Final Results

RNS Number : 3085Z

Town Centre Securities PLC

17 September 2015

 

For immediate release

Thursday 17 September 2015

TOWN CENTRE SECURITIES PLC

Final results for the year ended 30 June 2015

STRONG RETURNS DELIVERED THROUGH INTENSIVE ASSET MANAGEMENT

Town Centre Securities PLC ("TCS"), the Leeds based property investment and car parking company, today announces its audited final results for the year ended 30 June 2015.

Financial highlights

·     Net assets per share up 11.7% at 344p (2014: 308p)

·     Dividend 1.16 times covered, total dividend per share 10.44p (2014: 10.44p); proposed final dividend unchanged at 7.34p (2014: 7.34p)

·     Statutory profit before tax of £24.0m (2014: £27.4m) and statutory earnings per share of 45.1p (2014: 51.6p)

·     Underlying profit before tax* of £6.5m (2014: £7.6m) following planned disposals as part of capital recycling programme

·     Underlying earnings per share* of 12.1p (2014: 14.4p)

·     Total shareholder return of 19.1% (2014: 49.3%) and total property return of 12.2% (2014: 14.1%)

·     New £35m bank facility agreed at 50bp reduction in margin

*Excluding valuation movement and property disposal profits

Operating Performance

·     Total property return of 12.2% (2014: 14.1%) has out-performed IPD in all comparable categories

·     Like for like passing rent up 2.5% to £18.3m

·     Estimated Rental Value ('ERV') up 8% to £21.6m mainly due to Merrion House deal and acquisitions

·     Like for like ERV up 2.8%

·     Like for like property valuation increase of 7.1% (2014: 10.0%); initial yield of 5.8% (2014: 6.7%) and reversionary yield of 6.8% (2014: 7.4%)

·     Occupancy remains high at 96% (2014: 97%)

Operational highlights

·     Active capital recycling through

o  Sales of properties at Apperley Bridge and Victoria Gate for total consideration of £9.7m, exit yield 3.3%

o  Four property acquisitions at a net initial yield of 5.1% for a total cost of £11.3m

o  Sale of Goodramgate, York for £3.55m completed in August 2015, exit yield 6.24%

·     Good progress with Merrion Centre enhancements

o  Morrisons re-fit and extension nearing completion, trading well

o  Merrion House 50/50 JV with Leeds City Council now established and property transferred

o  Merrion Hotel Franchise agreements signed with Ibis Styles and Marco Pierre White

o  Arena Quarter now 80% let

·     Waitrose, Milngavie development completed and open for trading with £3.3m development surplus

·     Completed the redevelopment of Albion Place, Leeds replacing Austin Reed with a Sainsbury's store

·     Marketing a 91 unit residential scheme in Piccadilly basin, Manchester

·     Purchased, refurbished and let a retail/office investment in Duke Street, London

·     Added five new branches to our Citipark car parking portfolio, increasing total spaces by 81% to 5,200

·     Two new Non-executive Directors, Ian Marcus and Paul Huberman appointed 1 January 2015 and Ben Ziff appointed 17 September 2015

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

"Retail valuations have continued to rise in the regions and we expect this to continue as the economic backdrop continues to improve. The letting market remains competitive but we continue to find opportunities to increase income in all areas of our portfolio and over the next couple of years our income will benefit from the transactions we have already concluded. This is particularly so in the Merrion Centre where the Merrion House deal is now underway. We intend to increase portfolio sales and purchase activity this year.

We will continue our car park acquisitions programme as we have already seen this contributing positively to our profits.

We will also complete our bank facility renewal; the banking panel has improved and we expect to achieve a reduced margin and subsequent reduction in average borrowing cost.

Overall we look forward with confidence and are encouraged by the many profitable opportunities that we have to deliver attractive shareholder returns".

For further information, please contact:

Town Centre Securities PLC                                        www.tcs-plc.com

Edward Ziff, Chairman and Chief Executive         0113 222 1234

Duncan Syers, Finance Director

MHP Communications 

Reg Hoare / Gina Bell                                                     020 3128 8100

Chairman and Chief Executive's Statement

We have had another good year with Total Shareholder Return of 19% and our property portfolio has produced a Total Property Return of 12% which has out-performed IPD in all comparable categories

Portfolio performance

The like for like increase in the value of our investment property portfolio this year has been 7.1% (2014: 10%) which reflects a reversionary yield of 6.8% (2014: 7.4%). The total property return of 12.2% is ahead of IPD with excellent performances from the completed Waitrose development at Milngavie, Glasgow and Merrion House which was transferred into a JV with Leeds City Council in May 2015.

