TowneBank Annual Report 2020

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FY2020 Annual Report · TowneBank

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Town Centre Securities PLC
Town Centre Securities PLC

Annual Report & Accounts 2020

01. Strategic Report
At a glance
Market overview
Business model
Chairman and Chief Executive’s statement
Strategy and KPIs
Strategy in action
Portfolio review
Divisional review
Section 172 statement
Corporate responsibility
Financial review
Risk Report

02. Corporate Governance
Introduction from Chairman
Board of Directors
Nomination Committee Report
Audit Committee Report
Directors' Remuneration Report
Directors' Report
Statement of Directors’ responsibilities

03. Financial Statements
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

04. Shareholder Information
Notice of Annual General Meeting
Investor information

2
4
6
8
12
14
18
22
32
34
44
50

56
58
66
68
72
80
82

84
90
90

91
92

93
94

122
123
124

134
143

Who we are

Town Centre
Securities (TCS) is a
property investment
and development
company with
assets of over
£380 million.

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.

Highlights

EPRA net assets per share

Adjusted EPRA earnings before tax

292p

2020

2019

2018

£2.6m

292p

2020

£2.6m

354p

2019

384p

2018

£6.4m

£6.9m

Total dividends per share

Statutory profit before tax

5.0p

2020

5.0p

2019

2018

(£24.2m)

11.75p

(£24.2m)

2020

(£12.5m) 2019

2018

£18.4m

Total property return

Adjusted EPRA earnings per share

Leeds

(2.1%)

4.9p

(2.1%)

2020

4.9p

2019

1.3%

2018

2019

9.4%

2018

12.0p

13.0p

Total shareholder return

Statutory earnings per share

(50.4%)

2020

(25.0%)

2019

(45.5p)

2020

(23.4p) 2019

2018

3.2%

2018

34.6p

Retail & Leisure

34%

Hotels

10%

Off ices

Car Parks

30%

16%

Development

Other

Manchester

Carvers Warehouse

Retail & Leisure

22%

Residential

16%

Off ices

20%

Development
& Car Parks

42%

1
1

Town Centre Securities PLC

At a glance
TCS is a UK real estate investment trust
that has built a diversified, mixed use
portfolio with a high-quality tenant base
focused on regional centres, primarily
Leeds and Manchester.

Our portfolio covers a wide range of sectors:

Office Space
Over 360,000 sq ft of prime office
space, let to long-standing tenants
including Leeds City Council.

Portfolio value

22%

Retail & Leisure
Focused on the more stable
supermarket, discount, and
convenience retailing sector.
Leisure portfolio includes
restaurants, coffee shops, gyms
and a tenpin bowling facility.

Portfolio value

47%

Hotels
Own two hotels in Leeds at the year
end, one let to and operated by
Premier Inn, and one managed by
TCS under the ibis brand.

Portfolio value

Residential
Completed our first purpose-built
private rental sector building
in 2019 and have plans to develop
more residential properties.

Car Parking
Pioneering technology focused
car parking operator managing
car parks in key locations in Leeds,
London, Manchester and Watford.

Portfolio value

Read more on page 47

8
8

Dr. Edward Ziff OBE DL
Chairman & Chief Executive

* 2021 (post September 2020 sales)

Town Centre Securities PLC

Annual Report & Accounts 2020
Annual Report & Accounts 2020

01. Strategic Report
01. Strategic Report

Chairman & Chief Executive’s statement

continued

Total headroom at 30 June 2020
stood at £14.8m.

Despite the crisis, we have decided to
press ahead with key refurbishments
at 123 Albion Street and Ducie House.
These are high-quality opportunities
and we expect demand for off ice
space will return as the guidance
on working from home eases. Our
development pipeline is full of similarly
exciting opportunities and we envision
moving forwards with the next phase
of residential property development
at Eider House in Manchester when
it is prudent to do so.

Our stakeholders
We approached the crisis with
consideration for our key stakeholder
groups and the potential long-term
impacts our decisions may have on
them lie at the heart of our thinking.

We have always sought to work
closely with our tenants, building
trusting partnerships. Such long-term
relationships have been key during this
period, allowing us to understand the
changing needs of tenants and share
their pain where we can. We worked
closely with many tenants to agree
payment plans during the peak of the
crisis and are now helping to ensure
the safe and successful reopening
of their businesses.

Most tenants have acted responsibly
and in good faith in diff icult
circumstances, however, it has been
frustrating that some, such as Boots,
have not been so considerate and
have taken advantage of legislation
put in place for companies who
wouldn’t otherwise be able to aff ord
their rent. We were also extremely
disappointed with JD Sports in relation
to the administration of its subsidiary
Go Outdoors, a tenant at our Piccadilly
Basin site. For a large, profitable and
valuable company, their unwillingness
to stand by leases they had only
recently acquired is unacceptable
and reflects very poorly on their senior
management. Knowing they were
impacted by COVID-19, we made
proposals to share the impact. However,
with their chosen approach landlords
have had to take all the rental pain.
We presume they haven’t treated their
trade suppliers in the same manner,
otherwise they would have put their

supply chain in jeopardy. There is a
presumption in insolvency situations
that all creditors should be treated
equally. We hope that in light of this
the Government will seek to implement
legislation to prevent profitable
companies acting in this way in the
future. We have been able to support
our tenants in part thanks to our strong
relationships with our banks and
debenture holders.

The importance of good stakeholder
engagement with our funders has been
demonstrated again during this crisis.

I have been particularly proud of the
response from our colleagues. The
vast majority of our staff transitioned
to working from home, and in doing
so demonstrated great flexibility and
resolve. We chose to furlough 53
staff , predominantly CitiPark branch
employees, and I would like to thank
those colleagues for their patience
and understanding. Making use of the
furlough scheme was a necessary step,
but I am pleased that during a diff icult
time for all, we were able to continue
to pay all staff 100% of their salaries.
We expect a lot from our staff , however
we hope we have demonstrated that
we are always there to support them
when they need it.

I would also like to take this opportunity
to thank Lynda Shillaw, who has now
left the business as Group Property
Director. As a long-standing friend
of TCS we wish her and her family
well and wish her well in her future.
Following Lynda’s departure, we have
promoted Helen Green to the role
of Property Director, and appointed
Craig Burrow, previously Director of
Leeds at Bruntwood, as Development
Director. Both will report to me and as
a result of these changes we will not be
appointing a Group Property Director.

In line with our long history of being
a local business with strong ties to
our communities, we were proud to
be able to off er free car parking and
concessionary hotel accommodation
to hardworking NHS staff . We also
championed many other initiatives
set up by our tenants to support key
workers, the elderly and the most
vulnerable in the community during
the pandemic.

Finally, for our shareholders, we are very
disappointed to break a 60-year track
record of delivering a maintained or
increased dividend. The unpredictable
nature of the COVID-19 crisis has made
the decision to reduce the final dividend
payment for the year unavoidable.
We are pleased that we are able to pay
a 1.75p final dividend, totalling 5.00p
for the full year. However, we recognise
that this represents a significant
reduction for shareholders.

Outlook
I am extremely grateful to my
colleagues and staff , who have done an
excellent job in diff icult circumstances.
With most of our portfolio open and
trading again, and staff returning to the
off ice, the business is recovering. It is
now time for us to return to business
as usual. Our conservative and flexible
approach has allowed for our continued
operation despite the disruption;
however looking forwards, we face an
unprecedented level of uncertainty.

The acceleration of our disposal
programme, though essential for
generating cash, reducing risk and
strengthening our foundations, will
have an eff ect on earnings and our
dividend levels in the coming years.
That said, some of the cash generated
from sales will be available to reinvest
where it’s needed most, and we will
do all we can to see a return to
previous levels as soon as possible.

There are many reasons to be
positive though. Our portfolio is
unique and diversified, and our
development pipeline continues
to be a key diff erentiator for us.
We are not currently committed to
any single project but have £600m
of development opportunities in the
pipeline, with flexibility over when
and how these can be delivered.

Overall, I have been very satisfied with
our response to an unprecedented
situation. Despite the ongoing
challenges of COVID-19, I am certain
that we remain an excellent long-term
investment proposition.

Dr. Edward Ziff OBE DL
Chairman & Chief Executive

Peter Warrington,
TCS’s third
employee and its
Finance Director
from 1963–1993,
sadly passed away
in June 2020.

I owe Peter, and another former
director, David Whitehead, an
enormous debt of gratitude, in
particular for mentoring me in my
early days in the business. Much of
my knowledge and experience was
influenced for the better by Peter’s
involvement. Peter became not only
a trusted and valued colleague at
TCS, and advisor to the Ziff family,
but was a close personal friend who
is sorely missed.

I would like to personally acknowledge
his huge contribution to TCS over
the course of 30 years, many of our
shareholders will have known Peter
well. All of us at TCS would like to off er
our condolences to his wife Barbara,
his sons Philip and David and his
daughter Jane.

Co-op

Carvers Warehouse

123 Albion Street

11
11

Strategy and KPIs
We have clear plans to continue to
diversify our portfolio to generate income
and capital growth for the long term.

What we do

Actively manage assets
to optimise income and
capital growth

Maximise available capital
by divesting ex-growth assets
and refinancing to lower LTV

Progress

Refurbishment of Carvers Warehouse,

Manchester common parts completed,
improving quality of office space for
all tenants and helping to strengthen
rental values

Major refurbishment of the office space
at 123 Albion Street, Leeds due to be
completed in the summer of 2020.
Creating high-quality modern and flexible
office space at a premium to previous levels

Major refurbishment of Ducie House,

Manchester due to be completed in the
autumn of 2020. Comprising a significant
overhaul of the common parts and changing
the office layouts to maximise demand
and return

KPIs

CAPEX

£6.0m

Post investment yield
targeted at greater than

8.5%

We sold two small properties in Edinburgh
during the year for £2.5m, 3.7% ahead
of June 2019 valuation

In July 2020 we completed on the disposal

of our retail property in Chiswick, London for
£1.4m, 7.7% ahead of June 2019 valuation

We extended our NatWest RCF facility

by a year to April 2022, maintaining terms
and margins

We exchanged contracts on a further
£40.2m of retail and leisure sales in
September 2020, lowering LTV and
proportion of retail & leisure

Loan to value

53.2%

(FY19 49.4%)

47.9% following September sales

Headroom

£14.8m

Generated from asset sales in the year

£2.5m

Priorities

Future opportunities identified

at Vicar Lane, Leeds and Wade House
in the Merrion Centre

Further opportunities exist for
the ground floor leisure units
at 123 Albion Street, Leeds

We will continue to review our portfolio,

and have agreed to accelerate the strategy
of selling retail assets

Optimising our capital structure to

reduce gearing and absolute borrowing
levels is an ongoing focus

What we do

Progress

Invest in our development
pipeline, continuing to unlock
existing opportunities and
create new ones

Acquire investment assets
to diversify the portfolio across
sectors, with a focus on Leeds
and Manchester

Development plans on hold during COVID-19
crisis, but reviewing timing for new PRS
development in Manchester (Eider House)

Second half of a retail and residential
building in Kilburn, London acquired
for £1.7m

Our first PRS development, Burlington

House in Manchester completed in July
2019 was awarded Apartment Developer
of the Year at the North West Residential
Property Awards

We are in the process of reviewing the
development framework at Whitehall
Road in Leeds with the aim of increasing
long-term value

The proportion of our portfolio accounted
for by retail and leisure has fallen to 47%
of value (of which the Merrion Centre
accounts for 23%), from 70% in 2016

We took over the management of the
Manchester Arena Car Park in 2020,
rebranding to CitiPark, thereby extending
our brand presence and income and profit
without the need for capital investment,
adding to our Shipley and John Lewis
Cheltenham operations

KPIs

Development pipeline remains in place

Retail and leisure

£600m

47%

(FY19: 50%)

41% following September sales

Reversionary yield

7.0%

(FY19: 6.8%)

Car parks now under management

Priorities

We continue to review the sequence

We continually review opportunities

of our development pipeline, particularly
in the light of the recent COVID-19 crisis.
The most likely next development will
be Eider House PRS

We are in the process of reviewing residential

development opportunities in some of
our car parks in order to add to the future
development pipeline

to acquire new investment assets across
all sectors, and in particular in Leeds
and Manchester

Sites with asset management

and/or development opportunities are
a particular focus

Town Centre Securities PLCAnnual Report & Accounts 202001. Strategic Report
Actively managing assets

Strategy in action

Maximising available capital

Strategy in action

Annual Report & Accounts 2020

01. Strategic Report

Ducie House

We acquired Ducie House in 2018,
further extending our ownership
in Piccadilly Basin, Manchester.

Ducie House is a 33,000 sq ft
flexible office conversion, originally
a petticoat factory. 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 with spaces of up
to circa 4,000 sq ft, as well as the
flexibility for businesses to expand
within the building as they grow.

TCS bought the site for £9.0m as
a strategic acquisition with four key
asset management considerations:

To eliminate the potential rights

of light claim (valued at £1.5–£2m)
on our Eider House development the
value of which has been removed
from the ongoing valuation.

To increase land holdings around

Piccadilly Basin and to increase the
non-retail element of our portfolio.

configuration to provide two additional
meeting rooms, shower facilities
and break-out space. We have also
refurbished the common parts on the
upper floors to provide further amenity
space including break-out booths with
balcony space and improved toilet/
kitchen facilities. We have restructured
the space within the building to provide
larger office space to accommodate
greater requirements and facilitate
organic growth within the building.

Communities:

Improving the overall tone and

feel of Piccadilly Basin as a whole
for all visitors.

As the COVID-19 disruption hit we had
already started this redevelopment but
made the conscious decision to halt
works and preserve cash during the
height of the uncertainty. We have now
restarted the works and expect to be
completed by Autumn 2020.

The opportunity for a new

development on the 63-space car
park at the rear of the building.

Critical to the decision to proceed
with this investment was the benefits
derived for all stakeholders, including:

The opportunity to update and
refurbish the building to further
increase appeal and increase
rental income.

The acquisition solved the right of
light issue and we now have planning
permission for Eider House and are
determining appropriate timing.
Our proportion of retail and leisure
assets continues to reduce, and plans
for a 60,000 sq ft interlinking office
with an end value of over £21m and
£1.3m of income are being developed.

We are now underway with a £2m
refurbishment of this unique office
building with key aspects of the work
including essential fabric and M&E
repairs post acquisition. We adopted a
strategy of restructuring the building’s

Investors:

Increasing net income by circa

£0.3m per annum.

Delivering a post investment

return in excess of 8.5%.

Tenants:

Providing improved common space

with high-quality entrance and
reception, improved lifts, heating
and air-conditioning.

Increasing the availability of some
larger office spaces giving more
flexibility to tenants as they grow
their businesses.

Employees:

Creating a better quality working
environment for our on-site staff.

In order to facilitate the safe working
of the contractors and to provide
our tenants with a much needed
break in rental commitments we
have agreed that 21 tenants would
vacate the property for four months,
rent-free, allowing for completion of
the refurbishment. This did increase
the effective cost to TCS by £80k,
but the ability to support our tenants
and proceed with the development
outweighed this additional cost.

At the June 2020 valuation Ducie
House has been valued at £7.95m,
and it is expected to increase by a
further c. £1.0m following completion
of the development, with the
opportunity to improve further as
we move rental incomes forward.

Ducie House – estimated value

£7.95m

Working with the owners of the
arena car park we have agreed
an initial two-year fixed term
contract with the option to extend.
The opportunity presented by
management agreements means
there is no capital outlay by CitiPark
whilst still producing a fixed
management fee per annum.
In addition to this, our agreement
also allows us to earn a profit share
percentage should the car park
achieve pre-agreed targets.

On 1st April 2020 we took over
the management services of the
Manchester Arena car park, a
978 space MSCP in the heart of
Manchester. Despite the obvious
challenges presented at this time,
we successfully navigated the
handover from the predecessor and
oversaw the installation of a new
skidata parking management system.

Welcoming 1.2 million customers
every year, Manchester Arena is one
of the busiest venues in the world and
the largest indoor Arena in Europe.
Hosting some of the biggest names
in music, boxing and comedy, the
Manchester Arena car park puts you
right at the heart of the action. As well
as providing parking for arena visitors,
this car park is also ideally located for
the National Football Museum, Corn
Exchange and the iconic Arndale
shopping centre.

Manchester Arena
Car Park

Our CitiPark car parking business
has long been an important part
of TCS and provides a significant
profit contribution.

We see the CitiPark business as
a growth opportunity leveraging our
operational and technological areas
of expertise. A key part of this growth
strategy is car park management,
a business line that allows the business
to generate good profitability without
capital commitments – a key element
of the wider business strategy.

Annual Arena Customers

1.2m

15
15

Town Centre Securities PLCAnnual Report & Accounts 202001. Strategic Report

Investing in development pipeline

Strategy in action

Acquiring investment assets

Strategy in action

Annual Report & Accounts 2020

01. Strategic Report

Burlington House

Burlington House is our first
dedicated Private Rented Sector
(PRS) property.

Located in our Piccadilly Basin
development site in Manchester,
the 91-unit SimpsonHaugh designed
property achieved practical completion
in the late summer of 2019 and had
fully let by September 2019.

Burlington House was a strategic
next phase in realising our significant
development pipeline which stands
at over £600m (see page 29).
TCS’s strategy is to unlock each
element of the pipeline separately,
determining the best moment to
fund and to develop. This investment
represents the Company’s first
pure PRS development and further
diversified the portfolio, and opens
the way to a larger PRS offering from
further development land we own
in Piccadilly Basin.

The investment was undertaken in
a 50/50 joint venture with Highgrove
Group, with c. 60% development
finance initially provided by the Greater
Manchester Housing Fund, thereby
minimising the capital required by
TCS to unlock the scheme. Since
completion the joint venture has repaid
the fund and entered into a nine-year
fixed rate facility with PRS Finance PLC
as part of the government’s Private
Rented Sector Housing Guarantee
Scheme, borrowing £13.8m at a
fixed rate of 3.02%. This refinancing
provides long-term certainty at
an attractive rate of interest.

Burlington House, was awarded
‘Apartment Development of the
Year’ (fewer than 100 homes) at
the prestigious Insider North West
Residential Property Awards 2019.
The judges recognised that the
development has served as one of
the catalysts for further regeneration
and development across Piccadilly
Basin with the unique building being
fully let within just three months of
launch. TCS has also worked closely
with CityCo, the Manchester city
centre management company, along
with the Mayor’s office and the local
police to improve security and safety
in the Basin. Furthermore TCS has
commissioned a street art project to
further enhance and improve the area.

123 Albion Street

We originally purchased 123 Albion
Street (previously named The Cube)
from Aviva in 2018 for £12m at a yield
of over 12.5%. The building comprises
22,000 sq ft of leisure space on the
ground floor, with 50,000 sq ft
of office space over three floors.

It is located in central Leeds in close
proximity to the Merrion Estate.
This was a strategic purchase, as the
two office tenants had served notice
to end their leases in 2019. TCS always
planned to further invest in the office
at the point of exit of the tenants.

The acquisition of 123 Albion Street
is a prime example of our investment
strategy, where we seek to acquire
assets that are being sold at an
effective discount due to factors
that the previous owner was not
equipped to deal with, in this case
terminating leases.

We use our local knowledge, active
asset management expertise and
willingness to get into the detail to
deliver significant improvements in
value and/or income. This is a key
aspect of our business model cycle.

In the case of 123 Albion Street
10,000 sq ft of office space has since
been re-let to the existing tenant,
the Secretary of State. In addition
the other tenant has now vacated,
paying a £0.5m dilapidations
settlement which is reflected in the
year end earnings, helping to mitigate
lost rental income.

We are now underway with a net
£4m refurbishment of the office
space in this building. Critical to
the decision to proceed with this
investment was the benefits derived
for all stakeholders, including:

Investors:

Communities:

The development improves

and strengthens the business
and retail and leisure community
in the northern part of the city
centre, and will drive footfall to
the local businesses.

This £4m investment upgrading
the office space is expected to
deliver a post investment running
yield in excess of 8.5%.

The refurbishment work includes

some notable environmental
benefits which are detailed in
our ESG section on page 39.

At the June 2020 valuation 123
Albion Street has been valued at
£14.6m, and it is expected to increase
further following completion of the
development, with the opportunity
to improve further as we let the newly
refurbished space.

Rental income will be impacted by
£1.2m on a full year basis whilst the
space is being redeveloped but in
the current year the dilapidations
payment helped to mitigate this.

This investment helps to increase

the proportion on non-retail
property within our portfolio.

Tenants:

Providing high-quality flexible

office space, at a discount to prime
offices, in the heart of a busy part
of the city centre.

Providing facilities for cycle storage

and shower facilities.

Development pipeline

£600m

Post investment running yield

+8.5%

17
17

Town Centre Securities PLCAnnual Report & Accounts 202001. Strategic Report

Town Centre Securities PLC
Town Centre Securities PLC

Portfolio review

Valuation summary
For the year to the 30th June 2020 the
total portfolio, including development
and car parking assets, sales and
purchases, declined in value from
£394.2m to £372.5m after a net
movement of £5.1m of capex,
sales and purchases. This represents
a decline of 6.9% year on year.

TCS saw the like for like value of its portfolio also fall by
6.9% (£26.6m) after capex of £6.0m. TCS’s retail assets
bore the brunt of the valuation reductions (£23.0m being
11.8%), reflecting the major shift in both investor sentiment
and retail trading conditions. As reported at the half-year
TCS experienced only a 1.1% like for like decline in valuation
in the first half of the year, and therefore the remaining
5.8% fall has occurred in the second half of the year,
with the backdrop of the COVID-19 crisis.

Our development assets increased in value slightly by
2.6%, and our car parks increased by 1.3% where a bounce
back in customers is being seen as the lockdown eases and
long-term alternative uses are identified and progressed.
In the year, we sold two assets in Shandwick Place,
Edinburgh for £2.5m (3.7% above valuation) and acquired
106b Kilburn High Road, London for £1.7m including costs.

Our main and most complex asset, the Merrion Estate
saw a 6.1% decline (after capex) in value year on year from
£156.9m to £148.0m. More than a shopping centre, from
initial inception, a true mixed-use asset, this comprises
off ices including our share of Merrion House, retail space,
a hotel and a multi-storey car park.

The initial yield across the whole Merrion Estate of 6.8%
signifies a robust performance against others in the sector
where retail assets, particularly shopping centres have
fallen by in excess of 20% in value.

The valuation of all of our properties except one are
carried out by CBRE and Jones Lang LaSalle. As a result
of the COVID-19 crisis both companies have reported that
valuations on the majority of our properties are subject
to a ‘material valuation uncertainty’ clause as set out in
the RICS Valuation Global Standards.

Merrion Centre

Sales and purchases
It had been a relatively quiet year to the 30 June 2020
for sales and purchases. However, as described earlier
the COVID-19 crisis has prompted the Board to decide
to accelerate the retail and leisure disposal programme.
In September 2020 we agreed sales of a further six
properties for a combined sum of £40.2m. The sales
comprised two Waitrose stores and an Aldi/HomeBargains
in Scotland and three high street retail stores in Wood
Green and Chiswick in London.

Our continued commitment to asset recycling is clear.
The below table details the £89.1m of disposals since FY17
of which 95% were retail and leisure assets. Acquisitions
of £30.6m included only 24% retail and leisure.

Sales

Purchases

£m

22.3

10.1

% Retail
& Leisure

88%

95%

£m

4.0

9.0

14.0

100%

16.0

% Retail
& Leisure

46%

25%

2.5

100%

1.7

100%

FY17

FY18

FY19

FY20

FY21 to date

40.2

100%

89.1

95%

30.6

24%

As described earlier the COVID-19 crisis has prompted
the Board to decide to accelerate the retail and leisure
disposal programme.

1 CBRE UK Retail Market Snapshot Q2 2020
2 Savills UK Regional Off ice Investment Marketwatch 25th June 2020.
3 Savills UK Regional Off ice Investment Marketwatch 25th June 2020.

Annual Report & Accounts 2020

01. Strategic Report

vacancy rate across the core regional
off ice markets combined is 7.1% which
compares favourably to the long-term
average of 10%. Savills has produced
vacancy rate forecasts which underline
the robust nature of the market.3

Our off ice portfolio dropped £2.3m
or 2.9% over the year, the majority
of which was due to a reduction in
the value of 123 Albion Street as leases
fell away, tenants vacated, and we
were able to refurbish. We expect
this to recover. The value of TCS’ share
in Merrion House was unchanged
at £34.7m, at an initial yield of 4.49%.
Ducie House and 123 Albion Street
are currently undergoing major
refurbishments and we expect to
see a corresponding uptick in value
post completion.

FY20 Capex investment

£6.0m

Retail and leisure
The UK retail market has had a tough
time over the last 18 months. Structural
shifts in consumer behaviour and the
shift to multichannel retailing have
been accelerated by the impact of
COVID-19.

With high streets closed for nearly
three months to all but non-essential
retailers and off ice workers staying
away from the off ice, the easing of
lockdown more recently has supported
footfall improvements. However,
despite considerable weekly growth,
high street destinations over the
summer remain at nearly 50% below
2019 levels with shopping centres
slightly ahead of these levels at the half
year. Local regional high streets appear
to be responsible for driving the
recovery of footfall as off ice workers
remain working from home and the
feed through to larger urban centres
is much slower.

Retail parks have remained more
resilient over the entire period,
benefiting from schemes anchored by
essential retailers, the earlier reopening
of homeware retailers as well as being
more accessible by car and consisting
of more spacious stores, allowing for
greater social distancing.

