TIDMTOWN
RNS Number : 8710C
Town Centre Securities PLC
14 October 2022
14 October 2022
TOWN CENTRE SECURITIES PLC
('TCS' or the 'Company')
Final results for the year ended 30 June 2022
Further progress in resetting and reinvigorating the
business
Town Centre Securities PLC, the Leeds, Manchester, Scotland, and
London property investment, development, hotel and car parking
company, today announces its audited final results for the year
ended 30 June 2022.
Commenting on the results, Chairman and Chief Executive Edward
Ziff, said:
"It has been another year of recovery for the business, with
robust rent collection and significant improvements in both our car
park and hotel operations. Further successes after the year end,
including the significantly accretive sale of our investment in
YourParkingSpace (YPS), have helped to further reset TCS's
financial position and enabled shareholders to benefit from this
uplift, with the completion of a tender offer for 4 million of the
Company's own shares. Further development site sales, will enable
us to continue to strengthen the balance sheet through lowering our
level of absolute debt and leverage, whilst also investing in our
exciting development pipeline."
"Looking forward, the Russia--Ukraine conflict and the
unpredictability resulting from the situation has led to
inflationary and other economic pressures on our business and those
of our tenants including changes to consumer spending, increased
property and other expenses, interest rate rises, a weakening
sterling exchange rate, increased construction costs and rent
affordability."
"Against this background, we remain focused on enhancing value
for our shareholders and continue to consider further opportunistic
disposals, the proceeds of which will be used to reduce debt.
Unless there are acquisitions offering significant opportunities to
increase value we are not envisaging any further property
investments until there is stability in the real estate sector and
wider economy."
"Overall, we remain committed to continuing to reset and
reinvigorate TCS by 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 GBP179.3m or 341p per share up 15.3%
on prior year (2021: GBP155.4m, 292p), including a significant
revaluation of the YPS investment ahead of its sale in July
2022
o EPRA net tangible assets* measure at GBP174.9m or 333p per
share (2021: GBP151.0m or 284p)
o Revaluation increase and reversal of impairment uplifts on
property portfolio, hotel, car parks and TCS share of properties
held in Joint Ventures in the year of GBP4.2m (2021: Increase of
GBP1.4m)
o Revaluation gain on other investments (principally YPS) during
the year of GBP15.3m (2021: GBP2.8m)
-- Profits and earnings per share:
o Statutory profit before tax of GBP11.0m (2021: loss of
GBP0.6m) and statutory earnings per share of 20.9p (2021: loss of
1.1p)
o EPRA earnings*, profit of GBP3.3m (2021: GBP0.3m)
o EPRA earnings per share* of 6.2p (2021: 0.6p)
-- Financing strengthened:
o Headroom of GBP18.5m at the year-end based on June 2022
borrowings and valuations (2021: GBP12.1m). This now stands at
GBP24.7m as at 12 October 2022 following the sale of the investment
in YPS and a tender offer
o Seven properties were sold during the year, generating
aggregate proceeds of GBP37.9m
o Net debt (excluding finance leases liabilities) reduced by
6.7% to GBP135.1m (FY21: GBP145.6m), with LTV** reducing to 46.4%
(FY21: 51.3%) Net debt now stands at under GBP120m as at 12 October
2022 following the sale of the investment in YPS and a tender
offer
-- Dividends increased and partially restored to pre-covid levels:
o Final dividend of 2.5p proposed, following interim dividend of
2.5p
o Total dividend for the year of 5.0p, fully covered by earnings
(2021: 3.5p)
* Alternative performance measures are detailed, defined and
reconciled within Note 4 and the financial review section of this
announcement
** LTV Calculation includes finance lease assets and
liabilities
Resetting and reinvigorating the business for the future
It has been a year of recovery with a continued focus on
resetting and reinvigorating the business, in particular with 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
remains low at 31%, down from 40% in June 2020, and from 60% in
2016. Pure retail now represents only 23% of the total portfolio
and of that, 55% is in the resilient Merrion Estate
-- We disposed of seven assets in the year, following completed asset management initiatives.
-- The exposure to tenants either entering administration or
CVAs represented less than 1% of income (two tenants; no exposure
to any high-profile retail failures)
-- 39 new lettings were completed in the year, key highlights
being significant individual lettings in Glasgow and Hampstead, and
the near full occupancy of Ducie House in Manchester following its
refurbishment during the pandemic
Maximising available capital
A conservative capital structure, with a mix of short and
long-term secure financing, has always underpinned our
approach:
-- GBP10.7m of disposal proceeds from the sale of investment
properties in the year were used to part repay Group borrowings
-- Bought back for cancellation GBP3.4m of our GBP99.5m 2031 5.375% debenture
-- We are in the process of renewing our existing Lloyds and
Handelsbanken bank facilities. These both expire at the end of June
2023. Our existing NatWest bank facility expires in September 2024,
but with the option of two further one-year extensions
-- During the year we sold, subject to planning, our Port
Street, Manchester surface car parks. Completion of the sale is
expected to occur in December 2022, with the proceeds of GBP13.0m
being applied to further reduce Group borrowings
Investing in our development pipeline
Our development pipeline, with an estimated GDV of over GBP740m,
is a valuable and strategic point of difference for TCS which we
continue to progress and improve. Notably, in the past year:
-- In April 2022 we submitted the Whitehall Riverside Masterplan
in conjunction with Glenbrook. This includes detailed planning
applications for a 500 unit 'Build to Rent' scheme; a 12-storey
office building; a 478-space multi-storey car park and an outline
for further hotel/office buildings on the remainder of the site
-- In June 2022 we submitted a pre-application presentation to
Leeds City Council in relation to the existing consented 100MC
office building and a three-storey vertical extension to Wade
House, both at the Merrion Centre, with a view to delivering a
further 1,078 student accommodation units
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 GBP7.1m acquisition of a mixed use prime retail site in Hampstead
Post year end events
The resetting and reinvigoration of the business for the future
has continued:
-- In July 2022, we announced the significant disposal of the
Company's investment in YourParkingSpace for total cash
consideration of up to GBP20.7m
-- In August 2022, we completed a Tender Offer of 4 million
shares at a price of 185p per share for a total cost of GBP7.4m,
representing approximately 7.61% of the issued share capital,
delivering a positive impact on net asset value per share and
earnings per share for the benefit of continuing shareholders
-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 tcs@mhpc.com
Reg Hoare / Matthew Taylor / Pauline Guenot 020 3128 8567
Liberum www.liberum.com
Jamie Richards / Lauren Kettle / Nikhil Varghese
020 3100 2123
Peel Hunt www.peelhunt.com
Carl Gough / Henry Nicholls / Capel Irwin 020 3597 8673 /
8640
Chairman & Chief Executive's Statement
It has been another year of recovery and investment, with
further successes as we have sought to reset and reinvigorate our
business for the future.
Overview
After two years of work to significantly de-risk and de-gear the
business, we are in a very strong position. In spite of presenting
many challenges, the pandemic has offered a chance for us to reset
and reinvigorate the business. I am pleased with what we have been
able to achieve; disposing of less well performing assets and
lowering our levels of absolute debt and leverage. This process has
continued following the year end, with further significant
transactions underway.
I have spoken before about my belief that our city centres need
people and footfall in order to be vibrant and thriving spaces for
our communities following the damage from the pandemic.. Though
people are travelling abroad again and have returned to towns for
shopping and socialising, flexible working means many office
workers have remained at home. There seems to be an apathetic
attitude from workers and businesses towards their role in the
recovery of city centres.
Government, local authorities, local employers and large
organisations have been weak in their efforts to get people back in
the office, and I would urge them to do more. Employees undoubtedly
perform best when interacting and collaborating closely, so getting
them back in the office would be beneficial for all.
Performance
Our statutory profit in the year of GBP11.0m includes strong
performances from our investment property portfolio, revaluation
gains of GBP3.5m and surpluses generated from strategic disposals
of GBP4.6m. Coupled with other comprehensive income gains of
GBP16.0m, the Company's balance sheet has strengthened
significantly from a net asset value per share of 292p (at 30 June
2021) to 341p.
EPRA earnings per share* are 6.2p for the year (2021: 0.6p) and
although not back to pre Covid-19 levels, this is an encouraging
performance and is despite the impact the significant disposal
programme undertaken has had on the core business.
Rent collection has continued to improve with over 99% of all
rent and service charge income invoiced in the year collected.
As mentioned above, the Company has benefited from other
comprehensive income gains in the year, which primarily relate to
the significant disposal after the year end of the Company's
investment in YourParkingSpace (YPS) for total cash consideration
of up to GBP20.7m.
GBP37.9m of disposals during the year, together with the YPS
sale and further sales in the pipeline, are enabling us to continue
to strengthen the balance sheet of the Company through lowering our
level of absolute debt and leverage.
