RNS Number:5427I
Town Centre Securities PLC
06 September 2006
For Immediate Release Wednesday, 6 September 2006
TOWN CENTRE SECURITIES PLC
Preliminary results for the year ended 30 June 2006
Town Centre Securities PLC, the Leeds based property investment and development
Company, today announces its preliminary results, for the year ended 30 June
2006, the first prepared under International Financial Reporting Standards
(IFRS).
Highlights
* Net asset value (NAV) per share, under IFRS, up 33% to 487p (2005:
368p), benefiting from an #81.1m (2005: #43.0m) surplus on the revaluation
of the investment property portfolio:
- triple net asset value per share also increased 33% to 472p (2005: 354p)*
- adding back the IFRS deferred tax provision, gross NAV per share
increased 35% to 591p (2005: 437p)
* Statutory profit before tax increased 76% to #90.9m (2005: #51.5m) after
inclusion of revaluation surplus
* Underlying profit before tax, excluding revaluation surpluses, disposals
and exceptional costs, increased 4% to #8.5m (2005: #8.2m)
* Basic earnings per share increased 80% to 124.8p (2005: 69.5p),
benefiting from the increased revaluation surplus
* Underlying earnings per share up 27% to 14.1p (2005: 11.1p)
* Proposed final dividend of 5.2p (2005: 4.3p) making a total ordinary
dividend per share of 7.2p (2005: 6.2p), an increase of 16.1%:
- special dividend of 2.0p (2005: 2.0p) payable with the final
- total dividend for the year increased 12.2% to 9.2p (2005: 8.2p)
* Gearing 64% (2005: 69%), debt to property value 34% (2005: 36%)
* 1.04m shares repurchased during the year at a cost of #4.4m
* Major office property sold after the year end for #64.5m before costs
*after excluding IFRS deferred tax but taking into account the fair value
adjustment on long-term debt, and estimated capital gains tax
Commenting on the results, Chairman and Chief Executive Edward Ziff, said:
"These strong results and our future growth are based on a clear strategy of
active portfolio management, selective, part pre-let development and the
acquisition and cancellation of our own equity. Allied to this, in 2006 we have
acquired undervalued real estate equity investments and re-entered the car
parking business with a view to developing a meaningful future income stream.
"Despite my concerns about competitive prices paid to obtain good quality
property investments and more aggressive bidding by both investors and other
property companies, Town Centre Securities remains well positioned. We have a
portfolio in which quality is steadily improving and an excellent development
pipeline, backed up by a robust financial position and these factors give me
great confidence in the future prospects for the Group."
For further information, please contact:
Town Centre Securities PLC www.tcs-plc.com
-----------------
Edward Ziff, Chairman and Chief Executive 0113 222 1234
John Sutcliffe, Finance Director
Smithfield 0207 360 4900
Reg Hoare / Katie Hunt
Chairman's Statement and Chief Executive's Operating Review
Results
This has been another successful year for the Group with further strong
performance across all of our business.
These are the first results to be presented in accordance with International
Financial Reporting Standards (IFRS) which are now obligatory for all London
Stock Exchange listed companies. The main implications for Town Centre
Securities, in common with all listed property companies, is that the annual
revaluation of the investment portfolio is reported in the income statement and
the balance sheet now includes a deferred tax liability based on the valuation
of the investment portfolio at the balance sheet date.
These changes are unhelpful in demonstrating to shareholders how a traditional
property investment company is performing. We have therefore included
information to steer shareholders through a complicated set of financial
statements, help them to understand the underlying results and compare them with
previous accounting periods.
Highlights
The investment portfolio enjoyed a substantial revaluation surplus of #44.1m, an
increase of 12.1%. Furthermore the two major developments in Leeds and
Manchester, completed during the year, were independently valued for the first
time at #83.5m giving rise to a revaluation surplus of #37m. At the 30 June 2006
we owned property assets valued at #506m (2005: #395m), significantly greater
than at any time in the Company's history. Under IFRS, net assets increased 31%
to #269m (2005: #205m), representing an increase, on a per share basis, of 33%
to 487p (2005: 368p). Excluding the IFRS deferred tax provision, net assets
increased 35% to #326m (2005: #242m), resulting in adjusted net assets per share
increasing 35% to 591p (2005: 437p). Restating again to exclude the IFRS
deferred tax provision and replace it with the estimated capital gains tax
liability, and incorporating the fair value adjustment on long-term debt, the
"triple" net asset value per share, with which shareholders will be familiar,
increased 33% to 472p (2005: 354p).