Through a landlord’s lens, pressure
on valuations, LTVs, rents and leasing
models are all being experienced.
Despite Government moratoria, codes
of conduct, rates relief and other
available assistance, some retailers
who can aff ord to rent have chosen
not to do so. In addition to a flurry
of administrations and CVAs, most
tenants are seeking concessions on
their leases.

Lockdown continued to hit the retail
market in Q2, with yields increasing
across all asset classes. Prime UK high
street yields moved from 5.25% in
March 2020, to 6.25% in June 2020
and prime shopping centre yields are
now at 6.5%, up from 5.85% in March.
Good secondary high street yields
for Q2 were up from Q1 to 8.50% and
secondary high street yields in Q2
were up from Q1 to 12.0%1.

From a TCS perspective, total retail
and leisure assets fell by £23m or
11.8%. Merrion ex off ices delivered an
Initial Yield of 7.7% reflecting the skew
in tenant mix to supermarket and value
retailers. Merrion’s value fell by £7.3m
or 7.9%. TCS’s out of town retail had
an initial yield of 6.3% reflecting assets
in well placed suburbs and again,
a tenant mix of food and value retailers,
with value falling £4.0m or 9.5%. Other
retail and leisure assets fell by £11.7m
or 19.2%, with these more traditional
standalone retail units being most
significantly impacted.

Our hotels, while open for key workers,
were impacted by COVID-19, seeing
values fall £2.7m or 10.5%. While yields
have only softened slightly to the 30th
June, and the hospitality sector is now
slowly starting to recover as lockdown
eases; the speed of the recovery of the
sector will depend on how quickly both
tourists and businesses come back into
city centres at something approaching
pre-COVID-19 levels.

Regional off ices
Off ice investment volumes reached
£1.3 billion outside of central London
in Q1 2020, which was a 24% increase
in volumes recorded in Q1 2019,
although 15% below the long-term
average. 43% of off ice investment in
the UK was outside of central London
in Q1 20202.The regional off ice markets
have been quiet since COVID-19.
Not many prime assets are trading
with a general lack of any new stock
coming to market. Investors are set
to gauge general sentiment when
occupiers return to buildings and
restrictions are eased. Yields for prime
off ices in regional cities held at 4.75%
to June 2020.

Every core regional city market has
below two years of Grade A supply.
The development pipeline is limited
and will not alleviate the supply
constraints that are present in the
market. There is currently 4.48 million
sq ft under construction and 56% of
this total space in the regional city
off ice market has been pre-let. Nine
of the regional off ice markets have a
vacancy rate below 10% which Savills
classify as undersupplied. The total

18
18

Town Centre Securities PLC

Portfolio review

continued

Residential
Given the current operating
environment and little transactional
evidence in Q2, CBRE opted to
maintain their benchmark yields
at the current level. However, since
lockdown restrictions were eased,
there are early signs that deals are
progressing at pre-lockdown levels,
with no significant pricing impact.
Prime net yields continue to range
from 3.25% to 4.25%. Prime regional
centres are now trending stable, but
yields may begin to weaken in more
secondary locations.

Although there was little activity in
Q2, investment into the UK multifamily
sector looks poised to make a
significant rebound in the second
half of 2020. There is a substantial
investment pipeline with just over
£1.4bn worth of deals currently under
off er. This is broadly equivalent to the
investment pipeline at the end of 2019,
which then translated into £1bn of
investment in Q1 2020. Although it’s
not a certainty all of this will transact,
it nonetheless demonstrates the
continued strong appetite for the UK
multifamily sector. Currently half of the
investment pipeline is spread across
the prime regional centres.

Approximately two-thirds of the
investment pipeline are forward
funding agreements, with a further
20% accounted for by direct site
acquisitions. The lockdown period
has also served to demonstrate the
relative resilience of the multifamily
sector, which has boosted investor
appetite. Specifically, multifamily rent
collections have been resilient and
remained high, averaging 96% in May.
This compares with 90% (off ices) 82%
(logistics) and 63% (retail). Although we
may see modest rent falls in 2020, we
expect the sector to return to growth in
2021 and outperform. CBRE is currently
forecasting total returns of 5% per
annum for multifamily over the next
five years. This compares with 3% and
2% per annum, for off ices and retail
respectively. Overall, demand for UK
multifamily remains strong. Sentiment
is positive and we are seeing early
signs of an increasing level of activity
as the lockdown restrictions continue
to ease .

TCS’s residential assets are
concentrated in the city centres of
Leeds, Manchester, suburban London
and Glasgow. Overall, we saw a slight
decline in the value of our residential
portfolio year on year of -1.3%. This was
largely driven by a short-term softening
of rents in the Manchester market,
reflecting both the impact of COVID-19
and the volume of stock coming into
the market in 2021. Rents are expected
to return to a 3% per annum growth
rate from 2022. Appetite for high-
quality, centrally located residential
sites in Manchester from both tenants
and investors remains strong.
Our Piccadilly Basin site remains one
of the most centrally located and
accessible sites in the city and as such
we expect it to outperform the market
in the long term.

Residential

Carvers Warehouse

Annual Report & Accounts 2020

01. Strategic Report

Portfolio overview:

Retail & leisure

Merrion Centre (ex off ices)

Off ices

Hotels

Out of town retail

Distribution

Residential

Development property

Other car parks

Let portfolio

Passing
rent £m

3.6

7.0

3.8

1.2

2.5

0.4

1.1

19.7

1.6

0.9

22.2

ERV
£m

4.1

7.4

6.2

1.6

2.5

0.4

0.6

Value
£m

51.1

85.7

82.5

23.1

38.0

6.0

21.5

22.8

307.9

1.6

0.9

25.3

37.8

26.9

372.5

% of
portfolio

Valuation
incr/(decr)

Initial
yield

Reversionary
yield

6.6%

7.7%

4.4%

4.8%

6.3%

6.5%

5.0%

6.0%

7.5%

8.1%

7.1%

6.7%

6.2%

6.7%

2.8%

7.0%

14%

23%

22%

10%

83%

10%

-19.2%

-7.9%

-2.9%

-10.5%

-9.5%

-2.1%

-1.3%

-8.6%

2.6%

1.3%

100%

-6.9%

Note: includes Merrion House within off ices and Burlington House within residential, and therefore diff ers from the notes in the accounts.
Note: excludes IFRS 16 adjustments to car park valuations.

Location

Leeds

Manchester

Scotland

London

Other

Sector

Retail/leisure

Hotels

Off ice

Car parking

Distribution

Residential

Development

Lease Expiries

Retail/leisure

Value

226.5

66.8

47.9

30.2

1.2

372.5

Value

174.8

23.1

82.5

26.9

6.0

21.5

37.8

372.5

Value

9.5

4.0

6.2

19.7

61%

18%

13%

100%

47%

22%

10%

100%

48%

20%

31%

100%

Note: As at 30 June 2020

Bath Street

21
21

Town Centre Securities PLC

Divisional review
Property

Overview
This has been a
year of two parts
for the business.
In the first two
thirds of the year,
we delivered
robust operational
performance
and made good
progress against
our strategic
initiatives.

We continued to actively manage
our assets, investing in refurbishment
projects including Ducie House in
Manchester and 123 Albion Street
(formally known as The Cube) in
Leeds, both of which off er high-quality
off ice space.

We also signed a number of deals
with new tenants from a diverse range
of sectors, including supermarkets
and food and drink outlets, and further
expanded our Asian food off ering
at the Merrion Centre. In addition,
we successfully renewed leases
with a number of existing tenants
in both our retail and off ice portfolios,
including Whittards, OKA, Cotswold,
PCSU and K7.

We completed and launched our
first PRS product in Manchester,
Burlington House. This 91 apartment
SimpsonHaugh designed building has
been a real success as well as a new
iconic piece of architecture in the city.
Along with our JV partner GMI, we were
delighted to be awarded Apartment
Developer of the Year at the North West
Residential Property Awards.

In the final third of the year, we have
clearly been significantly impacted
by the disruption caused by COVID-19.
This period tested our colleagues,
our relationships with our customers
and suppliers, and our operational
capabilities in the most extreme way
imaginable. So far, our performance
has proved to be very reassuring, with
income collection at 82%, significantly
ahead of the majority of our peer
group. Overall, the strategy to diversify
the portfolio in recent years is proving
to be a resilient and sustainable one.
We have had to provide for non-
payment of £1.2m of rental income.

Impact of COVID-19
Since February, COVID-19 has had
a very significant impact on our
business. Our focus during this time
has been on maximising our capital
and managing our cash flow while
supporting our tenants and employees
and ensuring they can continue to
work safely.

While the housing and industrial
markets have remained more resilient,
the need to work remotely has led to
a slowdown in tenants looking for new
off ice space. The retail and leisure
sector has been significantly impacted
by COVID-19 and just under two thirds
of our retail and leisure businesses,
including high street shops, hotels,
food and beverage outlets, gyms
and hotels were closed during the
height of the lockdown period. This
has impacted rental payments and
collection rates in the short and
medium term.

We have good relationships with most
of our tenants, particularly our smaller
tenants, and have held one-on-one
discussions to find solutions, such as
deferring payments or renegotiating
lease terms and we have shared
the pain with those most in need of
support. As a result, we received or
agreed to defer payments for 86% of
the rent and service charge due for
the period from March to the middle
of September. However, a number
of our larger tenants have chosen to
take advantage of the government
limiting the ability of landlords to
pursue non-payment of rent. This has

resulted in some tenants who could
pay choosing not to pay their rent and
service charges. This puts pressure
on landlords, like TCS, and significant
uncertainty remains around the level of
rent receipts for the coming quarters.

COVID-19 has put additional significant
pressure on retailers and the food
and hospitality sectors. We expect
this to lead to increasing pressure on
rents, lower levels of rental growth
and continued lower levels of rent
collection. We could also potentially
see a shift towards more flexible
leases, for example, a combination of
fixed and turnover rent. It should be
noted that the nature of TCS’s retail
property portfolio means that we have
little exposure to those fashion retailers
and department stores who have been
most hard hit. However, there remains
a considerable degree of uncertainty
across the market in relation to the
speed at which normal business will
resume, rent receipts, rental levels
going forward and the ability of tenants
to continue trading.

TCS made the decision to put all
capital projects on hold, with the
exception of 123 Albion Street (which
completed in August 20), in order to
preserve cash during the height of the
crisis. Work has restarted post year
end on Ducie House, due to complete
this autumn.

The strategy
to diversify the
portfolio in recent
years is proving to
be a resilient and
sustainable one.

Annual Report & Accounts 2020
Annual Report & Accounts 2020

01. Strategic Report
01. Strategic Report

Our tenant portfolio

Overview
Over the past five years TCS has
built an increasingly diverse and
mixed-use portfolio with a high-quality
and diverse tenant base across a
range of sectors including retail and
leisure, off ice, hospitality, food and
drink and residential property. Through
our strategy of diversification, the
proportion of retail and leisure assets
in the portfolio has reduced to 47%
at year end, down from 70% in 2016.

Pure retail represents only 35% of the
total portfolio and our retail portfolio
remains focused on supermarket,
discount, and convenience retailing,
which typically has higher footfall
and is less aff ected by the growth in
internet shopping. As our exposure to
retail has been reduced, off ice space,
food and drink and private rented
sector (PRS) residential assets have
increased share.

Top 10 tenants

Leeds City Council

Waitrose

Wm Morrison

Pure Gym

Premier Inn Hotels

Aldi

Step Change Debt Charity

Home Bargains

Dune Group

The Deltic Group

As a result, we have been insulated to
a degree from some of the challenges
currently facing the retail sector,
but we have been exposed to the
challenges faced by our tenants in
the food, beverage and leisure sectors
and are working through this with
them, supporting their recovery.
The COVID-19 pandemic has
reinforced the need to continue
with our strategy of repositioning
our portfolio by reducing our retail
exposure going forward.

Key tenants include Leeds City
Council, Morrisons, Step Change Debt
Charity, Pure Gym and Premier Inn.

Top 10 – 42%

Other – 58%

Rent collected

82%

Rent deferred

Burlington House

(March 27 to September 15 inclusive)

23
23

Town Centre Securities PLC

Divisional review

continued

Regional focus

Leeds key facts

Leeds

TCS has a regionally
focused property portfolio,
with an emphasis on the
northern cities of Leeds
and Manchester, which
together represented 79%
of our portfolio by value
at end FY20.

Leeds and Manchester are two of the largest
conurbations in the UK and have attracted
significant investment from both UK and
international investors and delivered strong
economic growth over the past five years.

The regions typically do not see the extreme peaks
and troughs in returns seen in the London property
market, providing a more stable and less volatile
environment through the cycle. As a result, we believe
the fundamental longer-term outlook for our Leeds and
Manchester assets remains positive. The housing market
remains strong but the challenge of rebalancing the
UK economy and delivering the critical infrastructure
required to drive growth in the regions remains.
Devolution deals have an important role to play in
rebalancing the economy and Leeds and Manchester
have two of the most significant devolution deals of all
of the English regions and key roles to play in drawing
further investment into big regional cities to attract
businesses and create jobs.

Merrion Centre

Leeds City Region is the UK’s largest
regional economy and the largest contributor
to UK GDP in the Northern Powerhouse,
a national and international leader in key
industries and one of the best places in the
UK for businesses to grow.

Population:

770,000

Student population:

Largest number of
universities outside of
London. 39,000 skilled
graduates per year.

Workforce:

A skilled workforce
of 1.4m people.

Corporate off ices/HQs:

Channel 4, ASDA,
PwC, KPMG, HSBC,
DLA Piper, Direct Line,
BOS, Yorkshire Bank,
Addleshaw Goddard,
Eversheds, Pinsents.
169,000 businesses and
a GVA of over £69billion.
Home to the UK’s leading
professional services hub
outside of London.

Forecast growth rate:

8.3% forecast over
the next five years.
Fourth best shopping
destination in the UK,
with over 660,000
people claiming the
city as their primary
shopping destination.

Key growth sectors:

Digital technologies,
healthcare and innovation,
manufacturing, financial
and professional services.

Other development of
the Southbank by CEG,
the new West End by
MEPC and CPP, significant
amount of student
accommodation around
Merrion and Moda next
to WYPhouse.

Our stakeholders:

Value £m

18.1
53.6
42.1
25.5
8.6
147.9

15.1
14.6
14.5
3.9
6.0
10.5
14.0
226.5

8%
24%
19%
11%
4%
65%

7%
6%
6%
2%
3%
5%
6%
100%

Merrion Morrisons
Merrion Off ices
Merrion Retail & Leisure
Merrion Car Park
ibis Styles Hotel
Total Merrion
Other Leeds assets:
Retail & leisure
Off ices
Hotels
Residential
Industrial
Car parks
Development
Total Leeds

Leeds as % of total

61%

Annual Report & Accounts 2020

01. Strategic Report
01. Strategic Report

123 Albion Street
Acquired in 2018, we have undertaken
a net £4m refurbishment of this
building which achieved practical
completion in August 2020. The
building comprises 22,000 sq ft of
leisure space on the ground floor, with
50,000 sq ft of good quality off ice
space over three floors. It is located
in central Leeds in close proximity to
the Merrion Estate and we have had
healthy interest for occupancy from
the end of this year.

For more information,
see our case study on page 17.

New tenants
and lease renewals
At Vicar Lane, we have signed a ten-
year lease with income of £75,000 with
a new tenant, We are Cow, a leading
independent retailer specialising in
vintage clothing. This unit has now
been fitted out and is trading. We have
successfully re-geared a number of
our properties during the year. At the
Headrow in Leeds we have agreed
lease renewals with both Whittard (five
years) and Greggs (five years) while in
West Park, Harrogate ten-year lease
renewals have been signed with OKA
and Cotswold Outdoor. All deals have
been at or close to passing rent.

Outside the centre we have

invested significantly to improve
the centre’s fascia and kerb appeal.
This has generated significant
interest and led to a raft of new
tenants including the Co-op and
a variety of food outlets such as
Starbucks, Blue Sakura, Dominos,
and a number of new Asian food
off erings which are popular with
the local student population.

ibis Styles hotel
Due to the direct impact of COVID-19
on the hospitality sector, performance
has been weak across our hotel and
leisure assets. However, forming part
of the Merrion Estate, the hotel is in a
key location close to Leeds Infirmary
and it has been able to help support
the local community by remaining
open to key workers at a discounted
rate during the lockdown.

As people slowly return to work,
the business is starting to attract
customers once again and it has
expanded its marketing channels
to attract corporate bookings to
help increase the occupancy rate.

Refurbishing existing
investment assets
Grade A space is in short supply in
Leeds and Manchester. TCS is spending
over £7m on major refurbishments
of 123 Albion Street in Leeds and
Ducie House in Manchester, and the
common parts in Carvers Warehouse.
These great city centre locations are
well placed to benefit from the lack
of available new Grade A stock on the
market and we are seeing strong levels
of interest in 123 Albion Street where
the refurbishment is complete.

Merrion Estate
The Merrion Estate has been
a key asset in our portfolio for
over 55 years and one that we
continue to evolve as a unique
mixed-use development
consisting of retail and leisure,
off ice 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
approximately 3,500 new student
beds under construction around the
centre, our significant investment and
focused asset management activity
has materially reinvented the centre,
targeting the growing local student
population and the Leeds Arena
crowds. With various redevelopment
opportunities still existing, we
believe the Merrion Estate continues
to represent a valuable long-term
opportunity. During the year we
continued to develop the centre:

The off ice space is fully let serving a
range of smaller and larger tenants
including Leeds City Council’s
headquarters and we work hard
to keep tenants on site and build
strong relationships.

Inside the centre, 23% of our

space is retail, focused on the
more stable food and value sector
of the market. 30% of our retail
tenants were able to remain open
during lockdown including a large
Morrisons supermarket and we
have supported our tenants during
this time, ensuring they are able to
operate safely and helping other
tenants to get up and running as
lockdown eases.

* Total % rounded

123 Albion Street

25
25

Town Centre Securities PLC

Divisional review

continued

Manchester represents one of the largest
UK city regions outside London, with an
economy worth £62.8 billion (GVA). This
strength has enabled it to establish an
outstanding reputation as a competitive
place to do business, boasting a diverse and
high-quality portfolio of business properties.
Talent-hungry companies choose to invest
in Manchester because of the people that
choose to live, work and study here.

Manchester is a leading European business destination
and the most successful UK city for attracting foreign
direct investment outside of London. The birthplace of
the Industrial Revolution, it continues to be a city which
innovates across a variety of sectors. As highlighted in
The Data City for the UK’s Top Digital Tech Cities – 2020
report, Manchester outperforms all other major UK
cities in the fields of AI and data, advanced materials,
cyber, construction tech, eCommerce, IoT, MedTech
and service design.

Annual Report & Accounts 2020

01. Strategic Report
01. Strategic Report

Carvers Warehouse
During the year we also invested
£0.3m improving the common areas in
our Carvers Warehouse off ice building,
creating social and break-out space
for our tenants. Carvers Warehouse
continues to have high occupancy
levels and we are working hard to let
the remaining suite. Our investment
has enabled us to ensure that the asset
is consistent with the best refurbished
space available locally, pushing rents
on from an average of £16 psf to
£18psf. The tone of the building is
now £19–£20 psf.

Residential
Housing in the region is in short
supply and there are plans to develop
a minimum of 25,000 new homes
in Manchester over the next 10 years.
While there are some risks to the future
outlook from COVID-19, the residential
market here remains robust with
strong investor developer interest
for key sites.

Burlington House
Our first dedicated PRS building,
Burlington House, in Manchester,
was completed and fully occupied by
September 2019 and we were pleased
to be awarded Insider’s North West
Apartment Developer of the Year for
this development. It has continued to
enjoy high levels of occupancy during
COVID-19 and we anticipate that this
will be a key step towards further PRS
developments in the Piccadilly Basin.

Manchester key facts

Population:

Forecast growth rate:

14.1% over the 20 years
from 2017. Primary retail
catchment of 1.6m people.

Primary retail catchment:

1.6m people.

The Greater Manchester
Forecasting Model-2018
shows GVA growing at
1.7 % per year up to 2036,
an increase of £25,800
million between 2016
and 2036.

Total employment is
forecast to grow at 0.5%
per year in GM, equating
to a net increase of
140,100 employees 2016
to 2036. Employment
growth is largely driven
by Business, Financial,
and Professional Services
– accounting for over half
of the net increase in the
total number of jobs based
in GM, up to 2036.

With access to 7.2
million people within
a one-hour drive and
over 100,000 students,
Manchester provides
companies with unrivalled
access to a wealth of
talent. With strengths in
cyber security, FinTech,
genomics, advanced
materials and more.

Over 550,000 in
the centre with over
7.2m people within
one hour’s drive.

Student population:

Over 100,000, supported
by the city region’s five
universities and a strong
civic focus on developing
the future talent pipeline.

Workforce:

The population of
Manchester is forecast to
grow by 81,200 from 2017,
taking its total to 619,400
by 2036. The working age
population (16–64) will
increase by 10.5%.

Corporate off ices:

BBC, ITV, the Co-operative
Group, BooHoo, MAG,
THG, Amazon.

Manchester

Off ice space
In Manchester, vacancy
rates for grade A off ice 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 refurbished space
as these buildings off er an
attractive alternative to
new developments.

Ducie House
Ducie House is a 33,000 sq ft
multi-tenant off ice building where
we are investing £2.2m in a full
refurbishment of the building during
the year to create good quality working
spaces which can be let on flexible,
short-term leases. Due to COVID-19,
the refurbishment was paused in the
spring, but the work is now due to be
completed in October 2020 and we
expect to see strong demand as good
quality refurbished off ice space is
in short supply.

For more information, see our case
study on page 14.

Our stakeholders:

Value £m

14.8
13.6
11.0
3.8
23.8
66.8

22%
20%
16%
6%
36%
100

Manchester Retail & Leisure
Manchester Off ices
Manchester Residential
Manchester Car Parks
Manchester Development
Total Manchester

Manchester as % of total

18%

Ducie House

* Total % rounded

Urban Exchange

27
27

Town Centre Securities PLC

Divisional review

continued

Scotland & London

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.

In London, our investments are in
good quality secondary high street
locations and primarily consist of retail
and residential mixed-use assets.

Refurbishing existing
investment assets
We let the ground floor and
basement of a property in Bath Street,
Glasgow, on a fifteen year lease to
The Scotch Malt Whisky Society at
a headline rent of £30k per annum.
The transformational refurbishment
has been a great success and the
tenant opened for business in March
before unfortunately having to close
temporarily as a result of COVID-19.

Acquisitions and disposals
In London, we bought a shop with
upper residential space at 106b Kilburn
High Street for £1.61m. This was an
opportunistic purchase of an asset at
an attractive price and yield adjacent
to an existing TCS asset.

We continue to look to maximise
available capital partly through the
disposal of ex growth assets. In
January 2020 we completed the sale
of a retail unit in Shandwick Place in
Edinburgh. The 6,000 sq ft unit was
empty but let for a remaining eight
years to Morrisons, and has been
sold for £2m, 5% above valuation,
at a yield of 7%.

We continue to explore opportunities
to dispose of retail assets at the
right price.

1.Glasgow
Scotch Whisky Society

2. London
106a Kilburn High Street

3.Glasgow
Scotch Whisky Society

Our stakeholders:

Value £m

Scotland & London
Retail & Leisure
Scotland & London
Off ices
Scotland & London
Residential
Scotland & London
Car Parks
Total
Scotland & London

58.0

0.7

6.7

12.7

78.1

74%

16%

100%

Scotland & London as % of total

21%

* Total % rounded

Annual Report & Accounts 2020
Annual Report & Accounts 2020

01. Strategic Report
01. Strategic Report

Development pipeline

Our development pipeline of over
£600m has been built up over time
and is a major value creation opportunity
for the business, providing TCS with
opportunities to support the business
and generate long-term value on a case-
by-case basis. We take a conservative,
long-term approach to development to
ensure we do not overcommit ourselves,
exploiting opportunities when the timing
is right and controlling the pace
of development.

We still see long-term value in

residential property, particularly
prime sites with major transport
links, and this will enable us
to continue to diversify away
from retail. Our Eider House
development, our second PRS
scheme in Manchester’s Piccadilly
Basin, meets these criteria and has
been granted planning consent.
We intend to proceed with this
development, but the timing is
currently under review.

Over the long term we believe our
development pipeline continues to
present material opportunities for TCS.

In the current uncertain and
changing market environment,
our focus is capital management
and some development projects are
therefore under review as we assess
the opportunities.

We were in the planning process

for a 50/50 joint venture with Leeds
City Council to develop a 136 room
aparthotel on George Street in
Leeds. Our original plan was to
use shares in the joint venture as
security to fund the asset, but in
the current environment this has
proven unachievable, and therefore
we have decided not to proceed.

Our planning consent for Whitehall
Road in Leeds to develop a
180,000 sq ft Grade A off ice space
and 513 space multi-storey car
park has been implemented and
we continue to market the site
to secure a pre-let. We are also
reviewing alternative options for the
Whitehall Road development site
in order to ensure we can maximise
value from this prime location.