Including acquisitions, developments, joint ventures and leasehold car parks the portfolio value at the year end stood at £355.4m (2014: £326.8m).

Results

Net assets at 30 June 2015 were £182.9m, representing 344 pence per share (2014: £163.9m, 308 pence per share).  Adjusted net asset value was £183.0m, representing 344 pence per share (2014: £170.4m, 320 pence per share) reflecting the fact that long term interest rates are in line with the coupon on our Debenture Stock.

We report a statutory profit for the year of £24.0m (2014:  £27.4m) which includes the property revaluation surplus of £14.8m this year (2014 £19.8m). 

Our underlying profit before tax of £6.5m (2014: £7.6m) (excluding property revaluation and property disposals) is in line with expectations but behind last year due to planned disposals as part of our capital recycling programme.  The car park business was ahead of the prior year on a like for like basis.

Statutory earnings per share (including property revaluation and property disposals) were 45.1p (2014: 51.6p). Underlying earnings per share were 12.1p (2014: 14.4p). 

Dividend

The Board is recommending a final dividend of 7.34 pence per share, which, together with the interim dividend of 3.1 pence per share, provides an unchanged total dividend of 10.44 pence per share.  The final dividend comprises a Property Income Distribution of 2.16 pence and an ordinary dividend of 5.18 pence per share.  The final dividend will be paid on 5 January 2016 to shareholders on the register on 4 December 2015.

Funding

Net debt at 30 June 2015 amounted to £174.6m (2014: £160.5m).  This comprised £106.1m of 5.375% First Mortgage Debenture Stock 2031 and £70.0m of revolving credit facilities, net of £1.5m cash.  The increase in the level of net debt is principally due to capital expenditure (£37.6m) exceeding property disposal proceeds (£26.8m). Borrowings represent 49% of property values (2014: 49%).

The group is in the process of renewing its bank facilities. We have completed the renewal of our 3 year revolving credit facility with Handelsbanken increasing the facility from £20m to £35m and reducing the average margin by over 50 basis points. We shall renew the other bank facilities over the next few months.

Capital recycling

A key part of our property strategy is continually to refresh the portfolio through a combination of selective sales of properties where we can no longer add value and purchases of properties which give opportunities to grow income and value.

As part of this process in 2013/14 we sold five properties in Scotland for £8.9m. The income from these properties was £512,000 in 2013/14. We also sold Park Row, Leeds for £7.5m at the beginning of this year with income of £630,000. While the recycling programme continues to refresh and improve the portfolio these disposals have reduced income by £1.14m with an associated interest benefit of £400,000.

Our capital recycling in 2014/15 has been as follows:

·     Purchased Duke Street, London for £3.1m, rental value £196,700

·     Purchased Princes Street, Edinburgh for £2.4m, income £147,500

·     Purchased Wood Green, London for £1.3m, income £72,000

·     Purchased an industrial park in Stourton, Leeds for £4.5m, income £325,000

·     Sold Apperley Bridge, Leeds for £5.0m, income £121,000

·     Sold our interest in the Victoria Gate development in Leeds for £4.7m, income £200,000

The full year income gain from these transactions is £420,000 while the net interest increase is only £40,000.

We also agreed terms to sell Goodramgate, York in June 2015 with completion in August 2015; we received £3.55m and the exit yield was 6.24%.

Active property management

This is the time of year when we look back and review what we have achieved; the range and scope of our management activities is illustrated in the following pages. Our focus is on finding and generating income growth against a backdrop of a competitive retail rental market. Set out below is a summary of the projects we have been working on over the last couple of years which in total have added over £20m to net assets.

Merrion Centre

Arena Quarter

This redevelopment began with the Pure Gym letting in 2012, 20,600 sq ft at £8.50 psf.

Building work on all units created a total of 80,700 sq ft of retail space and was completed in 2014 at a cost of £5.6m. It is currently 80% let with a total rental value of £831,600. The current valuation is £8.1m which has therefore added £2.5m to net assets.

During the year we took a surrender of a lease to restaurant operator Cosmo as the tenant was unable to fit out; we received £150,000 in respect of the surrender, the existing lease was at £12.61 psf and we have been letting recently at £20 psf. This unit, along with all the remaining units in the scheme, is being actively marketed.

