Town Centre Regulatory News (TOWN)

2 Mar 2005 07:00

Town Centre Securities PLC02 March 2005 TOWN CENTRE SECURITIES PLC Interim results for the six months ended 31 December 2004 Town Centre Securities PLC, the Leeds based property investment and developmentcompany, today announces its interim results for the six months ended 31December 2004. Highlights: • Underlying* profit before tax of £4.0m (2003: £4.1m) • Profit before tax was £4.4m (2003: £2.8m) after a profit on disposal of investment properties of £0.4m (2003: £1.2m loss) • Underlying* earnings per share increased to 5.1p (2003: 5.0p), benefiting from the effects of the share buy back • Basic earnings per share increased 53% to 5.5p (2003: 3.6p) • Interim dividend of 1.9p per share, an increase of 5.5% (2002: 1.8p) • Active portfolio reshaping continues with £3.9m disposals and £11.0m investment property acquisitions completed in the first half • Bought back a total of 3.3m shares at a cost of £10.3m, including October 2004 Tender Offer at 310p per share, adding 1.9p to net asset value per share • Net assets per share have increased by 1.5% to 349p (30 June 2004: 344p), and 24.6% compared to a year ago (30 December 2003: 280p) *excluding investment property disposals Commenting on the interim results, Chairman and Chief Executive Edward Ziff,said:"The progress achieved on our developments is encouraging and we are managingthe development risk by obtaining pre-lets on a high proportion of the spaceprior to starting construction. "I remain confident that by capitalising on the opportunities inherent in ourportfolio of assets, we can continue to deliver long-term growth in shareholdervalue and I therefore expect a satisfactory performance for the year as awhole." For further information, please contact:Town Centre Securities PLC www.tcs-plc.com -----------------Edward Ziff, Chairman and Chief Executive 0113 222 1234John Sutcliffe, Finance DirectorSmithfield 0207 360 4900Reg Hoare / Katie Hunt Notes to editors:It is not the Company's practice to revalue properties at the half year. Theinvestment property portfolio is revalued once a year by independent externalvaluers. The next portfolio valuation will take place in June 2005, and will beannounced at the time of the Company's preliminary results. Chairman and Chief Executive's Statement I am pleased to report to shareholders the Company's results for the half yearended 31 December 2004 together with an update on the progress made within ourinvestment and development portfolios. ResultsTurnover in the period was £12.0m (2003: £12.2m); the decrease in turnover isdue to lower rents caused by property sales in the last year. We expect thatacquisitions made in this half year should increase rental income by the yearend. Profit before tax was £4.4m (2003: £2.8m); this improvement was largely dueto sales of investment properties which generated a profit of £0.4m compared toa loss of £1.2m in 2003. Underlying profit before tax, which excludes the effectof investment property disposals, was marginally lower at £4.0m (2003: £4.1m) asa result of the loss of rental income from the sales referred to above. Basicearnings per share increased 53% to 5.5p (2003: 3.6p) whilst underlying earningsimproved slightly to 5.1p (2003: 5.0p). Total property assets as at 31 December 2004 were £363m, compared with £352m asat 30 June 2004. Net assets were £196m (June 2004: £204m) with retained earningsreduced by the £10.3m cost of acquiring shares for cancellation. Net assets pershare increased 1.5% to 349p (30 June 2004: 344p), helped in part by the lowernumber of shares in issue. Total borrowings of £149m have resulted in gearing of76%, compared to borrowings of £130m and gearing of 64% at 30 June 2004. Theseinterim results do not include a property revaluation which is carried outannually at 30 June. In view of the progress made during the period I am pleased to declare anincreased interim dividend of 1.9p per share (2003: 1.8p). The dividend will bepaid on the 30 June 2005 to shareholders registered on 3 June 2005. Review of activities Property sales and acquisitionsDuring the period we sold ten properties for £3.9m realising a net gain afterdisposal costs of £0.4m. Our principal acquisition in the period, at a cost of£10.3m, was a prime retail store on Deansgate, Manchester, let to Daisy & Tom.We also added to a core retail holding in York with the acquisition of a smallneighbouring unit on Feasegate for £0.5m. Development projectsFollowing significant pre-lets for the first office building at WhitehallRiverside, Leeds, construction has started with expected completion in the