Annual Report and Accounts 2019
Town Centre Securities PLC | Annual Report & Accounts 2019
Contents
Strategic Report
At a glance
Why invest in
Town Centre Securities?
Chairman and
Chief Executive’s statement
Business model
Strategy & KPIs
Strategy in action
Portfolio review
Divisional reviews
Operating responsibly
Financial review
Risk report
Corporate Governance
Introduction from Chairman
Board of Directors
Nomination Committee report
Audit Committee report
Directors' remuneration report
Directors' report
Statement of Directors’
responsibilities
Town Centre House, office interior
Cover: Burlington House, Manchester
01
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06
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29
46
54
60
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68
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93
Financial Statements
Independent Auditor’s report
96
98
Consolidated income statement
104
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated statement
of changes in equity
Consolidated cash
flow statement
Notes to the consolidated
financial statements
Company balance sheet
Statement of changes in equity
Notes to the company
financial statements
Shareholder Information
104
105
106
107
108
131
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142
Notice of Annual General Meeting 142
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Investor information
152
Town Centre
Securities (TCS) is a
property investment
and development
company with assets
of over £394 million.
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Operating principally in Leeds,
Manchester, Glasgow and suburban
London, our portfolio comprises
office, retail and leisure, residential
and car parking assets.
Our purpose
Through the acquisition and active management of property
in sustainable locations, we create quality spaces for our tenants,
help communities to thrive and generate value for shareholders
over the long-term.
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01
Shareholder Information
At a glance
Founded in 1959, TCS is a UK real estate investment trust
operating a diversified, mixed use portfolio focused on
regional centres, primarily in Leeds and Manchester.
Highlights
Total dividends
per share
Statutory profit
before tax
EPRA net assets
per share
EPRA earnings
before tax
11.75p
(£12.5m)
354p
£6.4m
2019
2018
2017
11.75p
11.75p
11.50p
(£12.5m)
2019
2018
£18.4m
2017
£6.7m
2019
2018
2017
354p
384p
359p
2019
2018
2017
£6.4m
£6.9m
£7.0m
Total property
return
1.3%
Statutory earnings
per share
Total shareholder
return
EPRA earnings
per share
(23.4p)
(25.0%)
12.0p
What we do
We actively manage our portfolio for income and capital growth. We invest in locations likely to
demonstrate sustainable growth, work closely with tenants to improve our properties to meet their
needs, and dispose of properties that no longer meet our stringent criteria for future performance.
Offices
We own over 360,000 sq ft
of prime office space, let to
longstanding tenants including
Leeds City Council.
Retail & Leisure
Our retail and leisure assets
are let to high quality tenants
operating in resilient segments
of the retail sector with a focus
on supermarkets, discount and
convenience. We have a growing
leisure portfolio which includes
restaurants, coffee shops, gyms
and a tenpin bowling facility.
Hotels
Following the completion of
developments in 2017, we now
own two hotels in Leeds, one let to
and operated by Premier Inn, and
one managed by TCS under the
ibis brand.
20% of portfolio value
50% of portfolio value
7% of portfolio value
2019
1.3%
(23.5p)
9.4%
2019
2018
34.6p
6.0%
2017
12.7p
2018
2017
Our Locations
02
(25.0%)
2019
2018
3.2%
2017
9.6%
2019
2018
2017
12.0p
13.0p
13.2p
Leeds
60%
of portfolio value
Manchester
17%
of portfolio value
Residential
Car Parks
Developments
Having long owned residential
units, primarily above retail
property, we recently completed
our first purpose-built private
rental sector project and have
plans to develop more residential
properties, both standalone and/or
as part of mixed use developments.
Our CitiPark division delivers and
manages first class car parks in
key locations in Leeds, London,
Manchester and Watford.
Our development portfolio of
over £600m GDV principally
comprises large city centre sites
at Piccadilly Basin in Manchester
and Whitehall Road in Leeds, both
of which centre on office and
residential assets.
6% of portfolio value
7% of portfolio value
9% of portfolio value
Read more on pages 43–45
Read more on 42
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Town Centre Securities PLC | Annual Report & Accounts 2019
Why invest in
Town Centre Securities?
We have created value for stakeholders for almost
60 years through active asset management
and conservative financing of our diversified
regional portfolio.
Diversified regional portfolio
Active asset management
Multi-sector approach,
with 77% of assets in
Leeds and Manchester
We have a strong
record of creating
value through income
and capital growth
Read more on pages 29 and 35
Read more on pages 17 and 19
Strong tenant base
Attractive growth opportunities
Diverse, high quality
tenants including Leeds
City Council, Morrisons
and Waitrose
Development pipeline
with potential GDV of
over £600m
Read more on page 24
Read more on page 42
Reliable returns
Long-term stewardship
Unbroken record of
maintained or increased
dividend over almost
60 years
Close alignment between
management and
shareholders given 52%
Ziff family ownership
Read more on page 10
Read more on page 94
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Whitehall Riverside, Leeds (CGI)
05
Shareholder Information
Chairman and
Chief Executive’s statement
We remain committed to pursuing our
strategy for long-term value creation,
despite market fluctuations.
Delivering in an uncertain market
Against a challenging retail sector
context and ongoing economic
uncertainty, we have delivered a
robust underlying performance,
whilst importantly continuing to
re-position the portfolio for the
long-term, and maintaining our
long-standing dividend record.
Overall occupancy reached 96%
(2018: 95%), and like-for-like
passing rent increased by 2.6%
relative to a year ago. The value
of our portfolio stands at £394m,
with less than 50% of the portfolio
comprising Retail and Leisure
assets, which compares to 55%
a year ago, and 70% three years
ago. To have generated these
results against such a backdrop is
testament to the hard work of the
TCS team.
The like-for-like valuation of
our portfolio reduced by 3.8%
in the year (FY18: up 3.2%).
This reduction has been driven
by the continued pressure on
retail valuations. However, in
comparison to some of our
peers, we believe the combination
of the quality of our assets
alongside the reducing proportion
of retail assets in our portfolio has
played an important role in limiting
the level of devaluation. (See page
22 for more detail on the valuation
of the portfolio.)
EPRA earnings in the year were
£6.4m (FY18: £6.9m) resulting in
EPRA EPS of 12.0p (FY18: 13.0p).
As discussed in more detail in
the Finance section (page 54)
the year on year reduction was
driven by a number of factors
including the effect of Retail CVAs
and administrations, legal and
professional fees, and a one-off
dilapidation credit in the prior year.
We report a statutory loss for the
year of £12.5m (FY18: Profit of
£18.4m), which is as a result
of the unrealised devaluation
of our investment properties
of £18.3m.
Proportion of retail and leisure
2019
2018
2016
50%
55%
70%
on pages 9 and 21
06
Against a challenging retail context
and ongoing economic uncertainty,
we have delivered robust underlying
performance, whilst importantly
continuing to improve the portfolio
for the long-term, and maintaining
our long-standing dividend record.
Dr. Edward Ziff OBE DL
Chairman & Chief Executive
£394m
Portfolio value
Dividend maintained
2019
2018
2017
11.75p
11.75p
11.50p
Read more on page 10
Burlington House, Manchester
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Chairman and
Chief Executive’s statement continued
We continue to benefit from
a secure mix of debt funding,
which was strengthened last year
following the renewal or extension
of our bank facilities, and further
improved at the beginning of this
financial year by the completion
of the innovative Merrion House
financing arrangement with Leeds
City Council. Following a number
of years of reporting reducing
levels of leverage, we have this
year seen our Loan to Value level
increase to 49.3% (FY18: 47.5%).
However, this is completely driven
by the reduction in value of our
like-for-like investment portfolio,
and we have seen absolute
borrowing levels drop to £182m
(FY18: £193m).
In tough times such as these it
is important that we stick to our
strategy and ethos of focusing on
long-term income and capital gain,
even if this means riding out short-
term challenges:
• Actively managing our assets
to optimise income and capital
growth;
• Maximising available capital
by selling sites that no longer
meet our growth criteria and
maintaining conservative
financing, with the aim of
reducing gearing over the
longer term;
• Investing in our development
pipeline, continuing to unlock
existing opportunities and
create new ones;
• Acquiring investment assets to
diversify our portfolio across
sectors, with a focus on Leeds
and Manchester.
Actively managing our assets
The travails of the retail sector
are well documented, with long
established household names
struggling for survival and
Company Voluntary Arrangements
(CVAs) increasingly common as
a means of reducing retailers’
rental liabilities. Although we have
not been immune to the surge of
retail CVAs, our agile approach
to intensive asset management
has mitigated their ongoing
impact. During the financial year,
eight of our tenants entered into
administration or CVAs. By June
four units had been re-let to
new tenants and a further three
have seen the incumbent retailer
remain, such that, on average, we
have generated rents of at least
the previous level. The remaining
unit represents only 0.4% of the
total rent roll.
An example of this is the former
Mothercare site on the Holloway
Road in north London, where
the terms of the CVA resulted in
a rent reduction to 30% of the
contracted amount. We gave notice
to Mothercare, re-let the outlet
to The Works and are converting
the upper storey to residential
use, such that the total rent for
the property will be 24% greater
than it was with our former tenant.
Similarly, when Poundworld, one of
our Merrion Centre tenants, went
into administration we re-let the
site to Iceland, at the same rent as
part of a new, 10-year lease. These
cases underline our strongly held
belief that retail assets acquired in
the right locations at the right price
have a valuable role in our portfolio,
although we monitor tenant
performance and outlook to ensure
we act swiftly to manage risk.
New schemes to generate growth
have been identified at The
Cube and Vicar Lane in Leeds
and Ducie House in Manchester.
Again, further detail of our active
asset management approach,
including lease restructures and
rent reviews, is provided in our
Portfolio Review on page 20.
We completed our
first purpose built
PRS development
– Burlington House,
Manchester, in June 2019
Burlington House, Manchester
08
Maximising available capital
A conservative capital structure,
with a mix of short- and long-
term secure financing, has always
underpinned our approach.
During the year we completed
the innovative financing of the
Merrion House office complex,
following the most recent part of
the last decade’s redevelopment
and letting to Leeds City Council.
Under the agreement, the
Council paid all of the base rent
due for the term of the 25-year
lease. The resulting net cash
injection of £26.4 million allowed
us to complete the acquisition
of The Cube, an office, leisure
and residential property in
Leeds, ahead of selling our
Rochdale Retail Park asset,
thereby protecting income. In
addition to the financial flexibility
Merrion House has given us, it is
gratifying to have turned a tired,
1970s office block into a vibrant,
successful building occupied by a
long-term tenant with more than
2,200 employees.
We continue to proactively dispose
of ex-growth assets in order to
provide capital to invest in future
growth. Since FY14 we have sold
over £101m of assets representing
almost a third of our current
investment property portfolio,
including most recently Rochdale
Retail Park for £13.2m.
Investing in our
development pipeline
Over the years we have
established a high quality pipeline
of development opportunities,
reflected in ongoing increases in
valuation. Centred on Piccadilly
Basin in Manchester and Whitehall
Road and Merrion in Leeds, our
pipeline has an estimated Gross
Development Value of over £600m
and comprises predominantly
office and residential assets
(see page 42).
Most of the developments
are part of local authority
approved Strategic Planning
Frameworks or have detailed
planning permission. We have an
abundance of opportunity within
our development pipeline, but
with the economic environment
as challenging and unsettled as
it currently is, it is important that
we take our time and ensure we
take the most appropriate next
steps. Following the appointment
of Lynda Shillaw as Group Property
Director in November, we have
been reviewing our development
assets to evaluate the scope to
create even more value than
the current plans deliver. As a
result, we are in the process of
reviewing the prioritisation of the
development pipeline.
We recognise that further capital is
required to unlock the latent value
in the development pipeline and
we continue to look at all options,
but this is not a time to hurry
and we will proceed when the time
is right to create long-term value
for shareholders.
Acquiring investment assets
to diversify our portfolio
Although it is important to
differentiate between segments of
the retail sector, the overall market
context validates our strategy to
diversify our portfolio to maximise
returns. Retail and Leisure now
accounts for 50% of our portfolio
value, down from 70% in 2016.
Capital recycling has been key
to this strategic repositioning,
with divestment of ex-growth
assets, targeted acquisitions and
the ongoing unlocking of our
development pipeline all playing
a part.
Half of the value of our retail
portfolio relates to the Merrion
Centre, our longest held and
largest single asset that continues
to generate attractive income
following a £70m investment
programme over the last decade.
This year we celebrated the
Merrion Centre’s 55th year
(see page 26), its longevity and
success a testament of the
long-term focus and vision of
the Company. In the last year
occupancy was 96% and we
collected record levels of rent.
Around 50% of rental income from
this one million square foot mixed
use site relates to retail and leisure.
Of this, Morrisons accounts for
half, and the majority of our other
retail tenants operate in discount
and convenience, the more
resilient segments of the market.
Other assets acquired and
developed during the year
enhanced our position in non-
retail sectors, with our network
of contacts and entrepreneurial
mindset allowing us to capitalise
on attractive opportunities as they
have arisen. The completion of
Burlington House in May signals
our first material participation in
the purpose built, private rented
sector, and this is now fully let. We
are advancing other residential
projects, with Eider House being
the likely next phase of our
Piccadilly Basin development to
commence, and our development
pipeline is skewed towards office
and residential uses. More detail
is available in the Portfolio Review
from page 20. Our car parking
activities are also a core part
of our diversification strategy.
They are discussed in a dedicated
section below and in more
detail from page 43.
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Looking ahead
We have delivered a robust underlying performance, whilst continuing
to re-position the portfolio for the long-term and maintaining our 59-
year dividend record despite a challenging retail sector context and
ongoing economic uncertainty.
Short-term fluctuations in valuations do not shake our confidence
in our business model and conservative management approach.
The strength of our portfolio and the quality of our development
pipeline substantiate the potential for long-term growth. Although
we see an ongoing role for the type of retail assets that we own in
the areas we know intimately, we continue to increase our exposure
to non-retail sectors.
Given the current sector challenges and the growing gap between
our share price and the underlying value of the business, we
continue to look at our potential strategic options. We believe it is
appropriate to accelerate the disposal of ex-growth retail properties,
which despite the potential short-term impact to income, will de-risk
the portfolio and free up capital to re-invest. We are in the process
of reviewing priorities within our development pipeline where we
see latent value, whilst the opportunity for an earnings and NAV
enhancing share buy-back given our deeply discounted share price
is also under consideration.
Dr. Edward Ziff OBE DL
Chairman & Chief Executive
Chairman and
Chief Executive’s statement continued
We operate in geographical areas
that have been less exposed
to the more extreme swings of
the property cycle seen in the
South East. 77% of our portfolio
is in Leeds and Manchester, both
of which are thriving. In Leeds,
the plans for Channel 4 to open
offices and the consolidation of
HMRC’s satellite tax offices into a
building opposite one of our sites
serve to drive up values in the city
centre, as does the heightened
interest from institutional investors
looking beyond London. In the
longer term, if both Northern
Powerhouse Rail (HS3) and HS2
go ahead, the economies of
both Leeds and Manchester will
benefit significantly.
Growing CitiPark
This area of our business has
continued to grow, with revenue
up by 8.2% and profitability
by 9.7%. Accounting for 28%
of Group revenues and 31% of
operating profits, CitiPark is an
important source of value creation
for TCS. Well invested branches
with technological innovations
to enhance the customer
experience and our operational
efficiency have been central to
our growth strategy. Customers
of our strategic branches
benefit from online booking, and
barrier and cash-less systems
enabled by automatic number
plate recognition. We recently
launched a mobile app to further
facilitate customer interaction,
with strong early take-up. Electric
vehicle charging is available in
all branches, and we recently
installed a 50kW rapid charger in
the Merrion Centre, the first of its
type in Leeds City Centre.
We also continue to work
closely with Yourparkingspace.
co.uk, which matches drivers
with available spaces across
the country via its website and
mobile app. We own a 15% stake
in the business, which is in the
process of undertaking a new
round of fundraising to further
its ambitions.
Aside from our strategic car
parking facilities, CitiPark has
provided a valuable means of
generating income from areas
of our property development
portfolio that otherwise would
be unutilised as they await
investment.
Investing in ‘PropTech’
Sparked by our work with
Yourparkingspace.co.uk, in
recent years we have evaluated
opportunities to invest in
property-related technology
companies. During the year
we made a US$0.5m equity
investment in WiredScore, a US
based company that provides
a commercial real estate rating
system that empowers landlords
to understand, improve, and
promote their buildings' digital
infrastructure. We also have a
£25,000 investment in GetRntr,
a start-up company that provides
data-driven technology solutions
to simplify property licensing in
the PRS space.
Creating long-term value
for shareholders
Our objective has always
been to generate value for our
shareholders, with a particular
emphasis on income and
dividend, and we are very proud
of our unbroken, 59-year history
of maintaining or increasing
dividends. A source of frustration
in recent times has been the
disconnect between our share
price and net asset value per
share. We firmly believe that our
long history of value creation
combined with our material
development pipeline should
present an excellent investment
opportunity for investors.
£1,000 invested in TCS shares
50 years ago would today be
worth circa £580,700, on a total
return basis, equivalent to a CAGR
of 13.6% per annum (source:
Datastream). Furthermore, again
over the last 50 years, the TCS
share price has increased in value
by an average annual rate of 9.1%,
compared to the FTSE All Share at
7.0% (as at 9 August 2019).
Despite a tough year, the Board
is pleased to recommend a final
dividend of 8.50p per share. With
the interim dividend of 3.25p per
share, this gives a total of 11.75p
per share (2018: 11.75p). Of the
final dividend of 8.50p, 4.50p will
be made up of a Property Income
Distribution, and will be paid on 7
January 2020 to shareholders on
the register on 6 December 2019.
Operating responsibly
Contributing to our local areas
through fundraising activities,
volunteering and events has
always been an important
part of our ethos. We support
a wide range of not-for-profit
organisations, and helped raise a
total of over £150,000 for charities
in the past year. We are also proud
of the role we play in developing
attractive spaces for our tenants
and creating thriving communities.
We strive to minimise our impact
on the environment. Our newly
developed and refurbished
properties are fitted to achieve
efficient energy performance, we
operate solar farms on three of
our sites, and use electric hybrid
vehicles in our fleet. Read more
about our initiatives on page 46.
10
Merrion Centre, Leeds
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Business model
Our diversified regional portfolio, active asset
management and conservative financing
create value for stakeholders.
We create value through applying our key strengths to our active approach to portfolio
management, creating reliable income streams that form the backbone of our activities
We share value with
all of our stakeholders
We maximise value through...
Our key strengths
What we do
Experienced team with
detailed knowledge of
the communities in which
we operate
Long-term view,
underpinned by
family ownership
Conservative financing, with
a mix of short- and long-
term secure financing
Entrepreneurial approach
to identifying investment
and development
opportunities, and to
monetising development
land through car parking
Operating responsibly
and contributing to our
communities are at the
heart of our culture
Actively manage assets to optimise
income and capital growth
Refurbish and upgrade
Renew leases
Reduce voids
Maximise available capital by divesting
ex-growth assets and refinancing to lower LTV
Invest in our
development pipeline,
continuing to unlock
existing opportunities
and create new ones
Acquire investment
assets
to diversify portfolio
across sectors, with
a focus on Leeds and
Manchester
Create a long-term quality
portfolio, primarily in
Leeds and Manchester
Clear strategy
Read more on pages 14–19
Robust risk
management
Read more on pages 60–65
Sound governance
Read more on pages 68–95
Portfolio value
by sector
Our stakeholders
Investors
Stable dividend for the long-term
Long-term capital growth
10% Total Shareholder Return
compound growth over 10 years
75% growth in NAV per share
over 10 years
Office
Retail & Leisure
Residential
Hotel
Car Parking
Development
Other
20%
50%
6%
7%
7%
9%
2%
Portfolio value
by location
Tenants
Attractive spaces that
are fit for purpose
96% occupancy
Employees
Rewarding careers
82% employee retention
Communities
Thriving areas with high footfall
11 million annual footfall in
Merrion Centre
Active citizenship through
volunteering and charitable work
£150k raised for charitable causes
Leeds
Manchester
Scotland
London
60%
17%
14%
8%
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Strategy and KPIs
We have clear plans to continue to diversify our portfolio
to generate income and capital growth for the long-term.
Read more on about risk
management on pages 60–65
What we do
Progress
KPIs
Priorities
Actively manage assets
to optimise income and
capital growth
Refurbish and upgrade
Renew leases
Reduce voids
Maximise available
capital by divesting
ex-growth assets and
refinancing to lower LTV
Refurbishment activity included the conversion of the
former Homebase store at Milngavie in Scotland, and
continued investment in the Merrion Centre supports
rental income.
We signed new leases for The Cube in Leeds following
its acquisition in October 2018, and increased the rent
for Carvers Warehouse following new lease agreements.
In London, we let the former Mothercare outlet to The
Works and are converting the upper floors to residential,
increasing the total rent.
We sold two properties for a total of £14.0m during the
year, including the £13.2m sale of Rochdale Retail Park.
We completed the innovative refinancing of Merrion
House, which generated upfront cash of £26.4m, net
of costs, as a result of Leeds City Council advancing
25 years of rent on Merrion House.
Invest in our development
pipeline, continuing
to unlock existing
opportunities and
create new ones
We completed our first dedicated Private Rented Sector
investment, the 91 unit Burlington House in Manchester.
Planning permission was granted for a 17-storey office
tower, 100MC, to be built above an existing section of the
Merrion Centre.
Planning consent for No2 Whitehall Riverside and the
associated multi-storey car park implemented.
Acquire investment
assets to diversify
portfolio across sectors,
with a focus on Leeds
and Manchester
The proportion of our portfolio accounted for by retail and
leisure has fallen to 50% of value (of which the Merrion
Centre accounts for 23%), from 70% in 2016.
We acquired three properties for £16.0m during 2019, the
majority being office space at The Cube in Leeds.
Our CitiPark division continues to grow and to stay at the
forefront of technology. In 2019, we were pleased to enter
into a car park management contract for the new John
Lewis store in Cheltenham.
14
£3.7m CAPEX
2.6% LFL rent increase
96% occupancy rate
Future growth opportunities have been created,
with new schemes identified at The Cube and
Vicar Lane in Leeds and Ducie House in Manchester.
In our CitiPark division, we will continue to
pursue management agreements and roll out
EV charging points.
£14.0m generated
from asset sales
49.4% loan to value
(FY18: 47.5%)
£26.1m headroom
£2.1m invested in
development projects
building on the significant
investment of the last
few years
50% retail and leisure
(FY18: 55%)
Reversionary Yield 6.8%
(FY18: 6.4%)
We will continue to review our portfolio to replace
maturing assets, disposing of properties that no
longer meet our criteria for future performance.
Optimising our capital structure to reduce gearing
is an on-going focus.
We continue to add to the development pipeline.
Most recently the Ducie House purchase in
Manchester offers the opportunity of a development
on its car park for which plans are being developed.
We are in the process of reviewing the sequence of
the next phases of our development pipeline with
options including Eider House, the next Piccadilly
Basin PRS scheme, our Whitehall Road, Leeds office
and car park scheme, and the 100MC Merrion Tower
amongst others. We continue to consider alternative
sources of capital to enable this.
We continually review opportunities to acquire new
investment asset across all sectors, and in particular
in Leeds and Manchester.
Sites with asset management and/or development
opportunities being a particular focus.
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Town Centre Securities PLC | Annual Report & Accounts 2019
Strategy in action
Acquiring investment assets: The Cube
Actively managing assets: Milngavie
In October 2018 we acquired
The Cube from Aviva for £12m,
at a net initial yield of over 12.5%.
Originally a 1960s office building,
The Cube has been refurbished
and extended, and now comprises
22,000 sq ft of ground floor
leisure units together with 50,000
sq ft of offices over three floors.
This acquisition is a great example
of our strategic approach to
improving the portfolio by
acquiring stock for growth in
locations where we already have
a strong presence.
• Location: Leeds City Centre,
in close proximity to the
Merrion Centre
• Yield: extremely attractive yield,
primarily due to the office leases
coming to an end by the end
of 2019
• Diversification: Largely office
space, the acquisition helps
reduce the Company’s exposure
to Retail
• Growth potential: With
intensive asset management
and possible capital investment,
there is significant opportunity
for long-term capital growth
and maintenance of strong
levels of income.
The Cube is typical of the assets
that TCS looks to invest in, where
the lot size and the building’s need
for intensive asset management
puts off larger buyers, giving
TCS the opportunity to acquire
attractive assets at a competitive
price. At the purchase date,
£1.25m (77% of the income) was
generated through two leases to
the Government and to Capita,
with both leases due to expire in
2019. It was clear that Capita, the
largest tenant, would seek to leave
by September 2019.
Consistent with our strategy of
delivering for the long term, we
expect income levels and value
to dip whilst the tenant change
and capital investment are
delivered, with the aim of securing
long term income and creating
capital growth.
Actions so far:
We have now:
• Replaced £180k of at-risk
income with a renewed five-year
lease with the Secretary of State
for 10,000 sq ft
• The second floor, third floor and
half the first floor are currently
being marketed, with strong
interest.
To secure the final lettings and to
optimise value from the asset,
we are investing capital to:
• Reconfigure and improve the
remaining office space
•
Improve communal and
reception space.
We are also looking at
opportunities to:
• Repurpose some of the ground
floor leisure space
• Create flexible co-working space.
We believe that once the building
is fully let, we will be ahead of
our initial investment case. As we
progress with the expected tenant
changes and invest in the space,
we do expect FY20 income to drop
year on year.
£4.0m
improvement scheme
commenced
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One of our properties in
Milngavie, an upmarket
commuter town outside of
Glasgow, was previously let to
Homebase, who exited having
settled our dilapidations claim
in December 2017.
Having sub-divided and improved
this 36,500 sq ft unit, it was let
to Aldi and Home Bargains. This
change created a significant
opportunity for TCS. Through
actions aligned to our strategic
drivers, we unlocked value through:
• Intensive asset management:
The change allowed for
investment in the building and
dividing it into two, improving
rental levels and valuation
• Diversification: Whilst the new
tenants are also retailers, we
have been able to significantly
improve the covenants. In
addition, the development will
include two EV chargers in the
car park as part of our CitiCharge
initiative (see page 43)
• Growth potential: The
development work has
also future-proofed the site
infrastructure, enabling c. 9k sq
ft of additional usable land which
will be able to deliver further
new rental income in the future.
Whilst impacting on income as a result of the building being vacant for
c. 18 months, we have created significant value:
Before:
Expired poor covenant Homebase
lease delivering c. £560k rent pa,
valued at £7.8m.
After:
Two new high-quality leases to
Aldi and Home Bargains, delivering
8% more rent and valued at
£11.1m, following a £1.5m net
capital investment.
Looking forward:
We have an option to purchase and
develop a sizable site which sides
adjacent to this unit giving future
development opportunities for TCS.
23%
net increase in value
Strong covenants
Let to Aldi and Home Bargains.
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Shareholder Information
Strategy in action continued
Investing in our development pipeline and maximising
available capital: Burlington House
• Diversification: This investment
in PRS seeks to benefit from the
strong demand for residential
property in Manchester, whilst
helping to effectively reduce
the proportion of retail within
the portfolio.
Burlington House is our first
dedicated Private Rented Sector
(PRS) property. Located in our
Piccadilly Basin development
site in Manchester, the 91-unit
property has now achieved
practical completion, is being
actively marketed and is expected
to reach mature occupancy within
a few months of completion.
Completion of Burlington House
highlights the potential of TCS’s
development pipeline and
underlines how we continue to
strategically unlock value from
the pipeline:
• Invest in development
pipeline: The latest
development under the
Strategic Planning Framework
at Piccadilly Basin, Burlington
House is an iconic building that
will form the centre of our PRS
investment in Manchester
• Maximise available capital:
The investment was undertaken
in 50/50 joint venture with
Highgrove Group, with c.
60% development finance
being provided by the Greater
Manchester Housing Fund,
thereby minimising the capital
required by TCS to unlock
the scheme
Actively managing assets: Merrion Car Park
Over the past 10 years we have
strategically invested in our
CitiPark car parking business,
now owning or managing over
6,800 spaces across 15 branches,
generating in excess of £12m of
income a year. The Merrion Centre
and First Direct Arena car park is
our longest standing asset, and
our investment and reinvention
of this site over the past six years
highlight our strategic intentions in
this space:
• Intensive asset management:
We have invested £16m in the
Merrion Car Park and Arena
Quarter over the past six years,
ensuring long term stability of
parking income as well as new
sources of income
• Diversification: Ensures
continued diversification
of income from Car Parking
representing over £2.5m
of income
• Growth potential: The
investment enabled the
creation of the ‘New Front’
leisure space directly opposite
the Leeds Arena venue,
creating eight completely
new leisure units
• Investing in technology: The
branch has 13 standard EV
charging points, and in May
2019 we launched Leeds city
centre’s first rapid charger
under the CitiCharge brand.
The Merrion CitiPark branch is now
a state-of-the-art car park with 950
spaces generating over £2.5m of
revenue annually. It is a destination
for Leeds city centre car parking,
in particular being the closest
facility to the Leeds Arena. It
plays an important role in creating
footfall for the Merrion retail offer,
and is an important service for
Merrion Office tenants.
Having a large and profitable
car parking offer has been
fundamental to facilitating the
transition of the Merrion Centre
to a diverse mixed-use property.
In detail:
• 91-unit luxury waterfront
• Belgravia Living branding
established for further PRS
rollout in Piccadilly Basin – the
next planned PRS unit being
Eider House, with the potential
for 148 units.
PRS in Piccadilly Basin
The first 91 units of 730 in our
strategic framework.
scheme designed by acclaimed
architects SimpsonHaugh
incorporates 29 one-bed, 56
two-bed, and six three-bed
apartments in the heart of
Manchester
• £22.7m asset created (100% of
the asset), valued on a PRS basis
(value for vacant sale estimated
at over £26m, for the joint
venture, for which TCS invested
£5.3m including the value
attributed to the land
• Estimated mature net income of
£1.1m yielding circa 5% return
on cost, albeit TCS’s return
on cash spent is significantly
higher
• Development finance in the
process of being replaced with
longer term secured financing
18
1st
rapid charger in
Leeds City Centre
950
spaces opposite
the Leeds Arena
Over
£2.5m
of income annually
100%
fully let by September 2019
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Portfolio review
We continually strive to enhance our high
quality portfolio through active asset
management and capital recycling.
With good quality assets and development
land at the heart of two key regional
cities, TCS’s portfolio is both resilient
and adaptable to meet market conditions.
The strategy to reposition the portfolio
away from retail over the last few years
has enabled us to diversify our income
streams by adding more office, hotel
and PRS assets.
The Merrion Estate has been a key
asset in our portfolio for 55 years
and one that we continue to
evolve, most recently securing
planning permission for a new
180,000 sq ft office tower.
Lynda Shillaw
Group Property Director
20
We believe that our focus on the
cities of Leeds and Manchester
77% of our portfolio) creates a
point of strategic difference.
The economies of both cities go
from strength to strength, and,
from a property perspective,
while northern regional cities
don’t achieve the same highs,
there is less volatility through
the cycle than seen in London
and the South East. Our existing
portfolio, combined with the
scale of opportunity within our
development pipeline, gives TCS
a significant strategic advantage.
TCS prides itself on the active
management of our property
portfolio, and we have a long
history of active property selling
and buying in order to maintain
returns. Whilst the Merrion Estate
has long played a key role and
material role in our portfolio,
beyond Merrion we have made
significant changes to the
portfolio in recent years.
Since FY14 we have sold
over £101m of the property
portfolio, representing over
30% of the property portfolio.
This has resulted in a material
diversification of assets in recent
years, with the proportion of
Retail & Leisure within the overall
portfolio reducing to 50% from
over 80% ten years ago.
In addition, whilst we are long-
term owners of the Merrion Centre,
our continued investment in the
asset has ensured it has moved
with the times and remains as
relevant today as it was when it
opened 55 years ago. Page 26
captures our celebration of the
Merrion Centre’s 55th birthday this
year and highlights its transition to
a mixed-use investment asset.
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Sales and Purchases
It has been an important year in
terms of sales and purchases.
The most significant transactions
were the acquisition of The Cube
in Leeds for £12.0m in October
2018 and the sale of Rochdale
Retail Park for £13.2m in January
2019. In addition, we disposed of
a retail property on Shandwick
Place in Edinburgh for £0.8m, and
acquired two retail properties in
London and Glasgow for £1.6m
and £2.4m respectively.
As the table indicates, the
combined acquisitions and sales
of over £75m have substantially
altered the mix of properties in
our portfolio.
Rochdale Retail Park was sold to
Rochdale Council for £13.2m. The
park totalled 70,000 sq ft with
current tenants Argos, Halfords,
Matalan and Poundstretcher,
all with relatively short leases.
Through its prior ownership of
the Rochdale Canal Company,
TCS actively managed a number
of developments around Central
Retail Park. As a result, the park
was strongly let at an average of
£16.50 per sq ft, which was ahead
of current market rents. At the time
of sale, the property was valued on
our balance sheet at £14.0m, but
for TCS the asset was ex growth
and the decision to sell was to
avoid further declines in value.
Details on the acquisition of The
Cube can be found in the Strategy
in Action section on page 16.
FY17
FY18
FY19
Sales
Purchases
£m
22.3
10.1
14.0
% Retail
& Leisure
88%
95%
100%
46.4
91%
£m
4.0
9.0
16.0
29.0
% Retail
& Leisure
46%
0%
25%
20%
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Portfolio review continued
Valuation
These are uncertain times for
property investors, with valuations,
particularly in the retail sphere,
coming under significant pressure.
As of the June 2019 year end
our overall portfolio valuation
decreased by 4.6%. The key
drivers of this movement are:
• A like-for-like decrease in the
portfolio of 3.8% – this is all
driven by devaluations of
retail assets
• A reduction in value of non
like-for-like assets, mainly Ducie
House in Manchester which
had dropped by £2.0m at
the half year, as the purchase
price included the value of a
right of light claim the building
had over our Piccadilly Basin
development site (see page 39).
TCS has a strategy of investing
in core Leeds and Manchester,
providing diversification into the
portfolio through investments in
Scotland and London and creating
value through intensive asset
management and development
of assets. In a difficult market our
performance has been steady.
The fall in value across our
portfolio has largely been driven
by the stresses in the market on
high street retail which, while part
of our core asset base, accounts
for 36% of our assets by value (our
portfolio is 50% retail and leisure
by value). The resilience of our
portfolio in the current market
comes from the mixed-use nature
of the majority of our investments
and our lack of exposure to
brands such as Arcadia Group,
BHS, Debenhams and House
of Fraser and other high street
fashion retailers.
Retail
Merrion Estate
The retail sector has had a
turbulent 12 months. Major high
street brands have experienced
trading difficulties attributable
largely to structural change in
consumer trends, oversized
portfolios and the impact of
wider economic uncertainties
such as the devalued pound and
increased costs.
Pressure has been felt by landlords
as tenants have gone into
administration and entered into
CVAs or opened up a dialogue on
rent affordability in the current
trading climate. Where rents have
been rebased through CVAs for
some tenants, others who have
stronger balance sheets and
have typically managed their real
estate growth more effectively are
beginning to seek some level of
equilibrium in rents with their CVA
competitors. This will stall rental
growth/recovery over the short to
medium term for all but the super
prime retail stock.
Due to stresses in the trading
environment the valuation of the
retail elements of our portfolio
deteriorated by 2.7% during
the second half of the year and
5.6% overall year on year. This
relatively robust performance
is largely down to the active
asset management and targeted
investment across the estate and
the mixed-use nature of much of
our portfolio where our strategy
has been to invest in and develop
assets which have diversity of
uses. That said within our overall
portfolio we have also seen
some significant shifts in value
on an asset by asset basis (see
Challenges in the Retail sector
page 27).
At the northern edge of Leeds
city centre Merrion is the original
mixed-use development and
consists of retail and leisure, office
and car parking assets. Adjacent
to Leeds Arena and very much at
the centre of a growing student
community from both existing
student developments and
c. 3500 new student beds under
construction around the centre.
The Merrion valuation (including
the hotel) is down by £8.6m
year on year, with the equivalent
yield moving out from 7.79% to
7.91%. While the fall in valuation
continues to reflect the softening
of retail yields much of the second
half drop (£3.6m) is attributable
to a reduction in the value of the
hotel, reflecting the performance
of the restaurant where it has
taken us some time to find the
correct format.
The underlying performance
of Merrion minus the hotel was
reasonably stable compared to
the market with a 5.9% (£7.0m) fall
in value over the year reflecting
yield shift rather than a decline in
income. As with other landlords
we experienced a number of CVAs
and administrations over the year
from tenants such as Poundworld,
Crawshaws and Smoke BBQ, but
we do not have any exposure
to tenants such as Debenhams,
Arcadia Group and House of Fraser
where their CVA actions have
had a major impact on shopping
centres. The void rate in Merrion is
currently 3.5% and where we have
experienced vacancies we have re-
let much of what has come back to
us at the same (or improved) rent
levels to tenants such as Iceland
and Ramshaws.
22
The diversity of our offer has also
been maintained as we continue to
curate a good mix of independent
and national food and beverage
operators at the centre concluding
lettings to PizzaExpress, Starbucks,
Chatime and Blue Sakura – which
has proved to be highly popular
in particular with the surrounding
student population. We have also
continued to invest in Merrion with
a redevelopment of the Wade Lane
Mall, securing new leases from
existing tenants and by securing a
planning consent for 100 MC, a
17 storey, 180,000 square foot
office tower.
TCS Retail Overview
Scotland – The cornerstones
of our Scottish portfolio are the
prime Glasgow retail assets and
our investment in Milngavie.
Yield shift and the Berkertex CVA
at our Bath Street asset were
the primary factors in declines
in value. Where Bath Street is
concerned the location of the
asset is fundamentally strong
and following the tenant CVA
we moved quickly to refresh and
market the asset and now have
lettings in solicitors' hands in line
with previous rent levels. Any
declines in value in our Scottish
portfolio have been more than
offset by the redevelopment of the
former Homebase in Milngavie and
the conclusion of the lettings to
Aldi and Home Bargains, adding
£3.7m of value year on year.