Morrisons

We completed a surrender and lease renewal with Morrisons in June 2014 which added 20% to their floorspace and £500,000 to rental income. The fit out is well underway and has already had a beneficial impact on the main mall. This deal alone added £5m to net assets.

Main mall

We continue to improve the tenant line up and rental income in what remains a competitive retail market. Demand is strong for the main mall units and where units come available they let quickly. The tenant mix remains strong with a number of new lettings, renewals, re-locations and reviews including Superdrug, Ethel Austin, Holland & Barrett, 3store, O2, Peacocks, Claires Accessories, Greggs, Poundworld and Home Bargains and we have increased the rental income and the average lease length during the year.

NHS clinic

This letting uses space which was previously used as the centre management office, along with balcony units and office space which were difficult to let with a low rental value. This 5,543 sq ft letting is to a NHS funded clinic at £100,000 pa and has already generated demand for the other balcony units in complementary uses. This refurbishment has also allowed us to create a block of kiosk units with a rental value of £55,000 pa.

Merrion Hotel

The Merrion Centre Hotel is currently vacant and we have now signed management contracts and franchise agreements with Ibis Styles (3 star) and Marco Pierre White restaurants to create a 134 bed hotel and 4,000 sq ft restaurant. The estimated build cost is £7.5m and is expected to generate an initial profit of £600,000 rising to £1m over five years. The start on site will be Autumn 2015 subject to finalising the detailed planning permission. This provides an excellent return on the investment for space that has been vacant for over two years.

Merrion House

The Merrion House redevelopment has now entered the contractual stage; the property was transferred into a 50/50 joint venture with Leeds City Council in May 2015. The book value of property was £25m and had rental income of £1.4m pa. The redevelopment will add 50,000 sq ft of state of the art office space and refit the existing 120,000 sq ft; the total cost estimate is £31m with £28m funded by sale of the 50% stake to Leeds City Council. The completed redevelopment has an expected value of £70m (we have a 50% share) and will generate total income of £3.3m pa (indexed in line with CPI) from a new 25 year lease to Leeds City Council.

Other properties

Whitehall Riverside, Leeds

This area is rapidly becoming the prime office location in Leeds with three substantially speculative office buildings under construction on the sites adjoining Whitehall Riverside. There is an established demand for grade A space at £28 psf and we are currently marketing for pre-let on our site a 170,000 sq ft office building and we are also in detailed negotiations regarding a 128 bedroom hotel. The masterplan also includes a 500 space multi-storey car park along with a further 150,000 sq ft of offices.

Albion Place, Leeds

This deal is typical of the way we continue to generate increases in value in a competitive retail market; we took surrender of a short lease to Austin Reed, pre-let 5,125 sq ft to Sainsburys for 15 years at £157,500 pa and have also configured the building to allow for a future residential development of 3,886 sq ft. The resultant revaluation gain was £800,000 less the cost of works of £200,000.

Vicar Lane, Leeds

Our property forms one side of the main entrance to the Victoria Gate development which includes a John Lewis store and associated retail/leisure units with a total of 450,000 sq ft of new space scheduled to open in autumn 2016. Our property is let to a number of tenants including Flannels and High & Mighty. We have benefitted from an increase in value due to its proximity to the scheme and we propose to further capitalise on this by reconfiguring the unit to maximise rental value.

Apperley Bridge, Bradford

The former Barratts head office was purchased in July 2012 for £2.4m. A total of £600,000 was spent on demolition and site preparation and achieving a residential planning consent. The site was sold unconditionally for £5m in December 2014.

Urban Exchange, Manchester

This retail warehouse unit comprises 160,000 sq ft of space on two levels plus a basement. It became vacant in 2008 and since then we have worked to rebuild value through lettings to Aldi, M&S, Pure Gym and Go Outdoors.  These lettings were on turnover and stepped rents and the growth over the last five years has been 400%.

Piccadilly Basin, Manchester

The planning agenda on the Northern side of our five acre site has changed over the last year and there is a move towards residential development in this part of Manchester. We have refocused the master plan which now includes capacity for 850 apartments with a potential end value of over £240m. As part of this plan we have detailed consent for 91 canal-side units and we are finalising a pre-sale agreement.

The remaining site is zoned for commercial development and includes space for a 750 space multi-storey car park. The site continues to trade successfully as a surface car park along with the existing MSCP at Tariff Street.