firsthalf of 2006. At Piccadilly Basin, Manchester, we have commenced construction ona retail warehouse, which the Danish retailer ILVA has signed an agreement tolease for their first purpose built UK unit; this development is due forcompletion at the end of 2005. We have also signed a joint venture arrangementfor a major new retail led regeneration scheme in the centre of Leeds. Share buy backsThe tender offer to all shareholders in October 2004 was oversubscribed and weacquired for cancellation 3,000,000 shares at 310p per share. During the periodwe acquired a total of 3,263,839 shares at a cost of £10.3m, enhancing net assetvalue per share by 1.9p. IFRS reviewWe will adopt International Financial Reporting Standards (IFRS) for thefinancial year ending 30 June 2006. The two most significant impacts that IFRSwill have on the Company are that investment property revaluation gains andlosses will be included in the income statement, and the contingent tax that mayarise on the disposal of investment property will be deducted from shareholders'funds. Furthermore IFRS only permits recognition of the liability to pay a finaldividend when this has been approved by shareholders. A project plan is in placeto enable the transition to IFRS within the required timeframe. OutlookThe progress achieved on our developments is encouraging and we are managing thedevelopment risk by obtaining pre-lets on a high proportion of the space priorto starting construction. I remain confident that by capitalising on theopportunities inherent in our portfolio of assets, we can continue to deliverlong-term growth in shareholder value and I therefore expect a satisfactoryperformance for the year as a whole. Edward ZiffChairman and Chief Executive2 March 2005 Unaudited Unaudited Audited Half year Half year Year ended ended ended 31 31 30 June December December 2004 2003 2004 Notes £000 £000 £000---------------------------- ----- -------- -------- --------TurnoverContinuing operations includingshare of joint venture turnover 12,020 12,276 24,468Less share of turnover of jointventure (71) (43) (87)---------------------------- ----- -------- -------- -------- 2 11,949 12,233 24,381---------------------------- ----- -------- -------- --------Operating profitContinuing operations 9,539 9,638 18,896Share of operating profit of jointventure 70 46 84---------------------------- ----- -------- -------- -------- 2 9,609 9,684 18,980Profit/(loss) on disposal ofinvestment properties 348 (1,223) (1,457)---------------------------- ----- -------- -------- --------Profit before interest 9,957 8,461 17,523Net interest payable (5,594) (5,634) (10,954)---------------------------- ----- -------- -------- --------Profit before taxation 2 4,363 2,827 6,569Taxation 3 (1,156) (600) (1,716)---------------------------- ----- -------- -------- --------Profit for the financial period 3,207 2,227 4,853Dividends (945) (952) (3,362)---------------------------- ----- -------- -------- --------Retained profit for the period 2,262 1,275 1,491---------------------------- ----- -------- -------- -------- Earnings per ordinary share of 25peach: 4Basic 5.5p 3.6p 8.1pDiluted 5.4p 3.6p 8.0pUnderlying earnings per ordinary shareof 25p each:Basic 5.1p 5.0p 9.8pDiluted 5.0p 5.0p 9.7pDividend per ordinary share of 25peach 1.90p 1.80p 5.9p---------------------------- ----- -------- -------- -------- Unaudited Unaudited Audited Half year Half year Year ended ended ended 31 December 31 December 30 June 2004 2003 2004 £000 £000 £000------------------------------ -------- -------- --------Profit for the financial period 3,207 2,227 4,853Unrealised surplus on the revaluationof properties - - 36,598Share of unrealised surplus on therevaluation of joint venture properties - - 13Taxation on disposal of revaluedproperties - (700) -Unrealised surplus on the revaluationof other investments 21 78 65------------------------------ -------- -------- --------Total recognised gains relating to thefinancial period 3,228 1,605 41,529------------------------------ -------- -------- -------- Unaudited Unaudited Audited 31 31 30 June December December 2004 2003 2004 Notes £000 £000 £000------------------------- -------- -------- -------- --------Fixed assetsTangible assets 5 363,170 320,494 351,737Investments 549 584 383------------------------- -------- -------- -------- -------- 363,719 321,078 352,120Investment in joint ventureShare of gross assets 1,224 1,134 1,175Share of gross liabilities (21) (38) (42)------------------------- -------- -------- -------- -------- 1,203 1,096 1,133Current assetsDebtors 3,410 3,802 2,456------------------------- -------- -------- -------- -------- Creditors (due within one year)Bank overdraft (secured) 8 (6,528) (4,730) (3,315)Loan capital (secured) 8 - (7,500) -Other creditors (16,072) (15,057) (15,314)------------------------- -------- -------- -------- -------- (22,600) (27,287) (18,629)------------------------- -------- -------- -------- --------Net current liabilities (19,190) (23,485) (16,173)------------------------- -------- -------- -------- --------Total assets less current 345,732 298,689 337,080liabilitiesCreditors (amounts due after morethan one year)Loan capital (secured) 8 (142,227) (124,284) (126,257)Provisions for liabilities andchargesDeferred taxation (7,594) (6,958) (7,156)------------------------- -------- -------- -------- --------Net assets 195,911 167,447 203,667------------------------- -------- -------- -------- -------- Capital and reserves 7 195,911 167,447 203,667------------------------- -------- -------- -------- -------- Net assets per share 349p 280p 344p------------------------- -------- -------- -------- -------- Unaudited Unaudited Audited Half year Half year Year ended ended ended 31 December 2004 31 December 2003 30 June 2004 £000 £000 £000 £000 £000 £000---------------------- ------ ------ ------ ------ ------ ------Net cash inflowfrom operatingactivities 10,590 10,323 20,056 Returns on investments andservicing of financeNet interestpaid (5,503) (5,673) (11,163) Taxation(paid)/received (718) 596 (448) Capital expenditure andfinancial investmentPurchase of andcapitaladditions toinvestmentproperties (11,661) (5,925) (15,944)Expenditure ondevelopmentproperties (3,276) (802) (1,770)Purchase ofother tangibleassets (138) (87) (223)Proceeds fromsale ofinvestmentproperties 3,867 11,442 28,387Proceeds fromsale of othertangible assets 50 - 41Purchase ofinvestments (227) (185) (185)Proceeds fromsale of listedinvestments 93 - 217---------------------- ------ ------ ------ ------ ------ ------ (11,292) 4,443 10,523Equity dividendspaid (2,305) (2,303) (3,362)---------------------- ------ ------ ------ ------ ------ ------Net cash(outflow)/inflowbefore financing (9,228) 7,386 15,606FinancingShares issued ontake-up ofoptions 268 17 64Repurchase ofshare capital (10,253) (6,014) (7,366)Loan repayments - (2,500) (13,000)New loans 16,000 - 5,000---------------------- ------ ------ ------ ------ ------ ------Net cashinflow/(outflow)from financing 6,015 (8,497) (15,302)---------------------- ------ ------ ------ ------ ------ ------(Decrease)/increase in cash (3,213) (1,111) 304---------------------- ------ ------ ------ ------ ------ ------ The cash flow statement should be read in conjunction with Note 8. 1. Accounting policiesBasis of preparationThe results for the half year ended 31 December 2004 and 31 December 2003 areunaudited and do not constitute statutory accounts within the meaning of theCompanies Act 1985. Statutory accounts for the year ended 30 June 2004, whichinclude an unqualified audit report, have been delivered to the Registrar ofCompanies.The unaudited interim financial statements have been prepared in accordance withthe accounting policies set out in the Annual Report and Accounts for the yearended 30 June 2004, with the exception of the revaluation of investmentproperties, which is conducted on an annual basis. Investment properties Investment properties have not been revalued as at 31 December 2004. Therefore,tangible assets comprise the 30 June 2004 valuation adjusted for additions anddisposals in the interim period. 2. Segmental analysisThe Group operates in one business segment; property investment, trading anddevelopment, wholly in the United Kingdom. 3. TaxationTaxation has been calculated on profits based on an anticipated effective taxrate of 26.5% on headline earnings and 28.8% on underlying earnings, for theyear to 30 June 2005. 4. Earnings per share Unaudited Unaudited Audited Half year ended Half year ended Year ended 31 December 2004 31 December 2003 30 June 2004 --------- --------- --------- Earnings Earnings Earnings Earnings per Earnings per Earnings per share share share £000 Pence £000 Pence £000 Pence ---------------------- ------ ------ ------ ------ ------ ------Earnings andearnings pershare 3,207 5.5 2,227 3.6 4,853 8.1(Profit)/losson disposal ofinvestmentproperties(after tax) (244) (0.4) 861 1.4 1,047 1.7---------------------- ------ ------ ------ ------ ------ ------Underlyingearnings andearnings pershare 2,963 5.1 3,088 5.0 5,900 9.8---------------------- ------ ------ ------ ------ ------ ------ The earnings per share is calculated on the weighted average of 58.3m ordinaryshares in issue (31 December 2003: 61.3m, 30 June 2004: 60.4m). The dilutedearnings per share as at 31 December 2004 is basic: 5.4p per share andunderlying: 5.0p (31 December 2003 is basic: 3.6p, underlying: 5.0p, 30 June2004 is basic: 8.0p, underlying: 9.7p). 