In London, our investments
(c £8.7m) are in good quality
secondary high street locations
and consist of primarily retail
and residential mixed-use assets,
providing geographical diversity
into our portfolio through the
cycle. However, yield shift
particularly in the retail elements
of these assets has driven some of
the steepest declines in value year
on year (-8% to -26%), coupled with
lack of competition from retailers
for sites at this point in the cycle
we are seeing rents rebalancing to
lower levels with a corresponding
impact on valuation.
Leeds – The valuation of the
Vicar Lane retail asset fell by
c. 22% year on year (£2.45m)
through a combination of yield
shift and the remaining terms of
the occupational leases / current
voids. With an existing tenant
wishing to expand their premises
and three new lettings in solicitors’
hands, we anticipate some
recovery in value in 2020. Situated
in the heart of the new retail area
of Leeds between Hammerson’s
Victoria Gate development and
Victoria Quarter investment this
asset has strong development
potential and we are working up a
longer-term scheme to drive value.
In Harrogate, 8–10 West Park
saw a 16.7% decline in value to
£3m through a combination of
yield shift and the timing of lease
renewals to existing tenants.
Once the current negotiations
are concluded we expect the
value to recover.
The value of our Urban Exchange
asset in Manchester, fell by 2.6%
year on year to £17.1m. All of this
reduction was in the first half of
the year and largely attributable
to yield shift. No further outward
yield movement was seen in
the second half of the year due
primarily to the opportunity for
future rental growth driven by the
significant amount of development
activity in and around Piccadilly
Basin, including the completion of
our Burlington House scheme.
Offices
Our key office holdings are in
Leeds and Manchester and are
a mixture of new developments
(Merrion House) and secondary
assets, located close to our
strategic sites with short-term
asset management opportunities.
Office values across our portfolio
held steady year on year, largely
underpinned by Merrion House
at £34.7m. Carvers Warehouse
in Manchester saw a 7% uplift in
value reflecting that it is fully let
and that we have successfully
moved rents on.
The office markets in both Leeds
and Manchester are strong and
there is a shortage of Grade A
and good quality secondary stock
in both cities with much of the
development pipeline over the
next 18 months pre-let. During the
year we acquired Ducie House,
adjacent to our Piccadilly Basin
development and The Cube,
adjacent to Merrion in the first
half of the year.
Our acquisitions are typical of
where we see an opportunity
to drive value. Both had known
voids / voids pending and require
investment to reposition them and
drive rents on. We have seen dips
in value against purchase price in
both assets, reflecting tenant exits
and have worked up investment
schemes to reposition the asset.
Both are delivering rents ahead of
business plan and we are on site
with the works to Ducie House
and ready to go at The Cube
once the exiting tenant hands
the space back. Once our works
and the new lettings complete,
we expect to see the value of the
assets increase in line with our
investment case.
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Portfolio review continued
Valuation continued
Development
The market for both residential and
commercial development in Leeds
and Manchester remains robust
with relatively strong growth
forecast for both cities over the
next five years fuelled by tech
sector growth and north-shoring.
Our two main development
sites are in prime central Leeds
and Manchester and both have
licences to operate as car parks
in advance of development which
is brought forward in phases for
residential, or as we secure a pre-
let on a commercial element of
the scheme.
Development site valuations
were slightly up year on year at
£36.45m, reflecting the execution
of our masterplan in Piccadilly
Basin and the increasingly prime
nature of the Whitehall Riverside
site as MEPC build out their
adjacent scheme.
We completed the development
of Burlington House, a 91 unit
residential scheme in joint venture
with GMI during the second half
of the year and our share in the
joint venture is now held as an
investment asset.
Our top tenants
We believe we have a high quality tenant base, which has continued
to play an important role in mitigating some of the current challenges,
particularly in the Retail space.
Key statistics include:
Our top 15 tenants represent 51% of total rental income
Top 15 tenants:
Leeds City Council
Waitrose
Wm Morrison
PureGym
Premier Inn
Aldi Stores
StepChange
Home Bargains
Dune
Go Outdoors
The Deltic Group
Flannels
First Secretary of State
Carphone Warehouse
The Works
Other
9%
7%
7%
4%
4%
4%
3%
3%
2%
2%
2%
1%
1%
1%
1%
49%
100%
Looking forward
Intensive asset management
We will continue to intensively
manage our existing portfolio,
looking to create additional value
and income. In particular we
are currently working through
schemes for The Cube, the
Merrion Centre and Vicar Lane in
Leeds. We are already underway
with improvements to Ducie
House and Carvers Warehouse
in Manchester.
We expect overall LFL income
levels to reduce in FY20 as we
invest in The Cube and Ducie
House, ahead of reletting the
improved space, driving future
rental growth.
We work closely with our tenants
to understand how we can help
them get the most out of the
space they rent from us, and how
creating place and community in
our key locations can add value
for our tenants.
Asset sales
We constantly review our portfolio
with the aim of disposing of
properties that become ex-growth.
In the current retail climate this
exercise is more important than
ever, and we dedicate significant
management time to reviewing our
options in this space.
24
Investment purchases
Development
We are continually looking
for opportunities to create
value through the purchase of
investment assets, both retail and
non-retail. In particular we look
to purchase assets at competitive
prices due to the need for
tenant and asset management,
and / or that have development
opportunities. Examples include
the recently acquired assets Ducie
House and The Cube (see pages 16
and 39).
Our development pipeline has
substantial potential, with an
estimated Gross Development
Value of over £600m (see page
42). There is a significant capital
requirement to unlock this value,
and we continue to evaluate
funding options. With our focus on
long-term value creation we are
not under pressure to develop, and
we manage our risk and exposure
by ensuring that the timing is right
to bring an asset forward.
Given the changing needs within
the cities in which we operate,
we are reviewing the planned
timing for the next phase of
developments including George
Street, Eider House and 100MC
and the scope for our Masterplans
to be developed further and
rephased to create more value
for the business.
Portfolio Overview:
Retail & Leisure
Merrion Centre (ex offices)
Offices
Hotels
Out of town retail
Distribution
Residential
Passing
rent £m
ERV £m Value £m
% of
portfolio
Valuation
incr/(decr)
Initial
yield
Reversionary
yield
3.7
7.2
5.5
1.2
1.8
0.4
1.2
4.2
7.8
6.0
1.6
2.5
0.4
1.3
62.7
92.5
80.4
25.8
41.8
6.1
21.8
16%
23%
20%
7%
11%
2%
6%
20.9
23.8
331.0
84%
5.6%
7.3%
6.5%
4.3%
4.0%
6.3%
5.1%
6.0%
6.3%
7.9%
7.1%
6.0%
5.6%
6.6%
5.7%
6.8%
(13.0%)
(6.6%)
(3.7%)
(5.0%)
3.6%
6.8%
(4.0%)
(5.6%)
(0.1%)
3.8%
(4.6%)
Development property
Other car parks
Let portfolio
2.1
1.5
24.5
2.1
1.5
36.5
26.7
9%
7%
27.4
394.2
100%
Note: The above table includes Merrion House within Offices and Burlington House within Residential and therefore differs to the table in note 12 of the accounts.
Location
Leeds
Manchester
Scotland
London
Other
Value
%
Sector
Value
%
Lease Expiries
Value
%
236.9
60%
Retail/leisure
196.9
50%
0–5 years
68.2
56.4
31.2
1.6
17%
14%
8%
0%
Hotels
Office
Car parking
Distribution
394.2
100%
Residential
Development
25.8
7%
5–10 years
80.4
20%
Over 10 years
26.7
6.1
21.8
36.5
7%
2%
6%
9%
394.2
100%
11.2
3.4
6.3
54%
16%
30%
20.9 100%
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Portfolio review continued
Case study: Merrion's 55th Birthday
On the 26th May 2019 we celebrated the Merrion Centre’s 55th anniversary, unveiling an exhibition to
showcase the legacy and history of the centre. The exhibition was opened by Dr Marjorie Ziff, who
also originally opened the scheme in 1964.
The Merrion Centre was the first of its kind when it initially opened its doors in 1964, as it introduced Leeds
to the powerful combination of a destination for shopping by day with entertainment and attractions at night.
Merrion changed the face of retail in Leeds and with over 11m visitors per year it is still one of the city’s most
iconic and popular destinations to date.
Edward Ziff, Chairman and Chief Executive commented on the day; “I have no doubt that my late father would
be extremely proud; the Merrion Centre has continually evolved to cater for a diverse range of consumers
over the years, from our loyal customers who have shopped here for most of their lives, to the growing office
population, students and commuters. As we continue to evolve as part of the city’s thriving Arena Quarter, I
have no doubt that the Merrion Centre will continue to remain a key destination in the heart of Leeds for many
years to come.”
Then: 1964
Now: 2019
26
Challenges in the Retail sector
Stories of retailers in distress
have been rife and appear to
be on-going, and TCS has not
been immune from the effects
of these challenges. CVAs seem
now to be the retailers’ tool of
choice to reduce their cost base
and attempt to re-invent their
customer and economic models
in the face of the continued
growth in internet retailing.
TCS does not have any exposure
to the large retail names such
as Debenhams, House of Fraser
or Arcadia, and as a result have
managed to avoid significant
impact. In the year ended 30
June 2019 TCS was impacted by
tenant CVAs and Administrations
by £228k. When the impact of the
vacant ex-Homebase property
in Milngavie, Scotland (see page
17) is included this impact rises
to £800k.
Property owners of retail units
are facing their own commercial
challenge as a result. TCS has a
clear strategy to do all it can to
mitigate this effect, focusing on
three key elements:
1. Continue to divest of weak
retail assets and reinvest in
more diversified assets
2. Where we are confident in
the quality of our retail assets,
continue to invest and develop
multi-use destinations
3. Prioritise tenants that are largely
convenience, discount, grocery,
or high-volume leisure focused
In the year the Company
experienced eight new tenants
either going into administration or
launching a CVA. Of those eight
new impacts four have been re-let
to new tenants and a further three
have seen the incumbent retailer
choose to remain, leaving one unit
now void and in the process of
being re-let.
Across those eight properties,
once re-let or where occupancy
has continued, we have actually
seen a modest 1% increase in base
rent. Clearly there is a cost to
the Company in the form of void
periods and new tenant incentives,
however the continued speed with
which we ensure that the units
are occupied is a testament to
the quality of our portfolio.
Key examples are:
• Despite Cotswold Outdoors
(Harrogate) and Select
(Merrion Centre) launching
CVAs both retailers remain in
occupation paying full rent and
service charge
• Following the administration
of Berkertex, the bridal retailer,
and their departure from our
unit in Glasgow, we split and re-
let the unit to a successful local
beautician and the Scotch Malt
Whiskey Society, with total rent
increasing 8%.
We have previously highlighted
the success in the Merrion Centre
where Poundworld went into
administration and we successfully
re-let the unit with only seven
weeks' lost rent to Iceland on a
new 10-year lease at the same level
of rent as paid by Poundworld. This
clearly reaffirms the strength of
the footfall making the mixed-use
Merrion Centre a destination for
members of the public.
Examples of our successes in retail include
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vvTown Centre Securities PLC | Annual Report & Accounts 2019
Town Centre Securities PLC | Annual Report & Accounts 2019
6
1
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2
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3
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7
4
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10
8
9
11
12
Divisional reviews
Creating places in Leeds
Leeds represents 60% of the
property portfolio.
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Leeds Station
Offices:
1 Merrion House
2 Wade House
3 Town Centre House
4 Town Hall
5 The Cube
Retail & Leisure:
Trinity Shopping Centre
First Direct Arena
6
7 Merrion Centre
8
9 Victoria Gate
10 Central Road
11 Vicar Lane
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18
Hotels:
12 Premier Inn
13
ibis Styles Leeds City Centre Arena Hotel
Car Parks:
14 CitiPark Whitehall Road Car Park
15 CitiPark Merrion Centre & Arena Car Park
16 Leeds Dock Carpark*
Developments:
17 George Street (Joint Venture)
18 Whitehall Riverside
* Not pictured
TCS Ownership
Non-owned
29
28
Shareholder Information
Divisional reviews continued
Creating places in Leeds
Leeds is part of the fourth largest
conurbation in the UK, with the city itself
having a population of almost 770,000
and a workforce of almost two million.
Passing Rent
£15.1m
Car Park Income
£5.8m
GDV of Development
Opportunities
£287m
Value
£m
18.1
54.1
49.2
25.2
10.3
%
8%
23%
21%
11%
4%
156.9
66%*
18.3
12.4
15.5
3.9
6.1
10.3
13.5
8%
5%
7%
2%
3%
4%
6%
236.9
100%
Leeds portfolio overview
Merrion Morrisons
Merrion Offices
Merrion Retail & Leisure
Merrion Car Park
ibis Styles Hotel
Total Merrion
Other Leeds assets:
Retail & Leisure
Offices
Hotels
Residential
Industrial
Car Parks
Development
TOTAL LEEDS
* Total % rounded
Leeds as % of total
60%
30
George Street, Leeds
Market context
Leeds is part of the fourth largest
conurbation in the UK, with the
city itself having a population of
almost 770,000, and a work force
of almost two million. With three
universities, a millennial population
of close to 200,000 and 24% of
employees educated to degree
level or higher, the city is attracting
investment, with more than 9,000
professional jobs set to be added
in the centre over the next decade
and forecast economic growth of
8.3% over the next five years (5.7%
over the last five). The relocation
of the Channel 4 headquarters has
increased the profile of the city.
Leeds is also recognised as the
fourth best shopping destination in
the UK, with over 660,000 people
claiming the city as their primary
shopping destination.
Vicar Lane, Leeds
Key achievements
in the year
• Despite increased CVA
activity we continued to
re-let properties on average
at or above previous rent
levels. In the Merrion
Centre, particular successes
include the arrival of
Iceland and Ramshaws
(see Challenges in the
Retail Sector on page 27).
• The strong attraction of
the Arena Quarter section
of the Merrion Estate
(facing the Leeds Arena)
continued, with new lettings
to a number of food and
beverage tenants including
PizzaExpress, Starbucks,
Blue Sakura, and Union
Square (see Case Study
page 33).
• We completed a
refurbishment of our TCS
office in Town Centre House
(part of the Merrion Centre),
allowing us to move to a
single floor and release a
floor that has been let to
PureGym.
• We acquired The Cube
for £12m in October, and
subsequently renewed the
lease to the Secretary
of State (as above).
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Divisional reviews continued
Creating places in Leeds
Demand for space
Opportunities for TCS
Private sector office-based
employment within the region has
grown by 15% over the last five
years and is forecast to grow by a
further 7.9% over the next five. The
10-year average office take-up was
exceeded in 2018 by 34%, with
developments largely being pre-let
or fully let prior to completion.
Prime yields remain at 4.75%.
Availability of office space in Leeds
has been gradually falling since
2015, with 2018 seeing a reduction
of 31% in total office supply and
a 9% decrease in Grade A space.
Overall vacancy stood at 6.96%.
Rents are expected to continue
to grow through to 2020, with
Leeds still offering the lowest rents
among the big six regional cities.
As a fast-growing city Leeds has
a supply shortfall in housing,
particularly in the city centre.
Typically, residential values are
lower in Leeds than York and
Harrogate, which has generally
meant that regardless of a number
of sites capable of delivering a
total of in excess of 10,000 units,
other property asset classes where
there are also supply constraints
drive better returns. 2019 has
seen a shift, against a backdrop of
strong demand rents, and capital
values are forecast to grow by in
excess of 3% per annum. The city
currently has a 1300-unit pipeline
under construction for investors
such as with MODA Living, CEG,
Legal & General and Aberdeen
Asset Management.
Our development site at Whitehall
Riverside is one of the last prime
sites for office development in
the city, sitting opposite Hermes/
MEPC’s Wellington Place at
the heart of the new West End
business district and five minutes
away from the city’s train station
and the rapidly developing South
Bank. Whitehall Riverside will
deliver a minimum of 340,000 sq
ft of new grade A office space. The
planning consent has already been
implemented for the 180,000 sq
ft No2 building and the 524 space
multi storey car park, making the
development one of the most
immediately deliverable in the city.
Adjacent to the Merrion Estate
significant development of student
accommodation (3500+ beds)
is underway, much of which
is planned to be available for
the September 2019 and 2020
academic years. This will bring a
fresh influx of students into the
estate and create opportunities to
enhance our retail and food and
beverage offers and unlock the
next phase of development. The
estate’s immediate neighbours,
the Universities and Leeds General
Infirmary both have significant
masterplans to bring forward
a pipeline of c £750m GDV,
including a new children’s hospital,
commercial and residential
buildings and the landmark new
Nexus Development, providing
rentable offices, research and
innovation space. All of this
will increase footfall to the
area, further strengthening our
existing offer and improving our
development opportunities.
Source: Savills – UK Market in Minutes – Leeds Offices February 2019
CBRE – Tech Cities Research 2019
32
The Merrion Estate
With a total combined value of £157m the Merrion
Estate is our largest single asset and has significant
further development potential.
Development of the Leeds Arena and the growth
of the universities have already brought significant
investment and regeneration to the Merrion Estate. We
have invested significantly in recent years to develop
the Arena Quarter, ibis Styles and Merrion House, and
undertaken extensive refurbishment of the CitiPark car
park and the retail mall.
The Merrion Estate has been pivotal in providing new
offerings and amenity to the city centre, supporting
both the vibrant nightlife of the city and the growing
commercial community.
Our vision for the Merrion Estate is to continue to
evolve what we offer, delivering greater choice and
enhancing the mix of uses across the estate, and
the recently approved planning proposal to develop
a 17-storey office tower above the existing centre
demonstrates this intention.
Our continuing investment in the Merrion Centre has
materially reinvented the whole of the asset creating a
unique mixed-use property in the heart of Leeds that
now includes:
• 283,000 sq ft of offices including Merrion House,
the main public facing office for Leeds City Council
• 950 spaces of car parking
• A strongly trading 60,000 sq ft Morrisons superstore
with 20 years of their lease remaining, accounting
for a third of the total retail rent in the Centre
• A 134 bedroom ibis Styles hotel with restaurant.
Since 2012 we have invested £42m in the Centre, and
despite recent retail valuation pressures valuation
is still up £55m over the same period, and income
up over 20%. Our most recent investment was the
extension and improvement to the Wade Lane section
of the retail mall. This comprised:
• Capital spend of £0.7m
•
Increasing chargeable space by 500 sq ft, and
agreeing new leases with incumbent tenants
• The new leases with higher rents, the new space
added for existing tenants, and the refurbishment
of a void unit combined to increase income by over
£75,000 pa
• With the investment ensuring the renewed
commitment from quality tenants such as The Works
and Max Spielman, the total amount of rent secured
was £162,000 pa with a WAULT of 8.25 years.
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‑Town Centre Securities PLC | Annual Report & Accounts 2019
Town Centre Securities PLC | Annual Report & Accounts 2019
Piccadilly Station
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34
Divisional reviews
Creating places in Manchester
Manchester represents 17% of the
property portfolio and is the source of
significant development opportunity.
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Offices:
1 Carvers Warehouse
2 Ducie House
Retail & Leisure:
3 Urban Exchange
Hotel:
4 Dakota Deluxe
Residential:
5 AVRO (Urban Splash development)
6 Burlington House
Car Parks:
7 CitiPark Tariff Street. Multi-storey Car Park
8 CitiPark Port Street Car Park
9 CitiPark Dale Street Car Park
8
11
Developments:
10 Eider House
11 Residential opportunity
12 Commercial and Multi-storey Car Park opportunity
13 Commercial opportunity
TCS Ownership
Non-owned
35
Shareholder Information
Divisional reviews continued
Creating places in Manchester
Manchester is part of the second
largest conurbation in the UK, with
over 7m people within one hour's
drive of the city.
Manchester portfolio overview
Manchester Retail & Leisure
Manchester Offices
Manchester Residential
Manchester Car Parks
Manchester Development
TOTAL MANCHESTER
Manchester as % of total
17%
Value
17.1
13.1
11.3
3.8
23.0
68.2
%
25%
19%
17%
5%
34%
100%
Passing Rent
£2.5m
Car Park Income
£1.7m
GDV of Development
Opportunities
£320m
Burlington House, Manchester
Key achievements
in the year
• Carvers Warehouse
– Through active
management of the tenant
base and continued
investment in the asset we
have been able to improve
rental levels, with the most
recent lease at £19 per sq
ft, up from £14. The ERV
of this asset improved by
13% since commencing the
improvement plan.
• Ducie House – following last
year’s acquisition of Ducie
House, we commenced
physical improvement of
the asset, which will drive
lettings and income. In
addition, we are reviewing
architect plans for the
development of office
space on the car park and
are looking to progress to
planning shortly – see case
study on page 39.
• Burlington House – we have
now completed and fully let
our first dedicated Private
Rented Sector (PRS) asset
– see Strategy in Action on
page 18.
Market context
Manchester is part of the second
largest conurbation in the UK, with
over 7m people within one hour’s
drive of the city and a primary
retail catchment of 1.6m people.
The centre has a population of
over 550,000, and more than
105,000 students attend the city’s
five universities. As the leading
professional and business service
centre outside of London, the
city has clusters of life sciences,
manufacturing, creative, media
and digital industries, with the BBC
and ITV having a key presence.
Around 50% of Manchester’s
graduates stay in the city for work,
a rate second only to London in the
UK. There are plans to develop a
minimum of 25,000 new homes in
Manchester over the next 10 years.
Greater Manchester’s economy
is forecast to grow at a rate of
14% over the next five years, well
ahead of the UK average of 11%,
with 110,000 jobs expected to be
created in the next five years.
36
Carvers Warehouse, Manchester
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
with a mix of office, residential,
retail and leisure accommodation.
With the early developments
soon to be complemented by
Burlington House and the Dakota
Hotel, and the next building
Eider House (residential) having
planning consent, Piccadilly Basin
will cement itself as a destination
and an area where a new
community is rapidly establishing
itself. This momentum puts TCS
in a position ahead of much of
the proximate competition as we
continue to deliver the remainder
of the masterplan.
Divisional reviews continued
Creating places in Manchester
Demand for space
Opportunities for TCS
Vacancy rates for grade A office
stock are relatively low, and
rents have risen steadily over
the last five years. With a lack
of new build space, the city is
also seeing significant growth
in the Grade B refurbishment
market, as these buildings offer
an attractive alternative to new
developments, evidenced by the
narrowing gap between rents for
top-class refurbishments and new
build space.
Manchester’s city centre
residential market is set to
expand significantly over the next
couple of years to support the
rapid growth of the city centre
population. With more than 30
schemes underway, there are
some 12,000 units currently under
construction to be delivered into
the market over the next few
years. Manchester has seen the
perfect storm of increases in the
pricing of new build residential
property and increasing rents/
returns for investors as a relative
lack of new development and
an increase in city centre living
have put pressure on available
stock. It has become the go to city
outside of London for investors
in the Build To Rent sector, while
also seeing a significant amount
of stock built for sale. The wave
of units coming onto the market
during 2019/20 may see rental
growth slow until the market has
absorbed the supply. Beyond this
the fundamentals look good for
residential investment in the city.
Piccadilly Basin is well located
to capitalise on the burgeoning
demand for office space and
city living residential homes.
Our Carver’s Warehouse and
Ducie House sites offer 55,000
sq ft of office space, and our
development masterplan includes
a further 180,000 sq ft of Grade A
space. It also includes over
600 residential units.
The area is positioned for
investment and growth, with
much of the land surrounding
Piccadilly Railway Station the
subject of Strategic Regeneration
Frameworks (SRF), and the
planned HS2 station integral to
the Mayfield site. The schemes
will bring in excess of 15,000
homes into Piccadilly, East
Manchester and the Northern
Gateway. Mayfield and North
Campus are expected to jointly
deliver in excess of 2.5m sq
ft of new commercial space,
and Manchester City Council’s
acquisition of Central Retail Park
will bring forward a commercial
led mixed use scheme and
new car parking, immediately
opposite TCS’s Piccadilly Basin
development.
Piccadilly Basin is unique among
the SRFs with its mix of heritage,
water frontage and proximity to
Manchester’s vibrant Northern
Quarter and major transport hub.
The Piccadilly Basin SRF gives TCS
the opportunity to create a best in
class city centre neighbourhood
38
Ducie House
Ducie House is a 33,000 sq ft office converted from
a former petticoat factory and is located on the
boundary of TCS’s Piccadilly Basin site. The property
is a multi-tenanted office, occupied predominantly
by technology and creative industry companies. The
variety of product provides a wide choice for tenants,
as well as the flexibility for businesses to expand
within the building as they grow.
TCS bought the site in July 2018 for £9.0m as
a strategic acquisition, in part to eliminate the
potential rights of light claim (valued at £1.5–£2m)
on our Eider House development and also to
increase land holdings around Piccadilly Basin.
The acquisition produces income and has the
opportunity to be grown organically. In addition,
there is capacity for a future office development
in the rear car park.
The current valuation is £7.5m, revalued from the
purchase price as there is no longer a right of light
claim as TCS owns the asset. Current income levels are
below ERV primarily as a result of us having vacated
tenants out of the areas identified for improvement and
reconfiguration in advance of extensive refurbishment
in order to better position the asset in the local office
market place. We expect completion of this work to
increase both income and value.
The development strategy for the Ducie House
building is split into two phases including essential
repairs, refurbishment of common parts and creating
some larger office spaces. We have undertaken an
initial feasibility exercise on the redevelopment of the
car park to provide an interlinking seven storey office
premises of 60,000 sq ft. An indicative appraisal has
been prepared yielding a profit on cost of nearing
25%, with an ERV of £1,340,000 and delivering an
end value of £21,300,000. This further strengthens
our development pipeline.
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Town Centre Securities PLC | Annual Report & Accounts 2019
Divisional reviews
Creating places in
Scotland & London
22% of our portfolio is located
outside of Leeds and Manchester.
Passing Rent
£3.9m
Scotland and London portfolio overview
We have had a long-standing presence in Scotland, however following
disposals over the past couple of years we have sold the majority of
our Edinburgh assets and now focus solely on Retail and Residential
assets in Glasgow and its close commuter town of Milngavie.
Car Park Income
£4.6m
In London our investments are in good quality secondary high
street locations and primarily consist of retail and residential
mixed-use assets.
Our assets in Scotland and London offer a level of geographical
diversity in our portfolio away from our Leeds and Manchester
focus and provide balance through the cycle. Similar to Leeds and
Manchester, London and Glasgow have strong local economies and
growing populations.
Value
67.5
0.8
6.6
12.8
87.6
%
77%
1%
8%
15%
100%
Scotland & London Retail & Leisure
Scotland & London Offices
Scotland & London Residential
Scotland & London Car Parks
TOTAL SCOTLAND & LONDON
Scotland & London as % of total
22%
Duke Street, London
Key achievements in the year
• Bath Street, Glasgow –
• Holloway Road, London
Following the CVA of bridal
retailer Berkertex, we secured
two lettings to replace them
on both floors they occupied.
The new tenants are the
Scotch Malt Whiskey Society
and a local beautician and
income levels have been
increased by 8% compared to
previous levels.
• Milngavie – Since the exit of
Homebase in December 2018
we have now completed the
conversion of the unit into
two, with both Aldi and Home
Bargains now trading. As a
result of this conversion we
have seen valuation increase
by a net 23% and income
increase by 8% compared to
the pre-Homebase exit levels.
Read more about our Strategy
in Action on page 17.
– Following the CVA from
Mothercare which reduced
rent by around one third, we
re-let the lower floors to The
Works and converted the
upper floors to residential,
giving a total increase in rent
of 24% compared to the pre-
CVA Mothercare income.
In August 2018 we acquired a
retail unit on Gordon Street,
Glasgow, adjoining units we
already own on Buchanan
Street / Gordon Street. The
purchase price was £2.4m
with a Net Initial Yield (NIY)
of 5.3%.
In July 2018 we acquired a
retail and residential unit on
Chiswick High Road, London
for £1.6m with a Net Initial
Yield of 4.7%.
•
•
40
Buchanan Street, Glasgow
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Divisional reviews continued
Building a strong development pipeline
Our substantial development pipeline gives us a
clear path to grow over time, subject to financing.
We own a significant development
pipeline, totalling an estimated
gross development value (GDV)
of over £600m. The pipeline
comprises multi-sector assets
in Leeds and Manchester, much
of which have either strategic or
detailed planning approval. We
are in the process of reviewing our
plans to ensure that we direct our
resources in the optimal manner,
but the most sizeable components
of our pipeline are:
• Piccadilly Basin, Manchester:
Mixed residential, commercial,
and car parking with a total
estimated GDV of over £300m
• Whitehall Road, Leeds: Office,
car parking, and potentially
leisure provision with a total
estimated GDV of over £150m
• Merrion, Leeds: Office and
residential towers with a total
estimated GDV of over £100m.
Maximising value from these
opportunities will require capital,
and we continue to explore
how we might fund these future
developments, including through
joint ventures where appropriate.
Key achievements in the year
• Burlington House – 91-unit
PRS building in Manchester
completed (see Strategy in
Action page 18).
• 100 MC – in April 2019 we
achieved planning approval
for a 17-storey office tower
above the Merrion Centre,
replacing a cinema which had
been empty for decades.
• Whitehall Riverside, Leeds –
we are in detailed discussions
with a number of potential
tenants for our main No2 WHR
167,000 sq ft office building
with the aim of achieving a
material pre-let commitment.
In addition, we are in the
process of reviewing the
Strategic Planning Framework
for this site to ensure we
maximise value.
• Ducie House, Manchester
– we are in the process of
reviewing the first set of
designs for a new office
block on the car park of our
relatively newly acquired
Ducie House at Piccadilly
Basin (see page 39).
• Brownsfield Mill, Manchester –
this building has been sold for
development to Urban Splash,
with TCS set to receive 12.5%
proceeds on all sales. The full
year results for FY19 include
£263k of income from the
share of proceeds in the year.
• Eider House, Manchester –
our likely next PRS scheme
in Piccadilly Basin. We have
planning consent for a 128-
unit scheme and are reviewing
options to increase expected
value and returns. We are in
the process of determining if
a new planning approval will
be required and with an eye
on the volume of residential
stock being delivered into
the Manchester market and
the success of our Burlington
development, determining the
right time to start on site.
Development type
Status
Estimated
GDV
Estimated
Income
Yield on
cost
Leeds – George Street (at 50%)
Leisure
Detailed planning JV
Manchester – Eider House
Residential
Detailed planning
Leeds – Car Park
Leeds – Merrion Cinema Tower
Leeds – Whitehall Road No2
Leeds – Whitehall Road No3
Car Park
Detailed planning
Offices
Offices
Detailed planning
Detailed planning
Offices
Strategic Framework
Leeds – Whitehall Road No7
Offices / Leisure
Strategic Framework
Manchester – Residential Tower A
Residential
Strategic Framework
Manchester – Residential Tower B
Residential
Strategic Framework
Manchester – Residential D
Manchester – Ducie House
Manchester – Commercial
Manchester – Car Park
Residential
Strategic Framework
Offices
Unscoped
Mixed Use
Strategic Framework
Car Park
Strategic Framework
Leeds – Merrion Corner Tower
Residential/ Mixed Use
Unscoped
£11m
£46m
£14m
£62m
£82m
£40m
£28m
£82m
£55m
£28m
£21m
£76m
£12m
£50m
£0.6m
£2.5m
£1.2m
£4m
£5m
£2.8m
£2m
£3.5m
£2.4m
£1.1m
£1.3m
£5m
£0.8m
£3m
£607m
£35.2m
6.0%
6.5%
8.6%
7.1%
7.5%
8.6%
8.6%
5.2%
5.2%
4.9%
7.8%
7.9%
7.2%
6.4%
42
CitiPark, CitiCharge, and PropTech
CitiPark is delighted to have delivered another
successful year of revenue and profit growth,
whilst further accelerating our technological
advancements and launching new sources of
income generation.
Ben Ziff
Managing Director CitiPark & TCS Energy
CitiPark operates over 6,800
spaces across 15 branches.
Of those branches:
are freehold dedicated
multi-storey car parks (MSCPs)
are leasehold dedicated MSCPs
with lease lengths ranging from
21 years to over 100 years
are property development sites
being operated as car parks in
order to monetise vacant land
is operated by CitiPark
under a management
contract arrangement
(John Lewis Cheltenham)
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Divisional reviews continued
CitiPark, CitiCharge,and PropTech
CitiPark performance continues to
go from strength to strength, with
net revenue of £5.4m, up 8.2%
year on year, and operating profit
of £4.4m, up 9.7% year on year.
Three branches drove the vast
majority of the improvement in
both income and profit in the year.
Those were:
• Merrion Centre, Leeds –
increased occupancy following
the completion and occupation
of Merrion House, combined
with improvements in tariffs
• Whitehall Road, Leeds –
reduced competitor supply,
in particular due to the
development of the MEPC site
directly opposite which had
formally been run as a car park,
drove occupancy and rate
improvements
• Clipstone Street London –
improved occupancy levels
combined with a sublet of
part of the space to a storage
company drove income.
Furthermore, the strong growth
in revenue, combined with on-
going operational efficiency
programmes, have allowed us to
leverage our cost base, lowering
costs as a proportion of income,
and therefore driving profit growth
ahead of revenue growth.
We continue to see technology
as a point of difference for this
part of the business, whether
that be car parking, EV charging,
energy production, or 'PropTech'
investments. Key achievements in
year include:
• We launched CitiCharge, a new
initiative looking to provide
electric vehicle charging across
our locations and beyond. The
first example of this is in the
form of a 50kW rapid charger
at the Merrion Centre, the first
of its kind in central Leeds. We
are developing plans to offer EV
charging capability as a B2B and
B2C service in the parking, retail
and commercial sectors
• We have grown our internal EV
network by 25% – new EV bay
locations include 7 Whitehall
Road, Leeds, Rickmansworth,
and further increased our
provision in Clipstone Street,
London branch
• CitiPark launched its own
mobile app available on both
iOS and Android. Developed
fully in house and directly
integrated with our parking
management systems
throughout the portfolio,
the app brings ease and
convenience to our customers,
allowing them to either pay
for their parking or pre-book
a space
• We continue to invest in our
pre-booking system, creating
a new customer account
portal, allowing customers
to amend, cancel and refund
their bookings all online, in real
time, without the need for our
customer service team to action
this on their behalf, improving
service and generating cost
saving to the business
• The commencement of the John
Lewis car park management
contract for the new
Cheltenham store – read more
on page 45
• We continue to uphold the
highest standards expected
for our brand and parking
standards by achieving
Park Mark status for both
Rickmansworth and the John
Lewis, Cheltenham branches,
meaning that all of our branches
now have this status.
•
Increased investment in
PropTech:
› We made a $500k equity
investment in WiredScore,
a US based company that
provides a commercial real
estate rating system that
empowers landlords to
understand, improve and
promote their buildings’
digital infrastructure
› We currently hold a
15% equity stake in
YourParkingSpace.co.uk,
an internet and app-based
business that matches
customers to available car
parking spaces across the
UK. The company is in the
process of a further round
of fundraising that could see
TCS convert an element of its
debt funding to the business
to new equity, increasing our
share to over 20% (read more
in the Financial Review on
page 58).
• We continue to look for
innovative ways to be
environmentally responsible
and recently ran a programme
in Leeds exchanging plastic
bottles for recycling for parking
discounts (see page 48).
44
John Lewis management contract
In October 2018, CitiPark partnered with leading UK
retailer, John Lewis, to manage a fully renovated car
park in Cheltenham serving their new flagship store.
The CitiPark-run car park has 345 spaces, spread
across five-storeys. As part of the renovations, the car
park was fully rebranded with the CitiPark branding,
which includes updated wayfinding, internal and
external signage. There are 12 ‘Click and Collect’
parking bays which entitles John Lewis customers
free parking to collect online orders. This is managed
through our digital validation system, which is directly
integrated with our parking management system.
The car park employs the latest smart solutions such
as ANPR (Automatic Number Plate Recognition)
technology to ensure the customer journey is as quick
and hassle-free as possible. Shoppers are also able to
pre-book and pay for their parking at the Cheltenham
branch via the CitiPark app, further improving
customer satisfaction for both CitiPark and the retailer.
The branch boasts round-the-clock customer support,
either on-site or remotely via our ‘Engine Room’ in
Leeds. Other products and services offered include
season tickets, YourParkingSpace.co.uk integration,
permits and discounted partnership parking for
JL&P staff.
This is a significant new venture for CitiPark and
represents an excellent way to expand the CitiPark
presence, offering the best of our technology
innovation and management capability to retailers
and other parties.
Whilst we manage the car park and employ the staff,
all costs plus our management fee are recharged back
to John Lewis. In addition, we have a revenue sharing
agreement in place once the operation reaches set
revenue thresholds.
We see this as a significant opportunity for future growth
and are currently pursuing other live opportunities.
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Town Centre Securities PLC | Annual Report & Accounts 2019
Operating responsibly
Our Corporate and
Social Responsibility Report
TCS is focused on the impact that our business has in the core
communities that we operate and the impact that we have on the
environment. We have an extensive CSR and sustainable energy
programme and throughout the coming year we will develop a
sustainability framework that is aligned to, and embedded in our
corporate strategy.
Our approach to sustainability is
built around four focus areas
which address the major
social, economic and
environmental trends
that we can influence.
Page
47
Page
49
We strive to make
a positive contribution
locally and be considered
an integral part of our
local communities.
We strive to create
a positive, fulfilling,
and safe environment
for our colleagues
to work in.
Communities
Colleagues
Customers
We strive to create and curate
places that support the
productivity and wellbeing
of our customers
and occupiers.
Environment
We strive to operate
responsibly and to
minimise our
environmental
impact.
Page
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Page
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46
Operating responsibly: Communities
We contribute to a broad range of local causes, with charities focused on
children and young adults particularly close to our hearts. We complement
our support for longstanding partners with standalone initiatives.