Empire House, Glasgow

This actively managed property comprises nine shop units on Sauchiehall Street and four floors of multi-let offices above. We have obtained change of use for one unit this year from shop to restaurant, let the unit to Bella Italia and increased the rent by £65,000 pa.

Shandwick Place, Edinburgh

This is a substantial block of mixed retail and office space at the end of Princes Street in Edinburgh. We recently concluded a deal with Ask restaurants; we obtained possession from two former tenants, put two units together and let to Ask at £150,000 pa, an increase of £70,000 pa on previous rent. The valuation has increased by £1.1m while the cost of works was £400,000. Overall the income from this block is up £246,000 on last year.

Waitrose Milngavie, Glasgow

The land for this development adjoins our existing ownership of the Homebase in Milngavie. We acquired the land for £3m and construction costs were £7m to create a 36,000 sq ft store let to Waitrose under a 25 year lease at an initial rent of £644,000 pa; the year end valuation was £13.3m.

Duke Street, London

We completed the acquisition of this property in July 2014 at a cost of £3.1m from an LPA receiver. Although not fully occupied there were two existing leases with a total rent of £90,000 pa. We negotiated the surrender of the leases, completely refurbished the interior and exterior and at the same time regularised the legal and planning status of the ownership.  The ground, first floor and basement is now let to Titan Black at a rent of £122,000 pa and we have occupied the second and third floor offices which have a combined rental value of £60,000 pa. The total refurbishment cost was £350,000 and it is valued at the year end at £4.25m.

Car parking

We have been extremely active in the car park business as well. Following the acquisition of the Ilford multi-storey last June we have added five new sites to our portfolio in London and Watford; bringing the total to 5,200 spaces. These acquisitions all comprise leasehold sites and we have also negotiated lease extensions with the landlords. These operations are currently being fitted out in CitiPark branding and will generate turnover of approximately £10m in 2015/16.

Our cloud based management system has been installed in Ilford and Manchester with further installations currently underway at our Central London and Watford branches. Our Engine Room (central control room) became fully operational in August this year and we are now able to deal with all day to day operational matters remotely. This will allow us to rationalise staff levels at our branches.

The rebranding of the business to CitiPark was successfully completed during the year. All our branches will have a consistent brand and it will apply to surface and multi-storey operations. The rebrand will help give a clear modern identity and will emphasise the message that the business is at the forefront of technology and customer service. We are confident that the rebrand will increase our customer base and give the branches a cleaner look and feel.

Outlook

Retail valuations have continued to rise in the regions as the economic backdrop improves. The letting market remains competitive but we continue to find opportunities to increase income in all areas of our portfolio and over the next couple of years our income will benefit from the transactions we have already concluded. This is particularly so in the Merrion Centre where the Merrion House deal is now underway. We intend to increase portfolio sales and purchase activity this year.

We will continue our car park acquisitions programme as we have already seen this contributing positively to our profits.

We shall also complete our bank facility renewal; the banking panel has improved and we expect to achieve a reduced margin and subsequent reduction in average borrowing cost.

Overall we look forward with confidence and are encouraged by the many profitable opportunities that we have to deliver attractive shareholder returns.

Board changes

During the year we have appointed two new non-executive directors, Ian Marcus and Paul Huberman, and Howard Stanton has retired. We appointed Ben Ziff to the Board on 17 September 2015; he is the Managing Director of CitiPark.

Ian and Paul bring immense experience and expertise in the finance and property sector which will be invaluable to us in years to come. Ben has been extremely successful with the development of the car park business which is becoming an increasingly important part of the group and his appointment is well-deserved.

I would like to pay tribute to Howard Stanton. Howard joined us in April 2009 when we were facing some of the most challenging financial conditions the market has known and he has been a continuing support through those difficult times. He played a major role in the tender offer and exchange of our mortgage debenture which has been one of the most significant deals for the success of the group over the last 10 years. He has chaired our audit committee throughout his six year term and has done an excellent job with our finance team and our auditors. Finally and most importantly I would like to thank Howard for his personal support in steering the group through the last six turbulent years.

As ever I would also like to thank our loyal and dedicated staff for their commitment and support over the last 12 months.