5. Tangible fixed assetsInvestment properties Unaudited Unaudited Unaudited Long Freehold leasehold Total £000 £000 £000----------------------------- -------- -------- --------Valuation at 1 July 2004 314,791 22,210 337,001Additions 11,507 154 11,661Disposals (3,501) - (3,501)------------------------------ -------- -------- --------Balance at 31 December 2004 322,797 22,364 345,161------------------------------ -------- -------- -------- Development properties £000------------------------------ -------- -------- --------Cost/previous valuation at 1 July 2004 14,295Additions 3,276------------------------------ -------- -------- --------Balance at 31 December 2004 17,571------------------------------ -------- -------- -------- Fixtures, equipment and motor vehicles £000------------------------------ -------- -------- --------Net book value at 1 July 2004 441Additions 138Disposals (43)Depreciation (98)------------------------------ -------- -------- --------Balance at 31 December 2004 438------------------------------ -------- -------- --------Total net book value of tangible assets at31 December 2004 363,170------------------------------ -------- -------- --------Total net book value of tangible assets at30 June 2004 351,737------------------------------ -------- -------- -------- 6. Called up equity share capitalAuthorised164,879,000 (2003: 164,879,000) ordinary shares of 25peach. Issued and fully paid Unaudited Unaudited Number Nominal of shares value 000 £000------------------------------------ -------- --------At 1 July 2004 59,228 14,806Buy-back of own shares (3,264) (816)Issued on take-up of options 242 60------------------------------------ -------- --------At 31 December 2004 56,206 14,050------------------------------------ -------- -------- 7. Reconciliation of movements in equity shareholders' funds Unaudited Unaudited Audited Half year Half year Year ended ended ended 31 December 31 December 30 June 2004 2003 2004 £000 £000 £000------------------------------ -------- -------- --------Profit for the period 3,207 2,227 4,853Dividends (945) (952) (3,362)------------------------------ -------- -------- -------- 2,262 1,275 1,491Arising on purchase and cancellation ofown shares (10,253) (6,014) (7,366)New share capital subscribed 268 17 64Surplus on property revaluation - - 36,598Surplus on revaluation of joint ventureproperty - - 13Arising on disposal of investments - (16) -Revaluation deficit from previousperiod realised on disposal ofinvestment properties - 2,556 2,551Taxation on disposal of revaluedproperties - (700) -Surplus on revaluation of fixed assetinvestments 21 78 65Consideration paid for purchase of ownshares (held in trust) (54) - ------------------------------- -------- -------- --------Net (decrease)/increase inshareholders' funds (7,756) (2,804) 33,416Opening equity shareholders' funds 203,667 170,251 170,251------------------------------ -------- -------- --------Closing equity shareholders' funds 195,911 167,447 203,667------------------------------ -------- -------- -------- 8. Reconciliation of cash flow to movement in net debta. Analysis of changes in net debt Audited Unaudited Unaudited Unaudited As at As at 1 July Cash Other 31 December 2004 flow movements 2004 £000 £000 £000 £000------------------------- -------- -------- -------- --------Bank overdraft (3,315) (3,213) - (6,528)Loan capital due after morethan (126,257) (16,000) 30 (142,227)one year ------------------------- -------- -------- -------- --------Net debt (129,572) (19,213) 30 (148,755)------------------------- -------- -------- -------- -------- b. Reconciliation of net cash flow to movement in net debt Unaudited Unaudited Audited As at As at As at 31 December 31 December 30 June 2004 2003 2004 £000 £000 £000------------------------------ -------- -------- --------(Increase)/decrease in bank overdraft (3,213) (1,111) 304Net (increase)/decrease in loan capital (16,000) 2,500 8,000Other non-cash movements 30 28 55------------------------------ -------- -------- --------Change in net debt (19,183) 1,417 8,359------------------------------ -------- -------- --------Opening net debt (129,572) (137,931) (137,931)------------------------------ -------- -------- --------Closing net debt (148,755) (136,514) (129,572)------------------------------ -------- -------- -------- This information is provided by RNS The company news service from the London Stock Exchange