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Tour de Yorkshire project
BusinessDesk Masters Awards
Coordinated by our Head of Corporate Social
Responsibilities, Charlotte-Daisy Leeming, our work
last year raised a total of over £150,000 in charitable
donations (FY18 £145,000). In addition to our financial
contributions, we gave the opportunity to our Head
Office staff to support directly, by offering them time
off to volunteer as part of our employee involvement
programme. We also helped to raise awareness
of specific causes throughout the year by lighting
up CitiPark and Arnold’s Restaurant in a particular
charity’s colours. Examples in the year included
World Aids Day, Pancreatitis Awareness Day, Diabetes
Awareness Day, Children’s Cancer Month, Mental
Health Awareness Week and Autism Awareness Month.
Engaging young people
We firmly believe that supporting children and young
adults ensures a brighter future for our communities,
hence our work with local schools and children’s
charities has always been at the heart of our
philanthropic activity.
During the year we continued our well established
relationship with the Ahead Partnership social
enterprise by hosting a competition for local school
children. The children were asked to create an event
to increase footfall in the Merrion Centre. The entrants
were assessed on a range of skills, including their
ability to stick to a budget, their creative advertising
and their market research, by a panel of judges
including our own Chairman. The winners were
awarded money for their school.
Aside from our ongoing support of our core charities,
we are proud to have helped bring the First Give
programme to Yorkshire in our role as the main
sponsor. First Give works with Year nine children
to encourage them to give their time and energy
to deserving local causes, helping them develop
valuable skills in the process.
We sponsored the Young Fundraiser Award for
Candlelighters, the Yorkshire-based charity that
supports the families of children suffering from
cancer. Along with MIND (a mental health charity),
Candlelighters was the beneficiary of the money
raised from our Tour de Yorkshire project that saw
PureGym provide static bikes in the Merrion Centre
for our employees and passers-by to use. In total we
cycled 582 miles in one day. We also sponsored The
Yorkshire Children of Courage Awards and the PhyCap
Yorkshire Three Peaks Challenge.
Our close connection to Leeds Cares continued
with our agreement to provide sponsorship for the
distribution of the children’s book ‘Cones’ to children
in Leeds General Infirmary. We are also sponsoring the
charity’s new owl mascot. Working with Child Friendly
Leeds, we will be asking local school children to
design and name the new mascot.
Supporting vulnerable adults
During the year we launched a community service
day for all Head Office staff to take part in.
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Town Centre Securities PLC | Annual Report & Accounts 2019
Town Centre Securities PLC | Annual Report & Accounts 2019
Operating responsibly continued
Operating responsibly: Communities continued
Operating responsibly: Colleagues
Winner Sasha Gill (17) of Sock n Roll and from Leeds Grammar School
Celebrating Leeds Pride
We trialled the initiative with a number of senior staff
members, who volunteered at St. George’s Crypt,
a charity that supports the homeless and vulnerable
of Leeds.
Two of our team are actively involved in fundraising
with the Yorkshire and North West Regional Boards
of LandAid, a property charity which supports young
homeless people.
We also began a relationship with Tempus Novo, a
charity that helps former offenders to find work, the
most influential factor in reducing rates of reoffending.
We hosted the charity’s first annual dinner at Arnold’s
and recruited two of their candidates.
Encouraging sustainability
To complement the work we do to minimise the
Company’s environmental impact (see pages 50 to
52), last October we held The Merrion Centre Goes
Green event to mark National Recycling Week. With
different themes over five days (‘Reduce’, ‘Reuse’,
‘Recycle’, ‘Rejuvenate’ and ‘Renew’), we invited in
specialist external companies to raise awareness
among tenants and visitors of how to improve rates
of recycling. During the same month, our CitiPark
customers were able to pay for their parking at our
Merrion Centre branch using plastic bottles, with
each bottle equivalent to 20p of parking value. The
campaign was a great success and generated broad
media coverage.
Half of the bottles we collected were used by St.
George’s Crypt for their Poppy Appeal. The remainder
were used by local school children, who were charged
with designing a feature to discourage people from
using single-use plastic. All of the entries were
displayed in the Merrion Centre, and the winners won
a voucher for their school, work experience at our
head office and a personalised water bottle.
Recognised for contributing
Although not the reason for our community
involvement and work with charities, it is gratifying
to be recognised for our contributions. We were
delighted to win the Yorkshire Business Master Awards
for Contributing to the Community, and were thrilled
that Charlotte-Daisy Leeming was highly commended
in the British Property Federation’s BPF Futures
Community Engagement Award.
Family events at the Merrion Centre
48
We have a relatively small team at our Head Office and pride ourselves on
how we treat our employees.
Human rights
Work environment
Although we do not have a separate Human Rights
Policy, a respect for human rights is implicit in our
employment practices and our engagement with
third parties.
Health and safety
We are committed to providing a safe and secure
working environment, in our own offices and in our
properties, particularly those – such as the Merrion
Centre – where we maintain an on-site management
function. We have an established Group health and
safety policy, which is approved by the Board annually,
and we review health and safety issues and incidents
at every Board meeting. Lynda Shillaw is the Board
member with this responsibility, and she is supported
by specialist external advisers.
Our operational teams have clear health and safety
objectives and review procedures regularly, taking
action where necessary.
We continually look for opportunities to improve the
work environment for our staff. In the past year we
have renovated our Leeds head office to create of
more modern and comfortable work environment,
with live planting, living walls and break out areas.
In addition, we have improved benefits in the year
for head office staff, improving Company pension
contributions above statutory requirements, and
introducing a health insurance policy.
We are committed to learning and development
and are supporting colleagues through Chartered
Surveyor and Chartered Accountant qualifications.
We have also given work experience opportunities to
local students.
Diversity is important in our business with a 70/30
male to female split across the whole business and a
52/48 split within the Property division.
Operating responsibly: Customers
We are focused on creating and maintaining great environments for our
customers and occupiers across our office, retail and car parking assets.
From the curation of space in our shopping centres
to continue to offer variety and special events,
to the creation of vibrant new areas such as the
Arena Quarter we strive to continually improve our
offer. In an estate like ours there is inevitably some
crossover between our Customer, Community and
Environmental initiatives. Some examples of what we
are delivering for our customers are:
•
Investment in improving the look, feel, accessibility
and security for users of our car parks
• Roll out of the CitiPark app to enable customers to
conveniently pre-book and pre-pay for their parking
• Roll out of EV chargers across our car park estate
• Curating the mix of local and small food and
beverage operators alongside national names in
the Arena Quarter, bringing variety and vibrancy
to a previously quiet corner of the estate and
providing a mix which appeals to the surrounding
international student community
• Working with tenants e.g. PureGym to bring
wellbeing and fitness classes into Merrion
• Running a programme of events throughout the
year in Merrion for our customers.
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49
Town Centre Securities PLC | Annual Report & Accounts 2019
Operating responsibly continued
Operating responsibly: Environment
Operating responsibly: Environment
This section of the report outlines our approach to date on those aspects of
This section of the report outlines our approach to date on those aspects of
the environment that we can influence and some of the key initiatives that we
the environment that we can influence and some of the key initiatives that we
have delivered.
have delivered.
The Merrion Centre produced 538 tonnes of waste
in total last year, which is a reduction of 3% over the
previous 12 months. 23% of the total waste produced
this year was recycled and 77% was sent to an ERF.
•
Introduction of our first rapid charger at Merrion
in Leeds
• CitiPark plans to introduce an emission-based
parking tariff. This is currently being trialled in
one of our London branches.
And
• CitiPark were awarded 'Go Ultra Low' company
status in December 2017 recognising CitiPark’s
commitment to EV vehicles within its own fleet.
The Merrion Centre
Sustainability plays an important role in both the
running and decision-making process within the
Merrion Centre, and we strive to reduce our impact
on the environment and on our carbon footprint.
Initiatives include:
Waste Initiative
The Merrion Centre’s waste management strategy
allows both tenants and customers the opportunity
to reduce, reuse and recycle, as well as dispose of
waste in a sustainable way. The great work with our
stakeholders and service partners has continued
this year, and for the first full year our bespoke
service enabled 100% of the waste produced by the
Merrion Centre to be diverted from landfill with the
waste either being recycled or sent to a local Energy
Recovery Facility (ERF). Using a local firm also cuts
down on CO2 emissions from vehicles.
Sustainability Projects
We have had a busy year in Merrion and delivered
a number of initiatives to improve sustainability.
These include:
• Roofing upgrade across the Centre – this continued
over the past 12 months with the installation of
600sq metres of Europolymers insulation system,
which has improved energy usage and helped us to
meet our EPC targets.
• Power distribution – following last year’s power
scheme development initiative we established an
action plan that will see our distribution system
upgraded in key areas, in line with our energy
initiative directive. The plan includes:
› The installation of an additional ISU for the
purpose of EV charging
› Removal and replacement programme of an
aged distribution system that can be more
efficiently managed
› Removal of three aged metering systems,
reconnected onto a new BEMCO
› Replacement of the remaining car park lighting
with LED options.
Electric car charging
Electric car charging
This report does not include metrics for the whole of
This report does not include metrics for the whole of
our estate, since the majority of it is let to third party
our estate, since the majority of it is let to third party
tenants who are responsible for the generation of,
tenants who are responsible for the generation of,
and reporting on, their environmental footprint.
and reporting on, their environmental footprint.
We have chosen to highlight our environmental
We have chosen to highlight our environmental
work on the Merrion Centre, our largest and most
work on the Merrion Centre, our largest and most
complicated asset.
complicated asset.
Our Approach
Our Approach
Across our business our key environmental focus to
Across our business our key environmental focus to
date has been on sustainable energy usage in three
date has been on sustainable energy usage in three
key areas:
key areas:
1) Buildings
1) Buildings
• We aim to design and deliver buildings that:
• We aim to design and deliver buildings that:
› Are capable of achieving the WELL Building
› Are capable of achieving the WELL Building
Standard, reflecting our commitment to the
Standard, reflecting our commitment to the
health, wellbeing and productivity of the spaces
health, wellbeing and productivity of the spaces
that we create
that we create
›
›
Integrate high standards of environmental
Integrate high standards of environmental
design so that the impact on the natural world
design so that the impact on the natural world
is minimised and wherever possible delivers
is minimised and wherever possible delivers
positive environmental benefits.
positive environmental benefits.
• We target the BREEAM Excellent in our new
• We target the BREEAM Excellent in our new
office developments and a minimum of BREEAM
office developments and a minimum of BREEAM
Good in office refurbishments.
Good in office refurbishments.
• Sustainable materials, full lifecycle models and
• Sustainable materials, full lifecycle models and
energy efficiency are part of our project evaluation
energy efficiency are part of our project evaluation
process for development and refurbishment works
process for development and refurbishment works
in our estate.
in our estate.
• All of our buildings have had EPC assessments
• All of our buildings have had EPC assessments
and we monitor and seek to improve EPC ratings
and we monitor and seek to improve EPC ratings
through the lifecycle of the building.
through the lifecycle of the building.
• We aim to ensure that the construction process
• We aim to ensure that the construction process
minimises disruption and nuisance to surrounding
minimises disruption and nuisance to surrounding
communities and occupiers by employing
communities and occupiers by employing
contractors who meet the standards of the
contractors who meet the standards of the
Considerate Constructors Scheme.
Considerate Constructors Scheme.
2) Generation
2) Generation
• We have three of our own solar photovoltaic farms
• We have three of our own solar photovoltaic farms
in Leeds and Manchester, which in FY19 avoided
in Leeds and Manchester, which in FY19 avoided
over 110 tonnes of carbon dioxide.
over 110 tonnes of carbon dioxide.
3) Vehicles
3) Vehicles
Through our CitiPark business we have a unique
Through our CitiPark business we have a unique
lens into the consumer’s use of electric vehicles and
lens into the consumer’s use of electric vehicles and
are taking considerable steps forward in increasing
are taking considerable steps forward in increasing
the provision of EV charging for customers’ electric
the provision of EV charging for customers’ electric
vehicles. Projects include:
vehicles. Projects include:
•
•
Installation of EV charging across our car park
Installation of EV charging across our car park
estate and as part of new developments
estate and as part of new developments
50
Ariel view of the Merrion Centre
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Shareholder Information
Town Centre Securities PLC | Annual Report & Accounts 2019
Operating responsibly continued
Operating responsibly: Environment continued
Greenhouse gas (GHG) emissions statement
The Merrion Centre goes green initiative
• This year saw the further refurbishment of areas of
the Wade Lane and Merrion Street malls, including
replacement of shop fronts and ceilings, and
lighting being upgraded to LED. The plan for the
coming year is to continue this upgrade further
along the malls.
• We continue to upgrade lighting to LED in the
offices and common areas.
• Working in conjunction with CityConnect, we
secured a grant towards the creation of additional
secure bicycle facilities. Hydraulic cycle racks along
with lockers and changing facilities are currently
being installed.
• The toilet refurbishment programme continues,
and we have introduced sustainable initiatives
where possible:
› We have installed Encore cisterns, which draw
two thirds of their water supply from condensate
pumps in the air conditioning, thereby reduce
our mains water consumption. The system is
BREEAM and LEED compliant
› We continue to operate an Ecocap system in the
Town Centre House toilets, which saves water
and money whilst protecting the environment,
being a fully biodegradable product. From using
the Ecocap system in Town Centre House, in the
past year we saved approximately 300,000 litres
of water
› We installed no touch infrared sensor taps,
which are water efficient and more hygienic.
52
In accordance with the Companies Act 2006, Town Centre Securities is required to measure, monitor
and report its greenhouse gas (GHG) emissions profile.
To achieve this, the GHG calculation and reporting methodology follows the Greenhouse Gas Protocol
(‘operational approach’) and the DEFRA Environmental Reporting Guidelines (2013). The boundary for reporting
includes emissions from all sources under direct control, grouped under: Scope 1 (direct) GHG emissions from
owned assets; and Scope 2 (indirect) GHG emissions from supplied electricity and gas to office space over the
reporting period (July 2018 to June 2019).
This is the first year that TCS has disclosed its CO2 emissions profile. As a result, we will use 2018/19 data as
the baseline from which to provide comparable year-on-year data in future reporting.
As a property investment company, emissions from sources such as company vehicles, production processes
and combustion sources are minimal and therefore not deemed material (see description below). Emissions from
properties leased to customers have been excluded as they do not fall within the scope of the GHG Protocol’s
operational approach requirements. A full list of additional estimates and assumptions can be found in the
descriptions below this table.
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• The first Merrion Goes Green week was held in
October 2018, a platform to promote all things
sustainable and environmental. The themes were
Reduce, Reuse, Recycle, Rejuvenate and Renew,
working with Merrion Centre stakeholders, tenants
and local focus groups to raise awareness and
reiterate our commitment.
Utilities
Following further progression of our energy saving
initiatives we delivered a 28% reduction on electrical
consumption, notwithstanding the development of the
centre, saving £23,691 which was passed back to our
tenants. Through other initiatives we also achieved a
15% saving on gas and water consumption at Merrion.
Emissions type (kg of CO2e)
Absolute values
Scope 1 (direct)1
Scope 2 (indirect)2
TOTAL
Carbon intensity 13 (kg of CO2 per m² area)
Scope 1 (direct)
Scope 2 (indirect)3
TOTAL
Carbon intensity 24 (kg of CO2 per full time-equivalent employee)
Scope 1 (direct)
Scope 2 (indirect)4
TOTAL
2018/19
–
59,007
59,007
–
34.97
34.97
–
6,003
6,003
1)
2)
3)
Although TCS does not combust fuels, we do own a small fleet of eight company vehicles. As the majority of these vehicles are either fully electric vehicles
or petrol hybrids (six out of the eight), emissions from these sources are minimal and therefore not reported as part of our emissions profile.
Indirect (Scope 2) GHG emissions from supplied electricity and gas are based on actual energy consumption values. Estimates have been provided for the
electricity usage during the last six months of the financial year for our Duke Street office, and the final month for our Town Centre House office.
CO2 per m² area: Based on an office size of 8,311 m² across two owned offices. The downsizing of our Town Centre House office space from 8,800 m² to
6,500 m² has been included within our calculations.
4)
CO2 per full time employee (FTE): Based on 35.7 FTEs in our Town Centre House office, Leeds and 4 FTEs in our Duke Street office, London.
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53
Shareholder Information
Financial review
The Company has continued to strengthen
its underlying financial position.
We made progress towards our
aim of reducing our exposure to
the retail sector and unlocking
future growth through our
development pipeline.
Mark Dilley
Group Finance Director
TCS has a proud history of
focusing and delivering on long-
term shareholder return, and –
consistent with this – the activity of
the past year was undertaken with
long-term value creation in mind.
EPRA earnings in the year were
7.9% lower than last year. Despite
that we continued to deliver a fully
covered dividend, proud of our
59-year history of maintaining or
improving the dividend. This year
we propose holding the dividend
constant at 11.75 pence, delivering
a 6.4% yield based on the share
price as at 13 September 2019.
The table on page 55 highlights the
key financial measures over the past
five years. It is clear that 2019 was a
challenging year for the Company
financially driven by the unrealised
devaluation of our retail assets. In
addition, it is disappointing to see
Total Shareholder Return at such a
level for the year. This is all driven
by the significant, and in our minds
unfounded, deterioration in our
share price. Our fully covered
dividend, our well-funded balance
sheet, our development pipeline,
and the fact that we continue
to invest in the long-term future
of TCS are testament to the
underlying strength of the business.
54
Gross Revenue £m
EPRA Profit £m
Statutory Profit after Revaluation £m
NAV per Share p
Total Property Return
Total Shareholder Return
Loan to Value
Gearing
Absolute borrowing £m
Income Statement
2015
22.7
6.5
24.0
344
12.2%
19.1%
49.7%
95.5%
179.1
2016
26.3
6.6
11.9
357
7.8%
(3.9%)
49.2%
95.0%
185.8
2017
27.5
7.0
6.7
359
6.0%
9.6%
49.3%
96.5%
188.9
2018
30.2
6.9
18.4
384
9.4%
3.2%
47.5%
92.1%
192.6
EPRA Earnings for the year ended 30 June 2019 were £6.4m, down on the prior year profit of £6.9m.
£’000s
Gross Revenue
Property Expenses
Net Revenue
Other Income / JV Profit
Administrative Expenses
Operating Profit
Finance Costs
EPRA Earnings
Segmental
Property
Net Revenue
Operating Profit
CitiPark
Net Revenue
Operating Profit
ibis Styles Hotel
Net Revenue
Operating Profit
2019
31.2
6.4
(12.5)
354
1.3%
(25.0%)
49.4%
92.5%
182.0
YOY
3.4%
6.5%
1.6%
(20.9%)
4.3%
(2.8%)
1.7%
(7.9%)
FY19
31,189
FY18
30,178
(11,600)
(10,896)
19,589
1,649
(6,857)
14,382
(8,025)
6,356
19,282
2,084
(6,574)
14,792
(7,887)
6,905
FY19
FY18
YOY
13,970
9,725
5,387
4,425
231
231
13,850
10,307
4,979
4,032
453
453
0.9%
(5.6%)
8.2%
9.7%
(49.0%)
(49.0%)
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Financial review continued
Income Statement continued
Gross Revenue:
There were six key drivers of the
reduction in profit year on year:
• Retail CVAs, administrations
and bad debt write offs:
£0.4m. During the year eight
tenants entered into CVAs or
administration. See page 27
for details
•
•
Investing in our assets: £0.2m.
During the year we saw a level
of income reduction as we
took the opportunity of leases
coming to an end to invest in
and improve our assets. In the
short term this had the effect of
reducing rental levels, but will
create future value. Milngavie in
Scotland is the most significant
example (see page 17)
ibis Hotel and Restaurant:
£0.2m. Whilst the hotel room
performance was robust, we
were disappointed by the
performance of the rebranded
restaurant. We have now
launched a new more mass-
market offer, with a focus on
the bar facilities
• Admin expenses: £0.3m.
On top of inflationary cost rises
we experienced a number of
one-off costs, primarily for
professional services relating to
financing costs and renewing
old certificates of title for our
development land
• Other income: £0.4m. This was
lower year on year due to a
significant one-off dilapidation
payment from Homebase in the
prior year, and also the interest
effect of the new Merrion House
financing agreement, which is
consolidated into our accounts
within other income
• LIBOR increase: £0.2m.
These reductions were partly
offset by the timing benefit of
purchasing The Cube ahead of
selling Rochdale Retail Park.
Gross revenue was up £1.0m
or 3.4% year on year, with key
drivers being:
• Acquisitions including The Cube
in Leeds and Ducie House in
Manchester, ahead of the sale of
Rochdale Retail Park in January,
gave a net benefit of £1.1m,
accounting for 3.7% points of
the increase
• Organic growth of £0.6m or
5.5% in CitiPark, accounting
for 2.1% points of the increase
• These increases were partly
offset by the impact of CVAs
and bad debt of £0.4m year
on year
•
In addition, the effect of the
former Homebase property
in Milngavie being vacant for
almost the whole year further
reduced income by £0.2m year
on year.
Property Expense:
At a total Company level property
expenses were up 6.5% or £0.7m
year on year. Key drivers of this
underlying increase were:
• Property: our recent acquisition,
Ducie House has a higher level
of operating expense than the
rest of our portfolio. Due to the
nature of the property - most
leases have historically been
fully inclusive of costs with no
service charge. This accounted
for £0.3m or 3.0% points of
the increase
• CitiPark: greater operating
expenses accounted for 2.2%
points of the increase, although
these rose below the level of
revenue growth, improving
cost leverage
•
ibis Hotel: operating expenses
were £0.1m higher year on year,
driven primarily by the change
in restaurant operation, part of
which was a one-off payment to
terminate our agreement with
Marco Pierre White’s operating
company. This accounted for
0.7% points of the increase.
Other / JV Income:
Total Other / JV income was down
20.9% or £0.4m year on year. This
is explained by two key items:
•
Income from joint ventures was
down £0.1m year on year driven
by the onset of the financing
agreement in respect of Merrion
House, where our share of
income is reduced by the
effective interest cost
• Last year we received £0.3m
of income from Homebase as a
result of dilapidations charges
following their vacating our
property in Milngavie, which
was understandably not
repeated in FY19.
Administrative Expenses:
Administrative costs were up
4.3% or £0.3m year on year. The
increase was primarily driven by
staff costs, where the combination
of annual pay awards, the joining
of our new Property Director and
a provision release in the prior
year drove costs up £0.4m year
on year. This was partially offset by
the halving of the bonus accrual to
£0.25m as a result of performance.
In addition, professional costs
were circa £0.1m higher year on
year, driven primarily by additional
legal work required to renew
Certificates of Title for some of
our development land, following
last year’s renewal of our bank
loan facilities.
Finance Costs:
Finance costs were 1.7% or £0.1m
higher year on year. Despite
the receipt of £26.4m following
the Merrion House refinancing,
the combination of purchasing
The Cube ahead of selling our
Rochdale Retail Park asset and the
increase in LIBOR drove higher
interest costs in the year.
56
Balance Sheet
Our total non-current assets
(including JVs) of £370.2m (2018:
£407.2m) include £337.9m of
investment properties (2018:
£376.1m) and £30.7m of non-
current car parking assets (2018:
£29.6m). The Merrion Centre car
park is included in the investment
property asset value. The car
parking assets include £4m
(2018: £4m) of goodwill arising
on business combinations.
It is worth noting that the largest
single factor that reduced the
value of our non-current assets
was the financing of Merrion
House. Previously the Investment
in Joint Ventures value reflected
the full value of our share of
the Merrion House joint venture
vehicle. The reduction in value of
£27.3m is due to the distribution
received from the joint venture
following Leeds City Council’s
forward payment of 25 years of
discounted rent.
We continued to invest in our
properties with a total of £3.7m
of capital expenditure during the
year, including £1.3m into the
Merrion Centre and £1.5m net
into the redevelopment of our
property in Milngavie. We also
invested £0.4m into our Burlington
House Joint Venture. Capital
recycling comprised £14.0m of
sales and £17.0m of purchases.
Along with other cash movements
this resulted in a decrease in
borrowings from £192.6m to
£181.9m.
The property and car parking
balances reflect valuation losses
of £18.3m in respect of the
investment and development
properties, no movement in
respect of joint ventures and gains
of £0.7m in respect of car parks
(which includes a gain of £0.5m
which is shown in the Statement
of Changes in Equity as other
comprehensive income).
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This positive timing resulted in a
positive net revenue effect of over
£0.6m in the year, as well as the
disposal of an ex-growth asset
and the purchase of a strategically
important one.
Protecting income through flexibility
Demonstrating:
Innovative financing arrangement
enabling portfolio flexibility.
Snap shot:
TCS raised £26.4m leveraging
Merrion House, enabling the
acquisition of The Cube in Leeds
ahead of selling Rochdale Retail
Park, thereby protecting income in
the year.
The background:
Following the completion of the
redevelopment of Merrion House
in Leeds, in joint venture with
Leeds City Council (LCC), LCC
took occupation of the building
in early 2018, using the building
as their main public facing office
building on a new 25-year lease,
with built in five-yearly CPI uplifts.
In order to leverage the asset
TCS entered into an innovative
financing arrangement with LCC
where they effectively advanced
25 years of discounted base rent
in July 2018, providing TCS with
£26.4m of working capital. The
inflationary rental increases will
still apply, providing TCS with
further cash funds from year
five onwards.
The problem to be solved:
TCS was keen to sell Rochdale
Retail Park, a strongly rented but
ex-growth asset where valuation
was coming under pressure.
However, yielding income of
£1.15m per annum, the business
wanted to ensure this income was
suitably replaced, with little or no
loss of income in the year.
The solution:
The working capital provided
by the Merrion House financing
allowed TCS to purchase The Cube
for £12.0m (see Strategy in Action
page 16) three months ahead of
selling Rochdale for £13.2m.
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57
Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Financial review continued
Balance Sheet continued
Borrowings:
Future financial
considerations
A number of commercial and
accounting considerations are
currently being assessed by the
Company that are worthy of
comment:
None of this affects the FY19
accounts, but it is possible in the
future that we will need to report
on an adjusted EPRA Earnings
figure to enable investors to
understand performance of the
underlying Company on a like-for-
like basis.
Yourparkingspace.co.uk (YPS)
IFRS16
The business currently owns a
15% stake in YPS, and accounts
for it as an investment. We hold
no significant influence over the
company at the reporting date. We
review the value of our investment
for balance sheet purposes, and
from an income perspective look
at dividends paid. To date, we have
determined that the value of our
investment remains consistent
with our quantum invested, and
with no dividends paid we have
not reflected any income.
However, YPS is in the process
of undergoing a potential further
fundraising, and as part of our
existing arrangement with YPS we
have the ability to increase our
equity stake on the basis of the
original valuation. We also have the
ability to convert part or potentially
all of our loan to YPS into equity
on the basis of the new fund raise
valuation. These two possibilities
may increase our equity share to
more than 20%. This would require
us to account for the investment
on an equity basis. Should this
fundraising be successful, we
would envisage it having a positive
effect on our balance sheet
valuation given the expectation
that the new fundraising exercise
will highlight a significant increase
in value of the Company. However,
at the year end, this outcome
remains uncertain and the current
carrying value is management’s
best estimate of fair value. We also
however expect this accounting
approach to depress EPRA
Earnings in the near term as
a result of the current loss-
making status of this start up.
We will have to apply IFRS16
(lease accounting) for the year
ended June 2020. We have a small
number of leased operational car
parks. We are in the process of
finalising our review of the impact
of IFRS16.
Future P&L events
As highlighted elsewhere
in this report, we have not
escaped the impact of CVAs and
administrations from retail tenants,
and, given the current climate, it
is prudent to assume that this risk
will continue. Our experience to
date suggests that the strength
and diversity of our assets will
enable re-letting with minimal
or no medium-term income
loss, although we would expect
continued short-term impacts to
income and value (see page 27).
The situation with regards to
the uncertainty around retail
property reinforces our intention
to continue to recycle retail
assets and to identify the most
appropriate use of the proceeds.
Whilst we have been able to
protect the income line this year
with the purchase of The Cube
ahead of the sale of our Rochdale
Retail Park site, it is unlikely that we
will be able to continue to repeat
this, and therefore it is likely that
we will see income impacted as we
work our way through a continued
sale of retail assets.
Going concern and headroom
One of the most critical
judgements for the Board is the
headroom in the Group’s bank
facilities.
As reported in last year’s Annual
Report, we extended or renewed
all of our banking facilities in 2018.
There have been no changes since
that point meaning that we remain
with three RCF facilities as follows:
• Lloyds: A £35m three-year
facility with the opportunity for
two one-year extensions, with
the three-year element expiring
in June 2021. We also have a
£5m overdraft facility
• NatWest/RBS: A £33m three-
year facility expiring in
April 2021
• Handelsbanken: A £35m
five-year facility expiring in
June 2023.
These facilities, combined with
a £106m long-term debenture
scheduled to expire in 2031, give
the Company a good level of
certainty over its funding over
a long time frame.
In addition, again as reported
in last year’s Annual Report, we
finalised a funding arrangement
with Leeds City Council whereby
they paid upfront their 25 years of
rental payments at a discount for
their occupation of Merrion House.
TCS received £26.4m in July 2018
(see case study on page 57).
We have sought to lower our Loan
to Value (LTV) levels in recent
years, making good progress whilst
still investing in our portfolio. It is
disappointing to see LTV increase
to 49.3% at the 30th June 2019.
This was unfortunately fully due to
the reduction in valuation of the
portfolio seen in the last year. The
like-for-like reduction in valuation of
£13.8m in the year had a 3.7% point
impact on LTV levels, which would
otherwise have shown a continuing
reduction in leverage. Looking
at cash debt levels in the above
summary table it can be seen that,
at £182m, net borrowing levels
were lower than in any of the past
three years.
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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 the end of June 2019 was £26.1m (2018:
£10.6m), which was considered to be sufficient to support our going
concern conclusion.
Total shareholder return and total property return
Total shareholder return of minus 25.0% (2018: +3.2%) was calculated as the
total of dividends paid during the financial year of 11.75p (2018: 11.50p) and
the movement in the share price between 30 June 2018 (288p) and 30 June
2019 (205p), assuming reinvestment of dividends. This compares with the
FTSE All Share REIT index at minus 5.2% (2018: +9.8%) for the same period.
Despite the long-term improvement in dividend payments, the material
reduction in share price in the past 12 months has significantly impacted
our reported total shareholder return in the year and in the five and 10
year reported figure.
Total shareholder returns % (CAGR)
Total shareholder returns
1 Year
5 Years
10 Years
Town Centre Securities
FTSE All Share REIT index
(25.0%)
(0.6%)
(5.2%)
4.5%
9.9%
10.9%
Total property returns
Retail
Retail Warehouses
Shopping Centres
Offices
All Property
(12 months ending June 2018)
MSCI
Quarterly
index
(4.0)
(5.5)
(8.8)
4.6
3.1
TCS
(1.7)
5.6
(3.4)
3.1
1.3
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
1.3% (2018: 9.4%). This compared to the MSCI/IPD market return of 3.1%
(2018: 9.3%).
A key driver of the All Property MSCI index being higher that TCS is due
to the strong market performance of Industrial property of which TCS
has only a small amount of.
Mark Dilley
Group Finance Director
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Risk report
Protecting value by identifying and
managing our principal and emerging
risks is an integral part of our operations.
Risk management
We take risk management very
seriously, such that reference to,
and consideration of, key risks form
part of the day to day workings of
the Company. Whilst we recognise
that a level of risk taking is inherent
within the running of a commercial
enterprise, we work to ensure that
risk assessment and mitigation is
central to business planning and
decision making.
The business has a number of
formal meetings during the year
where risk assessment is a core
element of the agenda. We pay
particular attention to new and
emerging risks, in order to ensure
we put in place actions which
attempt to remove or reduce risk
before it occurs. In recent years,
in particular, we had identified
the risk of retail tenant failures
and the increase in CVAs and
Administrations. We use our
formal meeting structures to
identify emerging risks, as well as
highlighting existing risks. These
meetings include but are not
limited to:
• Annual Strategy Review –
Begins with a review of key risks
facing the business and a review
of how the strategy will best
mitigate those risks.
• Bi-annual Audit Committee –
Undertakes a formal review of
the risk register and mitigating
action plans.
• Quarterly IT & Data Governance
Committee – Chaired by
the Group Finance Director,
this Committee of senior
management reviews IT- and
data-specific risks and ensures
that key risks are understood
and managed. Includes a review
of adherence to the GDPR
regulations.
• Monthly Board Meetings –
Each meeting includes a review
of financial performance, debt
levels and banking covenants,
an IT update, and a review of
the papers and actions from
the Property Review Group
(see below).
• Monthly Property Review Group
– A meeting of the Executive
Board and senior Property and
Finance management, tasked
at undertaking a review of the
Property Portfolio. This includes
occupancy levels, tenancy
changes, adherence to payment
terms and bad debt levels, and
Health and Safety and IT related
matters.
• Monthly CitiPark Board
Meeting – A meeting of the
Executive Board and senior
CitiPark, Property, and Finance
management, tasked at reviewing
the performance of the CitiPark
business, including key risks
and areas such as IT and Health
and Safety.
• Joint Venture Board Meetings
– Formal Board structures and
quarterly Board meetings are
in place for the Company’s two
main joint venture companies,
Merrion House LLP and Belgravia
Living Group Ltd.
• YourParkingSpace.co.uk (‘YPS’)
– Following investment in YPS,
TCS Board Directors sit on
the Board of YPS, which meets
formally on a bi-monthly basis.
60
Likelihood
Impact
Change
from 2018
High
High
Improved
Medium
Medium
No Change
Low
Low
Worsening
Principal Risks and Uncertainties
Risk
Likelihood
Impact Mitigation
Movement
MACROECONOMIC RISKS
Economic and
Political Outlook
A broad economic downturn,
potentially as a result of
Brexit, or broader cyclical
reasons could result in tenant
failures, falling asset values,
rising debt costs, or less
debt availability.
CORPORATE RISKS
Strategy
The Company’s strategy
could be inappropriate for
the current stage of the
property cycle and the
economic climate, resulting
in lower profits and therefore
a pressure on dividend and
shareholder return.
People
The inability to attract and
retain high calibre staff,
affecting the ongoing
success of the Company.
An economic downturn at some point in the cycle is inevitable,
with the risk accentuated as a result of Brexit. TCS would not
escape the impact of an economic downturn, however specific
mitigating factors for TCS include:
• Rents paid in advance
• Market leading level of occupancy and a long history of ensuring
on-time payment by tenants
• Avoidance of speculative developments
• Concentrated portfolio of car parks in highly sought-after
locations
• Bank agreements renewed or extended last year ranging
from two to four years in length, and the long-term debenture
accounting for c 60% of our debt.
The Board undertakes regular reviews of the strategy and believe
the following help mitigate risk:
• All key decisions are reviewed and approved at Board level
• The strategy of developing diverse multi-use sites and lowering
exposure to retail
• The experience and expertise of the team, particularly in relation
to the property markets of Leeds and Manchester
• The presence of the Ziff Concert Party ensures a strong
alignment of management and shareholder aims.
The Company benefits from the long service of a number of key
individuals, including family members of the Concert Party, which
helps guarantee stability. In addition:
• Base salary packages are kept competitive within the market
• The Remuneration Committee reviews succession plans and pay
levels annually
• New recent appointments, including at Board level, demonstrate
the attractiveness of the business to new recruits at all levels
• Continued financial success combined with the development
opportunities of the business make the Company attractive to
new recruits.
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61
Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Risk report continued
Principal Risks and Uncertainties continued
Likelihood
Impact
Change
from 2018
High
High
Improved
Medium
Medium
No Change
Low
Low
Worsening
Risk
Likelihood
Impact Mitigation
Movement
Risk
Likelihood
Impact Mitigation
Movement
CORPORATE RISKS CONTINUED
Systems,
Processes
and Financial
Management
Weak controls putting at
risk the protection of the
Company’s assets and ability
to deliver on its strategy,
resulting in financial loss,
fraud, and suboptimal
returns. Risk to data and
systems as a result of
cyber-attacks.
GDPR
Financial and reputational
risk arising from a breach of
GDPR regulations, potentially
resulting in fines and damage
to customer trust.
Regulatory and
Tax Framework
Non-compliance with
tax, legal, or regulatory
obligations could result
in financial penalties,
reputational damage,
and higher levels of cost.
The Company has a strong culture of safeguarding assets, being
conservative in its approach, and using professional experts to
ensure risk levels are low:
•
IT systems are supported in house, and more services are
being moved to the cloud
• A new property and accounting IT solution has been
implemented in the last few years to ensure we remain
well controlled in this respect. This is in the process of
being upgraded and moved into the cloud
• Financial processes relating to cash are tight, robust,
and reviewed regularly. Clear and separated authorisation
processes are in place and robustly adhered to
•
Insurance policies are fully in place to safeguard assets
• Staff are trained in all aspects of cyber security and penetration,
and phishing tests are carried out to test for weaknesses
• A summary of the internal financial control review processes
can be found in the Audit Committee report.
Given the nature of the business we do not hold significant amounts
of customer data, with the CitiPark business our highest risk area.
That said, the Company has taken seriously the requirements of
the legislation and has implemented a detailed action plan that
has been reviewed at Board level. Key aspects include:
• Updated all Privacy related statements and policies
• Trained all staff on theirs and the Company’s responsibilities
•
IT and Data Governance Committee in place, meeting quarterly,
to oversee all aspects of GDPR and wider cyber security.
The Company takes its legal responsibilities seriously. Matters
are reviewed regularly at Board and Audit Committee level, and
the Company makes use of third-party professional services to
ensure compliance. Actions include:
• Link Company Matters engaged as formal Company Secretary
to provide advice and recommendations to the Company and
attend Board meetings
• PwC are engaged as the Company’s tax advisors and are tasked
with ensuring we remain compliant in all aspects of tax
• The Corporate and Criminal Offences legislation (CCO) is a key
consideration and a workshop has been held to ensure risks and
mitigating actions are clearly understood.