29
29

Town Centre Securities PLC

Divisional review

continued

CitiPark

CitiPark is a strong and profitable
standalone business in its own right,
and also plays a valuable role in monetising
what would otherwise be empty,
non-income producing, development
assets in Leeds and Manchester.

leisure and retail sectors combined
with the restrictions on movement
during lockdown reduced the use of
car parks. The majority of our car parks
were closed and we also saw season
ticket cancellations. In addition, car
parks were not able to benefit from the
UK government’s business rates relief
scheme. This has materially impacted
our profitability, leading to profit for
FY20 of £2.6m (pre IFRS 16) compared
to a profit of £4.4m for FY19. Given the
growth expected and seen in the first
eight months of the year we estimate
COVID-19 to have impacted CitiPark
profitability by £2.0m in the year.

We were proactive in taking action to
manage the impacts on the business by:

implementing cost saving initiatives

across the business;

making use of the furlough

scheme, furloughing approximately
80% of our car park business
employees including our hourly
paid operations staff ;

closing our operations in Leeds,
Manchester and Watford and
making partial closures throughout
the rest of our portfolio helping
to minimise costs, in particular
business rates; and

cancelling or suspending non-

essential contracts and services
wherever possible.

The measures we have taken
combined with our strong early start
to the year, mean that we have been

able to successfully navigate this
challenging situation and are well-
positioned to benefit as the economy
begins to open up.

We are starting to see an improvement
in business, our branches are now
open, and we expect this improvement
to accelerate as consumers move away
from public transport and companies
buy parking spaces for their employees
so they can drive to work.

Supporting our stakeholders
During this diff icult time, despite the
adverse eff ect on our business from
COVID-19, we felt it was important
to support the NHS and other key
workers, in line with our commitment
to contribute positively to our local
communities. We therefore off ered
our services and premises to the
NHS, becoming an NHS supplier so
we could open car parks and provide
6,500 car parking spaces to be used
completely free-of charge as and
when needed, worth £80,000.

We also put in place support
mechanisms for our employees,
including topping up the pay of those
staff who were furloughed so they
continued to receive their full salaries
and providing regular updates and
touch points for all our employees.
To protect our staff as they return
to work, we have conducted new
risk assessments for all our car parks
and ensured that our employees
have access to suitable PPE and
hand sanitisers.

Ben Ziff
Managing Director CitiPark
& TCS Energy

Key facts

Number of car parks

Spaces operated across 19 car parks

8,470

Overview
Until the end of February 2020,
CitiPark enjoyed a strong year and saw
significant year on year improvement
in both revenue and profitability.
We introduced a number of new
initiatives during this period, including
launching our own parking app and
off ering instantly available season
tickets to car park users. We have
also taken significant steps to expand
our car park management services
platform, successfully adding two new
locations in the past twelve months.
An important development for the
business was the launch of BaySentry
Solutions, our parking enforcement
company, which started operations
on 1st January 2020.

COVID-19
Since the end of February, COVID-19
has had a very significant adverse
eff ect on our business. Business
closures across the commercial,

Annual Report & Accounts 2020

01. Strategic Report

Finally, we have been working together
with high street retailers and other
operators to encourage people back
to their off ices and businesses, and
therefore using our car parking facilities.

Our performance
During the first eight months of the
year, CitiPark made good progress
and saw strong growth, increasing
revenues by 4.7% against the same
period in the previous year.

We added over 1,500 parking
spaces to our portfolio and following
our successful partnership with
John Lewis, we took on car park
management contracts at two new
locations, Victoria Mills, Shipley
and the Manchester Arena car park, a
prime car park with 978 parking spaces
in a flagship location. This went live
successfully on 1st April 2020, despite
the challenges during this time, and
we remain confident on the outlook
for this location. Car park management
services remain a growth opportunity
for the business going forward.

For more information, see our case
study on page 15.

Developing
technological solutions
We also continued to focus on
technological improvements and
progressed various new initiatives
during the year:

developing and launching our

own fully integrated CitiPark app,
enabling our customers to pre-book
parking and other services via their
mobile devices, whilst also allowing
third-party integration (e.g. YPS);

off ering digital season tickets that
can be downloaded to mobile
phones eliminating the need for
a plastic card; and

providing mobile pay, scan and
pay solutions at all our CitiPark
car parks.

We have seen strong take up of these
new solutions, recording over 16,900
pre-bookings and over 12,600 mobile
payment transactions since launch and
issuing over 500 digital season tickets.

In addition, we have developed our
own parking management system
which utilises ANPR technology
and our own app. This system has
been introduced at our Ducie Street,
Burlington and Victoria Mills car parks
during the year and we intend to
roll this out more widely across our
portfolio in the coming year.

CitiCharge
The business continues to look
at developing sustainable and
environmentally responsible solutions
and we view this as an opportunity to
create additional value going forward.
Sales of electric cars continue to
grow rapidly and, as a result, we
are seeing increased demand for
electric vehicle (EV) charging points.
As part of our CitiCharge plan to roll
out EV charging points across all our
appropriate investment property, we
installed EV bays in the car park of our
Milngavie retail property during the
year. Post year-end we won an order
to supply 35 EV chargers to Coventry
NHS hospital, a significant contract
which also provides us with a potential
opportunity for further collaboration
on future NHS projects.

BaySentry
In order to deter inconsiderate parking
and ensure that there are car parking
spaces available for fee-paying
customers, we use enforcement
services across our car parks, which
have previously been contracted
to a third-party supplier. We saw an
opportunity to reduce our costs and
gain an additional income stream by
supplying these services ourselves.

BaySentry Solutions Ltd, our parking
management company, started
operating in January 2020 following
receipt of its accreditation from the
British Parking Association Approved
Operator Scheme. We currently
have contracts in place to provide
enforcement services and issue
Parking Charge Notices (PCNs) at six
branches and this will expand further.

Going forward, we shall be able to
add our enforcement services to any
future car park management contracts
agreement tenders in the wider
market, often seen as a prerequisite
to those looking for an operator.

Yourparkingspace.co.uk (YPS)
YPS is an internet and app-based
business that matches customers
to available car parking spaces across
the UK. It has over 87,000 spaces
available to book in over 15,000
diff erent locations. TCS has a stake
in YPS, and in line with its original
investment agreement, TCS exercised
a further share purchase option in the
year. Our equity stake at 30 June 2020
stood at 19.9%.

YPS, like all parking businesses, has
been impacted by COVID-19. However,
it has managed its cash and expenses
very carefully, remains in good financial
shape and has seen a significant upturn
in business in the past few months.

Since the 30th June YPS has
concluded a further round of
fundraising with a new private
equity investor investing cash into
the business for the next phase of
growth, and becoming a significant
lead shareholder. As part of the
process TCS executed its final option
agreement, and post completion
of the transaction will hold 21.7%
of the business.

Outlook
The easing of lockdown measures since
the middle of June has enabled shops
and businesses to reopen and staff
to return to work and we have started
to see customers returning to our
car parks. We expect the business to
recover relatively quickly as confidence
returns and consumers are encouraged
to support local businesses. We have
put measures in place to ensure we are
able to operate safely and eff ectively
going forward, including phasing out
cash as a form of payment across our
car parks and implementing new, safe
ways of working to protect our staff
and customers.

We also continue to look at growth
opportunities, including the addition
of new management services
contracts, the growth of our
EV charging platform and further
development of our app including
the integration of the emissions-based
tariff s and the expansion of our
BaySentry Solutions business.

Town Centre Securities PLC

Annual Report & Accounts 2020

01. Strategic Report

Section 172 statement
Statement by the Directors
in performance of their statutory
duties in accordance with s172(1)
Companies Act 2006

The Board believes that, individually and collectively,
they have acted in a way they consider, in good faith,
would be most likely to promote the success of the
Company for the benefit of its members as a whole,
having regard to the stakeholders and matters set out
in s172(1)(a-f) Companies Act 2006.

We have continued to generate value for our stakeholders
for 60 years and remain committed to pursuing our strategy
for long-term value creation.

We believe that consideration of our stakeholders is the
foundation of what we do and the basis of every decision
that is made throughout the Company. To demonstrate how
entrenched this is into the way we act as a business we have
included cross-references to where you can find further
examples across this report:

Why invest
in Town Centre
Securities?

Clear demonstration
of the value we provide
to shareholders

Strategy

Clearly defined plans for
the future of the business

Environmental,
Social and
Governance Report

Demonstrating understanding
of how our business impacts
those around us

Page 6

Page 12-13

Page 34

How the Board factors its stakeholders into decision-making
The table below sets out who we believe to be our key stakeholders, why they
are important to us and, subsequently, how we factored their interests into our
decision-making process to promote the success of the business as a whole.

Our stakeholders:

Why they are important:

How we engaged during the year:

Shareholders

Shareholders are key to ensuring
we have the capital to continue
doing what we do. They keep us
accountable and provide direction
and approval to future plans.

The primary communications with private shareholders is through the Annual
Report and Accounts, the Half-Year release and the Annual General Meeting
(‘AGM’). All Directors attend the AGM and we encourage shareholders to ask
questions of the Board and meet informally after.

In addition, 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, and at other times throughout
the year.

During the COVID-19 crisis we have released a number of RNS statements
detailing actions the business is taking, levels of rent receipts being experienced
and levels of borrowing headroom to give all shareholders confidence in terms
of our response to the crisis and our ability to weather it.

We continue to engage with Edison to prepare analyst reports which are available
for all investors to read. We are very aware that we have a large proportion of
small investors who will not be able to use the reports written by our Brokers
Liberum and Peel Hunt. The Edison reports are freely available to all shareholders.

Our stakeholders:

Why they are important:

How we engaged during the year:

Employees

Our employees allow us to
continue to deliver and maintain
quality environments and services
for our customers, and sustain
long-term growth, providing value
to our shareholders. Ensuring
we have happy employees with
challenging work in turn produces
higher quality outcomes and
benefits all stakeholders.

Tenants

Debt funders

Community

Delivering for customers is at
the heart of everything we do.
Whether that is locally based
businesses in our mixed use
developments or users of one our
state of the art car parks. If our
customers are satisfied then we
know we are delivering enjoyable
and high-quality environments.
We value highly the long-term
relationships we have with our
tenants. This has been especially
important during the COVID-19
crisis where these relationships
have helped us to maintain a
healthy rate of rent collections
and have confidence in agreeing
rent deferrals.

Our economic model assumes
that we leverage assets developed
to continue to invest and grow.
This makes the availability of
secured debt funding key to
business development.
We see our three main bank debt
providers, and our debenture
holders, as key stakeholders.

We believe we have a duty to
make a positive contribution
locally and be considered an
integral part of the community.

We are committed to the personal and professional development
of our employees, supporting employees through studies.

We continue to look for ways to improve the rewards and support we give our
staff beyond their base salary, and have a number of schemes in place to enable
this. This includes but is not limited to: salary sacrifice schemes for childcare
vouchers and cycle to work initiatives; Westfield Health care for head office
based staff; a company pension scheme and access to a pension advisor; a share
save scheme allowing all staff to benefit from the HMRC scheme with TCS also
contributing shares. We are also currently investigating the option of an electric
vehicle salary sacrifice scheme, giving both a financial and environmental benefit.

Last year we completed the refurbishment of our Leeds head office. As well
as providing the Company with the ability to re-let some residual space, the
Company made sure to ensure that the new office space was designed with the
well-being of staff in mind including having: living green walls; improved lighting;
a revamped staff canteen; and better break-out spaces.

During the COVID-19 crisis we have kept in close contact with staff,
and for those furloughed staff have topped salaries fully up to 100%.

During the 2018 financial year we appointed Ian Marcus as our
workforce representative.

Further details on our workforce engagement can be found on page 40.

During the COVID-19 crisis we have been in very close contact with our tenants,
in an attempt to understand the pressures that they are under and how we can
work with them to get through the crisis and ensure that remain as tenants in the
longer term. We have been particular keen to ensure that small and long-term
loyal tenants are helped not only financially but with wider operational support
as well. In Merrion Centre in particular working with all our tenants to help bring
customers and workers back to the shops, restaurants and offices and to enable
socially distanced shopping and working has been critical.

In Ducie House in Manchester we have worked with tenants to support them
through the COVID-19 crisis whilst at the same time enable our refurbishment
of the building for their and our future benefit. As a result we have agreed
a four month rent-free period for all tenants with them vacating the building to
allow for the works to take place in a safe environment and in the shortest time.

Further details on our engagement with our customers can be found
on pages 10, 39, 43.

We remain in regular communication with our banks, and during the COVID-19
crisis this has increased. We have made sure to update them on rents received
and key measures related to overall Company performance and the assets
specifically secured to their facilities.

In addition this year we have prepared a debenture specific presentation available
on our website which the Chief Executive and Finance Director presented to the
majority of debenture holders.

The COVID-19 pandemic shone a light on how valued and essential our
key workers are to the survival of this country and the importance of community.
This unfortunate event enabled us to show our solidarity with our keyworkers
by launching initiatives such as free car parking, concessionary hotel
accommodation and lighting our flagship car park blue to mark their heroic work.

Further details on our engagement with the community can be found
on page 41.

Environment

The Board acknowledges that it
has a responsibility to minimise its
environmental impact.

This year we reintroduced our recycling scheme allowing customers
to receive a discount from their parking fee for every plastic bag brought
to CitiPark’s Merrion Centre car park.

Following receiving its ‘Contributing to the Community’ award last year,
CitiPark has continued to be a champion of green initiatives. Furthering
the UK’s electric vehicle charging infrastructure by installing more
subscription-free charging points.

Further details on our engagement with the environment can be found
on page 36.

3232

33
33

Town Centre Securities PLC

Corporate responsibility

Overview
TCS has been committed to generating
long-term sustainable success since its
foundation over 60 years ago and still
retains the ethos of its founder that business
should make a positive contribution
to the communities in which it operates.

The Marjorie & Arnold Ziff Charitable
foundation is a registered charity
which, whilst managed separately
with its own resources based on a
TCS shareholding, plays a key role in
facilitating the Ziff family to support
the local community while Edward
Ziff, our current Chair and CEO,
was awarded an OBE for service to
community in 2017 and is Chair and
Trustee of Leeds Cares, a charity which
supports Leeds Teaching Hospitals.

We recognise the need to develop
a more formal structure to support
our activities and ambitions in this
area and have embarked on a journey
to create an ESG framework with
clearly articulated targets and metrics
to measure progress against our
focus areas. While the disruption
due to COVID-19 has prevented us
from making the progress intended
this year, the approach we have
taken to managing the exceptional
challenges we have faced has
served to demonstrate our intrinsic
commitment to ESG issues.

Governance
The Board currently has responsibility for overseeing our activities in this
area and ensuring that ESG issues are considered in all our decision-making.
When we invest our capital we always look to protect the environment,
benefit the communities that surround us, and take into account the needs
of all our stakeholders.

Our approach
ESG is at the heart of everything we do. We aim to ensure that all the activities
we undertake as part of our four strategic workstreams are underpinned by the
following five ESG principles which form the basis for our ESG programme:

Always do the
right thing

Minimise our
environmental
impact

Engage with our
external
stakeholders

Make a positive
contribution to the
communities we
operate in

Engaged and
committed
employees

The table below details some of the ESG focused and COVID-19 specific activities that are currently
underway across the business and outlines how they fit into our strategic framework.

Actively managing
our assets

Maximising
available capital

Investing
in development

Investing in
investment assets

12, 19, 20

Minimise our environmental impact

Engage with our external stakeholders

1, 2, CV13

CV3, CV6

1, 4, 5, 13, 15

6, 8

2, 4, 15

2, 6, 8, 9, 11

2, 6, 9, 16, CV9

Engaged and committed employees

3, 7, CV4, CV7, CV11

18, 21

Make a positive contribution
to our communities

14, CV5

CV14

CV12

Always do the right thing

CV8

CV1, CV2, CV10

Strategic projects

COVID-19 specific

Merrion Centre waste
and sustainability plan
Energy efficiency
programmes lowering
service charge costs
New office refit with living
walls and improved space
Investment in EV charging
infrastructure
Solar farm investments
in Leeds and Manchester
BREEAM targets for
all new buildings
WELL Building
Standard target
Full recycling options
at Burlington House
Merrion House facilities
including recycling and
cycle store

10 Burlington House

value added services
including cleaning,
deliveries and fitness

Picaddilly Basin street
art project and security
improvement

12 Environmental targets
for 123 Albion Street
and Ducie House
13 Launch of CitiCharge
14 Significant CSR programme

supporting local
communities and charities
15 Specific parking rates for EV
drivers at Clipstone Street
16 Investment in WiredScore
17 Westfield Health benefits

for staff

18 Ongoing SIP scheme to

engage and benefit all staff

19 Go Ultra Low status

for CitiPark

20 Installation of PIR and

LED lighting systems in
properties and car parks

21 Ian Marcus

appointed workforce
Board representative

CV1

CV2

CV3

CV4

CV5

CV6

CV7

Reducing Board salaries
by 20%
Weekly full Board
meetings and weekly
Non-Exec meetings
with Chair/CEO
Entering into bespoke
agreements with tenants
regarding their ability to
pay lease commitments
during COVID-19
Granting three additional
rest days for non-
furloughed staff
to take in Q1 2021
NHS and key worker
support via car parks and
ibis Styles hotel
Working with tenants
who remained open
to ensure safe access
for customers and
facility users
Two or three times a
week video calls with
senior staff to review all
aspects of the business
including staff wellbeing

CV8

CV9

Full round of
updates presented to
Debenture holders
Continued investment
in 123 Albion Street and
Ducie House

CV11

CV10 All other Capex
suspended
All furloughed members
of staffed topped up
to 100% salary by the
Company
CV12 CitiPark and Walk

initiative to replace
closed Leeds Park
and Ride service
CV13 Energy usage across

closed premises
managed to reduce
environmental impact
and cost

CV14 Worked with trustees

of the Marjorie and
Arnold Ziff Charitable
Foundation to support
charities associated with
TCS during the crisis

Alignment with the UN
Sustainable Development
Goals (SDGs)
TCS recognises the importance of the
UN SDGs and as we further develop
our ESG programme we are using
these to inform our decision-making
and target setting.

The key SDGs that TCS has an impact
on and our activities in these areas
are set out adjacent:

SDG Goals

Goal 3 - Good health and wellbeing

Goal 7 - Affordable and clean energy

Our charitable work with children
(e.g. our work with the Ahead Partnership)

Producing our own solar energy through
the development of three solar farms
in Leeds and Manchester

Goals 11 & 12 - Sustainable cities
and communities and Responsible
consumption and production

EV charging network, and newly
formed CitiCharge business. Also our
five-year Merrion Centre sustainability plan

Goals 10 & 17 - Reduced inequalities
and Partnerships for the goals

Local charitable partnerships
including Tempus Nova

34
34

Annual Report & Accounts 202001. Strategic Report

Town Centre Securities PLC

Annual Report & Accounts 2020

01. Strategic Report

Corporate responsibility

continued

Delivering the programme:

1 Minimise our

environmental Impact

TCS has long taken its environmental
responsibilities seriously, including
making long-term investment
decisions that give immediate
environmental benefits, with longer-
term commercial ones. We outline
our approach to date on those
aspects of the environment that we
can influence and some of the key
initiatives that we have delivered.
This report does not include metrics
for the whole of our estate, since
the majority of it is let to third party
tenants who are responsible for the
generation of, and reporting on, their
environmental footprint. We also
highlight our environmental work
on the Merrion Centre, our largest
and most complicated asset, and
123 Albion Street which is currently
being refurbished.

Our approach
Across our business our key environmental focus to date
has been on sustainable energy usage in three key areas:

Generation - We have three of our
own solar photovoltaic farms in
Leeds and Manchester, which in
FY20 generated over 200,000 kWh
of energy and avoided over
115 tonnes of carbon dioxide.

Vehicles - Through our CitiPark
business we have a unique
lens into the consumer’s use of
electric vehicles and are taking
considerable steps forward in
increasing the provision of EV
charging for customers’ electric
vehicles. Projects include:

Installation of EV charging
across our car park estate and
introduction of our first rapid
charger at Merrion in Leeds.

Creation of our CitiCharge
EV charging venture, with new
charging facilities installed
in Milngavie in the year.

CitiPark plans to introduce an
emission-based parking tariff .
This is currently being trialled
in one of our London branches.

CitiPark are accredited as
a ‘Go Ultra Low’ company
recognising CitiPark’s
commitment to EV vehicles
within its own fleet.

Buildings - We aim to design
and deliver buildings that:
-

Are capable of achieving
the WELL Building Standard,
reflecting our commitment
to the health, wellbeing and
productivity of the spaces
that we create.

Integrate high standards of
environmental design so that
the impact on the natural world
is minimised and wherever
possible delivers positive
environmental benefits.

We apply the BREEAM standards,
targeting the BREEAM Excellent
rating in our new off ice
developments and a minimum
of BREEAM Good in off ice
refurbishments.

Sustainable materials, full lifecycle
models and energy eff iciency
are part of our project evaluation
process for development and
refurbishment works in our estate.

All of our buildings have had
EPC assessments and we
monitor and seek to improve
EPC ratings through the lifecycle
of the building.

We aim to ensure that the
construction process minimises
disruption and nuisance to
surrounding communities
and occupiers by employing
contractors who meet the
standards of the Considerate
Constructors Scheme.

The Merrion Centre
The Merrion Centre is now in year three of its five-year sustainability plan and is on target for
implementing its goals ahead of schedule. Our key objective is to reduce our carbon footprint
and in turn reduce our impact on the environment, these initiatives include:

Waste initiative
With growing services in the night-time
economy we have seen an increase in
the volume of waste being produced.
We have reviewed the various waste
streams, ensuring we better segregate
the recycling from the general waste.

The COVID-19 lockdown saw a number
of our tenants closing their doors for a
period of time. The waste management
service was adapted accordingly
to ensure financial savings were
captured. During this period recycling
was still widely promoted across site.

For the second year running 100%
of our waste has been 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.

The Merrion Centre produced
38.4 tonnes of waste in total last year,
which is a reduction of 28.7% over
the previous 12 months. 22% of the
total waste produced this year was
recycled and 78% was sent to an ERF.

Total waste produced (tonnes)

38.4

Total waste reduction over 12 months

-28.7%

Total waste recycled

22%

Total waste sent to ERF

78%

Sustainability projects
Measures to improve sustainability at the Merrion Centre include:

The creation of a cycle shower
facility in the centre largely
through reusable products to
support the growing number
of cycling enthusiasts.

Our rolling programme continues
to upgrade and improve our power
distribution network including:

Two new meters installed
to help reduce the load on
our oldest controls panel.

Further LED lighting was installed
in the centre mall and off ices.

To promote well-being and off er
a space to relax and re-charge,
the Merrion Centre launched
a brand-new space ‘The Green’.
Off ering free Wi-Fi and charging
points within a contemporary
garden backdrop of giant deck
chairs and seating, it invited visitors
to ‘experience the great indoors’ and
off ered the perfect place to ‘meet,
connect and charge’ in a serene
and creative space and in line with
Government guidance on social
distancing. Residing in a temporary
space on the main mall, ‘The Green’
hosted pop up refreshment stalls
and events including the Leeds
United Champions Trail and off ered
off ice workers, students and
families a space to enjoy their own
refreshments in the heart of the
city. This was created largely out
of reusable equipment.

We continue to operate an Ecocap
system in the Town Centre House
toilets and as a result in the past year
we saved approximately 300,000
litres of water.

‘Merrion Goes Green’ week was
re-launched in October 2019,
following its success the previous
year. This provided a platform to
promote all things sustainable and
environmental. The themes were
Reduce, Reuse, Recycle, Rejuvenate
and Renew, working with tenants and
local focus groups to raise awareness
and reiterate our commitment.

During the pandemic a new piece
of innovation was implemented,
an escalator hand sanitising unit.
This uses uv lamp technology
to sterilise the handrails by
continuously disinfecting the
rails during the operation of the
escalator on site. The system is
designed to wipe out 99.99 per
cent of germs on the surface of the
handrail in a sustainable manner.

The Merrion Centre and a
number of our tenants joined the
#Refill campaign, with the aim
of reducing plastic pollution by
making it easy to refill your reusable
water bottle instead of buying a
plastic one. For more information
visit refill.org.uk.

CitiPark’s highly successful ‘play
with plastic’ initiative was further
enhanced in 2019 with a month-long
recycling scheme. CitiPark rewarded
environmentally conscious drivers
by off ering a 5p discount on parking
for every plastic bag brought to both
the Merrion Centre and Leeds Dock
car parks.

Energy and water consumption
As a result of our energy saving
initiatives, the Merrion Centre saved
£5.1k last year, equating to a 10.9%
reduction on electrical consumption,
notwithstanding the development
of the centre.

The Merrion Centre also achieved a
52.7% saving on gas and water volumes.

37
37

Corporate responsibility

continued

SECR

In line with the Companies Act
2006 (2013 Regulations) and the
recently introduced Streamlined
Energy and Carbon Reporting (SECR)
requirement, Town Centre Securities
PLC (‘TCS’) is disclosing its annual
Global Greenhouse Gas (GHG)
emissions for the second time.
We are required to report the
Company’s emissions of carbon
dioxide equivalence (CO2e),
a CO2e intensity value, and the
consumption of energy in the UK.
The methodologies and processes
used to calculate these emissions
are also disclosed.

Energy consumption (all UK-based)

Scope 11

Scope 22

Total

CO2e emissions (all UK-based)

Scope 11

Scope 22

Total

Carbon intensity

Reference 1: Area

Reference 2: Employee

CO2e by area
CO2e by employee

This is the second year of GHG
emissions reporting for TCS but
the first following the new SECR
regulations under which energy
consumption must also be disclosed.
TCS has addressed environmental
impacts through a number of
measures and processes; details
of these are laid out on page 36
of this report.

