Final results for the year ended 30 June 2021
30 November 2021
TOWN CENTRE SECURITIES PLC
('TCS' or the 'Company')
Final results for the year ended 30 June 2021
Further progress in resetting and reinvigorating the business
Town Centre Securities PLC, the Leeds, Manchester, Scotland, and London property investment, development and car parking company, today announces its audited final results for the year ended 30 June 2021.
Commenting on the results, Chairman and Chief Executive Edward Ziff, said:
"It has been a challenging year, however I am pleased to see the business recovering since pandemic related restrictions have been eased. We have benefited from the decisions taken earlier in the year to accelerate our disposal programme and reduce our net borrowings. As a result, the Company is in a stronger financial position to benefit from the ongoing economic recovery."
"I am pleased that our rent collection has remained robust throughout the year. This demonstrates the resilience, quality and diversified nature of our continuing portfolio as well as our collaborative, longstanding and strong relationships with our tenants. With people steadily returning to offices and normal life resuming, we are seeing improvements in both our car park and hotel operations."
"Overall, we remain committed to delivering on our accelerated four pillar strategy of: actively managing our assets, maximising available capital, investing in our development pipeline and acquiring and improving investment assets to diversify our portfolio."
Financial performance
· Net assets:
o Statutory net assets of £155.4m or 292p per share up 0.2% on prior year (2020: £155.1m, 292p)
o EPRA net tangible assets* measure introduced during the year at £151.0m or 284p per share (2020 equivalents: £151.1m or 284p)
o Revaluation increase and reversal of impairment uplifts on property portfolio, car parks and TCS share of properties held in Joint Ventures in the year of £1.4m (2020: Reduction of £26.0m)
o Revaluation gain on other investments during the year of £2.8m (2020: Reduction of £2.4m)
· Profits and earnings per share:
o Significantly reduced statutory loss before tax of £0.6m (2020: loss of £24.1m) and statutory loss per share of 1.1p (2020: loss of 45.4p), including total estimated negative impact of COVID-19 on the results for the year of £6.2m
o EPRA earnings*, profit of £0.3m (2020: profit of £1.7m)
o EPRA earnings per share* of 0.6p (2020: 3.1p)
· Financing:
o Headroom of over £12.1m at year end based on June 2021 borrowings and valuations. This stands at £12.1m as at 18 November 2021
o Nine properties were sold during the year, generating aggregate proceeds of £48.0m
o Net debt (excluding finance leases liabilities) reduced by 21% to £145.6m (FY20: £183.6m), with LTV reducing to 51.3% (FY20: 56.0%) - note LTV calculation includes finance lease assets and liabilities
· Dividends:
o Final dividend of 1.75p proposed, following interim dividend of 1.75p paid at the half-year
o Total dividend for the year of 3.5p (2020: 5p)
Prior year comparatives have been restated to reflect six adjustments, full details of which are set out in Note 26 to the financial statements. The three key adjustments are as follows:
o Reclassification of two of the Group's Multi Storey Car Parks ('MSCPs') from freehold investment properties to freehold properties within car park activities
o Application of a single accounting policy to all types of leasehold car park properties, whether long term, short term or right of use asset
o Reclassification of the Group's investment in a listed entity from current to non-current asset investments
* Alternative performance measures are detailed, defined and reconciled within Notes 4 and 10 of this announcement
COVID-19 impact, response and recovery
Impact
· Estimated £6.2m impact on income from COVID-19 in the year, driven by:
o £1.0m impact in the property business, primarily bad debt
o £4.5m CitiPark impact due to lost car parking income during the nationwide lockdowns
o £0.7m ibis Styles hotel impact due to lockdowns and hotel closure
Response
· Temporary closure of car parks to minimise overhead costs, furloughing CitiPark operational branch staff and some head office staff, and TCS board took a 20% salary and fee reduction
· Our long history of engagement with tenants has ensured good outcomes achieved in most cases
Recovery
· The revaluation gains on our office and development portfolio ensured a net revaluation increase over the entire portfolio, despite further reductions in retail and leisure assets
· Rent receipts remain strong; as at 18 November 2021 of the £41.4m rent, service charge and VAT billed since March 2020, £38.3m or 92.6% has been paid, with a further £0.4m or 0.8% agreed to be deferred, totalling 93.4%
· Of the remaining £2.7m, £2.1m has been waived, mostly in return for improvements in the terms of length of leases. On the remaining £0.6m no agreement has yet been reached
Resetting and reinvigorating the business for the future
We are now seeing a broadening recovery across all segments of our business. As stated this time last year, the Board has focused on resetting and reinvigorating the business, in particular accelerating the disposal and debt reduction programme. Progress against the strategy is detailed below:
Actively managing our assets
Our long-standing strategy of active management and redevelopment, to drive income and capital growth, has continued:
· The proportion of retail and leisure assets in the portfolio has reduced to 29% from 40% in June 2020, and down from 60% in 2016. Pure retail now represents only 21% of the total portfolio and of that, 52% is in the resilient Merrion Estate
· The capital values of both 123 Albion Street and Ducie House have increased, reflecting the completion of their respective refurbishments
· Whilst we saw six tenants either entering administration or CVAs (no exposure to any high-profile retail failures), the exposure is modest, representing circa 4% of income. We remain confident in maintaining occupation in the majority of these units
Maximising available capital
A conservative capital structure, with a mix of short and long-term secure financing, has always underpinned our approach:
· £40m of disposal proceeds were used to part repay Group borrowings
· Bought back for cancellation of £6.5m of our £106m 2031 5.375% debenture
· Since the year end we have refinanced our NatWest facility, which now expires in August 2024 and extended our Lloyds facility by two further years out to June 2023
Investing in our development pipeline
Our development pipeline, with an estimated GDV of over £600m, is a valuable and strategic point of difference for TCS which we continue to progress and improve. Notably, in the past year:
· We completed the works to implement the planning consent for our next PRS development, Eider House, in Manchester's Piccadilly Basin
Acquiring and improving investment assets to diversify our portfolio
We continue to improve investment assets, and will consider new acquisition opportunities that offer the opportunity for both diversification and growth:
· Completed the £4m redevelopment of the office space at 123 Albion Street, Leeds and secured leases with StepChange Debt Charity and the Instant office Group for all the remaining vacant space
· Potential valuable opportunity to redevelop and modernise our Wade House office (having been vacated by StepChange Debt Charity), the third of our four Merrion Estate offices
Current trading - strong first half performance expected
· Strong rent receipts in the first quarter ended 30 September 2021
· Recoveries in both the car park and hotel operations as the economy has reopened
· Further disposals agreed and being marketed
-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 Communications 020 3128 8572
Reg Hoare / Alistair de Kare-Silver / Florence Mayo tcs@mhpc.com
Chairman and Chief Executive's Statement
Overview
As we take steps towards returning to normal life, although COVID-19 has indeed taken a considerable toll, I am pleased to see our business recovering well. We have used the year wisely, driving forward on our key strategic priorities to ensure we are in the best possible shape to bounce back. This includes reducing our debt, completing refurbishment projects and continuing to reduce the proportion of retail and leisure assets in our portfolio through a substantial disposal programme.
As COVID challenges continued, our focus has been on preserving cash and supporting our tenants, employees and communities. This challenge has reinforced the importance of a committed and resilient team. I would like to thank each and every one of them for their hard work and dedication in this difficult year. Support from our shareholders and lenders has also been very encouraging and greatly appreciated.
Despite the impact of COVID-19, the completion of two major refurbishments during the pandemic is testament to the strength and culture of our organisation and our commitment to building city centre environments fit for the future.
Performance
The significant impact of COVID on our revenues and profits is clear, resulting in earnings taking an estimated £6.2m hit during the year, £3.2m in the first half and £3.0m in the second half. I am confident that the gradual easing of lockdown measures will lead to a stronger first half in the current financial year.
EPRA earnings per share* are 0.6p for the year (2020: 3.1p), which compares to pre-COVID levels of 12p in FY19. EPRA net assets per share* are 292p and remains unchanged from the 292p at the previous year end, the small increase highlighting the resilience of our investment portfolio over what was a turbulent year.
The focus on accelerating key strategic initiatives means net borrowing (excluding finance lease liabilities) is down by £38.0m to £145.6m(2020: £183.6m) and loan to value is down to 51.3% (2020: 56.0%) following a proactive programme of disposals generating gross proceeds of £48.0m. This has contributed to a reduction in the proportion of retail and leisure assets in our portfolio to 29% from 40% in FY20.
Rent receipts over the entire COVID-19 period remain robust with 93.4% either paid or agreed to be deferred, reflecting our long history of engagement with our tenants and the hard work of our team to generate equitable solutions with the majority of our retailers, albeit with some notable exceptions. We were again disappointed to see the government's lack of support for landlords continuing with an extension of the government's rent moratorium until March 2022.
Whilst we were fortunate to avoid any significant exposure to retail store failures, we did see six tenants either entering administration or CVAs. Our broad portfolio of tenants ensured our exposure was modest representing only 4% of income and we are in active discussions on re-letting all of this space.
Restatement of prior year figures
Prior year comparatives have been restated to reflect six adjustments, full details of which are set out in Note 11 to this announcement. The three key adjustments are as follows:
o Reclassification of two of the Group's Multi Storey Car Parks ('MSCPs') from freehold investment properties to freehold properties within car park activities
o Application of a single accounting policy to all types of leasehold car park properties, whether long term, short term or right of use asset
o Reclassification of the Group's investment in a listed entity from current to non-current asset investments
* Alternative performance measures are detailed, defined and reconciled within Notes 4 and 10 of this announcement
Key achievements
Even in these challenging times, I have felt it is increasingly important to look forward to the future and reinvigorate our business to maintain momentum.
Leeds
The completion of the refurbishment of 123 Albion Street, Leeds represents a significant milestone in the year, creating a valuable asset which has already become the home of the StepChange Debt Charity, an existing tenant. It is particularly pleasing to report that, following the Instant Office Group letting, the whole of the building is now let, illustrating the strength of the development. This has in turn created a redevelopment opportunity in Wade House, Merrion Centre, their previous location.
This places us firmly at the heart of an exciting plan to transform Leeds City Centre, with investment in a leading-edge Innovation District including the building of purpose built accommodation for over 3,500 students around Merrion, which will drive footfall and create a vibrant, active community.
Manchester
The refurbishment of Ducie House, our multi-tenant office building in Manchester is now complete. We are pleased to welcome both existing and new tenants to the building.
We are also at the heart of one of Manchester's historic districts - Piccadilly Basin. We operate a large prime site, Urban Exchange, which is let to Aldi, M&S, Pure Gym and Go Outdoors. Go Outdoors was put into administration by its owners in 2020. Since that point, we have been receiving full rent from the administrator and are in active discussions regarding the future of the store.
We have an exciting development pipeline in this vibrant area of Manchester, including an implementable planning consent for Eider House, our second Build to Rent (BTR) development, which follows on from the successful completion of Burlington House in September 2019.
CitiPark
Our car parking business has been hit very hard by COVID-19. As a business it is dependent on commuter, retail and leisure parking so each lockdown has had a material impact on revenue. We are clearly not operating in a level playing field when retailers can take advantage of rent and business rates holiday, whereas we are expected to pay these in full. I find it hard to see why a business like car parking, which is so closely related to retail, has been completely ignored. The most we have been able to do is temporarily close branches or sections of branches to claim small reductions in business rates. As at the end of June 2021 we have opened all our car parks and we are seeing a recovery now similar to that experienced in the summer of 2020 with our portfolio of car parks operating at over 2/3rds of normal capacity.
As one of the most innovative parts of our business, through the creation of CitiCharge, we are already providing electric vehicle (EV) charging points in our branches, as part of the refurbishment of 123 Albion Street and winning contracts to provide EV chargers to external organisations.
Our investment in Yourparkingspace, an online parking marketplace, has continued to strengthen as this exciting business attracts new investors and embarks on the next phase of its rapid growth.
We also see a great opportunity to use technology to develop a professional and fair parking enforcement business as we add further contracts to BaySentry Solutions, including the acquisition of KBT Cornwall Ltd at the end of the year.
Stakeholder engagement
Tenants
Our staff have worked tirelessly to negotiate agreements with our tenants and ensure that we fill any vacant space as quickly as possible. Whilst many of our smaller tenants have worked collaboratively with us to meet their obligations, in contrast some of our larger tenants have made this difficult. For example, when Go Outdoors was put into administration and then bought back in a pre-pack deal by owner JD Sports, it left its landlords including Town Centre Securities (TCS) to shoulder the losses. JD Sports acquired Go Outdoors in 2017 and I presume were properly advised of the obligations they took on at that time. I find it outrageous and appalling that a company the size of JD Sports is allowed to walk away freely from its legal obligations, incurring only minor penalties and doing so without any reputational damage whatsoever. It is a sad indictment that profit is now regarded more importantly than moral and legal obligations. Bonuses for the JD Sports Directors this year seem inappropriate to say the least.