* Alternative performance measures are detailed, defined and
reconciled within Note 4 and the financial review section of this
announcement
Key achievements
Maximising available capital by divesting ex-growth assets
Our proactive programme of disposals was accelerated again this
year, with a strong market for us to sell into. We have disposed of
seven assets during the year and believe we can reinvest further
capital raised into our development pipeline and future
acquisitions.
Acquiring investment assets
We acquired for GBP7.1m a 12,600 sq.ft mixed--use property,
located in a prime retail pitch adjacent to Hampstead tube station,
which currently comprises four multi--level units. The asset
management opportunities and valuable parking spaces makes this a
solid investment for TCS and aligns with our core strategy of
acquisitions where long-term value can be added.
Citipark
The car park business has performed strongly as car park
occupancy levels recovered well across the period, but more office
workers need to return for our car parks to perform to their full
potential.
Hotel
The hotel business also performed very strongly. Staycations
continued to have a positive impact this year, and corporate
activity also recovered, returning to pre-pandemic levels for the
first time in Summer 2021. We are hugely encouraged by the signs of
recovery within the hotel segment.
Stakeholder engagement
Tenants
Following a torrid time during the pandemic, unfortunately, a
number of our tenants are now being hit hard with rising costs. We
appreciate our tenants continuing to choose to work collaboratively
with us, and I can guarantee we will work hard to do what we can to
support and help along the way. A good landlord-tenant relationship
is key to satisfactory outcomes for both parties, and we remain
focused on prioritising our mutually beneficial tenant
relationships.
Employees
In our property team, one of our long-standing property
directors, Helen Green, retired this year. Helen has given many
years of hard work and support to myself and the business, and I
would like to thank her for her service to TCS and wish her and her
family well for the future. Helen leaves a talented property team
behind, who are well-equipped to face the important challenges
ahead.
Our employees have demonstrated ongoing flexibility and
dedication throughout the year again, many returning to the office
full time, which has been pleasing to see.
Shareholder returns
Shareholder support remains important as we continue to recover
from the past two years.
On 6 January 2022 we commenced another share buy-back programme
and we acquired for cancellation 244,378 shares in the capital of
the Company, at an average price of 158p per 0rdinary Share for a
total consideration (incl SDRT and costs) of GBP389,060.
Following the year end, in August 2022, we completed a Tender
Offer of 4,000,000 Ordinary Shares which were acquired for
cancellation at a price of 185p per Ordinary Share for a total cost
of GBP7.4m. This represented approximately 7.61 per cent of the
issued share capital of the Company.
These buy-backs, conducted at a significant discount to the
Company's net asset value, have a positive impact on net asset
value per share and earnings per share for the benefit of
continuing shareholders.
The Board has approved a final dividend of 2.5p, totaling 5.0p
for the full year (compared to a total of 3.5p last year),
continuing the 'steps in the right direction' approach from last
year.
ESG and business responsibility
ESG is at the heart of our business with the Company continually
looking at ways to improve the responsibility of the business. Our
proposed development at Whitehall Riverside is a great example of
how we are looking to deliver environmentally friendly buildings
that meet the needs of potential occupiers, are sympathetic to
their surroundings and make a positive contribution to both the
users and visitors.
On a smaller scale we have phased out traditional business cards
in favour of a QR card approach and I am particularly pleased with
the recent roll out of our electric car scheme (under the
Government's salary sacrifice scheme) that has been made available
to all members of staff.
Giving back to communities has always been an essential part of
the way we operate. In addition to the Marjorie and Arnold Ziff
Charitable Foundation , our head office staff donated over 100
hours of their time in December 2021 to work shifts at the Leeds
Hospitals Charity Shop.
Outlook
Following the good work of the last two years, I am excited by
our diversified portfolio and the potential of our strong
development pipeline. I believe these show we have a sound business
that is well placed for the future and can only benefit as more and
more people return to normal city life.
We have already been boosted in the new financial year by the
sale (announced in July 2022) of the Company's investment in
YourParkingSpace for up to GBP20.7m and the sale, subject to
planning, of our two Port Street, Manchester surface car parks, for
GBP13.0m. These sales provide further financial flexibility to
continue to reduce debt and leverage, invest in accretive
developments and to buy back shares as appropriate.
However, it is hard to be completely optimistic. We have been
through a tough time during the pandemic, and it is a shame to be
faced with more turmoil in our world. The Russia--Ukraine conflict
and the unpredictability resulting from the situation has led to
inflationary and other economic pressures on our business and those
of our tenants including changes to consumer spending, increased
property and other expenses, interest rate rises, a weakening
sterling exchange rate, increased construction costs and rent
affordability for tenants.
We remain focused on enhancing value for our shareholders and
continue to look at further opportunistic disposals, the proceeds
of which will be used to reduce debt. Unless there are acquisitions
offering significant opportunities to increase value we are not
envisaging any further property investments until there is
stability in the real estate sector and wider economy.
Considering the balance of the underlying progress we are making
in resetting and reinvigorating our business and these
macro--economic and geopolitical challenges, I remain encouraged
about the many opportunities for TCS and committed to delivering on
our accelerated four-pillar strategy and continuing to deliver
value for all our stakeholders.
Portfolio review
Valuation summary
TCS saw the like-for-like value of its portfolio increase by
1.2% (GBP3.5m) after capital expenditure of GBP9.0m in the year. In
addition the Company has recognised a further surplus of GBP4.6m
arising on the disposal of investment properties in the year.
GBP2.8m of the revaluation gain in the year is from the
Company's retail and leisure portfolio, of which 62% is our key
Merrion Centre investment , signaling a slight rebound in what has
been a sector in decline over the last five years.
The valuation of all of our properties (except one) are carried
out by CBRE and Jones Lang LaSalle.
Portfolio overview
Passing % of Valuation Initial Reversionary
rent ERV Value portfolio incr/(decr) yield yield
Retail & Leisure 1.1 1.7 22.1 7% 10.3% 4.8% 7.3%
Merrion Centre
(ex offices) 4.9 5.2 58.8 19% 2.6% 7.8% 8.4%
Offices 4.5 6.5 91.0 30% -0.5% 4.7% 6.7%
Hotels 0.5 1.0 9.1 3% 5.4% 5.2% 9.9%
Out of town retail 1.0 1.2 14.5 5% 0.0% 6.6% 7.5%
Residential 0.9 0.9 19.2 6% 2.2% 4.6% 4.6%
12.9 16.5 214.7 70% 1.6% 5.7% 7.2%
Development property 42.6 14% 1.5%
Car parks 49.6 16% -1.8%
Portfolio 306.9 100% 1.2%
Note: includes our share of Merrion House within Offices (GBP35.7m
- see Note 7 of this announcement), our share of Burlington House
within Residential (GBP11.5m - see Note 7 of this announcement)
and Car Park Goodwill of GBP4.0m 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 5 of this announcement.
Note: excludes IFRS 16 adjustments that relate to Right-of-Use
car park assets (GBP26.7m) 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 5 of this announcement.
The table below reconciles the above table to that set out in
Note 5 of this announcement:
FY22 FY21
GBPm GBPm
Portfolio as per Note 5 282.4 305.9
50% share in Merrion House 35.7 35.8
50% share in Burlington House 11.5 11.3
Goodwill - Car Parks - Property specific
only 4.0 4.0
Less - IFRS 16 right-of-use car parks (26.7) (27.8)
As per the above table 306.9 329.2
Sales and Purchases
During the financial year ended 30 June 2022 we have sold seven
properties, above their 30 June 2021 book value, for gross proceeds
of GBP37.9m.
Our continued commitment to asset recycling is clear. The table
details the GBP135.4m of disposals since FY17 of which 83% were
retail and leisure assets.
GBPm Sales Purchases
================== =========== ================= ===========
% Retail & % Retail
Leisure & 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% -
FY22 37.9 59% 7.0 100%
134.8 83% 37.7 39%
Retail and leisure
The past 12 months has seen a shift in spend with consumers
turning away from durable goods to social activities as coronavirus
restrictions came to an end.
New leases signed continued to show a slight rental improvement.
On a rolling four quarter basis, net effective rents in Q2 2022
were up +13.9% year on year, while headline rents reported an +8.1%
growth over the same period illustrating some leasing confidence
creeping back into certain parts of the market. Compared to 2019
equivalent levels, both net effective and headline rents continue
to fall, albeit more marginally than experienced throughout
2020-21. Net effective rents were down just -4.9% compared to pre
covid equivalents, whilst reporting quarter on quarter
improvements, continuing to suggest that we have already reached
the bottom of the cycle. [1]
Although food store sales volumes remain slightly above pre
coronavirus levels they dipped during the financial year with ONS
reporting sales down -5.8% year-on-year in June 2022 as households
seek more value in their grocery shopping or are indeed forced to
reduce volume of goods bought whilst grocery inflation nears double
digits. 1
The number of transactions across the shopping centre investment
market improved slightly however yields continue to come under
increasing pressure as the cost of borrowing rises and there is
greater economic concern. However TCS, as a proactive landlord,
continues to build flexibility into its retail portfolio through
active asset management creating the ability to diversify and
unlock potential repositioning opportunities.
