous year to £4.4m (2005: £4.3m). In August 2006 the Company sold No. 1 Whitehall Riverside, Leeds for £62.5m netof disposal costs. £5.3m has been recognised in this period being the excessover its carrying value at 30 June 2006. Overall, the sale has realised a netprofit before tax of £26.4m. In November 2006, the Company completed a new debenture issue which will be thelong-term cornerstone of the Group's financing. The Company issued £150m of newdebenture stock at a coupon of 5.375% repayable in 2031. £127m of the new stockwas exchanged for the Company's £85m, 10.5% debenture, repayable in 2021 and theCompany took advantage of the significantly lower coupon to raise a further £23mof new stock. This results in an annualised interest saving of over £2m. A loss on the debenture exchange of £41.6m has been recognised in the incomestatement, which together with the profit arising from the disposal of thecompleted office development at No. 1 Whitehall Riverside and sale of listedinvestments results in a loss after tax of £21.3m (2005: profit £4.4m). Total investment property assets were £439m, increased from £434m as at 30 June2006. Net assets reduced to £240m (30 June 2006: £269m) mainly as a result ofthe 2021 debenture redemption. Total borrowings of £159m result in gearing of66%, compared to borrowings of £172m and gearing of 64% at 30 June 2006. In line with our policy these interim results do not include a propertyrevaluation, which is carried out annually at 30 June. DividendsI am pleased to declare a 5% increase in the interim dividend to 2.1p per share(2005: 2.0p) to be paid on 29 June 2007 to shareholders registered on 1 June2007. As a consequence of the realisation of a substantial profit from the saleof No 1 Whitehall Riverside and the Company's strong balance sheet, anadditional special dividend of 20p per share will also be paid on 1 May 2007 toshareholders on the register at 10 April 2007. Review of activities Development projects Eastgate Quarters, LeedsA council resolution to grant outline planning permission has now been obtainedfor a 1,100,000 sq ft retail-led scheme centred on the Eastgate Quarters inLeeds. We will initially take a 10% investment in the scheme to be developed inconjunction with Hammerson plc. The scheme will be anchored by a 260,000 sq ftJohn Lewis store and will include over 100 retail units, restaurants and bars, ahotel, office accommodation, up to 600 new homes and 2,700 associated carparking spaces. It is anticipated that construction will begin in 2009, withcompletion in 2012. The total cost of the development is estimated at £675million. Whitehall Road, LeedsThe first office development of 128,000 sq ft at No. 1 Whitehall Riverside hasgiven the Company great encouragement as to the prospects for the Whitehall Roadsite. This prime city centre riverside site, close to the railway station, hasdetailed planning permission for two further office buildings totalling 215,000sq ft which are now being actively marketed. In addition the Company has outlineplanning consent for a further 300,000 sq ft of offices. Piccadilly BasinConstruction of a 33,000 sq ft office building, pre-let to BDP internationalarchitects and consulting engineers, is due to be completed at the end of 2007.In addition, work to complete the restoration of a listed building, CarversWarehouse, to create 20,000 sq ft of office space, completes in October 2007 andis already 50% pre-let. Investment portfolio There have been a number of additions to the investment portfolio, costing intotal £4.5m. We acquired properties in West Yorkshire, on a sale and leasebackarrangement with development potential, and a retail unit in Kilmarnock.The principal focus throughout the period has been enhancing the value of assetsand, notably, we obtained an open A1 planning consent on our retail park atRochdale. Occupancy rates remain strong despite the reported issues facing the retailsector and we continue to conclude satisfactory rent reviews. Car parkingThe Company has added to its car park portfolio following the acquisition of a680 space multi-storey car park at Sheffield Railway Station for £13m in a 50%jointly owned venture with Q-Park. With a further 2,350 spaces under ourownership in Leeds and Manchester, opportunities are being actively pursued toacquire more sites. Capital reorganisationFollowing a resolution approved by the Company's shareholders on 9 August 2006,subsequent court approval and the debenture exchange, the Group effected thesimplification of its balance sheet through a reorganisation of the sharepremium account, the capital