Employees
Our employees have demonstrated their adaptability and flexibility whether transitioning to working from home or taking periods of furlough. We topped up salaries to 100% and continued open, regular communication with all employees to maintain morale and engagement. Some Head Office staff were furloughed but all have returned to work - many to our Merrion office working in COVID-safe conditions.
Board
In February 2021, we said goodbye to our Group Finance Director, Mark Dilley. Mark was invaluable during a period of significant change for TCS, both in his careful management of our financial position, and his valuable insight into our future direction. I am particularly grateful for his support and hard work during the extremely challenging past time and we wish him and his family well for the future.
On the 1st June 2021, we welcomed Stewart MacNeill to the Board as our new Group Finance Director after an interim period. His experience and knowledge have already made him a good addition to the TCS team and we are delighted he has joined us on permanent basis.
Shareholders
Shareholder support has been important during this difficult period. We will always follow the regulatory requirements to ensure shareholders are suitably informed. On 17 June 2021 we commenced a share buy-back programme and we acquired for cancellation 214,713 shares in the capital of the Company, for a total consideration (incl SDRT and costs) of £304,940. If prices allow us, we intend to use this authority again in the coming year.
Whilst we were pleased to declare a dividend at the half year, I am truly sorry that we are not able to announce dividends that return to pre-COVID levels. We need shareholders to remain patient as we secure the business for the long term. The Board has approved a final dividend of 1.75p, totalling 3.5p for the full year - a step in the right direction.
ESG and communities
We have a five-part approach to ESG: minimising our environmental impact; engaging with external stakeholders; having engaged and committed employees; making a positive contribution to our local communities and always behaving properly. We are committed to delivering environmentally friendly buildings that meet the needs of our occupiers and make a positive contribution to the communities they operate in.
Giving back to our local communities has always been an essential part of the way we operate, right from the moment the Marjorie and Arnold Ziff Charitable Foundation was set up in 1960. Offering free parking and concessionary hotel accommodation to NHS staff is a continuation of that long-held tradition, along with support for our retail partner initiatives during the year and our ongoing support for young people.
Outlook
Whilst our diversified portfolio, strong development pipeline and strong financial position gives me optimism for the future, I would like to reinforce the point that our city centres need people and footfall so they can return to the vibrant, busy spaces our communities thrive on. The government, local authorities, local employers and large organisations all have a responsibility to encourage their staff to return to their place of work to fill our public transport, our shops, restaurants and coffee shops and encourage the collaboration and innovation that fuels our growth and builds our future.
We remain committed to our strategy and will continue to actively manage our assets, sell certain retail assets to maximise our available capital, invest in our development pipeline and acquire assets to improve our portfolio. COVID-19 of course remains the big risk as any further lockdowns would create further damage, and the need for the Government to communicate its plans clearly in advance is crucial.
I am confident that our focus on the two growing and exciting cities of Leeds and Manchester, where we are helping to create a sense of place and purpose for living and working, will enable us to generate value for all our stakeholders as the world returns to normality.
Portfolio review
Valuation summary
TCS saw the like-for-like value of its portfolio increase by 0.3% (£1m) after modest capex of £2.2m in the year. This has reversed the £2.6m like-for-like reduction in value recorded in the six months to 31 December 2020. This recovery bears testament to the diversified portfolio of the Company and the continuing strategy of reducing our exposure to retail and leisure assets.
For the year to the 30th June 2021 the total portfolio, including development assets, our share of properties held in joint ventures and car parking assets, declined in value from £372.5m to £329.2m. However after adjusting for a net movement of £44.2m of capex, sales and purchases the underlying uplift in value of the portfolio was £1m. This represents an increase of 0.3% year on year. This is set out in the table on page *, which includes a reconciliation to the amounts disclosed in Note 12 to the financial statements.
Our development assets increased in value by 9.7%, whilst our Office portfolio increased by 6.1%, on a like for like basis. The combination of these outweighed an 8.7% revaluation decrease in our retail and leisure portfolio. Our retail and leisure investments outside of the Merrion Centre, primarily in Scotland, fared the worst, with a 17.4% like-for-like revaluation deficit in the year.
Our main and most complex asset, the Merrion Estate saw a 2.0% decline (after capex) in value year on year from £148.0m to £145.0m. More than a shopping centre, from initial inception, a true mixed-use asset, this comprises offices including our share of Merrion House, retail space, a hotel and a multi-storey car park. The initial yield across the whole Merrion Estate of 6.9% signifies a robust performance against others in the sector where retail assets, particularly shopping centres have continued to fall.
The valuation of all of our properties (except one) are carried out by CBRE and Jones Lang LaSalle. Both companies have removed the 'material valuation uncertainty' clause, as set out in the RICS Valuation Global Standards, which was included last year at the time of peak COVID-19 uncertainty.
Sales and Purchases
The COVID-19 crisis prompted the Board to accelerate the retail and leisure disposal programme. During the financial year ended 30 June 2021 we have sold nine properties for gross proceeds of £48.0m.
Our continued commitment to asset recycling is clear. The table details the £96.9m of disposals since FY17 of which 93% were retail and leisure assets.
£m | Sales |
|
|
| Purchases |
|
|
|
|
| % Retail & leisure |
|
| % Retail & leisure | |
FY17 | 22.3 |
| 88% |
| 4.0 |
| 46% |
FY18 | 10.1 |
| 95% |
| 9.0 |
| 0% |
FY19 | 14.0 |
| 100% |
| 16.0 |
| 25% |
FY20 | 2.5 |
| 100% |
| 1.7 |
| 100% |
FY21 | 48.0 |
| 93% |
| 0.0 |
|
|
|
|
|
|
|
|
|
|
Total | 96.9 |
| 93% |
| 30.6 |
| 24% |
Retail and leisure
The global pandemic has presented many challenges to the UK retail market during the last 18 months. Structural shifts in consumer behaviour and the move to multi-channel retailing have been accelerated by the pandemic.
However, as we move into the second half of 2021, the reopening phases throughout Q2 2021, the widespread vaccination programme and pent-up demand have triggered significant improvement to consumer sentiment.
Online sales accounted for 26.1% of total UK retail sales in June 2021. This is notably below the peak of 36.3%, recorded in January 2021. Although hospitality and leisure spend is reported as being subdued, within our own portfolio, there is increasing evidence of a rapid return to pre-pandemic levels.
Retail Parks continue to outperform with footfall down 4.1% on average in June (Source: Springboard) whilst Shopping Centre and High Street locations recorded 27.2% and 29.1% reductions respectively.
Changes to Government support packages including the changes to furlough, the extension of the eviction moratorium to March 2022 and changes to the rates support will all be relevant factors going forwards as operators consider their particular market headwinds. There are high levels of retail vacancy across the UK, however, Savills are reporting a slight softening in retail rental decline.
Shopping Centre yields have risen by 75 bps over the last year. There is evidence of this trend having turned a corner and in the first half of 2021, £594m was invested in the UK Shopping Centre Market. This compares with £343m in the whole of 2020. TCS's principal mixed-use scheme, The Merrion Estate, anchored by Morrisons (the only full-line supermarket in Leeds City Centre) is well placed to benefit from the interest of risk-averse investors preferring the food store anchored schemes. The retail sector is increasingly offering value for the opportunistic investor.
Unlike the Shopping Centre sector, High Street retail investment in 2021 is on a par with 2020, with c£1.1bn of investment turnover for the first half of 2021. Institutional investors are increasingly turning away from this sector. However there are still opportunities on the High Street, especially in the essential retail category that will attract the risk-adverse investor.
Investor demand for food stores remains strong with the downward pressure on prime yields. In the meantime, active landlords such as TCS are continuing to build flexibility into their retail portfolios through active asset management, planning consents and innovative terms.
From a TCS perspective, total retail and leisure assets fell by £9.0m or 8.7%. Merrion excluding offices and the MSCP delivered an Initial Yield of 7.7% reflecting the skew in tenant mix to supermarket and value retailers. Merrion's value fell by £3.8m or 6.3%. TCS's out of town retail had an initial yield of 7.9% representing its mix of food and value retailers, with value falling £0.3m or 2.0%. Other retail and leisure assets fell by £4.9m or 17.4%, with these more traditional standalone retail units being most significantly impacted.
Our hotels, while both open for key workers during the start of COVID-19, were then closed from the start of January 2021 to April 2021, but with a quick recovery values have rebounded slightly with an increase of £0.6m or 2.4%. The success of the 'staycation' has clearly had an effect and we are continuing to see increased booking volumes in the months after June 2021.
Regional offices
Office investment volumes reached 1.07 billion outside of central London in Q1 2021, which was a 25% decrease in volumes recorded in Q1 2020 and a 32% decrease in the long-term average. 1
Overseas investors were the most active investors across the regional office investment market in Q1 2021. The investor type accounted for 58% of investment which was the highest proportion from the sector in the last 10 years. 1
The regional office markets have remained quiet during the period due to changing working from home restrictions imposed by the pandemic and a general lack of any new stock coming to the market. Investors are set to gauge sentiment when occupiers return to buildings later this year in line with restrictions easing.
Take up in most of the major regional cities remains significantly below the ten-year averages. Enquiry levels have slowly started to increase with some of the larger requirements gathering momentum as they establish what their longer-term occupational requirements will be.
The prime regional office yield moved out by 25 basis points to 5.00% in April 2020 in response to investor caution arising from the coronavirus pandemic and has remained at this level. 1 Office sector capital values increased 0.2% in July, reflecting positive growth outside Central London, while Central London values were unchanged. Office rental values increased 0.2%. Office total returns were 0.5% for the month. 2
1) Savills UK Regional Office Investment Market Watch 8th June 2021.
2) CBRE UK Monthly Snapshot July 2021.
Our office portfolio increased in value by £5.0m or 6.1% over the year, the majority of which was due to the completion of the 123 Albion Street refurbishment and the subsequent letting of all of the vacant space. The value of TCS's share in Merrion House has also increased by £1.1m reflecting both an improvement in the yield but also an increase in the estimated rental value.
Residential
Residential property has been the surprise outperformer during the pandemic, with fears of a repeat of 2008's housing market collapse proving unwarranted. Investment levels into institutional rented property have been sustained and are expected to hit new records throughout the coming years. Fiscal support for the owner-occupied market has maintained prices and transaction levels, though the risk of rising unemployment could stall this is in the coming months.
At the end of Q2 there were just over £2.1bn of Buy-to-Rent transactions under offer. The pipeline again highlights strong demand for regional markets, with two-thirds located outside of London. There is currently close to £1.3bn under offer across regional markets including Birmingham, Bristol, Cardiff, Glasgow, Leeds, Manchester, Newcastle and Sheffield.
From a returns perspective, CBRE expect Residential to outperform other real estate sectors over a five-year horizon. According to the Office for National Statistics, rents across the UK have remained stable between January and June 2021. However, potential downside risks, including the ending of the furlough scheme in September, mean they continue to forecast a marginal fall in rents for the full year, but then expect a rebound in 2022. A highly competitive market will underpin asset pricing and yields. Overall, they are forecasting residential total returns to average 7.3% per year to 2025 and investment to continue on an upward trend throughout a five-year horizon, with the expectation of £9.8bn invested across the residential sector in 2021, rising to £15.7bn by 2025.