Income Statement
Net revenue for the year to 30 June 2006 was marginally higher than last year at
#23.1m (2005: #22.8m). Profit before tax increased 76% to #90.9m (2005: #51.5m)
after inclusion of the property revaluation surplus of #80.6m (2005: #42.7m),
required under IFRS. Included in the share of post tax profit from joint
ventures is a further revaluation surplus of #0.5m (2005: #0.3m). Excluding the
unrealised surpluses, pre-tax profit was 14% higher at #9.7m (2005: #8.5m).
Property disposal profit for the year was lower at #1.3m (2005: #2.3m), whilst
the 2005 profit included an exceptional pension accrual of #2.0m not repeated
this year.
Internally, the Board's preferred measure of profit is underlying profit before
tax, which excludes the impact of the revaluation movement, property disposals
and, in 2005, the exceptional pension cost. This measure was 4% higher at #8.5m
(2005: #8.2m).
Earnings per share
Basic earnings per share were 80% higher at 124.8p (2005: 69.5p per share)
because of the revaluation surplus noted above. Without the revaluation surplus,
disposal profit and exceptional pension cost, underlying earnings per share were
27% higher than last year at 14.1p (2005: 11.1p) helped by a lower tax charge on
underlying profit.
Financing and gearing
Net interest costs decreased 3% to #11.0m (2005: #11.3m). Interest cover,
expressed as the ratio of operating profit (excluding the valuation movement on
investment properties, disposal profit and, in 2005, exceptional pension cost)
to interest was 1.73 times (2005: 1.72), reflecting the Group's continuing
prudent financial position. Interest amounting to #1.3m (2005: #0.2m) has been
capitalised on developments completed during the year.
Year end borrowings were 22.4% higher at #172.3m (2005: #140.8m) following
investment in the development programme and the acquisition of listed
investments. Gearing, on net assets of #269m, was 64% (2005: net assets #205m,
gearing 69%). Gearing, once the IFRS deferred tax provision is added back, fell
to 52% (2005: 58%). Long-term fixed interest debt constitutes 49% of total
borrowings, with the balance on floating rates. At 30 June 2006 our weighted
average cost of debt was 8.0% (2005: 8.5%). The #85m 10.5% mortgage debenture
matures in 2021 and at 30 June 2006 had a fair value of #121.1m (2005: #124.8m).
This premium over the nominal value results from lower long-term interest rates
compared to when the debenture was issued. Total borrowings compared to total
property assets stood at 34% (2005: 35.6%).
Taxation
The tax charge for the year is #21.5m (2005: #12.0m). This charge is made up of
three elements: #18.1m (2005: #12.6m) relating to deferred tax, under IFRS, on
the revaluation surplus; #1.7m (2005 credit: #1.3m) relating to other deferred
tax adjustments; and a tax charge on ordinary activities of #1.7m (2005: #0.7m).
The balance sheet IFRS deferred tax liability is required to exclude indexation
allowances on buildings and estimates the liability arising if all the Group's
assets were disposed of at the amounts stated in the accounts at #65.2m (2005:
#45.5m). Shareholders will decide on the relevance of this calculation but may
be interested to know that the Directors' assessment of the capital gains tax
liability that would arise if the whole portfolio were sold at the balance sheet
date is #42.2m (2005: #21.1m).
Cash flow
Total borrowings increased by #31.5m during the year to #172.3m. Operating cash
flow less interest was #8.3m (2005: #4.8m) and property sales generated #17.7m
(2005: #31.5m). These inflows were offset by property acquisitions, capitalised
development costs and purchases of listed investments totalling #51.6m (2005:
#31.9m). During the year, we purchased 1.04m shares for cancellation at an
average price of 417p per share resulting in a cash outflow of #4.4m. Dividends
paid totalled #4.6m (2005: #3.4m) which included the special dividend of 2.0p
paid with the 2005 final dividend.