redemption reserve and other reserves resulting intransfers of £21.7m to the profit and loss reserve in the period. TaxationThe tax charge for the period has been eliminated due to the losses arising fromthe debenture exchange offsetting the trading profit in the period and capitalgains arising from the sale of property assets and listed investments. REITSThe Group continues to consider carefully the arguments for conversion to REITstatus. OutlookIt has been a remarkable six month period and I am delighted to have securedlong-term financing for the Company with the issue of the new debenture stock atattractive rates and to have successfully sold our office development at No. 1Whitehall Riverside. Our broad base of activity gives me every confidence thatwe will continue to deliver growth in the long-term for shareholders. Edward ZiffChairman and Chief Executive8 March 2007 Consolidated Income Statement 6 months 6 months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 Unaudited Unaudited Audited Notes £000 £000 £000 -------------------------- ----- -------- ----------- -----------Gross revenue 2 12,794 11,869 24,807Property expenses (1,190) (717) (1,664)-------------------------- ----- -------- ----------- -----------Net revenue 11,604 11,152 23,143Administrative expenses (3,249) (2,101) (4,631)Other income 755 375 598Profit on disposal ofinvestment properties 5,300 222 1,312Profit on disposal oflisted investments 3,675 - - Valuation movement oninvestment properties - - 80,637-------------------------- ----- -------- ----------- -----------Operating profit 18,085 9,648 101,059Loss on debenture exchange (41,554) - -Interest payable (5,107) (5,421) (11,156)Interest receivable 12 52 150Share of post tax profitsfrom joint ventures 72 263 817-------------------------- ----- -------- ----------- -----------(Loss)/profit beforetaxation (28,492) 4,542 90,870Taxation 3 7,157 (140) (21,527)-------------------------- ----- -------- ----------- -----------(Loss)/profit for the (21,335) 4,402 69,343period ----- -------- ----------- -------------------------------------All (loss)/ profit for the period is attributable to equity shareholders. (Loss)/earnings perordinary share of 25p each: 5 Basic (38.6)p 7.9p 124.8pDiluted (38.6)p 7.8p 123.9p-------------------------- ----- -------- ----------- ----------- The directors have approved an interim dividend of 2.1p per share (2005: 2.0p),along with a special dividend of 20p per share. The total cost of dividends paidin the period is £4.0m (six months to 31 December 2005: £3.5m). Consolidated Statement of Recognised Income and Expense 6 months ended 6 months ended Year ended 31 December 31 December 30 June 2006 2005 2006 Unaudited Unaudited Audited £000 £000 £000-------------------------- -------- ----------- -----------(Loss)/profit for the period (21,335) 4,402 69,343Surplus on revaluation ofinvestments 222 518 2,821-------------------------- -------- ----------- -----------Total recognised (expense)/income for the period (21,113) 4,920 72,164-------------------------- -------- ----------- ----------- All recognised (expense)/income for the period is attributable to the equityshareholders. Consolidated Balance Sheet 31 31 30 June December December 2006 2005 2006 Unaudited Unaudited Audited Notes £000 £000 £000 -------------------------- ----- -------- ----------- -----------Non-current assetsInvestment properties 6 438,903 365,363 434,361Property, plant and equipment 6 16,500 45,503 13,313Investments in joint ventures 4,065 1,684 2,239Pre-paid operating lease payments 940 262 950Deferred tax assets 527 717 510-------------------------- ----- -------- ----------- -----------Total non-current assets 460,935 413,529 451,373-------------------------- ----- -------- ----------- -----------Current assetsInvestments 3,950 8,802 12,669Non-current asset held for sale 7 - - 56,500Trade and other receivables 9,182 3,262 3,865-------------------------- ----- -------- ----------- -----------Total current assets 13,132 12,064 73,034-------------------------- ----- -------- ----------- -----------Total assets 474,067 425,593 524,407-------------------------- ----- -------- ----------- -----------Current liabilitiesFinancial liabilities - (3,557) (4,483) (7,169)borrowingsTrade and other payables (13,479) (11,235) (14,288)Current tax liabilities (2,988) (4,096) (3,624)-------------------------- ----- -------- ----------- -----------Total current liabilities (20,024) (19,814) (25,081)-------------------------- ----- -------- ----------- -----------Net current (liabilities)/assets (6,892) (7,750) 47,953Non-current