Half year results for the six months ended 31 December 2018

February2019

Town Centre Securities PLC announces its results for the six months ended 31 December 2018.

Continuing to focus on long-term growth through re-positioning portfolio and progressing development pipeline

Financial Performance
• Interim dividend held at 3.25p (2017: 3.25p)
• Net assets per share down 6% since 30 June 2018 at 361p (2017: 375p; 30 June 2018: 384p)
EPRA Earnings before tax decreased to £3.7m (2017: £4.0m), impacted by short term tenant changes and one-off costs
EPRA earnings per share at 6.9p (2017: 7.6p)
• Statutory loss before tax of £8.7m as a result of unrealised valuation movements and a loss on sale of an investment property (2017: £12.4m profit)
• Like for like portfolio decrease in value of 2.2%
• Loan to value ratio of 46.8% (2017: 47.0%; 30 June 2018: 47.5%); gearing fell to 88% (2017: 91%) following completion of the Merrion House refinancing

Operational Performance
• Robust underlying operational performance
• Overall occupancy level increased to 96% (June 2018: 95%)
• Like-for-like (LFL) passing rent up by 0.9% (FY18: 4.1%) versus a year ago, supported by the Merrion House lease to Leeds City Council
• Latest sales and purchases reduced Retail & Leisure exposure to 52%, from 70% in 2016
CitiPark grew its revenues and operating profits

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

“Our focus remains on continuing to deliver our strategy, weathering the variations in valuations and market sentiment, and continuing to build on the intrinsic strength of the business. Our sixty years of history has taught us to treat property investment as a long-term undertaking – TCS’s strength lies in our conservative management approach and our focus on long-term opportunities.

“Whilst it is disappointing to report half year valuation reductions and profits slightly down due to short term market fluctuations and some one-off costs, I remain confident in the quality and potential of our portfolio and the changes we are making to it. Our substantial development pipeline also underlines the opportunity for meaningful long-term growth. This confidence is reflected in continuing our long history of increasing or maintaining our dividend.”

Operational Highlights

TCS continues to focus on re-positioning the portfolio, and unlocking the latent potential within the sizeable development pipeline. Particular progress to be highlighted includes:

• Continued capital recycling activity increases diversity of the portfolio:
o Sale of Rochdale Central Retail Park for £13.2m
o Acquisition of The Cube, an office building with ground floor leisure, for £12.0m yielding 12.5% which diversifies income and provides future asset management opportunity
o Overall reduction in the retail and leisure proportion of the portfolio from 70% two years ago, 55% in June 2018 to 52% at the half-year end

TCS continues to invest to increase resilience and improve future income and capital values:
o Redevelopment of the former Homebase unit in Milngavie, Glasgow into two units for Aldi and Homebase is nearing completion with valuation already increasing 12.5% as a result
o Consolidation of TCS’s head office into one floor of Town Centre House to provide further letting opportunity for PureGym

TCS has been quick to replace tenants impacted by the recent spate of retail CVAs and administrations and improve income:
o Eight CVAs / Insolvencies in the last year representing 2.5% of the total rent roll. Includes Poundworld, Mothercare, Crawshaws, and Berketex
o These have adversely impacted net income in the first half by £0.25m, and will continue to have further impact in H2
o However, six of the eight have now been re-let with rents ahead, on average, of previous levels. New tenants include Iceland and The Works. Two remaining units account for just 0.5% of total rent roll

TCS continues to improve its development pipeline:
o Pipeline has a potential Gross Development value of over £590m
o Burlington House, Piccadilly Basin, Manchester is a 91-unit Private Rented Sector (PRS) joint venture development and is on track to complete in May 2019
o George Street, Leeds proposed aparthotel in joint venture with Leeds City Council has received detailed planning consent with development planned to commence this year
o Submitted a planning application to develop a 17-storey office above the Merrion Centre in Leeds, representing the next key stage of its development

• CitiPark performance strengthened and the business continues to diversify:
o Income up 6.4% year on year, with operating profit up 12.8%
o Investment in YouParkingSpace.co.uk continues to deliver promising results
o Increasing our investment in “PropTech” opportunities, TCS has taken a small equity stake in WiredScore, a rating system for buildings’ digital infrastructure

To view and download Announcements and Notice of Results please visit:
tcs-plc.co.uk/announcements

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Town Centre Securities PLC (TOWN.L) 210.00 -3.00 Last updated: 17/05/2019 at 16:29