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CORPORATE RISKS CONTINUED
Major Incident/
Business
Disruption
Cost and business down-
time as a result of a major
incident. This risk is primarily
associated with the Merrion
Centre, due to its importance
to the portfolio and as the
location of Company’s
head office.
PROPERTY RISKS
Investment
Risk
New investment
opportunities cannot be
sourced at economic prices.
Development
Risk
Development projects may
exceed cost estimates and/or
newly developed properties
may fail to rent. The scale of
such projects means they
are of material size to the
Company.
The provision of insurance across the portfolio is the main
mitigation to this risk, with policies in place to protect income as
a result of disruption. In terms of disruption to the head office the
following actions are in place:
• Key personnel have laptops to enable remote working
• Back up procedures are in place to ensure minimal loss
of data in the event of damage to IT hardware
•
IT audit has recommended further protections, which
we are in the process of putting in place.
The Company has clear plans in place to minimise the impact of
this risk, including:
• The Company typically targets assets of higher value than
sought by individual investors, but lower than many larger
property or overseas investors
• The Company looks to build strong relationships with partners
to generate opportunities that can be exploited together.
For example, our Belgravia Living PRS venture
• The existing portfolio has enough development potential to
provide growth opportunities even if asset purchase prices rise.
The Company has numerous actions in place to mitigate such
risks including:
• Build projects are generally contracted with third parties on a
fixed cost basis
• Where possible, the Company seeks to undertake a development
where there is a significant level of pre-let commitments
• Where that is not possible, (e.g. PRS residential investments) a
detailed market analysis will be undertaken, and the Company
will ensure that locations are in high demand and that target
rental levels are achievable
• When in Joint Venture, formal Board structures are created
with at least quarterly meetings to review progress and
performance, and to ensure that all development risks are
being managed appropriately.
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Risk report continued
Principal Risks and Uncertainties continued
Likelihood
Impact
Change
from 2018
High
High
Improved
Medium
Medium
No Change
Low
Low
Worsening
Risk
Likelihood
Impact Mitigation
Movement
Viability Statement
PROPERTY RISKS CONTINUED
Valuation
Risk
A material devaluation
in assets.
Tenant and
Sector Risk
Individual tenant failures, or
exposure to a specific sector.
FINANCING RISKS
Capital and
Financial Risk
The Company has insufficient
funds /lines of credit.
Cost of Debt
Rising debt costs.
64
The key mitigation to this risk is ensuring there is enough
headroom in terms of uncharged assets of undrawn, charged
facilities. Key actions include:
• All three bank facilities renewed or extended in June 2018,
extending the life of the facilities to between three and five years
from that point
• All three facilities now able to take development and car park
assets, maximising our drawdown ability. In addition, Lloyds
facility has removed any cap on such assets
• Asset cover in the long-term debenture can drop from the
required 1.67x to 1.5x without triggering a covenant break
• The Company recycles assets believed to be at greatest risk
of devaluation
• The Company recycles assets believed to be at greatest risk
of devaluation.
There have been an increasing number of CVAs and administrations
within the Retail sector. TCS are taking a number of actions:
• Since 2016 the Company has significantly reduced its exposure
to Retail from 70% to 50% of value at June 2019
• Now a mixed-use asset, the Merrion Centre now depends upon
Mall Retail for less than 25% of its income
• We have a diversified tenant base, and limited exposure to
individual tenants. Our top tenants are Leeds City Council,
Waitrose, Morrisons and Pure Gym
• CitiPark income helps further mitigate the reliance on
specific property tenants.
The majority of mitigating actions are contained with the
Valuation Risk category above. In addition:
• The Board reviews cash balances, forecast cash flow,
borrowing levels and headroom on a monthly basis
• The Company demonstrated during the last downturn the
strength of its conservative approach and longstanding
relationships with its banks.
The following actions help mitigate the risk to the Company:
• More than 50% of debt is in the form of fixed, long-term
debenture borrowing in place to 2031
• Having renewed or extended all three bank facilities in
June 2018, bank margins are locked in for three to five
years from that point
• The Company has a significant amount of income to
interest headroom
• The Board takes moving Libor rates into account when
considering three-year budgets and affordability.
In accordance with the requirements of the UK Corporate Governance Code, the Board have assessed
the prospects of the Company and future viability over a three-year period, longer than the 12 months
required by the Going Concern provision. The Board conducted this review taking into account the
Company’s long-term strategy, principal risks, attitude to risk, and the current health of the Company’s
finances, and future plans.
The Board’s review considered a three-year future period, consistent with the three-year budgeting
process that the Company undertakes annually. The three-year perspective allows the business to
review cash flows, dividend cover, borrowing headroom and other key financial ratios, and requires the
business to have clarity on its approach to bank financing over a longer period. The review also considers
alternative scenarios.
In taking this longer term perspective, the Board considers the risks covered in this Risk Management
review. In particular the key risks identified are:
• Changes in the macro-economic environment affecting rental income levels and property values
• Changes in the level of Tenant and Sector risk affecting occupancy levels and lettings
• Changes in availability of capital, affecting committed expenditure and investment transactions.
The Board has also taken into consideration the current financial position and the secure, recently
updated debt facilities.
Based on the results of their review, the Directors have a reasonable expectation that the Company will
be able to continue in operation and meet its liabilities as they fall due over the three-year period of
their assessment.
Going Concern
The Directors confirm that they have a reasonable expectation that the Company has adequate resources
to continue in operational existence for at least 12 months from the signing of these financial statements.
This confirmation is made having taken into account the Company’s latest rolling forecast, in particular the
cash flows, borrowings and undrawn facilities. Furthermore, the Directors consider headroom under the
Company’s financial covenants, and its options for recycling capital. The Board also consider the principal
risks that could impact on the Company’s liquidity and solvency over the next 12 months.
Based on the above, the Directors continue to adopt the going concern basis in preparing the accounts for
the year ended 30 June 2019.
This Strategic Report and the information referred to herein was approved on behalf of
the Board on 24 September 2019.
Dr. Edward Ziff OBE DL
Chairman & Chief Executive
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Corporate governance
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Introduction from Chairman
Board of Directors
Nomination Committee report
Audit Committee report
Directors’ remuneration report
Directors’ report
Statement of Directors’
responsibilities
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Town Centre Securities PLC
became a listed company
59 years ago and has over
that time provided strong
returns to shareholders.
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66
Image: Founder, Arnold Ziff
67
Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Corporate governance
Introduction from Chairman
As Chairman, I take my
responsibilities for ensuring
strong corporate governance
very seriously and it has been
an area of focus for the Board
this year…
Dr. Edward Ziff OBE DL
Chairman & Chief Executive
68
As Chairman, I take my
responsibilities for ensuring
strong corporate governance
very seriously and it has been
an area of focus for the Board
this year particularly following
the introduction of the 2018 UK
Corporate Governance Code
(the ‘Code’).The Board has been
looking on how it can best
implement the Code given the
Company’s particular structure.
The Board has undertaken
a review of its structure and
composition. There are currently
three independent Non-Executive
Directors who, as well as
contributing invaluable support
and guidance, offer significant
challenge to me and the other
Executive Directors. The Board
has focused on longer term
strategy during the year and the
Non-Executive Directors have
provided robust challenge which
has been particularly important
given the difficulties of the market
at present.
Following the retirement of
Richard Lewis last year, the Board
were delighted to welcome Lynda
Shillaw, formally of Manchester
Airports Group, to the Board as
Group Property Director. Lynda is
our first female Property Director
and the Board recognises the
benefits of having a diverse Board
and intends to continue to address
as opportunities arise to do so.
We try wherever possible to
comply with the Principles set
out in the UK Corporate
Governance Code.
However, the Board takes a
pragmatic approach and because
of the size and nature of the
Company, does not apply all the
Code’s Principles. The Board keeps
this under review and decisions
on these matters are made by the
Board bearing in mind the best
interests of all shareholders.
Last year, I reported that we
recognised the need to keep
up with required changes in
the reporting around Corporate
Governance, continuing to
increase our level of disclosure.
This year, we have taken a
further step forward and with
the support of Link Company
Matters Limited as Company
Secretary and the use of other
external experts we continue
to strengthen our governance
processes and reporting.
As mentioned earlier, we have
begun implementation of several
changes following the introduction
of the 2018 UK Code of Corporate
Governance. Corporate
Governance arrangements will
continue to be a key focus for the
Board going forward and regular
reviews undertaken to ensure
compliance to the fullest extent,
where practicable.
We report below in more detail
why the Board continues to believe
that it is appropriate for the roles of
Chairman and Chief Executive to
be combined. Clearly, the Board is
aware that this is not in compliance
with the Code and recognises
that a number of shareholders
will have concerns about this. It is
a matter which the independent
Non-Executives have discussed
during the year and will continue to
keep under review. The presence
on the Board of key executive
management provides the Non-
Executive Directors with direct
access to these major functions
rather than through the Chief
Executive. In addition, the three
independent Non-Executives are
extremely rigorous in their review
of my performance as Chairman
focusing on ensuring the Chairman:
• demonstrates objective
judgement and promotes a
culture of openness and debate
• facilitates constructive Board
relations and the effective
contribution of all Non-
Executive Directors.
The independent Directors are
firmly of the view that my holding
the combined role of Chairman
and Chief Executive continues
to be in the best interests of the
Company. Whilst the combined
role remains appropriate for
the time being, with my being
in a unique position – my father
having founded the Company and
the Ziff family being the largest
shareholder overall – the Board will
continue to review the situation on
a regular basis.
I also wanted to take the
opportunity to directly address
the issue concerning the number
of independent Non-Executive
Directors. Currently less than
at least half the Board are
independent (as required by the
Code). Again, this is a matter
which the independent Directors
have reviewed and concluded that
given the size of the Company,
three independent Directors is
appropriate and that to change the
composition of the Board would
either impact Board effectiveness
or add unnecessary cost. This is
a matter that will be kept under
review and is covered specifically
in the Board evaluation exercise.
Dr. Edward Ziff OBE DL
Chairman & Chief Executive
24 September 2019
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69
Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Corporate governance continued
Board of Directors
Executive
Non-Executive
COMMITTEES
Remuneration Committee
Nominations Committee
Audit Committee
Dr. Edward Ziff OBE DL
Chairman &
Chief Executive
Lynda Shillaw ACMA
Group Property
Director
Mark Dilley ACMA
Group Finance
Director
Ben Ziff
Managing Director
CitiPark & TCS Energy
Michael Ziff Hon DUniv
(Brad)
Non-Executive Director
Ian Marcus FRICS
Non-Executive
Director
Paul Huberman FCA CTA
Non-Executive
Director
Jeremy Collins
Non-Executive
Director
APPOINTED
03 / 1985
APPOINTED
11 / 2018
APPOINTED
07 / 2017
APPOINTED
09 / 2015
APPOINTED
07 / 2004
APPOINTED
12 / 2014
APPOINTED
12 / 2014
APPOINTED
02 / 2018
PROFILE
Edward Ziff joined the Company
in 1981 before being appointed
to the Board in 1985, becoming
Managing Director in 1983,
Chief Executive in 2001 and
succeeded his Father and
Founder of the Company as
Chairman in 2004. Edward is a
life-long supporter of Leeds the
city and plays an active role in
the community.
A passionate family man,
Edward brings a strong pastoral
care aspect to the business,
encouraging individual
leadership and an active role
in the community through
local charities. He is Chair and
Trustee of Leeds Cares, formally
the Leeds Hospital Charitable
Foundation.
In 2013 he was awarded an
Honorary Doctorate of Business
Administration by Leeds Beckett
University. Edward was awarded
an OBE for services to the Leeds
community and economy in the
2017 Queen’s birthday honours
list and more recently, in July
2018 he was appointed a Deputy
Lieutenant for the County of
West Yorkshire.
Edward’s position as son of
the founder of the TCS and his
lifelong experience working at
different levels in the business
make him uniquely qualified to
lead the Company. In addition,
the wider role he plays in the
Leeds community in particular,
support leading this proudly
Leeds based business.
PROFILE
Mark joined the Board in
July 2017 from Asda Stores
Limited (part of Walmart)
where he held a number of
senior finance roles over 14
years, including latterly as
Vice President, Retail and
Property Finance where
he was responsible for all
Asda stores and distribution
centres as well as the new
store acquisitions. Prior to
Asda, Mark held senior finance
positions at JP Morgan in
London for six years, and
began his career at Unilever.
Mark is a graduate of the
University of Oxford and is
a qualified accountant.
Mark’s chartered accounting
qualification clearly underpins
his ability to deliver in his role
as Group Finance Director. In
addition, his previous roles as
a senior commercial finance
business partner ensure he is
able to guide and add value
in the operational aspects of
the business as well as having
input in to the strategic
direction the business takes.
PROFILE
Lynda joined the TCS
Board in November 2018
from Manchester Airports
Group (MAG) where she
had served as the Divisional
Chief Executive Officer,
Property from 2014. Lynda
was a member of the MAG
Executive Committee. Prior
to MAG, Lynda has been
Director of Real Estate at
Scottish Widows Investment
Partnership, Managing
Director and Global Head
of Corporate Real Estate
for Lloyds Banking Group,
Managing Director of Co-
Operative Estates, and
Director of Property at
BT plc. Lynda holds Non-
Executive Director positions
on the Board of the Crown
Estate and VIVID housing
association.
Lynda’s broad property
experience, and in particular
her success in formulating
and delivering large scale
ventures, makes her a
valuable member of the
Executive Board. In addition,
her time spent in Banking
and her original accounting
qualification further
strengthen the value she
adds.
PROFILE
Ben joined TCS in 2008,
becoming CitiPark Managing
Director in 2009. In September
2015, Ben was appointed to
the Board of Directors. In 2013,
he successfully led a team
in the redevelopment of the
Merrion Centre multi-storey
car park, which turned a 1960’s
structure into a state-of-the-art
facility featuring cutting edge
systems; Skidata, ApplePay,
Contactless Payment and ANPR
technologies. Since 2014,
Ben has led the acquisitions
programme which has
doubled the size of the car
park division. Ben’s personal
interest in combining tech,
renewable energy and Electric
Vehicle Charging led to the
development of TCS Energy in
2012 which pursues renewable
energy production and storage.
Ben has ensured the Group
uses cutting edge technology
to revolutionise and maximise
its operations, including guiding
the Board’s financial investment
of YourParkingSpace.co.uk
Ben’s long and close
involvement with the business
ensures he is always able to
take the wider, cross business
long-term view. In addition, his
wide knowledge of the rapidly
changing effects of technology
ensures that we are able to
take advantage of new ways of
doing business across both the
Property and Car Parking parts
of the Company.
PROFILE
Dr Michael Ziff was appointed
to the Board in July 2004.
He is a Director of W Barratt
& Co Ltd, Transworld
Business Advisors UK Ltd and
London Business Franchise
& Brokerage Ltd. He is
President and a trustee of
Maccabi GB and International
Vice President of Maccabi
World Union. He is also
Hon President of UK Israel
Business and Member of
Council at the University of
Bradford.
Michael’s lifelong involvement
with the Company and his
retail experience puts him in a
unique position to understand
TCS and give counsel based
on the founding principles
of the business and the
importance of taking a long-
term strategic view.
PROFILE
Ian Marcus was appointed to
the board in January 2015.
He spent over 32 years as an
investment banker latterly at
Credit Suisse. Ian is Trustee
of The Princes Foundation, a
Crown Estate Commissioner
and a member of Redevco’s
Advisory Board. He is Senior
Advisor to Eastdil Secured,
the Senior Independent
Director for Secure Income
REIT, the Senior Independent
Director for Shurgard Self
Storage SA, Senior Advisor
to Elysian Residences, and
Advisor to Work.Life. Ian is
also President of Cambridge
University Land Society. He
is a former chairman of the
Bank of England Commercial
Property Forum and a Past
President of the British
Property Federation.
Ian’s significant experience in
the Property and Corporate
Finance worlds give him
an experience base and a
network that can valuably
inform, guide and support
TCS both in making day to
day operational decisions,
and in setting the long-
term strategic direction of
the business. He has broad
remuneration experience
which supports his role as
Chair of the Remuneration
Committee.
PROFILE
Paul Huberman was appointed
a Director in January 2015.
He brings over 30 years’
experience in the property
and finance sector. Paul was
previously Finance Director
at three quoted companies.
He is currently a Non-
Executive Director of Galliard
Homes Limited, a London
housebuilder, a Non-Executive
Director at LiFE At Ltd, a
multi-branch London based
residential estate agency, a
Non-Executive Director at
a privately-owned property
group, and a Non-Executive
Director at The Industrial
Dwellings Society (1885) Ltd,
a housing association. He also
sits on the Advisory Board
for London Resort Company
Holdings Ltd, the developer of
a major theme park in north-
west Kent. Recently, Paul was a
Non-Executive Director at GRIT
Real Estate Income Group Ltd
and a Non-Executive Director
at JCRA Group Ltd, the holding
company of JC Rathbone
Associates Ltd.
Paul’s previous experience as
Finance Director of a number
of quoted businesses, and
his on-going work in the real
estate arena mean that he
can robustly challenge and
scrutinise the financial affairs
of the business, leading the
Audit Committee, as well as
contributing meaningfully
to the broader operational
and strategic activities of
the Company.
PROFILE
Jeremy was appointed to the
Board in February 2018 and
has over 35 years’ experience
in retail property development
and management. In addition
to his TCS responsibility
Jeremy is Property Director
and Executive Board member
at Fenwick. Jeremy spent 15
years at John Lewis including
as Property Director until
2018. Previous experience
includes working for Lend
Lease, MEPC and Grosvenor
Square Properties. Jeremy’s
first job was at Wirral
Metropolitan Borough
Council, which gave him an
insight into the workings
of local authorities and
began his passion for urban
regeneration. He graduated
from the University of
Reading, qualified as a
chartered surveyor, and is a
Past President of the British
Council of Shopping Centres.
Jeremy’s wide experience
base as a property
professional, particularly
in the Retail field, puts him
in a strong position to help
TCS really understand the
challenges of owning retail
property during a period of
such significant change. His
guidance on the changing
face of retail combined with
the importance creating
mixed-use communities
plays an important role in the
Company’s strategic planning
70
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Corporate governance continued
Board of Directors
Details of the Board of Directors are given on pages 70 and 71 of this report. At the end of the year the Board
comprised four Non-Executive Directors, three of whom are independent and four Executive Directors, including
the Chairman and Chief Executive.
The key roles and responsibilities are as follows:
Chairman and CEO:
Edward Ziff OBE DL
Property Director:
Lynda Shillaw
Managing Director:
Ben Ziff
• Ensure a robust decision
making process is in place and
all appropriate information
is provided to the Board in a
timely manner
• Setting the Board agenda,
focusing on strategic matters
and giving adequate time to
other key issues as required
• Managing the Board to allow
time for discussion of complex
or contentious issues
• Ensuring the Board discharges
its responsibilities with
respect to Risk Management
and Governance, promoting
high standards of Corporate
Governance
• Effective communication
with shareholders and other
stakeholders
• Leadership of the Board and
the Company
• Successful achievement of
objectives and execution of
strategy
• Responsible for identifying and
recruiting Board members
• Ensure long-term business
sustainability
• Ensure implementation of
Board decisions.
•
Identify and propose
commercial acquisitions
and/or disposals
• Manage development
programme
• Propose major projects or bids
• Manage commercial
expenditure
• Manage Marketing activity
of the Company.
• Provide advice and guidance on
car parking strategy
•
•
•
•
Implement agreed business
plan for CitiPark
Identify and recruit CitiPark
senior management team
Identify and propose car park
acquisitions and/or disposals
Identify and lead relationship
with Property and Car Park
related technology investments.
Finance Director:
Mark Dilley
Senior Independent Director:
Paul Huberman
• Provide advice and guidance
on financial strategy
• Supporting the Chairman and
CEO’s delivery of objectives
• Ensure the Group’s financial
commitments, targets and
obligations are met
• Budget setting and
performance management
• Ensure compliance with
statutory regulations
• Assist with shareholder
communications
• Oversee all banking and
debt facilities
• Board responsibility for IT
and data security.
• Leading the Non-Executive
Directors in the oversight and
evaluation of the Chairman
and CEO
• Being available to shareholders
to express concerns that the
normal channels have failed
to resolve or which would
be inappropriate
• Taking responsibility for an
orderly succession process
for the Chairman were it to
be required.
72
Our four Non-Executive Directors
bring considerable experience
and expertise to the work of the
Board and provide a significant
independent view to our
deliberations. They regularly
challenge and question the
conclusions of the Executive
and have a particular focus on
the interests of all shareholders,
including non-family shareholders.
In accordance with the UK
Corporate Governance Code
the Board considers that Jeremy
Collins, Paul Huberman, and Ian
Marcus to be independent and
confirm that they:
• have not been an employee of
the Company or Group during
the prior five years;
• have not had any material
business relationship with
the Company or has been a
Director or a senior employee
of a body which has had such a
relationship with the Company;
• have not received or receive
remuneration from the
Company other than Directors
fees, nor do they participate in
any Company Share Plan, nor
is a member of the Company’s
pension scheme;
• do not have close family ties
with the Company’s advisors,
Directors, or senior employees;
• have no cross Directors or
significant links with other
Directors through involvement
in other companies and
bodies other than that referred
to below;
• do not represent a significant
shareholder; and
• have not been a Director of the
Company for more than nine
years since their first appointment.
Ian Marcus and Lynda Shillaw
are independent Non-Executive
Directors of The Crown Estate.
The Board has carefully considered
this and discussed the matter
with both Ian and Lynda in order
to gain a full understanding of
how each exercise their duties
as Board members of The Crown
Estate. The Board concluded that
this situation does not impair Ian
Marcus’s independence.
One of the Non-Executive
Directors, Michael Ziff, is not
considered to be independent,
due mainly to his shareholding in
the Company and his close family
ties. The Board consider that
he brings extensive experience
and expertise and provides an
invaluable contribution to the
work of the Board. The remaining
three Non-Executive Directors are
considered to be independent.
Additionally, under the Code,
the Company is required to
identify a Senior Independent
Non-Executive Director. Ian
Marcus and Paul Huberman were
appointed on the same day and,
while they have different skills
and experience neither is senior
to the other. Therefore, for the
purpose of compliance with the
Code, the position will alternate on
an annual basis from the date of
this report until the next, it will be
Paul Huberman.
During the year Ian Marcus
was appointed as workforce
representative in anticipation of
the requirements of the 2018 UK
Corporate Governance Code.
The full Board met 10 times in the
year and the record of Directors’
attendance at the Board meetings
is set out overleaf. This year the
Board met twice specifically
to review the strategic direction
of the Group. The Board manages
overall control of the Group’s
affairs in accordance with the
schedule of matters reserved
for its decision. These include
the approval of Financial
Statements, business plans,
all major acquisitions and
disposals, risk management
strategy and treasury decisions.
The Board has established two
divisional Boards, the Property
Review Board (eight meetings
in the year) and CitiPark Board
(six meetings in the year), which
comprise Executive Directors and
senior. The Board has delegated
responsibility to the divisional
Boards for assisting the Executive
Directors on measures relating
to the Board’s strategies and
policies, operational management
and the implementation of the
systems of internal control, within
agreed parameters.
There is an agreed procedure for
Directors to take independent
professional advice at the
Company’s expense, if necessary,
in the performance of their duties.
This is in addition to the access
which every Director has to the
Company Secretary. The Group
maintains liability insurance on
behalf of Directors and Officers
of the Company.
On appointment, the Directors are
provided with information about
the Group’s operations, the role of
the Board, the Group’s corporate
governance policies and the latest
financial information. Additionally,
upon appointment, Directors are
provided with induction including
training in respect of all their
responsibilities in accordance
with the UK regulatory regime.
Subsequent training is also
undertaken as appropriate.
The appointment and removal
of Directors is governed by the
Company’s Articles of Association,
the UK Corporate Governance
Code and the Companies Act
2006 and other related legislation.
The Articles are available on
application to the Company
Secretary at the Company’s
registered office.
The Independent Non-Executive
Directors meet at least once a
year without the other Executive
Directors present to discuss the
performance of the Board and to
appraise the Chairman and Chief
Executive’s performance.
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73
Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Corporate governance continued
2018 UK Corporate Governance Code (the ‘Code’)
As part of the Company’s commitment to good corporate governance a
review of compliance with the 2018 Code was undertaken and areas of
non-compliance identified. The Board has undertaken several changes
to comply with the 2018 Code and several other actions remain ongoing.
Detail on compliance with the Code is provided on page 76.
Listing Rules
In accordance with listing rule 9.8.4 R the following information has been
disclosed as set out below.
Listing Rule requirement
A statement of the amount of interest capitalised
during the period under review and details of any
related tax relief.
Location
Not Applicable
Information required in relation to the publication
of unaudited financial information.
Not Applicable
Details of any long-term incentive schemes.
Details of any arrangements under which a
Director has waived emoluments, or agreed to
waive any future emoluments, from the Company.
No such long-term
incentive plans
No such waivers
Details of any non pre-emptive issues of equity
for cash.
No such share
allotments
Details of any non pre-emptive issues of equity for
cash by any unlisted major subsidiary undertaking.
No such share
allotments
Details of parent participation in a placing by a
listed subsidiary.
Not applicable
Details of any contract of significance in which a
Director is or was materially interested.
No such contract
Details of any contract of significance between
the Company (or one of its subsidiaries) and a
controlling shareholder.
No such contract
Details of waiver of dividends by a shareholder.
No such waiver
Board statement in respect of relationship
agreement with the controlling shareholder.
Directors’ Report,
page 93
Performance of the Board
An evaluation of the effectiveness of the Board, its committees and
Directors has been undertaken. Given the size of the Board and nature
of the business the Directors performed an internal board evaluation.
The Board decided not to undertake an external Board evaluation this
year but will keep the matter under review.
The evaluation of the Board and
its committees, which did not
highlight any areas of concern,
considered:
• The Directors’ understanding of
the roles and responsibilities of
the Board and of its committees;
• The structure of the Group,
including succession planning
in keys areas of the business;
• The Board’s understanding
of the Group’s activities and
the appropriateness of its
strategic plan;
• Whether Board meetings
effectively monitor and evaluate
progress towards strategic goals;
• Board composition and the
involvement of each Director
in the business of the Group;
• The overall effectiveness of the
Board in the provision of the
necessary experience required
to direct the business efficiently;
and
• The effectiveness of the Board
committees in performing
their roles.
The evaluation of the performance
of individual Directors was
undertaken by the Chairman
and Chief Executive and the
performance of the Chairman and
Chief Executive was evaluated
by the Non-Executive Directors
led by the Senior Non-Executive
Director, taking into account the
views of the Executive Directors.
The independent Non-Executive
Directors met at least once during
the year without the Chairman and
non-independent Directors.
Committees of the Board
Nomination Committee
Audit Committee
Remuneration Committee
Edward Ziff (Chair)
Paul Huberman (Chair)
Ian Marcus (Chair)
Ian Marcus
Paul Huberman
Jeremy Collins
Michael Ziff
Attendance
Board Meetings
Executives
Edward Ziff
Mark Dilley
Lynda Shillaw
Ben Ziff
Richard Lewis
Ian Marcus
Jeremy Collins
Paul Huberman
Jeremy Collins
Non-Executive
Michael Ziff
Ian Marcus
Paul Huberman
Jeremy Collins
10
10
7*
10
4
Audit Committee Meetings
Paul Huberman
Ian Marcus
Jeremy Collins
2
2
2
10
10
10
10
*
There have been seven Board meetings since Lynda Shillaw was appointed to the Board on 20 November 2018.
74
Town Centre House, Leeds
75
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Corporate governance continued
Statement of compliance with the UK Corporate Governance Code
The UK Corporate Governance Code (2016) (‘the Code’) can be found on the FRC’s website: frc.org.uk. Under
the Code, the Board is required to make a number of statements. These statements are set out below:
1. Compliance with the Code:
As a Company listed on the London Stock Exchange Town Centre Securities PLC is subject to the
requirements of the Code. The Board is required to comply with the Code and, where it does not, explain
the reasons for non-compliance. The Board has been taking steps to ensure that it complies with the
new UK Corporate Governance Code published in 2018 and will report against that version of the Code
next year including information on how Directors have performed their duties under section 172 of the
Companies Act 2006.
Statement of compliance with the Code
The Board has considered the principles and provisions of the Code, published by the Financial Reporting
Council (‘FRC’). The Board of Directors has complied with the Code throughout the year except for the
following matters:
UK Corporate
Governance
Code
Provision A.2.1
Provision
Explanation of departure from the Code
The roles of the
Chairman and Chief
Executive should
not be exercised by
the same individual.
The Board acknowledges that the appointment of Edward Ziff as
Chairman and CEO and his tenure depart from the UK Code.
Edward Ziff became Chief Executive in 2001 and succeeded his
Father and Founder of the Company as Chairman in 2004. The Board
unanimously agreed that, for a number of reasons, including cost
efficiency, that taking on both roles would be in the Company’s
best interests. The Board is focused on the commercial success of
the Company and believes that continuing the combined position
of Chairman and Chief Executive is the best way to achieve this.
Furthermore, the Board noted the contributions which have been
made by Edward Ziff in delivering the strategy of the Company, whilst
utilising his position to act as an ambassador for the Company.
The Independent Directors meet at least annually in a private
session chaired by the Senior Independent Director to consider the
governance of the Company including the division of responsibilities
for the Chairman and CEO.
Edward Ziff will stand for re-election at all future Annual General
Meetings in accordance with the 2018 Code requirements.
Chair not to remain
in post for more
than nine years.
Edward Ziff is Chairman and CEO which the Board feels is in the best
interest of the Company. Due to this combined role Edward Ziff is not
considered to be independent. The Board believes that the valuable
experience provided by Edward Ziff continues to benefit the Company.
Provision D.1.5
Notice or contract
periods should
be set at one
year or less.
The Chairman and Chief Executive has a service contract with a notice
period greater than one year.
Given the role and experience of the Chairman and Chief Executive,
and his deep knowledge of the Company, the Board believes the
longer notice period continues to be appropriate.
Provision B.1.2
At least half the
Board, excluding
the Chairman to
be independent.
The Board noted that less than half of the Board is considered to be
independent. The composition of the Board is regularly reviewed to
ensure that there in an appropriate balance of skills and experience.
The Board currently comprises four Non-Executive Directors.
To review each Non-
Executive Director’s
time commitment.
The Board has a conflict of interest register which is tabled at meetings
and regularly reviewed by the Board. The Board and Nomination
Committee will meet as required to review any significant changes
to membership.
76
2. Going Concern:
The Board is required to confirm that the Group has adequate
resources to continue in operation for at least 12 months.
The Directors are satisfied that the Group has adequate resources to
continue to be operational as a going concern for the foreseeable
future and therefore have adopted the going concern basis in preparing
the Group’s 2018 financial statements. More details can be found in the
Risk Report on page 60 and the Director’s Report on page 93.
3. Viability Statement:
The Board is required to assess the viability of the Company taking
into account the current position and the potential impact of the
principal risks and uncertainties facing the business.
The Directors have a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they fall due
over the next three years. Our Viability Statement can be found in the
Risk Report on page 65.
4. Principal Risks facing the Group
The Board is required to confirm that a robust assessment of the
principal risks facing the Company has been carried out and should
describe those risks and explain how they are being managed
or mitigated.
A robust assessment of the principal risks facing the Company was
undertaken during the year, including those that would threaten its
business model, future performance, solvency or liquidity. These
risks and how they are being managed or mitigated can be found
in the Risk Report starting on page 60.
5. Risk Management and Internal Control
The Board is required to monitor the Company’s risk management and
internal control systems and, at least annually, carry out a review of
their effectiveness.
The Board conducted a review of the effectiveness of the systems of
risk management and internal control during the year, and considers
that there is a sound system in place. More detail can be found in the
Audit Committee Report on page 80.
6. Fair, balanced and understandable
The Board should confirm that it considers the Annual Report, taken
as a whole, to be fair, balanced and understandable and provides
the information necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
The Directors consider, to the best of each person’s knowledge and
belief, that the Annual Report, taken as a whole is fair, balanced
and understandable and provides the information necessary for
shareholders to assess the Company’s position and performance,
business model and strategy. This is considered in the Audit
Committee Report on page 82 and the Statement of Directors’
Responsibilities on page 95.
Relations with Shareholders
The Board is committed to
maintaining good communications
with shareholders. The Chairman
and Chief Executive and Finance
Director maintain a dialogue with
institutional shareholders and
analysts immediately after the
announcement of the half year
and full year results. Their views
are reported to the Board as
appropriate. The Company also
encourages communications
with private shareholders
throughout the year and
welcomes their participation
at shareholder meetings.
The principal communication with
private shareholders is through the
Annual Report and Accounts, the
Half Year release and the Annual
General Meeting (AGM). The
Notice of AGM and related papers
are communicated to shareholders
at least 20 working days before
the meeting to give shareholders
sufficient time to consider the
business of the meeting. All
Directors attend the AGM and
shareholders are given the
opportunity to ask questions of the
Board and meet all the Directors
informally after the meeting.
Separate resolutions are proposed
for each item of business and
the proxy votes for, against
and withheld are announced.
An announcement confirming
resolutions passed at the AGM
is made through the London
Stock Exchange immediately
after the meeting. The Senior
Independent Director is available
to shareholders at all times if they
have concerns they wish to raise.
The Group has a comprehensive
website on which up to date
information is available to all
shareholders and potential
investors (www.tcs-plc.co.uk).
Dr. Edward Ziff OBE DL
Chairman & Chief Executive
24 September 2019
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Nomination Committee report
for the 2019 Annual Report
I am pleased to continue
to act as Chairman of the
Nomination Committee.
Dr. Edward Ziff OBE DL
Chairman of Nomination Committee
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Dear Shareholder,
I am pleased to continue to act
as Chairman of the Nomination
Committee. The other members of
the Committee are Jeremy Collins,
Ian Marcus, Paul Huberman and
Michael Ziff. The Committee
therefore comprises a majority
of independent Directors. The
Committee formally met once
during the year.
Responsibilities of the
Nominations Committee
The Committee is responsible
for the regular review of the
structure, size and composition
(including the skills, knowledge,
independence and experience)
of the Board and it makes
recommendations to the Board
with regard to any changes.
The Committee also considers
succession planning for the
Executive Board in the course
of its work, taking into account
the challenges and opportunities
being faced and the skills and
expertise required.
Committee Members
Edward Ziff (Chair)
Ian Marcus
Paul Huberman
Jeremy Collins
Michael Ziff
Read biographies of the committee
members on pages 70 and 71
The Board is committed to
ensuring an appropriate
balance of skills, knowledge and
experience on its board. Diversity
is a vital part of the continued
assessment and enhancement
of board composition, and the
Board recognises the benefits of
diversity amongst its members,
and the senior team. The Board
will continue to have regard for
diversity for future appointments.
All Board appointments are made
on merit and we are pleased that
the appointment of Lynda Shillaw
as Property Director was an
important step towards the Board
becoming more diverse.
With Lynda’s appointment, the
Board will consist of seven men
and one woman. At the senior
management level within the
business, below the Board, there
are five men and one woman.
Edward Ziff
Chairman of Nominations
Committee
Work of the Committee
during the year
Lynda Shillaw formally joined
the Board in November 2018
as Property Director following
a detailed search process with
support of Thomas Cole Kinder,
an executive search firm. Thomas
Cole Kinder had previously been
used in the appointment of Mark
Dilley as Group Finance Director.
The Board were delighted to
appoint someone of Lynda’s
experience.
The effectiveness of the Board,
its committees and Directors was
reviewed as part of the September
Board proceedings. More detail
can be found in the Directors’
Report on page 93.
Following changes in the
Corporate Governance Code the
Board has now agreed that all
members be put forward for re-
election every year. Biographies
of the Board members can be
found on page 70.
Diversity
The Board embraces the
supporting principles on diversity
in its broadest sense: diversity of
skills, background, experience,
knowledge, outlook, approach,
gender and ethnicity. In addition,
the Company has regard for
diversity in recruitment
at all levels.
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Audit Committee report
for the 2019 Annual Report
I am pleased to present the
report of the Committee for
the year ended 30 June 2019.
Paul Huberman
Chairman of Audit Committee
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that at least one member of the
Audit Committee has recent and
relevant financial experience. The
Committee as a whole has relevant
sector experience.
Executive Directors, including
Edward Ziff and Mark Dilley, join
Committee meetings by invitation
but are not members of the
Committee. The Committee meets
alone with the External Auditor
without Executives present at least
twice a year.
The Audit Committee carries out
an annual review of its Terms of
Reference. This year the Terms
of Reference were amended to
reflect some changes required
to ensure the Committee’s role
is fully compliant with the new
UK Corporate Governance Code
which it recommended to the
Board were amended in order
to reflect best practice. This is
available to view on the Company’s
Website.
Responsibilities
The Committee’s role includes
assisting the Board to discharge
its responsibilities and duties for
financial reporting, internal control,
management of risk and the
appointment, reappointment and
remuneration of an independent
external Auditor.
The Committee is responsible
for reviewing the scope, terms of
engagement, and results of the
audit work and the effectiveness
of the Auditor. The Committee is
responsible for monitoring the
integrity of the financial statements,
announcements and judgements,
as well as reviewing the Company’s
internal financial controls. The
Committee also satisfies itself of
the Auditor’s independence and
objectivity, reviews and approves
the level of non-audit services,
and the Group’s arrangements on
whistleblowing. Any matter the
Committee considers needs action
or improvement is reported to the
Board. In addition, the Committee
continues to review annually
whether an internal audit function
is required.
Report on the Committee’s
activities during the year
During the year, the Committee
met two times and discharged its
responsibilities by:
• Reviewing the Group’s draft
Annual Report and financial
statements and its interim
results statement prior to
discussion and approval by
the Board
• Reviewing the continuing
appropriateness of the Group’s
accounting policies
• Reviewing BDO’s plan for the
2019 Group audit and approving
their terms of engagement and
proposed fees
• Reviewing reports prepared by
management on internal control
issues as necessary
• Considering the effectiveness,
objectivity and independence
of BDO as external Auditor and
recommending to the Board
their reappointment
• Reviewing management’s
biannual risk review report and
the effectiveness of the material
financial, operational and
compliance controls that help
mitigate the key risks
• Reviewing the effectiveness of
the Group’s whistleblowing policy
• Monitoring the level of non-
audit fees and the scope of
non-audit services provided in
the year by the Auditor
• Considering management’s
approach to the viability
statement in the 2019
Annual Report
• Reviewing and updating the
terms of reference of the
Audit Committee
• Carrying out an annual
performance evaluation
exercise and noting the
satisfactory operation of
the Committee.