TCS's residential assets are concentrated in the city centres of Leeds, Manchester, suburban London and Glasgow. Overall, we saw an increase in the value of our residential portfolio year on year of 3.5%. This was largely driven by a rebound in the Manchester market, effectively reversing and improving on the negative impact COVID-19 had on residential values at 30 June 2020 of -1.3% . Rents are expected to return to a 3% per annum growth rate from 2022. As mentioned last year our Piccadilly Basin site remains one of the most centrally located and accessible sites in the city and as such, we expect it to outperform the market in the long term.
| Passing rent | ERV |
| Value | % of portfolio | Valuation incr/(decr) |
| Initial yield | Reversionary yield |
|
|
|
|
|
|
|
|
|
|
Retail & Leisure | 1.6 | 1.9 |
| 23.4 | 7% | -17.4% |
| 6.4% | 7.9% |
Merrion Centre (ex offices) | 4.6 | 4.9 |
| 56.7 | 17% | -6.3% |
| 7.7% | 8.1% |
Offices | 4.5 | 6.2 |
| 91.4 | 28% | 6.1% |
| 4.7% | 6.4% |
Hotels | 1.2 | 1.6 |
| 23.6 | 7% | 2.4% |
| 4.7% | 6.5% |
Out of town retail | 1.2 | 1.2 |
| 14.5 | 4% | -2.0% |
| 7.9% | 7.5% |
Distribution | 0.4 | 0.5 |
| 6.5 | 2% | 7.7% |
| 6.0% | 6.8% |
Residential | 1.0 | 1.0 |
| 20.5 | 6% | 3.5% |
| 4.6% | 4.6% |
|
|
|
|
|
|
|
|
|
|
| 14.6 | 17.3 |
| 236.6 | 72% | -1.0% |
| 5.8% | 6.9% |
|
|
|
|
|
|
|
|
|
|
Development property |
|
|
| 41.5 | 13% | 9.7% |
|
|
|
Car parks |
|
|
| 51.2 | 16% | -1.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio |
|
|
| 329.2 | 100% | 0.3% |
|
|
|
Note: includes our share of Merrion House within Offices (£35.8m - see Note 7 of this announcement), our share of Burlington House within Residential (£11.3m - see Note 7 of this announcement) and Car Park Goodwill of £4.0m arising on individual car park assets, but specifically excluding goodwill arising from the current year car park operation acquisitions. All of the above are not included in the table set out in Note 6 of this announcement. |
Note: excludes IFRS 16 adjustments that relate to Right-of-Use car park assets (£27.8m) as the Directors do not believe it is appropriate to include in this analysis assets where there is less than 50 years remaining on their lease and the Group does not have full control over these assets - These assets are included in the table set out in Note 6 of this announcement. |
The table below reconciles the above table to that set out in Note 6 of this announcement:
| FY21 | FY20 |
| £m | £m |
Portfolio as per Note 6 | 305.9 | 354.3 |
50% share in Merrion House | 35.8 | 34.7 |
50% share in Burlington House | 11.3 | 10.9 |
Goodwill - Car Parks - Property specific only | 4.0 | 4.0 |
Less - IFRS 16 right-of-use car parks | (27.8) | (29.7) |
Less - addition recognised relating to an asset held for sale | - |
(1.7) |
|
|
|
As per the above table | 329.2 | 372.5 |
Location | Value | % |
Leeds | 222.4 | 68% |
Manchester | 71.9 | 22% |
Scotland | 11.4 | 3% |
London | 23.4 | 7% |
| 329.2 | 100% |
|
|
|
Sector | Value | % |
Retail/leisure | 94.6 | 29% |
Hotels | 23.6 | 7% |
Office | 91.4 | 28% |
Car parking | 51.2 | 16% |
Distribution | 6.5 | 2% |
Residential | 20.5 | 6% |
Development | 41.5 | 13% |
| 329.2 | 100% |
|
|
|
Lease Expiries | Value | % |
0-5 years | 6.8 | 46% |
5-10 years | 2.0 | 14% |
Over 10 years | 5.8 | 40% |
| 14.6 | 100% |
Divisional review - property
Overview
It has been an intense period for our dedicated team as they manage our estate on a daily basis, securing income, extending lease terms, and working closely with our tenants to support them through the current challenges. Despite the immediate urgencies created by COVID-19, we have also continued to focus on pursuing new opportunities to help create places that attract people and create communities.
Over the course of the year our like-for-like void percentage has improved marginally from 5.6% to 5.3%, again representing the resilience of our portfolio. In measuring voids we include premises to let and also those in Solicitor's hands, but where an agreement for lease has not yet been signed. In measuring voids we specifically exclude premises that are temporarily unlet pending redevelopment.
Our portfolio is largely focused in the vibrant Northern cities of Leeds and Manchester, where we have resilient assets and a high-quality pipeline of development opportunities.
Leeds
The last twelve months have demonstrated the resilience of our portfolio in Leeds and the strength of the Merrion Estate which is at the heart of the Arena Quarter and adjacent to the Innovation District in the City. The Arena Quarter has been transformed in recent years with the development of the First Direct Arena, substantial investment by the two largest universities in Leeds, a brand-new Head Office for Leeds City Council and over 8,000 new residential and student residential units. These new developments include the tallest building in Leeds - IQ Altus, which is under construction and scheduled for completion later this year. The same developer is preparing to invest further in this location, underlying the industry's confidence in this area.
The Merrion Estate is a mixed-use scheme comprising supermarkets, offices, retail, leisure, car parks and a hotel. Our largest office occupier is Leeds City Council's Head Office (170,000 sq ft) and our supermarket tenants include Iceland, Co-op and the only full line City Centre supermarket in Leeds, Morrisons. Merrion represents 44% of the value of the portfolio.
Asset management
Merrion Centre
The Merrion Estate has continued its diversification and repurposing programme that began over 10 years ago. Merrion's strategic location at the heart of the Arena Quarter, adjacent to the Innovation District, is continuing to deliver new customer sources for our Estate. Domino's Pizza, Co-op, Leeds Teaching Hospitals Trust and 7 independent and regional tenants all opened premises during the last year. It is particularly pleasing to see existing tenants invest further in Merrion, such as the popular Blue Sakura Restaurant taking their second restaurant premises at Merrion and Morrisons' investment in their brand new 'Market Kitchen' concept.
Our teams have worked extremely hard to ensure that our rent collection rates have remained high, ending the year at over 93% either collected or deferred. This is testament to the close relationships we have built with tenants over the years and the collaborative approach we have taken to build arrangements that work for both parties.
Despite challenging footfall levels, many employees working from home and lower student numbers, our retail and leisure portfolio has proven resilient given the emphasis on essential retailing, namely grocery, health, convenience and discount retailing. Fortunately, we have had no exposure to any of the larger high street retail failures such as Arcadia or Debenhams.
Since July 2020, just four Merrion Estate tenants have entered into CVAs or administration: Deltic Group, Café Nero, Slam Trading and Select. These four tenants, together with two non-Merrion Estate tenants, are the only TCS tenants to enter administration/CVA during the last financial year. The billable rent for these represents circa 4% of property income. Encouragingly, all but one of these tenants are capable of being replaced via a new letting or proposed new assignment. We have completed or renewed 11 leases in the financial year including eight new retailers moving into the Merrion Centre - examples include the Leeds Rhinos shop, Teisha's Hair and Beauty Salon, and Youshi. It is also encouraging to note a further seven new lettings or lease renewals have completed after the year end.
123 Albion Street
Acquired in 2018, we have now completed a net £4m refurbishment of 123 Albion Street adjacent to the Leeds Innovation district and the Merrion Estate. The newly refurbished building comprises 21,000 sq ft of flexible commercial space on the ground floor, with 56,000 sq ft of good quality office space over three upper floors. In a collaboration with our CitiPark's division, the refurbishment programme includes two CitiCharge EV chargers as well as plenty of parking, cycle storage and electricity regeneration lifts.
The whole building has already been let, illustrating the strength of the location. The ground floor will
now trade as a 'Job Centre Plus' focused on coaching people out of work due to COVID-19 and in
December 2020 we agreed a new 12-year lease for the remaining 46,000 sq ft to StepChange Debt Charity. StepChange is the UK's leading debt charity offering free expert advice to individuals enabling them to tackle and manage their debts. This letting at 123 Albion Street involves the charity moving out of our Wade House office (on the Merrion Estate) into this newly refurbished building. StepChange has been a valuable Town Centre Securities tenant for almost 20 years and the business has now reached a stage where larger floorplate offices were required to take the business forward. It is pleasing, both for TCS and for the wider City of Leeds, that we have been able to satisfy StepChange's new office requirement, enabling them to continue their important and valuable work.
123 Albion Street was valued at £12.1m twelve months ago and has increased to in excess of £20m, following the renovation and successful letting programme.
The completion of 123 Albion Streets' refurbishment now presents us with an opportunity to redevelop or refurbish Wade House, on the back of the new demand for the area. Wade House represents the last of the four main office buildings that form part of the Merrion Estate, this being one that is now in need of investment, following the redevelopment of Town Centre House and Merrion House. We are in detailed discussions with potential partners and are confident in delivering on this new opportunity.
ibis Styles Hotel
It's been a roller coaster of a year for our hotel, ibis Styles. During the first lockdown in 2020, we were able to keep the hotel open for key workers and offer concessionary rates to essential workers, especially NHS staff. The hotel was then fully open and trading well in early autumn 2020, only to shut down completely from January to April 2021. Trading has rebounded since its reopening in May 2021, although different trading patterns are emerging. The initial lack of corporate business during the week has been replaced by leisure bookings that extend over the weekend into the traditionally quiet Sunday nights. Early signs of the corporate market returning have recently started to emerge. ibis Styles is on track to return to full strength very soon.
Manchester
Our Manchester portfolio represents 22% of our total assets and is centred around the Piccadilly Basin area - a historic and exciting contribution to Manchester's development. This is a 12.5-acre mixed use development site situated next to the Northern Quarter, Ancoats and New Islington, all of which have experienced significant investment and development over recent years. The value and appeal of the immediate and surrounding areas is rising and our most recent developments at Burlington House and Ducie House are showing strong potential.
We have an approved Strategic Regeneration Framework in place with Manchester City Council which identifies 800 residential units, a 500 space multi-storey car park and 200,000 sq ft of canal-side commercial development over the coming years.
Asset Management
Ducie House
We have now completed our £2.1m refurbishment of the iconic Ducie House in Manchester. Originally a petticoat factory, Ducie House is a 33,000 sq ft multi-tenant office building. The work included essential fabric and M&E repairs post acquisition. This included full roof, façade, and window repairs as well as new boilers, lifts, air conditioning and heating. We adopted a strategy of restructuring the building's configuration to provide three additional meeting rooms, shower facilities and booth spaces. The common areas on the upper floors have also been refurbished to provide further amenity space including break-out booths with balcony space and improved toilet/kitchen facilities.
We have seen a very positive response following our investment and continue to expect the investment to deliver increased net income of circa £0.3m per annum and a post investment return in excess of 8.5%. The value of Ducie House increased by £1.0m to £9.0m reflecting the additional capex spent in the first half of FY2020. In January, we signed the first new lease for one of the larger duplex offices with textile company NB Avenue Limited, who supply and manufacture clothing to online retailers internationally. Many existing tenants who moved out temporarily during the refurbishment are returning and the building is now home to around 20 companies from various sectors(Including technology, marketing and fashion).
Urban Exchange
Urban Exchange is a 120,000 sq ft retail outlet within our Piccadilly Basin ownership in the centre of Manchester. It is let to Aldi, M&S, Pure Gym, and Go Outdoors. As previously reported, Go Outdoors was put into administration by its owners in 2020. Since that point, we have been receiving full rent from the administrator and are in active discussions regarding the future of the store which is likely to continue to trade and stay open. However, once again this presents TCS with an opportunity to look at alternative uses and development options for this large, prime site.
Other assets in our portfolio are performing well. Carver's Warehouse continues to be strategically important and voids are filled promptly. Burlington House, which was completed two years ago, has proved resilient during the COVID-19 challenge. This was the first residential scheme in Manchester to be awarded a Wiredscore Silver rating for connectivity.
London and Scotland
Overview
Following a number of disposals in the year, our portfolio in Scotland now comprises three mixed use properties in Glasgow and restaurant premises in Edinburgh. In addition to our prime office premises at Duke Street, London W1, our London investments are in good-quality secondary high street locations and primarily consist of retail and residential mixed-use assets.
Scotland
Our activity in Scotland this year has centred around the disposal of mature assets, largely in the retail sector.
These include two Waitrose stores in Milngavie and Glasgow sold for £23.2m and a recently completed retail development in Milngavie, let to Home Bargains and Aldi, for £10.7m.
We have, however, following our tenant in Buchanan Street, Glasgow entering a CVA, exercised our right to exit the lease agreement. Whilst this did incur rental losses, it has given us the opportunity to look at an alternative future for this property. We have submitted a planning application to convert the top three floors into six luxury apartments and will let the remaining retail outlet to Watches of Switzerland. This greatly improves the quality of tenancy and lease.
London
Activity in London has also centred around disposals of mature assets, including retail units in Chiswick and Wood Green for a total of £6.2m. Our other assets are performing well and, whilst our key focus is on Leeds and Manchester, we will continue to take advantage of good-quality opportunities as they arise.
Development Pipeline
Our portfolio is peppered with development opportunities, great and small; from our strategically important sites at Piccadilly Basin, Whitehall Riverside and Merrion Estate to smaller residential flat conversion opportunities in Glasgow. We are now actively exploring the impact of the booming residential and co-living sector on our development pipeline.
Our development pipeline is significant, with an estimated GDV of over £600m and we see this as a strategic point of difference.
The key components of the development pipeline include:
·Piccadilly Basin, Manchester. Mixed residential, commercial, and car-parking with a total estimated GDV of circa £300m.
·Whitehall Road, Leeds. Office, car-parking, and potentially leisure provision with a total estimated GDV of over £170m.
·Merrion, Leeds. Office and residential towers with a total estimated GDV of over £100m.
The value of our development pipeline value increased by £3.7m or 9.7% since June 2020, driven by a 15.6% increase in the value of our Piccadilly Basin, Manchester holding as the market value of development land there has increased.
We are also exploring different options for Vicar Lane, Leeds, as well as delivering new apartments, alongside Urban Splash at Brownsfield Mill, Manchester.
The changing property landscape has led us to reimagine the Whitehall Riverside development to ensure the master plan is fit for the future. Initially focused on constructing three office buildings, we are now active on site assessing a mixed-use scheme to capitalise on the vibrant Build to Rent (BTR) in Leeds and planning how best to bring forward plans for 3.5 acres of undeveloped land.