Overall the market has shown signs of stabilising however the
outlook remains uncertain as the cost of living crisis continues to
squeeze disposable income for many households.
Regional offices
Our office portfolio decreased in value by GBP0.5m or -0.5% over
the year. This does not necessarily tell the whole story, with
valuation decreases of over GBP2.0m over the Company's Leeds office
estate, offset by gains made in Manchester of GBP1.5m.
Office take-up nationally totalled 3.83 million sq ft in the
second quarter of 2022, indicating a rise of 23% on the previous
quarter's level and 44% above the same period in 2021. Leasing
activity is now 15% above the five-year Q2 average of 3.33 million
sq ft and 6% above the overall five-year quarterly average of 3.62
million sq ft. These five-yearly averages need to be considered
against the backdrop of the pandemic.
There is strengthening demand, particularly from large tenants
looking at pre-let deals. This has been particularly noticeable in
Central London, where the four largest deals to complete in Q2 were
all pre-lets in excess of 100,000 sq ft.
On the supply side after peaking in Q4 2021, with 31.82 million
sq ft available across the UK, supply levels in both the UK Regions
and Central London have fallen in each of the subsequent quarters.
By the end of Q2, there was 30.92 million sq ft available across
the UK, with Central London accounting for 75% of this. In the UK
Regions, the vacancy rate declined to 8.6%, while 8.1% was recorded
across Central London.
Despite uncertainties around future levels of office occupation,
there has been no reduction in prime rental levels with most city
centres seeing prime rents continue to climb and are above their
pre-pandemic levels.
The resilience of prime rents reflects the increasing focus of
occupier demand towards top quality space, driven by the desire to
create a vibrant and attractive work environment to encourage
employees back to the office and assist with recruitment, retention
and productivity strategies, as well as staff health &
wellbeing issues. In addition, there is a greater focus on
buildings that are sustainable and energy-efficient, as occupiers
try to meet increasingly ambitious ESG aspirations.
The dearth of new development coming through will mean that
upward pressure on prime rents will continue, and the gap with
rents for poorer quality grade B stock is likely to widen.
Looking regionally at the Leeds office market, 201,000 sq ft was
transacted in Q2 2022, bringing the H1 total to 430,000 sq ft,
which is in line with average levels of this time of the year. The
public services and professional services sectors were responsible
for 80% of take up in Q2.
Availability saw its fifth consecutive quarterly increase,
reaching 1.2m sq ft in Q2. However, this was from a historically
low base during 2019 and early 2020 and, overall, availability
remains 7.2% below the ten-year average levels. There has been a
notable increase in sublet space - now standing at 110,000 sq ft,
double the ten-year pre-Covid average.
Prime rents remained at GBP34.00 per sq ft for the fourth
quarter in a row, supported mainly by a lack of grade A
availability. Typical rent-free periods remained at 24 months on a
10-year term, higher than the Big Nine average by four months.
Investment volumes reached GBP92m in Q2 2022, higher than
long-term average levels (GBP60m). Although untested by a true
prime grade A transaction, prime yields remain stable at 5.25%.
Across the Pennines in Manchester Q2 take-up continued the
year's steady trajectory at 512,112 sq ft, bringing H1 total take
up to just 2% under the 10-year average.
Availability across the city centre fell by 6% this quarter,
although remained 15% above the 10-year average. Rent-frees
remained at 24 months on 10-year deals, and 9-12 months on 5-year
deals. Plug-and-play spaces continue to prove popular, achieving
GBP5 per sq ft premiums on 5,000+ sq ft suites.
In Q2 prime rents rose to GBP39.50 per sq ft, and are widely
expected to reach at least GBP40 per sq ft this year, reflecting
strong demand for high-quality spaces with excellent ESG
credentials.
On the investment side there were GBP191m of investment deals
transacted in Q2, 15% above the 10-year average.
Residential
Residential property values have continued to grow, with supply
constraints particularly key in Manchester. Our residential
property portfolio, with over half in our successful Belgravia
Living joint venture, has performed well, with occupancy levels of
almost 100% now the norm. This has been reflected in a valuation
uplift in the year of GBP0.4m or 2.2%. As 2023 progresses we are
expecting to see further valuation uplifts as the rental income
earned should increase on a unit by unit basis.
Nationwide has reported that annual UK house price growth has
been consecutively in double digits in 2022, but the rate of growth
is now slowing.
Supply of homes for sale remains low, with competition still
strong for quality properties. This will sustain value growth in
the short term, even if the speed of growth is gradually slowing.
First time buyers are making up a growing share of the mortgaged
market.
The numbers of buyers looking for a residential property have
more than doubled, and Buy-to-Let landlords continue to capitalise
on the strength of the rental market, with rental growth now almost
six times the pre-pandemic average. (Source: Zoopla).
Build-to-Rent schemes continue to perform well as an asset class
with high occupancy, however consumer expectations are at an
all-time high with levels of on-site amenity being a key deciding
factor.
Other significant valuation movements
The value of the Company's development sites has increased
marginally by GBP0.6m in the year as the next phases of both
Whitehall Riverside, Leeds and Piccadilly Basin, Manchester are
getting closer to having implementable planning permissions.
During the year, the value of the Company's freehold car parks
has declined by GBP0.9m, with the majority of the decline relating
to the Merrion MSCP, due to reduced occupancy levels during the
work day.
As mentioned previously, our hotel has seen increased booking
volumes since the end of the lockdowns, the success of the
'staycation' remains whilst business travel has also increased.
Both of these have led to an increase in value of GBP0.5m in our
Merrion hotel.
Location Value %
Leeds 200.7 65%
Manchester 74.0 24%
Scotland 11.5 4%
London 20.7 7%
------ ------
306.9 100%
Sector Value %
Retail/leisure 95.4 31%
Hotels 9.1 3%
Office 91.0 30%
Car parking 49.6 16%
Residential 19.2 6%
Development 42.6 14%
------ ------
306.9 100%
Lease Expiries Value %
0-5 years 7.4 56.9%
5-10 years 2.0 15.4%
Over 10 years 3.6 27.7%
------ ------
13.0 100%
Divisional review - Property
Overview
It has been another busy year for our dedicated property team,
which manages acquisitions, disposals and planning for our
increasingly diverse mixed-use portfolio and our development
pipeline.
Whilst TCS has been successfully delivering business as usual
with our existing portfolio, we have also been going through a
shift in our focus. As we have continued to dispose of a number of
assets, instead of simply replacing those with new acquisitions, we
have been working to reimagine many of our existing assets and
revisiting our development pipeline.
With an inevitable lull in delivery, COVID-19 afforded us the
opportunity to look at our development pipeline again and determine
where we need to bring forward new applications and new designs to
replace our original proposals.
In line with this work, our relatively new property team is keen
to bring new ideas to the table and relook at its systems and
processes.
Disposals and acquisitions
We completed seven strategic disposals in the year, for proceeds
of GBP37.9 million, as we sought to rebalance and diversify our
portfolio. We have also disposed of assets to facilitate bringing
forward further development, such as the Premier Inn on Whitehall
Riverside.
We also agreed, subject to planning, with developers Select
Property Group for the sale of Port Street, a part of the
Manchester Piccadilly Basin scheme. Select have submitted plans to
develop 485 apartments on the site, and we are positive about how
this will complement our own strategic regeneration plans for the
Basin.
We completed one acquisition in the year, 58-62 Heath Street in
Hampstead. The 12,600 sq ft mixed-used property is located in a
prime retail location adjacent to Hampstead tube station in one of
the capital's most desirable suburbs. As of May, the property was
fully let.
Rent collection
The strength of our relationships with our tenants has been
demonstrated again, as our rent collection for the year was over
99% collected or agreed to be deferred, better than pre-pandemic
levels. This is a very positive result, showing our ability to work
with tenants to find solutions.
Asset management/letting progress in Manchester and Leeds
Ducie House
Across the last six months there have been a number of
significant lettings at Ducie House. As we approach full occupancy,
it has been pleasing to see the market respond so positively to the
space we renovated in late 2020.
Merrion
We have seen shoppers consistently return to Leeds city centre
for a number of months now, demonstrated by footfall within the
Merrion Centre continuing to increase, although still not at
pre-pandemic levels.
We have completed a number of positive lettings in the period,
welcoming some interesting businesses in both retail and
leisure.