Dear Shareholder,
As Chairman of the Audit
Committee (‘the Committee’) I am
pleased to present the report of
the Committee for the year ended
30 June 2019.
The Audit Committee consists of
three of the Board’s Independent
Non-Executive Directors. As
Chairman of the Audit Committee
I am a qualified Chartered
Accountant and experienced
senior finance executive having
been Finance Director of three
different listed companies, and
more recently as a Non-Executive
Director at Galliard Homes and
Grit Real Estate Income Group.
Ian Marcus has a breadth of
experience in Investment Banking,
and as a Non-Executive Director
with past Audit Committee
responsibilities. Jeremy Collins is
also a member of the Committee,
bringing valuable experience
from his prior roles, including as
Property Director at John Lewis.
The Board is therefore satisfied
Committee Members
Paul Huberman (Chair)
Ian Marcus
Jeremy Collins
Read biographies of the committee
members on pages 70 and 71
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Audit Committee report continued
for the 2019 Annual Report
Significant issues considered
in relation to the financial
statements
During the year, the Committee
considered key accounting
matters and judgements in respect
of the financial statements. The
Committee received detailed
reporting from the Finance
Director and BDO in respect
of key areas of management
judgement and reporting.
Using BDO’s assessment of
risk and the Committee’s own
independent knowledge of
the Company, estimates and
judgements of management in
relation to the preparation of
the financial statements were
reviewed and challenged. The
significant accounting matters and
judgements related to:
•
Investment Property Valuation
– The Committee reviewed the
reports of the independent
valuers JLL and CBRE
• Treatment of property sales and
acquisitions in the year
• The investment in
YourParkingSpace.co.uk (YPS),
and the accounting treatment
required to meet fair value
requirements – The Committee
agreed that the current carrying
value reflects fair value,
although this will be kept under
regular review
• The future accounting treatment
of YPS, and the fact that should
the Company’s share exceed
20%, it would be highly likely
that the P&L and Balance Sheet
of YPS would have to be fully
consolidated (pro rata) into the
financial statements of TCS.
The Committee agreed with the
judgement that the Company
did not hold significant
influence over YPS given the
15% shareholding at the balance
sheet date
• Going concern and covenant
compliance – The Committee
reviewed and approved the
Going Concern analysis
• Viability Statement and
appropriateness of period
of the statement – The
Committee reviewed and
agreed the longer-term viability
analysis and recommended
timeframe. As part of this
process a number of stress
scenarios were provided to the
Committee. The assumptions
behind those scenarios were
robustly examined
• Accounting treatment in
relation to Merrion House
Financing – The Committee
reviewed the analysis provided
by management with the
advice of third parties, and
approved the approach
of treating the transaction
as a loan for accounting
purposes. The Committee
also reviewed advice
received by the Company
on any tax implications of
this arrangement.
Fair, balanced and
understandable
In its review the Audit Committee
has determined that the 2019
Annual Report, taken as a
whole, is fair, balanced and
understandable and provides
shareholders with the necessary
information to assess the
Company’s position and
performance, business model
and strategy.
Risk Management and Internal
Controls
The UK Corporate Governance
Code provides that the Directors
should monitor the Company’s
risk management and internal
control systems and, at least
annually, carry out a review of their
effectiveness and should report
to shareholders in the Annual
Report. The monitoring and review
should cover all material controls,
including financial, operational
and compliance controls. The
Board recognises that effective
risk management is critical to
the achievement of the Group’s
strategic objectives, and the
Audit Committee plays a key role
in reviewing identified risks and
assessing the effectiveness of
mitigation plans.
The principal risks and
uncertainties identified by the
Board and the processes in place
to manage and mitigate such
risks are summarised in the Risk
Management section. It will be
noted in the Risk Management
section that three areas of risk have
been identified as having worsened
in likelihood in the past year; those
being Development, Valuation Risk,
and Tenant & Sector Risk. All three
effectively driven by a combination
of the challenging environment
for Retailers, and the protracted
uncertainty regarding Brexit. Whilst
the Company has demonstrated
mitigating actions regarding these
risks, including reducing the
proportion of retail assets within
the portfolio, there is no doubt that
the risk environment has worsened.
The risk management system
is designed to give the Board
confidence that the risks are being
managed or mitigated as far as
possible. However, it should be
noted that no system can eliminate
the risk of failure to achieve the
Group’s objectives entirely and
can only provide reasonable but
not absolute assurance against
material misstatement or loss.
The key elements of the internal
control framework are as follows:
• A comprehensive system
of financial budgeting and
forecasting based on an annual
budget in line with strategic
objectives. Performance is
monitored and action is taken
throughout the year based on
variances to budget and forecast
• Rolling 18-month cash flow
forecasting that is reviewed by
the Board on a monthly basis
82
• An organisational structure with
clearly defined roles, separation
of duties, and authority limits
Committee before the Interim and Full Year results. The Committee
questioned and challenged the work undertaken and the key assumptions
made in reaching their conclusions.
• Close involvement of the
Executive Directors in day to
day operations, and regular
formal meetings with senior
management to review
the business
• Monthly meetings of the
Executive, the Property Review
Group, the CitiPark Board, and
quarterly meetings of the IT and
Data Governance Committee
• A documented appraisal
and approval process for all
significant capital expenditure
• Approval by the Board for all
material acquisitions, disposals
and capital expenditure
• The maintenance of a risk
register, and a formal review of
significant business risks twice
a year
• A formal whistleblowing policy
Auditor Independence and Objectivity
The Committee recognises the importance of auditor objectivity and
independence and understands that this can be compromised by the
provision of non-audit work. All taxation advice is provided separately
by PwC. However, there may be certain circumstances where, due to
BDO’s expertise and knowledge of the Company, it’s appropriate for
them to under-take non-audit work. The Company has put in place a
formal process for agreeing and approving non audit work by the Audit
Committee. BDO have confirmed to the Audit Committee that they remain
independent and have maintained internal safeguards to ensure the
objectivity of the engagement partner and audit staff is not impaired.
Audit fees for the year are broken down as follows:
Audit of Year End Consolidated Financial Statements
Audit of Company subsidiaries pursuant to legislation
Other Audit related services
Total Audit Services
Non-audit services
Total Auditor’s remuneration
£000’s
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10
15
111
2
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and anti-bribery policy.
Auditor Reappointment
The Board has delegated
responsibility for reviewing
the effectiveness of the risk
management framework and
internal control to the Audit
Committee.
Oversight of the external
Auditor
BDO were appointed as the
Company’s auditors following a
formal tender process in 2015/16.
Current UK regulations require
rotation of the lead audit partner
every five years, a formal tender of
the auditor every ten years and a
change of auditor every 20 years.
The 2019 audit was the fourth audit
by Russell Field and we anticipate
him continuing in role in 2020.
BDO presented their audit plan
for the year end to the Board,
where the key audit risks and areas
of judgement were highlighted
and the level of audit materiality
agreed. BDO presented detailed
reports of their findings to the
The Committee reviewed the
effectiveness of the external audit
process and the performance
of the Auditor and for the
reasons stated above, believe
that BDO remain independent
and recommend that BDO be
reappointed as external auditor for
the Company. The Committee note
the requirements for the external
auditor position to undergo
tender and propose for this to be
undertaken prior to 2025/2026.
The Committee has also adopted
a new process for evaluating audit
effectiveness than it will use to
review the FY19 audit.
Internal Audit
The Group does not have a
dedicated stand-alone internal
audit function. This decision is
made taking into account the
size and complexity of the Group.
Where appropriate reviews are
either carried out by staff member,
or where appropriate by third
party experts.
The need for an internal audit
function is considered by the
Audit Committee annually.
Whistleblowing
The Group has in place a
whistleblowing policy which
encourages employees to report
any malpractice or illegal acts or
omissions or matters of similar
concern by other employees or
former employees, contractors,
suppliers or advisors. The policy
provides a mechanism to report any
ethical wrongdoing or malpractice
or suspicion thereof. The Committee
review this policy annually.
Committee Evaluation
As part of the Board and Committee
self-evaluation process it was felt
that the Committee continued to
operate at a high standard and was
effective in its support to the Board
during the year.
Paul Huberman
Chairman of Audit Committee
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Directors’ remuneration report
for the 2019 Annual Report
On behalf of the Board I am
pleased to present the Directors’
Remuneration Report of the
Remuneration Committee.
Ian Marcus
Chairman of the Remuneration Committee
84
Dear Shareholders,
On behalf of the Board I am
pleased to present the Directors’
Remuneration Report of the
Remuneration Committee (the
Committee). The report is divided
into three sections:
• This annual statement for the
year ended 30 June 2019, which
summarises remuneration
outcomes and how the
Remuneration Policy will
operate for the year ending
30 June 2020;
• The Remuneration Policy
Report, which details the
Group’s policy on the
remuneration of Executive and
Non-Executive Directors which
was approved by shareholders
at the 2017 AGM;
• The Annual Report on
Remuneration which explains
how the Remuneration Policy
was implemented in the year
ended 30 June 2019, and how
the Remuneration Policy will be
implemented for the year ended
30 June 2020.
Committee Members
Ian Marcus (Chair)
Paul Huberman
Jeremy Collins
Read biographies of the committee
members on pages 70 and 71
As no changes are being proposed
to the Remuneration Policy which
was approved by shareholders
last year, only the Annual
Statement and Annual Report on
Remuneration will be subject to a
vote at the forthcoming 2019 AGM.
As the Remuneration Policy will not
be subject to a vote at the 2019
AGM, the Remuneration Policy
report remains unchanged from
the policy which was approved at
the 28 November 2017 AGM.
We formally met three times during
the year.
Pay and performance
during 2019
In determining the bonus award
levels for the year ended 30 June
2019 the Remuneration Committee
have taken full account of the
progress made by the Company
in the past year. Profitability in
the year has been challenged
and this clearly has had an effect
on bonus awards in the year. In
addition, despite the significant
asset management initiatives
undertaken in the year, NAV has
declined driven primarily by the
pressure on retail values. Despite
the significant progress made
in delivering on the longer-term
strategy, aimed at delivering long
term value for shareholders, the
Committee have determined that
there should be no bonus paid to
the Board members.
Bonus award for year ended
30 June 2019:
The maximum bonus for
the Executive Directors was
unchanged from 2018 at 60% of
base salary. The Committee has
determined that there will be no
bonus award for Directors for
2019.
Other activities and key
decisions of the Committee
during the year
In accordance with its terms
of reference, the Committee
continues to review the
Remuneration Policy periodically
to seek to ensure a clear linkage
between Executive Directors
pay and Group performance.
In reviewing the policy, the
Committee not only assesses the
alignment between policy, strategy
and shareholder interests, but also
the extent to which remuneration
is sufficiently competitive to
recruit, motivate and retain key
talent. Following a review last
year, and as indicated in last year’s
report, we continue to have the
following views and intentions:
• Overall Maximum Potential
Remuneration (MPR) for
Executive Directors is low in
comparison to the Company’s
property sector peers. Whilst
base salaries are competitive,
maximum bonus opportunity is
significantly lower than that
of peers
• Actual remuneration is also
low relative to peers, with an
average bonus pay-out of 18%
of base salary over the last
five years
• The lack of a Long-Term
Incentive Plan (LTIP) contributes
to lower overall pay levels and
means that remuneration does
not actively assist to align
Executives to longer-term
shareholder interests.
As a result of these conclusions
the Committee has made the
following decisions:
• A more detailed review of the
•
Remuneration Policy is required
to focus on reviewing the bonus
opportunity and targets, and
the potential introduction of
an LTIP
In order for the Committee
to give the matter due
consideration, it is the
Committee’s intention to
continue this review during the
2019/20 financial year with a
view to setting forth proposals
for our shareholders to consider
at the 2020 AGM or before if
appropriate.
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Directors’ remuneration report continued
for the 2019 Annual Report
Edward Ziff and Mark Dilley have
between them engaged with a
number of shareholders, both
family and, where possible, larger
independent shareholders. In
addition, I am available to any
shareholder who would like
to discuss their concerns on
remuneration throughout the
year, not only at the AGM.
Ian Marcus
Chairman of
Remuneration Committee
Implementation of the
Remuneration Policy in 2020
• From October 2019 salaries
will increase by 3% for Edward
Ziff, 3% for Mark Dilley, 1.75%
for Lynda Shillaw, and 15% for
Ben Ziff.
• The annual bonus opportunity
will remain at a maximum of
60% of salary. The bonus will
be based on similar measures
to 2019. The weightings,
measures and targets will be
disclosed retrospectively in our
subsequent report, owing to
commercial sensitivity.
• Pension and benefits will
operate as per 2019.
At the Company’s AGM in 2018,
7.71% of shareholders voted
against the resolution to approve
the 2018 Remuneration Report
and, whilst the Committee is
pleased that so many shareholders
showed their support, the
Committee notes that a few
shareholders have concerns
over aspects of the Company’
approach to remuneration. Based
on a comment of one proxy
advisory body, we understand
the concern to be a 20% salary
increase in Ben Ziff’s salary last
year, following on from a 29%
increase in the previous year. We
commented in last year’s report
that this increase was on the
back of the strong performance
of CitiPark, contribution to the
business as a whole, and bench
marking. Ben’s salary is relatively
low when compared to main board
Directors of peer companies so the
Committee considers it important
that his salary is competitive.
This, together with the fact that
the Company does not pay large
bonuses or operate any share
schemes, we feel justifies the
increase in Ben’s salary. We have
again agreed to increase Ben’s
salary by 15% for the coming
financial year. As in recent years
the Committee believes this is
appropriate given Ben’s continued
performance running CitiPark,
and given his relatively low pay
given he is a member of TCS’s
PLC Board.
Furthermore, the proxy advisory
body noted that pay outcomes
at TCS were not well aligned on a
three-year basis relative to Total
Shareholder Return. We take our
responsibility to shareholders
extremely seriously, nowhere more
than in relation to remuneration.
We would highlight the fact
that actual bonus pay-out levels
have averaged 16% over the last
10 years and, combined with
a scheme that has a relatively
modest cap of 60% of salary and
the lack of an LTIP scheme, we
believe remuneration relative to
performance has been well, and
conservatively, managed. The
recent and significant reduction in
the TCS share price has distorted
the comparisons of remuneration
to recent Shareholder Return,
however we remain convinced of
the positive long term actions that
management are taking to create
long-term value for shareholders,
and that the material discount of
the share price to NAV highlights
the opportunity.
86
REMUNERATION POLICY REPORT
Policy Report
Variable remuneration
The Remuneration Committee
implements the Group’s policy,
which is to provide remuneration
packages with fixed and variable
elements that fairly award the
Executive Directors for their
contribution to the business. It
seeks to ensure that the packages
are sufficiently competitive to
attract, retain and motivate the
Directors to manage the Group
successfully, without making
excessive payments. The policy
seeks to achieve the Group’s
strategic and financial objectives
by aligning the interests of the
Directors and shareholders.
Fixed remuneration
The fixed element of Directors’
remuneration comprises base
salary, benefits and pension
(see below for the pension). This
element seeks to ensure that
the Group attracts and retains
appropriately talented individuals
and provides a framework for
them to save for retirement. The
Committee considers the overall
balance between the elements.
Salaries are determined with
regard to individual and Group
performance and to market
rates and comparable roles at
comparable companies. Benefits
principally comprise company cars
or a salary alternative, permanent
health and medical insurance
premiums. The Chairman and
Chief Executive receives re-
imbursement of the costs of
maintaining a flat in London which
is regularly used for Company
meetings. The value of the benefits
are not pensionable.
Edward Ziff receives no pension
contributions.
The Group makes payments to a
defined contribution scheme (or
cash equivalent) for Mark Dilley of
13% of salary, Lynda Shillaw of 13%
of salary, and for Ben Ziff of 13%
of salary.
The Group operates an annual
bonus plan under which
awards are discretionary and
the Committee considers the
performance of each individual
Director and of the Group in
assessing the level of payments
under the plan. In particular
profit and growth in shareholder
value (measured by the increase
in net asset value per share and
dividends paid as well as any
increase in share value) were
carefully considered by the
Remuneration Committee in
awarding the bonus reported when
such increases were the result of
Directors’ input. The maximum
award is up to 60% of salary. This
bonus is not pensionable. It is
Group policy to reward exceptional
growth or performance.
The Directors participate annually
in the Share Incentive Plan (All
Employee Incentive Plan) which
was approved by shareholders
in December 2003. The current
investment limit is £1,800 per
annum with a share matching
element equal to 100% of the
investment made subject to
forfeiture should the individual
cease to be employed during the
first three years of the plan.
Service agreements and
external appointments
The Chairman and Chief Executive
has a service contract that is
subject to not less than two years
notice. Lynda Shillaw, Mark Dilley
and Ben Ziff have service contracts
with one years’ notice. The
contracts provide for retirement
at 65. The Group can discharge
any obligation in relation to the
unexpired portion of their notice
period or any notice required to be
given under their service contracts
by making a payment in lieu
thereof. If the Group terminates the
contract without giving notice and/
or makes a payment in lieu of any
damages to which the Executive
may be entitled the payment is to
be calculated in accordance with
common law principles including
those relating to mitigation of loss
and accelerated receipt. Executive
Directors are permitted to accept
Non-Executive appointments by
prior arrangement and approval
and provided there is no conflict
with the Group’s objectives. All
Non-Executive positions are listed
in the Director’s biographies;
none of the Executive Directors
receive any remuneration for
those activities.
Non-Executive Director
Remuneration
The Non-Executive Directors
do not have service contracts.
They are appointed for an initial
three-year period and this may be
renewed on expiry of that period.
The Non-Executive Directors are
not entitled to participate in bonus,
or share based payments schemes
or any other benefits.
Remuneration of other
employees
Remuneration of other employees
is set at a level to attract, motivate
and retain talented individuals.
This may include a company car
or car allowance as appropriate.
Remuneration levels are
recommended by the Executive
Directors and noted by the
Remuneration Committee.
Employees are eligible to
participate in the Group bonus
scheme and the SIP scheme.
The Group makes pension
contributions for eligible
employees at rates which vary
depending on seniority. In the
past year the Company has
improved pension contributions
and introduced a Westfield Health
policy for a large number of
staff members.
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Directors’ remuneration report continued
for the 2019 Annual Report
REMUNERATION POLICY REPORT CONTINUED
Consideration of shareholder views
The Group welcomes comments on its remuneration from shareholders. These comments are reviewed by the
Remuneration Committee who consider the comments particularly with a view to overall levels of remuneration.
Board Remuneration including theoretical maximum bonuses
Year ended 30 June 2019. £’000s
0
200
400
600
800
1,000
1,200
Edward Ziff
Mark Dilley
610
74 0
371
332
48 0
202
Lynda Shillaw
261
340
158
Ben Ziff
194 48 0
122
Salary
Benefits
Bonus (paid)
Bonus (unpaid)
Note: The unpaid element of the bonus represents the difference between the maximum possible bonus award of 60% of salary and the actual amount awarded.
Lynda Shillaw joined the Board in November 2018 and therefore the above relates to her eight months of employment.
ANNUAL REPORT ON REMUNERATION
Single Total Figure of Remuneration for each Director
The following table sets out the total single figure of remuneration for each Director for the years ended 30 June
2019 and 30 June 2018.
Salaries and fees
Bonuses
Taxable Benefits1
SIP Shares2
Pension
contributions3
Total
2019
£’000
2018
£’000
2019
£’000
2018
£’000
2019
£’000
2018
£’000
2019
£’000
2018
£’000
2019
£’000
2018
£’000
2019
£’000
2018
£’000
Executive Chairman
and Chief Executive
Edward Ziff
610
585
Executive Directors4
332
194
261
137
313
159
326
37
1,534
1,420
0
48
52
52
48
47
49
49
31
19
235
128
76
131
–
571
72
3
21
29
125
92
4
12
25
9
142
2
2
2
–
–
–
6
2
–
2
–
–
4
43
25
34
102
–
684
914
41
21
–
4
66
380
242
295
166
0
486
270
0
482
50
1,767
2,203
48
52
52
48
0
47
49
49
31
19
200
195
1,734
1,615
0
0
0
571
0
125
0
142
0
6
0
4
0
102
0
66
200
195
1,967
2,398
Mark Dilley
Ben Ziff
Lynda Shillaw
Richard Lewis
Duncan Syers
Non-Executive Directors4
Michael Ziff
Paul Huberman
Ian Marcus
Jeremy Collins
John Nettleton
Notes:
1 Taxable benefits include cash and non-cash benefits principally company
cars or a cash alternative, permanent health and medical insurance
premiums. The Chairman and Chief Executive receive re-imbursement of the
costs of maintaining a flat in London which is regularly used for company
meetings. The value of the benefits are not pensionable.
2 No long-term incentive plan was in operation for the relevant years although
Directors were awarded shares under the Company SIP.
3 Edward Ziff received no pension contribution. The Group makes payments to
a Defined Contribution scheme (or cash equivalent) for Mark Dilley (13% base
salary), Lynda Shillaw (13% base salary) and Ben Ziff (13% base salary).
4 Lynda Shillaw joined the Board, and Richard Lewis retired in November 2018.
Duncan Syers and John Nettleton retired from the Board in September and
November 2017 respectively.
88
Notes to the single figure table – Annual bonus targets and outcomes for 2019
The current AGM approved bonus scheme allows for a maximum pay-out of 60% of base salary.
For the year ended 30 June 2019, the Executive Directors did not receive a bonus pay-out.
Scheme interests awarded during the financial year
Town Centre Securities PLC does not currently operate a long-term incentive plan. It does operate an All
Employee Share Incentive Plan, approved by shareholders in December 2003. The investment limit is £1,800
per annum with a share matching element equal to 100% of the investment made subject to forfeiture should the
individual cease to be employed during the first three years of the plan.
In May 2019 Edward Ziff, Ben Ziff and Mark Dilley accepted an invitation to participate in the SIP by each agreeing
to purchase shares to the value of £1,800, paid between June 2019 and November 2019. They will be eligible
to receive ‘matching’ shares on a one for one basis. The number of shares will be determined at the end of
November 2019. For illustration, based on the share price as at 30 June 2019, this would equate to each Director
receiving 870 partnership shares and 870 matching shares. In November 2018 Edward Ziff, Ben Ziff and Mark
Dilley received 740 partnership shares and 740 matching shares in respect of the 2018 Share Incentive Plan.
The total number of partnership and matching SIP shares beneficially held at 30 June 2018 is shown below.
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Executive
Edward Ziff
Mark Dilley
Lynda Shillaw
Ben Ziff
Holding of Partnership
and Matching SIP Shares
(30 June 2018)
6,432
1,480
0
6,432
Payments to past Directors/payments for loss of office
There were no payments to past Directors or payments for loss of office during the financial year.
Directors’ Shareholdings
The table below sets out the shares held by the Directors as at 30 June 2019. There has been no change to this
information during the period 1 July 2019 to 24 September 2019.
Executive
Edward Ziff
Ben Ziff
Mark Dilley
Michael Ziff
Beneficial
5,483,354
300,443
1,480
2,539,081
Non-beneficial
16,086,569
0
0
8,105,121
The non-beneficial interest disclosures include the 1,069,278 Ordinary Shares over which a power of attorney
has been granted by Mrs ME Ziff jointly to Edward and Michael Ziff for personal estate management reasons
and 6,264,665 Ordinary Shares over which a power of attorney has been granted by AL Manning to Edward
Ziff for personal estate management reasons. Non-beneficial holdings include shares held in trust and under
powers of attorney.
Edward Ziff, Lynda Shillaw and Mark Dilley are Directors of TCS Trustees Limited, Trustee for the shares that
are required for the All Employee Share Incentive Plan. At 30 June 2019, TCS Trustees Limited held 89,532
Ordinary Shares (2018: 9,782) on behalf of all participants including those share awards of Executive Directors
shown above.
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Directors’ remuneration report continued
for the 2019 Annual Report
Performance graph and table
The following graph shows the Company’s Total Shareholder Return (TSR) performance compared to the FTSE
All Share REIT Index, over the nine years ended 30 June 2019. This index has been chosen because the Directors
consider it the most appropriate comparison and TCS is a constituent of this list. This chart illustrates the
movement in value of a hypothetical investment of £100 in TCS and the FTSE All Share REIT index.
400
350
300
250
200
150
100
50
0
Jun–09
Feb–10 Oct–10
Jun–11
Feb–12 Oct–12
Jun–13
Feb–14 Oct–14
Jun–15
Feb–16 Oct–16
Jun-17
Feb–18 Oct–18
Jun–19
Source: DataStream (Thomson Reuters)
TOWN
FTSE UK REITs
On a five year basis TCS TSR was minus 0.6% versus the FTSE All Share REIT at 4.5%. On a ten year basis TCS
TSR was 9.9% versus the FTSE All Share REIT at 10.9%.
The table below sets out the total remuneration and incentive plan pay-outs for the Executive Chairman and
CEO over a ten-year period.
Single total figure of
remuneration (£’000s)
Annual Bonus pay-out
(% of maximum)
2018/19
2017/18
2016/17
2015/16
2014/15
2013/14
2012/13
2011/12
2010/11
2009/10
90
684
914
809
718
782
784
604
672
669
1,498
0%
40%
20%
10%
30%
33%
0%
13%
23%
0%
Percentage change in remuneration of Executive Chairman and Chief Executive Officer
The table below sets out a comparison of the percentage change in base salary, benefits and bonus of the
Executive Chairman and Chief Executive Officer versus the total employee population from 2018 to 2019.
Salary % change
Taxable Benefits % change
Annual Bonus % change2
Executive Chairman and
Chief Executive Officer
(%)
3.0%
(21.7%)
n/a
Average pay for
employees1 (%)
4.6%
(33.0%)
(7.2%)
1
2
Average pay for employees is calculated on a like for like basis for comparison purposes.
Chairman & Chief Executive’s bonus change shown as n/a as it was zero in the year ended 30 June 2019 compared to £235,000 in the prior year.
Relative importance of spend on pay
The table below shows how expenditure on total pay compares to other financial outgoings.
Staff remuneration costs
Dividends to shareholders
External appointments
2018
£’000
5,365
6,114
2019
£’000
5,704
6,247
%
change
6.3%
2.2%
Edward Ziff is the unpaid Chair and Trustee of Leeds Cares. Lynda Shillaw is a Non-Executive Director for
Vivid Housing Ltd and The Crown Estate for which she receives £28,000 compensation in total.
Implementation of the Remuneration Policy for 2019
The following table outlines how TCS intends to implement the Remuneration Policy in the year ending
30 June 2020.
Component
Implementation for 2020
Base salary
The Committee has approved the following increases effective from 1 October 2019:
Benefits
Pension
• 3% increase for Edward Ziff and Mark Dilley, and 1.75% for Lynda Shillaw
• 15% increase for Ben Ziff based on the strong performance of CitiPark, contribution to the
business as a whole, and bench marking
Benefits provisions will be as per 2019, to include cash and non-cash benefits principally
company cars or a cash alternative, permanent health and medical insurance premiums.
The Chairman and Chief Executive receive re-imbursement of the costs of maintaining a flat
in London which is regularly used for Company meetings
EM Ziff does not receive a contribution. The Group makes payments to a Defined Contribution
scheme (or cash equivalent) for Mark Dilley (13% base salary), Lynda Shillaw (13% base salary),
and Ben Ziff (13% base salary)
Annual bonus
Maximum opportunity 60% base salary (unchanged)
The measures and weightings applying to the 2020 bonus will be disclosed in next year’s
report owing to commercial sensitivity
SIP
Executive Directors will continue to participate in the SIP
NED fees
A 3% increase in fees for Non-Executive Directors has been agreed
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Directors’ remuneration report continued
for the 2019 Annual Report
Directors’ report
Consideration by the Directors of matters relating to Directors’ remuneration
The Remuneration Committee formally met three times during the year and following Directors were
members of the Committee during 2018:
The Directors present their report for
the year ended 30 June 2019.
•
Ian Marcus
• Paul Huberman
• Jeremy Collins.
The key activities of the Committee during the year were:
• Approving the bonus outcome for 2018
• Approving the salary increases for 2019
• Setting the bonus targets for 2019
• Reviewing Service Contracts for continued appropriateness
• Discussing potential structures for a future LTIP scheme
• Reviewing changes to Corporate Governance, and the Committee’s approach to those changes.
Statement of voting in relation to the 2018 AGM
Votes For
Votes Against
This report was approved by the Board on 24 September 2019 and signed on its behalf by
Annual Report on
Remuneration
92.29%
7.71%
Ian Marcus
Chairman of the Remuneration Committee
92
Principal Activities
Share Capital
The principal activities of the Group
during the financial year remained
those of property investment,
development and trading and
the provision of car parking.
Company Status
Town Centre Securities PLC is a
public limited liability company
incorporated under the laws of
England and Wales. It has premium
listing on the London Stock
Exchange main market for listed
securities (LON: TOWN).
Results for the year and
dividends
The results for the year are set
out in the Consolidated Income
Statement on page 104.
An interim dividend of 3.25p per
share was paid on 21 June 2019 as
a PID. The Directors now propose
a payment of a final dividend of
8.50p per share comprising a PID
of 4.50p per share and an ordinary
dividend of 4.00p per share for
approval of the shareholders at
the forthcoming Annual General
Meeting (‘AGM’). The proposed final
dividend will be paid on 7 January
2020 to ordinary shareholders on
the register at the close of business
on 6 December 2019.
Non-current assets
Details of movements in non-
current assets are set out in
Note 12 to the Consolidated
Financial Statements.
Investment properties are held
at fair value and were revalued
by Jones Lang LaSalle and CBRE
as at 30 June 2019, on the basis
of open market value, or were
revalued by the Directors. The key
assumptions are set out in Note
12 to the Consolidated Financial
Statements. In arriving at the
valuation, each property has
been valued individually.
There were no changes in the
Company’s issued share capital
during the year as set out in Note 23
to the Consolidated Accounts. At 30
June 2019, there were 53,161,950
Ordinary Shares of 25p per share in
issue and fully paid. The Company
does not hold any Ordinary Shares
in treasury. Further details relating to
share capital, including movements
during the year, are set out in Note
23 to the financial statements.
Purchase of own shares
The Company repurchased 95,617
shares of its own shares during
the year to satisfy Employee Share
Incentive Plan (‘SIP’) Scheme.
The Company currently holds no
treasury shares.
At the forthcoming AGM the
Company will be seeking to renew
its authority to purchase up to 15%
of the Ordinary Shares in issue,
assuming the remaining authority
is fully utilised. Shares will only be
purchased if the Board believes it
can take advantage of stock market
conditions to enhance returns for
the remaining shareholders.
Shareholder Voting Rights
The Company has only one type of
Ordinary Share class in issue and
all shares have equal entitlement
to voting rights and dividend
distributions.
The Company has no share option
schemes in current operation and
there are no unexercised options
outstanding at 30 June 2019.
Political Donations
The Group made no political
contributions in the financial year
(2018: nil).
Taxation
The Company is not a close
company.
Directors and Directors’
Interests
The Directors of the Company and
their biographical details are shown
on page 70. None of the Directors
have any contracts of significance
with the Company. Details of
the Executive Directors’ service
contracts are given in the Directors’
Remuneration Report on page 87.
Beneficial and non-beneficial
interests of the Directors in the
shares of the Company as at 30
June 2019 are disclosed in the
Directors’ Remuneration Report on
page 89. Details of the interests
of the Directors in share options
and awards of shares can be found
within the same report.
In accordance with the Code of
Corporate Governance all Directors
will retire at the Company’s AGM
on 25 November 2019 and offer
themselves for re-election.
On 20 November 2018 Mr Richard
Lewis stepped down as a Director
following his retirement and Ms
Lynda Shillaw was appointed a
Director. Service agreements of
Executive Directors and terms
of conditions of Non-Executive
Directors available for inspection
at Company’s registered office.
Workforce Engagement
Ian Marcus, Non-Executive Director,
agreed to be workforce champion
for the Company. Further details
on workforce engagement are
included on page 49.
Power of Directors
The Directors manage the business
of the Company under the powers
set out in the Company’s Articles
of Association (the Articles) and
those contained within relevant
UK legislation.
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Directors’ report continued
Statement of Directors’ responsibilities
Directors’ indemnity
insurance
In accordance with the Company’s
Articles of Association, the
Company has provided to all the
Directors an indemnity (to the
extent permitted by the Companies
Act 2006) in respect of liabilities
incurred as a result of their office
and the Company has taken out
an insurance policy in respect
of those liabilities. Neither the
indemnity nor insurance provide
cover in the event that the Director
is proven to have acted dishonestly
or fraudulently. The Company has
appropriate Directors’ and Officers’
liability insurance cover in respect
of potential legal actions against
the Directors.
2019 Annual General Meeting
A Notice of Meeting can be found
on pages 142 to 151 explaining
the business to be considered at
the AGM on 25 November 2019
at Town Centre House, Leeds.
This will include renewal of the
Company’s authority to purchase,
in the market, its own shares
and allot shares for cash other
than on a pre-emptive basis to
existing shareholders.
Going Concern
Further detail is set out on
page 65 of the Strategic Report.
Independent Auditors
The auditors, BDO LLP, have
indicated their willingness to
continue in office, and a resolution
that they be re-appointed will be
proposed at the AGM.
The Board confirms that, since
the entry into the relationship
agreement until 24 September
2019, being the latest practicable
date prior to the publication of this
Annual Report and Accounts:
• the Company has complied with
the independence provisions
included in the relationship
agreement;
• so far as the Company is aware,
the independence provisions
included in the relationship
agreement have been complied
with by the Ziff Family Concert
Party and their associates; and
• so far as the company is aware,
the procurement obligation
included in the relationship
agreement has been complied
with by the Principal Concert
Party Shareholders.
Relationship Agreements
In accordance with the UK Listing
Rules, the Company has entered
into an agreement with the Ziff
Family Concert Party which, as
it controls more than 30% of
the Group’s total issued share
capital, is deemed a controlling
Shareholder. The relationship
agreement is intended to ensure
the controlling shareholder
complies with the independence
provisions in Listing Rule 9.2.2A.
Under the terms of the relationship
agreement, the Principal Concert
Party Shareholders (Mr E Ziff & Mr
M Ziff) have agreed to procure the
compliance of other individual
members of the Ziff Family
Concert Party who are treated
as controlling shareholders
with independence obligations
in the relationship agreement.
The Ziff Family Concert Party,
as controlling shareholders
of the Company, have a
combined aggregate holding
of approximately 51.3% of the
Company’s voting rights.
Substantial Shareholdings
At 30 June 2019, the following shareholders had notified an interest in
the issued Ordinary Share capital of the Company in accordance with the
UK Listing Authority’s Disclosure Guidance and Transparency Rules. The
Company has not received any further notifications in this respect during
the period 1 July 2019 until 24 September 2019.
Ziff Concert Party
New Fortress Finance Holdings Limited
Post-Balance Sheet Events
Number
of shares
% of
Issued Capital
27,285,464
3,376,000
51.33
6.35
Since 30 June 2019, there have been no material events to report.
The Directors’ Report was approved by the Board on 24 September 2019.
By order of the Board
Link Company Matters Limited
Company Secretary
24 September 2019
94
The Directors are responsible for
preparing the Annual Report, the
Directors’ Remuneration Report
and the Financial Statements in
accordance with applicable law
and regulations.
Company law requires the
Directors to prepare Financial
Statements for each financial year.
Under that law the Directors have
prepared the Group Financial
Statements in accordance with
International Financial Reporting
Standards (IFRS) as adopted by the
European Union, and the Parent
Company Financial Statements in
accordance with United Kingdom
Generally Accepted Accounting
Practice (United Kingdom
Accounting Standards and
applicable law). Under company
law the Directors must not approve
the Financial Statements unless
they are satisfied that they give
a true and fair view of the state
of affairs of the Group and the
Company and of the profit or
loss of the Group for that period.
In preparing these Financial
Statements, the Directors are
required to:
• select suitable accounting
policies and then apply
them consistently;
• make judgements and
accounting estimates that are
reasonable and prudent;
• state whether IFRS as adopted
by the European Union and
applicable UK Accounting
Standards have been followed,
subject to any material
departures disclosed and
explained in the Group and
Parent Company Financial
Statements respectively; and
• prepare the financial statements
on a going concern basis unless
it is inappropriate to assume
that the Company will continue
in business.
The Directors are responsible for
keeping adequate accounting
records that are sufficient to
show and explain the Company’s
transactions and disclose with
reasonable accuracy at any
time the financial position of the
Company and the Group and
enable them to ensure that the
Financial Statements and the
Directors’ Remuneration Report
comply with the Companies Act
2006 and, as regards the Group
Financial Statements, Article
4 of the IAS Regulation. The
Directors are also responsible
for safeguarding the assets of
the Company and the Group and
hence for taking reasonable steps
for the prevention and detection
of fraud and other irregularities.
Under applicable laws and
regulations, the Directors are
also responsible for preparing
a Strategic Report, Directors’
Report, Directors’ Remuneration
Report and Corporate Governance
Statement that complies with that
law and those regulations.
The Directors are responsible for
the maintenance and integrity of
the Company’s website https://tcs-
plc.co.uk/. Legislation in the United
Kingdom governing the preparation
and dissemination of Financial
Statements may differ from
legislation in other jurisdictions.
Each of the Directors, whose
names and functions are listed on
pages 70 to 71, confirms that, to
the best of their knowledge:
• the Strategic Report includes a
fair review of the development
and performance of the
business and position of the
Company, together with a
description of the principal risks
and uncertainties that it faces.