Dividends
Recognising the strong portfolio performance, our healthy cash flow and
shareholder value created in the year the Directors propose the payment of an
increased final ordinary dividend of 5.2p per share (2005: 4.3p), making a total
ordinary dividend for the year of 7.2p (2005: 6.2p), an increase of 16.1%. In
addition, in recognition of the year's beneficial underlying tax result, the
Directors once again recommend the payment of a special dividend of 2.0p (2005:
2.0p), making a total dividend payable for the year of 9.2p per share (2005:
8.2p) a total increase in dividend of 12.2%. The final and special dividend will
be paid on 2 January 2007 to shareholders on the register on 1 December 2006.
Balance sheet - Investments
We have identified a number of UK quoted companies which we believe are
undervalued by the market and where we also identify a strong underlying
property portfolio that is likely to outperform direct investment. In the year
we invested in shares at a net cost of #4.9m (2005: net investment #4.0m) taking
the total cost of our holdings to #9.4m. At 30 June 2006 the market value of
this share portfolio was #12.7m creating an unrealised surplus of #3.3m, of
which #2.8m was created in the year. IFRS requires that this surplus is taken
directly to retained earnings as unrealised.
Capital reorganisation
In order to simplify the balance sheet reserves and increase the balance
standing to the profit and loss account reserve the Board took the decision to
reorganise the Company's balance sheet reserves. In a circular to shareholders
dated 11 July 2006 we announced our intention to reorganise the share premium
account, capital redemption reserve and the special reserve, in total #21.7m,
and transfer these amounts to the profit and loss account reserve. The proposal
was approved by shareholders at an EGM on 9 August 2006, with over 99.8% of
votes in favour. We have now made our application to the courts to approve this
proposal. Subject to that approval, it is anticipated that the legal and
statutory requirements of this process will be completed in September 2006.
Post balance sheet event, sale of No.1 Whitehall Riverside
On 7 August 2006, following the year end, we announced the sale of No.1
Whitehall Riverside for #64.5m before disposal costs of #0.85m and two year
rental guarantees on the un-let space which, as a maximum, could equal #1.2m. At
30 June 2006 this building was valued at #56.5m and is disclosed as a
"Non-current asset held for resale" in the balance sheet at that date. The fully
let, passing rent of the building was in the region of #3.24m per annum.
Performance benchmarking and total shareholder returns (TSR)
The Deutsche Bank FTSE Real Estate Index, for the year to 30 June 2006, showed
us ranked 7th out of 30 with TSR of 49% (2005: 11th out of 30 with TSR 44%) over
one year, 4th out of 30 with TSR 283% (2005: 4th out of 30 with TSR 183%) over
three years and 3rd out of 30 with TSR of 424% (2005: 2nd out of 30 with TSR
407%) over five years. TSR is calculated as the increase in share price plus
dividends per share.
The Board's internal measure of performance is the creation of total shareholder
value (TSV), calculated as the increase in net asset value plus dividends per
share. For the year ended 30 June 2006, TSV was 128p per share, equating to a
35% return on opening net assets.
Annual operating review
I strongly believe that our specialisation in a retail and retail mixed use
property portfolio has been a key factor in our continuing success. Our income
and cash flows are derived from long-term rental contracts with an increasingly
better quality and varied tenant base and are key to our future success. We
strive to maintain a high occupancy level and this allied to efficient cost and
credit control ensure we retain a high proportion of passing rent.
In the year to 30 June 2006 the UK property market has seen limited rental
growth with capital appreciation resulting from a further downward shift in
yields. My view is that the tightening of yields, linked to falling long-term
interest rates, may now be coming to an end. The recent increases in commodity
prices have put upward pressure on inflation and, with the global interest rate
environment shifting to a tighter stance, property yields in general are
unlikely to fall much further. Capital appreciation will therefore have to come
from active portfolio management, rental growth, profitable development and
off-market property opportunities. Within the Group, these key performance
indicators are core to our strategy and with hard work we aim to achieve above
average growth in, what is likely to be, a more challenging time for the
property market.
The strength of the property market has been remarkable over recent years. I
remain very concerned by the very competitive prices paid to obtain good quality
property investments and I am certain that this situation cannot be sustained
indefinitely. Whilst there are always opportunities, even in this market, we are
very careful not to be caught up in the more aggressive bidding that has arisen
in the year.
Portfolio performance
The revaluation surplus following the independent valuation of our investment
portfolio undertaken by Jones Lang LaSalle was #81.1m, an increase of 19.7% over
the year. This result reflected the first external valuation of our newly
constructed development properties at Whitehall Road Leeds and Piccadilly Basin
Manchester, which showed a surplus of #37m, with a surplus of #44.1m over the
remaining balance of the portfolio. The underlying performance reflects the
combination of improved rental income and the lowering of investment returns
generally in the marketplace. The initial yield on revaluation of our portfolio
was 5.2% at 30 June 2006.