Edward Ziff

Chairman and Chief Executive

17 September 2015

 

Detailed Portfolio Performance

The value of our investment property portfolio including acquisitions, developments, joint ventures, leasehold car parks and assets held for sale now stands at £355.4m with a gross income of £19.8m and an occupancy rate, based upon income (rather than square footage), of 96%.  The external valuation of our investment portfolio as at 30 June 2015 on a like for like basis showed an increase of 7.1% (2014: 10.0%) and reflects an initial yield of 5.8% (2014: 6.4%) and a reversionary yield of 6.8% (2014: 7.4%).

The investment property portfolio has out-performed IPD in all comparable categories.

Total property returns TCS IPD Retail All 12.0% 11.3% Retail shopping centres 12.3% 12.1% Retail Warehouses 12.6% 11.1% Retail rest of UK standard shops 10.2% 9.4% Offices Rest of UK 23.5% 17.2%

The most notable gains are in Merrion House (£17.5m compared to £12.8m), Waitrose at Milngavie (£13.3m compared to total cost of £10m), the London suburban shops at 16.3% (2015 value £3.1m) and Albion Place, Leeds at 10.3% (2015 value £5.4m).

Merrion Centre has again out-performed IPD in each of the last 5 years.

Total property return
	2011	2012	2013	2014	2015
Merrion Centre	13.6%	0.4%	6.7%	16.4%	12.3%
IPD shopping centres index	8.1%	(0.5)%	(0.8)%	12.3%	12.1%

PORTFOLIO ANALYSIS

	Passing rent	ERV	Value	% of portfolio	Valuation incr/(decr)	Initial yield	Reversionary yield
	£m	£m	£m
Retail & leisure	5.1	5.7	90.1	25%	5.1%	5.4%	6.0%
Merrion Centre (excl offices)*	6.1	7.2	112.6	32%	7.1%	6.4%	7.1%
Offices	3.0	4.5	48.0	14%	11.1%	5.9%	8.8%
Out of town retail	3.4	3.5	59.7	17%	7.4%	5.4%	5.5%
Industrial	0.2	0.4	4.4	1%	-	5.0%	7.8%
Residential	0.5	0.5	9.5	3%	4.7%	4.6%	4.6%
	18.3	21.6	324.3	91%	7.1%	5.8%	6.8%
Development property (car park income)	0.9	1.4	13.5	4%	-
Car parks	0.6	1.2	17.6	5%	-5.6%
Let portfolio	19.8	24.2	355.4	100%	6.5%
Voids (4%)		0.8
		25.0

Portfolio income analysis	Passing rent		ERV
	2015	2014	2015	2014
	£m	£m	£m	£m
Merrion excluding Merrion House	7.5	7.6	8.6	8.2
Merrion House	0.7	1.4	1.7	1.4
Waitrose Milngavie	0.7	-	0.7	-
Park Row Leeds (sold July 2014)	-	0.7	-	0.7
Property acquisitions 2015	0.5	-	0.8	-
Other	8.9	8.4	9.8	9.7
	18.3	18.1	21.6	20.0

Location	Value	%
Leeds	190.9	56%
Manchester	47.2	14%
Scotland	82.3	24%
London	21.5	6%
	341.9	100%
Sector	Value	%
Retail/leisure	262.4	77%
Office	48.0	14%
Car parking	17.6	5%
Industrial	4.4	1%
Residential	9.5	3%
	341.9	100%
Development sites	13.5
	355.4
Lease Expiries	Value	%
0-5 years	5.9	33%
5+ years	6.9	37%
10+ years	5.5	30%
	18.3	100%

Consolidated income statement
for the year ended 30 June 2015
		2015	2014
	Notes	£000	£000
Gross revenue		22,714	22,633
Property expenses		(5,248)	(3,679)
Net revenue		17,466	18,954
Administrative expenses	2	(5,068)	(4,679)
Other income	3	1,451	852
Valuation movement on investment and development properties		14,791	19,805
Operating profit		28,640	34,932
Finance costs		(7,258)	(7,585)
Loss on disposal of investment properties into joint ventures		(2,488)	-
Share of post tax profits from joint ventures	7	5,109	87
Profit before taxation		24,003	27,434
Taxation		-	-
Profit for the year attributable to owners of the Parent		24,003	27,434
Earnings per ordinary share of 25p each
Basic and diluted	4	45.1p	51.6p
Underlying (non-GAAP measures)	4	12.1p	14.4p
Dividends per ordinary share
Paid during the year	5	10.44p	10.44p
Proposed	5	7.34p	7.34p
Consolidated statement of comprehensive income
for the year ended 30 June 2015
		2015	2014
		£000	£000
Profit for the year		24,003	27,434
Other comprehensive income
Revaluation gain on cash flow hedges		-	298
Revaluation gains on other investments		228	112
Total comprehensive income for the year		24,231	27,844
All recognised income for the year is attributable to owners of the Parent.