The table below includes emissions
for the consumption and combustion
of fuel (Scope 1) and purchased
electricity (Scope 2) of the premises
and other assets operated by TCS.

TCS purchases natural gas for one
office and has a fleet of nine vehicles
– three of which are electric and three
that are petrol/electric hybrid cars –
which is the sum of the Company’s
Scope 1 GHG emissions. Scope 2
emissions are made up of electricity
consumed at two offices and for
the charging of electric vehicles.
All of TCS’s operations are in the
UK, therefore all values below are
both Group totals and UK totals.
Vehicle emission data and emissions
from natural gas combustion have
been reported for the first time
in 2020.

2019

n/a

2019

n/a

59,007

2019

8,311

7.103

1,4753

2020

Unit

29,447

Kilowatt hours of energy used

118,118

Kilowatt hours of energy used

164,743

2020

Unit

10,876 Kgs of CO2e
39,808 Kgs of CO2e
50,684

2020

Unit

8,311

Square metres (office area for Group)

Employees (FTE)

6.10

1,334

Kg CO2e per m2
Kg CO2e per employee (FTE)

Scope 1 emissions are traditionally emitted from fuel combustion in either buildings or Company leased/owned vehicles. Emissions from personal
or privately-hired vehicles used for Company business are considered to be Scope 3 (under the GHG protocol) and as such are not included in the
‘Operational control’ boundary approach adopted by TCS (see ‘Methodology and scope’).

Scope 2 emissions are derived from electricity consumption at TCS’s offices and by the electric vehicles within their company car fleet.

Values restated following changes to reporting and calculation processes.

Methodology and scope
Carbon Dioxide equivalence (CO2e)
emission data has been collected,
calculated, consolidated and analysed
following the GHG Protocol (Corporate
Accounting & Reporting Standard)
following the ‘operational control’
approach. Emission factors of supplied
electricity for locations and vehicle
charging (both GHG emissions and
energy use based on vehicle mileage)
were sourced from the UK Government
GHG Conversion Factors for Company

Reporting 2020 (DEFRA agency) – this
represents the annual average CO2e
emissions of the UK’s electricity grid.
The boundary for reporting includes
assets (in the case of TCS these are
offices and Company owned/leased
vehicles) that are operated by the
Group and does not include the energy
and emissions of building tenants who
lease property from TCS; tenants are
responsible for reporting their GHG
emissions under their own Scope 2

disclosures. Energy consumption
values for offices, and their
corresponding GHG emissions,
are based on values provided by
utility suppliers, e.g. electricity or
natural gas bills. Company vehicle
mileage is estimated and is used
as the basis for calculating energy
consumption and emissions from
fuel and electric charging.

2 Engage with our

external stakeholders

123 Albion Street
Our refurbishment
of 123 Albion Street is
a significant investment
for TCS, and as part of the
project we have looked to
make environmentally and
user-positive decisions
wherever possible.

Examples include:

Touch-free technology that has
significant sustainable products
such as the latest PIR lighting
controls improving efficiency
by 50%.

Contactless lifts.

Energy efficient heating and
cooling system and a bespoke
building management system
that brings all of our initiatives
together to ensure they deliver
at an optimum level.

The ventilation system recovers
80% of the heat extracted from
within the office space.

Hot water produced by local
point of use electric heaters
to minimise energy wastage.

A new cycle facility including
shower room, cycle racks and
a cycle repair stand.

CitiPark diagrid
The flagship CitiPark branch at
Leeds Merrion Centre has this year
supported a variety of regional,
national and international causes by
illuminating its external LED diagrid
facing Merrion Way.

The NHS (blue), National Play Day
(Orange), Pride (Rainbow) and many
more initiatives have been supported
through this unique and impactful
channel which further highlights
TCS’s commitment to our business
partners and customer base.

Engaging young people
2019 saw us embark on a journey
of brand re-invention as Leeds
Merrion Centre’s ‘Shop, Eat, Drink
and Be Merrion!’ strategy continued
to return the Merrion to its status as a
retail and leisure destination. Initiating
a Leeds shopping centre ‘first’, an
empty space was reinvented to bring
three unique immersive experiences
to life under the themes of ‘educate’,
‘excite’ and ‘experience’ to appeal
to our three target audience groups.

Educate (under 12’s)
July–September: Leeds first
interactive history experience,
Professor Humboldt’s Chamber
of Time, was a 45-minute totally
immersive and action-packed
educational encounter where you
could experience history first hand
throughout the ages during
the school summer holiday.

This also coincided with our
involvement in the city’s first
‘Dinosaur Trail’ where we played
host to a life-size Triceratops as part
of the free trail for children visiting
the city over the school holidays.

Excite (millennials)
September– October: Leeds
first shopping centre scare
attraction – The Black Death:
Zombie experience! The five-night
60-minute immersive experience
was held after hours within the
event pop up space and saw
groups of up to 80 explore, sneak
and scream their way through their
very own zombie blockbuster with
20+ live actors, sets and industry
leading special effects.

Experience (families)
November–December: Leeds first
interactive Christmas ‘Elfington’
Factory replaced a traditional
grotto. This magical immersive
adventure saw Elves tinkering to
make all things Christmas, before
visitors discovered the way to visit
the big man himself. FREE trail
maps for every visitor guided them
to Santa before posting maps
for entry into a prize draw.

123 Albion Street

Town Centre Securities PLCAnnual Report & Accounts 202001. Strategic Report

Town Centre Securities PLC

Annual Report & Accounts 2020

01. Strategic Report

Corporate responsibility

continued

3 Engaged and

committed employees

We have a relatively small
team at our Head Off ice
and pride ourselves on how
we treat our employees.

We pride ourselves on being
a business that has a family feel to
it, building a clear culture over our
60 years in business of being a small
company that cares for and looks
after its employees, creating
opportunity and giving accountability.
Expectations of staff are high and
at times demanding. However we
endeavour to always support staff ,
and go above and beyond any written
down HR policy. We like all staff
to know that if they have a problem,
work-based or personal, that they
can talk with the Directors and senior
management in the knowledge that
the Company will do everything it
can to support them. We believe
in the concept of opportunity for all,
and are intolerant towards any form
of discrimination.

Our Non-Executive Director Ian Marcus
has taken on responsibility as our
Board representative for the wider

workforce. Whenever in the off ice
Ian meets with staff members and
during the COVID-19 crisis we have
ensured that staff are aware of his role
and that he is available to them. Ian’s
responsibility in this regard enables us
to assess the culture and engagement
within the business and challenge
management where necessary
in this regard.

TCS runs a Share Incentive Plan (SIP)
scheme available to all staff . Under
the HMRC guidelines it is an appealing
benefit and helps engage colleagues
in the wider success of the business.

Human rights
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.

Work environment
We continually look for opportunities
to improve the work environment for
our staff . We have renovated our Leeds
head off ice to create a more modern
and comfortable work environment.

In addition, we have improved
benefits in recent years for head
off ice 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.

4 Making a positive contribution

to the communities we operate in

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. We also seek to
improve and create a sense of
wider community in our areas
of operation, using our assets
and resources to work with
other community partners:

Young people – Ahead Partnership

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
Easter themed product/prototype
made of recyclable items ‘and/or’
generate a marketing/social media
campaign to discourage the use
of single use plastic items”.

Young people – LEAP

Recognition for contribution

We continued to support young
entrepreneurs by being host to
not-for-profit organisation The
Leeds Enterprise Advisory
Programme (LEAP) which runs an
enterprise programme for students
aged 14–19. Each academic year,
teams of students set up their own
companies, raise share capital,
write a business plan, and select,
source and market a product or
service which is then sold at one
of two events within the Merrion
Centre throughout the year.

Congratulating LUFC banners
Following Leeds United Football
Club’s recent promotion to
the Premier League during the
COVID-19 pandemic, Town Centre
Securities, CitiPark and the Merrion
Centre congratulated the team
in their own, unique way. Banners
were erected on Town Centre House
and the Merrion Centre which soon
appeared on social media as fans
posted about the statement pieces
that adorned two of our large assets
within the heart of Leeds.

toward regeneration
Burlington House was awarded
‘Apartment Development of the
Year’ (fewer than 100 homes)
at the prestigious Insider North
West Residential Property Awards
2019. The judges recognised that
the development has served as
one of the catalysts for further
regeneration and development
across Piccadilly Basin. TCS has
also worked closely with CityCo,
the Manchester city centre
management company, along with
the Mayor’s off ice and the local
police to improve security and
safety in the Basin. Furthermore
TCS has commissioned a street
art project to further enhance
and improve the area.

Award: British Property Federation
Futures Community Engagement
– highly commended for
the work of our head of CSR
Charlotte-Daisy Ziff .

LEAP, Merrion Centre

41
41

Town Centre Securities PLC

Annual Report & Accounts 2020
Annual Report & Accounts 2020

01. Strategic Report

Corporate responsibility

continued

5 Always do

the right thing

TCS takes its responsibilities
as a listed UK business
extremely seriously, and
is committed to upholding
high standards of corporate
governance. Whilst we spend
considerable time ensuring
we review our compliance
against rules, laws and codes,
we also spend much time
ensuring we abide by the spirit
of such requirements and
instilling a culture within the
orgnanisation of ‘doing the
right thing’.

Key areas of focus include:

Implementing the new Corporate
Governance Code – As detailed
on page 64, TCS has worked
closely as a Board to review the
requirements of the Code and be
clear where we believe compliance
is necessary and right, and where
it is appropriate to explain why
we take a diff erent approach.

Debenture holders, engagement
– TCS has in place a long-term
debenture where most of our
day to day contact is with the
debenture trustee. Given the nature
of the challenges and pressures of
COVID-19 on the business Edward
Ziff and Mark Dilley presented
individually to the majority of
bond holders to ensure they fully
understood the status of TCS and
the security of their investment.

Health and Safety (H&S)
– We are committed to providing
a safe and secure working
environment, in our own off ices
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. The Property Director
oversees its implementation, and
chairs a quarterly internal meeting
reviewing all aspects of H&S across
the business as a whole from our
off ices to our properties, car parks
and hotel. We have implemented
a new reporting and monitoring
system in the past year to facilitate
this. Our operational teams have
clear health and safety objectives
and review procedures regularly,
taking action where necessary.

Whistleblowing – We have a
whistleblowing policy in place
that is reviewed at least annually.
We see this policy as an important
feature to encourage and enable
all staff members to ‘do the
right thing’.

123 Albion Street

Sticking to our ESG principles
during COVID-19

Wilkos all remained open, with TCS
advocating specific tenant projects
including the award winning My Thai
who operated a ‘soup kitchen’ service
that served food to key workers and
the vulnerable that were unable
to leave their homes.

Always do the right thing
TCS made use of the government
furlough scheme, furloughing
53 individuals and topping up salaries
to ensure all members of staff received
100% of their salary. In addition
the Board of TCS also agreed to
a 20% reduction in salaries and
fees for six months.

Engaged and
committed employees
As well as issuing regular Chairman’s
updates to staff members, the Board
approved a granting of three additional
days holiday for those members of
staff working through the disruption
period, giving them a chance to rest
and recuperate following a tough and
stressful period.

Contributing to the
communities we operate in
TCS supports NHS/key workers
At the outset of the COVID-19
pandemic, TCS responded by
launching a series of initiatives to
support the NHS. This included free
parking with CitiPark and concessionary
hotel accommodation at the ibis Styles
Leeds City Centre Arena hotel (located
close to the LGI) which was one of the
only hotels in Leeds to remain open
throughout the pandemic.

In addition, TCS also championed
schemes set up by our extensive
tenant base which included exclusive
shopping slots for key workers, the
elderly and vulnerable. Iceland,
Morrisons, Boots Pharmacy, Heron
Foods, Home Bargains, Holland &
Barrett, Sing-Kee Supermarkets,
the NHS Sexual Health Clinic and

COVID-19 has allowed TCS to
prove its commitment to ESG.
The table above lists the main
examples, but we set out a few
highlights here.

Minimise our
environmental impact
As many of our tenants had to shut
during the COVID-19 disruption, our
property team reviewed lighting times
and levels, waste services, and heating
and air-conditioning usage to ensure we
minimised the environmental footprint
of our buildings and car parks. This not
only had an environmental benefit but
also reduced service charge costs for
our tenants.

Engage with our
external stakeholders
Touch-free technology at 123
The £5m comprehensive
refurbishment of 123 Albion Street in
Leeds (formally The Cube) continued
throughout the COVID-19 pandemic.
This gave TCS a unique opportunity
to ensure it met the needs of potential
occupiers looking for space in a new,
post-COVID-19 business environment.

By using the latest in touch-free
technology, the development of
the Grade A off ices, floorplates and
communal areas including showers
and storage facilities, cycling storage
and EV CitiCharge charging points,
will feature a virtually touch-free
journey through common areas for
occupiers and visitors to the building.
By installing the latest PIR lighting,
contactless lifts, automated doors into
the building and off ering soap and
water dispensers operable on infrared
zones, TCS were able to respond
swiftly to research showing that
occupiers are looking for a touch-free
experience and design the building
to minimise contact through the main
communal areas.

43
43

Town Centre Securities PLC

Financial review

COVID-19 has materially impacted financial
performance in FY20 and uncertainty
remains. However, the strength of our
portfolio has delivered good levels of rent
receipts allowing TCS to think strategically
about the future.

Mark Dilley
Group Finance Director

EPRA earnings in the year were
£2.1m. This is the first year that the
financial statements are presented in
accordance with IFRS 16 which aff ects
how we account for leases that we have
entered into. For a full explanation of
the eff ect and implications see page
48. As a result of the changes relating
to this standard we are introducing an
additional income statement measure
of Adjusted EPRA earnings which
removes the eff ect of IFRS 16 making
the results directly comparable with the
prior year’s financial statements which
have not been restated. Adjusted EPRA
earnings in the year were £2.6m, down
£3.7m on the prior year.

COVID-19 has had a material impact
on our financial performance, and we
estimate a total impact to earnings in
the year of £3.6m. We estimate that
our Investment Property business has
been impacted by £1.2m, primarily as a
result of bad debt provisions associated
with non-payment of rental income
and service charges. The impact to
our CitiPark business is £2.0m due to
a significant reduction in car parking
income with many fixed costs, such as
rent and rates. Our ibis Styles hotel has
been impacted by £0.4m in the year.

With adjusted EPRA earnings in the
year 59% lower than last year, and with
pressure on cash flow and headroom
we have had to make the very diff icult
decision to reduce our dividend
for the first time in our history. The
unprecedented impact of COVID-19
and the level of uncertainty that has
arisen means we believe this is the
only responsible action to take for the
sake of the long-term prosperity of the
Company. The final dividend for the
year will be 1.75p per share, giving a
full year dividend of 5.00p per share.

The impact of COVID-19 disruption has
prompted the Company to revisit its
strategy, and agree to an acceleration
of the retail and leisure disposal
programme, albeit only at sensible
values. Whilst the Board has yet to
finalise plans for the use of the disposal
proceeds, it is anticipated that TCS will
look to reduce borrowing levels further.
This, combined with the inevitable
gap between asset sales and any
asset purchases, will lead to a longer
period of reduced earnings which
will inevitably lead to a lower level of
dividend payment than in recent years.

Annual Report & Accounts 2020

01. Strategic Report

Income statement
EPRA Earnings for the year ended 30 June 2020 were £2.1m. Adjusted EPRA earnings (removing the eff ect
of IFRS 16) were £2.6m down on the prior year profit of £6.4m.

£000s

Gross Revenue

Property Expenses

Net Revenue

Other Income / JV Profit

Other Expenses

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

Excluding the estimated impact of
COVID-19 on our results, underlying
Adjusted EPRA earnings would have
been circa £0.1m down year on year
with the key drivers being:

FY20
inc IFRS 16

FY20
exc IFRS 16

26,702

(10,643)

16,059

2,018

(777)

(6,197)

11,103

(9,009)

2,094

26,702

(11,149)

15,553

2,018

(777)

(6,197)

10,597

(7,975)

2,622

FY19

31,189

(11,600)

19,589

1,649

(6,857)

14,381

(8,025)

6,356

YOY

(14.4%)

(3.9%)

(20.6%)

22.4%

–

(9.6%)

(26.3%)

(0.6%)

(58.7%)

FY20
exc IFRS 16

FY19

YOY

11,676

7,830

3,740

2,630

137

13,970

9,725

5,388

4,425

231

(16.4%)

(19.5%)

(30.6%)

(40.6%)

(40.7%)

Property (£0.7m) down year
on year underlying:

CitiPark £0.2m up year
on year underlying:

TCS took the decision not to
continue with the planned George
Street aparthotel joint venture with
Leeds City Council and the income
statement reflects a £0.8m provision
against the capital expenditure.
We are looking for opportunities
to recover some of this cost.

As reported at the half year,
TCS benefited from a one-off
£0.5m dilapidations payment
in respect of 123 Albion Street.
As expected, the benefit of this
increase in Other Income has been
off set as a result of the reduction
in rental income year on year from
the building as it was redeveloped
and significantly vacant.

This underlying improvement
was seen in the first half of the
year reflective of the previously
strong run rate.

ibis Styles Hotel £0.3m up year
on year underlying:

One-off costs associated with the
change in the restaurant in FY19
meant an expected and significant
increase in profitability year on year
in FY20, and this was indeed being
achieved in the first eight months
of the year.

In addition, interest costs were
£0.05m lower year on year.

Financial review

continued

Statutory profit
On a statutory basis the reported loss
for the year, on an IFRS 16 basis, was
£24.2m, £11.7m worse year on year.

The statutory profit reflects the EPRA
earnings of £2.09m less £26.42m of
non-cash valuation and impairment
movements plus a £0.17m profit
on disposal from Brownsfield Mill,
Manchester and two properties
in Scotland.

The year on year worsening of £11.7m
is due to the valuation write down
being £8.31m worse, underlying
EPRA earnings being £3.73m worse,
disposals improving the result by £0.88
year on year and the introduction of
IFRS 16 impacting FY20 by £0.53m
(see following IFRS 16 section).

Gross revenue
Gross revenue was down £4.5m
or 14.4% year on year, with key
drivers being:

Property rents impacted by
COVID-19 with £1.3m of net
incremental bad debt provisions
where no agreement has been
reached on payment of outstanding
rent or where payments have
agreed to be deferred but doubt
remains over the likelihood of
receipt and therefore the income
has not been recognised.

CitiPark revenues were materially
reduced due to COVID-19 from
March through to the end of
the year. Whilst some monthly
subscription income kept being
received, daily receipts were down
over 90% with half of the branches
being closed for the period.
The estimated impact to revenue
is £2.3m.

Income for the ibis Styles hotel
was impacted by COVID-19 by
an estimated £1.0m

Underlying improvements in

income, particularly in CitiPark
and the Hotel marginally offset
the impact of COVID-19.

Property expense
At a Company level, property
expenses excluding the effect of
IFRS 16 were down 3.9% or £0.45m
year on year. Key drivers of this
underlying decrease were:

Property: operating expenses
were £0.47m higher year on year
predominantly due to a one-off
write-off of historic service charges
now deemed to be irrecoverable.

CitiPark: operating expenses were
£0.31m lower year on year primarily
as a result of savings initiated as
a result of COVID-19 including
furlough savings, reduced rates
costs where branches were closed,
and operational cost savings due
to the significantly reduced level
of transactions.

ibis Hotel: operating expenses
were £0.62m lower year on year,
driven primarily by the response
to the COVID-19 crisis. Whilst
the hotel operated at all times,
supporting key workers, the
operation was able to reduce
variable operating costs including
the furloughing of some staff.

In addition, the implementation of
IFRS 16 reduced property expenses
by a further £0.51m with the
removal of certain rental expenses
partly offset by depreciation of the
newly created ‘right-of-use’ assets.

Other / JV income
Total Other / JV income was up 22.4%
or £0.4m year on year. This is explained
by two key items:

Dilapidations income of £0.6m
was £0.6m up year on year mainly
as a result of the dilapidations
payment in respect of 123 Albion
Street, Leeds.

Income from joint ventures was
down £0.3m year on year driven
by the annualisation of the
financing agreement in respect
of Merrion House, where our
share of income is reduced by
the effective interest cost.

Other expenses
This cost is due to a one-off provision
against capitalised costs associated
with the proposed George Street
aparthotel joint venture with Leeds
City Council. TCS incurred £0.8m
of cost associated with getting the
building designed and through
planning approval. Our intention was
to be a long-term partner in the joint
venture. However, given the current
climate, we have been unable to
secure a commitment to use our share
in the joint venture as security for debt.
Without being able to leverage the
asset and with a need for the project
to proceed, we have taken the decision
to end our involvement and provide
against the spend to date. We are
working with partners involved in the
project to look to hand over the output
of our work in return for a financial
contribution towards our costs, albeit
nothing yet has been agreed.

Administrative expenses
Administrative costs were £0.7m lower
year on year. This includes £0.1m for
the last quarter as a result of all the
Directors agreeing to a 20% salary
and fees cut. There is a further £0.2m
saving year on year in bonuses. Further
savings arose as a result of significantly
reduced spend on advertising, travel,
entertaining and other expenditure as
a result of our response to COVID-19.

Finance costs
Excluding the effect of IFRS 16,
Finance costs were 0.6% or £0.05m
lower year on year. This is due to lower
levels of LIBOR year on year.

Balance sheet
The below table shows the year end balance sheet as reported including the IFRS 16 implementation. In addition
it is shown excluding IFRS 16 to allow for a like for like comparison with the prior year.

Excluding IFRS 16 NAV is £156.0m, down £32.3m or 17.1% year on year. IFRS 16 has the effect of reducing NAV by £0.5m
but more significantly materially increases both assets and liabilities reflecting the creation of the ‘right-of-use’ assets
and the corresponding lease liabilities.

£m

Investment properties*

Development properties

Car parks

Joint ventures

Other non-current assets

Total non-current assets including available for sale

Net borrowings

Other assets/(liabilities)

EPRA NAV

EPRA NAV per share

* includes assets held for sale

FY20 inc
IFRS 16

FY20 exc
IFRS 16

FY19

vs FY19

266.4

37.8

56.8

361.0

13.8

1.1

375.3

(214.2)

(6.1)

155.5

292p

265.8

37.8

31.0

334.6

13.8

1.1

349.4

(186.9)

(6.5)

156.0

293p

288.0

36.5

30.7

355.2

13.4

1.6

370.2

(182.0)

(0.0)

188.3

354p

(7.7%)

3.4%

0.8%

(5.8%)

2.6%

(30.9%)

(5.6%)

2.7%

–

(17.1%)

All the following commentary in relation
to the balance sheet is on a comparable
basis to prior year excluding the effect
of IFRS 16. See page 48 for detail on
the effect of the new standard on the
statutory accounts. In addition, in
the reported balance sheet we have
classified our two Waitrose stores in
Scotland as available for sale with a
value of £23.2m. At the 30 June 2020,
heads of terms for the sale of these
properties has been agreed hence
their change in categorisation. These
stores were subsequently sold after the
year end. For comparability purposes,
the numbers in the table above
and described below include these
properties in non-current assets.

Our total non-current assets (including
JVs) of £349.4m (2019: £370.2m)
include £317.4m of investment
properties (2019: £337.9m) and £31.0m
of non-current car parking assets (2019:
£30.7m). The Merrion Centre car park
is included in the investment property
asset value. The car parking assets
include £4m (2019: £4m) of goodwill
arising on business combinations.

The most significant driver of the
decrease in non-current assets year
on year is the £26.3m of non-cash
valuation movements reflecting a 6.9%
like for like reduction. The majority of
this reduction has come in the second
half of the year, and is significantly
affected by the uncertainty due to
COVID-19, particularly in relation
to retail and leisure assets. At the
December 2019 valuation TCS
experienced only a 1.2% like for like
reduction in value from June 2019.

Although we paused the vast
majority of our capital expenditure
from March onwards in order to
preserve cash during the initial
uncertainty of the COVID-19 crisis,
across the year we invested a total
of £6.0m of capital expenditure in
our properties. This included £3.3m
as part of the refurbishment of
123 Albion Street, £1.0m as part
of the Ducie House refurbishment
and £0.6m of improvements in the
Merrion Centre. Capital recycling
comprised £2.5m of sales and
£1.7m of purchases.

Borrowings (excluding IFRS 16)
As in previous years we have total
borrowing facilities of £214m. These
facilities comprise three revolving
bank facilities and a £106m long-term
debenture at a fixed rate of 5.375%
which expires in 2031.

Two of the three bank facilities expire
within twelve months of the year end
and are therefore classed as current
liabilities in the balance sheet. Since
the year end we have already extended
our £33m facility with NatWest for
a further year on the same terms and
margin, and this facility now expires
in April 2022.

Our Lloyds Bank facility’s initial
three-year term expires in June 2021.
However the facility allows for two
one-year extensions and this is
currently in the process of being
requested. The Lloyds facility is a £35m
revolving credit facility with a further
£5m overdraft facility.

Finally, our £35m Handelsbanken
facility does not expire until June 2023.

Town Centre Securities PLCAnnual Report & Accounts 202001. Strategic Report

Future balance sheet
and covenant pressure
As described in the valuation report,
the circumstances relating to COVID-19
have led to our valuers CBRE and JLL
including uncertainty clauses as part
of their valuations in relation to the
majority of our assets. As identified
in the Risk Report, we have highlighted
the continued pressure on retail and
leisure assets to be a significant risk
to the business. Whilst we comfortably
met all of our banking and debenture
covenants as at 30 June 2020, the
revaluation process in December
2020 presents a further risk to loan
to value covenants.