Excluding the performance from our new development properties, our retail
warehouses and food stores performed exceptionally, growing in value by 21%.
This success reflects our desire to own out of town retail property which
benefits from open A1 planning consents wherever possible. Our shopping centres
grew by 12.5% and our portfolio of high street shops by over 10%. Our offices
and residential portfolios which comprise less than 5% of the portfolio
increased in value by 4%. Combining this capital growth with net income, after
deduction of all expenses, our portfolio generated a total return of 18.5%
during the year.
Disposals and acquisitions
We sold four investment properties at Victoria Street Blackpool, Market Street
and Earle Street Crewe, Phoenix House Nottingham and a non-income producing
property on York Place, Leeds where we felt that the disposal with planning
consent offered a more certain outcome than undertaking the development. These
disposals, when added together with minor properties sold, totalled #18m and
generated a profit of #1.3m. We also sold a site in Kilmarnock acquired as a
trading property within a joint venture where, once again, having obtained
planning consent we felt that the disposal secured a more favourable return than
development.
The investment market has again been characterised by competitive bidding for
good quality assets which has restricted our opportunity to acquire new
properties. We have, however, acquired adjoining retail premises in Shandwick
Place Edinburgh, Buchanan Street Glasgow and Feasegate/Market Street York. In
each case these acquisitions have added to our core holdings. We have completed
the site assembly for the reconfiguration of our retail park in Rochdale by the
acquisition of two small properties. The combined cost of these acquisitions was
#10.5m.
Asset management
Our occupancy rate has again remained above 97% and our irrecoverable costs have
been maintained at a similar low level to last year. The passing rental income
was #23.1m at the year end, reflecting like for like growth of 4%, much of this
growth reflects concluded rent reviews and lease renewals. The rental value of
our entire portfolio has increased to #26.2m reflecting like for like growth of
5.8%. Following receipt of planning consent for our fire damaged property in
Wrexham, redevelopment of this site is now underway. The principal tenant of
this new development will be Arcadia Group trading as Top Man/Top Shop. The last
two lettings are expected to be agreed before completion, scheduled for early
Spring 2007. Given that we now own a number of properties with longer term asset
management opportunities, I look forward to reporting future progress on a
number of key initiatives as we continue to maximise returns from our portfolio.
Property development
The development programme continues to form an integral part of our business
activity where we can secure an acceptable level of pre-let. During the year we
completed two major developments that were in progress at the end of June 2005,
selling the Leeds office building after the year end.
Manchester - Piccadilly Basin
During the year we concluded our 120,000 sq ft stand alone, pre-let retail unit
within the Piccadilly Basin development, to Danish retailer, ILVA. Furthermore
we completed the adjoining multi-storey car park which our new subsidiary, Town
Centre Car Parks, now operates on a commercial basis. We have commenced
construction of a 33,000 sq ft office building where we obtained detailed
planning consent during the previous year. The building has been fully pre-let
to BDP, international architects and consulting engineers.
Work has also started on the refurbishment and extension of Carvers Warehouse, a
listed building which, upon completion, will provide 20,000 sq ft of office
accommodation, which is substantially pre let and is due for completion at the
end of 2007. We continue to market the remaining commercial and retail space to
be created on the site in line with our development objectives.
Leeds - Whitehall Riverside
As noted earlier, following the sale of No.1 Whitehall Riverside, the first
landmark building on this six acre site which is ideally situated close to the
railway station and the core business area of Leeds, interest in the next part
of the development of this site is being actively pursued. We have outline
planning consent for a further 400,000 sq ft of offices and associated car
parking on this prime site and have drawn up plans and obtained detailed
planning consent for the next two office buildings.
Leeds - Eastgate and Harewood Quarter
An outline planning application was submitted at the end of May for this major
retail-led joint development with Hammerson plc. In total the project comprises
1,076,000 sq ft of retail space in over 100 shops, 2,700 car parking spaces and
up to 600 residential apartments. The scheme will be anchored by John Lewis
Partnership with a 260,000 sq ft department store.