The Directors consider the
Annual Report and Accounts,
taken as a whole, is fair, balanced
and understandable and the
information provided to the
shareholders is sufficient to allow
them to assess the Company’s
performance, business model
and strategy.
This responsibility statement for
the year ended 30 June 2019
was approved by the Board on
24 September 2019.
Disclosure of information to
the Auditors
The Directors who held office
at the date of approval of this
Directors’ Report confirm that, so
far as they are each aware, there
is no relevant audit information of
which the Company’s auditors are
unaware. Each Director has taken
all the reasonable steps that they
ought to have taken as a Director
to make themselves aware of any
relevant audit information and
to establish that the Company’s
auditors are made aware of
that information.
For and on behalf of the Board
Edward Ziff OBE
• the financial statements,
Chairman and Chief Executive
24 September 2019
prepared in accordance with
the applicable set of accounting
standards, five a true and fair
view of the assets, liabilities,
financial position and profit or
loss of the Company taken as a
whole; and
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Financial statements
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Independent Auditor’s report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated statement
of changes in equity
Consolidated cash flow statement
Notes to the consolidated
financial statements
Company balance sheet
Statement of changes in equity
Notes to the company
financial statements
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96
Burlington House, Manchester
Image: Description
97
Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Independent Auditor’s report
to the members of Town Centre Securities PLC
Opinion
Key audit matters
We have audited the financial statements of Town Centre Securities PLC (the ‘Parent Company’) and its
subsidiaries (the ‘Group’) for the year ended 30 June 2019 which comprise the Consolidated Income Statement,
the Consolidated Statement of Comprehensive Income, the Consolidated and Company Balance Sheets, the
Consolidated and Company Statements of Changes in Equity, the Consolidated Cash Flow Statement and Notes to
the Financial Statements, including a summary of significant accounting policies. The financial reporting framework
that has been applied in the preparation of the Group financial statements is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that
has been applied in the preparation of the Parent Company financial statements is applicable law and United
Kingdom Accounting Standards, including Financial Reporting Standard 102, The Financial Reporting Standard
applicable
in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice (UK GAAP)).
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs
as at 30 June 2019 and of the Group’s loss for the year then ended;
• the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
• the Parent Company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act
2006; and, as regards the Group financial statements, Article 4 of the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are independent of the Group and the Parent Company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to principal risks, going concern and viability statement
We have nothing to report in respect of the following information in the annual report, in relation to which the
ISAs (UK) require us to report to you whether we have anything material to add or draw attention to:
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Valuation of the Group’s property interests
Risk
The valuation of the Group’s property interests is
the key driver of the Group’s net asset value and
underpins the results for the year.
Accounting policy for treatment of investment
properties can be found on page 110 and further
detail is found in note 12.
These interests, totalling £362.1m (2018: £399.5m)
consist of investment and development properties,
car park fixed assets, and interests in joint
ventures; being the Group’s share of the fair value
of investment and development properties within
these entities.
All interests in property as listed above are subject
to independent revaluation to open market value at
each reporting date by third party valuation experts
appointed by management. Of the total portfolio,
only £0.25m is valued by management internally,
being an immaterial property interest.
The valuation of the Group’s interests, including those
held in joint ventures, depends on the individual
nature of each property, including its location, and
the rental income it generates. The assumptions on
which the valuations are based are further influenced
by quality of tenant, prevailing market yields and
comparable market transactions.
Assets held as development properties are valued
using a comparable sale approach or income based
approach if being utilised as car parks. Where assets
are undergoing development, these are generally
valued using the residual appraisal method,
which estimates the fair value of the completed
project, including a suitable developers profit and
deductions for expected costs to complete.
All of these valuation methods can require
significant judgement and estimation to be applied
the external valuation experts, increasing the
inherent risk in this area.
The above, along with the highly material size of the
balances, means we consider this to be a significant
risk area as small percentage changes in each key
assumption could materially affect the carrying
value of the assets concerned.
• the disclosures in the Annual Report set out on page 60 that describe the principal risks and explain how they
Response
are being managed or mitigated;
• the Directors’ confirmation set out on page 65 in the Annual Report that they have carried out a robust
assessment of the principal risks facing the Group, including those that would threaten its business model,
future performance, solvency or liquidity;
• the Directors’ statement set out on page 65 in the financial statements about whether the Directors considered
it appropriate to adopt the going concern basis of accounting in preparing the financial statements and
the Directors’ identification of any material uncertainties to the Group and the Parent Company’s ability to
continue to do so over a period of at least 12 months from the date of approval of the financial statements;
• whether the Directors’ statement relating to going concern required under the Listing Rules in accordance
with Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit; or
• the Directors’ explanation set out on page 65 in the Annual Report as to how they have assessed the prospects
of the Group, over what period they have done so and why they consider that period to be appropriate, and
their statement as to whether they have a reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or assumptions.
Our audit approach to this area included an
assessment of the external valuation completed
by management experts and their objectivity,
independence and qualifications to undertake
this work.
expenditure details and lease terms, which
were agreed back to appropriate supporting
documentation. No differences were identified
between the internal data and that used within the
valuation calculations.
We held meetings with both external valuation
experts in which we confirmed directly with these
experts that valuations had been performed on
bases consistent with practices approved by the
Royal Institute of Chartered Surveyors (‘RICS’)
and the requirements of IFRS as adopted by the
EU and United Kingdom Generally Accepted
Accounting Practice.
We tested a sample of the key inputs used in the
valuation calculations by agreeing underlying
data used to internal tenancy schedules, capital
We attended meetings with the valuation experts
to further understand the methodology applied
and challenge them on any key inputs to their
calculations and any assumptions made. In doing
this we considered movements in yield that were
outside of a tolerable range based on our own and
wider market expectations. From these discussions
and comparison to other market data available
there were no indications of any bias on the part of
the valuation experts and all key movements were
appropriately justified.
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99
Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Independent Auditor’s report continued
to the members of Town Centre Securities PLC
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. For planning, we consider materiality to be the magnitude by which misstatements, individually
or in aggregate and including omissions, could influence the economic decisions of reasonable users that are
taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that
any misstatements exceed materiality we use a lower materiality level, performance materiality, to determine
the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as
immaterial as we also take account of the nature of identified misstatements, and the particular circumstances
of their occurrence, when evaluating their effect on the financial statements as a whole.
The materiality for the Group financial statements as a whole was set at £3,700,000 (2018: £4,000,000)
and for the Parent Company £3,600,000 (2018: £3,500,000). This was determined with reference to a
benchmark of total non-current assets (of which it represents 1% (2018: 1%), which we consider to be one
of the principal considerations for members of the Company in assessing the financial performance of a
property investment group.
International Standards on Auditing (UK) also allow the auditor to set a lower materiality for particular classes
of transactions, balances or disclosures for which misstatements of lesser amounts than materiality for the
financial statements as a whole could reasonably be expected to influence the economic decisions of users
taken on the basis of the financial statements. In this context, we set a lower level of materiality for the Group of
£320,000 (2018: £350,000) to apply to all classes of transactions and balances excluding non-current assets,
any property revaluation movements, gains or losses on disposal of properties and changes in the fair value of
financial instruments. For the Parent Company financial statements this was set at £210,000 (2018: £300,000).
This lower level of materiality was set with reference to a benchmark of profit after taxation excluding investment
and development property revaluations, gains/losses on investing and trading property disposals and changes
in the fair value of financial instruments (of which it represents 5% at group level) which we consider to be a key
consideration in assessing the financial performance of the business.
Performance materiality was set at 65% of the above materiality levels which we have determined by reference to
the number of components, the errors identified in prior years and our accumulated knowledge of the business.
Component materiality on significant components was set at levels between £140,000 and £1,560,000 (2018:
£170,000 and £1,770,000) with specific materiality being set between £100,000 and £210,000 (2018: £100,000
and £270,000).
We reported to the Audit Committee all individual audit differences in excess of £16,000 (2018: £20,000).
We also agreed to report differences below this threshold that, in our view, warranted reporting on
qualitative grounds.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the
Group’s system of internal control, and assessing the risks of material misstatement in the financial statements.
We also addressed the risk of management override of internal controls, including assessing whether there was
evidence of bias by the Directors that may have represented a risk of material misstatement due to fraud.
The Group operates solely in the United Kingdom and operates through a number of legal entities, which
form reporting components. The financial information relating to the parent company and all significant
and non-significant trading components of the Group were subject to full scope audits by the Group audit
team. Significant components were defined as those reporting components contributing more than 15%
towards group assets, turnover or profits. There were 39 components which were dormant for which no
audit procedures were performed.
100
Capability of the audit to detect irregularities including fraud
We undertook audit procedures to respond to the risk of non-compliance with laws and regulations, focussing
on those that could give rise to a material misstatement in the Group and Parent Company financial statements,
including, but not limited to, the Companies Act 2006, the UK Listing Rules, the REIT regime requirements
and legislation relevant to the rental of properties. We made enquiries of management to obtain further
understanding of risks of non-compliance. There are inherent limitations in the audit procedures described above
and the further removed non-compliance with laws and regulations is from the events and transactions reflected
in the financial statements, the less likely we would become aware of it.
We addressed the risk of management override of internal controls, by undertaking procedures to review journal
entries processed during and subsequent to the year end and evaluate whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
We consider that the audit procedures we planned and performed in accordance with ISAs (UK) have provided us
with reasonable assurance that irregularities, including fraud, would have been detected to the extent that they
could have resulted in material misstatements in the financial statements. Our audit was not designed to identify
misstatements or other irregularities that would not be considered to be material to the financial statements.
Other information
The Directors are responsible for the other information. The other information comprises the information
included in the Annual Report and Accounts, other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material misstatement of the other information we are
required to report that fact.
We have nothing to report in this regard.
In this context, we also have nothing to report in regard to our responsibility to specifically address the following
items in the other information and to report as uncorrected material misstatements of the other information
where we conclude that those items meet the following conditions:
• Fair, balanced and understandable set out on page 82 – the statement given by the Directors that they
consider the Annual Report and financial statements taken as a whole is fair, balanced and understandable and
provides the information necessary for shareholders to assess the Group’s performance, business model and
strategy, is materially inconsistent with our knowledge obtained in the audit; or
• Audit Committee reporting set out on page 80 – the section describing the work of the Audit Committee
does not appropriately address matters communicated by us to the Audit Committee; or
• Directors’ statement of compliance with the UK Corporate Governance Code set out on page 76 – the parts
of the Directors’ statement required under the Listing Rules relating to the Company’s compliance with the
UK Corporate Governance Code containing provisions specified for review by the auditor in accordance with
Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate
Governance Code.
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Independent Auditor’s report continued
to the members of Town Centre Securities PLC
Opinions on other matters prescribed by the Companies Act 2006
Auditor’s responsibilities for the audit of the financial statements
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the financial statements;
• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal
requirements;
• the information about internal control and risk management systems in relation to financial reporting
processes and about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure
Guidance and Transparency Rules sourcebook made by the Financial Conduct Authority (the FCA Rules),
is consistent with the financial statements and has been prepared in accordance with applicable legal
requirements; and
•
information about the Company’s corporate governance code and practices and about its administrative,
management and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the
FCA Rules.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained
in the course of the audit, we have not identified material misstatements in:
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Other matters which we are required to address
Following the recommendation of the Audit Committee, we were appointed by the Directors to audit the financial
statements for the year ended 30 June 2015 and subsequent periods. In respect of the year ended 30 June
2019, we were re-appointed as auditors by the members of the Company at the Annual General Meeting held
on 20 November 2018. The period of total uninterrupted engagement is four years, covering the years ending
30 June 2015 to 30 June 2019.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Parent
Company and we remain independent of the Group and the Parent Company in conducting our audit.
Our audit opinion is consistent with the additional report to the Audit Committee.
• the Strategic Report or the Directors’ Report; or
Use of our report
the information about internal control and risk management systems in relation to financial reporting processes
and about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit
have not been received from branches not visited by us; or
• the Parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are
not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.; or
• a corporate governance statement has not been prepared by the Parent Company.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 95, the Directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the Directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the
Parent Company or to cease operations, or have no realistic alternative but to do so.
102
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and
the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Russell Field
(Senior Statutory Auditor)
For and on behalf of BDO LLP,
Statutory Auditor
London, UK
24 September 2019
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Consolidated income statement
for the year ended 30 June 2019
Consolidated balance sheet
as at 30 June 2019
Gross revenue
Property expenses
Net revenue
Administrative expenses
Other income
Valuation movement on investment properties
Reversal of impairment of car parking assets
(Loss)/profit on disposal of investment properties
Share of post tax profits from joint ventures
Operating (loss)/profit
Finance costs
(Loss)/profit before taxation
Taxation
(Loss)/profit for the year attributable to owners of the Parent
Earnings per share
Basic and diluted
EPRA (non-GAAP measure)
Dividends per share
Paid during the year
Proposed
Notes
3
3
4
7
14
8
9
11
11
10
10
2019
£’000
31,189
(11,600)
19,589
(6,857)
574
(18,308)
200
(709)
1,067
(4,444)
(8,025)
(12,469)
–
(12,469)
(23.4)p
12.0p
11.75p
8.5p
2018
£’000
30,178
(10,896)
19,282
(6,574)
888
5,932
1,300
1,677
3,757
26,262
(7,887)
18,375
–
18,375
34.6p
13.0p
11.50p
8.5p
Consolidated statement of comprehensive income
for the year ended 30 June 2019
(Loss)/profit for the year
Items that may be subsequently reclassified to profit or loss
2019
£’000
(12,469)
2018
£’000
18,375
Non-current assets
Property rental
Investment properties
Investments in joint ventures
Car park activities
Freehold and leasehold properties
Goodwill
Investments
Fixtures, equipment and motor vehicles
Total non-current assets
Current assets
Investments
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Total current liabilities
Non-current liabilities
Financial liabilities
Total liabilities
Net assets
Equity attributable to the owners of the Parent
Called up share capital
Share premium account
Capital redemption reserve
Revaluation reserve
Retained earnings
Total equity
Net asset value per share
Notes
2019
£’000
2018
£’000
12
14
12
13
15
12
15
16
17
18
324,500
13,387
337,887
24,194
4,024
2,510
30,728
1,609
336,311
39,742
376,053
23,423
4,024
2,125
29,572
1,544
370,224
407,169
5,871
5,354
23,692
34,917
405,141
(34,739)
(34,739)
(182,152)
(216,891)
188,250
3,530
6,288
23,149
32,967
440,136
(37,954)
(37,954)
(198,057)
(236,011)
204,125
23
13,290
13,290
200
559
250
173,951
188,250
354p
200
559
250
189,826
204,125
384p
21
Revaluation gains/(losses) on car parking assets
500
(350)
Items that will not be subsequently reclassified to profit or loss
Company number: 00623364
Revaluation gains on other investments
Total other comprehensive income
Total comprehensive (loss)/income for the year
2,341
2,841
(9,628)
1,136
786
19,161
The financial statements on pages 104 to 130 were approved by the Board of Directors on 24 September 2019
and signed on its behalf by
All profit and total comprehensive income for the year is attributable to owners of the Parent. The Notes on pages
108 to 130 are an integral part of these Consolidated Financial Statements.
Dr. Edward Ziff OBE DL
Chairman & Chief Executive
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Consolidated statement of changes in equity
for the year ended 30 June 2019
Consolidated cash flow statement
for the year ended 30 June 2019
Balance at 30 June 2017
Comprehensive income for the year
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Contributions by and distributions to owners
Final dividend relating to the year ended
30 June 2016
Interim dividend relating to the year ended
30 June 2017
Called up
share
capital
£’000
13,290
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Revaluation
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
200
559
600
176,429
191,078
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
18,375
18,375
(350)
(350)
1,136
786
19,511
19,161
–
–
(4,386)
(4,386)
(1,728)
(1,728)
Balance at 30 June 2018
13,290
200
559
250
189,826
204,125
Comprehensive income for the year
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Contributions by and distributions to owners
Final dividend relating to the year ended
30 June 2018
Interim dividend relating to the year ended
30 June 2019
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(12,469)
(12,469)
2,841
2,841
(9,628)
(9,628)
(4,519)
(4,519)
(1,728)
(1,728)
Balance at 30 June 2019
13,290
200
559
250
173,951
188,250
Cash flows from operating activities
Cash generated from operations
Interest paid
Net cash generated from operating activities
Cash flows from investing activities
Purchase and construction of investment properties
Refurbishment of investment properties
Payments for leasehold property improvements
Purchases of fixtures, equipment and motor vehicles
Proceeds from sale of investment properties
Proceeds from sale of fixed assets
Payments for acquisition of non-listed investments
Investments in joint ventures
Distributions received from joint ventures
Net cash generated from/(used in) investing activities
Cash flows from financing activities
(Repayment of)/proceeds from non-current borrowings
Dividends paid to shareholders
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
2019
2018
Notes
£’000
£’000
£’000
£’000
24
11,090
(7,678)
14,235
(7,595)
3,412
6,640
(25,517)
(3,740)
(255)
(814)
17,089
23
(385)
(723)
28,145
(16,252)
(6,247)
(900)
(1,806)
(153)
(340)
7,534
–
(175)
(8,809)
676
13,823
(3,973)
5,796
(6,114)
(22,499)
(5,264)
5,473
209
23,692
(23,483)
209
(318)
2,349
3,124
5,473
23,149
(17,676)
5,473
Cash and cash equivalents at the year end are comprised of the following:
Cash balances
Overdrawn balances
The Consolidated Cash Flow Statement should be read in conjunction with Note 24.
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Notes to the consolidated financial statements
1. ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these Consolidated Financial Statements are set
out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Town Centre Securities PLC (the Company) is a public limited company domiciled in the United Kingdom. Its
shares are listed on the London Stock Exchange. The Consolidated Financial Statements of the Company for the
year ended 30 June 2019 comprise the Company and its subsidiaries (together referred to as the Group). The
address of its registered office is Town Centre House, The Merrion Centre, Leeds, LS2 8LY.
Basis of preparation
Statement of compliance
The Consolidated Financial Statements of Town Centre Securities PLC have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European Union, IFRIC Interpretations and
the Companies Act 2006.
Income and cash flow statements
The Group presents its Income Statement by nature of expense. The Group reports cash flows from operating
activities using the indirect method. The acquisitions of investment properties are disclosed as cash flows from
investing activities because this most appropriately reflects the Group’s business activities. Cash flows from
investing and financing activities are determined using the direct method.
Preparation of the Consolidated Financial Statements
The Consolidated Financial Statements have been prepared under the historical cost convention as modified
by the revaluation of the Group’s property interests and other investments.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s
accounting policies. Changes in assumptions may have a significant impact on the financial statements in the
period the assumptions are changed. Management believes that the underlying assumptions are appropriate.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates
are significant to the Consolidated Financial Statements, are disclosed in Note 2.
Changes in accounting policy and disclosure
(a)
Standards, amendments to published standards and interpretations effective for the period ended
30 June 2019.
The effect of IFRS 15 has been assessed by the Directors and does not have a material impact on the Group.
The effect of IFRS 9 has been assessed by the Directors and does not have a material impact on the Group.
(b)
New standards, amendments to published standards and interpretations issued but not effective for the
period ended 30 June 2019 and not early adopted.
The effect of IFRS 16 is still being assessed by the Directors and is not expected to have a material impact on
net asset value but is expected to result in a significant increase in the value of both assets and liabilities.
Going concern
The Directors have reviewed the cash flow forecasts of the Group and the underlying assumptions on which
they are based. The Consolidated Financial Statements include details of bank and debenture facilities and of
investment properties at open market value. The Group uses external valuers to determine the value of properties
and these values are used in the assessment of loan to value covenants, compliance with which is reviewed on
a regular basis.
The Group’s business activities, together with the factors likely to affect its future development, are set out in
the Chairman and Chief Executive’s Statement. In addition, the Directors considered the accounting polices
note which includes the Group’s objectives, policies and processes for managing its capital, its financial risk
management objectives, details of its financial instruments and hedging activities and its exposure to credit
and liquidity risk.
108
The Board considers that it has adequate financial resources (as set out in Note 18), tenants with appropriate
leases and covenants, and properties of sufficient quality to enable it to conclude that it is well placed to manage
its business risks in the current economic climate. The Directors have therefore concluded that the Group has
adequate resources to continue in operational existence for the foreseeable future and continue to adopt the
going concern basis of accounting in preparing the Consolidated Financial Statements.
Consolidation
(a) Subsidiaries
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee
if all three of the following elements are present: power over the investee, exposure to variable returns from the
investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed
whenever facts and circumstances indicate that there may be a change in any of these elements of control.
De-facto control exists in situations where the Company has the practical ability to direct the relevant activities
of the investee without holding the majority of the voting rights. In determining whether de-facto control exists
the Company considers all relevant facts and circumstances, including:
• The size of the Company’s voting rights relative to both the size and dispersion of other parties who hold
voting rights
• Substantive potential voting rights held by the Company and by other parties
• Other contractual arrangements
• Historic patterns in voting attendance.
The Consolidated Financial Statements present the results of the Company and its subsidiaries (the ‘Group’) as
if they formed a single entity. Intercompany transactions and balances between Group companies are therefore
eliminated in full.
The Consolidated Financial Statements incorporate the results of business combinations using the acquisition
method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are
included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained.
They are deconsolidated from the date on which control ceases.
(b) Joint Arrangements
A joint arrangement is a contractual arrangement whereby the Group and other parties undertake an economic
activity that is subject to joint control.
Investments in joint ventures are accounted for using the equity method of accounting and are initially
recognised at cost.
The Group’s share of its joint ventures post-acquisition profits or losses is recognised in the Income Statement.
Investments in joint ventures are carried in the balance sheet at cost as adjusted by post-acquisition changes in
the Group’s share of net assets of the joint ventures less any impairment in the value of the investment.
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the
Group’s interest in the joint venture. Accounting policies of joint ventures have been changed where necessary
to ensure consistency with the policies adopted by the Group.
Segmental reporting
An operating segment is a group of assets and operations engaged in providing products or services that are
subject to risks and returns that are different from those of other business segments.
The Group operates in three business segments comprising property rental, car park operations and hotel
operations. The Group’s operations are performed wholly in the United Kingdom.
The chief operating decision-maker has been identified as the Board. The Board reviews the Group’s internal
reporting in order to assess performance and allocate resources. Management has determined the operating
segments based on these reports.
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Notes to the consolidated financial statements continued
1. ACCOUNTING POLICIES CONTINUED
Non-Current assets
(a) Investment properties
Investment property comprises freehold land and buildings and long-leasehold buildings. This comprises mainly
retail units, offices and operational car parks, and is measured initially at cost, including related transaction costs.
These are held as investments to earn rental income and for capital appreciation and are stated at fair value at the
balance sheet date.
The acquisition or disposal of investment property is recognised at the point of unconditional exchange.
Investment properties held under finance leases are initially valued at the present value of minimum lease
payments payable over the term of the lease.
After initial recognition investment property is carried at fair value, based on market values. It is then determined
twice annually by independent external valuers or held at Directors’ valuation if appropriate. The gains or losses
arising from these valuations are included in the Consolidated Income Statement. When an existing investment
property is redeveloped for continued future use as an investment property, it remains an investment property
whilst in development.
The fair value of investment property reflects, among other things, rental income from current leases and
assumptions about rental income from future leases in light of current market conditions.
Subsequent expenditure is added to the asset’s carrying amount only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All
other repairs and maintenance costs are charged to the Consolidated Income Statement during the financial
period in which they are incurred.
(c) Fixtures, equipment and motor vehicles
Fixtures, equipment and motor vehicles are shown at historical cost less depreciation and provision for
impairment. Historic cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight line basis at rates appropriate to write off individual assets over their
estimated useful lives of between three and ten years.
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and
are included in the Consolidated Income Statement.
Fair value
Fair value estimation under IFRS 13 requires the Group to classify for disclosure purposes fair value
measurements using a fair value hierarchy that reflects the significance of the inputs used in making the
measurements on its financial assets. The fair value hierarchy has the following levels:
• Level (1) quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level (2) inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices); and
• Level (3) inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The fair value of assets held for sale, other financial assets and investment property are determined by using
valuation techniques. See note 2 for further details of the judgements and assumptions made in relation to
investment properties.
Borrowing costs associated with direct expenditure on properties undergoing major refurbishment are
capitalised. The amount is calculated using the Group’s weighted average cost of borrowing.
Goodwill
Property that is being constructed or developed for future use as an investment property is also classified as
investment property under the sub-heading development property and is stated at fair value.
The gain or loss arising on the disposal of investment properties is determined as the difference between the
net sale proceeds and the carrying value of the asset at the beginning of the period and is recognised in the
Consolidated Income Statement of the period during which the sale becomes unconditional. In circumstances
where the conditional exchange of contracts and the completion of the disposal fall on either side of the balance
sheet date, the asset is re-classified as a current asset in the Consolidated Balance Sheet.
Freehold land held for development is not depreciated.
(b) Freehold and leasehold properties
Freehold and leasehold properties are initially recognised at cost and are subsequently carried at fair value,
based on periodic valuations by a professionally qualified valuer. These revaluations are made with sufficient
regularity to ensure that the carrying amount does not differ materially from that which would be determined
using fair value at the end of the reporting period. Changes in fair value are recognised in other comprehensive
income and accumulated in the revaluation reserve except to the extent that any decrease in value in excess of
the credit balance on the revaluation reserve, or reversal of such a transaction, is recognised in profit or loss.
Freehold land is not depreciated. Properties held under finance leases are initially valued at the present value of
minimum lease payments payable over the term of the lease. Depreciation on assets under construction does not
commence until they are complete and available for use. Depreciation is provided on all other items within this
category so as to write off their carrying value over their expected useful economic lives.
At the date of revaluation, the accumulated depreciation on the revalued freehold property is eliminated against
the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. On
disposal of the asset the balance of the revaluation reserve is transferred to retained earnings.
110
Goodwill represents the excess of the cost of a business combination over the Group's interest in the fair value
of identifiable assets, liabilities and contingent liabilities acquired. Cost comprises the fair value of assets given,
liabilities assumed and equity instruments issued. Direct costs of acquisition are recognised immediately as an
expense. Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to
the Consolidated Statement of Comprehensive Income. Where the fair value of identifiable assets, liabilities and
contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the Consolidated
Statement of Comprehensive Income on the acquisition date.
Investments
The Group classifies its listed and unlisted investments in accordance with IFRS9, being at fair value through
profit and loss.
Purchases and sales of investments are recognised on the trade date, which is the date the Group commits to
purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs. Investments are
derecognised when the rights to receive cash flows from the investments have expired or have been transferred
and the Group has transferred substantially all risks and rewards of ownership. Equity instruments are valued at
fair value at each reporting date. The fair values of listed investments are based on current bid prices. Any fair
value gains and losses arising on equity instruments classified as fair value through profit and loss are recognised
in the Income Statement. However, an assessment for each individual equity instrument not held for trading is
considered, to establish whether an irrevocable election under IFRS 9 should be made to classify the instrument
at fair value through other comprehensive income. Where this election has been made, fair value gains are
recognised through other comprehensive income.
Dividends on equity instruments are recognised in the Consolidated Income Statement when the Group’s right to
receive payment is established.
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Town Centre Securities PLC | Annual Report & Accounts 2019
1. ACCOUNTING POLICIES CONTINUED
Investments continued
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a
group of financial assets is impaired. In the case of equity securities, a significant or prolonged decline in the fair
value of the security below its cost is considered in determining whether the securities are impaired. If any such
evidence exists for equity instruments, the cumulative loss – measured as the difference between the acquisition
cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or
loss – is removed from equity and recognised in the Consolidated Income Statement.
Investments in equity instruments that do not have a quoted price in an active market and whose fair value
cannot be reliably measured due to the range of reasonable fair value measurements obtained being significant
are measured at cost, being the most reliable estimate of fair value at the period end.
Trade and related party receivables
Trade and related party receivables (such as loans to joint ventures or loans to investments) are recognised
initially at fair value and are subsequently measured at amortised cost. A provision for impairment of trade
receivables is established when there is objective evidence that the Group will not be able to collect all amounts
due according to the original terms of the receivables concerned. The amount of the provision is recognised in
the Consolidated Income Statement.
Impairment provisions for current and non-current trade receivables are recognised based on the simplified
approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses.
During this process the probability of the non-payment of the trade receivables is assessed. This probability is
then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit
loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a
separate provision account with the loss being recognised within cost of sales in the Consolidated Statement
of Comprehensive Income. On confirmation that the trade receivable will not be collectable, the gross carrying
value of the asset is written off against the associated provision.
Impairment provisions for receivables from related parties and loans to related parties are recognised based on a
forward looking expected credit loss model. The methodology used to determine the amount of the provision is
based on whether there has been a significant increase in credit risk since initial recognition of the financial asset.
For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve
month expected credit losses along with gross interest income are recognised. For those for which credit risk has
increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For
those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net
basis are recognised. From time to time, the Group elects to renegotiate the terms of trade receivables due from
customers with which it has previously had a good trading history. Such renegotiations will lead to changes in the
timing of payments rather than changes to the amounts owed and, in consequence, the new expected cash flows
are discounted at the original effective interest rate and any resulting difference to the carrying value is recognised
in the Consolidated Statement of Comprehensive Income (operating profit).
Cash and cash equivalents
Cash and cash equivalents are carried in the Consolidated Balance Sheet are held at amortised cost. Cash
and cash equivalents comprise cash in hand, deposits held at call with banks, other short-term, highly liquid
investments with original maturities of three months or less and bank overdrafts. Bank overdrafts are included
within borrowings in current liabilities on the Consolidated Balance Sheet.
Share capital
Ordinary Shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
Borrowings
Borrowings are recognised net of transaction costs incurred. Debt finance costs are amortised based on the
effective interest rate.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the balance sheet date.
112
Leased assets
Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred
to the Group (a ‘finance lease’), the asset is treated as if it had been purchased outright. The amount initially
recognised as an asset is the lower of the fair value of the leased property and the present value of the minimum
lease payments payable over the term of the lease. The corresponding lease commitment is shown as a liability.
Lease payments are analysed between capital and interest. The interest element is charged to the Consolidated
Statement of Comprehensive Income over the period of the lease and is calculated so that it represents a
constant proportion of the lease liability. The capital element reduces the balance owed to the lessor. Where
substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an ‘operating
lease’), the total rentals payable under the lease are charged to the Consolidated Statement of Comprehensive
Income on a straight-line basis over the lease term. The aggregate benefit of lease incentives is recognised as a
reduction of the rental expense over the lease term on a straight-line basis.
Operating leases
(a) A Group company is the lessee
Leases where the lessor retains a significant portion of the risks and rewards of ownership are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are
charged to the Consolidated Income Statement on a straight line basis over the period of the lease.
(b) A Group company is the lessor
Properties leased to third parties under operating leases are included in investment property in the Consolidated
Balance Sheet. The leases in our portfolio have a wide variety of term and tenures and there is no standard.
Unamortised tenant lease incentives
Leasehold incentives given to tenants on entering property leases are recognised as unamortised lease
incentives. The operating lease incentives are spread over the non-cancellable life of the lease. Where this ends
with a clean break clause the incentives are spread to this date unless management is reasonably certain that the
break will not be exercised.
Cash flow hedges
Where a derivative is designated as a hedge of the variability of a highly probable forecast transaction, e.g.
an interest payment, the element of the gain or loss on the derivative that is an effective hedge is recognised
directly in equity. When the forecast transaction subsequently results in the recognition of a financial asset or
a financial liability, the associated gains or losses that were recognised directly in equity are reclassified into
the Consolidated Income Statement in the same period or periods during which the asset acquired or liability
assumed affects the Consolidated Income Statement, i.e. when interest income or expense is recognised.
Taxation
The tax charge in the Consolidated Income Statement comprises tax currently payable.
Town Centre Securities PLC elected for group Real Estate Investment Trust (REIT) status with effect from 2
October 2007. As a result the Group no longer pays United Kingdom corporation tax on the profits and gains
from its qualifying rental business in the United Kingdom provided it meets certain conditions. Non-qualifying
profits and gains of the Group continue to be subject to corporation tax as normal. On entering the REIT regime
an entry charge equal to 2% of the aggregate market value of the properties associated with the qualifying rental
business was payable. Deferred tax accrued at the date of conversion in respect of the assets and liabilities of
the qualifying rental business was released to the Income Statement as the relevant temporary differences are no
longer taxable on reversal.
In respect of non-qualifying activities and related profits, gains and losses:
(a) Deferred income tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the Consolidated Financial Statements. However,
no provision for deferred tax is made for temporary differences arising on the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and
laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when
the related deferred income tax asset is realised or the deferred income tax liability is settled.
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Town Centre Securities PLC | Annual Report & Accounts 2019Notes to the consolidated financial statements continued
1. ACCOUNTING POLICIES CONTINUED
(a) Deferred income tax continued
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be
available against which the temporary differences can be utilised. Deferred tax assets and liabilities are offset
when they relate to income taxes levied by the same taxation authority and the Group is entitled to settle its
current tax assets and liabilities on a net basis.
(b) Current tax
The charge for current tax is based on the results for the period as adjusted for items which are non-assessable
or disallowed. It is calculated using rates of tax that have been enacted by the balance sheet date.
Employee benefits
The Group operates defined contribution arrangements for all eligible Directors and employees. A defined
contribution plan is a pension plan under which the Group pays contributions into a private or publicly
administered pension insurance plan. Pension costs are charged to the Consolidated Income Statement in the
period when they fall due. Pre-paid contributions are recognised as an asset to the extent that a cash refund or a
reduction in future payments is available.
Revenue recognition
(a) Rental income
Revenue includes the fair value of rental income and management charges from properties (net of Value
Added Tax).
This income is recognised as it falls due, in accordance with the lease to which it relates. Any lease incentives
are spread evenly across the period of the lease.
This income is recognised as follows:
Reserves
Reserves are analysed in the following categories:
• Share capital represents the nominal value of issued share capital
• Share premium represents any consideration received in excess of nominal value of the shares issued
• Capital redemption reserve represents the nominal value of the Company’s own shares that have been
repurchased and cancelled
• Revaluation reserve represents the surplus valuation movement upon revaluation of freehold and leasehold
property relating to car park activities
• Retained earnings represents the cumulative profit or loss position less dividend distributions.
Financial risk management
The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk, cash flow and fair value
interest rate risk, capital risk and price risk.
(a) Credit risk
The Group has no significant concentrations of credit risk. It has policies in place to ensure that rental contracts
are made with customers with an appropriate credit history. The Group has policies that limit the amount of credit
exposure to any financial institution. The Group has no significant concentration of credit risk as exposure is
spread over a large number of counterparties and tenants.
(b) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability
of funding through an adequate amount of committed credit facilities and the ability to close out market
positions. Due to the dynamic nature of the underlying businesses, Group treasury policy aims to maintain
flexibility in funding by keeping committed credit lines available.
i)
ii)
rental income is recognised on an accrual basis on a straight line basis over the term of the lease;
(c) Cash flow and fair value interest rate risk
turnover rents are based on underlying turnover and are recognised in the period to which the turnover
relates; and
The Group has no significant interest bearing assets. Borrowings issued at variable rates expose the Group to
cash flow interest rate risk.
iii)
rent reviews are recognised with effect from the review date.
(b) Car park income
Contract car park income is recognised on a straight line basis over the relevant period, in accordance with the
contract to which it relates. Daily car park income is recognised when received.
(c) Hotel income
The Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on
its financial position and cash flows. Interest costs may increase as a result of such changes. They may reduce
profits or create losses in the event that unexpected movements arise.
The Group continually reviews interest rates and interest rate risk and has a policy of monitoring the costs and
benefits of interest rate fixing instruments with a view to hedging exposure to interest rate risk on a regular basis.
Room revenue is recognised on a daily basis in accordance with the date of the overnight stay. Food and
beverage revenue is recognised at the point of sale.
At 30 June 2019, 59.4% (2018: 54.5%) of the Group’s borrowings were under long term fixed rate agreements and
therefore were protected against future interest rate volatility.
(d) Interest income
(d) Capital risk
Interest income on any short-term deposits is recognised in the Consolidated Income Statement as it accrues.
(e) Other income
Other income includes dividend income, which is recognised when the right to payment is established and
surrender premiums or lease assignments received from outgoing tenants prior to the termination of their lease.
(f) Service charge income
Service charge income receivable from tenants relating to management fees is recognised on a straight line
basis over the relevant period.
Dividend distribution
Dividend distributions to the Company’s shareholders are recognised in the Consolidated Financial Statements in
the period in which the dividends are approved by the Company’s shareholders.
The Group’s objective in managing capital is to maintain a strong capital base to support current operations and
planned growth and to provide for an appropriate level of dividend payments to shareholders.
The Group is not subject to external regulatory capital requirements.
(e) Price risk
Current asset investments are subject to price risk as a result of fluctuations in the market. The Group limits the
amount of exposure by continually assessing the performance of these investments.
(f) Compliance with covenants
The Group’s bank facilities and the mortgage debenture stock include a number of covenants principally relating
to income and capital cover. The Directors monitor performance against these covenants on a regular basis.
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Town Centre Securities PLC | Annual Report & Accounts 2019Notes to the consolidated financial statements continued
2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The only estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying value amounts of assets and liabilities within the next financial
year are the Group’s property investments. The basis of valuation is set out in Note 12.
3. SEGMENTAL INFORMATION
The chief operating decision-maker has been identified as the Board. The Board reviews the Group’s internal
reporting in order to assess performance and allocate resources. Management has determined the operating
segments based on these reports.
2019
£’000
363,375
31,466
10,300
405,141
2018
£’000
397,577
30,659
11,900
440,136
The car park results also 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 Merrion Centre and development sites for the year ended 30 June 2019, arising from car
park operations, was £3,961,000. After allowing for an allocation of administrative expenses, the operating profit
at these sites was £3,249,000. 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.