liabilitiesFinancial liabilities - (155,617) (157,163) (165,130)borrowingsDeferred tax liabilities (58,141) (44,482) (65,281)-------------------------- ----- -------- ----------- -----------Total non-current liabilities (213,758) (201,645) (230,411)-------------------------- ----- -------- ----------- -----------Total liabilities (233,782) (221,459) (255,492)-------------------------- ----- -------- ----------- -----------Net assets 240,285 204,134 268,915-------------------------- ----- -------- ----------- -----------Shareholders' equityCalled up share capital 9 13,813 13,856 13,794Share premium account 10 63 1,064 1,114Other reserves 10 - 20,329 20,657Retained earnings 10 226,409 168,885 233,350-------------------------- ----- -------- ----------- -----------Total equity 11 240,285 204,134 268,915-------------------------- ----- -------- ----------- -----------Net assets per share 437p 368p 487p-------------------------- ----- -------- ----------- ----------- Consolidated Cash Flow Statement Six months Six months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 Unaudited Unaudited Audited ----------------- ------------------ ----------------- £000 £000 £000 £000 £000 £000---------------------- ------- ------- ------- ------- ------- --------Cash flows from operatingactivitiesCash generatedfrom operations 7,529 12,050 21,725Interest paid (4,451) (5,282) (12,315)Interest received 12 52 150Tax paid (636) (372) (1,224)---------------------- ------- ------- ------- ------- ------- --------Net cash from operatingactivities 2,454 6,448 8,336---------------------- ------- ------- ------- ------- ------- --------Cash flows from investingactivitiesPurchases of investmentproperties (4,542) (3,873) (13,186)Purchases of property, plant and equipment (3,276) (16,519) (32,925)Purchase of investments (2,562) (3,883) (5,447)Purchase of jointventure investment (1,844) - -Proceeds from saleof investmentproperties 62,700 2,372 17,659Proceeds from saleof property, plantand equipment 11 33 62Proceeds from saleof investments 11,851 545 545Dividends receivedfrom joint venture 90 75 75Loan (to)/fromjoint venture forpurchase ofinvestmentproperty (6,482) - 1,861---------------------- ------- ------- ------- ------- ------- --------Net cash generatedfrom/(used in)investing activities 55,946 (21,250) (31,356)---------------------- ------- ------- ------- ------- ------- --------Cash flows from financingactivitiesProceeds from issue of share capital 81 320 388Purchase of ownshares for ShareIncentive Plan (294) - (1)Proceeds fromother non-currentborrowings - 22,000 30,000Repayment of othernon-currentborrowings (72,000) - -Repurchase ofshare capital - (2,930) (4,360)Proceeds fromissue of newdebenture stock 21,401 - -Dividends paid toshareholders (3,976) (3,492) (4,597)---------------------- ------- ------- ------- ------- ------- --------Net cash (used in)/generated fromfinancing activities (54,788) 15,898 21,430---------------------- ------- ------- ------- ------- ------- --------Net increase/(decrease) in cash and cashequivalents 3,612 1,096 (1,590)---------------------- ------- ------- ------- ------- ------- --------Cash and cashequivalents at 1July (7,169) (5,579) (5,579)---------------------- ------- ------- ------- ------- ------- --------Cash and cashequivalents atperiod end (3,557) (4,483) (7,169)---------------------- ------- ------- ------- ------- ------- -------- The Consolidated Cash Flow Statement should read in conjunction with Note 12 Notes to the Financial Statements 1. Basis of preparation These interim financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRS) and IFRIC interpretations andwith those parts of the Companies Act 1985 and the listing rules application tocompanies reporting under IFRS. These interim financial statements have been prepared under the historical costconvention as modified by the revaluation of land and buildings, available forsale investments, financial assets and liabilities held for trading andshare-based payments. Investment properties have not been revalued at 31December 2006. Therefore tangible assets comprise the 30 June 2006 valuationadjusted for additions and disposals in the interim period. The interim financial report does not comply with IAS 34 'Interim FinancialReporting', which is currently not required to be applied under the listingrules. The principal accounting policies following in the preparation of theseinterim financial statements are set out in the Group's Annual Report andAccounts for the year ended 30 June 2006 on pages 35 to 40. The financial information included in these interim financial statements for thesix months ended 31 December 2006 does not constitute a set of statutoryaccounts as defined in section 240 of the Companies Act 1985, and is unaudited.The comparative figures for the six months to 31 December 2005 were alsounaudited. The comparative figures for the year ended 30 June 2006 are extractedfrom the Annual Report and Accounts which received an unqualified auditors'report and did not contain statements under section 237(2) or (3) of theCompanies Act 1985. 