Directors and staff
As announced last year Robert Bigley joined us in December 2005 as Corporate
Development Director. Also John Sutcliffe will be leaving the Group later in the
year and I am pleased to report that he will be replaced by Karen Prior as
Finance Director and Company Secretary on 1 October 2006. Karen previously
worked for Town Centre Securities as Financial Controller and Company Secretary
before leaving to join Q-Park as their UK Finance Director. Karen's experience
in both property and car parking will be very beneficial. I would like to wish
all three well in their new roles.
REITS
Legislation has now been passed within the 2006 Finance Act which provides for a
UK tax transparent property investment vehicle, a REIT. This form of investment
vehicle has been a feature of other jurisdictions for some years and their
introduction in the UK is welcome. Certain detailed elements of the regulations
are still awaited and of particular interest to Town Centre Securities are the
detailed rules with respect to significant shareholders. Once we have clarity on
these detailed regulations we will consider whether or not a REIT is the most
appropriate corporate structure in the future.
Outlook
I believe that these strong results and our future growth are based on a clear
strategy of active portfolio management, selective, part pre-let development and
the acquisition and cancellation of our own equity. Allied to this, in 2006 we
have acquired undervalued real estate equity investments and re-entered the car
parking business with a view to developing a meaningful future income stream.
Despite my concerns about competitive prices paid to obtain good quality
property investments and more aggressive bidding by both investors and other
property companies, Town Centre Securities remains well positioned. We have a
portfolio in which quality is steadily improving and an excellent development
pipeline, backed up by a robust financial position and these factors give me
great confidence in the future prospects for the Group.
Finally, I would like to express my sincere thanks to all my colleagues and
staff. Their commitment and effort has enabled us to continue the outstanding
track record of achievements.
Edward Ziff
Chairman and Chief Executive
6 September 2006
Consolidated Income Statement
Year ended 30 June 2006
Year Year
ended Ended
30 June 30 June
2006 2005
Notes #000 #000
Continuing operations
--------------------------------------------------------------------------------
Gross revenue 24,807 23,988
Property expenses (1,664) (1,151)
--------------------------------------------------------------------------------
Net revenue 23,143 22,837
Administrative expenses (4,631) (5,707)
Other income 598 288
Profit on disposal of investment properties 1,312 2,306
Valuation movement on investment properties 80,637 42,703
--------------------------------------------------------------------------------
Operating profit 101,059 62,427
Interest payable (11,156) (11,338)
Interest receivable 150 48
Share of post tax profits from joint ventures 817 364
--------------------------------------------------------------------------------
Profit before taxation 90,870 51,501
Taxation 2 (21,527) (11,952)
--------------------------------------------------------------------------------
Profit for the period 69,343 39,549
--------------------------------------------------------------------------------
All profit for the period is attributable to equity
shareholders.
Earnings per ordinary share of 25p each: 3
Basic 124.8p 69.5p
Diluted 123.9p 68.7p
Dividends per ordinary share: 5
Paid during period 8.3p 6.0p
Proposed (including a special dividend of 2.0p) 7.2p 6.3p
Consolidated Statement of Recognised Income and Expense
Year ended 30 June 2006
Year Year
ended ended
30 June 30 June
2006 2005
#000 #000
--------------------------------------------------------------------------------
Profit for the period 69,343 39,549
Revaluation gains on other investments 2,821 580
--------------------------------------------------------------------------------
Total recognised income for the period 72,164 40,129
--------------------------------------------------------------------------------
All recognised income for the period is attributable to the equity shareholders.