4. ADMINISTRATIVE EXPENSES
Employee benefits
Depreciation
Charitable donations
Other
2019
£’000
4,240
339
92
2,186
6,857
2018
£’000
3,919
339
116
2,200
6,574
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2018
During the year the Group obtained the following services from the Group’s auditors at costs as detailed below:
5. SERVICES PROVIDED BY THE GROUP’S EXTERNAL AUDITORS
Property
rental
£’000
Car park
activities
£’000
Hotel
operations
£’000
Total
£’000
Property
rental
£’000
Car park
activities
£’000
Hotel
operations
£’000
Total
£’000
Gross revenue
16,408
12,154
2,627
31,189
15,891
11,516
2,771
30,178
Audit services:
(A) Segmental assets
Property rental
Car park activities
Hotel operations
(B) Segmental results
Other income
Share of post-tax profits
from joint ventures
Operating profit before
valuation movements
Valuation movement on
investment properties
Reversal of impairment
of car parking assets
(Loss)/profit on disposal
of investment properties
Valuation movement on
joint venture properties
Service charge income
Service charge expenses
2,976
(3,990)
–
–
–
–
2,976
2,556
(3,990)
(3,387)
–
–
–
–
2,556
(3,387)
Property expenses
(1,424)
(6,766)
(2,396)
(10,586)
(1,210)
(6,537)
(2,318)
(10,065)
Net revenue
13,970
5,388
231
19,589
13,850
4,979
453
19,282
Administrative expenses
(5,889)
(968)
569
1,075
5
–
–
–
–
(6,857)
(5,627)
(947)
574
888
1,075
1,196
–
–
–
–
–
(6,574)
888
1,196
9,725
4,425
231
14,381
10,307
4,032
453
14,792
(18,308)
–
–
200
(709)
(8)
–
–
–
–
–
–
(18,308)
5,932
–
200
–
1,300
(709)
1,677
(8)
2,561
–
–
–
–
–
–
5,932
1,300
1,677
2,561
Operating (loss)/profit
(9,300)
4,625
231
(4,444)
20,477
5,332
453
26,262
Finance costs
(Loss)/profit before taxation
Taxation
(Loss)/Profit for the year
(8,025)
(12,469)
–
(12,469)
(7,887)
18,375
–
18,375
All results are derived from activities conducted in the United Kingdom.
The results for the car park activities include the car park at the Merrion Centre. As the value of the car park
cannot be separated from the value of the Merrion Centre as a whole, the full value of the Merrion Centre is
included within the assets of the property rental business.
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– Fees payable to the Group auditors for the audit of
the Consolidated Financial Statements
– Audit of the Company’s subsidiaries pursuant to legislation
– Other audit related services
Total audit services
Non-audit services:
– IT consultancy
– Other non-audit services
Total other services
Total auditors’ remuneration
6. EMPLOYEE BENEFITS
Wages and salaries (including Directors’ emoluments)
Social security costs
Other pension costs
Employee benefits detailed above are charged to the Consolidated Income Statement through administrative
expenses and property expenses. Disclosures required by the Companies Act 2006 on Directors’ remuneration,
including salaries, share options, pension contributions and pension entitlement are included on pages 84 to 92
in the Directors’ Remuneration Report and form part of these Consolidated Financial Statements.
The average monthly number of staff employed during the year was 135 (2018: 140). The Group operates
pension arrangements for the benefit of all eligible Directors and employees, which are defined contribution
arrangements. The assets of the arrangements are held separately from those of the Group in independently
administered funds. All of the pension costs in the table above relate to defined contribution schemes.
2019
£’000
2018
£’000
85
10
15
110
–
2
2
112
2019
£’000
4,969
620
115
5,704
82
10
18
110
35
4
39
149
2018
£’000
4,700
575
90
5,365
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Town Centre Securities PLC | Annual Report & Accounts 2019Notes to the consolidated financial statements continued
7. OTHER INCOME
Commission received
Dividends received
Management fees receivable
Dilapidations receipts and income relating to lease premiums
Other
8. FINANCE COSTS
Interest payable on debenture loan stock
Interest payable on bank borrowings
Amortisation of arrangement fees
Total finance costs
9. TAXATION
2019
£’000
172
33
207
85
77
574
2019
£’000
5,698
1,981
346
8,025
2018
£’000
142
29
198
438
81
888
2018
£’000
5,698
1,879
310
7,887
There was no current or deferred tax charge for both of the years presented.
Taxation for the year is lower (2018: lower) than the standard rate of corporation tax in the United Kingdom of 19%
(2018: 19%). The differences are explained below:
Profit before taxation
Profit on ordinary activities multiplied by rate of
corporation tax in the United Kingdom of 19% (2018: 19%)
Effects of:
– United Kingdom REIT tax exemption on net income before revaluations
– United Kingdom REIT tax exemption on revaluations
Total taxation
Factors affecting current and future tax charges
2019
£’000
(12,469)
2018
£’000
18,375
(2,369)
3,491
(1,206)
3,575
–
(1,630)
(1,861)
–
Town Centre Securities PLC elected for group REIT status with effect from 2 October 2007. As a result the Group
no longer pays United Kingdom corporation tax on the profits and gains from its qualifying rental business in the
United Kingdom provided it meets certain conditions. Non-qualifying profits and gains of the Group continue to
be subject to corporation tax as normal.
10. DIVIDENDS
2017 final paid: 8.25p per share
2018 interim paid: 3.25p per share
2018 final paid: 8.50p per share
2019 interim paid: 3.25p per share
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2019
£’000
–
–
4,519
1,728
6,247
2018
£’000
4,386
1,728
–
–
6,114
An interim dividend in respect of the year ended 30 June 2019 of 3.25p per share was paid to shareholders on
21 June 2019. This dividend was paid entirely as a Property Income Distribution (PID).
A final dividend in respect of the year ended 30 June 2019 of 8.5p per share is proposed. This dividend, based on
the shares in issue at 24 September 2019, amounts to £4.5m which has not been reflected in these accounts and
will be paid on 7 January 2020 to shareholders on the register on 6 December 2019. This dividend will comprise
an ordinary dividend of 4.0p per share and a PID of 4.5p.
11. EARNINGS PER SHARE
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
53,161,950 (2018: 53,161,950).
(Loss)/profit for the year and earnings per share
Valuation movement on investment properties
Reversal of impairment of car parking assets
Valuation movement on properties held in joint ventures
Loss/(profit) on disposal of investment and development
properties
EPRA earnings and earnings per share
2019
2018
Earnings
£’000
(12,469)
18,308
(200)
8
709
6,356
Earnings
per share
p
(23.4)
34.5
(0.4)
0.0
1.3
12.0
Earnings
£’000
18,375
(5,932)
(1,300)
(2,561)
(1,677)
6,905
Earnings
per share
p
34.6
(11.2)
(2.4)
(4.8)
(3.2)
13.0
There is no difference between basic and diluted earnings per share.
There is no difference between basic and diluted EPRA earnings per share.
12. NON-CURRENT ASSETS
(A) Investment properties
Valuation at 30 June 2017
Additions at cost
Other capital expenditure
Disposals
(Deficit)/surplus on revaluation
Transfers
Movement in tenant lease incentives
Valuation at 30 June 2018
Additions at cost
Other capital expenditure
Disposals
Deficit on revaluation
Movement in tenant lease incentives
Valuation at 30 June 2019
Freehold
£’000
276,861
9,483
1,656
(9,507)
(3,326)
900
1,851
277,918
16,968
3,469
(14,290)
(17,879)
579
266,765
Long
leasehold
£’000
22,609
–
–
(15)
(2)
(900)
–
21,692
–
–
–
(408)
–
21,284
Development
£’000
27,301
–
140
–
9,260
–
–
36,701
–
271
(500)
(21)
–
Total
£’000
326,771
9,483
1,796
(9,522)
5,932
–
1,851
336,311
16,968
3,740
(14,790)
(18,308)
579
36,451
324,500
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Town Centre Securities PLC | Annual Report & Accounts 2019Notes to the consolidated financial statements continued
12. NON-CURRENT ASSETS CONTINUED
(B) Freehold and leasehold properties – car park activities
Valuation at 30 June 2017
Additions
Depreciation
Deficit on revaluation
Reversal of impairment
Valuation at 30 June 2018
Additions
Depreciation
Surplus on revaluation
Reversal of impairment/(impairment)
Valuation at 30 June 2019
Property income, values and yields have been set out by category in the table below.
Freehold
£’000
2,000
–
–
–
1,000
3,000
–
–
500
250
3,750
Long
leasehold
£’000
20,495
153
(175)
(350)
300
20,423
255
(184)
–
(50)
Total
£’000
22,495
153
(175)
(350)
1,300
23,423
255
(184)
500
200
20,444
24,194
Retail and Leisure
Merrion Centre (excluding offices)
Offices
Hotels
Out of town retail
Distribution
Residential
Development property
Car parks
Finance lease adjustments
Value
£’000
Initial yield
%
Reversionary
yield
%
5.6%
7.3%
8.0%
4.3%
4.0%
6.3%
5.6%
6.2%
6.3%
7.9%
9.0%
6.0%
5.6%
6.6%
5.7%
7.1%
Passing rent
£’000
3,704
7,126
3,867
1,180
1,752
411
617
ERV
£’000
4,179
7,759
4,335
1,630
2,477
427
636
62,650
92,500
45,685
25,800
41,750
6,140
10,500
18,657
21,443
285,025
36,451
22,793
4,425
348,694
The historical cost of freehold and leasehold properties relating to car park activities is £22,425,000
(2018: £22,425,000).
The Company occupies an office suite in part of the Merrion Centre and also at 6 Duke Street in London.
The Directors do not consider this element to be material.
The fair value of the Group’s investment and development properties has been determined principally by
independent, appropriately qualified external valuers CBRE and Jones Lang LaSalle. 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 the income from car parking
and an assessment of their realisable value in their existing state and condition based on market evidence of
comparable transactions.
The effect on the valuation of applying a different yield and a different ERV would be as follows:
Valuation in the Consolidated Financial Statements at an initial yield of 7.2% – £309.1m, Valuation at 5.2% – £403.9m.
Valuation in the Consolidated Financial Statements at a reversionary yield of 8.1% - £313.6m, Valuation at
6.1% – £395.3m.
Property valuations can be reconciled to the carrying value of the properties in the balance sheet as follows:
Externally valued by CBRE
Externally valued by Jones Lang LaSalle
Investment properties valued by the Property Director
Finance lease obligations capitalised
Leasehold improvements
Investment
Properties
£’000
195,345
127,780
251
1,124
–
324,500
Freehold and
Leasehold
Properties
£’000
–
17,000
–
3,301
3,893
24,194
Total
£’000
195,345
144,780
251
4,425
3,893
348,694
Leasehold improvements primarily relate to expenditure incurred on the refurbishment of three car parks in
Watford that are held under operating leases.
All investment properties measured at fair value in the consolidated balance sheet 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
valuers and the Property Director 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.
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Town Centre Securities PLC | Annual Report & Accounts 2019Notes to the consolidated financial statements continued
12. NON-CURRENT ASSETS CONTINUED
(C) Fixtures, equipment and motor vehicles
At 1 July 2017
Additions
Disposals
Depreciation
At 30 June 2018
Net book value at 30 June 2018
At 1 July 2018
Additions
Disposals
Depreciation
At 30 June 2019
Net book value at 30 June 2019
13. GOODWILL
At the start and end of the year
Cost
£’000
4,819
339
(1,526)
–
3,632
3,632
814
(56)
–
4,390
2019
£’000
4,024
Accumulated
depreciation
£’000
2,847
–
(1,517)
758
2,088
1,544
2,088
–
(42)
735
2,781
1,609
2018
£’000
4,024
Goodwill represents the difference between the fair value of the consideration paid on the acquisitions of car
park businesses and the fair value of the assets and liabilities acquired as part of these business combinations.
These transactions relate to businesses that held car parks under operating leases with a net asset value of £nil.
Goodwill therefore represents the full consideration of these acquisitions.
A review of the year end carrying value has been performed to identify any potential impairment. This has been
based on the discounted future cash flows that are expected to be generated by the assets acquired. The cash
generating units are the individual car parks acquired. The key assumptions used in preparing these cash flow
forecasts are an underlying revenue growth rate of 1% (2018: 1%) and a discount rate of 8% (2018: 8%). The
assumptions used in the cash flow are based on historical experience of the sector.
As the discounted future cash flows are in excess of the year end carrying value, no impairment of the carrying
value is required.
14. INVESTMENTS IN JOINT VENTURES
At the start of the year
Investments in joint ventures
Dividends and other distributions received in the year
Share of profits after tax
At the end of the year
Investments in joint ventures are broken down as follows:
Equity
Loans
122
2019
£’000
39,742
723
(28,145)
1,067
13,387
2019
£’000
7,792
5,595
13,387
2018
£’000
27,852
8,809
(676)
3,757
39,742
2018
£’000
34,650
5,092
39,742
Investments in joint ventures primarily relate to the Group’s interest in the partnership capital of Merrion House
LLP and Belgravia Living Group Limited.
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 net assets of Merrion House LLP for the current and previous year are as stated below:
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
The profits of Merrion House LLP for the current and previous year are as stated below:
Revenue
Expenses
Finance costs
Valuation movement on investment properties
Net profit
2019
£’000
69,400
1,178
(2,702)
(52,080)
15,796
2019
£’000
3,328
(33)
(1,406)
1,889
(17)
1,872
2018
£’000
69,400
1,754
(1,374)
–
69,780
2018
£’000
2,134
(92)
–
2,042
5,691
7,733
Belgravia Living Group Limited has recently completed construction of a block of residential apartments in
Piccadilly Basin, Manchester. The Group’s financial interest in this joint venture is primarily in the form of a loan
with a value as at 30 June 2019 of £5.5m (2018: £5.1m).
The net assets of Belgravia Living Group for the current and previous year are as stated below:
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net liabilities
2019
£’000
22,736
540
(23,355)
–
(79)
The profits of Belgravia Living Group Limited for the current and previous year are as stated below:
Expenses
Net profit
2019
£’000
(14)
(14)
2018
£’000
10,466
363
(9,745)
(1,129)
(45)
2018
£’000
(31)
(31)
The Group’s interest in other joint ventures are not considered to be material.
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.
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14. INVESTMENTS IN JOINT VENTURES CONTINUED
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:
Merrion House LLP
Belgravia Living Group Limited
Bay Sentry Limited
15. INVESTMENTS
Current asset investments
At the start of the year
Increase in value of investments
At the end of the year
Beneficial
Interest
%
Activity
50
50
50
Property investment
Property Investment
Software Development
2019
£’000
3,530
2,341
5,871
2018
£’000
2,394
1,136
3,530
Current asset 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 £889,130 (2018: £889,130).
Current asset 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 current asset investments.
Non-current asset investments
Equity investments
Loans
2019
£’000
975
1,535
2,510
2018
£’000
590
1,535
2,125
Non-current asset investments primarily relate to an equity shareholding and loans advanced to
YourParkingSpace Limited, a privately owned company incorporated in the United Kingdom.
The asset is 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.
16. TRADE AND OTHER RECEIVABLES
Trade receivables
Less: provision for impairment of receivables
Other receivables and prepayments
124
2019
£’000
2,955
(411)
2,544
2,810
5,354
2018
£’000
1,539
(458)
1,081
5,207
6,288
The Directors consider that the carrying amount of net trade receivables approximates their fair value. The credit
risk in respect of trade receivables is not concentrated as the Group has many tenants spread across a number of
industry sectors. In addition, the tenants’ rents are payable in advance.
Due to the nature of income, debts are generally recovered in advance and only a small proportion of debt is
overdue at the balance sheet date. As such, the credit risk relating to trade and other receivables in considered to
be low and any expected credit loss would be immaterial.
As at 30 June 2019, trade receivables which had not been impaired can be analysed as follows:
2019
2018
Total
£’000
2,544
1,081
Within
credit terms
£’000
2,124
1,006
211
11
Outside credit terms
Less than
one month
£’000
One to
two months
£’000
Older than
two months
£’000
Movements in the Group provision for impairment of trade receivables are as follows:
At the start of the year
Provision for receivables impairment
Receivables written off as uncollectible
Provision held within acquired subsidiaries
Unused amounts reversed
At the end of the year
10
7
2019
£’000
458
229
(218)
–
(58)
411
199
57
2018
£’000
435
211
(160)
–
(28)
458
The creation and release of the provision for impaired receivables have been included in administrative expenses
in the Consolidated Income Statement.
The ageing of the provision is as follows:
2019
2018
Total
£’000
411
458
Less than
one month
£’000
One to
two months
£’000
Older than
two months
£’000
9
141
19
33
383
284
The only class within trade receivables is rent receivable. Other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables as
mentioned above.
The Group does not hold any material collateral as security.
In assessing whether trade receivables are impaired, each debt is considered on an individual basis and provision
is made based on specific knowledge of each tenant, together with the consideration of appropriate economic
market indicators.
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17. TRADE AND OTHER PAYABLES
Bank overdraft
Trade payables
Social security and other taxes
Other payables and accruals
2019
£’000
23,483
128
529
10,599
34,739
2018
£’000
17,676
140
816
19,322
37,954
The Group’s banking facility has an agreement which allows the right of off-set between fellow group companies.
Interest payments and covenant tests are conducted on a net basis across the accounts within the banking
facility. Whilst management monitors cash on a net basis, the fact that accounts were not actually swept and
netted off at 30 June 2019 has meant that the cash and overdraft balances have been presented on a gross basis.
The prior year cash and bank overdraft balances have been adjusted upwards by £17.676m to allow for consistent
treatment and presentation of the group facility.
18. FINANCIAL LIABILITIES – BORROWINGS
All the Group’s borrowings are either at floating or fixed rates of interest. The Group takes on exposure to
fluctuations in interest rates on its financial position and its cash flows. Interest costs may increase or decrease
as a result of such changes.
Non-current
Bank borrowings
Finance leases
5.375% First mortgage debenture stock
Total borrowings
The movement in financial liabilities during the year can be summarised as follows:
At the start of the year
Cash items
Borrowings drawn down
Arrangement fees paid
Total cash items
Non-cash items
Amortisation of arrangement fees
Movement in finance leases
Total non-cash items
At the end of the year
2019
£’000
2018
£’000
71,862
4,425
105,865
182,152
87,759
4,444
105,854
198,057
2019
£’000
2018
£’000
198,057
191,969
(16,000)
(233)
(16,233)
347
(19)
328
6,500
(704)
5,796
310
(18)
292
182,152
198,057
The debenture, bank loans and overdrafts are secured by fixed charges on properties, valued at £336,825,000
(2018: £339,485,000) owned by the Company and its subsidiary undertakings.
The Group has an overdraft pooling facility in place with Lloyds Bank. This facility includes the right to offset,
therefore the net position of all accounts that fall under this facility have been presented as the Group’s cash
balance at year end.
The gross cash and overdraft balances on the individual accounts are summarised as follows:
Cash balances
Overdrawn balances
Cash and cash equivalents
2019
£’000
23,692
(23,483)
209
2018
£’000
23,149
(17,676)
5,473
The Group’s remaining contractual non-discounted cashflows for financial liabilities is set out below:
In one year or less on demand
In more than one year but not
more than five years
In more than five years
In one year or less on demand
In more than one year but not
more than five years
In more than five years
2019
Trade
and other
creditors
£’000
23,483
Bank
borrowings
£’000
Debenture
stock
£’000
1,750
5,698
–
–
76,690
–
23,483
78,440
22,790
148,163
176,651
2018
Finance
lease
£’000
209
818
17,475
18,502
Total
£’000
18,913
100,298
165,638
284,849
Trade
and other
creditors
£’000
17,676
Bank
borrowings
£’000
Debenture
stock
£’000
Finance lease
£’000
Total
£’000
2,130
5,698
211
28,317
–
–
93,919
–
17,676
96,049
22,790
153,860
182,348
830
17,785
18,826
117,539
171,645
317,501
The debenture issue premium is net of issue costs and is amortised over the life of the debt agreement.
The numbers disclosed in the maturity profile above have been calculated to include notional interest payments,
using the interest rates prevailing at the balance sheet date. The calculation is based on the assumption that the
level of borrowings remains unchanged until maturity.
The Group had undrawn committed floating rate bank facilities as follows:
Expiring in one year or less
Expiring in more than one year
2019
£’000
–
30,500
30,500
2018
£’000
–
14,500
14,500
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Town Centre Securities PLC | Annual Report & Accounts 2019Notes to the consolidated financial statements continued
19. FINANCIAL INSTRUMENTS
The above debenture stock has been valued as at 30 June 2019 on the basis of open market value.
The Group finances its operations through a combination of retained cash flows, debentures, finance leases
and bank borrowings. Procedures are in place to monitor interest rate risk as considered appropriate by
management. Numerical financial instruments disclosures are set out below. Additional disclosures are set out
in the accounting policies relating to financial risk management. The carrying value of short-term receivables
and payables approximate to their fair values. All financial liabilities are denominated in Sterling.
Interest rate risk
The interest rate risk of the Group’s financial liabilities is as follows:
Debenture stock
Bank floating rate liabilities
Finance leases
As at 30 June 2019
As at 30 June 2018
Nominal
value
£’000
Weighted
average rate
%
106,001
72,500
4,425
182,926
5.375
2.41
5.0
Weighted
average
period
Years
12
2
118
Nominal
value
£’000
Weighted
average rate
%
106,001
88,500
4,444
198,945
5.375
2.41
5.0
Weighted
average
period
Years
13
3
119
Floating rate financial liabilities bear interest at rates for term loans based on LIBOR plus an average margin of
1.72% and for the overdraft of 2.00% above base rate.
Facilities provided by banks and other investors are a mixture of fixed rates and floating charge funding. Floating
rate borrowings are exposed to the risk of rising interest rates which the Group manages where necessary by
the use of appropriate financial hedging instruments, primarily interest rate swaps.
An increase in LIBOR by one percentage point would have reduced profit for the year by approximately £735,000
(2018: £803,000).
Financial instruments held for trading purposes
The fair valuation of debenture stock is categorised as Level 1 in the fair value hierarchy as defined in IFRS13 as
inputs are quoted in active markets.
All financing liabilities are held at amortised cost.
Capital management
The Group manages its capital to ensure that entities in the Group will each be able to continue to operate
as a going concern while maximising the return to stakeholders through the optimisation of debt and equity.
The capital structure of the Group consists of financial liabilities per note 18 and equity per the consolidated
statement of changes in equity. The Group’s capital structure is reviewed regularly by the Directors.
The Group is not subject to externally imposed capital requirements.
20. FINANCE LEASES
The Group has a long leasehold interest in two properties that are classified as finance leases.
Future lease payments are as follows:
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In one year or less on demand
In more than one year but not
more than five years
In more than five years
Minimum
lease
payments
£’000
209
818
17,475
18,502
2019
Interest
£’000
209
818
13,050
14,077
Present
value
£’000
–
–
4,425
4,425
Minimum
lease
payments
£’000
211
836
17,785
18,832
2018
Interest
£’000
211
836
13,341
14,388
Present
value
£’000
–
–
4,444
4,444
It is, and has been throughout the year under review, the Group’s policy not to trade in financial instruments.
21. EPRA NET ASSET VALUE PER SHARE
Foreign currency exposure
The Group has no exposure to foreign currency as it has no overseas operations and all sales and purchases are
made in Sterling.
Effective interest rates
The effective interest rates at the balance sheet date were as follows:
Bank overdraft facility
Bank borrowings
Debenture loan
Finance leases
2019
2.75%
2.41%
5.375%
5.0%
2018
2.50%
2.41%
5.375%
5.0%
Fair value of current borrowings
The fair value of bank borrowings and overdrafts approximates to their carrying value.
Fair value of non-current borrowings
Debenture stock
Non-current bank borrowings
128
2019
2018
Book value
£’000
105,865
71,862
Fair value
£’000
116,518
71,862
Book value
£’000
105,854
87,759
Fair value
£’000
111,347
87,759
The Basic and EPRA net asset values are the same, as set out in the table below.
Net assets at 30 June
Shares in issue (000)
Basic and EPRA net asset value per share
22. COMMITMENTS
2019
£’000
188,250
53,162
354p
2018
£’000
204,125
53,162
384p
The Group has no capital commitments (2018: £nil) in respect of capital expenditure contracted for at the
balance sheet date but not yet incurred, for investment and development property.
Minimum total future lease payments receivable:
Within one year
One to five years
In more than five years
2019
£’000
13,821
40,713
83,364
2018
£’000
14,224
45,444
88,591
The Group has a wide range of leases in place with tenants across a broad range of properties, sectors, tenures
and rental values.
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Company balance sheet
as at 30 June 2019
Fixed assets
Investment properties
Property, plant and equipment
Investments
Current assets
Investments
Debtors
Cash
Creditors: amounts falling due within one year
Financial liabilities – borrowings
Other creditors
Net current liabilities
Total assets less current liabilities
Financial liabilities – borrowings
Net assets
Equity attributable to the owners of the Parent
Called up share capital
Share premium account
Capital redemption reserve
Other reserves
Profit and loss account
Total shareholders’ funds
Company number: 00623364
Notes
2019
£’000
2018
£’000
4
4
5
6
7
9
8
9
102,026
872
256,798
359,696
5,871
96,626
22
102,519
(20,337)
(132,519)
(152,856)
(50,337)
309,359
(177,727)
131,632
92,984
457
255,909
349,350
3,530
121,520
20
125,070
(16,270)
(131,709)
(147,979)
(22,909)
326,441
(193,613)
132,828
10
13,290
13,290
200
559
80,057
37,526
131,632
200
559
80,057
38,722
132,828
As permitted by Section 408 of the Companies Act 2006, the Parent Company’s Profit and Loss Account has not
been included in these financial statements. The profit shown in the financial statements of the Parent Company
was £5,051,000 (2018: £11,106,000).
The financial statements on pages 131 to 141 were approved by the Board of Directors on 24 September 2019 and
signed on its behalf by
Dr. Edward Ziff OBE DL
Chairman & Chief Executive
22. COMMITMENTS CONTINUED
Minimum total future lease payments payable:
Within one year
One to five years
In more than five years
2019
£’000
1,411
5,643
25,511
2018
£’000
1,411
5,643
26,922
Future lease commitments relate to five car parks operated under lease agreements. The annual rent for these
car parks ranges from £175,000 to £400,000 and the remaining term on the leases are all less than 35 years.
The expense recognised in relation to operating lease agreements for the year ended 30 June 2019 was
£1,411,000 (2018: £1,400,000).
23. CALLED UP SHARE CAPITAL
Authorised
The authorised share capital of the company is 164,879,000 (2018: 164,879,000) Ordinary Shares of 25p each.
The nominal value of authorised share capital is £41,219,750 (2018: £41,219,750).
Issued and fully paid up
At 30 June 2018 and 30 June 2019
Number of shares
000
Nominal value
£’000
53,162
13,290
The Company has only one type of Ordinary Share class in issue. All shares have equal entitlement to voting
rights and dividend distributions.
24. CASH FLOWS FROM OPERATING ACTIVITIES
(Loss)/profit for the financial year
Adjustments for:
Depreciation
Profit on disposal of fixed assets
Loss/(profit) on disposal of investment properties
Finance costs
Share of post tax profits from joint ventures
Movement in valuation of investment and development properties
Movement in lease incentives
Reversal of impairment of car parking assets
(Increase)/decrease in receivables
(Decrease)/increase in payables
Cash generated from operations
2019
£’000
(12,469)
919
(9)
709
8,025
(1,067)
18,308
(579)
(200)
(2,074)
(473)
11,090
2018
£’000
18,375
933
–
(1,677)
7,887
(3,757)
(5,932)
(1,851)
(1,300)
144
1,413
14,235
25. REMUNERATION OF KEY MANAGEMENT PERSONNEL
The remuneration of the Executive Directors, who are the key management personnel of the Group, is set out
below in aggregate for each of the applicable categories specified in IAS 24 ‘Related Party Disclosures’. Further
information about the remuneration of individual Directors is provided in the audited part of the Directors’
Remuneration Report on page 88.
Short-term employee benefits
Post-employment benefits
130
2019
£’000
1,865
102
1,967
2018
£’000
2,332
66
2,398
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Statement of changes in equity
for the year ended 30 June 2019
Notes to the company financial statements
Balance at 30 June 2017
Comprehensive income for the year
Profit
Total comprehensive income for the year
Contributions by and distributions to owners
Final dividend relating to the year ended
30 June 2017
Interim dividend relating to the year ended
30 June 2018
Called
up share
capital
£’000
13,290
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Other
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
200
559
80,057
33,730
127,836
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11,106
11,106
11,106
11,106
(4,386)
(4,386)
(1,728)
(1,728)
Balance at 30 June 2018
13,290
200
559
80,057
38,722
132,828
Comprehensive income for the year
Profit
–
–
–
–
Total comprehensive income for the year
Contributions by and distributions to owners
Final dividend relating to the year ended
30 June 2018
Interim dividend relating to the year ended
30 June 2019
5,051
5,051
5,051
5,051
(4,519)
(4,519)
(1,728)
(1,728)
Balance at 30 June 2019
13,290
200
559
80,057
37,526
131,632
132
1. ACCOUNTING POLICIES
Basis of Preparation
The Company Financial Statements have been prepared in accordance with FRS 102, (The Financial Reporting
Standard applicable in the United Kingdom and Republic of Ireland), the going concern basis, the historical cost
convention as modified by the revaluation of investment properties and certain investments and in accordance
with the Companies Act 2006 and applicable law.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting
estimates. It also requires management to exercise judgement in applying the Company’s accounting policies
(see note 2).The principal accounting policies, which have been applied consistently, are as set out below:
Financial reporting standard 102 – reduced disclosure exemptions
The Company has taken advantage of the following disclosure exemptions in preparing these financial
statements, as permitted by the FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic
of Ireland’:
• the requirements of Section 4 Statement of Financial Position paragraph 4.12(a)(iv);
• the requirements of Section 7 Statement of Cash Flows;
• the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
• the requirements of Section 11 Financial Instruments paragraphs 11.41(b), 11.41(c), 11.41(e), 11.41(f), 11.42,
11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
• the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b)
and 12.29A;
• the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the Consolidated Financial Statements of Town Centre Securities PLC as at
30 June 2018 and these financial statements may be obtained from Companies House, Cardiff CF4 3UZ.
Deferred taxation
Town Centre Securities PLC elected for group REIT status with effect from 2 October 2007. As a result the
Company no longer pays United Kingdom corporation tax on the profits and gains from qualifying rental business
in the United Kingdom provided it meets certain conditions. Non-qualifying profits and gains of the Company
continue to be subject to corporation tax as normal. On entering the REIT regime an entry charge equal to 2% of
the aggregate market value of the properties associated with the qualifying rental business was payable. Deferred
tax accrued at the date of conversion in respect of the assets and liabilities of the qualifying rental business was
released to the income statement as the relevant temporary differences are no longer taxable on reversal. From
17 July 2012 there is no REIT entry charge payable where the Company makes acquisitions of companies owning
qualifying properties.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance
sheet date, where transactions or events that result in an obligation to pay more tax in the future or a right to pay
less tax in the future have occurred at the balance sheet date.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing
differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted
by the balance sheet date. Deferred tax is measured on an undiscounted basis.
Investment properties
Investment properties are included in the accounts at open market values based on an independent external
valuation, as at 30 June each year, or held at Directors’ valuation. Movements in fair value are taken through the
Income Statement.
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Town Centre Securities PLC | Annual Report & Accounts 2019
Notes to the company financial statements continued
1. ACCOUNTING POLICIES CONTINUED
Investments
Investments are held on the balance sheet at fair value. Any fair value gains and losses are taken to the
income statement.
Investment income
Income from investments is accounted for on the payment date of the dividends.
Investment in subsidiary undertakings
Investments in subsidiary undertakings are stated in the balance sheet of the Company at cost less impairment.
Trade receivables
Trade receivables are recognised initially at fair value and are subsequently measured at cost less provision for
impairment. A provision for impairment of trade receivables is established when there is objective evidence
that the Group will not be able to collect all amounts due according to the original terms of the receivables
concerned. The amount of the provision is recognised in the Consolidated Income Statement.
Cash and cash equivalents
Cash and cash equivalents are carried in the Balance Sheet at cost. Cash and cash equivalents comprise cash in
hand, deposits held at call with banks, other short-term, highly liquid investments with original maturities of three
months or less and bank overdrafts. Bank overdrafts are included within borrowings in current liabilities on the
Balance Sheet. Where there is a formal legal arrangement with a right to offset the net position of the individual
accounts will be presented in cash or current liabilities as appropriate.
Joint ventures
Cash flow hedges
Where a derivative is designated as a hedge of the variability of a highly probable forecast transaction, e.g. an
interest payment, the element of the gain or loss on the derivative that is an effective hedge is recognised directly
in equity. When the forecast transaction subsequently results in the recognition of a financial asset or a financial
liability, the associated gains or losses that were recognised directly in equity are reclassified into the Income
Statement in the same period or periods during which the asset acquired or liability assumed affects the Income
Statement, i.e. when interest income or expense is recognised.
Reserves
Reserves are analysed in the following categories:
• Share capital represents the nominal value of issued share capital
• Share premium represents any consideration received in excess of nominal value of the shares issued
• Capital redemption reserve represents the nominal value of the Company’s own shares that have been
repurchased and cancelled
• Other reserves relates to the revaluation of the company’s investments
• Retained earnings represents the cumulative profit or loss position less dividend distributions.
2. JUDGEMENTS IN APPLYING ACCOUNTING POLICIES AND KEY SOURCES
OF ESTIMATION UNCERTAINTY
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will,
by definition, seldom equal the related actual results. The only estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying value amounts of assets and liabilities within the next
financial year are investment properties (note 4).
A joint venture is a contractual arrangement whereby the Company and other parties undertake an economic
activity that is subject to joint control.
3. EMPLOYEE BENEFITS
Investments in jointly controlled entities are valued at cost less impairment.
Turnover
Turnover, which excludes value added tax, represents the invoiced value of rent and services supplied to
customers. Rental income is accounted for as it falls due in accordance with the lease to which it relates.
Unamortised tenant lease incentives
Leasehold incentives given to tenants on entering property leases are recognised as unamortised lease
incentives. The operating lease incentives are spread over the non-cancellable life of the lease. Where this ends
with a clean break clause the incentives are spread to this date unless management is reasonably certain that the
break will not be exercised.
Derivative financial instruments (derivatives) and hedge accounting
The Company occasionally uses interest rate swaps to help manage its interest rate risk. In accordance with its
treasury policy, the Company does not hold or issue derivatives for trading purposes.
The Company documents at the inception of the transaction the relationship between hedging instruments
and hedged items, as well as its risk management objectives and strategy for undertaking various hedging
transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis,
of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair
value or cash flows of hedged items.
All derivatives are initially recognised at fair value at the date the derivative is entered into and are subsequently
re-measured at fair value. The fair value of interest rate swaps is based on broker quotes.
The method of recognising the resulting gain or loss depends on whether the derivative is designated as a
hedging instrument.
134
Wages and salaries (including Directors’ emoluments)
Social security costs
Other pension costs
2019
£’000
3,086
369
62
3,517
2018
£’000
2,693
452
58
3,203
Employee benefits are charged to the Profit and Loss account through administrative expenses.
All of the pension costs in the table above relate to define contribution schemes.
The aggregate remuneration of the Directors of the Company was £1,967,000 (2018: £2,398,000).
The average monthly number of staff employed during the year was 56 (2018: 56). Disclosures required by the
Companies Act 2006 on Directors’ remuneration, including salaries, share options, pension contributions and
pension entitlement, are included on page 88 in the Remuneration Report and form part of the Consolidated
Financial Statements. The remuneration paid to the Parent Company auditors in respect of the audit of the
Parent Company Financial Statements for the year ended 30 June 2019 is included in note 5 to the Consolidated
Financial Statements.
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Town Centre Securities PLC | Annual Report & Accounts 2019
Notes to the company financial statements continued
4. TANGIBLE ASSETS
Investment properties
Valuation at 30 June 2018
Additions
Valuation movement
Movement in tenant lease incentives
Valuation at 30 June 2019
Freehold
£’000
49,494
14,709
(5,401)
(166)
58,636
Long leasehold
£’000
Development
£’000
7,340
–
(350)
–
6,990
36,150
271
(21)
–
Total
£’000
92,984
14,980
(5,772)
(166)
5. FIXED ASSET INVESTMENTS
Shares in Group undertakings
At 1 July
Additions
At 30 June
36,400
102,026
Other investments
The above freehold and long leasehold properties have been valued as at 30 June 2019 on the basis of open
market value by Jones Long LaSalle and CBRE in accordance with the Royal Institution of Chartered Surveyors
Appraisal and Investment Manual.
Fixtures, equipment and motor vehicles
Balance at 30 June 2018
Additions
Disposals
Depreciation
Balance at 30 June 2019
Net book value at 30 June 2019
Net book value at 30 June 2018
Total tangible assets
At 30 June 2019
At 30 June 2018
Cost
£’000
1,484
699
(56)
–
2,127
Accumulated
depreciation
£’000
1,027
–
(42)
270
1,255
872
457
102,898
93,441
136
2019
£’000
2018
£’000
248,693
248,693
–
–
248,693
248,693
2,125
385
2,510
5,091
372
132
–
–
1,950
175
2,125
–
4,985
106
–
–
5,595
256,798
5,091
255,909
At 1 July
Additions
At 30 June
Interest in joint ventures
At 1 July
Loans advanced
Share of profits after tax
Dividends received
Transferred to shares in Group undertakings
At 30 June
Total fixed asset investments
As permitted by Section 615 of the Companies Act 2006, where the relief afforded under Section 612 of the
Companies Act 2006 applies, cost is the aggregate of the nominal value of shares issued plus the fair value of
any other consideration given to acquire the share capital of the subsidiary undertakings.
6. LISTED INVESTMENTS
At 1 July
Increase in value of investments
At 30 June
2019
£’000
3,530
2,341
5,871
2018
£’000
2,394
1,136
3,530
Listed investments, all of which are listed on a recognised stock exchange, are stated at market value in the table
above and have a historic cost of £889,130 (2018: £889,130).