The success of Burlington House and the buoyant BTR sector in Manchester have proved to be a springboard for our next development in the vibrant Piccadilly Basin area. Planning permission for Eider House was implemented in January 2021 for a new development of 128 luxury apartments opposite Ducie House and adjacent to Dakota hotel. We are currently reviewing the proposed scheme to ensure that our next residential development builds on the success of Burlington House and delivers a best in class scheme.
We take a conservative approach to development to ensure we never over-commit ourselves, which has proven crucial following the COVID-19 crisis. However, TCS does have a successful track record in obtaining planning and delivering strategic developments. In the last four years, TCS has delivered Merrion House office, two new hotels in Leeds, and the Burlington House BTR scheme in Manchester. In addition, over that time frame we have secured planning permission for Eider House, our second BTR scheme in Manchester, and for a 17-storey office tower at the Merrion Estate. This will be our first high-rise development at Merrion and strategic partnerships are now being put in place for this ambitious project.
Divisional review - CitiPark
Overview
It's been a challenging year for our CitiPark business. It has taken the full impact of COVID-1 related lockdowns, with no support from government or local authorities on rent or rates relief, leading to a material impact on revenue and profitability. Gross revenue for FY 2021 was £6.7m, 34% down year on year with operating profit reduced to £0.2m, compared to £2.7m in the prior year.
Now lockdown is easing, we are seeing a strong recovery. All our car parks are now open and short-term income is rising in line with expectations, although season ticket revenue remains affected by the slow return to the office. Interestingly, discussions with our larger commercial clients suggest that nervousness about travelling on public transport may lead to a rise in demand for parking, as employees choose to drive as they return to the office.
We have remained flexible throughout the period, temporarily closing branches when it was economically sensible and using the government furlough scheme where appropriate. Now we are responding to changing working patterns with restructured products, for example, new style season tickets and commercial promotions to support hybrid working.
Mindful of the needs of our local communities, we provided free parking for NHS staff in the first lockdown, tailoring ongoing concessions on a location by location basis as we manage capacity.
We have also fully supported our staff throughout the year, topping up furlough salaries and carefully managing their return to work safely. Throughout this period of stop/start and moving goal posts, they have proved remarkably resilient and we are very pleased to see them all back at work.
Technology and innovation
Our strategic technology initiatives have made significant advances in the year as we continue to expand beyond traditional car park ownership, using technology as a key differentiator and to underpin our focus on sustainable growth.
EV charging/CitiCharge
Launched shortly after the year end, in July 2021, our CitiCharge app allows users to search for our electric vehicle (EV) charging points around the country and will offer pre-booking facilities in the future. We own and operate 30 charging points in Leeds and 22 in Central and Greater London, where the congestion charge is a key driver of demand. 35 EV charging points for a Coventry NHS hospital will be live by the end of the calendar year and we see this as an important future income stream as electric car numbers increase.
Our three solar energy farms in Manchester and Leeds provide the capacity to underpin this growth, in addition to selling excess power to the National Grid.
CitiPark App
Launched last year, this app has come into its own with COVID-19 accelerating take-up as digital payments replaced cash. Our early promotional message - 'a pay station in your pocket' - emphasised the benefits of paying for your parking safely on the app and today 60% of all digital parking fees are paid via the CitiPark App.
BaySentry Solutions
Our parking management company, BaySentry Solutions Ltd, has expanded significantly during the year, acquiring a Cornwall-based parking enforcement company with 270 sites and 75 enforcement contracts from an independent operator covering East, West & North Yorkshire. We see opportunities to use technology to grow these businesses, using ANPR cameras and other electronic payment systems, both here and in 25 of our own branches. As the market for electric vehicles grows, we will look to exploit our presence in all these locations to expand our EV charging network.
YourParkingSpace.co.uk (YPS)
Our equity share in innovative online marketplace - YourParkingSpace.co.uk - has continued to increase in value. This platform connects drivers with over 350,000 privately owned and commercially operated parking spaces across the UK, available to book hourly, daily, or on a monthly basis. Drivers can book parking on-demand through its website and mobile applications. In September 2020, YPS completed a significant fund raise from a new private equity investor, which will fuel its future expansion as demand recovers to accommodate returning workers who don't want to use public transport. As part of the transaction, we exercised our third and final investment option and now have a 19.9% voting share with additional 1.2% non-voting shares, convertible to voting on exit. Our cost of equity investment totals £1.0m, which following an external fair value exercise undertaken after the recent fund raise is valued at £1.5m as at 30 June 2021. We continue to retain a Board position and are looking forward to working closely with the founders and new investors as we rapidly grow this very exciting business.
Multistories at the Merrion Centre
An innovative venue at the Merrion Centre in Leeds helped maximise the use of space in the Centre car park that would have otherwise been empty and breathe new life into the hard-hit hospitality industry.
The top floor of the Merrion Centre car park was rented to a third party for a series of unique summer pop-up events delivering music, food and drinks in a setting not normally associated with social gatherings. The various events were branded using the Multistories name, inspired by the unique car park setting.
Outlook
CitiPark is set to benefit from a strong recovery in the car parking sector as concerns over safety influence the return to work and leisure pursuits, although we are anticipating regional differences in our car parking estate. For example, our management contract for Manchester Arena has only just come back on stream with the restarting of events in September 2021.
Looking forward, we see technology as the key driver of growth as we transition to a cashless society, developing and enhancing our CitiPark and CitiCharge apps. We expect our EV charging business to grow at a steady pace, building our sustainability point of difference, and to look for strategic acquisition opportunities for BaySentry Solutions.
FINANCIAL REVIEW
"The financial performance of the Company was significantly impacted by COVID-19 during the year ended 30 June 2021 and a degree of uncertainty remains. However, we have seen consistently improving rent receipts throughout the year, strong recoveries in both our Car Park and Hotel businesses following the easing of the last lockdown and the acceleration of our disposal and debt reduction programme."
The statutory loss for the year was £0.6m, compared to a loss of £24.1m in the previous year, with the prior year heavily influenced by a negative revaluation movement in Investment Properties of £26.0m.
EPRA Earnings* were a profit of £0.3m in the year, compared to a profit of £1.7m in the prior year. These amounts are presented in accordance with IFRS 16 which affects how we account for right-of-use leases that we have entered into. IFRS 16 was brought in and adopted for the first time in the results for the year ended 30 June 2020.
COVID-19 had a material impact on our financial performance during the year, and we estimate a total impact to earnings of £6.2m, compared to pre-COVID-19 levels. We estimate that our Investment Property business has been impacted by £1.0m, primarily as a result of the fair valuation of rental income and service charge income that would ordinarily be recognised but due to COVID-19 is not expected to be recovered. The impact to our CitiPark business is £4.5m due to a significant reduction in car parking income with many fixed costs, such as rent and rates. Our ibis Styles hotel has also been impacted by £0.7m in the year.
With EPRA Earnings at historically low levels it would not be prudent to increase our dividend. The unprecedented impact of COVID-19 and the level of uncertainty that has arisen means we believe this is the only responsible action to maintain the long-term prosperity of the Company. The final dividend for the year will be 1.75p per share, giving a full year dividend of 3.5p per share.
During the year the Company sold nine separate investment property assets which generated £48.0m of proceeds. The funds generated were in the first instance applied to reduce the Company's borrowings, which has reduced from £183.6m to £145.6m in the year. Net borrowings represent total financial borrowings of £176.1m less lease liabilities of £29.9m and cash and cash equivalents of £0.6m. These disposals, combined with the inevitable gap between asset sales and any asset purchases, and the gradual recovery from COVID-19, will lead to a longer period of reduced earnings which will inevitably lead to a lower level of dividend payment than in recent years.
* Alternative performance measures are detailed, defined and reconciled within Notes 6 and 10 of this announcement
Restatement of prior year figures
Prior year comparatives have been restated to reflect six adjustments, full details of which are set out in Note 11 of this announcement
o Reclassification of two of the Group's Multi Storey Car Parks ('MSCPs') from freehold investment properties to freehold properties within car park activities
o Application of a single accounting policy to all types of leasehold car park properties, whether long term, short term or right of use asset
o Disclosure of amounts received under the Coronavirus Job Retention Scheme
o Reversal of an historic provision for future anticipated repairs and maintenance costs on an Investment Property owned by the Group
o Separately identifying service charge income and expenses within the consolidated income statement as opposed to disclosing a net amount
o Reclassification of the Group's investment in a listed entity from current to non-current asset investments
Income statement
EPRA Earnings* for the year ended 30 June 2021 were £0.3m.
|
|
|
| Restated |
|
|
£000s |
| FY21 |
| FY20 |
| YOY |
|
|
|
|
|
|
|
Gross Revenue |
| 21,429 |
| 30,792 |
| (30.4%) |
Impairment of debtors |
| 788 |
| (1,478) |
| (153.3%) |
Property Expenses |
| (11,145) |
| (13,681) |
| (18.5%) |
|
|
|
|
|
|
|
Net Revenue |
| 11,072 |
| 15,633 |
| (29.2%) |
|
|
|
|
|
|
|
Other Income / JV Profit |
| 2,962 |
| 2,018 |
| 46.8% |
Other Expenses |
| - |
| (777) |
| - |
Administrative Expenses |
| (5,585) |
| (6,197) |
| (9.9%) |
|
|
|
|
|
|
|
Operating Profit |
| 8,449 |
| 10,677 |
| (20.9%) |
|
|
|
|
|
|
|
Finance Costs |
| (8,145) |
| (9,009) |
| (9.6%) |
|
|
|
|
|
|
|
EPRA Earnings |
| 304 |
| 1,668 |
| (81.8%) |
|
|
|
|
|
|
|
Segmental |
| FY21 |
| FY20 |
| YOY |
|
|
|
|
|
|
|
Property |
|
|
|
|
|
|
Net Revenue |
| 10,196 |
| 11,694 |
| (12.8%) |
Operating Profit |
| 8,471 |
| 7,849 |
| 7.9% |
|
|
|
|
|
|
|
CitiPark |
|
|
|
|
|
|
Net Revenue |
| 1,053 |
| 3,802 |
| (72.3%) |
Operating Profit |
| 155 |
| 2,691 |
| (94.2%) |
|
|
|
|
|
|
|
ibis Styles Hotel |
|
|
|
|
|
|
Net Revenue |
| (177) |
| 137 |
| (229.2%) |
Operating Profit |
| (177) |
| 137 |
| (229.2%) |
Statutory profit
On a statutory basis the reported loss for the year was £0.6m.
The statutory profit reflects the EPRA Earnings* of £0.3m plus £1.4m of non-cash valuation and impairment movements less the loss on disposal recognised of £2.3m on the nine investment properties sold in the year.
Gross revenue
Gross revenue was down £9.4m or 30.4% year on year, with key drivers being:
· Property sales during the year accounted for £3.0m of this reduction and a further £1.6m due to COVID-19 related voids and rent concessions.
· CitiPark revenues were materially reduced due to COVID-19, in particular with the three significant UK lockdowns and the stay at home/work from home policies. Whilst some monthly subscription income continued to be received, daily receipts were again down over 90% during the various lockdowns. This has reduced revenue on a year on year basis by £3.5m.
· Income for the ibis Styles hotel was impacted by COVID-19 by an estimated £1.3m, in particular during the period from January 2021 to April 2021 when the hotel was fully closed.
Property expense
Property expenses were down 18.5% or £2.5m year on year. Key drivers of this underlying decrease were:
· Property: operating expenses were £0.8m lower year on year predominantly due to a one-time write-off of historic service charges in the prior period.
· CitiPark: operating expenses were £0.7m lower year on year primarily because of savings initiated as a result of COVID-19 including furlough savings, reduced rates costs where branches were closed, and operational cost savings due to the significantly reduced level of transactions.
· Ibis Hotel: operating expenses were £1.0m lower year on year, driven primarily by the response to the COVID-19 crisis. With the hotel closed for over three months in the year, the operation was able to reduce variable operating costs including the furloughing of some staff and reduced rates costs.
Other / JV income
Total Other / JV income was up 46.8% or £0.9m year-on-year, the majority of which relates to dilapidations payments received by the Company as tenants vacate but there was also an increase in the underlying profits within the joint ventures the Company has a 50% interest in.
Other expenses
There are no recurring costs in relation to the proposed George Street aparthotel joint venture with Leeds City Council. The write down of this joint venture resulted in the prior year charge of £0.8m.
Administrative expenses
Administrative costs were £0.6m lower year on year. This is as a result of significantly reduced spend on bonuses, advertising, travel, entertaining and other expenditure as a result of our response to COVID-19.
Finance costs
Finance costs were 9.6% or £0.9m lower year on year as a result of the reduction in both the Company's bank borrowings and the buyback of £6.5m of debenture stock.
* Alternative performance measures are detailed, defined and reconciled within Notes 6 and 10 of this announcement.