30 June 30 June
2006 2005
Notes #000 #000
--------------------------------------------------------------------------------
Non-current assets
Investment properties 6 434,361 363,640
Property, plant and equipment 6 13,313 29,100
Investments in joint ventures 2,239 2,815
Prepaid operating lease payments 950 255
Deferred tax assets 510 717
--------------------------------------------------------------------------------
Total non-current assets 451,373 396,527
--------------------------------------------------------------------------------
Current assets
Investments 12,669 4,902
Non-current asset held for sale 7 56,500 -
Trade and other receivables 3,865 4,795
--------------------------------------------------------------------------------
Total current assets 73,034 9,697
--------------------------------------------------------------------------------
Total assets 524,407 406,224
--------------------------------------------------------------------------------
Current liabilities
Financial liabilities - borrowings (7,169) (5,579)
Trade and other payables (14,288) (11,319)
Current tax liabilities (3,624) (3,317)
--------------------------------------------------------------------------------
Total current liabilities (25,081) (20,215)
--------------------------------------------------------------------------------
Net current assets/(liabilities) 47,953 (10,518)
Non-current liabilities
Financial liabilities - borrowings (165,130) (135,196)
Deferred tax liabilities (65,281) (45,492)
--------------------------------------------------------------------------------
Total non-current liabilities (230,411) (180,688)
--------------------------------------------------------------------------------
Total liabilities (255,492) (200,903)
--------------------------------------------------------------------------------
Net assets 268,915 205,321
--------------------------------------------------------------------------------
Shareholders' equity
Called up share capital 8 13,794 13,963
Share premium account 1,114 818
Other reserves 20,657 20,396
Retained earnings 233,350 170,144
--------------------------------------------------------------------------------
Total equity 9 268,915 205,321
--------------------------------------------------------------------------------
Net assets per share 487p 368p
--------------------------------------------------------------------------------
Consolidated Balance Sheet
As at 30 June 2006
Year ended Year ended
30 June 30 June
2006 2005
#000 #000 #000 #000
--------------------------------------------------------------------------------
Cash flows from operating activities
Cash generated from operations 21,725 17,654
Interest paid (12,315) (11,413)
Interest received 150 29
Tax paid (1,224) (1,463)
--------------------------------------------------------------------------------
Net cash from operating activities 8,336 4,807
--------------------------------------------------------------------------------
Cash flows from investing activities
Purchases of investment properties (13,186) (13,159)
Purchases of property, plant and (32,925) (14,646)
equipment
Purchase of investments (5,447) (4,116)
Proceeds from sale of investment 17,659 31,529
properties
Proceeds from sale of property, plant 62 107
and equipment
Proceeds from sale of investments 545 238
Dividends received from joint venture 75 -
Loan from/(to) joint venture for
purchase of 1,861 (1,318)
investment property
--------------------------------------------------------------------------------
Net cash used in investing activities (31,356) (1,365)
--------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from issue of share capital 388 398
Purchase of own shares for Share (1) (40)
Incentive Plan
Proceeds from other non-current 30,000 9,000
borrowings
Repurchase of share capital (4,360) (11,699)
Dividends paid to shareholders (4,597) (3,365)
--------------------------------------------------------------------------------
Net cash generated from/(used in)
financing 21,430 (5,706)
activities
--------------------------------------------------------------------------------
Net increase/(decrease) in cash and cash (1,590) (2,264)
equivalents
Cash and cash equivalents at 1 July (5,579) (3,315)
--------------------------------------------------------------------------------
Cash and cash equivalents at 30 June (7,169) (5,579)
--------------------------------------------------------------------------------
Consolidated Cash Flow Statement
Year ended 30 June 2006
The Cash Flow Statement should be read in conjunction with Note 10.
Notes to the Preliminary Statement
Year ended 30 June 2006
Basis of preparation
This preliminary announcement does not constitute statutory accounts within the
meaning of section 240 of the Companies Act 1985. The financial information for
the years ended 30 June 2006 and 30 June 2005 has been extracted from the
consolidated financial statements on which the auditors have given an
unqualified opinion and which do not contain a statement under Sections 237(2)
or 237(3) of the Companies Act 1985. The announcement has been agreed with the
Group's auditors for release.
The financial information included in this preliminary announcement does not
include all the disclosures required by IFRS and accordingly it does not itself
comply with IFRS.
A copy of the Group's financial statements for the year ended 30 June 2005,
which were prepared in accordance with UK Generally Accepted Accounting
Principles ('UK GAAP'), and on which the auditors gave an unqualified opinion
and did not make a statement under section 237 of the Companies Act 1985, has
been filed with the Registrar of Companies. The Group's financial statements for
the year ended 30 June 2006 will be delivered to the Registrar of Companies
following the Company's Annual General Meeting.
Prior to 2005, the Group prepared its audited financial statements under UK
GAAP. From 1 July 2005, the Group was required to prepare its annual
consolidated financial statements in accordance with IFRS and its
interpretations issued by the International Accounting Standards Board (IASB) as
adopted by the European Union (EU).
1. Segmental analysis
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments.
A geographical segment is engaged in providing products or services within a
particular economic environment that are subject to risks and returns that are
different from those of segments operating in other economic environments.