Vicar Lane
Another success story during the year was at Vicar Lane. Having
had a significant proportion of its units vacant for some time, it
has been pleasing to see a number of new operators take space at
Vicar Lane as it also nears full occupancy.
Residential
The residential portfolio, although smaller than it once was,
has performed particularly well this year. We are seeing high
levels of occupancy and rental growth, which is giving us the
confidence to seek further acquisitions and bring forward
development of further residential projects.
Development pipeline highlights
Wade House
Wade House is a 1960s office building, which became
predominantly vacant around June time last year. Since then, we
have been exploring options for redevelopment of that building and
repurposing it for an alternative use.
We are currently in a pre application planning process to
redevelop Wade House, as well as the adjacent 100MC site, as a
comprehensive purpose-built student accommodation scheme. Work is
ongoing around how those sites are redeveloped while maintaining
occupancy and footfall in the vibrant area around the Merrion
Centre. This area has seen significant development of student
accommodation in recent years and a good proportion of our retail
and leisure customers in Merrion are students. This has allowed us
to rethink the next evolution of the Merrion estate, as a truly
mixed-use site.
We have arranged some temporary lettings to local charities,
like the Tutor Trust and the Children's Hospital to make best use
of the available space in the meantime.
Piccadilly Basin
We are revisiting our own designs for Eider House, which was
previously consented for 128 apartments. Since that joint venture
scheme with the Belgravia Living Group entity was conceived and
planning consent granted in 2018, a lot has changed in the world of
build-to-rent accommodation. The knowledge we have gained from
three years of operating Burlington House, our first build-to-rent
development, has prompted us to submit a new application as part of
the new phase of developing our campus of build-to-rent residential
in Piccadilly Basin.
As part of our rethinking of Eider House, we are also looking at
how we can reposition some future development opportunities in the
vicinity of Eider House, Ducie House and Tariff Street, working
with the local authority to review and update the strategic
regeneration framework.
Whitehall Riverside planning case study
In April 2022, we submitted a new planning application for the
development of Whitehall Riverside in Leeds city centre as part of
a GBP280 million commercial partnership with build-to-rent
residential developers Glenbrook.
Recognising the opportunity to deliver a unique neighbourhood in
the West End of Leeds, our proposal comprises 500 build to rent
apartments, a smart enabled and energy efficient office building
and a state of the art multi-storey car park and travel hub for
CitiPark. Building on the truly mixed-use nature of the masterplan,
a significant focus will be on creating a sustainable and modern
environment, with landscaping, cycling and pedestrian-friendly
infrastructure.
TCS has owned the site for many years, having already delivered
No.1 Whitehall Riverside (offices), Whitehall Waterfront
(residential) and most recently the Premier Inn (hotel), completed
in 2017.
George Street redevelopment
In our 2020 annual report, we discussed not proceeding with
plans for a 50/50 joint venture with Leeds City Council to develop
a 136-room aparthotel on George Street in Leeds. Work to find a
solution for that project has been continuing ever since and we are
still working to help the council deliver regeneration for a key
part of the city.
Divisional review - Citipark
It has been a much improved year for Citipark, with its recovery
ongoing. While many customers have returned, many workers are
staying at home and we must continue to innovate to drive revenue
and profitability.
Overview
Gross revenue for FY22 was GBP11.4m, a 70% increase on the prior
year. Operating profit has also increased significantly to GBP3.1m
from a breakeven position.
We remain cautiously optimistic about the recovery. Car park
occupancy levels recovered well across the period, although this
recovery was temporarily stalled with the emergence of the Omicron
variant and government advice to work from home at the end of 2021.
Despite that, performance has been in line with our
expectations.
We've seen some geographical variation in performance but
generally we are pleased to see customers returning as the public
regain their confidence in the wake of the pandemic.
However, we are seeing that, due to changing working patterns
and the prevalence of flexible working, our Monday to Friday, nine
to five customer group is not returning to pre-pandemic levels.
Throughout the pandemic, we've had to make some difficult decisions
in order to streamline our operations, and we will continue to
evolve and think differently, considering innovative new ways of
using our car parks and spaces. We also have a development pipeline
for many of our car parks, and these provide opportunities for us
to consider other options depending on the pace of recovery.
Technology and innovation
We continue to focus on using technology as a key differentiator
and a way to expand our revenue generation. Considering
stakeholders and collaborating with our partners is a key focus as
we seek to grow each of our platforms.
EV charging/CitiCharge
Our CitiCharge division is growing, with ongoing work to add
more charging points across our portfolio.
A highlight of this year was the installation of 34 EV charging
bays (including an option to increase to 82) with the Warwickshire
NHS Trust.
We are very committed to expanding our offering, increasing the
number of spaces and diversifying our offering via disabled
charging bays and more. We are also looking to work with our
enforcement business to expand the EV network with third party
landowners and clients.
CitiPark app
We've seen some strong investment in the CitiPark app this year,
including the change of payment flow to accommodate frictionless
pay on entry as well as on exit and the inclusion of corporate
billing allowing larger organisations to have one main account and
just add and remove vehicles themselves and be billed
accordingly.
We have a development pipeline to ensure ongoing investment in
our app, with plans to add new products to ensure the customer
journey improves year on year.
BaySentry Solutions
We continued the expansion of parking management company,
BaySentry Solutions Ltd, this year with a further acquisition,
which concluded in October. Having successfully onboarded a number
of acquisitions and enjoyed steady revenue growth in this part of
the business, we are in dialogue over further opportunities to grow
in the coming year.
Alternative forms of income
Having first hosted a number of rooftop events last year, we
continue to explore and welcome opportunities to use our locations
for the hospitality industry.
YourParkingSpace
After the year end the Company completed the unconditional sale
of its equity investment in YourParkingSpace Limited ("YPS") to
Flowbird SAS for total cash consideration (net of fees and
associated deal costs) of up to GBP20.7m; representing a
significant uplift in value of the Group's investment.
The consideration from this sale helps to further strengthen the
TCS balance sheet whilst providing the funds to invest in our
development pipeline and make strategic technology investments.
Outlook
The potential impact of the current financial pressure on some
sections of the UK economy is difficult to forecast, but we remain
cautiously optimistic.
We have demonstrated our ability to be responsive and adaptive
to challenges across the last two years. Our products and tariffs
can be tailored to customer needs, and we will seek to help our
customers while also trying to operate a successful and profitable
business.
We have invested in our existing facilities and have a strong
development pipeline for the future, including our new 478-space
CitiPark multi--storey car park in Leeds. We will also continue to
grow our management agreement platform and invest in further
acquisitions in our subsidiary companies.
Our app and our EV charging network provide exciting
opportunities to help improve our customer experience while also
improving our environmental impact.
FINANCIAL REVIEW
"The financial performance of the Company during the year ended
30 June 2022 shows a recovery from the prior years, which were
significantly impacted by COVID-19. We saw consistently improving
rent receipts throughout the year and strong recoveries in both our
Car Park and Hotel businesses, however the acceleration of our
disposal programme impacted the overall profitability of the
business."
The statutory profit for the year was GBP11.0m, compared to a
loss of GBP0.6m in the previous year, with the current year heavily
influenced by Investment Property gains of over GBP8m (GBP3.5m of
revaluation gain and GBP4.6m of profits recognized on
disposal).
EPRA Earnings* were a profit of GBP3.3m in the year, compared to
a profit of GBP0.3m in the prior year, highlighting the recovery
seen in the underlying business
A final dividend of 2.5p per Ordinary Share has been approved by
the Board, giving a full year dividend of 5.0p, up from 3.5p in the
previous year.
During the year the Company sold seven separate investment
property assets which generated GBP37.9m of proceeds. GBP10.7m of
the proceeds were used to part repay Group Borrowings, GBP17.5m was
temporarily held as collateral against the Company's Debenture
Stock with the balance increasing the Company's cash resources. Net
borrowings has reduced from GBP145.6m to GBP135.1m in the year. Net
borrowings represent total financial borrowings of GBP165.5m less
lease liabilities of GBP28.7m and net overdrafts of GBP1.3m. These
disposals, partially offset by the property acquired during the
year and the further post year end purchase 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 Note 4 and the financial review in this
announcement
Income statement
EPRA Earnings* for the year ended 30 June 2022 were GBP3.3m.