Balance sheet
The below table shows the year-end balance sheet as reported including the IFRS 16 implementation.
|
|
| Restated |
|
|
£m | FY21 |
| FY20 |
| vs FY20 |
|
|
|
|
|
|
Freehold and Right of Use Investment properties* | 181.3 |
| 239.4 |
| (24.3%) |
Development properties | 41.5 |
| 37.8 |
| 9.8% |
Car Park related Assets, Goodwill and Investments | 82.7 |
| 83.2 |
| (0.6%) |
Hotel operations | 8.6 |
| 0.0 |
| n/a |
| 314.1 |
| 360.4 |
| (12.8%) |
|
|
|
|
|
|
Joint ventures | 16.2 |
| 13.8 |
| 17.4% |
Listed Investments | 5.8 |
| 3.5 |
| 65.7% |
Other non-current assets | 1.0 |
| 1.1 |
| (9.1%) |
|
|
|
|
|
|
Total non-current assets inc available for sale | 337.1 |
| 378.8 |
| (11.0%) |
|
|
|
|
|
|
Net borrowings (incl. lease liabilities) | (174.6) |
| (214.2) |
| (18.5%) |
Other assets/(liabilities) | (7.1) |
| (9.5) |
| (25.9%) |
|
|
|
|
|
|
Statutory and EPRA NAV | 155.4 |
| 155.1 |
| 0.2% |
|
|
|
|
|
|
Statutory and EPRA NAV per share | 292p |
| 292p |
| 0.0% |
|
|
|
|
|
|
* includes Assets held for sale in FY20 of £23.2m, FY21 £3.9m |
|
|
|
| |
Non-current assets:
Our total non-current assets (including investments in JVs) of £337.1m (2020: £378.8) include £222.8m of investment properties (2020: £279.1m), £82.7m of non-current car parking assets (2020: £83.2m) and £8.6m of Operational Hotel assets (2020: £nil). The car parking assets include £4.8m (2020: £4m) of goodwill and intangible assets arising on business combinations.
The reduction in non-current assets of £41.7m during the year comprises:
· Disposals of £(49.5m)
· Depreciation charge of £(1.8m)
· Capital expenditure of £3.0m
· Movement in tenant lease incentives £1.5m
· Revaluation uplift/reversal of impairments totalling £4.2m
· Operating profits generated and retained in JV entities £0.9m
Although we paused the vast majority of our capital expenditure from March 2020 onwards in order to preserve cash during the uncertainty of the COVID-19 crisis, across the year we invested a total of £3.0m of capital expenditure in our properties and car parking operations.
Borrowings:
During the year our Net Borrowings have reduced by £39.6m, from £214.2m as at 30 June 2020 to £174.6m. This was primarily as a direct consequence of the targeted retail sales made in the first six months. As part of this we bought back £6.5m of our £106m 2031 5.375% debenture stock with the remaining reduction spread across our bank facilities.
Two of the three bank facilities expire within twelve months of the year end and are therefore classed as current liabilities in the balance sheet. Since the year end we have had bank credit approval and have refinanced our £33m facility with NatWest, for a further three years on the same terms and margin albeit at lower facility limit of £25m, this facility will expire in September 2024, with an option for two further one-year extensions.
Our Lloyds Bank facility's initial three-year term expired in June 2021. However, the facility allows for two one-year extensions and these were both actioned prior to the year end, the second extension is subject to a bank instructed valuation exercise, which is in progress. The Lloyds facility is a £35m revolving credit facility with a further £5m overdraft facility and once the valuation exercise is completed will expire in June 2023.
Finally, our £35m Handelsbanken facility does not expire until June 2023.
Loan to value has been reduced to 51.3%, down from 56.0% a year ago. Note the calculation of loan to value includes both the finance lease assets and liabilities.
After the year end, the Company breached a financial covenant on its Handelsbanken facility for the covenant reporting period from 6 July 2021 to 5 October 2021. The Company had made the bank aware prior to formally reporting this breach. On 24 November 2021 the bank confirmed in writing to the Company that it had waived its right to take any action as a consequence of this breach.
At the time of the breach, the Company had drawndown £6.3m out of a total facility of £35m. At the date of this report, the total amounts drawndown were £2.6m.
EPRA net asset reporting
Following the introduction of the EPRA net asset reporting, we will focus primarily on the measure of Net Tangible Assets (NTA). The below table reconciles IFRS net assets to NTA, and the other new EPRA measures.
There are three new 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.
|
|
|
|
|
|
| Restated |
|
|
| Restated | FY21 |
| FY20 | |
£m | FY21 |
| FY20 |
| p per share |
| p per share |
|
|
|
|
|
|
|
|
IFRS reported NAV | 155.4 |
| 155.1 |
| 292 |
| 292 |
|
|
|
|
|
|
|
|
Purchasers Costs 1 | 21.1 |
| 24.1 |
|
|
|
|
|
|
|
|
|
|
|
|
EPRA Net Reinstatement Value | 176.5 |
| 179.2 |
| 332 |
| 337 |
|
|
|
|
|
|
|
|
Remove Purchasers Costs | (21.1) |
| (24.1) |
|
|
|
|
Remove Goodwill 2 | (4.4) |
| (4.0) |
|
|
|
|
|
|
|
|
|
|
|
|
EPRA Net Tangible Assets | 151.0 |
| 151.1 |
| 284 |
| 284 |
|
|
|
|
|
|
|
|
Fair value of fixed interest rate debt 3 | (10.2) |
| (17.7) |
|
|
|
|
|
|
|
|
|
|
|
|
EPRA Net Disposal Value | 140.8 |
| 133.4 |
| 265 |
| 251 |
|
|
|
|
|
|
|
|
1 Estimated purchasers' costs including fees and stamp duty and related taxes. |
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|
| |||
2 Removal of goodwill as per the IFRS Balance Sheet - relates predominantly to goodwill paid to acquire two long term car park leaseholds in London. | |||||||
3 Represents the adjustment to fair value (market price) of the 2031 5.375% debenture. |
|
| |||||
Future financial considerations
Future P&L pressure
As highlighted elsewhere in this report, COVID-19 had a material impact on profitability in the year ended 30 June 2021, in particular the changing ways people work and their shopping habits. Both of which have had an effect on our retail and leisure tenants but also in the revenue derived from our car park operation. However we are seeing recoveries in all segments of our business, although there is still a risk if these recoveries are stalled.
As has been seen, the acceleration of our retail disposal programme has enabled us to reduce Company borrowings and gearing, although the disposal of income producing assets has had an impact on the earnings of the business. The Board is reviewing options for how the proceeds of any further sales could be utilised including debt repayment, asset purchases and share buybacks.
Whilst the reduction in the dividend in the current year is due to the impact of COVID-19, the gradual recovery of our car park business and the loss of income due to disposals are likely to lead to continued pressure on our ability to pay a higher covered dividend.
Future balance sheet and covenant pressure
As identified in the Risk Report, we have highlighted the continued pressure on retail and leisure assets to be a significant risk to the business. A further risk is the pressure on the financial covenants of the Company's banking facilities, especially after the recent breach on the Handelsbanken facility. As part of the going concern and viability statement review process the Company has prepared consolidated forecasts and identified a number of mitigating factors to ensure that the ongoing viability of the business was not threatened.
Our expectation is that continued asset sales and debt repayments, will strengthen this further.
Going concern and headroom
One of the most critical judgements for the Board is the headroom in the Group's debt facilities. This is calculated as the maximum amount that could be borrowed, taking into account the properties secured to the funders and the facilities in place. The total headroom at 30 June 2021 was £12.1m (2020: £14.8m), which was considered to be sufficient to support our going concern conclusion. The properties secured under the Group's debt facilities would need to fall 19.8% in value before this headroom number was breached.
In assessing both the viability and going concern status of the Company, the Board reviewed detailed projections including various different scenarios. A summary of the approach and the findings is set out in the Risk Report, forming part of the Strategic Report of these financial statements.
Total shareholder return and total property return
Total shareholder return of 55.8% (2020: minus 50.4%) was calculated as the total of dividends paid during the financial year of 3.5p (2020: 11.75p) and the movement in the share price between 30 June 2020 (95p) and 30 June 2021 (144p), assuming reinvestment of dividends. This compares with the FTSE All Share REIT index at 23.1% (2020: minus 10.1%) for the same period.
The Company's share price continues to trade at a significant discount to its NAV, impacting total shareholder return.
Total shareholder returns % (CAGR) |
|
| ||
|
|
|
| |
Total shareholder returns | 1 Year | 10 Years | 20 Years | |
Town Centre Securities | 55.8% | 1.6% | 5.4% | |
FTSE All Share REIT index | 23.1% | 6.4% | 3.3% | |
|
|
|
| |
|
| |||
Total Property Return is calculated as the net operating profit and gains / losses from property sales and valuations as a percentage of the opening investment properties.
Total Property Return for the business for the reported 12 months was 4.3% (2020: (2.1%)). This compared to the MSCI/IPD market return of 6.4% (2020: (2.9%)).
A key driver of the All Property MSCI index being higher than TCS is due to the strong market performance of industrial property of which TCS only has a small amount.