 

Consolidated balance sheet
as at 30 June 2015
		2015	2014
	Notes	£000	£000
Non-current assets
Investment properties	6	328,249	317,697
Lease premiums	6	4,311	-
Investments in joint ventures	7	19,344	1,748
Fixtures, equipment and motor vehicles	6	1,214	1,112
Unamortised tenant lease incentives		3,966	3,788
Total non-current assets		357,084	324,345
Current assets
Non-current assets held for sale		3,450	7,500
Investments		1,962	1,734
Trade and other receivables		6,871	4,705
Cash and cash equivalents		1,515	-
Total current assets		13,798	13,939
Total assets		370,882	338,284
Current liabilities
Trade and other payables		(11,857)	(13,908)
Financial liabilities - borrowings		(38,668)	(1,845)
Total current liabilities		(50,525)	(15,753)
Net current liabilities		(36,727)	(1,814)
Non-current liabilities
Financial liabilities - borrowings		(137,479)	(158,660)
Total non-current liabilities		(137,479)	(158,660)
Total liabilities		(188,004)	(174,413)
Net assets		182,878	163,871
Equity attributable to the owners of the Parent
Called up share capital	8	13,290	13,290
Share premium account		200	200
Capital redemption reserve		559	559
Retained earnings		168,829	149,822
Total equity		182,878	163,871
Net assets per share		344p	308p

Consolidated statement of changes in equity
as at 30 June 2015
	Called up share capital		Share premium account		Hedging reserve		Capital redemption reserve		Retained earnings	Total equity
	£000		£000		£000		£000		£000	£000
Balance at 1 July 2013	13,290		200		(298)		559		128,152	141,903
Profit for the year	-		-		-		-		27,434	27,434
Other comprehensive income:
- Revaluation gains on cash flow hedges	-		-		298		-		-	298
- Revaluation gains on other investments	-		-		-		-		112	112
Total comprehensive income for the year ended 30 June 2014	-		-		298		-		27,546	27,844
Final dividend relating to the year ended 30 June 2013 paid in January 2014	-		-		-		-		(3,902)	(3,902)
Interim dividend relating to the year ended 30 June 2014 paid in June 2014	-		-		-		-		(1,648)	(1,648)
Other adjustments	-		-		-		-		(326)	(326)
Balance at 30 June 2014	13,290		200		-		559		149,822	163,871
Profit for the year	-		-		-		-		24,003	24,003
Other comprehensive income:
- Revaluation gains on other investments	-		-		-		-		228	228
Total comprehensive income for the year ended 30 June 2015	-		-		-		-		24,231	24,231
Final dividend relating to the year ended 30 June 2014 paid in January 2015	-		-		-		-		(3,902)	(3,902)
Interim dividend relating to the year ended 30 June 2015 paid in June 2015	-		-		-		-		(1,648)	(1,648)
Other adjustments	-		-		-		-		326	326
Balance at 30 June 2015	13,290		200		-		559		168,829	182,878

 

Consolidated cash flow statement
for the year ended 30 June 2015
		2015			2014
	Notes	£000	£000		£000	£000
Cash flows from operating activities
Cash generated from operations	9	9,950			15,664
Interest paid		(7,759)			(7,823)
Net cash generated from operating activities			2,191			7,841
Cash flows from investing activities
Purchase and construction of investment properties		(22,132)			(4,803)
Refurbishment of investment properties		(10,602)			(8,174)
Acquisition of leasehold property		(4,311)			-
Purchases of fixtures, equipment and motor vehicles		(532)			(490)
Proceeds from sale of investment properties		16,821			8,802
Proceeds from sale of Merrion House to joint venture		10,000			-
Proceeds from sale of listed investments		-			241
Net cash used in investing activities			(10,756)			(4,424)
Cash flows from financing activities
Proceeds from non-current borrowings		17,475			676
Dividends paid to shareholders		(5,550)			(5,550)
Net cash generated from/(used in) financing activities			11,925			(4,874)
Net increase/(decrease) in cash and cash equivalents			3,360			(1,457)
Cash and cash equivalents at 1 July			(1,845)			(388)
Cash and cash equivalents at 30 June			1,515			(1,845)