Our expectation is that continued asset
sales and debt repayments, combined
with the strength of our underlying
asset base, the Merrion Estate in
particular, will ensure we are able to
successfully navigate these challenges.
The risk however remains significant.

Going concern and headroom
One of the most critical judgements
for the Board is the headroom in
the Group’s debt facilities. This is
calculated as the maximum amount
that could be borrowed, taking into
account the properties secured to
the funders and the facilities in place.

The total headroom at 30 June 2020
was £14.8m (2019: £26.1m), which was
considered to be sufficient to support
our going concern conclusion.

Financial review

continued

Borrowings (excluding IFRS 16)
(continued)
Net borrowing (excluding finance
leases) as at 30 June 2020 was
£183.6m. This is £5.8m higher than
a year ago driven effectively by the
£6.0m capex investment with earnings
impacted by the COVID-19 crisis.

Loan to value on this basis is 53.2%
up from 48.8% a year ago and 48.5%
in December 2019. The driver of the
increase being the £26.3m reduction
in value of the investment portfolio.
On a proforma basis, the addition
of the £35.2m of sales since 30 June
2020 improves LTV to 47.9%.

IFRS 16
As stated above, these financial
statements are presented in
accordance with IFRS 16. Under
IFRS 16, while total lease related
charges over the life of a lease remain
unchanged, the lease charges are
now characterised as depreciation
and financing expenses with higher
total expense in the early periods of
a lease and lower total expenses in the
later periods of the lease. In addition,
on the balance sheet, the accounting
treatment has the effect of creating
new assets on the balance sheet for
these ‘right-of-use’ leased assets, partly
offset by a liability reflecting the future
obligation to make lease payments.
On the balance sheet, as with the
income statement, the effect is neutral
over the life of the lease but lowers
net asset value in the early periods,
reversing over time.

The leases effected by the change
in accounting treatment reside
primarily within the CitiPark segment
of our financial results, flowing into
the consolidated results.

In the twelve months ended
30 June 2020 the effect of IFRS 16
is as follows:

Income statement
A net reduction in statutory profit (and
EPRA Earnings) of £0.53m, comprising
a £1.14m increase in depreciation and
a £1.03m increase in interest costs,
partly offset by a £1.65m reduction
in rental expenses.

Balance sheet
A net reduction in net assets
of £0.53m, comprising a £26.40m
increase in non-current assets, offset
by a £25.62m increase in financial
liabilities and a £1.31m increase
in current liabilities.

As a result of these changes we are
introducing an additional income
statement measure of Adjusted EPRA
Earnings which removes the effect
of IFRS 16 making the result directly
comparable with the prior year’s
financial statements which have not
been restated.

Given the effect on the balance sheet
is minimal, accounting for only 0.34%
of the total net assets we shall only
report on net assets including the
IFRS 16 adjustment. However, both
non-current assets and liabilities
are materially affected, and we shall
highlight pre and post IFRS 16 values
for clarity and comparison purposes.

Future financial considerations
Future P&L pressure
As highlighted elsewhere in this report,
we have not escaped the impact of
COVID-19 and changing shopping
habits, particularly affecting retail and
leisure tenants, and, given the current
climate, it is prudent to assume that
this risk will continue. We are prudently
assuming that over the coming two
quarters that rent receipts will continue
to be challenged.

As already described, we have made
the decision to accelerate our retail
disposal programme, and this is likely
to put future earnings under pressure.
The Board is reviewing options for
how the proceeds of such sales could
be utilised including debt repayment,
asset purchases and share buybacks.

Whilst the reduction in the dividend
in the current year is due to the impact
of COVID-19, the combination of likely
shortfalls in rent receipts over the
coming quarters and loss of income
due to disposals are likely to lead
to continued pressure on our ability
to pay a higher covered dividend.

Total shareholder returns % (CAGR)

Total shareholder returns

Town Centre Securities

FTSE All Share REIT index

1 Year

(50.4%)

(10.1%)

10 Years

20 Years

0.8%

8.1%

5.0%

2.3%

Total property returns

Retail

Retail Warehouses

Shopping Centres

Offices

All Property

(12 months ending June 2020)

TCS

(7.8%)

(4.3%)

(5.5%)

3.4%

(2.1%)

MSCI
Quarterly index

(12.7%)

(14.9%)

(22.8%)

1.4%

(2.9%)

Total shareholder return
and total property return
Total shareholder return of minus
50.4% (2019: minus 25.0%) was
calculated as the total of dividends
paid during the financial year of 11.75p
(2019: 11.75p) and the movement in
the share price between 30 June
2019 (205p) and 30 June 2020 (95p),
assuming reinvestment of dividends.
This compares with the FTSE All Share
REIT index at minus 10.1% (2019: minus
5.2%) for the same period.

Disappointingly TCS has seen its
share price come under significant
pressure despite the dividend
performance over the measured
timescales. The Company’s share
price continues to trade at a significant
discount to its NAV, impacting total
shareholder return. The long-term
twenty-year measure remains positive.

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
-2.1% (2019: 1.3%). This compared
to the MSCI/IPD market return of
-2.9% (2019: 3.1%).

A key driver of the All Property MSCI
index being higher than TCS is due
to the strong market performance
of industrial property of which TCS
has only a small amount.

Mark Dilley
Group Finance Director

We Are Cow, Vicar Lane

Town Centre Securities PLCAnnual Report & Accounts 202001. Strategic Report
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. 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.
This 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.

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.

Our Principal Risk Register is summarised as follows:

Risk

Macro Economic

Economic & Political Outlook

Corporate

Strategy

People

Systems, Process & Financial Management

GDPR

Regulatory & Tax Framework

Major Incident & Business Disruption

Property

Investment Risk

Development Risk

Valuation Risk

Tenant & Sector Risk

Financing

Capital & Financial Risk

Cost of Debt

Likelihood

High

Medium

Low

Medium

Low

High

Medium

High

Medium

High

Impact

Medium

High

Low

High

Medium

High

Change from HY20

No Change

Worsening

No Change

Worsening

No Change

Worsening

Medium

No Change

COVID-19
Whilst the above meeting structure
has and will continue to form a key
part of our risk management process,
the impact of COVID-19 has been
unprecedented and unpredicted.
Consequently we have significantly
increased our risk management activity
to take account of this. That activity
has included:

Weekly full Board video calls

to review the impact of COVID-19
on the business and to agree
on key actions.

Weekly Non-Executive Board video
calls with the Chairman to follow
up on actions agreed at the Board
meeting, to review wider market
activity, and to ensure the Non-
Executives are fully engaged in the
actions of the business.

Twice or three times weekly

senior management video calls
– operational meetings to review
all aspects of the business including
staff matters and wellbeing, rent
collections, car parking volumes,
tenant discussion, cost saving
initiatives, and IT considerations.

A review of the strategy and the

decision to speed up the disposals
of predominantly retail assets.

Formal presentations to our

debenture holders by Edward
Ziff and Mark Dilley, to ensure
they understood the impact of
COVID-19 on TCS and the security
of their investment.

Regular updates with our three

banks updating them on rent receipt
levels and car parking performance
and in the case of NatWest and
Lloyds discussion facility extensions.

Viability statement
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 period longer
than the 12 months required by the
Going Concern provision. In previous
years this review has been as part of
a longer-term three-year strategic
planning exercise. In the current year,
as a result of the COVID-19 disruption
the Board have undertaken an even
more rigorous scenario-based review
of potential outcomes but over a
slightly shorter two-year period. The
opinion of the Board being that if we
are comfortable with our viability
assumption over that period with the
additional COVID-19 related scenario
considerations that longer-term
viability beyond the two-year period
could reasonably be assumed.

The Board’s review considered
cash flows, profitability, borrowing
headroom and other key financial
ratios, and required the business to
have clarity on its approach to bank
financing over a longer period.

In taking this longer-term perspective, the Board considers the risks covered
in this Risk Management review. In particular the key risks identified are:

The potentially lasting effect of
COVID-19 on our assets, tenants,
hotel operation, car parking
operations, and the wider economy.

Further changes in the macro-
economic environment affecting
rental income levels and
property values.

Changes in the level of tenants
and sector risk affecting
occupancy levels and lettings.

Changes in availability of capital,
affecting committed expenditure
and investment transactions.

The review also considered alternative scenarios. These scenarios included:

A range of levels of rent receipts
affecting quarterly income up to
the end of June 2021.

A range of levels of car parking
income affecting profitability up
to the end of June 2021.

The potential of a longer-term,
more permanent impact to rental
levels particularly with respect
to retail assets.

The effect on cash, borrowing
levels, and headroom following a
significant asset sale programme.

Cost savings assumptions were
deliberately restricted to the current
year for prudence although longer-
term savings would be envisaged
given the downside scenarios.

Aligned to our Going Concern
statement the greatest uncertainty
and risk lies in relation to our asset
valuations and the possibility of
breaching bank and debenture
covenants. Given the current
circumstances this uncertainty will
continue beyond the shorter-term
future covered by the Going
Concern statement.

Based on the results of their review
whilst taking into account the level
of uncertainty, 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 longer-term period
of their assessment.

Going concern statement
The accounts for the year ended
30 June 2020 have been prepared
on a going concern basis. In light of
the current COVID-19 pandemic the
Directors have considered various
downside scenarios in assessing
the Group’s ability to continue as a
going concern. Despite the potential
negative economic impacts and the

uncertainty in respect of the timeline
for recovery, the scenarios reviewed
confirm the appropriateness of
preparing the financial statements
on a going concern basis. The most
material risk concerns the impact
of the COVID-19 pandemic on the
valuation of the property portfolio and
our ability to meet gearing covenants.
Whilst a significant risk, the Group

does have potential mitigants at its
disposal to address these uncertainties
which include, but are not limited to,
further disposals of assets, pledging as
additional security ungeared properties
currently valued at £4.8m million as
30 June 2020 and seeking lender
consent to an extension of financial
covenant waivers to cover extended
periods of disruption.

Town Centre Securities PLCAnnual Report & Accounts 202001. Strategic Report

Risk Report

continued

Likelihood

Impact

High

Medium

High

Medium

Low

Change from HY20

Improving

No Change

Worsening

Macroeconomic risks

Corporate risks (continued)

Risk

Likelihood

Impact

Mitigation

Trend

Risk

Likelihood

Impact

Mitigation

Trend

An economic downturn at some point in the cycle is inevitable,
with the risk accentuated as a result of uncertainty around the
final shape of post-transition Brexit. In addition the impact on
the longer-term economy resulting from COVID-19 has to be
a consideration. 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 pre-COVID-19.
A reduced and reducing level of retail exposure, with much of the
remaining portfolio focused on discount and convenience retailing

- Avoidance of speculative developments.
-
-

Concentrated portfolio of car parks in highly sought-after locations.
Bank agreements ranging from one to three years in length, and
the long-term debenture accounting for c. 60% of our debt.

Economic and
political outlook
A broad economic downturn,
potentially as a result of the
conclusion of Brexit, or broader
cyclical reasons could result in tenant
failures, falling asset values, rising
debt costs, or less debt availability.
In addition the ongoing potentially
lasting impact of COVID-19 and the
longer-term effects of the actions
taken by Government to manage the
disruption will in all likelihood have
lasting economic effect.

Corporate risks

Risk

Likelihood

Impact

Mitigation

Trend

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.
This risk has been exacerbated
by COVID-19 due to increased
debt levels and the subsequently
changed attitudes towards
property usage.

People
The inability to attract and retain
high calibre staff, affecting the
ongoing success of the Company.

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 remains appropriate.
The strategy to sell retail and leisure assets has been accelerated
following COVID-19.
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 demonstrate the attractiveness
of the business to new recruits at all levels.
A history of conservative financial management combined
with the development opportunities of the business make
the Company attractive to new recruits.

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.

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, with key services having been
moved to the cloud.
Horizon is our combined property and accounting IT solution
ensuring we remain well controlled in this respect. This has been
upgraded and moved onto the cloud, further safeguarding business
continuity.
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 of the Annual Report.

GDPR
Financial and reputational risk
arising from a breach of GDPR
regulations, potentially resulting in
fines and damage to customer trust.

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:

Regulatory and
tax framework
Non-compliance with tax, legal, or
regulatory obligations could result
in financial penalties, reputational
damage, and higher levels of cost.

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. This risk has been
exacerbated as a result of the
COVID-19 disruption.

- Updated all Privacy related statements and policies.
-
-

Trained all staff on theirs and the Company’s responsibilities.
IT & 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.

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, all of which have ensured our ability to function
fully during the COVID-19 disruption:

All personnel either have laptops or have technology at home
which enables remote working.
Our geographical focus in Leeds and Manchester enables
a hands on approach with the majority of our properties and
tenants is possible.
Back up procedures are in place to ensure minimal loss of data
in the event of damage to IT hardware.
Horizon and email (Microsoft 365) have been moved to a cloud-
based technology significantly improving business continuity.

Town Centre Securities PLCAnnual Report & Accounts 202001. Strategic ReportRisk Report

continued

Property risks

Likelihood

Impact

High

Medium

High

Medium

Low

Change from HY20

Improving

No Change

Worsening

Financing risks

Risk

Likelihood

Impact

Mitigation

Trend

Risk

Likelihood

Impact

Mitigation

Trend

Capital and financial risk
The Company has insufficient
funds/lines of credit. With debt
levels increasing and property
valuations decreasing as a result
of COVID-19 this area of risk
has increased.

Cost of debt
Rising debt costs.

The majority of mitigating actions are contained within 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 Company has extended its NatWest facility by one year
and is in the process of extending the Lloyds Bank facility.
The Company’s policy of accelerating asset sales will enable
a reduction in absolute debt levels.

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.
The recent extension of the NatWest facility has been agreed
with no change to terms or cost.
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.
The business is in the process of discussing with our banks
the process of replacing LIBOR as it ceases to be used in
banking facilities.

This Strategic Report and the information referred to herein was approved on behalf of the Board on 22 September 2020.

Dr. Edward Ziff OBE DL
Chairman & Chief Executive

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. With the property
market in a state of flux in the
current climate any long-term
investment with significant capital
required represents a heightened
level of risk.

Valuation risk
A material devaluation in assets.
This is particularly high in relation
to retail assets due to the changing
nature of shopping habits that has
been accelerated by COVID-19.

Tenant and sector risk
Individual tenant failures,
or exposure to a specific sector.
This risk has been heightened by
the impact of COVID-19 particularly
on retail and leisure tenants.

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.

The key mitigation to this risk is ensuring there is enough headroom
in terms of uncharged assets of undrawn, charged facilities.
Key actions include:

Our Handelsbanken facility doesn’t expire until June 2023,
we have recently extended our NatWest facility until April 2022,
and our Lloyds Bank facility has the ability to extend for a further
two years beyond its initial June 2021 maturity date.
All three facilities now allowing charging of 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 to 1.5x without
triggering a covenant break.
The Company recycles assets believed to be at greatest risk
of devaluation, and has undertaken an acceleration in its disposal
of retail assets.

There have been an increasing number of CVAs and administrations
within the retail sector. Furthermore due to the requirement for many
retail and leisure tenants to close for an extended period during the
COVID-19 crisis, their ability to pay rent and to remain a going concern
remain a concern. TCS are taking a number of actions:

Since 2016 the Company has significantly reduced its exposure
to retail from 70% to 47% of value at June 2020.
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 and Morrisons.
In normal times, CitiPark income helps further mitigate the reliance
on specific property tenants.
We have granted many of our tenants rent-free periods or other
concessions during the COVID-19 crisis with the aim of helping
ensure they are able to continue trading and remain valuable tenants
post COVID-19. The arrangements finalised after the year end.

Town Centre Securities PLCAnnual Report & Accounts 202001. Strategic ReportTown Centre Securities PLC
Town Centre Securities PLC

Annual Report & Accounts 2020

02. Corporate Governance

Corporate governance

02. Corporate governance
Introduction from Chairman
Board of Directors
Nomination Committee Report
Audit Committee Report
Directors' Remuneration Report
Directors' Report
Statement of Directors’ responsibilities

56
58
66
68
72
80
82

Introduction from Chairman

The Board has taken
steps over the last eighteen
months to implement
the new 2018 UK Corporate
Governance Code
(the ‘Code’) in a way
that is appropriate for
Town Centre Securities.

Dr. Edward Ziff OBE DL
Chairman & Chief Executive

the Non-Executive Directors to
have greater access to those parts
of the business. This provides more
opportunity for a robust assessment
of the Company at a level aside from
the CEO. This level of representation
of management and increased access
for robust challenge by Non-Executive
Directors is highly unusual at Board level
and without this wider representation,
the Board would meet the requirement
of at least half the Board being
independent. 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 at this point be
disruptive and add unnecessary cost.
This is a matter that will be kept under
review and is covered specifically in the
Board evaluation exercise. The Board
will however consider increasing the
number of independent directors over
a period of time and as opportunities
arise. This will be a key part of the
succession plan that the nomination
Committee will be focused on over
the next 12 months.

Dr. Edward Ziff OBE DL
Chairman & Chief Executive
22 September 2020

This year we have produced
a section 172 statement
demonstrating how Directors
have discharged their duties
to the Company’s stakeholders.
This statement can be found
on pages 32–33.

Wherever possible, the Board seeks
to comply with the Principles set out
in the 2018 UK Corporate Governance
Code (the ‘Code’). However, the
Board takes a pragmatic approach
and, because of the size and nature
of the Company, makes a carefully
considered judgement about how
it should apply the Code. The Board
keeps this under regular review and
decisions on these matters are made
by the Board taking into account the
best interests of all stakeholders.

The Board currently consists of
three independent Non-Executive
Directors who, as well as contributing
invaluable support and guidance, off er
significant challenge to me and the
other Executive Directors. The Board’s
focus this year had been on long-term
strategy but in recent months this
has moved to the diff icult economic
environment resulting from the
COVID-19 pandemic. Whilst this has
led the Board to consider some short-
term issues, it is of critical importance
that the Board now considers the
medium and long-term strategy.

The independent Non-Executive
Directors have provided robust
challenge and this has been
particularly important over the recent
months. In addition to our regular
scheduled Board meetings, I have
held weekly meetings with the Non-
Executive Directors which has been
of invaluable help. I am grateful to
each of them for the additional time
they have given to the Company whilst
accepting a temporary 20% reduction
in their fees.

We are sorry that Lynda Shillaw left
the business at the end of August 2020,
and we wish her well for the future.
We are not replacing Lynda directly
but have made two new appointments
which are detailed in the Nomination
Committee report on page 66.

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 keep
under continual review and will
continue to keep under review to
ensure that is in the best interests
of the Company’s stakeholders.
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; and

facilitates constructive
Board relations and the
eff ective 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 me 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). However,
given my combined role as Chair/
CEO, the Board agreed that including
wider management representation
on the Board, for example the CitiPark
Managing Director and previously
the Property Director, would allow

56
56

Town Centre Securities PLC

Annual Report & Accounts 2020

02. Corporate Governance

Corporate governance

Board of Directors

Committee

Nomination

Audit

Remuneration

Chair

Dr. Edward Ziff
OBE DL
Chairman &
Chief Executive

Mark Dilley
ACMA

Group Finance Director

Ben Ziff

Managing Director CitiPark
& TCS Energy

Michael Ziff
Hon DUniv (Brad)

Ian Marcus
OBE FRICS

Paul Huberman
FCA CTA

Jeremy Collins

Non-Executive Director

Appointed

08/1985

Independent

Committee
Membership

Skills &
Experience

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.

Edward’s position as son of the founder,
and his lifelong experience working in
the business make him uniquely qualified
to lead the Company. The wider role
he plays in the Leeds community, in
particular, support leading this proudly
Leeds-based business.

07/2017

09/2015

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 inputting in to the strategic
direction the business takes.

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 eff ects 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.

Ben joined TCS in 2008, becoming
CitiPark Managing Director in 2009.
In September 2015, Ben was appointed
to the Board of Directors.

External
Appointments

He is Chair and Trustee of Leeds
Cares, a member of Council of the
University of Leeds, a Trustee of the
United Hebrew Congregation, Leeds,
and a Deputy Lieutenant for the
County of West Yorkshire.

None

Previous
Experience

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

Mark joined the Board in July 2017 from
Asda Stores Limited (part of Walmart)
where he held a number of senior
finance roles over fourteen 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.

Ben successfully led the 2013
redevelopment of the Merrion Centre
multi-storey car park, which turned a
1960s structure into a state-of-the-art
facility featuring cutting-edge systems.
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 EV 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.

07/2004

01/2015

Yes

01/2015

Yes

02/2018

Yes

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.
Michael was appointed to the
Board in July 2004.

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.
Ian Marcus was appointed to
the Board in January 2015.

Paul Huberman was appointed
a Director in January 2015.
He brings over 33 years’
experience in the property
and finance sector.

Paul’s previous experience as
Finance Director at three quoted
companies, and his ongoing work
in the real estate arena mean
that he can robustly challenge
and scrutinise the financial
aff airs of the business, leading
the Audit Committee, as well as
contributing meaningfully to the
broader operational and strategic
activities of the Company.

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.

Ian is Trustee of The Princes
Foundation 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, Advisor to Work.Life,
and a senior advisor to Anschutz
Entertainment Group. Ian is
also President of Cambridge
University Land Society.

Ian spent over 32 years as an
investment banker latterly at
Credit Suisse. Ian was previously
a Crown Estate Commissioner, as
is a former chairman of the Bank
of England Commercial Property
Forum and a Past President of the
British Property Federation.

He is currently a Non-Executive
Director of Galliard Homes
Limited, a Non-Executive Director
at LiFE At Ltd, a Non-Executive
Director at GetBusy plc, a Non-
Executive Director at a privately-
owned property group, and a
Non-Executive Director at The
Industrial Dwellings Society
(1885) Ltd. He also sits on the
advisory board for London Resort
Company Holdings Ltd.

Paul was previously Finance
Director at three quoted
companies. Previously Paul was
a Non-Executive Director at GRIT
Real Estate Income Group Ltd,
a listed pan African property
investment company and a
Non-Executive Director at JCRA
Group Ltd, the holding company
of JC Rathbone Associates Ltd,
the independent advisors on
interest rate risk management,
debt finance and foreign
exchange exposure.

Jeremy was appointed to the
Board in February 2018 and
has over 35 years’ experience
in retail property development
and management.

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.

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.

59
59

Corporate governance

continued

Board of Directors

Details of the Board of Directors are given on pages 58–59
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 & Chief Executive.

The key roles and responsibilities are as follows:

Dr. Edward Ziff
OBE DL
Chairman & Chief Executive

Mark Dilley
ACMA
Group Finance Director

Ian Marcus
OBE FRICS
Senior Independent Director

Supporting the Chairman and
CEO’s delivery of objectives.

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.

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.

Ensure a robust decision-making

Provide advice and guidance

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.

on financial strategy.

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.

Ben Ziff
Managing Director

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.

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.

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 64.

In accordance with the UK Corporate
Governance Code the Board
considers 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 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 are they 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;

do not represent a significant

shareholder;

have not been a Director of the

Company for more than nine years
since their first appointment.

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 considers
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. Consequently, for the purpose
of compliance with the Code, the

position will alternate on an annual
basis. Over the past year Paul
Huberman has stood as our Senior
Independent Director and therefore,
from the date of this report until the
next, the position will be rotated to
Ian Marcus.

Prior to the introduction of the 2018
UK Corporate Governance Code, Ian
Marcus was appointed as a workforce
representative. His role has been key
in ensuring workforce representation
in the discussions and decisions of the
Board, useful in enabling all Directors
to perform their duties under Section
172 Companies Act 2006.

The full Board met eight times in the
year and the record of Directors’
attendance at the Board meetings is
set out overleaf. Additionally the Board
met every week from April as a result
of the COVID-19 crisis, although those
meetings are not included in the formal
reporting on page 63. 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 (seven meetings in the year)
and CitiPark Board (nine meetings in
the year), which comprise Executive
Directors and senior management.
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.

Town Centre Securities PLCAnnual Report & Accounts 202002. Corporate GovernanceTown Centre Securities PLC

Corporate governance

continued

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.

Information required in relation
to the publication of unaudited
financial information.

Location

Not applicable

Details of any long-term
incentive schemes.

No such long-term
incentive plans

Details of any arrangements
under which a Director has waived
emoluments, or agreed to waive
any future emoluments, from
the Company.

Details of any non pre-emptive issues
of equity for cash.

Details of any non pre-emptive issues
of equity for cash by any unlisted
major subsidiary undertaking.

Details of parent participation in
a placing by a listed subsidiary.

Details of any contract of
significance in which a Director
is or was materially interested.

Details of any contract of
significance between the Company
(or one of its subsidiaries) and
a controlling shareholder.

Details of waiver of dividends
by a shareholder.

Board statement in respect
of relationship agreement with
the controlling shareholder.

Due to the COVID-19 pandemic,
from April 2020 until September
2020 the Non-Executive
Directors accepted a 20%
reduction in fees. The salaries
of the Executive Directors were
also reduced by 20% for the
same period.

No such share allotments

Not applicable

No such contract

No such waiver

Directors’ Report, page 80

62
62

Performance of the Board
The effectiveness of the Board, its
committees and Directors was reviewed
as part of Board proceedings. Given
the size of the Board and nature of the
business the Directors performed an
internal Board evaluation. The Board
recognises the requirement to consider
the use of an external evaluator at
least every three years and during the
next financial year will consider the
appropriateness of this measure for
Town Centre Securities.