Consolidated income statement
for the year ended 30 June 2021
|
|
2021 |
2020 Restated |
| Notes | £000 | £000 |
Gross revenue (excl. service charge income) |
| 18,703 | 27,989 |
Service charge income |
| 2,726 | 2,803 |
Gross revenue |
| 21,429 | 30,792 |
Release of provision/(provision for) impairment of debtors |
| 788 | (1,478) |
Service charge expenses |
| (3,656) | (4,011) |
Property expenses |
| (7,489) | (9,670) |
Net revenue |
| 11,072 | 15,633 |
Administrative expenses | 2 | (5,585) | (6,197) |
Other income | 3 | 1,989 | 1,218 |
Other expenses |
| - | (777) |
Valuation movement on investment properties |
| 63 | (26,024) |
Impairment of car parking assets |
| (111) | 414 |
(Loss)/profit on disposal of investment properties |
| (2,320) | 168 |
Share of post-tax profits from joint ventures |
| 2,461 | 450 |
Operating profit/(loss) |
| 7,569 | (15,115) |
Finance costs |
| (8,145) | (9,009) |
Loss before taxation |
| (576) | (24,124) |
Taxation |
| - | - |
Loss for the year attributable to owners of the Parent |
| (576) | (24,124) |
Earnings per share |
|
|
|
Basic and diluted | 4 | (1.1)p | (45.4)p |
EPRA (non-GAAP measure) | 4 | 0.6p | 3.1p |
Dividends per share |
|
|
|
Paid during the year | 5 | 3.5p | 11.75p |
Proposed | 5 | 1.75p | 1.75p |
Consolidated statement of comprehensive income
for the year ended 30 June 2021
|
| 2021 | 2020 Restated | |
|
| £000 | £000 | |
Loss for the year |
| (576) | (24,124) | |
Items that will not be subsequently reclassified to profit or loss |
|
|
| |
Revaluation gains/(losses) on other investments |
| 2,795 | (2,363) | |
Total other comprehensive income/(loss) |
| 2,795 | (2,363) | |
Total comprehensive income/(loss) for the year |
| 2,219 | (26,487) | |
All profit and total comprehensive income for the year is attributable to owners of the Parent. |
| |||
Consolidated balance sheet
as at 30 June 2021
|
|
|
2021 |
2020 Restated |
2019 Restated |
|
|
Notes |
£000 |
£000 |
£000 |
|
Non-current assets |
|
|
|
|
|
Property rental |
|
|
|
|
|
Investment properties |
6 |
218,909 |
254,014 |
297,300 |
|
Investments in joint ventures |
7 |
16,212 |
13,751 |
13,387 |
|
|
|
235,121 |
267,765 |
310,687 |
|
Car park activities |
|
|
|
|
|
Freehold and leasehold properties |
6 |
74,502 |
76,513 |
50,810 |
|
Goodwill and intangible assets |
|
4,841 |
4,024 |
4,024 |
|
|
|
79,343 |
80,537 |
54,834 |
|
Hotel operations |
|
|
|
|
|
Freehold and leasehold properties |
6 |
8,630 |
- |
- |
|
|
|
8,630 |
- |
- |
|
Fixtures, equipment and motor vehicles |
|
955 |
1,113 |
1,609 |
|
Investments |
|
9,217 |
6,164 |
8,381 |
|
Total non-current assets |
|
333,266 |
355,579 |
375,511 |
|
Current assets |
|
|
|
|
|
Assets held for sale |
6 |
3,850 |
23,199 |
- |
|
Trade and other receivables |
|
5,311 |
3,468 |
5,354 |
|
Cash and cash equivalents |
|
21,670 |
12,643 |
23,692 |
|
Total current assets |
|
30,831 |
39,310 |
29,046 |
|
Total assets |
|
364,097 |
394,889 |
404,557 |
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
(32,612) |
(23,236) |
(34,593) |
|
Financial liabilities |
|
(42,260) |
(61,984) |
- |
|
Total current liabilities |
|
(74,872) |
(85,220) |
(34,593) |
|
Non-current liabilities |
|
|
|
|
|
Financial liabilities |
|
(133,830) |
(154,591) |
(182,152) |
|
Total liabilities |
|
(208,702) |
(239,811) |
(216,745) |
|
Net assets |
|
155,395 |
155,078 |
187,812 |
|
Equity attributable to the owners of the Parent |
|
|
|
|
|
Called up share capital |
8 |
13,282 |
13,290 |
13,290 |
|
Share premium account |
|
200 |
200 |
200 |
|
Capital redemption reserve |
|
567 |
559 |
559 |
|
Revaluation reserve |
|
500 |
500 |
- |
|
Retained earnings |
|
140,846 |
140,529 |
173,763 |
|
Total equity |
|
155,395 |
155,078 |
187,812 |
|
Net asset value per share |
10 |
292p |
292p |
353p |
Consolidated statement of Changes in Equity
as at 30 June 2021
|
|
Share capital |
Share premium account |
Capital redemption reserve |
Revaluation reserve |
Retained earnings |
Total equity |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Balance at 30 June 2019 - restated |
13,290 |
200 |
559 |
- |
173,763 |
187,812 |
|
Comprehensive income for the year |
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
(24,124) |
(24,124) |
|
Other comprehensive income |
- |
- |
- |
- |
(2,363) |
(2,363) |
|
Transfer |
- |
- |
- |
500 |
(500) |
- |
|
Total comprehensive income for the year |
- |
- |
- |
500 |
(26,987) |
(26,487) |
|
Contributions by and distributions to owners |
|
|
|
|
|
|
|
Final dividend relating to the year ended 30 June 2019 |
- |
- |
- |
- |
(4,519) |
(4,519) |
|
Interim dividend relating to the year ended 30 June 2020 |
- |
- |
- |
- |
(1,728) |
(1,728) |
|
Balance at 30 June 2020 - restated |
13,290 |
200 |
559 |
500 |
140,529 |
155,078 |
|
Comprehensive income for the year |
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
(576) |
(576) |
|
Other comprehensive income |
- |
- |
- |
- |
2,795 |
2,795 |
|
Total comprehensive loss for the year |
- |
- |
- |
- |
2,219 |
2,219 |
|
Contributions by and distributions to owners |
|
|
|
|
|
|
|
Arising on purchase and cancellation of own shares |
(8) |
- |
8 |
- |
(42) |
(42) |
|
Final dividend relating to the year ended 30 June 2020 |
- |
- |
- |
- |
(930) |
(930) |
|
Interim dividend relating to the year ended 30 June 2021 |
- |
- |
- |
- |
(930) |
(930) |
|
Balance at 30 June 2021 |
13,282 |
200 |
567 |
500 |
140,846 |
155,395 |
Consolidated cash flow statement
for the year ended 30 June 2021
|
|
|
2021 |
|
2020
|
||
|
|
Notes |
£000 |
£000 |
|
£000 |
£000 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
Cash generated from operations |
9 |
4,644 |
|
|
14,433 |
|
|
Interest paid |
|
(6,920) |
|
|
(7,648) |
|
|
Net cash (absorbed by)/generated from operating activities |
|
|
(2,276) |
|
|
6,785 |
|
Cash flows from investing activities |
|
|
|
|
|
|
|
Purchase and construction of investment properties |
|
- |
|
|
(1,610) |
|
|
Refurbishment of investment properties |
|
(2,637) |
|
|
(5,442) |
|
|
Payments for leasehold property improvements |
|
- |
|
|
(25) |
|
|
Purchases of fixtures, equipment and motor vehicles |
|
(198) |
|
|
(93) |
|
|
Proceeds from sale of investment properties |
|
48,049 |
|
|
2,494 |
|
|
Payments for business acquisitions |
|
(874) |
|
|
- |
|
|
Payments for acquisition of non-listed investments |
|
(258) |
|
|
(146) |
|
|
Repayment of loans from joint ventures |
|
- |
|
|
86 |
|
|
Net cash generated from/(used in) investing activities |
|
|
44,082 |
|
|
(4,736) |
|
Cash flows from financing activities |
|
|
|
|
|
|
|
Proceeds from non-current borrowings |
|
4,000 |
|
|
8,000 |
|
|
Repayment of non-current borrowings |
|
(44,091) |
|
|
- |
|
|
Principal element of lease payments |
|
(1,659) |
|
|
(1,650) |
|
|
Dividends paid to shareholders |
|
(1,860) |
|
|
(6,247) |
|
|
Net cash generated from/(used in) financing activities |
|
|
(43,610) |
|
|
103 |
|
Net (decrease)/increase in cash and cash equivalents |
|
|
(1,804) |
|
|
2,152 |
|
Cash and cash equivalents at beginning of the year |
|
|
2,361 |
|
|
209 |
|
Cash and cash equivalents at end of the year |
|
|
557 |
|
|
2,361 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the year end are comprised of the following: |
|
|
|
|||
|
|
|
|
|
|
|
|
|
Cash balances |
|
|
21,670 |
|
|
12,643 |
|
Overdrawn balance |
|
|
(21,113) |
|
|
(10,282) |
|
|
|
|
557 |
|
|
2,361 |
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
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|||
|
|
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|
|||
Audited preliminary results announcements
The financial information for the year ended 30 June 2021 and the year ended 30 June 2020 does not constitute the company's statutory accounts for those years.
Statutory accounts for the year ended 30 June 2020 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 30 June 2021 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
The auditors' reports on the accounts for 30 June 2021 and 30 June 2020 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006 .
1. Segmental information
|
Segmental assets |
2021 |
2020 Restated |
|
|
£000 |
£000 |
|
Property rental |
275,661 |
306,407 |
|
Car park activities |
79,658 |
79,852 |
|
Hotel operations |
8,778 |
8,630 |
|
|
364,097 |
394,889 |
|
Segmental results |
2021 |
|
2020 Restated |
|||||||
|
|
Property |
Car park |
Hotel |
|
|
Property |
Car park |
Hotel |
|
|
|
|
rental |
activities |
operations |
Total |
|
rental |
activities |
operations |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
|
£000 |
£000 |
£000 |
£000 |
|
|
Gross revenue (excl. service charge income) |
11,358 |
6,719 |
626 |
18,703 |
|
15,875 |
10,198 |
1,916 |
27,989 |
|
|
Service charge income |
2,726 |
- |
- |
2,726 |
|
2,803 |
- |
- |
2,803 |
|
|
Gross revenue |
14,084 |
6,719 |
626 |
21,429 |
|
18,678 |
10,198 |
1,916 |
30,792 |
|
|
Release of provision/ (provision for) impairment of debtors |
788 |
- |
- |
788 |
|
(1,478) |
- |
- |
(1,478) |
|
|
Service charge expenses |
(3,656) |
- |
- |
(3,656) |
|
(4,011) |
- |
- |
(4,011) |
|
|
Property expenses |
(1,020) |
(5,666) |
(803) |
(7,489) |
|
(1,495) |
(6,396) |
(1,779) |
(9,670) |
|
|
Net revenue/(costs) |
10,196 |
1,053 |
(177) |
11,072 |
|
11,694 |
3,802 |
137 |
15,633 |
|
|
Administrative expenses |
(4,687) |
(898) |
- |
(5,585) |
|
(5,086) |
(1,111) |
- |
(6,197) |
|
|
Other income |
1,989 |
- |
- |
1,989 |
|
1,218 |
- |
- |
1,218 |
|
|
Other expenses |
- |
- |
- |
- |
|
(777) |
- |
- |
(777) |
|
|
Share of post-tax profits from joint ventures |
973 |
- |
- |
973 |
|
800 |
- |
- |
800 |
|
|
Operating profit/(loss) before valuation movements |
8,471 |
155 |
(177) |
8,449 |
|
7,849 |
2,691 |
137 |
10,677 |
|
|
Valuation movement on investment properties |
63 |
- |
- |
63 |
|
(26,024) |
- |
- |
(26,024) |
|
|
Impairment of car parking assets |
- |
(111) |
- |
(111) |
|
- |
414 |
- |
414 |
|
|
(Loss)/profit on disposal of investment properties |
(2,320) |
- |
- |
(2,320) |
|
168 |
- |
- |
168 |
|
|
Valuation movement on joint venture properties |
1,488 |
- |
- |
1,488 |
|
(350) |
- |
- |
(350) |
|
|
Operating profit/(loss) |
7,702 |
44 |
(177) |
7,569 |
|
(18,357) |
3,105 |
137 |
(15,115) |
|
|
Finance costs |
|
|
|
(8,145) |
|
|
|
|
(9,009) |
|
|
Loss before taxation |
|
|
|
(576) |
|
|
|
|
(24,124) |
|
|
Taxation |
|
|
|
- |
|
|
|
|
- |
|
|
Loss for the year |
|
|
|
(576) |
|
|
|
|
(24,124) |
|
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 year ended 30 June 2021, arising from car park operations , was £1,005,000. After allowing for an allocation of administrative expenses, the operating profit at these sites was £646,000.
Revenue received within the car park and hotel segments is the only revenue recognised on a contract basis under IFRS 15. All other revenue within the Property segment comes from rental lease agreements.
|
2. Administrative expenses |
|
|
|
|
2021 |
2020 |
|
|
£000 |
£000 |
|
Employee benefits |
3,444 |
3,893 |
|
Depreciation |
163 |
227 |
|
Charitable donations |
7 |
49 |
|
Other |
1,971 |
2,028 |
|
|
5,585 |
6,197 |
Depreciation charged to the Consolidated Income Statement as an administrative expense relates to depreciation on central office equipment, including fixtures and fittings, computer equipment and motor vehicles. Depreciation on operational equipment and right of use assets within both the car park and hotel businesses are charged as direct property expenses within the Consolidated Income Statement.
|
3. Other income and expenses |
|
|
|
|
2021 |
2020 |
|
|
£000 |
£000 |
|
Commission received |
166 |
172 |
|
Dividends received |
34 |
33 |
|
Management fees receivable |
245 |
245 |
|
Dilapidations receipts and income relating to surrender premiums |
1,103 |
715 |
|
Other |
441 |
53 |
|
|
1,989 |
1,218 |
Other expenses
During the prior year a provision of £777,000 was recognised in relation to costs incurred on a project that may not be recoverable. Costs had been incurred over a number of years on the planned George Street aparthotel joint venture however there was some doubt over the future viability of the project, therefore a full provision was recognised against the costs incurred to date.
4. Earnings per share (EPS)
| ||||||
The calculation of basic earnings per share has been based on the profit for the period, divided by the weighted average number of shares in issue. The weighted average number of shares in issue during the period was 53,161,950 (2020: 53,161,950).
| ||||||
| 2021 |
| 2020 Restated | |||
|
|
| Earnings |
|
| Earnings |
|
| Earnings | per share |
| Earnings | per share |
|
| £000 | p |
| £000 | p |
Loss for the year and earnings per share |
| (576) | (1.1) |
| (24,124) | (45.4) |
Valuation movement on investment properties |
| (63) | (0.1) |
| 26,024 | 49.0 |
Impairment of car parking assets |
| 111 | 0.2 |
| (414) | (0.8) |
Valuation movement on properties held in joint ventures |
| (1,488) | (2.8) |
| 350 | 0.6 |
Profit/loss on disposal of investment and development properties |
| 2,320 | 4.4 |
| (168) | (0.3) |
EPRA earnings and earnings per share |
| 304 | 0.6 |
| 1,668 | 3.1 |
There is no difference between basic and diluted earnings per share.
There is no difference between basic and diluted EPRA earnings per share.
5. Dividends |
|
|
| 2021 | 2020 |
| £000 | £000 |
2019 final paid: 8.50p per 25p share | - | 4,519 |
2020 interim paid: 3.25p per 25p share | - | 1,728 |
2020 final paid: 1.75p per share | 930 | - |
2021 interim paid: 1.75p per share | 930 | - |
| 1,860 | 6,247 |
An interim dividend in respect of the year ended 30 June 2021 of 1.75p per share was paid to shareholders on 25 June 2021. This dividend was paid entirely as a Property Income Distribution (PID).
A final dividend in respect of the year ended 30 June 2021 of 1.75p per share is proposed. This dividend, based on the shares in issue at 23 November 2021, amounts to £0.9m which has not been reflected in these accounts and will be paid on 21 January 2022 to shareholders on the register on 30December 2021. The entire dividend will be paid as an ordinary dividend.