GBP000s FY22 FY21 YOY
--------- --------- ---------
Gross Revenue 28,141 21,429 31.3%
Impairment of debtors provision
movement 49 788 (93.8%)
Property Expenses (13,666) (11,145) 22.6%
Net Revenue 14,524 11,072 31.2%
--------- --------- ---------
Other Income / JV Profit 2,497 2,962 (15.7%)
Other Expenses 0 0 -
Administrative Expenses (6,531) (5,585) 16.9%
Operating Profit 10,490 8,449 24.2%
--------- --------- ---------
Finance Costs (7,215) (8,145) (11.4%)
EPRA Earnings 3,275 304 977.3%
--------- --------- ---------
Segmental FY22 FY21 YOY
--------- --------- ---------
Property
Net Revenue 9,188 10,196 (9.9%)
Operating Profit 6,437 8,471 (24.0%)
CitiPark
Net Revenue 4,843 1,053 359.9%
Operating Profit 3,525 155 2174.2%
ibis Styles Hotel
Net Revenue 493 (177) (378.5%)
Operating Profit 493 (177) (378.5%)
Statutory profit
On a statutory basis the reported profit for the year was
GBP11.0m.
The statutory profit reflects the EPRA Earnings* of GBP3.3m plus
GBP3.5m of non-cash valuation and impairment movements plus the
profit on disposal recognised of GBP4.5m on the seven investment
properties and investments sold in the year less GBP0.3m of loss
recognized on the repurchase of debenture stock in the year.
Gross revenue
Gross revenue was up GBP6.7m or 31.3% year on year, with key
drivers being:
-- Property sales during the year had a negative impact of
GBP0.2m on the total Gross Revenue.
-- CitiPark revenues have recovered strongly across the
portfolio in the year, with gross revenue across the portfolio
increasing by 70% in the year from GBP6.7m to GBP11.4m , with total
occupancy now at just under 90% of pre COVD-19 levels.
-- Income for the ibis Styles hotel, which was heavily impacted
by COVID-19 has also recovered strongly increasing by GBP2.2m in
the year, from GBP0.6m to GBP2.8m.
Property expense
Property expenses have increased in the year by 22.6%, primarily
reflecting the increased trading experienced in both the Hotel and
Car Park businesses.
Other / JV income
Total Other / JV income was down 16% or GBP0.5m year-on-year,
the majority of the difference relates to substantial dilapidation
payments received by the Company in the previous year.
Administrative expenses
Administrative costs were GBP0.4m higher year on year reflecting
the increased activity across all segments within the
buisnesss.
Finance costs
Finance costs were 11.4% or GBP0.9m lower year on year as a
result of the reduction in both the Company's bank borrowings and
the buyback of GBP3.4m of debenture stock.
* Alternative performance measures are detailed, defined and
reconciled within Note 4 and the financial review in this
announcement
Balance sheet
The below table shows the year-end balance sheet as
reported.
vs
GBPm FY22 FY21 FY21
-------- -------- ---------
Freehold and Right to Use Investment
properties* 158.5 181.3 (12.6%)
Development properties 42.6 41.5 2.7%
Car Park related Assets, Goodwill
and Investments** 97.9 82.7 18.4%
Hotel operations 9.1 8.6 n/a
308.1 314.1 (1.9%)
Joint ventures 18.0 16.2 11.1%
Listed Investments 4.1 5.8 (29.3%)
Other non-current assets 1.0 1.0 0.0%
Total non-current assets inc available
for sale 331.2 337.1 (1.8%)
Net borrowings (163.8) (174.6) (6.2%)
Other assets/(liabilities) 11.9 (7.1) (268.6%)
Statutory NAV 179.3 155.4 15.3%
Statutory NAV per share 341p 292p 16.8%
EPRA Net Tangible Assets (NTA) 174.9 151.0 15.8%
EPRA NTA per share 333p 284p 17.3%
* includes Assets held for sale
in FY21 of GBP3.9m
** includes Assets held for sale
in FY22 of GBP20.4m
Non-current assets:
Our total non-current assets (including investments in JVs) of
GBP331.2m (2021: GBP337.1) include GBP201.1 of investment
properties (2021: GBP222.8m), GBP97.9m of non-current car parking
assets (2021: GBP82.7m) and GBP9.1m of Operational Hotel assets
(2021: GBP8.6). The car parking assets include GBP4.9m (2021:
GBP4.8m) of goodwill and intangible assets arising on business
combinations.
The reduction in non-current assets of GBP7.0m during the year
comprises:
-- Disposals of GBP(34.3m)
-- Depreciation charge of GBP(2.5m)
-- Capital expenditure of GBP9.9m
-- Revaluation uplift/reversal of impairments totalling GBP19.5m
-- Operating profits generated and retained in JV entities GBP1.5m
Borrowings:
During the year our Net Borrowings have reduced by GBP10.8m,
from GBP174.6m as at 30 June 2021 to GBP163.8m. This was primarily
as a direct consequence of the disposals made throughout the year.
As part of this we bought back GBP3.4m of our GBP99.5m 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. During the year end we refinanced our GBP33m
facility with NatWest, for a further three years on the same terms
and margin albeit at lower facility limit of GBP25m, this facility
will expire in September 2024, with an option for two further
one-year extensions.
Our Lloyds Bank facility's was extended in the year and now
expires in June 2023. The Lloyds facility is a GBP35m revolving
credit facility with a further GBP5m overdraft facility and we are
in the process of renewing this facility effective on expiry with a
new three year facility (again with two one-year extensions)
Finally, our GBP35m Handelsbanken facility was reduced in the
year to a GBP25m facility and expires in June 2023. As with our
Lloyds facility we are in the process of renewing this facility
effective on expiry with a new three year facility (again with two
one-year extensions)
Loan to value has been reduced to 46.4%, down from 51.3% a year
ago. Note the calculation of loan to value includes both the
finance lease assets and liabilities.
EPRA net asset reporting
We focus primarily on the measure of Net Tangible Assets (NTA).
The below table reconciles IFRS net assets to NTA, and the other
EPRA measures.
There are three 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.
FY22 FY21
p per p per
GBPm FY22 FY21 share share
------- ------- ------- -------
IFRS reported NAV 179.3 155.4 341 292
Purchasers Costs (1) 19.1 21.1
EPRA Net Reinstatement Value 198.4 176.5 378 332
Remove Purchasers Costs (19.1) (21.1)
Remove Goodwill (2) (4.4) (4.4)
EPRA Net Tangible Assets 174.9 151.0 333 284
Fair value of fixed interest rate
debt (3) 1.3 (10.2)
EPRA Net Disposal Value 176.2 140.8 335 265
------- -------
(1) Estimated purchasers' costs
including fees and stamp duty
and related taxes
(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, our recent disposal
programme and the wider economy has had a material impact on
profitability/financial recovery in the year ended 30 June 2022, 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. We
have seen 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 continuing to review
options for how the proceeds of any further sales could be utilised
including debt repayment, asset purchases and share buybacks.
Although we have started to increase the level of the dividend,
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
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. 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 2022 was GBP18.5m (2021: GBP12.1m), 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 24.4% in value before this headroom
number was breached.
There have been a number of post balance sheet events that have
impacted both the headroom but the percentage properties can fall
by - taken in aggregation, these events have improved the headroom
to GBP24.7m and percentage properties can fall by to 28.3%.
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 minus 4.5% (2021: 55.8%) was
calculated as the total of dividends paid during the financial year
of 4.25p (2021: 3.5p) and the movement in the share price between
30 June 2021 (144p) and 30 June 2022 (133.5p), assuming
reinvestment of dividends. This compares with the FTSE All Share
REIT index at minus 5.2% (2021: 23.1%) 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 (4.5%) 2.3% 4.1%
FTSE All Share REIT
index (5.2%) 6.9% 3.1%
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 8.7% (2021: 4.3%). This compared to the MSCI/IPD market
return of 19.3% (2021: 6.4%).
The key drivers of the All Property index being higher than TCS
is due to strong market performances of both industrial properties
and retail warehouses of which TCS only has a small amount.
Consolidated income statement
for the year ended 30 June 2022
2022 2021
Notes GBP000 GBP000
--------------------------------------------- ------ --------- --------
Gross revenue (excl service charge
income) 25,383 18,703
Service charge income 2,758 2,726
--------------------------------------------- ------ --------- --------
Gross revenue 28,141 21,429
Release of provision for impairment
of debtors 49 788
Service charge expenses (3,666) (3,656)
Property expenses (10,000) (7,489)
--------------------------------------------- ------ --------- --------
Net revenue 14,524 11,072
Administrative expenses 2 (6,531) (5,585)
Other income 3 1,612 1,989
Valuation movement on investment properties 3,489 63
Impairment of car parking assets (384) (111)
Loss on disposal of investments (89) -
Profit/(loss) on disposal of investment
properties 4,563 (2,320)
Share of post-tax profits from joint
ventures 1,315 2,461
--------------------------------------------- ------ --------- --------
Operating profit 18,499 7,569
Finance costs (8,063) (8,145)
Finance income 576 -
--------------------------------------------- ------ --------- --------
Profit/(loss) before taxation 11,012 (576)
Taxation - -
--------------------------------------------- ------ --------- --------
Profit/(loss) for the year attributable
to owners of the Parent 11,012 (576)
--------------------------------------------- ------ --------- --------
Earnings per share
Basic and diluted 4 20.9p (1.1)p
EPRA (non-GAAP measure) 4 6.2p 0.6p
--------------------------------------------- ------ --------- --------
Dividends per share
Paid during the year 5 4.25p 3.5p
Proposed 5 2.5p 1.75p
--------------------------------------------- ------ --------- --------
Consolidated statement of comprehensive income
for the year ended 30 June 2021
2022 2021
GBP000 GBP000
---------------------------------------- --- -------- --------------
Profit/(loss) for the year 11,012 (576)
Items that will not be subsequently
reclassified to profit or loss
Revaluation gains on hotel assets 713 -
Revaluation gains on other investments 15,306 2,795
--------------------------------------------- -------- --------------
Total other comprehensive income 16,019 2,795
--------------------------------------------- -------- --------------
Total comprehensive income for the
year 27,031 2,219
--------------------------------------------- -------- --------------
All profit and total comprehensive income for the year is
attributable to owners of the Parent.