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

Edward Ziff (Chair)

Ian Marcus

Paul Huberman

Jeremy Collins

Michael Ziff

Audit Committee

Paul Huberman (Chair)

Ian Marcus

Jeremy Collins

Remuneration Committee

Ian Marcus (Chair)

Paul Huberman

Jeremy Collins

Attendance at
Board Meetings (of 8)
Edward Ziff

Mark Dilley

Lynda Shillaw

Ben Ziff

Michael Ziff

Ian Marcus

Paul Huberman

Jeremy Collins

Attendance at Audit
Committee Meetings (of 2)
Paul Huberman

Ian Marcus

Jeremy Collins

Merrion Centre

63
63

Town Centre Securities PLCAnnual Report & Accounts 202002. Corporate GovernanceCorporate governance

continued

Statement of compliance
with the UK Corporate
Governance Code
The UK Corporate Governance
Code (‘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:

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 now
reports against the 2018 Corporate
Governance Code and has also
produced a Section 172 Statement
demonstrating how Directors
have performed their duties in
compliance with 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

Explanation of departure from the Code

Provision
9

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.

As mentioned previously, the Company
took the step to include wider management
representation at Board level as a measure
to give the Non-Executive Directors greater
access and further avenues to scrutinise the
business. This ensures an appropriate level
of robust challenge and is an ongoing focus
for the Non-Executive Directors.

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.

Edward Ziff was appointed Chairman and CEO
in 2004, which the Board feels continues to be
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
19

Chair not to remain in post
for more than nine years.

Provision
39

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.

Provision
11

At least half the Board,
excluding the Chairman
to be independent.

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

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 is an appropriate balance
of skills and experience. The Board currently
comprises four Non-Executive Directors.

Again, without the unusual wider
management representation on the Board,
the Company would meet the required ratio
of Independent Directors.

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 68.

6. Fair, balanced

and understandable:
The Board is required to 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
68 and the Statement of Director’s
Responsibilities on page 82.

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 2020
financial statements. More details
can be found in the Risk Report on
page 51 and the Director’s Report
on page 80.

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 two years. Our
Viability Statement can be found
in the Risk Report on page 51.

4. Principal risks facing the Group:
The Board is required to confirm
that a robust assessment of the
principal and emerging 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 50.

Relations with shareholders
The Board is committed to
maintaining good communications
with shareholders. The Chairman and
Chief Executive and Group 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
(tcs-plc.co.uk).

Dr. Edward Ziff OBE DL
Chairman & Chief Executive
22 September 2020

Town Centre Securities PLCAnnual Report & Accounts 202002. Corporate Governance

Town Centre Securities PLC

Annual Report & Accounts 2020
Annual Report & Accounts 2020

02. Corporate Governance
02. Corporate Governance

Nomination Committee Report

for the 2020 Annual Report

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.

Work of the Committee
during the year
The eff ectiveness 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 80.

As a result of this exercise, the
Committee will be focusing on
continuing to develop its succession
plan for the Board.

A central part of this plan will be to seek
to make the Board more diverse. The
Company will face new challenges in
the future, some of which existed prior
to the COVID-19 pandemic, but these
challenges have now been accelerated.

The Committee will be considering
the Board’s skill set to ensure it is able
to lead the Company post COVID-19
and a diverse Board will be key to the
Board’s eff ectiveness. The Company’s
approach to diversity is set out later
in this report.

As previously announced, Lynda
Shillaw, the Group Property Director,
left the business with eff ect from
31 August 2020. We initially engaged
Thomas Cole Kinder to undertake a
search for a replacement. As part of
that process a decision was made to
change our organisational structure.
As a result we will not be appointing
a new Executive Property Director.

Instead we are creating two new
positions, whilst not Executive Board
positions both will be invited to
attend Board meetings continuing our
commitment to giving the full Board
the ability to receive updates from the
wider management team. I am pleased
that Helen Green, our former Associate
Property Director is taking the role of
Property Director. In addition Craig
Burrow, formally at Bruntwood is
joining TCS as Development Director.
Both will formally be in role by the
beginning of October 2020.

The Committee recognises that the
Chair of the Board has remained
in post beyond nine years and the
reasons for this are continuously
and rigorously reviewed by the
independent Non-Executive Directors
to ensure this remains in the best
interests of the Company and its
stakeholders. This exercise by the
independent Non-Executive Directors
also incorporates review of the
combined role of Chairman and Chief
Executive Off icer. Further information
can be found on page 57.

Following the introduction of the new
UK Corporate Governance Code,
all Directors will be put forward for
re-election at each Annual General
Meeting every year. Biographies of
the Board members can be found
on pages 58–59.

Dr. Edward Ziff OBE DL
Chairman & Chief Executive

Responsibilities of
the Nomination 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.

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. At the Company’s head off ice
in Leeds, 20 of the Company’s 36
employees, are female. The Company
drives diversity through its university
placements, adding to its core strategy
on enhancing diversity via a strong and
diverse pipeline of talent throughout
the Group at all levels.

The Board is committed to ensuring
it has an appropriate balance of skills,
knowledge and experience. 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. As mentioned earlier in this
report, the Board recognises that its
composition should enable it to meet
future challenges and assist it
in discharging its responsibilities
to all of its stakeholders.

All Board appointments are made
on merit and whilst the Nomination
Committee has decided not to employ
specific diversity targets, it continues
to actively support diversity in all
forms. The Board is committed to
furthering its diversity and is looking
to address the issue wherever the
opportunity arises to do so. The
Committee is committed to ensuring
that recruiting a female independent
Non-Executive Director is a priority
when future vacancies arise. The Board
currently consists of seven men and
at the senior management level within
the business, below the Board, there
are five men and one woman.

Edward Ziff
Chairman of Nomination Committee

67
67

Town Centre Securities PLC

Annual Report & Accounts 2020

02. Corporate Governance

Audit Committee Report

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 2020.

Paul Huberman
Chairman of Audit Committee

The Audit Committee consists
of the Board’s three Independent
Non-Executive Directors. I am
a qualified Chartered Accountant and
experienced senior finance executive
having been Finance Director of three
diff erent 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 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.
Last year the Terms of Reference
were amended to reflect a number
of changes required to ensure the
Committee’s role is fully compliant with
the 2018 UK Corporate Governance
Code which it recommended to the
Board for adoption. The Terms of
Reference 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 eff ectiveness
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

2020 Group audit and approving
their terms of engagement and
proposed fees.

Reviewing reports prepared by

management on internal control
issues as necessary.

Considering the eff ectiveness,
objectivity and independence
of BDO as external Auditor and
recommending to the Board
their reappointment.

Reviewing management’s

biannual risk review report and
the eff ectiveness of the material
financial, operational and
compliance controls that help
mitigate the key risks.

Reviewing the eff ectiveness of

the Group’s whistleblowing policy.

Monitored the level of non-audit
fees and the scope of non-audit
services provided in the year by
the Auditor.

Reviewing progress against the
IT infrastructure and security
action plan.

Considering management’s

approach to the viability statement
in the 2020 Annual Report.

Reviewing the terms of reference

of the Audit Committee.

Carrying out an annual

performance evaluation exercise
and noting the satisfactory
operation of the Committee.

Reviewing the Group’s Non-Audit

Services Policy.

Reviewing the Group’s compliance
with the requirements necessary
to qualify as a REIT.

Reviewing and considering
the impact of IFRS 16 which
came into force for the first time
for the interim period ended
31 December 2019.

Reviewing the impact of COVID-19
on the Company both for the year
ended 30 June 2020 and also in
respect of the longer-term viability
of the business and its going
concern status.

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.

Treatment of outstanding

rental income due from tenants
as at the year-end – Given the
unprecedented impact of COVID-19
and the uncertainty with regard to
the ongoing viability of tenants who
had not been able to pay their rent
and service charges, the Committee
agreed that it was appropriate
to provide for non-payment of the
amounts due.

Accounting for costs incurred

by the Company in relation to the
potential George Street, Leeds joint
venture investment with Leeds City
Council – Following the Board’s
decision not to proceed with this
venture it was deemed appropriate
to fully provide for the £0.7m of
capitalised expenditure in relation
to this project. We are seeking
to mitigate these costs.

Accounting for IFRS 16 –

The Company’s accounts for
the half year and full year now
incorporate the application of
IFRS 16 Accounting for Leases
– The Committee reviewed and
approved the proposed application
of IFRS 16 within the accounts,
reviewing the eff ects of the new
standard and agreeing to also
report on an Adjusted EPRA
earnings measure alongside
the statutory measures.

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
respects 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, and the Chair and
other members of the Committee
attended the valuation review
meetings with management,
BDO and CBRE and then JLL.
The Committee noted the
uncertainty clauses that the
valuations included as a result
of COVID-19.

Treatment of property sales
and acquisitions in the year.

The further investment in

YourParkingSpace.co.uk (YPS), and
the accounting treatment required
to meet fair value requirements –
The Committee agreed that the
current carrying value still reflects
fair value, although this needs to
be kept under regular review.

The future accounting treatment

of YPS, and the fact that when the
Company’s share exceeds 20%,
it would be possible that the P&L
and balance sheet of YPS would
have to be equity accounted into
the financial statements of TCS.
The Committee agreed with the
judgement that the Company did
not hold significant influence over
YPS given the 19.9% shareholding
at the balance sheet date, and
the nature of the operation of the
business and Board structure.

Audit Committee Report

continued

COVID-19
The Committee and the wider Board
have spent significant time since March
2020 reviewing and stress testing the
financial robustness of the Company.
This is detailed in the Risk Review on
page 50, but in summary key Audit
Committee activities included:

Weekly full Board video calls

to review the impact of COVID-19
on the business and to agree on
key actions.

Weekly Non-Executive Board

video calls with the Chairman to
follow up on actions agreed at the
Board meeting, to review wider
market activity, and to ensure the
Non-Executives are fully engaged
in the actions of the business.

A review of the strategy and the

decision to speed up the disposals
of predominantly retail assets.

Detailed reviews of predicted cash

flow forecasts under different
scenarios, and review of predicted
bank and debenture covenant tests.

Detailed discussions regarding

the Viability Statement and Going
Concern Statement included within
this Report and Accounts.

Fair, balanced and
understandable
In its review the Audit Committee
has determined that the 2020
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 a number of areas have
worsened in likelihood or impact in
the past six months. All the changes
are effectively driven by the impact
of COVID-19, and in a number of
places particularly in relation to our
retail tenants reflect an acceleration
of the challenging environment facing
that sector. Whilst the Company has
demonstrated mitigating actions
regarding these risks, including
speeding up the sale 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.

An organisational structure with
clearly defined roles, separation
of duties, and authority limits.

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

and anti-bribery policy.

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 twenty years. The 2020
audit was the fifth audit by Russell Field
and therefore, the lead audit partner
for 2021 will be Richard Levy.

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 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.

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 undertake non-audit work.
The Company has put in place a
formal process for agreeing and
approving non-audit work by the
Audit Committee alongside a Non-
Audit Services Policy as mentioned
previously. 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

Other non-audit services

Total Auditor’s remuneration

The Committee ensures it is able
to assess the quality of BDO’s audit
in three key ways: it ensures there
is a comprehensive engagement
agreement in place, secondly the
Committee reviews the detailed
audit planning document provided
by BDO, and thirdly BDO produces a
detailed audit report that is thoroughly
reviewed by the Committee with
follow up iterations as necessary.
In addition, by meeting the auditor
without management present, the
Committee are able to stress test
the independence and quality of
the review.

The review described above allows
the Committee to determine and
understand the degree to which the
auditor has challenged management
and if necessary require the auditor
to review particular aspects in more
detail. In this past year the attendance
of Committee members at the
Valuation Review meetings has allowed
the Committee to witness first-hand
the level of scrutiny and challenge
given by the auditors to management
and CBRE and JLL.

In the year ended 30 June 2020 the
Committee has not asked the auditors
to look at any specific areas not already
covered by the audit plan.

During FY20 the Committee also
considered the findings of the FRC’s
Audit Quality Review inspection
of BDO’s audit of TCS for the year
ended 30 June 2018. In particular, the
Committee reviewed how BDO had
addressed the points raised, and how
these had been incorporated into the
audit approach for the year ended
30 June 2020.

£000’s

110

112

Auditor reappointment
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 notes
the requirements for the external
auditor position to undergo tender
and propose for this to be undertaken
prior to 2025/2026.

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 reviews 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

Town Centre Securities PLCAnnual Report & Accounts 202002. Corporate Governance
Town Centre Securities PLC

Annual Report & Accounts 2020

02. Corporate Governance

Directors’ Remuneration Report

Dear Shareholder,
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:

Ian Marcus OBE
Chairman of Remuneration Committee

This annual statement for the

year ended 30 June 2020, which
summarises remuneration outcomes
and how the Remuneration Policy
will operate for the year ending
30 June 2021.

The Remuneration Policy Report.

The Directors’ Remuneration
Policy (Policy) was approved by
shareholders at the Company’s
AGM in 2017 and the Company
is therefore again required to
seek approval of the Policy at
the forthcoming AGM.

The Annual Report on

Remuneration which explains
how the Remuneration Policy
was implemented in the year
ended 30 June 2020, and how the
Remuneration Policy, if approved,
will be implemented for the year
ended 30 June 2021.

The Committee has decided that it
would not be appropriate at present to
put forward a Remuneration Policy that
looked forward three years or indeed
to engage a remuneration consultant
due to the uncertainties that prevail at
this time. Accordingly, the Committee is
proposing that at the AGM shareholders
approve the current Policy for a further
year. The Policy is set out on page 73.
Assuming the Company’s longer-term
financial condition is more certain as
we enter 2021, the Committee intend
to seek shareholder approval of a new
Remuneration Policy at the 2021 AGM.
In 2019, Willis Towers Watson undertook
an independent market benchmarking
exercise which is referred to later in this
report. The Committee will consider
the extent to which the result of that
exercise can be used to inform any
new policy that might be proposed
next year.

Annual statement
Pay and performance during 2020

Following a review of earnings, NAV,
dividends, and other financial metrics
the Committee agreed that no bonuses
were to be paid in respect of the year
ended 30 June 2020. The salaries of
Executive Directors were reduced by
20% for the period from April to June,
and continued to remain reduced from
July to September. Non-Executive
Directors also waived 20% of their
fees for the same period.

Other activities

We met twice 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
suff iciently competitive to recruit,
motivate and retain key talent. Last
year, following market benchmarking
exercise undertaken by Willis Towers
Watson, the Committee came to
a number of conclusions which
were reported in the 2019 Report
and Accounts:

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 14% 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 all Executives to
longer-term shareholder interests.

As a result, the Committee
concluded a more detailed review of
the Remuneration Policy was required.
As stated above the Committee still
believe that this is required, however
given the disruption created by
COVID-19 and the decision not
to pay Board bonuses to Executive
Directors in the year, it was decided
that this review should be delayed
and proposed that the current Policy
be extended for a further year. It is
our intention to put forward a new
Remuneration Policy for approval
at the 2021 AGM.

Implementation of the Remuneration
Policy in 2021

There will be no October pay
review for Edward Ziff , Mark Dilley
or Ben Ziff .

The annual bonus opportunity
will remain at a maximum of
60% of salary. The bonus will
be based on similar measures to
previous years. The weightings,
measures and targets will be
disclosed retrospectively in our
subsequent report, owing to
commercial sensitivity.

Pension and benefits will operate

as per 2020.

Edward Ziff and Mark Dilley continue
to engage with shareholders, both
family and where possible larger
independent shareholders on all topics
including remuneration. 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.

Building on work carried out in 2019,
we are continuing to improve the level
of disclosure provided in the Directors’
Remuneration Report for the benefit
of our shareholders.

Remuneration Policy
The Remuneration Committee
implements the Group’s Policy, which
is to provide remuneration packages
with fixed and variable elements that
fairly reward the Executive Directors
for their contribution to the business.
It seeks to ensure that the packages
are suff iciently 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. 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, although this
is being phased out, permanent health
and medical insurance premiums.
The Chairman and Chief Executive
receives reimbursement of the
costs of maintaining a flat in London
which is regularly used for Company
meetings. The value of the benefits is
not pensionable. The Company makes
no pension contributions in respect
of Edward Ziff . The Group makes
payments to a defined contribution
scheme for both Mark Dilley and
Ben Ziff of 13% of salary.

The Committee recognises the
guidance of the 2018 Corporate
Governance Code in relation to the
alignment of executive pensions
with the wider staff pool. This will be
considered as part of the discussions
regarding the replacement of Lynda
Shillaw. Further changes will be
considered over the longer term and
as part of the wider Remuneration
Policy review.

Variable remuneration

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) are carefully
considered by the Remuneration
Committee in awarding the bonuses
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

Edward Ziff has a service contract
that is subject to not less than two
years notice. 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. Directors are
permitted to accept Non-Executive
appointments by prior arrangement
and provided there is no conflict with
the Group’s objectives.

Directors’ Remuneration Report

continued

Remuneration Policy (continued)
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 payment
schemes and 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 2019 the Company
improved pension contributions for
more junior staff and also introduced
a Westfield Health policy for a large
number of staff members.

Consideration of shareholder views

At the 2019 AGM the Board noted
the fact, when excluding controlling
shareholder votes, that the proportion
of non-controlling shareholders
voting to pass resolution 5, my
reappointment as a Non-Executive
Director, was 79.0%. Upon review of
the voting details and consideration by
the Board, it is believed that the level

of votes against resolution 5 related
to concerns around remuneration,
in particular given my responsibility
as Chairman of the Remuneration
Committee. Issues raised by ISS in
their Proxy Analysis report highlighted
concerns in respect of Ben Ziff’s third
significant salary increase in as many
years. The Committee unanimously
stands by its decisions in that regard,
however, they have taken that concern
into consideration this year. The
Committee has discussed my position
and experience as a Non-Executive
including remuneration responsibilities
elsewhere, and I continue to have
the full support of the wider Board
and importantly the majority of
shareholders.

Board remuneration including theoretical maximum bonuses
Year ended 30 June 2020 (£000s)

200

400

600

800

1,000

1,200

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 2020 and 30 June 2019.

Salaries and fees

Bonuses

Taxable benefits1

SIP shares2

Pension contributions3

Total

2020
£000’s

2019
£000’s

2020
£000’s

2019
£000’s

2020
£000’s

2019
£000’s

2020
£000’s

2019
£000’s

2020
£000’s

2019
£000’s

2020
£000’s

2019
£000’s

Executive
Chairman and
Chief Executive

Edward Ziff

Executive
Directors

Mark Dilley

Ben Ziff

Lynda Shillaw

Richard Lewis4

Non-Executive
Directors

Michael Ziff

Paul Huberman

Ian Marcus

Jeremy Collins

600

610

326

214

380

332

194

261

137

1,520

1,534

107

125

197

1,717

200

1,734

107

125

674

684

376

271

437

380

242

295

166

125

102

1,758

1,767

125

197

200

102

1,955

1,967

Edward Ziff

600

382

Notes:

Mark Dilley

326

208

Lynda Shillaw

380

241

Ben Ziff

214

140

Salary

Benefits

Bonus (paid)

Bonus (unpaid)

Note:
The unpaid element of the bonus represents the full potential bonus award as there was no actual bonus awarded in the year.

Taxable benefits include cash and non-cash benefits principally company cars or a cash alternative, permanent health and medical insurance premiums.
Edward Ziff receives reimbursement of the costs of maintaining a flat in London which is regularly used for Company meetings. The value of the benefits
are not pensionable.

No long-term incentive plan was in operation for the relevant years although Directors were awarded shares under the Company SIP.

Edward Ziff received no pension contribution. The Group made payments to a Defined Contribution scheme and/or cash alternative for Mark Dilley,
Lynda Shillaw and Ben Ziff (all at 13% of base salary).

Richard Lewis left the Board in November 2018.

Notes to the single figure table – Annual bonus targets and outcomes for 2020

The current AGM approved bonus scheme allows for a maximum pay-out of 60% of base salary.

For the year ended 30 June 2020, the Executive Directors did not receive a bonus pay-out.

Town Centre Securities PLCAnnual Report & Accounts 202002. Corporate Governance

Directors’ Remuneration Report

continued

Annual Report on Remuneration (continued)
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 2020 Edward Ziff, Ben Ziff
and Mark Dilley accepted the annual
invitation to participate in this All
Employee Share Incentive Plan by each
agreeing to purchase shares to the
value of £1,800, paid between June
2020 and November 2020. 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 2020.

For illustration, based on the share
price as at 30 June 2019, this would
equate to each Director receiving 1,894
partnership shares and 1,894 matching
shares. In November 2019 Edward Ziff,
Mark Dilley, Lynda Shillaw and Ben Ziff
received 869 partnership shares and
869 matching shares in respect of the
2019 Share Incentive Plan. The total
number of partnership and matching
SIP shares beneficially held at 30 June
2020 is shown below.

Executive

Edward Ziff

Mark Dilley

Lynda Shillaw

Ben Ziff

Holding of Partnership
and Matching SIP Shares
(30 June 2020)

6866

3218

1738

6866

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 2020:

Edward Ziff

Mark Dilley

Lynda Shillaw

Ben Ziff

Michael Ziff

Beneficial

Non-beneficial

5,483,898

15,806,569

3,218

1,738

335,877

2,619,081

7,685,121

The non-beneficial interest disclosures
include the 649,278 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
6,404,665 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 81,488

Ordinary Shares (2019: 89,532)
on behalf of all participants including
those share awards of Executive
Directors shown above.

There were no changes in Directors’
shareholdings from 30 June 2020 and
22 September 2020 being the latest
practicable date before this report
was published.

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 ten years ended 30 June 2020.
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.

Over the long term TCS has
outperformed FTSE All Share REIT
companies. On a 20-year basis TCS
TSR was 5.0% versus the FTSE All
Share REIT at 2.3%. On a 10-year basis
TCS TSR was 0.8% behind the FTSE
All Share REIT at 8.1%.

The adjacent table sets out the total
remuneration and incentive plan pay-
outs for the Executive Chairman and
CEO over a ten-year period.

350

300

250

200

150

100

0
Jun-10

Jun-11

Jun-12

Jun-13

Jun-14

Jun-15

Jun-16

Jun-17

Jun-18

Jun-19

Jun-20

TCS

FTSE UK REITs

Source: DataStream

2019/20

2018/19

2017/18

2016/17

2015/16

2014/15

2013/14

2012/13

2011/12

2010/11

Single total figure of
remuneration (£000s)

Annual Bonus pay-out
(% of maximum)

674

684

914

809

718

782

784

604

672

669

40%

20%

10%

30%

33%

13%

23%

Percentage change in remuneration
of Executive Chairman and Chief
Executive Officer

The adjacent table 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
2019 to 2020.

Salary % change

Taxable Benefits % change

Annual Bonus % change

Executive Chairman and
Chief Executive Officer (%)

Average pay for employees1
(%)

(1.6%)

0.0%

5.5%

21.9%

0.0%

Average pay for employees is calculated on a like for like basis for comparison purposes.

Town Centre Securities PLCAnnual Report & Accounts 202002. Corporate Governance

Town Centre Securities PLC

Annual Report & Accounts 2020

02. Corporate Governance

Directors’ Remuneration Report

continued

Annual Report on Remuneration (continued)
Relative importance of spend on pay

The adjacent table shows how
expenditure on total pay compares
to other financial outgoings.

Staff remuneration costs

Dividends to shareholders

2019 (£000)

2020 (£000)

5,704

6,247

5,216

6,247

% change

(8.6%)

External appointments

None of the Executive Directors have other external appointments for which
they are paid. Edward Ziff is the unpaid Chair and Trustee of Leeds Cares,
and a member of the Leeds University Council.

Implementation of the Remuneration
Policy for 2021

Base salary

Component

Implementation for 2020

The following table outlines how
TCS intends to implement the
Remuneration Policy in the year ending
30 June 2021.

Benefits

The Committee usually agrees base salary increases eff ective
from October. This year the Committee has agreed that there
will be no such increase for Board Directors. The 20% COVID-19
reduction will be removed from October 2020.

Benefits provisions will be as per 2020, 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 reimbursement
of the costs of maintaining a flat in London which is regularly
used for Company meetings.

Pension

Edward Ziff does not receive a contribution. The Group
makes payments to a Defined Contribution scheme for
Mark Dilley (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

NED fees

Executive Directors will continue to participate in the SIP.

There will be no change in NED fees. The 20% COVID-19
reduction will be removed from October 2020.

Consideration by the
Directors of matters relating
to Directors’ remuneration

The Remuneration Committee
formally met twice during the year
and following Directors were members
of the Committee during 2020:

Ian Marcus

Paul Huberman

Jeremy Collins

The key activities of the Committee
during the year were:

Approving the bonus outcome

for 2019 (no payment).

Approving the salary increases

for 2019.

Setting the bonus targets for 2020.

Reviewing Service Contracts

for continued appropriateness.

Discussing structures for any
potential future LTIP scheme.

Reviewing and agreeing the

approach to extend the previous
Remuneration Policy for another
year due to the disruption caused
by COVID-19.

Reviewing the Terms of Reference.

Reviewing changes to Corporate
Governance and the Committee’s
approach to these changes.

Statement of voting in relation
to the 2019 AGM

Votes For

Votes Against

Annual Report
on Remuneration

96.05%

3.95%

This report was approved by the
Board on 22 September 2020 and
signed on its behalf by

Ian Marcus OBE
Chairman of the
Remuneration Committee

Eider House

Directors’ Report

Principal activities
The principal activities of the Group
during the financial year remained
those of property investment,
development and trading and the
provision of a hotel and 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 90.