The Group's primary segment is business and the Group operates in one business
segment; comprising property investment and development. The Group's operations
are performed wholly in the United Kingdom.
2. Taxation
Taxation has been calculated on profits based on an anticipated effective tax
rate of 21.1% on headline earnings for the year to 30 June 2006.
Analysis of charge in period 2006 2005
#000 #000
--------------------------------------------------------------------------------
Current tax
- Current year 664 1,591
- Adjustment in respect of prior year (1,391) (863)
- Corporation tax in respect of property disposal 2,258 -
--------------------------------------------------------------------------------
1,531 728
--------------------------------------------------------------------------------
Deferred tax 19,996 11,224
--------------------------------------------------------------------------------
Taxation 21,527 11,952
--------------------------------------------------------------------------------
3. Earnings per share
Year ended Year ended
30 June 30 June
2006 2005
----------------------------------------------------------------------------------
Earnings Earnings
Earnings per share Earnings per share
#000 Pence #000 Pence
----------------------------------------------------------------------------------
Earnings and earnings per share 69,343 124.8 39,549 69.5
Post tax loss/(profit) on
disposal of investment
properties 1,427 2.5 (4,129) (7.3)
Post tax exceptional pension
costs - - 1,400 2.5
Revaluation movement on
investment properties reported
in income statement (80,637) (145.1) (42,703) (75.1)
Revaluation movement on
investment properties in joint
ventures reported in income
statement (525) (0.9) (290) (0.5)
Deferred tax on revaluation of
investment properties reported
in income statement 18,233 32.8 12,507 22.0
----------------------------------------------------------------------------------
Underlying earnings and
earnings per share 7,841 14.1 6,334 11.1
----------------------------------------------------------------------------------
The earnings per share is calculated on the weighted average of 55.6m ordinary
shares in issue (30 June 2005: 56.9m). The diluted earnings per share as at 30
June 2006 is: 123.9p per share and underlying 14.0p (30 June 2005 is: 68.7p and
underlying 11.0p).
4. Underlying profit
To assist shareholders in understanding the underlying results and compare to
those results in previous accounting periods:
2006 2005
#000 #000
--------------------------------------------------------------------------------
Profit before taxation 90,870 51,501
Less: revaluation surplus - Group (80,637) (42,703)
Less: revaluation surplus - Joint venture (525) (290)
Less: profits on disposal (1,312) (2,306)
Add: exceptional pension cost - 2,000
Add: tax on joint venture 123 13
--------------------------------------------------------------------------------
Underlying profit 8,519 8,215
--------------------------------------------------------------------------------
"Triple" net asset value per share
--------------------------------------------------------------------------------
2006 2005
#000 #000
--------------------------------------------------------------------------------
Closing net assets 268,915 205,321
Add: debenture issue premium 2,130 2,196
Add: IFRS deferred tax adjustment 57,032 38,902
Less: Directors' estimated capital gains tax (42,125) (21,098)
Less: debenture mark to market (after tax at 30%) (25,291) (27,879)