2. Revenue 6 months ended 6 months ended Year ended 31 December 2006 31 December 2005 30 June 2006 £000 £000 £000---------------------- ------------ ------------ ------------Rental income frominvestment properties 11,347 10,772 22,553Income from car parks 1,447 1,097 2,254---------------------- ------------ ------------ ------------ 12,794 11,869 24,807---------------------- ------------ ------------ ------------ 3. Taxation Current tax payable on underlying profits and capital gains arising in theperiod has been fully offset by losses arising on the debenture exchange: 6 months ended 6 months ended Year ended 31 December 2006 31 December 2005 30 June 2006 £000 £000 £000------------ ------------ ------------ ------------Current tax - (1,150) (1,531)Deferred tax 7,157 1,010 (19,996)------------ ------------ ------------ ------------ 7,157 (140) (21,527)------------ ------------ ------------ ------------ 4. Dividends A final dividend in respect of 2006 of 5.2p per share and a special dividend of2.0p per share were approved at the Company's Annual General Meeting on 22November 2006 and paid to shareholders on 2 January 2007. A special dividend of 20p per share is proposed. This amounts to an estimateddividend of £11.1m which has not been reflected in this report and which will bepaid on 1 May 2007 to shareholders on the register on 10 April 2007. An interim dividend in respect of 2007 of 2.1p per share is also proposed. Thisamounts to an estimated dividend of £1.1m which has not been reflected in thisreport and which will be paid on 29 June 2007 to shareholders on the register on1 June 2007. 5. (Loss)/earnings per share 6 months ended 6 months ended Year ended 31 December 31 December 30 June 2006 2005 2006 -------------------- -------------------- ------------------ Earnings Earnings Earnings Earnings per Earnings per Earnings per share share share £000 pence £000 pence £000 pence------------------ -------- -------- -------- -------- -------- --------Basic earningsand earningsper share (21,335) (38.6) 4,402 7.9 69,343 124.8Loss on debentureexchange 39,336 71.2 - - - -Post tax profit on disposal ofinvestmentproperties (12,440) (22.5) (155) (0.3) 1,427 2.5Post tax profit on disposal oflisted investments (2,639) (4.8) - - - -Post tax buyout of Directors'share options 255 0.5Revaluationmovement oninvestmentpropertiesreported in incomestatement - - - - (80,637) (145.1)Revaluation movement on investmentproperties injoint venturesreported inincome statement - - - - (525) (0.9)Deferred taxon revaluationof investmentpropertiesreported inincomestatement - - (1,010) (1.8) 18,233 32.8------------------ -------- -------- -------- -------- -------- --------Underlying earnings and earnings pershare 3,177 5.8 3,237 5.8 7,841 14.1------------------ -------- -------- -------- -------- -------- -------- The earnings per share is calculated on the weighted average of 55.2m ordinaryshares in issue (31 December 2005: 55.8m, 30 June 2006: 55.6m). The dilutedearnings per share as at 31 December 2006 is (38.6p) per share and underlying:5.8p (31 December 2005 is: 7.8p, underlying: 5.8p; 30 June 2006 is 123.9p,underlying: 14.0p). 6. Tangible fixed assets a) Investment properties Long Freehold leasehold Total £000 £000 £000------------------------------ --------- ---------- ----------Valuation at 1 July 2006 409,651 24,710 434,361Additions 3,315 1,227 4,542------------------------------ --------- ---------- ----------Balance at 31 December 2006 412,966 25,937 438,903b) Property, plant and equipmentDevelopment properties £000------------------------------ --------- ---------- ----------Cost at 1 July 2006 12,654Additions 3,111------------------------------ --------- ---------- ----------Net book value at 31 December 2006 15,765------------------------------ --------- ---------- ---------- Fixtures, equipment and motor vehicles £000------------------------------ --------- ---------- ----------Net book value at 1 July 2006 659Additions 223Disposals (17)Depreciation (130)------------------------------ --------- ---------- ----------Net book value at 31 December 2006 