6. Non-current assets
|
|
|
|
|
(a) Investment properties |
|
|
|
|
| Freehold | Right of use asset | Development | Total |
| £000 | £000 | £000 | £000 |
Valuation at 30 June 2019 - restated | 239,565 | 21,284 | 36,451 | 297,300 |
Additions at cost | 1,610 | - | - | 1,610 |
IFRS 16 adjustments | - | 518 | - | 518 |
Other capital expenditure | 5,630 | - | 348 | 5,978 |
Purchase of freehold | 14,129 | (13,594) | - | 535 |
Disposals | (2,425) | - | - | (2,425) |
Transfer to assets held for sale | (23,199) | - | - | (23,199) |
Deficit on revaluation | (24,906) | (2,070) | 952 | (26,024) |
Movement in tenant lease incentives | (279) | - | - | (279) |
Valuation at 30 June 2020 - restated | 210,125 | 6,138 | 37,751 | 254,014 |
Capital expenditure | 2,146 | - | 22 | 2,168 |
Disposals | (26,319) | - | - | (26,319) |
Transfer to hotel operations | (8,630) | - | - | (8,630) |
Transfer to assets held for sale | - | (3,850) | - | (3,850) |
Valuation movement | (4,095) | 480 | 3,678 | 63 |
Movement in tenant lease incentives | 1,463 | - | - | 1,463 |
Valuation at 30 June 2021 | 174,690 | 2,768 | 41,451 | 218,909 |
At 30 June 2021, investment property valued at £213,720,000 (2020: £247,985,000) was held as security against the Group's borrowings.
Right of use investment property assets include long leasehold property interests.
(b) Freehold and leasehold properties - car park activities
| Freehold | Right to use asset | Total |
| £000 | £000 | £000 |
Valuation at 30 June 2019 - restated | 30,950 | 19,860 | 50,810 |
Additions | - | 25 | 25 |
IFRS 16 adjustment | - | 27,021 | 27,021 |
Depreciation | (285) | (1,472) | (1,757) |
(Impairment)/reversal of impairment | (15) | 429 | 414 |
Valuation at 30 June 2020 - restated | 30,650 | 45,863 | 76,513 |
IFRS 16 adjustment | - | (95) | (95) |
Depreciation | (329) | (1,476) | (1,805) |
(Impairment)/reversal of impairment | (421) | 310 | (111) |
Valuation at 30 June 2021 | 29,900 | 44,602 | 74,502 |
The historical cost of freehold properties and right of use assets relating to car park activities is £30,153,000 (2020: £30,506,000).
At 30 June 2021, freehold properties and right of use assets relating to car park activities, held as security against the Group's borrowings are held at £43,650,000 (2020: £44,450,000).
The Company occupies an office suite in part of the Merrion Centre and also at 6 Duke Street in London. The Directors do not consider this element to be material.
(c) Freehold and leasehold properties - hotel operations
| Freehold |
| £000 |
Valuation at 30 June 2020 | - |
Transfer from investment properties | 8,630 |
Valuation at 30 June 2021 | 8,630 |
At 30 June 2021, freehold and leasehold property relating to hotel operations valued at £8,630,000 was held as security against the Group's borrowings.
The Group owns and operates a hotel that has previously accounted for within Investment Property, on the basis that it was marketing the property for a letting to a hotel operator. The hotel was closed between January and April 2021 due to the Covid pandemic. Since re-opening, trading at the hotel has been strong and given there was no firm interest for a third party letting the directors have decided to continue to operate the hotel, therefore this property has been transferred to freehold and leasehold properties with effect from 30 June 2021.
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 external valuation reports for June 2020 explicitly mentioned material valuation uncertainty due to Novel Coronavirus (COVID- 19) in their portfolio valuation reports to management for certain properties within the TCS portfolios. This reference has not been considered necessary in the valuation reports for June 2021. 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 land value calculations.
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 | 1,589 | 1,947 | 23,445 | 6.4% | 7.9% |
Merrion Centre (excluding offices) | 4,630 | 4,857 | 56,654 | 7.7% | 8.1% |
Offices | 2,872 | 4,568 | 55,546 | 4.9% | 7.8% |
Hotels | 1,180 | 1,630 | 23,630 | 4.7% | 6.5% |
Out of town retail | 1,205 | 1,155 | 14,500 | 7.9% | 7.5% |
Distribution | 411 | 463 | 6,470 | 6.0% | 6.8% |
Residential | 504 | 492 | 9,175 | 5.2% | 5.1% |
| 12,391 | 15,112 | 189,420 | 6.2% | 7.5% |
Development property |
|
| 41,451 |
|
|
Car parks |
|
| 74,502 |
|
|
IFRS 16 Adjustment - Right of use assets held within investment property |
|
| 518 |
|
|
|
|
| 305,891 |
|
|
Investment properties (freehold and right of use), freehold properties (PPE), hotel operations and assets held for sale
The effect on the total valuation (excluding development property and car parks of £189.4m of applying a different yield and a different ERV would be as follows:
Valuation in the Consolidated Financial Statements at an initial yield of 7.2% - £163.1m, Valuation at 5.2% - £226.0m.
Valuation in the Consolidated Financial Statements at a reversionary yield of 8.5% - £167.2m, Valuation at 6.5% - £218.4m.
Investment properties (development properties)
The key unobservable inputs in the valuation of one of the Group's development properties of £27.4m 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 residual land value - £428.8m, 5% decrease in the residual land value - £26.0m.
The other key development property in the Group is valued on a residual 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 £29.9m 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 - £35.3m, 1% increase in the yield/discount rate - £26.0m
Property valuations can be reconciled to the carrying value of the properties in the balance sheet as follows:
|
Investment Properties |
Freehold and Leasehold Properties |
Hotel operations | Assets held for sale |
Total |
| £000 | £000 | £000 | £000 | £000 |
Externally valued by CBRE | 108,150 | 24,500 | 8,630 | 3,850 | 145,130 |
Externally valued by Jones Lang LaSalle | 110,190 | 5,400 | - | - | 115,590 |
Investment properties valued by the Directors | 51 | - | - | - | 51 |
Properties held at valuation | 218,391 | 29,900 | 8,630 | 3,850 | 260,771 |
IFRS 16 right to use assets | 518 | 44,602 | - | - | 45,120 |
| 218,909 | 74,502 | 8,630 | 3,850 | 305,891 |
Valuation of investment properties (freehold and right of use),freehold properties (PPE), hotel operations and assets held for sale at fair value
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.
Assets held for sale
As at 30 June 2021, one property with a value of £3,850,000 (2020: two properties with a total value of £23,199,000) was in the process of being sold and was therefore classified within current assets as Assets held for sale. The valuation surplus recognised through the Income Statement in relation to this property for the year ended 30 June 2021 was £230,000 (2020: deficit of £3,471,000).
|
|
| ||||
(d) Fixtures, equipment and motor vehicles |
|
|
| |||
|
| Accumulated |
| |||
| Cost | depreciation |
| |||
| £000 | £000 |
| |||
At 1 July 2019 | 4,390 | 2,781 |
| |||
Additions | 93 | - |
| |||
Depreciation | - | 589 |
| |||
At 30 June 2020 | 4,483 | 3,370 |
| |||
Net book value at 30 June 2020 |
| 1,113 |
| |||
At 1 July 2020 | 4,483 | 3,370 |
| |||
Additions | 198 | - |
| |||
On acquisition of subsidiaries | 30 | - |
| |||
Depreciation | - | 386 |
| |||
At 30 June 2021 | 4,711 | 3,756 |
| |||
Net book value at 30 June 2021 |
| 955 |
| |||
7. Investments in joint ventures
| 2021 | 2020 |
| £000 | £000 |
At the start of the year | 13,751 | 13,387 |
Repayments of loans from joint ventures | - | (86) |
Loan interest | 110 | 156 |
Valuation movement | 1,488 | (350) |
Share of profits after tax | 863 | 644 |
At the end of the year | 16,212 | 13,751 |
Investments in joint ventures are broken down as follows:
| 2021 | 2020 |
| £000 | £000 |
Equity | 10,376 | 8,452 |
Loans | 5,836 | 5,299 |
| 16,212 | 13,751 |
Investments in joint ventures primarily relate to the Group's interest in the partnership capital of Merrion House LLP and share capital of Belgravia Living Group Limited.
Also within Investments in Joint Ventures exist loan balances due from joint ventures as they are considered to form part of the net investment in the JV. Repayment of the loans is neither planned nor likely to occur in the foreseeable future. These loan balances are held at amortised cost and are assessed for impairment on an annual basis using an expected credit loss model, in accordance with IFRS 9. Where a joint venture is loss making (as was the case for Belgravia Living Group Ltd in the prior year) and the losses exceed the equity investment in the joint venture, any excess losses are allocated to the loan balance which reduces the loan receivable's carrying amount. If the joint venture becomes profitable (as is the case for Belgravia Living Group Ltd in the current year) the profits are allocated first to the loan to reverse previous losses allocated and are subsequently allocated to the equity investment.
Merrion House LLP owns a long leasehold interest over a property that is let to the Group's joint venture partner, Leeds City Council ('LCC'). The interest in the joint venture for each partner is an equal 50% share, regardless of the level of overall contributions from each partner. The investment property held within this partnership has been externally valued by CBRE at each reporting date.
The net assets of Merrion House LLP for the current and previous year are as stated below:
| 2021 | 2020 |
| £000 | £000 |
Non-current assets | 71,650 | 69,400 |
Current assets | 664 | 689 |
Current liabilities | (2,307) | (2,269) |
Non-current liabilities | (48,929) | (50,532) |
Net assets | 21,078 | 17,288 |
The profits of Merrion House LLP for the current and previous year are as stated below:
| 2021 | 2020 |
| £000 | £000 |
Revenue | 3,328 | 3,328 |
Expenses | (8) | (5) |
Finance costs | (1,780) | (1,832) |
| 1,540 | 1,491 |
Valuation movement on investment properties | 2,250 | - |
Net profit | 3,790 | 1,491 |
Belgravia Living Group Limited completed construction of a block of residential apartments in Manchester in 2019. These apartments have been let to residential tenants during the year. The Group's financial interest in this joint venture is primarily in the form of a loan with a value as at 30 June 2021 of £5.7m (2020: £5.3m).
The assets and liabilities of Belgravia Living Group for the current and previous year are as stated below:
| 2021 | 2020 |
| £000 | £000 |
Non-current assets | 22,783 | 22,923 |
Current assets | 3,168 | 3,014 |
Current liabilities | (11,286) | (11,365) |
Non-current liabilities | (14,634) | (14,725) |
Net liabilities | 31 | (153) |
The income and expenses of Belgravia Living Group Limited for the current and previous year are as stated below:
| 2021 | 2020 |
| £000 | £000 |
Revenue | 1,262 | 1,215 |
Expenses | (514) | (538) |
Finance costs | (571) | (751) |
| 177 | (74) |
Valuation movement on investment properties | 726 | (700) |
Net profit/(loss) | 903 | (774) |
The Group's interest in other joint ventures are not considered to be material. The book value of the Group's investment in Bay Sentry Limited is £nil (2020: £nil)
The joint ventures have no significant contingent liabilities to which the Group is exposed nor has the Group any significant contingent liabilities in relation to its interest in the joint ventures.
A full list of the Group's joint ventures, which are all registered in England and operate in the United Kingdom, is set out as follows:
| Beneficial Interest | Activity |
| % |
|
Merrion House LLP | 50 | Property investment |
Belgravia Living Group Limited | 50 | Property Investment |
Bay Sentry Limited | 50 | Software Development |
8. Share capital |
Authorised
The authorised share capital of the company is 164,879,000 (2020: 164,879,000) Ordinary Shares of 25p each. The nominal value of authorised share capital is £41,219,750 (2020: £41,219,750).
Issued and fully paid up
| Number of shares | Nominal value |
| 000 | £000 |
At 30 June 2020 | 53,162 | 13,290 |
Purchase and cancellation of own shares | (31) | (8) |
At 30 June 2021 | 53,131 | 13,282 |
The Company has only one type of Ordinary Share class in issue. All shares have equal entitlement to voting rights and dividend distributions.
At the year end the Company had authority to buy back for cancellation a further 7,943,377 Ordinary Shares.
9. Cash flow from operating activities |
|
|
| 2021 | 2020 Restated |
| £000 | £000 |
Loss for the financial year | (576) | (24,124) |
Adjustments for: |
|
|
Depreciation | 2,191 | 2,346 |
Amortisation | 37 | - |
Loss/(profit) on disposal of investment properties | 2,320 | (168) |
Finance costs | 8,145 | 9,009 |
Share of post tax profits from joint ventures | (2,461) | (450) |
Movement in valuation of investment properties | (63) | 26,024 |
Movement in lease incentives | (1,463) | 279 |
Impairment of/(reversal of impairment of) car parking assets | 111 | (414) |
(Increase)/decrease in receivables | (2,675) | 1,097 |
(Decrease)/increase in payables | (922) | 834 |
Cash generated from operations | 4,644 | 14,433 |
10. EPRA net asset value per share |
The Basic and EPRA net asset values are the same, as set out in the table below.
| 2021 | 2020 |
| £000 | £000 |
Net assets at 30 June | 155,395 | 155,078 |
Shares in issue (000) | 53,131 | 53,162 |
Basic and EPRA net asset value per share | 292p | 292p |
11. Restatement of prior year figures
During the year the Directors identified that a number of the Group's accounting policies were either not in compliance with the relevant accounting standard or where not applied correctly. For this reason prior year figures have been restated and the details are summarised below:
1) Classification of owner-occupied assets
The Group operates a number of car parks on freehold land owned by the Group. Under the relevant accounting standards these owner-occupied car parks are required to be classified as Property, Plant and Equipment. During the year two car parks were identified that were mis-classified as Investment Property. The prior year comparatives have been restated to:
· Re-classify investment property as Freehold and Leasehold Properties (car park activities) within the Consolidated balance sheet, the amount being £27,200,000 at 1 July 2019 and £26,900,000 at 30 June 2020.