Consolidated balance sheet
as at 30 June 2022
2022 2021
Notes GBP000 GBP000
------------------------------------------------- ------ ---------- ----------
Non-current assets
Property rental
Investment properties 6 201,106 218,909
Investments in joint ventures 7 18,016 16,212
219,122 235,121
------------------------------------------------- ------ ---------- ----------
Car park activities
Freehold and leasehold properties 6 72,226 74,502
Goodwill and intangible assets 4,912 4,841
77,138 79,343
------------------------------------------------- ------ ---------- ----------
Hotel operations
Freehold and leasehold properties 6 9,100 8,630
------------------------------------------------- ------ ---------- ----------
9,100 8,630
------------------------------------------------- ------ ---------- ----------
Fixtures, equipment and motor vehicles 6 976 955
Investments 8 4,506 9,217
------------------------------------------------- ------ ---------- ----------
Total non-current assets 310,842 333,266
------------------------------------------------- ------ ---------- ----------
Current assets
Trade and other receivables 21,708 5,311
Cash and cash equivalents 22,150 21,670
------------------------------------------------- ------ ---------- ----------
43,858 26,981
Assets held for sale 8 20,368 3,850
------------------------------------------------- ------ ---------- ----------
Total current assets 64,226 30,831
------------------------------------------------- ------ ---------- ----------
Total assets 375,068 364,097
------------------------------------------------- ------ ---------- ----------
Current liabilities
Trade and other payables (9,828) (11,499)
Bank overdrafts (23,414) (21,113)
Financial liabilities (34,655) (42,260)
Total current liabilities (67,897) (74,872)
------------------------------------------------- ------ ---------- ----------
Non-current liabilities
Financial liabilities (127,867) (133,830)
------------------------------------------------- ------ ---------- ----------
Total liabilities (195,764) (208,702)
------------------------------------------------- ------ ---------- ----------
Net assets 179,304 155,395
------------------------------------------------- ------ ---------- ----------
Equity attributable to the owners of the Parent
Called up share capital 9 13,132 13,282
Share premium account 200 200
Capital redemption reserve 717 567
Revaluation reserve 1,213 500
Retained earnings 164,042 140,846
------------------------------------------------- ------ ---------- ----------
Total equity 179,304 155,395
------------------------------------------------- ------ ---------- ----------
Net asset value per share 11 341p 292p
------------------------------------------------- ------ ---------- ----------
Consolidated statement of Changes in Equity
as at 30 June 2022
Share capital Share Capital Revaluation Retained Total equity
premium account redemption reserve earnings
reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
Balance at 30
June 2020 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
income 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
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
Comprehensive
income for the
year
Profit for the
year - - - - 11,012 11,012
Other
comprehensive
income - - - 713 15,306 16,019
Total
comprehensive
loss for the
year - - - 713 26,318 27,031
Contributions
by and
distributions
to owners
Arising on
purchase and
cancellation
of own shares (150) - 150 - (885) (885)
Final dividend
relating to
the year ended
30 June 2021 - - - - (924) (924)
Interim
dividend
relating to
the year ended
30 June 2022 - - - - (1,313) (1,313)
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
Balance at 30
June 2022 13,132 200 717 1,213 164,042 179,304
---------------- -------------- ---------------- --------------- ---------------- ---------------- -------------
Consolidated cash flow statement
for the year ended 30 June 2022
2022 2021
-------------------- --------------------
Notes GBP000 GBP000 GBP000 GBP000
----------------------------------------- ------ --------- --------- --------- ---------
Cash flows from operating activities
Cash generated from operations 10 11,688 4,644
Interest paid (6,839) (6,920)
----------------------------------------- ------ --------- --------- --------- ---------
Net cash generated from/(absorbed
by) operating activities 4,849 (2,276)
----------------------------------------- ------ --------- --------- --------- ---------
Cash flows from investing activities
Purchase and construction of investment
properties (7,433) -
Refurbishment of investment properties (1,617) (2,637)
Purchases of fixtures, equipment
and motor vehicles (283) (198)
Proceeds from sale of investment
properties 20,608 48,049
Proceeds from sale of investments 68 -
Payments for business acquisitions (293) (874)
Payments for acquisition of non-listed
investments - (258)
Investments in joint ventures (326) -
----------------------------------------- ------ --------- --------- --------- ---------
Net cash generated from investing
activities 10,724 44,082
----------------------------------------- ------ --------- --------- --------- ---------
Cash flows from financing activities
Proceeds from non-current borrowings 6,399 4,000
Repayment of non-current borrowings (18,643) (44,091)
Arrangement fees paid (380) -
Principal element of lease payments (1,648) (1,659)
Dividends paid to shareholders (2,237) (1,860)
Purchase of own shares (885) -
----------------------------------------- ------ --------- --------- --------- ---------
Net cash used in financing activities (17,394) (43,610)
----------------------------------------- ------ --------- --------- --------- ---------
Net decrease in cash and cash
equivalents (1,821) (1,804)
Cash and cash equivalents at beginning
of the year 557 2,361
----------------------------------------- ------ --------- --------- --------- ---------
Cash and cash equivalents at end
of the year (1,264) 557
----------------------------------------- ------ --------- --------- --------- ---------
Cash and cash equivalents at the year end are comprised
of the following:
Cash balances 22,150 21,670
Overdrawn balance (23,414) (21,113)
(1,264) 557
----------------------------------------- ------ --------- --------- --------- ---------
Audited preliminary results announcements
The financial information for the year ended 30 June 2022 and
the year ended 30 June 2021 does not constitute the company's
statutory accounts for those years.
Statutory accounts for the year ended 30 June 2021 have been
delivered to the Registrar of Companies. The statutory accounts for
the year ended 30 June 2022 will be delivered to the Registrar of
Companies following the Company's Annual General Meeting.
The auditors' reports on the accounts for 30 June 2022 and 30
June 2021 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 2022 2021
GBP000 GBP000
--------------------- -------- --------
Property rental 263,598 266,444
Car park activities 77,496 79,658
Hotel operations 9,100 8,778
Investments 24,874 9,217
--------------------- -------- --------
375,068 364,097
--------------------- -------- --------
Segmental
results 2022
------------------------------------------------------------- ----------------------------------
Property Car Hotel Property Car Hotel
park park
rental activities operations Invest-ments Total rental activities operations Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- --------- ----------- ----------- ------------- --------- --------- ----------- ----------- --------
Gross revenue (excl
service charge
income) 11,138 11,417 2,828 - 25,383 11,358 6,719 626 18,703
Service charge
income 2,758 - - - 2,758 2,726 - - 2,726
--------------------- --------- ----------- ----------- ------------- --------- --------- ----------- ----------- --------
Gross revenue 13,896 11,417 2,828 - 28,141 14,084 6,719 626 21,429
Release of provision
for impairment of
debtors 49 - - - 49 788 - - 788
Service charge
expenses (3,666) - - - (3,666) (3,656) - - (3,656)
Property expenses (1,091) (6,574) (2,335) - (10,000) (1,020) (5,666) (803) (7,489)
--------------------- --------- ----------- ----------- ------------- --------- --------- ----------- ----------- --------
Net revenue 9,188 4,843 493 - 14,524 10,196 1,053 (177) 11,072
--------------------- --------- ----------- ----------- ------------- --------- --------- ----------- ----------- --------
Administrative
expenses (5,213) (1,318) - - (6,531) (4,687) (898) - (5,585)
Other income 1,577 - - 35 1,612 1,989 - - 1,989
Share of post-tax
profits from joint
ventures 885 - - - 885 973 - - 973
--------------------- --------- ----------- ----------- ------------- --------- --------- ----------- ----------- --------
Operating
profit/(loss)
before valuation
movements 6,437 3,525 493 35 10,490 8,471 155 (177) 8,449
Valuation movement
on investment
properties 3,489 - - - 3,489 63 - - 63
Impairment of car
parking assets - (384) - - (384) - (111) - (111)
Loss on disposal
of investments - - - (89) (89) - - - -
Profit/(loss) on
disposal of
investment
properties 4,563 - - - 4,563 (2,320) - - (2,320)
Valuation movement
on joint venture
properties 430 - - - 430 1,488 - - 1,488
Operating
profit/(loss) 14,919 3,141 493 (54) 18,499 7,702 44 (177) 7,569
Finance costs (8,063) (8,145)
Finance income 576
--------------------- --------- ----------- ----------- ------------- --------- --------- ----------- ----------- --------
Profit/(loss) before
taxation 11,012 (576)
--------------------- --------- ----------- ----------- ------------- --------- --------- ----------- ----------- --------
Taxation - -
--------------------- --------- ----------- ----------- ------------- --------- --------- ----------- ----------- --------
Profit/(loss) for
the year 11,012 (576)
--------------------- --------- ----------- ----------- ------------- --------- --------- ----------- ----------- --------
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 2022, arising from car park operations , was GBP2,125,000.