1. Segmental information

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

Segment assets
		2015		2014
		£000		£000
Property rental		349,840		323,048
Car park operations		21,042		15,236
		370,882		338,284
Segmental results
	2015							2014
	Property		Car park					Property		Car park
	rental		operations		Total			rental		operations		Total
	£000		£000		£000			£000		£000		£000
Gross revenue	15,844		6,870		22,714			17,532		5,101		22,633
Property expenses	(1,558)		(3,690)		(5,248)			(1,634)		(2,045)		(3,679)
Net revenue	14,286		3,180		17,466			15,898		3,056		18,954
Administrative expenses	(4,484)		(584)		(5,068)			(4,259)		(420)		(4,679)
Other income	1,435		16		1,451			852		-		852
Property valuation movement	15,577		(786)		14,791			20,155		(350)		19,805
Operating profit	26,814		1,826		28,640			32,646		2,286		34,932
Finance Income/costs	(7,258)		-		(7,258)			(7,585)		-		(7,585)
Loss on disposal of investment properties into joint ventures	(2,488)		-		(2,488)			-		-		-
Share of post tax profits from joint ventures	5,109		-		5,109			87		-		87
Profit before taxation	22,177		1,826		24,003			25,148		2,286		27,434
Taxation charge	-		-		-			-		-		-
Profit for the year	22,177		1,826		24,003			25,148		2,286		27,434
All results are derived from the UK.

2. Administrative expenses
	2015	2014
	£000	£000
Employee benefits	3,479	3,086
Depreciation	176	203
Charitable donations	99	108
Other	1,314	1,282
	5,068	4,679

 

3. Other income
				2015							2014
				£000							£000
Commission received				110							113
Dividends received				26							26
Management fees receivable				216							259
Profit/(loss) on disposal of investment properties				236							(59)
Profit on disposal of listed investments				-							101
Dilapidations receipts and income relating to lease premiums				380							207
Other				483							205
				1,451							852
4. Underlying profit/earnings per share (EPS)
To assist shareholders in understanding the underlying results and compare to those results in previous accounting periods, adjustments made to the profit after taxation are:
	2015								2014
			Weighted							Weighted
			average							average
			number of			Earnings				number of		Earnings
	Earnings		shares			per share			Earnings	shares		per share
	£000					p			£000			p
Basic and diluted profit/EPS	24,003		53,162			45.1			27,434	53,162		51.6
Valuation surplus on investment and development properties	(14,791)		-			(27.8)			(19,805)	-		(37.2)
Valuation surplus on joint venture investment properties	(5,013)		-			(9.4)			-	-		-
Profit on disposal of investment properties	(236)		-			(0.4)			-	-		-
Loss on disposal of investment properties into joint ventures	2,488		-			4.6			-	-		-
Underlying profit/EPS	6,451		53,162			12.1			7,629	53,162		14.4
5. Dividends
		2015			2014
		£000			£000
2013 final paid: 7.34p per 25p share		-			3,902
2014 interim paid: 3.10p per 25p share		-			1,648
2014 final paid: 7.34p per 25p share		3,902			-
2015 interim paid: 3.10p per 25p share		1,648			-
		5,550			5,550

The Directors are proposing a final dividend in respect of the financial year ended 30 June 2015 of 7.34p per share, which will absorb an estimated £3,902,000 of shareholders' funds. This dividend will comprise an ordinary dividend of 5.18p per share and a Property Income distribution (PID) of 2.16p per share and will be paid on 5 January 2016 to shareholders who are on the Register of Members on 4 December 2015.

6. Non-current assets
(a) Investment properties
		Long
	Freehold	leasehold	Development	Total
	£000	£000	£000	£000
Valuation at 1 July 2014	283,218	15,921	18,558	317,697
Additions	29,038	3,468	729	33,235
Disposals	(27,319)	(1,460)	(5,245)	(34,024)
Transfer of Assets held for sale	(3,450)	-	-	(3,450)
Transfer	242	326	(568)	-
Valuation movement	14,996	(205)	-	14,791
Valuation at 30 June 2015	296,725	18,050	13,474	328,249

The fair value of the group's investment and development properties has been determined principally by independent, appropriately qualified external valuers Jones Lang LaSalle (in respect of £114,915,000 of investment properties and £3,450,000 shown in assets held for sale) and CB Richard Ellis (in respect of £199,015,000 of investment properties). The remainder of the portfolio (£14,319,000) has been valued by the Property Director.