7. DEBTORS
Trade debtors
Less: provision for impairment of debtors
Amounts owed by subsidiary undertakings
Other debtors and prepayments
2019
£’000
383
(72)
311
95,176
1,139
96,626
2018
£’000
169
(68)
101
120,988
431
121,520
The expense recognised in relation to the impairment of debtors for the year ended 30 June 2019 was £1,000
(2018: £1,000).
Amounts owed by subsidiary undertakings are unsecured, interest free and repayable on demand.
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Town Centre Securities PLC | Annual Report & Accounts 2019Shareholder Information
Notes to the company financial statements continued
8. OTHER CREDITORS
Trade payables
Taxation and social security
Amounts owed to subsidiary undertakings
Other payables and accruals
2019
£’000
36
–
128,807
3,676
132,519
2018
£’000
35
22
120,242
11,410
131,709
Amounts owed to subsidiary undertakings are unsecured, interest free and repayable on demand.
9. FINANCIAL INSTRUMENTS
The Company’s borrowings are at both floating and fixed rates of interest. The Company takes on exposure to
fluctuations in interest rates on its financial position and cash flows. Interest costs may increase or decrease as a
result of such changes.
Interest rate risk
The interest rate risk of the Company’s financial liabilities is as follows:
Debenture stock
Bank floating rate liabilities
As at 30 June 2019
As at 30 June 2018
Nominal value
£’000
106,001
92,837
198,838
Weighted
average rate
%
5.375
2.41
Weighted
average
period
Years
12
3
Nominal value
£’000
106,001
104,750
210,751
Weighted
average rate
%
5.375
2.41
Weighted
average
period
Years
13
3
Floating rate financial liabilities bear interest at rates for term loans based on LIBOR plus an average margin of
1.72% and for the overdraft of 2.00% above base rate.
Financial instruments held for trading purposes
It is, and has been throughout the year under review, the Company’s policy not to trade in financial instruments.
2019
£’000
2018
£’000
Foreign currency exposure
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Non-current
Bank borrowings
5.375% First mortgage debenture stock
Current
Bank borrowings
Total borrowings
71,862
105,865
177,727
20,337
198,064
87,759
105,854
193,613
16,270
209,883
The debenture, bank loans and overdrafts are secured by fixed charges on properties, valued at £336,825,000
(2018: £339,485,000) owned by the Company and its subsidiary undertakings.
The debenture issue premium is net of issue costs and is amortised over the life of the debt agreement.
The Company had undrawn committed floating rate bank facilities as set out below:
Expiring in one year or less
Expiring in more than one year
2019
£’000
–
30,500
30,500
2018
£’000
–
14,500
14,500
Included within facilities expiring in one year or less are overdraft facilities subject to annual review. There are
net cash balances of £21,743,000 held by other Group companies which offset the Company’s overdraft on
consolidation. The total overdraft facility is based on the Group’s right of set off. Other facilities are available
to provide funding for future investments.
The Company finances its operations through a combination of retained cash flows, debentures and bank
borrowings. Procedures are in place to monitor interest rate risk as considered appropriate by management.
Numerical financial instruments disclosures are set out overleaf.
All financial liabilities are denominated in Sterling.
138
The Group has no exposure to foreign currency as it has no overseas operations and all sales and purchases are
made in Sterling.
Effective interest rates
The effective interest rates at the balance sheet date were as follows:
Bank overdraft facility
Bank borrowings
Debenture loan
Fair values of current borrowings
2019
2.75%
2.41%
5.375%
2018
2.50%
2.41%
5.375%
Where market values are not available, fair values of financial assets and liabilities have been calculated by
discounting expected future cash flows at prevailing interest rates and by applying year end exchange rates.
The carrying amounts of short-term borrowings approximate to book value.
Fair value of non-current borrowings
2019
2018
Book value
£’000
105,865
71,862
Fair value
£’000
116,518
71,862
Book value
£’000
105,854
87,759
Fair value
£’000
111,347
87,759
Debenture stock
Long-term bank borrowings
10. CALLED UP SHARE CAPITAL
Authorised
164,879,000 (2018: 164,879,000) Ordinary Shares of 25p each.
Issued and fully paid up
At 30 June 2018 and 30 June 2019
Number of shares
000
Nominal value
£’000
53,162
13,290
The Company has only one type of Ordinary Share class in issue. All shares have equal entitlement to voting
rights and dividend distributions.
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Town Centre Securities PLC | Annual Report & Accounts 2019
Notes to the company financial statements continued
11. SUBSIDIARY COMPANIES
The Company’s wholly owned active subsidiary undertakings at 30 June 2019, registered in England or Scotland
and operating in the United Kingdom, are as follows:
Company number
Activity
Held directly
TCS Holdings Limited
Dundonald Property Investments Limited
Buckley Properties (Leeds) Limited
Citipark plc
TCS Development Management (Merrion) Limited
TCS (Residential Conversions) Limited
TCS (Property Management) Limited*
TCS Trustees Limited*
TCS Properties Limited*
TCS (Whitehall Plaza) Limited
TCS (9 Cheapside) Limited
TCS (Tariff Street) Limited
TCS (Brownsfield Mill) Limited
TCS (Merrion Hotel) Limited
Apperley Bridge Limited
TCS Park Row Limited
Citipark UK Limited
TCS (Merrion House JVC02) Limited
Tassgander Limited
Blackpool Markets Limited
Emett Exhibitions Limited
Milngavie East Limited
No 29 Management Co (Eastgate) Limited
T Herbert Kaye’s Estates Limited
TCS (Bolton) Limited
TCS Piccadilly Limited
TCS Whitehall Riverside Limited
TCS (Rochdale JV) Limited
TCS (Rochdale Management) Limited
TCS Car Parks Limited
TCS Eastgate Limited
TCS Finance Limited
TCS Trading Limited
The Merrion Centre Limited
Town Centre Enterprises Limited
Town Centre Securities (Developments) Limited
Town Centre Securities (Manchester) Limited
Town Centre Securities (Scotland) Limited
Town Centre Services Limited
TCS plc
TCS (EX TCCP) plc
2271353
3672365
647309
8837214
8696141
3946495
5281225
3112923
2831154
9922032
10139127
09929851
10291290
10380988
6879596
8077103
8837203
8561356
4077297
2740190
1544918
SC464805
3873683
0226678
4104688
4317396
4329860
7712764
7712123
4847697
6554827
3108777
3060862
0814845
0221003
3946549
0129485
0748937
2285764
4329979
3385312
Property investment
Property investment
Property investment
Car park operations
Property investment
Property investment
Management company
Trustee for employee benefit plans
Property investment
Property investment
Property investment
Property investment
Property investment
Hotel operator
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
140
Held indirectly
TCS Freehold Investments Limited
TCS Leasehold Investments Limited
Town Centre Car Parks Limited
TCCP (Clarence Dock) Limited
TCS (Milngavie) Limited
TCS (Merrion House JVC01) Limited
Dundonald (Cumbernauld) Limited
TCS (Bothwell Street) Limited
Dundonald Property Developments Limited
Riverside (Leeds) Limited
TCS (Greenhithe) Limited
TCS (Isleworth) Limited
TCS (Parliament Street 1) Limited
TCS (Parliament Street 2) Limited
TCS Energy Limited
TCS (Mill Hill) Limited
TCS (Residential) Limited
TCS Solar Limited
Company number
Activity
3684812
3684827
5494592
6219875
6391627
8561354
5983938
4240551
6430444
4569350
4413344
4413343
4768830
4768845
4414144
4413341
4249007
5113915
Property investment
Property investment
Car park operations
Car park operations
Property investment
Property investment
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
*
The subsidiaries marked with an asterisk above are exempt from preparing audited statutory accounts under section 479a of the Companies Act 2006.
The registered office of all subsidiaries is at the following address:
Town Centre House
The Merrion Centre
Leeds
LS2 8LY
The Company’s directly owned joint ventures, which are all registered in England and operate in the United
Kingdom, are as follows:
Belgravia Living Group Limited
Bay Sentry Limited
Proportion of
Ordinary Shares held
%
Activity
50
50
Property Investment
Software Development
The registered offices of joint ventures are as follows:
Belgravia Living Group Limited
Middleton House
Westland Road
Leeds
LS11 5UH
Bay Sentry Limited
Town Centre House
The Merrion Centre
Leeds
LS2 8LY
The Company also has an indirect 50% interest in Merrion House LLP, which has the same registered office
as the Company.
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Town Centre Securities PLC | Annual Report & Accounts 2019
Notice of Annual General Meeting
Notice is hereby given that the 2019 Annual General Meeting (the ‘Meeting’) of Town Centre Securities PLC
(the ‘Company’) will be held at Town Centre House, The Merrion Centre, Leeds, LS2 8LY on Monday
25 November 2019 at 10.30am.
You will be asked to consider and, if thought fit, to pass the resolutions below. Resolutions 1 to 15 will be
proposed as ordinary resolutions. For an ordinary resolution to be passed, a simple majority of the votes cast
must vote in favour of the resolution. Resolutions 16 to 19 will be proposed as special resolutions. For a special
resolution to be passed, at least 75% of the votes cast must vote in favour of the resolution.
ORDINARY RESOLUTIONS
Resolution 1: Annual Financial Statements and Directors’ Report
1.
To receive the Company’s annual financial statements (together with the Directors’ Report and the auditors’
report) for the financial year ended 30 June 2019.
Resolution 2: Directors’ Remuneration Report
2.
To approve the Directors’ Remuneration Report set out on pages 84 to 92 of the Company’s 2019 Annual
Report for the year ended 30 June 2019 (excluding the Directors’ Remuneration Policy included in the
report).
Resolution 3: Final Dividend
3.
To declare a final cash dividend recommended by the Board for the year ended 30 June 2019 of 8.50 pence
per Ordinary Share, to be paid on 7 January 2020, to shareholders whose names appear on the register at
close of business on 6 December 2019.
Resolutions 4 to 11: Re-election of Directors
4.
To re-elect Michael Ziff as a Non-Executive Director of the Company.
5.
To re-elect Ian Marcus as a Non-Executive Director of the Company.
6.
To re-elect Paul Huberman as a Non-Executive Director of the Company.
7.
To re-elect Jeremy Collins as a Non-Executive Director of the Company.
8.
To re-elect Edward Ziff as an Executive Director of the Company.
9.
To re-elect Benjamin Ziff as an Executive Director of the Company.
10. To re-elect Lynda Shillaw as an Executive Director of the Company.
11. To re-elect Mark Dilley as an Executive Director of the Company
Resolution 12: Re-appointment of Auditors
12.
To re-appoint BDO LLP as the auditors of the Company, to hold office from the conclusion of this Meeting
until the conclusion of the next General Meeting at which annual financial statements are laid before the
Company’s shareholders.
Resolution 13: Remuneration of Auditors
13. To authorise the Directors to determine the remuneration of the Company’s auditors.
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Resolution 14: Authority to Make Political Donations
14.
To authorise, in accordance with Part 14 of the UK Companies Act 2006 (the ‘Act’), the Company and all
companies that are subsidiaries of the Company at the date on which this resolution is passed, or at any
time when this resolution has effect to:
(a) make political donations to political parties and/or independent election candidates;
(b) make political donations to political organisations other than political parties; and
(c)
incur political expenditure,
(as such terms are defined in the Act), up to an aggregate amount of £50 000, and the amount authorised
under each of paragraphs (a) to (c) above shall also be limited to such amount, during the period beginning
on the date of the passing of this resolution and ending at the conclusion of the next Annual General
Meeting of the Company to be held in 2020. Upon the passing of this resolution, all existing authorisations
and approvals relating to political donations or expenditure under Part 14 of the Act shall be revoked without
prejudice to any donation made, or expenditure incurred, prior to the passing of this resolution pursuant
to such authorisation or approval. For the purpose of this resolution, the terms ‘political donation’, ‘political
parties’, ‘independent election candidates’, ‘political organisation’ and ‘political expenditure’ shall have the
meanings given by sections 363 to 365 of the Act.
Resolution 15: Authority to Allot Ordinary Shares
15.
To generally and unconditionally authorise the Board, in substitution for any existing authority, but without
prejudice to the exercise of any such authority prior to the date of the passing of this resolution, pursuant to
and in accordance with section 551 of the Act to exercise all the powers of the Company to allot shares in
the Company or grant rights to subscribe for or to convert any security into shares in the Company:
(a)
(b)
up to an aggregate nominal amount of £4,430,162.50 (representing 17,720,650 Ordinary Shares)
(such amount to be reduced by any allotments or grants made under paragraph (b) below in excess
of such sum); and
comprising equity securities (as defined in the Act) up to a nominal amount of £8,860,325
(representing 35,441,300 Ordinary Shares) (such amount to be reduced by any allotments or grants
made under paragraph (a) above) in connection with an offer by way of a rights issue:
(i)
(ii)
to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings;
and
to holders of other equity securities as required by the rights of those securities or as the Board
otherwise considers necessary,
and so that the Board may impose any limits or restrictions and make any arrangements which it considers
necessary, expedient or appropriate to deal with treasury shares, fractional entitlements, record dates,
legal, regulatory or practical problems in, or under the laws of, any territory or any other matter, provided
that this authority shall expire at the conclusion of the next annual general meeting of the Company, to be
held in 2020, or 25 February 2021, whichever is earlier, save that the Company may, before such expiry,
make an offer or enter into an agreement which would or might require shares to be allotted, or rights to
subscribe for or to convert securities into shares to be granted, after such expiry; and the Board may allot
shares or grant such rights in pursuance of such an offer or agreement as if the authority conferred hereby
had not expired.
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Town Centre Securities PLC | Annual Report & Accounts 2019
Notice of Annual General Meeting continued
SPECIAL RESOLUTIONS
Resolution 16: Authority to Disapply Pre-emption Rights
16.
That, if resolution 15 above is passed, the Board be given power to allot equity securities (as defined in
the Act) for cash under the authority given by that resolution and/or to sell Ordinary Shares held by the
Company as treasury shares for cash as if section 561 of the Act did not apply to any such allotment or sale,
such power to be limited:
(a)
to the allotment of equity securities and sale of treasury shares in connection with an offer of, or
invitation to apply for, equity securities (but in the case of the authority granted under paragraph (b)
of resolution 15, by way of a rights issue only):
(i)
(ii)
to ordinary shareholders in proportion (as nearly as may be practicable) to their existing
holdings; and
to holders of other equity securities, as required by the rights of those securities, or as the Board
otherwise considers necessary,
and so that the Board may impose any limits or restrictions and make any arrangements which it considers
necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory
or practical problems in, or under the laws of, any territory or any other matter; and
(b)
in the case of the authority granted under paragraph (a) of resolution 16 and/or in the case of any sale
of treasury shares, to the allotment of equity securities or sale of treasury shares (otherwise than under
paragraph (a) above) up to a nominal amount of £664,524.25,
such power to apply until the end of the next Annual General Meeting to be held in 2020, or 25 February
2021, whichever is earlier, but, in each case, during this period the Company may make offers and enter into
agreements, which would, or might, require equity securities to be allotted (and treasury shares to be sold)
after the power ends and the Board may allot equity securities (and sell treasury shares) under any such
offer or agreement as if the power had not ended.
Resolution 17: Additional Authority to Disapply Pre-emption Rights for Purposes of Acquisitions
or Capital Investments
17.
That, if resolution 15 above is passed, the Board be given the power, in addition to any power granted under
resolution 16 above, to allot equity securities (as defined in the Act) for cash under the authority granted
under paragraph (a) of resolution 15 and/or to sell Ordinary Shares held by the Company as treasury shares
for cash as if section 561 of the Act did not apply to any such allotment or sale, such power to be:
(a)
(b)
limited to the allotment of equity securities or sale of treasury shares up to a nominal amount of
£664,524.25; and
used only for the purposes of financing a transaction which the Board determines to be an acquisition
or other capital investment of a kind contemplated by the Statement of Principles on Disapplying
Pre-Emption Rights most recently published by the Pre-Emption Group prior to the date of this notice,
or for the purposes of refinancing such a transaction within six months of it taking place,
such power to apply until the end of the next Annual General Meeting to be held in 2020, or 25 February
2021, whichever is earlier, but, in each case, during this period the Company may make offers and enter into
agreements, which would, or might, require equity securities to be allotted (and treasury shares to be sold)
after the power ends and the Board may allot equity securities (and sell treasury shares) under any such
offer or agreement as if the power had not ended.
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Resolution 18: Authority to purchase Company’s own shares
18.
That the Company be generally and unconditionally authorised for the purpose of Section 701 of the Act to
make market purchases (within the meaning of Section 693(4) of the Act) of Ordinary Shares of £0.25 each
in the capital of the Company, provided that:
(a)
the maximum number of Ordinary Shares which may be purchased is 7,974,292;
(b)
the minimum price, exclusive of any expenses, which may be paid for each Ordinary Share is £0.25;
(c)
the maximum price, exclusive of any expenses, which may be paid for each Ordinary Share is an
amount equal to the higher of:
(i)
105% of the average mid-market value of an Ordinary Share, as derived from the London Stock
Exchange Daily Official List for the five business days prior to the day on which the purchase is
made; and
(ii)
an amount equal to the higher of the price of the last independent trade of an Ordinary Share and
the highest current independent bid for an Ordinary Share.
(d)
this authority shall expire on the date of the next Annual General Meeting of the Company or on 25
February 2021 whichever is the earlier, but, in each case, provided that the Company may, before such
expiry, enter into a contract or contracts to purchase shares which will or may be executed wholly or
partly after the expiry of such authority and the Company may make a purchase of shares under such
contract or contracts as if the authority had not expired.
Resolution 19: Notice of General Meetings, other than Annual General Meetings
19.
That a general meeting (other than an Annual General Meeting) of the Company may be called on not less
than 14 clear days’ notice.
By order of the Board.
Link Company Matters Limited
Company Secretary
24 September 2019
Registered Office:
Town Centre House,
The Merrion Centre,
Leeds LS2 8LY
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Town Centre Securities PLC | Annual Report & Accounts 2019
Notice of Annual General Meeting continued
EXPLANATORY NOTES
Ordinary Resolutions
Resolution 1: To receive the Annual Financial Statements and Directors’ Report
Under the Company’s Act 2006, the Directors are required to present the Strategic Report, Directors’ Report,
Auditor’s Report and Annual Financial Statements of the Company to the Meeting. These are contained in
the Company’s 2019 Annual Report and Financial Statements for the year ended 30 June 2019 (the ‘Annual
Report’), which was circulated at the time of this Notice and is also available on the Company’s website at
www.tcs-plc.co.uk.
Resolutions 2: Directors’ Remuneration Report (excluding the Directors’ Remuneration Policy)
for the year ended 30 June 2019
Under the Companies Act 2006 (the ‘Act’), the Directors must prepare an Annual Report detailing the
remuneration of the Directors and a statement by the Chairman of the Remuneration Committee (together, the
‘Directors’ Remuneration Report’). The Act also requires that a resolution be put to shareholders each year for
their approval of that report. The Directors’ Remuneration Report can be found on pages 84 to 92 of the Annual
Report. Resolution 2 is an advisory vote only and the Directors’ entitlement to remuneration is not conditional on
it. No changes are proposed to the remuneration policy approved by shareholders at the Annual General Meeting
held in 2017.
Resolutions 3: Final Dividend
The Board proposes a final dividend of 8.50 pence per share in respect of the year ended 30 June 2019 If
approved, the recommended final dividend will be paid on 7 January 2020 to all ordinary shareholders who are
on the register of members on 6 December 2019.
Resolutions 4 to 11: Re-election of Directors
The Board has agreed a policy whereby all Directors will seek annual re-election at the AGM, in accordance with
the FRC Code of Corporate Governance.
The Board believes that each Director seeking re-election continues to have the requisite skills and experience,
and demonstrates the necessary commitment, to contribute effectively to the Board. The biographical details of
the Directors seeking re-election at the Meeting are set out on pages 70 to 71 of the Annual Report.
None of the independent Non-Executive Directors seeking re-election at the Meeting has any existing or previous
relationship, transaction or arrangement with the Company, nor with any controlling shareholder of the Company
or any associate of a controlling shareholder of the Company, within the meaning of Listing Rule 13.8.17R(1). In
considering the independence of the Non-Executive Directors, the Board has taken into account guidance from
the UK Corporate Governance Code.
Resolution 12: Re-appointment of Auditor
At each general meeting at which the Company’s annual financial statements are presented to its members, the
Company is required to appoint an auditor to serve until the next such meeting. The Board, on the recommendation
of the Audit Committee, recommends the re-appointment of BDO LLP as auditors of the Company.
Resolution 13: Remuneration of Auditor
The remuneration of the Company’s auditor must be fixed by the Company in a general meeting or in such
manner as the Company may determine in a general meeting. This resolution gives authority to the Directors to
approve the terms of engagement and determine the remuneration of the Company’s auditors.
Resolution 14: Authority to make political donations
Under the Act, political donations to any political parties, independent election candidates or political
organisations other than political parties, or the incurring of political expenditure, are prohibited unless
authorised by shareholders in advance.
As the legislation is capable of wide interpretation, the terms ‘political donation’, a ‘political party’, a ‘political
organisation’ or ‘political expenditure’ are not easy to define. For example, sponsorship, subscriptions, payment
of expenses, paid leave for employees fulfilling public duties, and support for bodies representing the business
community in policy review or reform, may fall within the scope of these matters.
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Therefore, notwithstanding that the Company has not made a political donation in the past, and has no intention,
either now or in the future, of making any political donation or incurring any political expenditure, the Board
has decided to propose Resolution 14 to avoid running the risk of the Company or its subsidiaries inadvertently
breaching the Act through the undertaking of routine activities.
As permitted under the Act, this resolution also covers any political donations made or political expenditure
incurred by any subsidiaries of the Company. This resolution caps the amount of all forms of political donations
and expenditure that the company and its subsidiaries would be permitted to make at an aggregate of £50,000.
Resolution 15: Authority to Allot Ordinary Shares
The purpose of this resolution is to give the Directors authority to allot shares in place of the existing authority
approved at the Annual General Meeting of the Company held on 20 November 2018, which expires at the end of
the 2019 Annual General Meeting.
The authority in paragraph (a) of the resolution will allow the Directors to allot new shares and grant rights to
subscribe for, or convert other securities into, shares up to a nominal value of £4,430,162.50 (representing
17,720,650 Ordinary Shares), which is equivalent to approximately one third of the total issued Ordinary Share
capital of the Company as at 24 September 2019, which is the latest practicable date prior to publication of
this Notice.
In accordance with institutional guidelines issued by the Investment Association, paragraph (b) of Resolution 15
will allow Directors to allot, including the Ordinary Shares referred to in paragraph (a) of Resolution 15, further
of the Company’s Ordinary Shares in connection with a pre-emptive offer by way of a rights issue to ordinary
shareholders up to a maximum nominal amount of £8,860,325, representing approximately two thirds (66.67%)
of the Company’s existing issued Ordinary Share capital and calculated as at 24 September 2019 (being the latest
practicable date prior to publication of this document).
The Company does not currently hold any shares in treasury.
The Board believes it is in the best interests of the Company to have these authorities so that the Board can allot
securities at short notice and without the need to hold a general meeting if the need arises.
The authorities sought in paragraphs (a) and (b) of resolution 15 are without prejudice to previous allotments
made under such existing authorities.
The authorities will only be valid until the conclusion of the next Annual General Meeting of the Company to be
held in 2020 or 25 February 2021, whichever is earlier.
Special Resolutions
Resolution 16: Authority to Dis-apply Pre-emption Rights
At the Annual General Meeting held on 20 November 2018, the Directors were given the authority to issue equity
securities of the Company and sell treasury shares in exchange for cash until the 2019 Annual General Meeting.
Resolution 16 renews this authority allowing Directors to issue equity securities and to sell treasury shares for
cash on a non-pre-emptive basis: (i) to ordinary shareholders in proportion to their existing shareholdings and
to holders of other equity securities as required by the rights of those securities, or as the Directors consider
necessary, and to deal with, among other things, treasury shares, fractional entitlements and legal and practical
problems in any territory, for example, in the case of a rights issue or other similar share issue; and (ii) otherwise,
up to an aggregate nominal amount of £664,524.25 (representing 2,658,097 Ordinary Shares). This number
represents approximately 5% of the issued share capital as at 24 September 2019, the latest practicable date
prior to publication of this Notice.
The Directors believe that this resolution will assist them in taking advantage of business opportunities as they arise.
The Company does not currently hold any shares in treasury.
These authorities are without prejudice to allotments made under previous authorities and will only be valid until
the conclusion of the next Annual General Meeting to be held in 2020 or 25 February 2021, whichever is earlier.
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Town Centre Securities PLC | Annual Report & Accounts 2019
Notice of Annual General Meeting continued
EXPLANATORY NOTES CONTINUED
Attendance and Voting in Person or by Proxy
Resolution 17: Additional Authority to Disapply Pre-emption Rights for Purposes of Acquisitions
or Capital Investments
On 5 May 2016, the Pre-Emption Group published a monitoring report on the implementation of its 2015
Statement of Principles for Disapplying Pre-emption Rights and a recommended template resolution for
disapplying pre-emption rights. The template recommends companies request authority to disapply pre-emption
rights in respect of the additional 5% to be used when the Board considers the use to be for an acquisition or
specified capital investment in accordance with the 2015 Statement of Principles as a separate resolution to the
disapplication to issue shares on an unrestricted basis.
All resolutions for consideration at the Meeting will be voted on by way of a show of hands. The proxy votes will
be taken into account where necessary or appropriate.
If you are entitled to, but unable to attend and vote at the Meeting, you may appoint a proxy to vote on your
behalf. Please take careful note of the provisions included in the Notice set out on pages [XXX] to [XXX] regarding
the actions required by shareholders. If you are in any doubt as to the action you should take, please consult your
stockbroker, solicitor/attorney, accountant, CSDP, banker or other independent professional adviser immediately.
Further Information
Resolution 17 seeks this separate authority. Where the authority granted under resolution 17 is used, the Company
will disclose this in the announcement regarding the issue, the circumstances that have led to its use and the
consultation process undertaken.
Further information relating to the Company and its financial information can be found in the Company’s Annual
Report and Financial Statements for the year ended 30 June 2019, which was circulated at the same time as this
Notice and is also available on the Company’s website at www.tcs-plc.co.uk
In accordance with the section of the Statement of Principles regarding cumulative usage of authorities within a
rolling three-year period, the Directors also confirm their intention that (except in relation to an issue pursuant to
resolution 17 in respect of the additional 5% referred to above) no more than 7.5% of the issued Ordinary Share
capital will be issued for cash on a non-pre-emptive basis during any rolling three-year period, without prior
consultation with shareholders.
Recommendation
The Board considers that Resolutions 1 to 19 are in the best interests of the Company and its shareholders as a
whole and recommends that you vote in favour of such resolutions, as the Directors intend to do in respect of
their own beneficial holdings.
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IMPORTANT NOTES
These authorities are without prejudice to allotments made under previous authorities and will only be valid until
the conclusion of the next Annual General Meeting to be held in 2020, or 25 February 2021, whichever is earlier.
Resolution 18: Authority to Purchase Company’s Own shares
Resolution 18 is a special resolution that will grant the Company authority to make market purchases of up to
7,974,292 Ordinary Shares, representing 15% of the Ordinary Shares in issue as at the date of the Notice.
The Directors have no present intention to exercise the authority granted by this resolution, but the authority
provides the flexibility to allow them to do so in future. The Directors would not exercise the authority unless
they believed that the expected effect would promote the success of the Company for the benefit of its
shareholders as a whole. Any shares bought back will either be cancelled or placed into treasury at the
determination of the Directors.
The maximum price which may be paid for each Ordinary Share must not be more than the higher of (i) 105%
above the average of the mid-market values of the Ordinary Shares for the five business days before the purchase
is made or (ii) the higher of the price of the last independent trade and the highest current independent bid for
the Ordinary Shares. The minimum price which may be paid for each ordinary share is £0.25.
This authority shall expire at the Annual General Meeting to be held in 2020 or on 25 February 2021, whichever is
the earlier, when a resolution to renew the authority will be proposed.
Resolution 19: Notice of general meetings other than Annual General Meetings
Under the Act, the notice period required for all general meetings of the Company is 21 clear days. Annual
General Meetings will always be held on at least 21 clear days’ notice but shareholders can approve a shorter
notice period for other general meetings. At last year’s Annual General Meeting shareholders authorised the
calling of general meetings (other than an Annual General Meeting) on not less than 14 clear days’ notice, and
it is proposed that this authority be renewed.
Resolutions and Important Notes
The formal notice convening the Meeting (the ‘Notice’) is set out on pages 149 to 151 of this document and
includes explanatory notes to each of the resolutions to be proposed at the Meeting. There will be an opportunity
for you to raise questions at the Meeting about the resolutions set out in the Notice and about the business of
the Company.
The following notes explain your general rights as a shareholder and your right to attend and vote at this Annual
General Meeting or to appoint someone else to vote on your behalf.
1.
2.
3.
The right to vote at the meeting is determined by reference to the register of members. Only those
shareholders registered in the register of members of the Company as at close of business on Thursday,
21 November 2019 (or, in the event that the meeting is adjourned, in the register of members at close of
business on the date which is two days before the date of any adjourned meeting) shall be entitled to attend
or vote at the meeting in respect of the number of shares registered in their name at that time. Changes
to entries in the register of members after that time shall be disregarded in determining the rights of any
person to attend or vote (and the number of votes they may cast) at the meeting.
In order to gain admittance to the meeting, members may be required to produce their attendance card
which is attached to the Form of Proxy enclosed with this document, or otherwise prove their identity.
A shareholder is entitled to appoint one or more persons as proxies to exercise all or any of his or her rights
to attend, speak and vote at the meeting. A proxy need not be a shareholder of the Company. A shareholder
may appoint more than one proxy in relation to the meeting provided that each proxy is appointed to
exercise the rights attached to a different share or shares held by him/her. To appoint more than one proxy,
you will need to complete a separate Form of Proxy in relation to each appointment. Additional proxy forms
may be obtained by contacting the Company’s registrar at Link Asset Services, PXS, 34 Beckenham Road,
Beckenham, Kent BR3 4TU or you may photocopy the proxy form. You will need to state clearly on each
proxy form the number of shares in relation to which the proxy is appointed. A failure to specify the number
of shares each proxy appointment relates to or specifying a number which when taken together with the
number of shares set out in the other proxy appointments is in excess of the number of shares held by
the shareholder may result in the proxy appointment being invalid. You can only appoint a proxy using the
procedures set out in these notes and the notes to the proxy form.
The appointment of a proxy will not preclude a member from attending and voting in person at the meeting
if he or she so wishes.
4.
A Form of Proxy is enclosed. To be valid, it must be completed, signed and sent to the offices of the
Company’s registrars, Link Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU, so as to
arrive no later than 10.30am on Thursday 21 November 2019 (or, in the event that the meeting is adjourned,
no later than 48 hours (excluding any part of a day that is not a working day) before the time of any
adjourned meeting).
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Town Centre Securities PLC | Annual Report & Accounts 2019
Notice of Annual General Meeting continued
IMPORTANT NOTES CONTINUED
5.
6.
As an alternative to completing the hard copy Form of Proxy, a shareholder can appoint proxies electronically
by logging onto www.signalshaeres.com.com where full instructions are given. For an electronic proxy
appointment to be valid, the appointment must be received by the Company’s registrar by no later than
10.30am on Thursday 21 November 2019 (or in the event that the meeting is adjourned, no later than 48 hours
(excluding any part of a day that is not a working day) before the time of any adjourned meeting).
Any electronic communication sent by a member to the Company or the Company’s registrar which is
found to contain a virus will not be accepted by the Company but every effort will be made by the Company
to inform said member of the rejected communication.
A shareholder or shareholders having a right to vote at the meeting and holding at least 5% of the total
voting rights of the Company (see Note 8 below), or at least 100 shareholders having a right to vote at the
meeting and holding, on average, at least £100 of paid share capital, may require the Company to publish
on its website a statement setting out any matter that such shareholder(s) propose to raise at the meeting
relating to either the audit of the Company’s accounts (including the auditor’s report and the conduct of
the audit) that are to be laid before the meeting or any circumstances connected with an auditor of the
Company ceasing to hold office since the last Annual General Meeting of the Company in accordance with
Section 527 of the Act.
Any such request must:
6.1
identify the statement to which it relates, by either setting out the statement in full or, if supporting a
statement requested by another shareholder, clearly identifying the statement which is being supported;
6.2 comply with the requirements set out in Note 7 below; and
6.3 be received by the Company at least one week before the meeting.
Where the Company is required to publish such a statement on its website:
6.4 it may not require the shareholder(s) making the request to pay any expenses incurred by the
Company in complying with the request;
6.5
it must forward the statement to the Company’s auditors no later than the time when it makes the
statement available on the website; and 6.6 the statement may be dealt with as part of the business of
the meeting.
7.
Any request by a shareholder or shareholders to require the Company to publish audit concerns as set out
in Note 6 above:
7.1
may be made either:
7.1.1 in hard copy, by sending it to the Company Secretary, Town Centre House, The Merrion Centre,
Leeds LS2 8LY; or
7.1.2 in electronic form, by sending it to 0113 234 0442, marked for the attention of the Company
Secretary, or to info@tcs-plc.co.uk (please state ‘TCS: AGM’ in the subject line of the email);
7.2
must state the full name(s) and address(es) of the shareholder(s); and
7.3
(where the request is made in hard copy from or by fax) must be signed by the shareholder(s).
8.
As at 24 September 2019 (being the last practicable date prior to the publication of this notice) the
Company’s issued share capital consists of 53,161,950 Ordinary Shares of 25p each, carrying one vote
each. The Company does not hold any Ordinary Shares in treasury. Therefore, the total voting rights in the
Company as at 24 September 2019 are 53,161,950.
9.
Shareholders have the right to ask questions at the meeting relating to the business being dealt with at the
meeting in accordance with Section 319A of the Act. The Company must answer any such questions unless:
9.1
to do so would interfere unduly with the preparation for the meeting or would involve the disclosure of
confidential information;
9.2
the answer has already been given on a website in the form of an answer to a question; or
9.3
it is undesirable in the interests of the Company or the good order of the meeting that the question
be answered.
10.
Where a copy of this notice is being received by a person who has been nominated to enjoy information
rights under Section 146 of the Act (‘Nominee’):
10.1
the Nominee may have a right under an agreement between the Nominee and the shareholder by
whom he/she was appointed, to be appointed, or to have someone else appointed, as a proxy for the
meeting; or
10.2 if the Nominee does not have any such right or does not wish to exercise such right, the Nominee may
have a right under any such agreement to give instructions to the shareholder as to the exercise of
voting rights.
The statement of the rights of shareholders in relation to the appointment of proxies in Notes 3 to 5 above does not
apply to a Nominee. The rights described in such notes can only be exercised by shareholders of the Company.
11.
12.
Biographical details of all those Directors who are offering themselves for appointment or re appointment at
the meeting are set out on page 70 and 71 of the Annual Report and Accounts.
A shareholder which is a corporation may authorise one or more persons to act as its representative(s) at
the meeting. Each such representative may exercise (on behalf of the corporation) the same powers as the
corporation could exercise if it were an individual shareholder, provided that (where there is more than
one representative and the vote is otherwise than on a show of hands) they do not do so in relation to the
same shares.
13.
The following documents will be available for inspection during normal business hours at the registered
office of the Company from the date of this notice until the time of the meeting. They will also be available
for inspection at the place of the meeting from at least 15 minutes before the meeting until it ends:
13.1
copies of the service contracts of the Executive Directors; and
13.2 copies of the letters of appointment of the Non-Executive Directors.
14.
The information required by Section 311A of the Act to be published in advance of the meeting, which
includes the matters set out in this notice and information relating to the voting rights of shareholders is
available at www.tcs-plc.co.uk.
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Town Centre Securities PLC | Annual Report & Accounts 2019
Investor information
Registrar
Dividends
All general enquiries concerning shareholdings in
Town Centre Securities PLC should be addressed to:
Interim dividend: 3.25p per share paid on 21 June 2019
to shareholders on the register on 24 May 2019.
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Telephone: 0871 664 0300
(Calls cost 12p per minute plus network extras.
Lines are open from 9.00am–5.30pm, Monday to Friday.)
Telephone outside United Kingdom:
+44 (0) 371 664 0300
Email: shareholder.services@linkgroup.co.uk
Website: www.linkassetservices.com
Final dividend: 8.50p per share to be paid on
7 January 2020 to shareholders on the register on
6 December 2019.
Payment of dividends
Shareholders whose dividends are not currently
paid to mandated accounts may wish to consider
having their dividends paid directly into their bank
or building society account. This has a number
of advantages, including the crediting of cleared
funds into the nominated account on the dividend
payment date. If shareholders would like their future
dividends to be paid in this way, they should complete
a mandate instruction available from the registrars.
Under this arrangement tax vouchers are sent to the
shareholder’s registered address.
ADVISORS
Independent Auditor
BDO LLP
Brokers
Liberum
Peel Hunt
Bankers
Lloyds Banking Group Plc
The Royal Bank of Scotland Plc
Svenska Handelsbanken AB (Publ)
Solicitors
DLA Piper UK LLP
Bond Dickinson LLP
TLT LLP
Principal Valuers
Jones Lang LaSalle
CBRE
Corporate public relations
MHP Communications
CONTACT INFORMATION
Registered office
Town Centre House
The Merrion Centre
Leeds LS2 8LY
Registered number
623364 England
Email
info@tcs-plc.co.uk
Website
www.tcs-plc.co.uk
Company Secretary
Link Company Matters
6th Floor
65 Gresham Street
London EC2V 7NQ
Registrar and transfer office
Link Asset Services
Trustees to mortgage debenture holders
Link Market Services Trustees
6th Floor
65 Gresham Street
London EC2V 7NQ
152
Town Centre House, office interior
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153
Town Centre Securities PLC | Annual Report & Accounts 2019
Town Centre House
The Merrion Centre
Leeds
LS2 8LY
+44 (0)113 222 1234
6 Duke Street
Marylebone
London
W1U 3EN
+44 (0)20 3370 0080
info@tcs-plc.co.uk
tcs-plc.co.uk