After allowing for an allocation of administrative expenses, the
operating profit at these sites was GBP1,563,000.
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
2022 2021
GBP000 GBP000
------------------------------ ------- -------
Employee benefits 4,281 3,444
Depreciation 129 163
Charitable donations 35 7
Other 2,086 1,971
------------------------------ ------- -------
6,531 5,585
------------------------------ ------- -------
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
2022 2021
GBP000 GBP000
-------------------------------------------- ------- -------
Commission received 139 166
Dividends received 35 34
Management fees receivable 235 245
Dilapidations receipts and income relating
to surrender premiums 1,145 1,103
Other 58 441
-------------------------------------------- ------- -------
1,612 1,989
-------------------------------------------- ------- -------
4. Earnings per share (EPS)
The calculation of basic earnings per share has been based on
the profit for the year, divided by the weighted average number
of shares in issue. The weighted average number of shares in
issue during the year was 52,755,750 (2021: 53,161,220).
2022 2021
--------------------- ---------------------
Earnings Earnings
Earnings per Earnings per share
share
GBP000 p GBP000 p
---------------------------------------- --------- --------- --------- ----------
Profit/(loss) for the year and
earnings per share 11,012 20.9 (576) (1.1)
----------------------------------------- --------- --------- --------- ----------
Valuation movement on investment
properties (3,489) (6.6) (63) (0.1)
Impairment of car parking assets 384 0.7 111 0.2
Valuation movement on properties
held in joint ventures (430) (0.8) (1,488) (2.8)
Profit/(loss) on disposal of
investment and development properties (4,563) (8.7) 2,320 4.4
Loss on disposal of investments 89 0.2 - -
Loss on repurchase of debenture
stock 272 0.5 - -
----------------------------------------- --------- --------- --------- ----------
EPRA earnings and earnings per
share 3,275 6.2 304 0.6
----------------------------------------- --------- --------- --------- ----------
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
2022 2021
GBP000 GBP000
----------------------------------- ------- -------
2020 final paid: 1.75p per share - 930
2021 interim paid: 1.75p per
share - 930
2021 final paid: 1.75p per share 924 -
2022 interim paid: 2.5p per share 1,313 -
----------------------------------- ------- -------
2,237 1,860
----------------------------------- ------- -------
An interim dividend in respect of the year ended 30 June 2022 of
2.5p per share was paid to shareholders on 24 June 2022. This
dividend was paid entirely as a Property Income Distribution
(PID).
A final dividend in respect of the year ended 30 June 2022 of
2.5p per share is proposed. This dividend, based on the shares in
issue at 12 October 2022, amounts to GBP1.2m which has not been
reflected in these accounts and will be paid on 6 January 2023 to
shareholders on the register on 9 December 2022. The entire
dividend will be paid as an ordinary dividend.
6. Non-current assets
(a) Investment properties
Freehold Right of Development Total
use asset
GBP000 GBP000 GBP000 GBP000
------------------------------------- --------- ----------- ------------ ---------
Valuation at 30 June 2020 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
------------------------------------- --------- ----------- ------------ ---------
Additions at cost 7,433 - - 7,433
Other capital expenditure 1,053 22 542 1,617
Disposals (29,680) (518) - (30,198)
Valuation movement 2,878 (22) 633 3,489
Movement in tenant lease incentives (144) - - (144)
------------------------------------- --------- ----------- ------------ ---------
Valuation at 30 June 2022 156,230 2,250 42,626 201,106
------------------------------------- --------- ----------- ------------ ---------
At 30 June 2022, investment property valued at GBP198,630,000
(2021: GBP213,720,000) 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 Total
to use
asset
GBP000 GBP000 GBP000
------------------------------------- --------- -------- --------
Valuation at 30 June 2020 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
------------------------------------- --------- -------- --------
IFRS 16 adjustment - (96) (96)
Depreciation (316) (1,480) (1,796)
(Impairment)/reversal of impairment (384) - (384)
-------- --------
Valuation at 30 June 2022 29,200 43,026 72,226
------------------------------------- --------- -------- --------
The historical cost of freehold properties and right of use
assets relating to car park activities is GBP30,153,000 (2021:
GBP30,153,000).
At 30 June 2022, freehold properties and right of use assets
relating to car park activities, held as security against the
Group's borrowings are held at GBP42,170,000 (2021:
GBP43,650,000).
The Company occupies an office suite in part of the Merrion
Centre. The Directors do not consider this element to be
material.
(c) Freehold and leasehold properties - hotel operations
Freehold
GBP000
--------------------------- ---------
Valuation at 30 June 2021 8,630
Depreciation (243)
Valuation movement 713
--------------------------- ---------
Valuation at 30 June 2022 9,100
--------------------------- ---------
At 30 June 2022, freehold and leasehold property relating to
hotel operations valued at GBP9,100,000 (2021: GBP8,630,000) 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
2022 and 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 value calculations.
Property income, values and yields have been set out by category
as at 30 June 2022 in the table below.
Passing ERV Value Initial Reversionary
rent yield yield
GBP000 GBP000 GBP000 % %
---------------------------- -------- ------- -------- -------- -------------
Retail and Leisure 1,122 1,709 22,125 4.3% 6.8%
Merrion Centre (excluding
offices) 4,874 5,234 58,818 7.8% 8.4%
Offices 2,862 4,801 55,262 4.9% 8.2%
Hotels 500 950 9,100 5.2% 9.9%
Out of town retail 1,006 1,155 14,500 6.6% 7.5%
Residential 428 428 7,775 5.1% 5.1%
---------------------------- -------- ------- -------- -------- -------------
10,792 14,277 167,580 6.0% 8.0%
---------------------------- -------- ------- -------- -------- -------------
Development property 42,626
Car parks 45,527
IFRS 16 Adjustment - Right
of use assets held within
investment property 26,699
---------------------------- -------- ------- --------
282,432
---------------------------- -------- ------- --------
Property income, values and yields have been set out by category
as at 30 June 2021 in the table below.
Passing ERV Value Initial Reversionary
rent yield yield
GBP000 GBP000 GBP000 % %
---------------------------- -------- ------- -------- -------- -------------
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 GBP167.6m of applying a different yield
and a different ERV would be as follows:
Valuation in the Consolidated Financial Statements at an initial
yield of 7.0% - GBP143.7m, Valuation at 5.0% - GBP201.0m.
Valuation in the Consolidated Financial Statements at a
reversionary yield of 9.0% - GBP148.9m, Valuation at 7.0% -
GBP191.6m.
Investment properties (development properties)
The key unobservable inputs in the valuation of one of the
Group's development properties of GBP27.6m 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 per acre or per unit value - GBP29.0m, 5% decrease
in the per acre or per unit value - GBP26.2m.
The other key development property in the Group is valued on a
per acre development 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 GBP29.2m 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 - GBP34.4m, 1% increase in the
yield/discount rate - GBP25.4m
Property valuations can be reconciled to the carrying value of
the properties in the balance sheet as follows:
Freehold
Investment and Leasehold Hotel
Properties Properties operations Total
GBP000 GBP000 GBP000 GBP000
------------------------------ ------------- ---------------- ------------- --------
Externally valued by CBRE 104,250 23,800 9,100 137,150
Externally valued by Jones
Lang LaSalle 96,805 5,400 - 102,205
Investment properties valued
by the Directors 51 - - 51
------------------------------ ------------- ---------------- ------------- --------
Properties held at valuation 201,106 29,200 9,100 239,406
IFRS 16 right of use assets
held at depreciated cost - 43,026 - 43,026
------------------------------ ------------- ---------------- ------------- --------
201,106 72,226 9,100 282,432
------------------------------ ------------- ---------------- ------------- --------
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 GBP3,850,000
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 GBP230,000.