Valuations are performed bi-annually and are performed consistently across all properties in the group's portfolio. At each reporting date appropriately qualified employees verify all significant inputs and review computational outputs. 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 been valued taking into account the income from car parking and the Property Director's assessment of their realisable value in their existing state and condition based on market evidence of comparable transactions.

The valuation of investment properties includes £0.5m (2014: £0.2m) in respect of borrowing costs capitalised during the year.

Investment properties are analysed as follows:
	2015	2014
	£000	£000
Investment property (externally valued)	313,930	289,780
Development properties	13,474	18,558
Residential property acquired for potential development	-	3,804
Other	845	5,554
	328,249	317,696

 

(b) Lease premiums £000 At 1 July 2014 - Additions 4,311 At 30 June 2015 4,311 Lease premiums comprise upfront payments upon acquisition of leasehold car parks with a term of less than 50 years. In December 2014 the group acquired a leasehold interest in a basement car park on Clipstone Street, London, in exchange for consideration of £800,000. The lease has an unexpired term of 18 years and has a passing rent of £331,000 per annum. Including professional fees and transaction costs, the total expenditure associated with this acquisition was £900,000. Subsequently, in March 2015 the group acquired the leasehold interest in a basement car park on Bell Street, London, in exchange for consideration of £3 million. The lease has an unexpired term of 24 years and has a passing rent of £197,000 per annum. Including professional fees and transaction costs the total expenditure associated with this acquisition was £3,124,000. In April 2015, the group was assigned leases for three multi-story car parks in Watford town centre. No premium was paid for the acquisition of these leases, however the group has provided a commitment to refurbish the car parks during the next financial year. Professional costs and transaction fees associated with the acquisition of these leases amounted to £287,000.

(c) Fixtures, equipment and motor vehicles
		Accumulated
	Cost	depreciation
	£000	£000
At 1 July 2014	3,771	2,659
Additions	532	-
Disposals	(160)	(32)
Depreciation	-	302
At 30 June 2015	4,143	2,929
Net book value at 30 June 2015		1,214

7. Investments in joint ventures

	2015	2014
	£000	£000
Interest in joint ventures
Opening balance	1,748	1,661
Additions	12,487	-
Share of profits after tax	5,109	87
At 30 June	19,344	1,748

The Group's share of the joint ventures' net assets are as stated below:

	2015	2014
	£000	£000
Non-current assets	19,194	1,661
Current assets	182	154
Current liabilities	(32)	(65)
Non-current liabilities	-	(2)
At 30 June	19,344	1,748

The Group's share of the joint ventures' post tax profits are as stated below:

	2015	2014
	£000	£000
Income	138	223
Expenses	(31)	(125)
Tax	(11)	(11)
	96	87
Increase in revaluation of investment properties	5,013	-
Share of post tax profits from joint ventures	5,109	87

8. Share capital
Authorised
The authorised share capital of the company is164,879,000 (2013: 164,879,000) ordinary shares of 25p each. The nominal value of authorised share capital is £41,219,750 (2013: £41,219,750).
Issued and fully paid
	Number of	Nominal
	shares	value
Ordinary shares of 25p each		£000
At 30 June 2014 and 30 June 2015	53,162	13,290

9. Cash flow from operating activities
	2015	2014
	£000	£000
Profit for the financial year	24,003	27,434
Adjustments for:
- Depreciation	302	282
- (Profit)/loss on disposal of investment properties	(236)	59
- Loss on disposal of investment properties into joint ventures	2,488	-
- Profit on disposal of listed investments	-	(140)
- Finance costs	7,258	7,585
- Share of post tax profits from joint venture	(5,109)	(87)
- Movement in valuation of investment and development properties	(14,791)	(19,805)
- Increase in receivables	(2,345)	(598)
- (Decrease)/increase in payables	(1,620)	934
Cash generated from operations	9,950	15,664

10. Adjusted net asset value per share
To assist shareholders in understanding the results, the table below shows how the adjusted net asset value was arrived at:
	2015	2014
	£000	£000
Net assets at 30 June	182,878	163,871
Less: debenture issue premium	(179)	(190)
Add: debenture mark to market after tax	305	6,737
	183,004	170,418
Shares in issue (000)	53,162	53,162
Adjusted net asset value per share	344p	320p

 

END

 

 

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