--------------------------------------------------------------------------------
260,661 197,442
--------------------------------------------------------------------------------
Shares in issue ('000) 55,178 55,853
"Triple" net asset value per share 472p 354p
--------------------------------------------------------------------------------
5. Dividends paid
2006 2005
#000 #000
--------------------------------------------------------------------------------
2004 final paid: 4.1p per 25p share - 2,304
2005 interim paid: 1.9p per 25p share - 1,061
2005 final paid: 4.3p per 25p share 2,380 -
2005 special paid: 2.0p per 25p share 1,108 -
2006 Interim paid: 2.0p per 25p share 1,109 -
--------------------------------------------------------------------------------
4,597 3,365
--------------------------------------------------------------------------------
In addition, the Directors are proposing a final ordinary of 5.2p and a special
dividend of 2.0p, totalling 7.2p in respect of the financial year ending 30 June
2006 which will absorb an estimated #4,028,000 of shareholders' funds. It will
be paid on 2 January 2007 to shareholders who are on the register of members on
1 December 2006.
6. Tangible fixed assets
Investment properties
Long
Freehold leasehold Total
#000 #000 #000
--------------------------------------------------------------------------------
Valuation at 1 July 2005 342,700 20,940 363,640
Additions 12,504 958 13,462
Disposals (16,601) - (16,601)
Increase in value on revaluation 77,825 2,812 80,637
Reclassification from development 49,723 - 49,723
properties
Reclassification to non-current assets
held for sale (56,500) - (56,500)
--------------------------------------------------------------------------------
Balance at 30 June 2006 409,651 24,710 434,361
--------------------------------------------------------------------------------
Property, plant and equipment
Development properties #000
--------------------------------------------------------------------------------
Cost at 1 July 2005 28,726
Additions 33,651
Reclassification to investment properties (49,723)
--------------------------------------------------------------------------------
Cost at 30 June 2006 12,654
--------------------------------------------------------------------------------
Fixtures, equipment and motor vehicles #000
--------------------------------------------------------------------------------
Net book value at 1 July 2005 374
Additions 550
Disposals (54)
Depreciation (211)
--------------------------------------------------------------------------------
Balance at 30 June 2006 659
--------------------------------------------------------------------------------
Total property, plant and equipment at 30 June 2006 13,313
--------------------------------------------------------------------------------
7. Non-current assets held for sale
2006 2005
#000 #000
--------------------------------------------------------------------------------
Re-classification from investment properties 56,500 -
--------------------------------------------------------------------------------
The above freehold property has been revalued to #56,500,000 on transfer from
development properties to investment properties based on the Directors'
valuation. This valuation is supported at 30 June 2006, on the basis of open
market value by Jones Lang LaSalle in accordance with the Royal Institution of
Chartered Surveyors Appraisal and Investment Manual.
The above property, No.1 Whitehall Riverside, was disposed of after the year end
for #64.5m before disposal costs of #0.9m and two year rental guarantees on the
un-let space which, as a maximum, could equal #1.2m.
8. Called up equity share capital
Authorised
164,879,000 (30 June 2005: 164,879,000) ordinary shares of 25p each.
Issued and fully paid
Number Nominal
of shares Value
000 #000
--------------------------------------------------------------------------------
At 1 July 2005 55,856 13,963
Buy back of own shares (1,044) (261)
Issued on take-up of options 368 92
--------------------------------------------------------------------------------
At 30 June 2006 55,180 13,794
--------------------------------------------------------------------------------
9. Statement of changes in shareholders' equity
2006 2005
#000 #000
--------------------------------------------------------------------------------
Profit for the period 69,343 39,549
Dividends (4,597) (3,365)
--------------------------------------------------------------------------------
64,746 36,184
Arising on purchases and cancellation of own shares (4,360) (11,699)
New share capital subscribed 388 398
Surplus on revaluation of investments 2,821 580
Purchase of own shares for Share Incentive Plan (1) (36)
--------------------------------------------------------------------------------
Net increase in shareholders' equity 63,594 25,427
Opening shareholders' equity 205,321 179,894
--------------------------------------------------------------------------------
Closing shareholders' equity 268,915 205,321
--------------------------------------------------------------------------------
10. Cash flow from operating activities
2006 2005
#000 #000
--------------------------------------------------------------------------------
Profit for the period 69,343 39,549
Adjustments for:
Tax 21,527 11,952
Depreciation 211 186
Profit on disposal of investment properties (1,312) (2,306)
Realised gains on disposal of property, plant and
equipment and listed investments (50) (72)
Interest received (150) (48)
Interest expense 11,156 11,338
Share of joint venture profit after tax (817) (364)
Movement in revaluation of investment properties (80,637) (42,703)
Operating lease incentives and IFRS 2 adjustments - (16)
Decrease/(increase) in debtors 235 (2,339)
Increase in creditors 2,219 2,477
--------------------------------------------------------------------------------
Cash generated from operations 21,725 17,654
--------------------------------------------------------------------------------
Other information
(a) The proposed final dividend will be paid on 2 January 2007 to ordinary
shareholders on the register at the close of business on 1 December 2006.
(b) The Annual Report and Accounts will be posted to all shareholders by 20
October 2006 and copies will be available to the public from that date at the
Company's registered office, Town Centre House, The Merrion Centre, Leeds, LS2
8LY.
(c) The accounting policies upon which the financial information has been
prepared are as set out in the Group's 2006 Annual Report and Accounts.
This announcement was approved by the Board of Directors on 5 September 2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LAMPTMMIMBIF
Town Centre (LSE:TCSC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Town Centre (LSE:TCSC)
Historical Stock Chart
From Jul 2023 to Jul 2024