(d) Fixtures, equipment and motor vehicles
Accumulated
Cost depreciation
GBP000 GBP000
------------------------------------------------ ------- ---------------
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
------------------------------------------------ ------- ---------------
At 1 July 2021 4,711 3,756
Additions 283 -
Depreciation - 262
At 30 June 2022 4,994 4,018
------------------------------------------------ ------- ---------------
Net book value at 30 June 2022 976
------------------------------------------------ ------- ---------------
7. Investments in joint ventures
2022 2021
GBP000 GBP000
--------------------------------------------- ------- -------
At the start of the year 16,212 13,751
Investments in joint ventures 326 -
Loan interest 163 110
Valuation movement on investment properties 430 1,488
Share of profits after tax 885 863
--------------------------------------------- ------- -------
At the end of the year 18,016 16,212
--------------------------------------------- ------- -------
Investments in joint ventures are broken down as follows:
2022 2021
GBP000 GBP000
-------- ------- -------
Equity 11,691 10,376
Loans 6,325 5,836
-------- ------- -------
18,016 16,212
-------- ------- -------
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 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 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 assets and liabilities of Merrion House LLP for the current
and previous year are as stated below:
2022 2021
GBP000 GBP000
----------------------------------- --------- ---------
Non-current assets 71,850 71,650
Cash and cash equivalents 278 263
Debtors and prepayments 295 401
Trade and other payables (616) (704)
Current financial liabilities (1,659) (1,603)
Non-current financial liabilities (47,270) (48,929)
----------------------------------- --------- ---------
Net assets 22,878 21,078
----------------------------------- --------- ---------
A reconciliation of the net assets to carrying value is set out
as follows:
2022 2021
GBP000 GBP000
------------------------------------- ------- --------
Proportional interest in net assets 11,439 10,539
Unutilised provisions - (192)
------------------------------------- ------- --------
Carrying value 11,439 10,347
------------------------------------- ------- --------
The profits of Merrion House LLP for the current and previous
year are as stated below:
2022 2021
GBP000 GBP000
--------------------------------------------- -------- --------
Revenue 3,328 3,328
Expenses (2) (8)
Finance costs (1,725) (1,780)
Valuation movement on investment properties 200 2,250
--------------------------------------------- -------- --------
Net profit 1,801 3,790
--------------------------------------------- -------- --------
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 2022 of GBP6.3m (2021:
GBP5.7m).
The net assets of Belgravia Living Group for the current and
previous year are as stated below:
2022 2021
GBP000 GBP000
----------------------------------- --------- ---------
Non-current assets 24,586 22,783
Cash and cash equivalents 2,048 1,998
Debtors and prepayments 664 1,170
Trade and other payables (434) (140)
Current financial liabilities (11,453) (11,146)
Non-current financial liabilities (14,541) (14,634)
----------------------------------- --------- ---------
Net assets 870 31
----------------------------------- --------- ---------
A reconciliation of the net assets to carrying value is set out
as follows:
2022 2021
GBP000 GBP000
------------------------------------- ------- -------
Proportional interest in net assets 435 16
Valuation adjustment (183) 13
------------------------------------- ------- -------
Carrying value 252 29
------------------------------------- ------- -------
The income and expenses of Belgravia Living Group Limited for
the current and previous year are as stated below:
2022 2021
GBP000 GBP000
--------------------------------------------- ------- -------
Revenue 1,339 1,262
Expenses (420) (364)
Depreciation (151) (150)
Finance costs (603) (571)
Valuation movement on investment properties 714 726
Corporation tax (175) -
--------------------------------------------- ------- -------
Net profit 704 903
--------------------------------------------- ------- -------
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 GBPnil (2021: GBPnil).
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 Activity
Interest
%
------------------------------- ----------- ---------------------
Merrion House LLP 50 Property investment
Belgravia Living Group Limited 50 Property Investment
Bay Sentry Limited 50 Software Development
------------------------------- ----------- ---------------------
8. Investments
2022 2021
GBP000 GBP000
------------------------ ------- -------
Listed investments 4,096 5,802
Non-listed investments 410 3,415
------------------------ ------- -------
4,506 9,217
------------------------ ------- -------
Listed investments
2022 2021
GBP000 GBP000
------------------------------ -------- -------
At the start of the year 5,802 3,508
Disposals (62) -
(Decrease)/increase in value
of investments (1,644) 2,294
------------------------------ -------- -------
At the end of the year 4,096 5,802
------------------------------ -------- -------
Listed investments relate to an equity shareholding in a company
listed on the London Stock Exchange. This is stated at market value
in the table above and has a historic cost of GBP882,300 (2021:
GBP889,130).
Listed investments are measured at fair value in the
consolidated balance sheet and are categorised as level 1 in the
fair value hierarchy as defined in IFRS13 as the inputs to the
valuation are based on quoted market prices.
The maximum risk exposure at the reporting date is the fair
value of the other investments.
Non-listed investments
2022 2021
GBP000 GBP000
---------------------------------- --------- -------
At the start of the year 3,415 2,656
Additions - 258
Loan interest 413 -
Increase in value of investments 16,950 501
Transferred to assets held (20,368) -
for sale
---------------------------------- --------- -------
At the end of the year 410 3,415
---------------------------------- --------- -------
Non-listed investments are broken down
as follows: 2022 2021
GBP000 GBP000
---------------------------------------- ------- -------
Equity investments 410 1,880
Loans - 1,535
---------------------------------------- ------- -------
410 3,415
---------------------------------------- ------- -------
Non listed investments - Assets held
for sale
Assets held for sale are broken down
as follows: 2022 2021
GBP000 GBP000
--------------------------------------- ------- -------
Equity investments 18,420 -
Loans 1,948 -
--------------------------------------- ------- -------
20,368 -
--------------------------------------- ------- -------
Assets held for sale relate to an equity shareholding and loans
advanced to YourParkingSpace Limited ('YPS'), a privately owned
company incorporated in the United Kingdom. The company has
completed the sale of these assets in July 2022 as set out in note
26.
As at 30 June 2022, the loans are held at amortised cost and are
assessed for impairment under the IFRS9 expected credit loss
model.
The assets are categorised as level 3 in the fair value
hierarchy as defined in IFRS 13 as the inputs to the valuation are
based on unobservable inputs.
The key unobservable inputs in the valuation of the Group's
asset held for sale at 30 June 2022 of GBP20.4m is the estimated
performance of YPS in the 14 month period following completion of
the sale and the effect it has on the earn out element of
consideration. The effect on the valuation of applying a different
assumed net revenue figure is as follows:
Valuation in the Consolidated Financial Statements if a 10%
increase in the net revenue - GBP20.7m, 10% decrease in the net
revenue - GBP20.1m.
9. Share capital
Authorised
The authorised share capital of the company is 164,879,000
(2021: 164,879,000) Ordinary Shares of 25p each. The nominal value
of authorised share capital is GBP41,219,750 (2021:
GBP41,219,750).
Issued and fully paid up
Number Nominal
of shares value
000 GBP000
--------------------------- ----------- --------
At 30 June 2021 53,131 13,282
Purchase and cancellation
of own shares (600) (150)
--------------------------- ----------- --------
At 30 June 2022 52,531 13,132
--------------------------- ----------- --------
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.
10. Cash flow from operating activities
2022 2021
GBP000 GBP000
----------------------------------------- ------------------ ----------
Profit/(loss) for the financial year 11,012 (576)
Adjustments for:
Depreciation 2,301 2,191
Amortisation 222 37
(Profit)/loss on disposal of investment
properties (4,563) 2,320
Loss on sale of investments 89 -
Finance costs 8,063 8,145
Finance income (576) -
Share of post tax profits from joint
ventures (1,315) (2,461)
Movement in valuation of investment
properties (3,489) (63)
Movement in lease incentives 144 (1,463)
Impairment of car parking assets 384 111
Decrease/(increase) in receivables 1,083 (2,675)
Decrease in payables (1,667) (922)
----------------------------------------- ------------------ ----------
Cash generated from operations 11,688 4,644
----------------------------------------- ------------------ ----------
11. Net asset value per share
The Basic and diluted net asset values are the same, as set out
in the table below.
2022 2021
GBP000 GBP000
----------------------------- -------- --------
Net assets at 30 June 179,304 155,395
Shares in issue (000) 52,531 53,131
Basic and diluted net asset
value per share 341p 292p
----------------------------- -------- --------
[1] Savills Research - Shopping Centre and High Street Spotlight
Q2 2022
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(END) Dow Jones Newswires
October 14, 2022 02:00 ET (06:00 GMT)
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