735------------------------------ --------- ---------- ----------Total property, plant and equipment at 31December 2006 16,500------------------------------ --------- ---------- ---------- 7. Non-current assets held for sale £000 Valuation at 1 July 2006 56,500Disposal (56,500)------------------------------ ----------Balance at 31 December 2006 ------------------------------- ---------- 8. Borrowings, bank loans and overdraft On 20 November 2006 the Group exchanged its £85m, 10.5% debenture stock,repayable in 2021 at a cost of £127.4m for new debenture stock issued at couponof 5.375% repayable in 2031. At the same time £22.6m of new debenture stock wasalso issued. On receipt of the additional proceeds the Group repaid £18m of bankborrowings. Subsequently, further short-term bank loans have been drawn downwithin existing facilities to fund the ongoing development programme andproperty acquisitions. 9. Called up equity share capital Authorised164,879,000 (30 June 2005: 164,879,000) ordinary shares of 25p each. Issued and fully paid Number Nominal of shares value 000 £000----------------- --------------- -----------At 1 July 2006 55,180 13,794Issued on take-up of options 72 18----------------- --------------- -----------At 31 December 2006 55,252 13,812----------------- --------------- ----------- 10. Reserves Share premium Other Retained account reserves earnings ----------- ---------- ---------At 1 July 2006 1,114 20,657 233,350Retained lossfor the period - - (25,311)Reversal of historic surplus on revaluationof investments recognised in loss for period. - - (3,328)Surplus on revaluation ofinvestments - - 222Capital reorganisationtransfer (1,114) (20,657) 21,771Consideration paid forpurchase of own shares (held in trust) - - (295)New share capitalsubscribed 63 - -------------------------- ----------- ---------- ---------Closing shareholders'equity 63 - 226,409------------------------- ----------- ---------- --------- 11. Statement of changes in shareholders' equity 6 months ended 6 months ended Year ended 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000----------------------------- ----------- ---------- ---------(Loss)/ profit for the period (21,335) 4,402 69,343Dividends (3,976) (3,492) (4,597)----------------------------- ----------- ---------- --------- (25,311) 910 64,746Loss arising on purchase andcancellation of own shares - (2,930) (4,360)New share capital subscribed 81 320 388Surplus on revaluation ofinvestments 222 518 2,821Reversal of historic surplus onrevaluation of investmentsrecognised in loss for period. (3,328) - ------------------------------ ----------- ---------- --------- 6 months ended 6 months ended Year ended 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000----------------------------- ----------- ---------- ---------Consideration paid for purchaseof own shares (held in trust) (294) (5) (1)----------------------------- ----------- ---------- ---------Net (decrease)/increase inshareholders' equity (28,630) (1,187) 63,594Opening shareholders' equity 268,915 205,321 205,321----------------------------- ----------- ---------- ---------Closing shareholders' equity 240,285 204,134 268,915----------------------------- ----------- ---------- --------- 12. Cash flow from operating activities 6 months ended 6 months ended Year ended 31 December 31 December 30 June 2006 2005 2006 £000 £000 £000----------------------------- --------- ---------- ---------(Loss)/profit for the period (21,335) 4,402 69,343Adjustments for:Tax (7,157) 140 21,527Depreciation 130 90 211Profit on disposal ofinvestment properties (5,300) (222) (1,312)Profit on disposal of property,plant and equipment and listedinvestments (3,670) (50) (50)Interest received (12) (52) (150)Interest expense 5,107 5,421 11,156Share of joint venture profitafter tax (72) (263) (817)Movement in revaluation ofinvestment properties - - (80,637)Loss on debenture exchange 41,554 - -Decrease/(increase) in debtors 640 2,584 235(Decrease)/increase increditors (2,356) - 2,219----------------------------- --------- ---------- ---------Cash generated from operations 7,529 12,050 21,725---------------------------- --------- ---------- --------- 13. Share based payments During the period the Group paid two Directors of the Company, Mr James Crawfordand Mr Richard Lewis, compensation to surrender 26,750 and 31,000 share optionsrespectively under the 1994 Unapproved Scheme. The total cost amounting to£365,000 has been expensed in the period within administrative expenses. This information is provided by RNS The company news service from the London Stock Exchange