Final results for the year ended 30 June 2021

December2021

Town Centre Securities PLC today (30 Nov 2021 ) announces our audited final results for the year ended 30 June 2021.

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

To see all announcements please visit tcs-plc.co.uk/investors

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Town Centre Securities PLC (TOWN.L) 158.89 -1.11 Last updated: 28/01/2022 at 16:35