An interim dividend of 3.25p per
share was paid on 26 June 2020
as a PID. The Directors now propose
a payment of a final dividend of
1.75p per share all payable as an
ordinary dividend for approval of
the shareholders at the forthcoming
Annual General Meeting (‘AGM’).
The proposed final dividend will
be paid on 5 January 2021 to Ordinary
Shareholders on the register
at the close of business on
4 December 2020.

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 2020,
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.

Financial instruments
The key risks rising from financial
instruments are considered to be
Trade Debtors, Lease Liabilities and
Borrowings, which are set out in further
detail on pages 113–117.

Share capital
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
2020, 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 did not repurchase
any of its own shares during the year.
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 2020.

Town Centre Securities confirms that
there are no restrictions concerning
the transfer of securities in the
Company; no special rights to control
attached to securities; no restrictions
on voting rights; no agreements
between holders of securities
regarding their transfer known to
the Company; and no agreements to
which the Company is a party that
might affect its control or trigger any
compensatory payments for Directors
following a successful takeover bid.

Political donations
The Group made no political
contributions in the financial year
(2019: 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 pages 58–59. 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 73.

Lynda Shillaw was a Director of the
Company throughout the year ended
30 June 2020. Lynda resigned from the
Board on 7 August 2020.

Beneficial and non-beneficial
interests of the Directors in the
shares of the Company as at 30 June
2020 are disclosed in the Directors’
Remuneration Report on page 76.
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 UK Corporate
Governance Code all Directors will
retire at the Company’s AGM on 17
November 2020 and offer themselves
for re-election.

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 40.

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.

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.

2020 Annual General Meeting
A Notice of Meeting can be found on
pages 134–142 explaining the business
to be considered at the AGM on 17
November 2020 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 51
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.

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 and 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.

The Board confirms that, since the
entry into the relationship agreement
until 22 September 2020, 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.

Substantial shareholdings
As at 22 September 2020, being the last practicable date, the Company had
been notified, in accordance with the UK Listing Authority’s Disclosure Guidance
and Transparency Rules, that the shareholders in the table below held, or were
beneficially interested in, 3% or more of the voting rights in the Company’s issued
share capital.

Ziff Concert Party

New Fortress Finance Holdings Limited

Number of shares

% of Issued Capital

27,285,170

4,308,117

51.3%

8.1%

Post-balance sheet events
Post-balance sheet events since 30 June 2020 are detailed in note 27.

By order of the Board

Link Company Matters Limited
Company Secretary
22 September 2020

Town Centre Securities PLCAnnual Report & Accounts 202002. Corporate Governance

Statement of Directors’ responsibilities

Financial Statements

Annual Report & Accounts 2020

03. Financial Statements

84
90
90

91
92

93
94

122
123
124

Merrion Centre

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 2020 was approved
by the Board on 22 September 2020.

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

Dr. Edward Ziff OBE DL
Chairman & Chief Executive
22 September 2020

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: 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 58–59, confirms that, to the
best of their knowledge:

the financial statements, prepared
in accordance with the applicable
set of accounting standards, are
a true and fair view of the assets,
liabilities, financial position and
profit or loss of the Company taken
as a whole; and

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.

83
83

Town Centre Securities PLC

Independent Auditor’s Report

to the members of Town Centre Securities Plc

Material uncertainty related to going concern
We draw attention to note 1 of the financial statements,
which indicates the Directors’ consideration over going
concern, including the potential impact of the current
COVID-19 outbreak on the Group and its future compliance
with debt facility covenants. As stated in note 1, these events
or conditions, along with other matters as set out in note 1
indicate that a material uncertainty exists that may cast
significant doubt on the Group and Parent Company’s ability
to continue as a going concern. Our opinion is not modified
in respect of this matter.

We have highlighted going concern as a key audit matter
based on our assessment of the significance of the risk
and the effect on our audit strategy.

In respect of the work completed in this area
we completed the following:

a comparison of the best estimate forecasts prepared
by management to the actual results in the financial
period being audited along with an assessment of the
assumptions used to substantiate the potential impact
of COVID-19 through use of sensitivity analysis on these
key assumptions and an overall comparison to actual
post year end results;

confirmed the accuracy of the management forward

looking covenant calculations on the banking facilities
based on the forecast figures;

challenged management on the banking relationships
and anticipated renewals of these facilities including
discussion with the board and examination of
correspondence with the bank; and

an assessment of the assumptions within the longer

term cash flow forecast used in the preparation of the
viability statement, including a challenge of management
decisions to use a two-year viability statement to allow
greater short term accuracy in light of the immediate
potential impact of COVID-19.

Opinion
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 2020 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).

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 2020
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
Other than the matters referred to in the Material
uncertainty related to going concern section 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:

the Directors’ confirmation set out on page 50 in

the Annual Report that they have carried out a robust
assessment of the Group’s emerging and principal risks
and the disclosures in the Annual Report that describe
the principal risks and the procedures in place to identify
emerging risks and explain how they are being managed
or mitigated;

whether the Directors’ statements relating to going

concern and their assessment of the prospects of the
Group 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 51 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.

Key audit matters
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. In addition to the matter described in the Material uncertainty related to going concern
section, we have determined the matters described below to be the key audit matters to be communicated in our report.

Valuation of the Group’s property interests:

Key audit matter
The valuation of the Group’s property interests
(pages 108–110) is the key driver of the Group’s net
asset value and underpins the results for the year.
See page 96 for accounting policies.

These interests, totalling £370.2m (2019: £394.7m)
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 joint ventures.

All interests in property as listed above are subject to
independent revaluation to open market value at each
reporting date by management’s third party valuation
experts, with the exception of two properties totalling
£151k (2019: £151k) which are subject to internal
Director valuation.

The valuation of the Group’s property 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 by management
and the external valuation experts, increasing the inherent
risk in this area.

Note 12 to the financial statements also explains that
as a result of the impact of the outbreak of the Novel
Coronavirus (COVID-19) on the market, the Company’s
property valuer has advised that less certainty, and a
higher degree of caution, should be attached to certain
property valuations within the Group’s portfolio than
would normally be the case.

In light of the above, along with the materiality of the
balances, 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.

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsIndependent Auditor’s Report

continued

to the members of Town Centre Securities Plc

Key audit matters (continued)

How the scope of our audit responded
to the matter
Our audit approach to this area included an assessment
of management’s external valuation experts objectivity,
independence and qualifications to undertake the valuation.

We held meetings with both management’s external
valuation experts in which we confirmed directly with these
experts that the 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 European Union 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 expenditure details and lease
terms, which were agreed back to appropriate supporting
documentation.

We attended meetings with management’s valuation
experts to further understand the methodology applied

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 £3,500,000 (2019: £3,700,000). This
was determined with reference to a benchmark of total
non-current assets (of which it represents 1 per cent (2019:
1 per cent)), which we consider to be one of the principal
considerations for members of the Parent Company in
assessing the financial performance of a property investment
group. The materiality for the Parent Company financial
statements was set at £1,200,000 (2019: £3,700,000)
with reference to a benchmark of total non-current assets
excluding investments in subsidiaries, of which it represents
1% (2019: 1% of total non-current assets).

International Standards on Auditing (UK) also allow the
auditor to set a lower materiality, specific materiality, for
particular classes of transactions, balances or disclosures

and challenge them on any key 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.

For development properties valued on a residual basis,
we obtained the development appraisal and assessed the
costs and assumptions included against our knowledge
and experience. For development properties valued
on a comparable basis, we have obtained details of the
comparable sites and checked the appropriateness of
using this information with the valuation calculation.

Key observation:
Based on procedures performed, we consider the
methodology applied and the assumptions made
in the valuation of the Group’s property interests
to be appropriate.

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 specific materiality for the Group of £260,000 (2019:
£320,000) 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 £150,000
(2019: £210,000). This 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, averaged over three years.

Performance materiality was set at 70% (2019: 65%)
of the above materiality levels. Performance materiality is set
with regard to the number and size of historic adjustments,
management’s attitude towards proposed adjustments and
the number of accounts subject to estimation.

Component materiality was set at levels between £140,000
and £1,470,000 (2019: £140,000 and £1,560,000) with
specific materiality for components being set between
£34,000 and £170,000 (2019: £100,000 and £210,000).

We agreed with the Audit Committee that we would report
to the Committee all individual audit differences in excess
of £18,000 (2019: £16,000). 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
through a number of legal entities, which form reporting
components. Significant components were defined as
those reporting components contributing more than 15%
towards Group assets, turnover or profits, or if judgementally
considered to be significant by nature. The financial
information relating to the Parent Company and all other
significant components of the Group were subject to full
scope audits by the Group audit team. We also perform
full scope statutory audits on the trading non-significant
components, however the extent of this work completed
for the Group accounts is limited to those areas deemed
material to the Group accounts on either an individual or
aggregate basis across all components.

The extent to which the audit was capable
of detecting irregularity including fraud
The extent to which the audit is capable of detecting
irregularities is affected by the inherent difficulty in
detecting irregularities, the effectiveness of the entity’s
controls, and the nature, timing and extent of the audit
procedures performed.

As part of the audit we gained an understanding of the
legal and regulatory framework applicable to the Group
and the industry in which it operates, and considered the
risk of acts by the Group that were contrary to applicable
laws and regulations, including fraud. We considered the
Group’s compliance with laws and regulations that have a
direct impact on the financial statements including, but not
limited to, UK company law, UK tax legislation (including the
REIT regime requirements) and the UK Listing Rules, and we
considered the extent to which non-compliance might have
a material effect on the Group financial statements.

We designed audit procedures to respond to the risk,
recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion.

Based on our understanding we designed our audit
procedures to identify instances of non-compliance with
such laws and regulations. Our procedures included
reviewing the financial statement disclosures and agreeing
to underlying supporting documentation where necessary.
We made enquiries of management and of the Directors
as to the risks of non-compliance and any instances thereof,

and made similar enquiries of advisers to the Group,
where information from that adviser has been used in the
preparation of the Group financial statements. We also
addressed the risk of management override of internal
controls, including testing journal entries processed during
and subsequent to the year and evaluating whether there
was evidence of bias by the Directors that represented
a risk of material misstatement due to fraud.

Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some
material misstatements in the financial statements, even
though we have properly planned and performed our audit
in accordance with the auditing standards. For example, the
further removed non-compliance with laws and regulations
is from the events and transactions reflected in the financial
statements, the less likely the inherently limited procedures
required by the auditing standards would identify it.

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 65

– 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 position, performance, business model and
strategy, is materially inconsistent with our knowledge
obtained in the audit; or

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsTown Centre Securities PLC

Annual Report & Accounts 2020

03. Financial Statements

Independent Auditor’s Report

continued

to the members of Town Centre Securities Plc

Audit Committee reporting set out on page 68
– 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 64
– 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.

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:

the Strategic Report or the Directors’ Report; or

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.

Opinions on other matters prescribed
by the Companies Act 2006
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 and those
reports 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.

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 statement of Directors’
responsibilities set out on page 82, 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.

Use of our report
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 Parent
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, United Kingdom
22 September 2020

BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).

Auditor’s responsibilities for the audit
of the financial statements
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: 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 reappointed by the members at the Annual
General Meeting on 25 November 2019 to audit the
financial statements for the year ending 30 June 2020.
The period of total uninterrupted engagement is 5 years,
covering the years ending 30 June 2016 to 30 June 2020.

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.

Consolidated income statement
for the year ended 30 June 2020

Consolidated balance sheet
as at 30 June 2020

Gross revenue

Provision for impairment of debtors

Property expenses

Net revenue

Administrative expenses

Other income

Other expenses

Valuation movement on investment properties

Reversal of impairment of car parking assets

Profit/(loss) on disposal of investment properties

Share of post tax profits from joint ventures

Operating loss

Finance costs

Loss before taxation

Taxation

Loss for the year attributable to owners of the Parent

Earnings per share

Basic and diluted

EPRA (non-GAAP measure)

Adjusted EPRA (non-GAAP measure)

Dividends per share

Paid during the year

Proposed

Notes

2020
£000

27,989

(1,478)

(10,452)

16,059

(6,197)

1,218

(777)

2019
£000

31,418

(229)

(11,600)

19,589

(6,857)

574

–

(26,324)

(18,308)

250

168

450

(15,153)

(9,009)

(24,162)

–

200

(709)

1,067

(4,444)

(8,025)

(12,469)

–

(24,162)

(12,469)

(45.5)p

3.9p

4.9p

11.75p

1.75p

(23.4)p

12.0p

11.75p

8.5p

Consolidated statement of comprehensive income
for the year ended 30 June 2020

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

Assets held for sale

Trade and other receivables

Cash and cash equivalents

Total current assets

Total assets

Current liabilities

Trade and other payables

Financial liabilities

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

Notes

2020
£000

2019
£000

280,914

13,751

294,665

50,159

4,024

2,656

56,839

1,113

324,500

13,387

337,887

24,194

4,024

2,510

30,728

1,609

352,617

370,224

3,508

23,199

3,468

12,643

42,818

395,435

(23,382)

(61,984)

(85,366)

(154,591)

(239,957)

155,478

5,871

–

5,354

23,692

34,917

405,141

(34,739)

–

(34,739)

(182,152)

(216,891)

188,250

13,290

200

559

750

140,679

155,478

292p

200

559

250

173,951

188,250

354p

Loss for the year

Items that may be subsequently reclassified to profit or loss

Revaluation movement on car parking assets

Items that will not be subsequently reclassified to profit or loss

Revaluation (losses)/gains on other investments

Total other comprehensive (loss)/ income

Total comprehensive loss for the year

2020
£000

2019
£000

(24,162)

(12,469)

–

500

Net asset value per share

(2,363)

(26,525)

2,341

2,841

(9,628)

Company number: 00623364

The financial statements on pages 94–120 were approved by the Board of Directors on 22 September 2020
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 94–120 are an integral part of these consolidated financial statements.

Dr. Edward Ziff OBE DL
Chairman and Chief Executive

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsConsolidated statement of changes in equity
for the year ended 30 June 2020

Consolidated cash flow statement
for the year ended 30 June 2020

Called
up share
capital
£000

Share
premium
account
£000

Capital
redemption
reserve
£000

Revaluation
reserve
£000

Retained
earnings
£000

Total
equity
£000

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 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

–

(12,469)

2,841

(9,628)

(4,519)

(1,728)

(4,519)

(1,728)

Balance at 30 June 2019

13,290

200

559

250

173,951

188,250

Comprehensive income for the year

Loss for the year

Other comprehensive income

Transfer

Total comprehensive loss for the year

Contributions by and distributions to owners

Final dividend relating to the year ended 30 June 2019

Interim dividend relating to the year ended
30 June 2020

–

500

–

(24,162)

(2,363)

(500)

–

(27,025)

(26,525)

(4,519)

(1,728)

Balance at 30 June 2020

13,290

200

559

750

140,679

155,478

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

Repayment of loans from/(investments in) joint ventures

Distributions received from joint ventures

Net cash (used in)/generated from investing activities

Cash flows from financing activities

Proceeds from/(repayment of) non-current borrowings

Movement in lease liabilities

Dividends paid to shareholders

Net cash generated from/(used in) financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of the year

Cash and cash equivalents at end of the year

2020

2019

Notes

£000

14,433

(7,648)

11,090

(7,678)

6,785

3,412

(1,610)

(5,442)

(25)

(93)

2,494

–

(146)

–

8,000

(1,650)

(6,247)

(25,517)

(3,740)

(255)

(814)

17,089

(385)

(723)

28,145

(4,736)

13,823

(16,233)

(19)

(6,247)

103

2,152

209

2,361

12,643

(10,282)

2,361

(22,499)

(5,264)

5,473

209

23,692

(23,483)

209

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.

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes 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.

Going concern
In making their assessment of the ability of the Group to continue as a going concern the Directors have considered
the impact of COVID-19 on both the liquidity and compliance with bank loan covenants of the Group as a whole.

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 2020 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 2020

IFRS 16 Leases - Details of the impact this standard has had are given in note 26 below. Other new and amended
standards and Interpretations issued by the IASB that will apply for the first time in the next annual financial statements
are not expected to impact the Group as they are either not relevant to the Group’s activities or require accounting
which is consistent with the Group’s current accounting policies.

(b) New standards, amendments to published standards and interpretations issued but not effective for the period
ended 30 June 2020 and not early adopted
There are a number of standards, amendments to standards, and interpretations which have been issued by the
IASB that are effective in future accounting periods that the Group has decided not to adopt early. The following
amendments are effective for the period beginning 1 July 2020:

- IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates

and Errors (Amendment – Definition of Material)

- IFRS 3 Business Combinations (Amendment – Definition of Business)

- Revised Conceptual Framework for Financial Reporting

In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether liabilities
are classified as current or non-current. These amendments clarify that current or non-current classification is based
on whether an entity has a right at the end of the reporting period to defer settlement of the liability for at least twelve
months after the reporting period. The amendments also clarify that ‘settlement’ includes the transfer of cash, goods,
services, or equity instruments unless the obligation to transfer equity instruments arises from a conversion feature
classified as an equity instrument separately from the liability component of a compound financial instrument.
The amendments are effective for annual reporting periods beginning on or after 1 January 2022.

The Group is currently assessing the impact of these new accounting standards and amendments.

The Group owns a portfolio of multi-let regional property assets located throughout the UK, and operates a car parking
business. The business is funded in part by a £106m debenture which is due for repayment in 2031. In addition the
business has three bilateral RCF facilities totalling £103m which are due for repayment or renewal between April 2022
and June 2023. In order to assess the potential impact of COVID-19 on the Group and its ability to continue as a going
concern, management have analysed the portfolio’s tenant base and car parking operation and produced forecasts
to 31 December 2021. These forecasts reflect management’s view of a worst case scenario including assumptions that
rent receipts are materially lower than normally experienced and that the car park and hotel businesses recovers over
the forecast period to a materially lower level than would normally be expected.

These forecasts show that the Group has sufficient resources to continue to operate as a going concern for at least
the next 12 months. Based on the forecasts, including the mitigating options utilised such as the government approved
furlough scheme and VAT and PAYE pay deferral available to the Group the Directors consider it appropriate to prepare
these financial statements on the going concern basis.

However, the debt facilities include an interest cover covenant and a loan to value covenant. The Group is currently
in compliance with all of its covenants. Were there to be a deterioration in rent collection or sentiment towards the
value of these assets as a result of COVID-19 there is a possibility that these covenants could be breached. Whilst these
forecasts provide robust support, in light of the uncertainty in respect of the adverse impacts of COVID-19, its duration,
the ability of the Group to obtain loan covenant waivers if required and the current bank facility renewal, a material
uncertainty exists which may cast significant doubt on the Group’s ability to continue as a going concern and therefore
its ability to realise its assets and settle its liabilities within the ordinary course of business.

These financial statements do not include the adjustments that would be necessary should the going concern basis
of preparation no longer be appropriate.

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.

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.
Any impairment is initially recognised against the equity value, or if nil, against any outstanding loan balances.

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.

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial Statements

Notes to the consolidated financial statements
(continued)

1. ACCOUNTING POLICIES CONTINUED
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.

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.

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.

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.

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.

(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.

(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.

Goodwill
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
Other than where the Group has taken an irrevocable election to recognise investments as fair value through
other comprehensive income, the Group treats all investments as far 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.

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.

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes to the consolidated financial statements
(continued)

1. ACCOUNTING POLICIES CONTINUED
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 less provision for impairment.
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 twelve months after the balance sheet date.

Leased assets
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

•

leases of low value assets; and

leases with a duration of 12 months or less.

IFRS 16 was adopted 1 July 2019 without restatement of comparative figures. For an explanation of the
transitional requirements that were applied as at 1 January 2019, see note 26. The following policies apply
subsequent to the date of initial application, 1 July 2019. Lease liabilities are measured at the present value
of the contractual payments due to the lessor over the lease term, with the discount rate determined by
reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable,
in which case the Group’s incremental borrowing rate on commencement of the lease is used. Variable lease
payments are only included in the measurement of the lease liability if they depend on an index or rate.
In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged
throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

On initial recognition, the carrying value of the lease liability also includes:

• amounts expected to be payable under any residual value guarantee;

• the exercise price of any purchase option granted in favour of the Group if it is reasonably certain

to assess that option;

• any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis

of termination option being exercised.

Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives
received, and increased for:

•

lease payments made at or before commencement of the lease;

initial direct costs incurred; and

• the amount of any provision recognised where the Group is contractually required to dismantle, remove

or restore the leased asset (typically leasehold dilapidations – see note 30).

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate
on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised
on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset
if, rarely, this is judged to be shorter than the lease term.

When the Group revises its estimate of the term of any lease (because, for example, it reassesses the probability
of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability
to reflect the payments to make over the revised term, which are discounted using a revised discount rate.
The carrying value of lease liabilities is similarly revised when the variable element of future lease payments
dependent on a rate or index is revised, except the discount rate remains unchanged. In both cases an equivalent
adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised
over the remaining (revised) lease term. If the carrying amount of the right-of-use asset is adjusted to zero,
any further reduction is recognised in profit or loss.

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes to the consolidated financial statements
(continued)

1. ACCOUNTING POLICIES CONTINUED
When the Group renegotiates the contractual terms of a lease with the lessor, the accounting depends on the nature
of the modification:

•

if the renegotiation results in one or more additional assets being leased for an amount commensurate with the
standalone price for the additional rights-of-use obtained, the modification is accounted for as a separate lease
in accordance with the above policy

in all other cases where the renegotiated increases the scope of the lease (whether that is an extension to the
lease term, or one or more additional assets being leased), the lease liability is remeasured using the discount
rate applicable on the modification date, with the right-of-use asset being adjusted by the same amount

if the renegotiation results in a decrease in the scope of the lease, both the carrying amount of the lease liability
and right-of-use asset are reduced by the same proportion to reflect the partial of full termination of the lease with
any difference recognised in profit or loss. The lease liability is then further adjusted to ensure its carrying amount
reflects the amount of the renegotiated payments over the renegotiated term, with the modified lease payments
discounted at the rate applicable on the modification date. The right-of-use asset is adjusted by the same amount.

The Group sometimes negotiates break clauses in its property leases. On a case-by-case basis, the Group will consider
whether the absence of a break clause would expose the Group to excessive risk.

Typically, factors considered in deciding to negotiate a break clause include:

• the length of the lease term;

• the economic stability of the environment in which the property is located; and

• whether the location represents a new area of operations for the Group.

Prior year comparatives
As IFRS 16 has been adopted during the year using the modified retrospective approach the prior year comparative
balances have not been restated and therefore been reported in line with the policy set out below.

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.

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.

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).
Deferred income is only recognised to the extent it is expected to be recovered from tenants.

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:

i) rental income is recognised on an accrual basis on a straight-line basis over the term of the lease;

ii) turnover rents are based on underlying turnover and are recognised in the period to which the turnover relates; and

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
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.

100

101

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes to the consolidated financial statements
(continued)

1. ACCOUNTING POLICIES CONTINUED
(d) Interest income
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
as follows:

interim dividends are recognised in the period they are paid;

ii) final dividends are recognised in the period in which the dividends are approved by the Company’s shareholders.

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.

(c) Cash flow and fair value interest rate risk
The Group has no significant interest bearing assets. Borrowings issued at variable rates expose the Group
to cash flow interest rate risk.

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.

At 30 June 2020, 56.8% (2019: 59.4%) of the Group’s borrowings were under long-term fixed rate agreements
and therefore were protected against future interest rate volatility.

(d) Capital risk
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.

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 as follows:

i) Group’s property investments – the basis of valuation is set out in note 12

ii) Accounting for YPS investment – an assessment of the level of influence over this investment has been

set out within the Audit Committee Report

iii) IFRS 16 – the incremental borrowing rate has been based on the interest rates of the Group’s Revolving

Credit Facilities, adjusted for individual leases as appropriate

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.

(A) Segmental assets

Property rental

Car park activities

Hotel operations

2020
£000

2019
£000

333,307

363,375

53,498

8,630

395,435

31,466

10,300

405,141

102

103

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes to the consolidated financial statements
(continued)

3. SEGMENTAL INFORMATION CONTINUED
(B) Segmental results

2020

2019

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

15,875

10,198

1,916

27,989

16,637

12,154

2,627

31,418

Provision for impairment
of debtors

Service charge income

Service charge expenses

Property expenses

Net revenue

(1,478)

2,803

(4,011)

–

(1,478)

2,803

(229)

2,976

(4,011)

(3,990)

–

(229)

2,976

(3,990)

(1,495)

(5,970)

(1,779)

(9,244)

(1,424)

(6,766)

(2,396)

(10,586)

11,694

4,228

137

16,059

13,970

5,388

231

19,589

Administrative expenses

(5,086)

(1,111)

1,218

(777)

800

–

(6,197)

(5,889)

(968)

1,218

(777)

569

800

1,075

–

(6,857)

574

1,075

7,849

3,117

137

11,103

9,725

4,425

231

14,381

(26,324)

–

250

168

(350)

–

(26,324)

(18,308)

–

250

–

200

168

(709)

(350)

(8)

–

(18,308)

200

(709)

(8)

Operating (loss)/profit

(18,657)

3,367

137

(15,153)

(9,300)

4,625

231

(4,444)

Finance costs

Loss before taxation

Taxation

Loss for the year

(9,009)

(24,162)

–

(24,162)

(8,025)

(12,469)

–

(12,469)

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.