· Recognise a depreciation charge of £285,000 within the Consolidated income statement for the year ended 30 June 2020
· Recognise an impairment of £15,000 on Freehold and Leasehold Properties within the Consolidated income statement for the year ended 30 June 2020
· Reduce the valuation movement on investment properties in the income statement by £300,000 for the year ended 30 June 2020
The adjustment has no overall effect on the total net assets of the Group at 30 June 2020 or on the Group's loss for the year ended 30 June 2020.
2) Measurement of leasehold properties (car park activities)
The group operates a number of car parks from leasehold properties (right-of-use assets). The Directors consider that the leased sites upon which these car parks are operated fall into one class of asset because they are of similar nature and use in the Group's operations. Accounting standards require right-of-use assets within the same class of assets to be measured consistently using either the cost model or the revaluation model.
In the prior year, leasehold properties were inconsistently split between two classes of assets, being long leasehold and right-of-use assets. Within these classes a mixed measurement approach was applied with two sites held at valuation and the remaining held under the cost model.
The prior year comparative figures have been restated to present all leased car park sites as right-of-use assets within note 12(B) and to consistently apply the cost model to the entire class of assets. The effect of this restatement is:
· A decrease in Freehold and leasehold properties and of £584,000 at 1 July 2019 and £546,000 at 30 June 2020
· Recognise an additional depreciation charge of £141,000 within the Consolidated income statement for the year ended 30 June 2020
· Recognise an additional reversal of impairment of £179,000 on Freehold and Leasehold Properties within the Consolidated income statement for the year ended 30 June 2020
The adjustment results in a reduction in net assets of £546,000 June 2020. The adjustment also results in a £38,000 decrease to the Group loss for the year ended 30 June 2020.
3) Disclosure of employee benefits
Company law requires the Group to disclose the total amount of employee benefits paid or payable in respect of the year. In the prior year, employee benefits were presented net of monies received under the Coronavirus Job Retention Scheme (furlough grant) and excluded some benefits payable to employees where the cost was later re-claimed via a service charge. As a result, the disclosure did not comply with the requirements of the Companies Act.
The comparatives in note 6 have been restated to provide correct information. The effect of this restatement is to increase the disclosed total employee benefits payable for the year ended 30 June 2020 by £377,000.
The adjustment has no overall effect on the total net assets of the Group at 30 June 2020 or on the Group's loss for the year ended 30 June 2020.
4) Provisions / trade and other payables
In the prior year a provision of £146,000 was recognised in relation to future anticipated repairs and maintenance costs on an Investment Property owned by the Group. The provision was presented within trade and other payables. The provision should not have been recognised as the amount relates to a future operating cost of the Group. The prior year comparatives have been restated to:
· Reduce trade and other payables within the Consolidated Balance Sheet by £146,000 at 1 June 2019 and £146,000 at 30 June 2020.
The adjustment results in an increase in net assets of £146,000 at 30 June 2020. The adjustment has no effect on the income statement for the year ended 30 June 2020.
5) Service charge income and expenses
In the prior year Consolidated income statement service charge income and service charge expenses were presented as a net amount within property expenses. The amounts should not have been presented net under the relevant accounting standards. The prior year comparatives in the consolidated income statement have been restated to present service charge income of £2,803,000 and service charge expenses of £4,011,000 as gross amounts in the year to 30 June 2020.
The adjustment has no overall effect on the total net assets of the Group at 30 June 2020 or on the Group's loss for the year ended 30 June 2020.
6) Classification of Investments
The Group owns shares in a company listed on the AIM market of the London Stock Exchange. The total value of the investment at 30 June 2020 was £3,508,000 and this was presented in the Consolidated balance sheet within current asset investments. The investment should not have been classified as current because on 30 June 2020 management did not expect to realise the asset within twelve months of the reporting date.
The Group additionally holds shares in an unlisted company which were valued at £2,656,000 at 30 June 2020. Previously this investment was presented within car park activities as a non-current investment. This investment has been re-classified outside of car park activities and presented the investment together with the Group's listed investment, the investment remains in non-current assets.
The prior year comparatives have been restated to:
· Decrease current investments in the Consolidated balance sheet by £5,871,000 at 1 July 2019 and 3,508,000 at 30 June 2020
· Decrease non-current investments (car park activities) in the Consolidated balance sheet by £2,510,000 at 1 July 2019 and £2,656,000 at 30 June 2020
· Increase non-current investments in the Consolidated balance sheet by £8,381,000 at 1 July 2019 and £6,164,000 at 30 June 2020.
The adjustment has no overall effect on the total net assets of the Group at 30 June 2020 or on the Group's loss for the year ended 30 June 2020.
The above restatements do not have any tax implications as the Group's activities are tax exempt due to its REIT status.
The impact on the Balance Sheet as at 30 June 2020 is as follows:
| 2020 Previously reported | (1) Car parking assets | (2) Leasehold properties | (4) Sinking fund provision | (6) Listed investments | 2020 Restated |
| £000 | £000 | £000 | £000 | £000 | £000 |
Non-current assets |
|
|
|
|
|
|
Property rental |
|
|
|
|
|
|
Investment properties | 280,914 | (26,900) | - | - | - | 254,014 |
Investments in joint ventures | 13,751 | - | - | - | - | 13,751 |
| 294,665 | (26,900) | - | - | - | 267,765 |
Car park activities |
|
|
|
|
|
|
Freehold and leasehold properties | 50,159 | 26,900 | (546) | - | - | 76,513 |
Goodwill and intangible assets | 4,024 | - | - | - | - | 4,024 |
Investments | 2,656 | - | - | - | (2,656) | - |
| 56,839 | 26,900 | (546) | - | (2,656) | 80,537 |
Fixtures, equipment and motor vehicles | 1,113 | - | - | - | - | 1,113 |
Investments | - | - | - | - | 6,164 | 6,164 |
Total non-current assets | 352,617 | - | (546) | - | 3,508 | 355,579 |
Current assets |
|
|
|
|
|
|
Investments | 3,508 | - | - | - | (3,508) | - |
Assets held for sale | 23,199 | - | - | - | - | 23,199 |
Trade and other receivables | 3,468 | - | - | - | - | 3,468 |
Cash and cash equivalents | 12,643 | - | - | - | - | 12,643 |
Total current assets | 42,818 | - | - | - | (3,508) | 39,310 |
Total assets | 395,435 | - | (546) | - | - | 394,889 |
Current liabilities |
|
|
|
|
|
|
Trade and other payables | (23,382) | - | - | 146 | - | (23,236) |
Financial liabilities | (61,984) | - | - | - | - | (61,984) |
Total current liabilities | (85,366) | - | - | 146 | - | (85,220) |
Non-current liabilities |
|
|
|
|
|
|
Financial liabilities | (154,591) | - | - | - | - | (154,591) |
Total liabilities | (239,957) | - | - | 146 | - | (239,811) |
Net assets | 155,478 | - | (546) | 146 | - | 155,078 |
Equity attributable to the owners of the Parent |
|
|
|
|
|
|
Called up share capital | 13,290 | - | - | - | - | 13,290 |
Share premium account | 200 | - | - | - | - | 200 |
Capital redemption reserve | 559 | - | - | - | - | 559 |
Revaluation reserve | 750 | - | (250) | - | - | 500 |
Retained earnings | 140,679 | - | (296) | 146 | - | 140,529 |
Total equity | 155,478 | - | (546) | 146 | - | 155,078 |
The impact on the Balance Sheet as at 30 June 2019 is as follows:
| 2019 Previously reported | (1) Car parking assets | (2) Leasehold properties | (3) Sinking fund provision | (4) Listed investments | 2019 Restated |
| £000 | £000 | £000 | £000 | £000 | £000 |
Non-current assets |
|
|
|
|
|
|
Property rental |
|
|
|
|
|
|
Investment properties | 324,500 | (27,200) | - | - | - | 297,300 |
Investments in joint ventures | 13,387 | - | - | - | - | 13,387 |
| 337,887 | (27,200) | - | - | - | 310,687 |
Car park activities |
|
|
|
|
|
|
Freehold and leasehold properties | 24,194 | 27,200 | (584) | - | - | 50,810 |
Goodwill and intangible assets | 4,024 | - | - | - | - | 4,024 |
Investments | 2,510 | - | - | - | (2,510) | - |
| 30,728 | 27,200 | (584) | - | (2,510) | 54,834 |
Fixtures, equipment and motor vehicles | 1,609 | - | - | - | - | 1,609 |
Investments | - | - | - | - | 8,381 | 8,381 |
Total non-current assets | 370,224 | - | (584) | - | 5,871 | 375,511 |
Current assets |
|
|
|
|
|
|
Investments | 5,871 | - | - | - | (5,871) | - |
Assets held for sale | - | - | - | - | - | - |
Trade and other receivables | 5,354 | - | - | - | - | 5,354 |
Cash and cash equivalents | 23,692 | - | - | - | - | 23,692 |
Total current assets | 34,917 | - | - | - | (5,871) | 29,046 |
Total assets | 405,141 | - | (584) | - | - | 404,557 |
Current liabilities |
|
|
|
|
|
|
Trade and other payables | (34,739) | - | - | 146 | - | (34,593) |
Financial liabilities | - | - | - | - | - | - |
Total current liabilities | (34,739) | - | - | 146 | - | (34,593) |
Non-current liabilities |
|
|
|
|
|
|
Financial liabilities | (182,152) | - | - | - | - | (182,152) |
Total liabilities | (216,891) | - | - | 146 | - | (216,745) |
Net assets | 188,250 | - | (584) | 146 | - | 187,812 |
Equity attributable to the owners of the Parent |
|
|
|
|
|
|
Called up share capital | 13,290 | - | - | - | - | 13,290 |
Share premium account | 200 | - | - | - | - | 200 |
Capital redemption reserve | 559 | - | - | - | - | 559 |
Revaluation reserve | 250 | - | (250) | - | - | - |
Retained earnings | 173,951 | - | (334) | 146 | - | 173,763 |
Total equity | 188,250 | - | (584) | 146 | - | 187,812 |
The impact on the income statement is as follows:
| 2020 Previously reported | (1) Car parking assets
| (2) Leasehold properties | 2020 Restated |
| £000 | £000 | £000 | £000 |
Gross revenue | 27,989 | - | - | 27,989 |
Provision for impairment of debtors | (1,478) | - | - | (1,478) |
Service charge income | 2,803 | - | - | 2,803 |
Service charge expenses | (4,011) | - | - | (4,011) |
Property expenses | (9,244) | (285) | (141) | (9,670) |
Net revenue | 16,059 | (285) | (141) | 15,633 |
Administrative expenses | (6,197) | - | - | (6,197) |
Other income | 1,218 | - | - | 1,218 |
Other expenses | (777) | - | - | (777) |
Valuation movement on investment properties | (26,324) | 300 | - | (26,024) |
Impairment of car parking assets | 250 | (15) | 179 | 414 |
Profit on disposal of investment properties | 168 | - | - | 168 |
Share of post-tax profits from joint ventures | 450 | - | - | 450 |
Operating loss | (15,153) | - | 38 | (15,115) |
Finance costs | (9,009) | - | - | (9,009) |
Loss before taxation | (24,162) | - | 38 | (24,124) |
Taxation | - | - | - | - |
Loss for the year attributable to owners of the Parent | (24,162) | - | 38 | (24,124) |
The impact on the cash flow statement is as follows:
| 2020 Previously reported | (1) Car parking assets
| (2) Leasehold properties |
2020 Restated |
| £000 | £000 | £000 | £000 |
Loss for the financial year | (24,162) | - | 38 | (24,124) |
Adjustments for: |
|
|
|
|
Depreciation | 1,920 | 285 | 141 | 2,346 |
Profit on disposal of investment properties | (168) | - | - | (168) |
Finance costs | 9,009 | - | - | 9,009 |
Share of post tax profits from joint ventures | (450) | - | - | (450) |
Movement in valuation of investment and development properties | 26,324 | (300) | - | 26,024 |
Movement in lease incentives | 279 | - | - | 279 |
Impairment of car parking assets | (250) | 15 | (179) | (414) |
Decrease in receivables | 1,097 | - | - | 1,097 |
Increase in payables | 834 | - | - | 834 |
Cash generated from operations | 14,433 | - | - | 14,433 |
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