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 2020, arising from
car park operations, was £3,053,000. After allowing for an allocation of administrative expenses, the operating
profit at these sites was £2,251,000.

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.

Other income

Other expenses

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

Profit/(loss) on disposal
of investment properties

Valuation movement on
joint venture properties

4. ADMINISTRATIVE EXPENSES

Employee benefits

Depreciation

Charitable donations

Other

2020
£000

3,893

227

2,028

6,197

2019
£000

4,240

339

2,186

6,857

5. SERVICES PROVIDED BY THE GROUP’S EXTERNAL AUDITORS
During the year the Group obtained the following services from the Group’s auditors at costs as detailed below:

Audit services:

– 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:

– 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

2020
£000

2019
£000

110

112

2020
£000

4,547

537

132

5,216

110

112

2019
£000

4,969

620

115

5,704

Employee benefits detailed above are charged to the Consolidated income statement through administrative
expenses and property expenses. These are presented net of furlough claims received from HMRC under the
Coronavirus Job Retention Scheme.

Disclosures required by the Companies Act 2006 on Directors’ remuneration, including salaries, share options,
pension contributions and pension entitlement are included on pages 72–79 in the Directors’ Remuneration Report
and form part of these consolidated financial statements.

The average monthly number of staff employed during the year was 127 (2019: 135).

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.

104

105

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes to the consolidated financial statements
(continued)

7. OTHER INCOME AND EXPENSES
Other income

Commission received

Dividends received

Management fees receivable

Dilapidations receipts and income relating to lease premiums

Other

2020
£000

172

245

715

1,218

Other expenses
During the year a provision of £777,000 has been recognised in relation to costs incurred on a project that may
not be recoverable. Costs have been incurred over a number of years on the planned George Street aparthotel
joint venture however there is some doubt over the future viability of the project, therefore a full provision has
been recognised against the costs incurred to date.

8. FINANCE COSTS

Interest payable on debenture loan stock

Interest payable on bank borrowings

Amortisation of arrangement fees

Interest expense on lease liabilities

Total finance costs

2020
£000

5,698

1,950

327

1,034

9,009

2019
£000

172

207

574

2019
£000

5,698

1,981

346

–

8,025

9. TAXATION
There was no current or deferred tax charge for both of the years presented.

Taxation for the year is lower (2019: lower) than the standard rate of corporation tax in the United Kingdom
of 19% (2019: 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%
(2019: 19%)

Effects of:

– United Kingdom REIT tax exemption on net income before revaluations

– United Kingdom REIT tax exemption on revaluations

Total taxation

2020
£000

2019
£000

(24,162)

(12,469)

(4,591)

(2,369)

(398)

4,989

–

(1,206)

3,575

–

Factors affecting current and future tax charges
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

2018 final paid: 8.50p per share

2019 interim paid: 3.25p per share

2019 final paid: 8.50p per share

2020 interim paid: 3.25p per share

2020
£000

–

4,519

1,728

6,247

2019
£000

4,519

1,728

–

6,247

An interim dividend in respect of the year ended 30 June 2020 of 3.25p per share was paid to shareholders
on 26 June 2020. This dividend was paid entirely as a Property Income Distribution (PID).

A final dividend in respect of the year ended 30 June 2020 of 1.75p per share is proposed. This dividend, based
on the shares in issue at 22 September 2020, amounts to £0.8m which has not been reflected in these accounts
and will be paid on 5 January 2021 to shareholders on the register on 4 December 2020. The entire dividend will
be paid as an ordinary dividend.

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 (2019: 53,161,950).

Loss 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

Profit/loss on disposal of investment and development properties

EPRA earnings and earnings per share

Impact of IFRS 16 adjustments (note 26)

Adjusted EPRA earnings and earnings per share

2020

2019

Earnings
£000

(24,162)

26,324

(250)

350

(168)

2,094

528

2,622

Earnings
per share
p

(45.5)

49.5

(0.5)

0.7

(0.3)

3.9

1.0

4.9

Earnings
£000

(12,469)

18,308

(200)

709

6,356

–

6,356

Earnings
per share
p

(23.4)

34.5

(0.4)

0.0

1.3

12.0

–

12.0

There is no difference between basic and diluted earnings per share.

There is no difference between basic and diluted EPRA earnings per share.

106

107

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes to the consolidated financial statements
(continued)

12. NON-CURRENT ASSETS
(A) Investment properties

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

Additions at cost

IFRS 16 adjustments

Other capital expenditure

Purchase of freehold

Disposals

Transfer to assets held for sale

Deficit on revaluation

Movement in tenant lease incentives

Valuation at 30 June 2020

Long
leasehold
£000

Development
£000

Right-to-use
asset
£000

Freehold
£000

277,918

16,968

3,469

(14,290)

(17,879)

579

21,692

36,701

–

(408)

–

271

(500)

(21)

–

266,765

21,284

36,451

1,610

–

5,630

14,129

(2,425)

(23,199)

–

(13,594)

–

(25,206)

(2,070)

(279)

–

348

–

952

–

Total
£000

336,311

16,968

3,740

(14,790)

(18,308)

579

324,500

1,610

518

5,978

535

(2,425)

(23,199)

(26,324)

(279)

237,025

5,620

37,751

518

280,914

(B) Freehold and leasehold properties – car park activities

Valuation at 30 June 2018

Additions

Depreciation

Surplus on revaluation

Reversal of impairment/(impairment)

Valuation at 30 June 2019

Additions

IRFS 16 adjustment

Depreciation

Reversal of impairment

Valuation at 30 June 2020

Freehold
£000

Long
leasehold
£000

Right-to-use
asset
£000

Total
£000

3,000

20,423

–

23,423

–

500

250

255

(184)

–

(50)

3,750

20,444

–

(3,301)

30,322

(187)

250

(1,144)

–

255

(184)

500

200

24,194

27,021

(1,331)

250

3,750

17,231

29,178

50,159

The historical cost of freehold and leasehold properties relating to car park activities is £22,425,000
(2019: £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 external valuation
reports have explicitly mentioned material valuation uncertainty due to Novel Coronavirus (COVID-19) in their
portfolio valuation reports to management for certain properties within the TCS portfolios. The remainder
of the portfolio has been valued by the Property Director.

–

518

–

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.

Property income, values and yields have been set out by category in the table below.

Retail and Leisure

Merrion Centre (excluding offices)

Offices

Hotels

Out of town retail

Distribution

Residential

Development property

Car parks

Right to use assets

Passing
rent
£000

2,973

6,993

2,175

1,180

1,938

411

616

ERV
£000

3,455

7,351

4,529

1,630

1,871

427

639

Value
£000

41,990

85,725

47,795

23,080

25,575

6,010

10,570

16,286

19,902

240,745

Initial
yield
%

Reversionary
yield
%

6.7%

7.7%

4.3%

4.8%

7.2%

6.5%

5.5%

6.4%

7.8%

8.1%

9.0%

6.7%

6.9%

6.7%

5.7%

7.8%

37,751

22,881

29,696

331,073

The effect on the total valuation (including development property, car parks and right-to-use assets)
of applying a different yield and a different ERV would be as follows:

Valuation in the consolidated financial statements at an initial yield of 7.4% – £298.5m, Valuation at 5.4% – £375.7m.

Valuation in the consolidated financial statements at a reversionary yield of 8.8% – £303.8m, Valuation at 6.8% – £366.4m.

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

Acquisitions recognised at cost

IFRS 16 right to use assets

Leasehold improvements

Investment
properties
£000

160,265

119,980

151

–

518

–

280,914

Freehold and
leasehold
properties
£000

Assets held
for sale
£000

–

21,540

17,250

–

29,178

3,731

50,159

–

1,659

–

Total
£000

181,805

137,230

151

1,659

29,696

3,731

23,199

354,272

Leasehold improvements primarily relate to expenditure incurred on the refurbishment of three leasehold
car parks in Watford.

108

109

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes to the consolidated financial statements
(continued)

12. NON-CURRENT ASSETS CONTINUED
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 IFRS 13 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.

Assets held for sale
As at 30 June 2020, two properties with a total value of £23,199,000 were in the process of being sold
and therefore have been classified within current assets as Assets held for sale. The valuation deficit
recoginsed through the Income Statement in relation to these properties was £3,471,000.

At 1 July 2018

Additions

Disposals

Depreciation

At 30 June 2019

Net book value at 30 June 2019

At 1 July 2019

Additions

Depreciation

At 30 June 2020

Net book value at 30 June 2020

13. GOODWILL

At the start and end of the year

Cost
£000

3,632

814

(56)

–

4,390

–

4,483

2020
£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,
after taking account of the continuing impact of COVID-19. 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% (2019: 1%) and a discount rate of 8% (2019: 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

(Repayments of loans from)/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:

Accumulated
Depreciation
£000

Equity

Loans

2020
£000

13,387

(86)

–

450

13,751

2020
£000

8,452

5,299

13,751

2019
£000

39,742

723

(28,145)

1,067

13,387

2019
£000

7,792

5,595

13,387

2,088

–

(42)

735

2,781

1,609

2,781

–

589

3,370

1,113

2019
£000

4,024

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 assets and liabilities 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

2020
£000

69,400

689

(2,269)

(50,532)

17,288

2020
£000

3,328

(5)

(1,832)

1,491

–

1,491

2019
£000

69,400

1,178

(2,702)

(52,080)

15,796

2019
£000

3,328

(33)

(1,406)

1,889

(17)

1,872

Belgravia Living Group Limited completed construction of a block of residential apartments in Manchester
towards the end of the previous financial year. These apartments have been let to residential tenants during
the year. The Group’s financial interest in this joint venture is primarily in the form of a loan with a value as at
30 June 2020 of £5.3m (2019: £5.5m).

110

111

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes to the consolidated financial statements
(continued)

14. INVESTMENTS IN JOINT VENTURES CONTINUED
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

2020
£000

22,923

3,014

(11,365)

(14,725)

(153)

2019
£000

22,736

540

(23,355)

–

(79)

The income and expenses of Belgravia Living Group Limited for the current and previous year are as stated below:

Non-current asset investments

Equity investments

Loans

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.

Revenue

Expenses

Finance costs

Net loss

2020
£000

1,215

(538)

(751)

(74)

2019
£000

–

(14)

16. TRADE AND OTHER RECEIVABLES

Trade receivables

Less: provision for impairment of receivables

Other receivables and prepayments

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.

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

Property investment

Property Investment

Software Development

2020
£000

5,871

(2,363)

3,508

2019
£000

3,530

2,341

5,871

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. The provision for impairment
of receivables has been calculated after taking into account the impact of COVID-19 on the economy and the
financial position of tenants.

Due to the nature of income, debts are generally recovered in advance and full provision has been made
for income recognised but not recovered during the year. As such, the credit risk relating to trade and other
receivables is considered to be low and any expected credit loss would be immaterial.

As at 30 June 2020, trade receivables which had not been impaired can be analysed as follows:

2020

2019

Outside credit terms

Total
£000

2,086

2,544

Within credit
terms
£000

Less than one
month
£000

One to two
months
£000

Older than
two months
£000

2,086

2,124

–

211

–

199

Movements in the Group provision for impairment of trade receivables are as follows:

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 (2019: £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 IFRS 13 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.

At the start of the year

Provision for receivables impairment

Receivables written off as uncollectible

Unused amounts reversed

At the end of the year

112

113

The creation and release of the provision for impaired receivables have been included in administrative
expenses in the Consolidated income statement.

2020
£000

1,121

1,535

2,656

2020
£000

3,852

(1,766)

2,086

1,382

3,468

2019
£000

975

1,535

2,510

2019
£000

2,955

(411)

2,544

2,810

5,354

2020
£000

411

1,478

(123)

–

1,766

2019
£000

458

229

(218)

(58)

411

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes to the consolidated financial statements
(continued)

16. TRADE AND OTHER RECEIVABLES CONTINUED
The ageing of the provision is as follows:

The movement in financial liabilities during the year can be summarised as follows:

2020

2019

Total
£000

1,766

411

Less than
one month
£000

One to two
months
£000

Older than
two months
£000

–

229

1,537

383

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.

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

2020
£000

182,152

8,000

–

8,000

271

26,152

26,423

216,575

2019
£000

198,057

(16,000)

(233)

(16,233)

347

(19)

328

182,152

17. TRADE AND OTHER PAYABLES

Bank overdraft

Trade payables

Social security and other taxes

Other payables and accruals

2020
£000

10,282

910

1,143

11,047

23,382

2019
£000

23,483

128

529

10,599

34,739

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 2020 has meant that the cash and overdraft balances have been
presented on a gross basis.

18. FINANCIAL LIABILITIES
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.

Current

Bank borrowings

Lease liabilities

Non-current

Bank borrowings

Lease liabilities

5.375% First mortgage debenture stock

Total borrowings

2020
£000

60,326

1,658

61,984

19,796

28,919

105,876

154,591

216,575

2019
£000

–

71,862

4,425

105,865

182,152

The debenture, bank loans and overdrafts are secured by fixed charges on properties, valued at £314,375,000
(2019: £336,825,000) owned by the Company and its subsidiary undertakings.

The gross cash and overdraft balances on the individual accounts are summarised as follows:

Cash balances

Overdrawn balances

Cash and cash equivalents

2020
£000

12,643

(10,282)

2,361

2019
£000

23,692

(23,483)

209

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

2020

Trade and
other
creditors
£000

10,282

–

Bank
borrowings
£000

Debenture
stock
£000

Lease
liabilities
£000

61,855

20,783

5,698

22,792

1,658

6,716

Total
£000

79,493

50,291

–

142,465

48,001

190,466

10,282

82,638

170,955

56,375

320,250

In one year or less on demand

In more than one year but not more than five years

In more than five years

Trade and
other
creditors
£000

23,483

–

2019

Bank
borrowings
£000

Debenture
stock
£000

Lease
liabilities
£000

1,750

76,690

–

5,698

22,790

148,163

176,651

209

818

17,475

18,502

Total
£000

31,140

100,298

165,638

297,076

23,483

78,440

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.

114

115

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes to the consolidated financial statements
(continued)

18. FINANCIAL LIABILITIES CONTINUED
The Group had undrawn committed floating rate bank facilities as follows:

Expiring in one year or less

Expiring in more than one year

2020
£000

7,500

15,000

22,500

2019
£000

–

30,500

The availability of undrawn funds is subject to compliance with banking covenants. Performance against
covenants is monitored continually and calculations are formally prepared at the end of each quarter.
There have been no instances of non-compliance during the year.

19. FINANCIAL INSTRUMENTS
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

Lease liabilities

As at 30 June 2020

As at 30 June 2019

Weighted
average
rate
%

Weighted
average
period
Years

5.375

1.78

3.5

Nominal
value
£000

106,001

80,500

30,577

217,078

Nominal
value
£000

106,001

72,500

4,425

182,926

Weighted
average
rate
%

Weighted
average
period
Years

5.375

2.41

5.0

118

Floating rate financial liabilities bear interest at rates for term loans based on LIBOR plus an average margin
of 1.65% 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
£745,000 (2019: £735,000).

Financial instruments held for trading purposes
It is, and has been throughout the year under review, the Group’s policy not to trade in financial instruments.

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

Lease liabilities

116

2020

2.1%

1.78%

5.375%

3.5%

2019

2.75%

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

2020

2019

Book value
£000

105,876

80,122

Fair value
£000

123,578

80,122

Book value
£000

105,865

71,862

Fair value
£000

116,518

71,862

The above debenture stock has been valued as at 30 June 2020 by J C Rathbone Associates on the basis
of open market value.

The fair valuation of debenture stock is categorised as level 1 in the fair value hierarchy as defined in IFRS 13
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. LEASE LIABILITIES
At 30 June 2020 the Group has a long leasehold interest in seven properties that are accounted for under IFRS 16.

Two of these properties were classified as finance leases at 30 June 2019.

Future lease payments are as follows:

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

1,658

6,716

48,001

56,375

2020

Interest
£000

1,012

3,808

20,978

25,798

Present
value
£000

646

2,908

27,023

30,577

Minimum
lease
payments
£000

209

818

17,475

18,502

2019

Interest
£000

209

818

13,050

14,077

Present
value
£000

–

4,425

21. EPRA NET ASSET VALUE PER SHARE
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

2020
£000

155,478

53,162

292p

2019
£000

188,250

53,162

354p

117

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes to the consolidated financial statements
(continued)

22. COMMITMENTS
The Group has no capital commitments (2019: £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:

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 pages 72–79.

Within one year

One to five years

In more than five years

2020
£000

14,174

42,409

85,516

2019
£000

13,821

40,713

83,364

Short-term employee benefits

Post-employment benefits

2020
£000

1,830

125

1,955

2019
£000

1,865

102

1,967

The Group has a wide range of leases in place with tenants across a broad range of properties, sectors,
tenures and rental values.

23. CALLED UP SHARE CAPITAL
Authorised
The authorised share capital of the Company is 164,879,000 (2019: 164,879,000) Ordinary Shares of 25p each.
The nominal value of authorised share capital is £41,219,750 (2019: £41,219,750).

Issued and fully paid up

At 30 June 2019 and 30 June 2020

Number
of shares
000

53,162

Nominal
value
£000

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 for the financial year

Adjustments for:

Depreciation

Profit on disposal of fixed assets

(Profit)/loss 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

Decrease/(increase) in receivables

Increase/(decrease) in payables

Cash generated from operations

2020
£000

2019
£000

(24,162)

(12,469)

1,920

–

(168)

9,009

(450)

26,324

279

(250)

1,097

834

14,433

919

(9)

709

8,025

(1,067)

18,308

(579)

(200)

(2,074)

(473)

11,090

26. ADOPTION OF IFRS 16
Effective 1 July 2019, IFRS 16 has replaced IAS 17 Leases and IFRIC 4 Determining whether an Arrangement
Contains a Lease.

IFRS 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases,
together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset
is of low value. IFRS 16 substantially carries forward the lessor accounting in IAS 17, with the distinction between
operating leases and finance leases being retained.

Transition method and practical expedients utilised
The Group adopted IFRS 16 using the modified retrospective approach, with recognition of transitional adjustments
on the date of initial application (1 July 2019), without restatement of comparative figures. The Group elected to apply
the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application.
Contracts entered into before the transition date that were not identified as leases under IAS 17 and IFRIC 4 were not
reassessed. The definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after
1 July 2019.

IFRS 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard.
The Group applied the following practical expedients when applying IFRS 16 to leases previously classified as operating
leases under IAS 17:

(a) Apply a single discount rate to a portfolio of leases with reasonably similar characteristics;

(b) Exclude initial direct costs from the measurement of right-of-use assets at the date of initial application for leases

where the right-of-use asset was determined as if IFRS 16 had been applied since the commencement date;

under IAS 36 as at the date of initial application; and

(d) Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months

of lease term remaining as of the date of initial application.

As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether
the lease transferred substantially all of the risks and rewards of ownership. Under IFRS 16, the Group recognises
right-of-use assets and lease liabilities for most leases. However, the Group has elected not to recognise right-of-use
assets and lease liabilities for some leases of low value assets based on the value of the underlying asset when new
or for short-term leases with a lease term of 12 months or less.

The discount rate applied in the calculations is 3.5% which represents the incremental cost of borrowing.

The impact of the adoption of IFRS 16 on the primarily statements is presented on pages 120–121.

118

119

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsConsolidated income statement
for the year ended 30 June 2020

Consolidated balance sheet
as at 30 June 2020

Gross revenue

Property expenses

Net revenue

Administrative expenses

Other income

Other expenses

Valuation movement on investment properties

Reversal of impairment of car parking assets

Profit on disposal of investment properties

Share of post tax profits from joint ventures

Operating loss

Finance costs

Loss before taxation

Taxation

Loss for the year

Pre IFRS 16
adjustments
£000

Rental
expense
£000

Depreciation
charge
£000

Interest
expense
£000

Post IFRS 16
adjustments
£000

26,702

(11,149)

15,553

(6,197)

1,218

(777)

(26,324)

250

168

450

(15,659)

(7,975)

(23,634)

–

1,650

–

(1,144)

–

1,650

(1,144)

–

1,650

(1,144)

–

(1,034)

–

26,702

(10,643)

16,059

(6,197)

1,218

(777)

(26,324)

250

168

450

(15,153)

(9,009)

(24,162)

–

(23,634)

1,650

(1,144)

(1,034)

(24,162)

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

Assets held for sale

Trade and other receivables

Cash and cash equivalents

Total current assets

Total assets

Current liabilities

Trade and other payables

Financial liabilities

Total current liabilities

Non-current liabilities

Financial liabilities

Total liabilities

Net assets

Pre IFRS 16
adjustments
£000

Right-to-use
assets
£000

Lease
liabilities
£000

Post IFRS 16
adjustments
£000

280,396

13,751

294,147

518

–

518

24,282

25,877

4,024

2,656

–

30,962

25,877

1,113

–

326,222

26,395

3,508

23,199

3,468

12,643

42,818

–

369,040

26,395

(23,735)

(60,326)

(84,061)

(128,973)

(213,034)

353

–

353

–

353

–

(1,658)

280,914

13,751

294,665

50,159

4,024

2,656

56,839

1,113

352,617

3,508

23,199

3,468

12,643

42,818

395,435

(23,382)

(61,984)

(85,366)

(25,618)

(154,591)

(27,276)

(239,957)

156,006

26,748

(27,276)

155,478

27. POST-BALANCE SHEET EVENTS
Since the year end the Group has extended its £33m facility with NatWest for a further year on the same terms
and margin. This facility now expires in April 2022.

Four retail properties have been sold since the year end for a total sum of £35.2m.

120

121

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsCompany balance sheet
as at 30 June 2020

Statement of changes in equity
for the year ended 30 June 2020

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

2020
£000

2019
£000

Called up
share capital
£000

Share
premium
account
£000

Capital
redemption
reserve
£000

Other
reserve
£000

Retained
earnings
£000

Total
equity
£000

102,406

102,026

Balance at 30 June 2018

13,290

200

559

80,057

38,722

132,828

743

256,648

359,797

3,508

93,580

97,113

(3,322)

(147,065)

(150,387)

(53,274)

306,523

(185,998)

120,525

872

256,798

359,696

5,871

96,626

102,519

(20,337)

(132,519)

(152,856)

(50,337)

309,359

(177,727)

131,632

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

(4,519)

(1,728)

Balance at 30 June 2019

13,290

200

559

80,057

37,526

131,632

Comprehensive income for the year

Loss

Total comprehensive (loss)/income
for the year

Contributions by and distributions to owners

Final dividend relating to the year ended
30 June 2019

Interim dividend relating to the year ended
30 June 2020

–

(4,859)

(4,519)

(1,729)

Balance at 30 June 2020

13,290

200

559

80,057

26,419

120,525

13,290

200

559

80,057

26,419

120,525

200

559

80,057

37,526

131,632

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 loss shown in the financial statements of the
Parent Company was £4,859,000 (2019: profit of £5,051,000).

The financial statements on pages 122–133 were approved by the Board of Directors on 22 September 2020
and signed on its behalf by

Dr. Edward Ziff OBE DL
Chairman and Chief Executive

122

123

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes to the Company financial statements

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.

In making their assessment of the ability of the Company to continue as a going concern the Directors have
considered the impact of COVID-19 on both the liquidity and compliance with bank loan covenants of the Group
as a whole. This approach is considered appropriate on the basis that all external funding is held within the
Company. As such, the below assessment represents the Group position.

The Group owns a portfolio of multi-let regional property assets located throughout the UK, and operates
a car parking business. The business is funded in part by a £106m debenture which is due for repayment
in 2031. In addition the business has three bilateral RCF facilities totalling £103m which are due for repayment
or renewal between April 2022 and June 2023. In order to assess the potential impact of COVID-19 on the Group
and its ability to continue as a going concern, management have analysed the portfolio’s tenant base and
car parking operation and produced forecasts to 30 December 2021. These forecasts reflect management’s
view of a worst case scenario including assumptions that rent receipts are materially lower than normally
experienced and that the car park and hotel businesses recovers over the forecast period to a materially lower
level than would normally be expected.

These forecasts show that the Group has sufficient resources to continue to operate as a going concern
for at least the next 12 months. Based on the forecasts, including the mitigating options utilised such as the
government approved furlough scheme and VAT and PAYE pay deferral available to the Group the Directors
consider it appropriate to prepare these financial statements on the going concern basis.

However, the debt facilities include an interest cover covenant and a loan to value covenant. The Group is
currently in compliance with all of its covenants. Were there to be a deterioration in rent collection or sentiment
towards the value of these assets as a result of COVID-19 there is a possibility that these covenants could be
breached. Whilst these forecasts provide robust support, in light of the uncertainty in respect of the adverse
impacts of COVID-19, its duration, the ability of the Group to obtain loan covenant waivers if required and the
current bank facility renewal, a material uncertainty exists which may cast significant doubt on the Group’s
ability, and therefore because of the above-mentioned reliance on the group, the Company’s ability to continue
as a going concern and therefore its ability to realise its assets and settle its liabilities within the ordinary course
of business.

These financial statements do not include the adjustments that would be necessary should the going concern
basis of preparation no longer be appropriate.

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.

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
A joint venture is a contractual arrangement whereby the Company and other parties undertake an economic
activity that is subject to joint control.

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.

124

125

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes to the Company financial statements
(continued)

1. ACCOUNTING POLICIES CONTINUED
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 remeasured 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.

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).

3. EMPLOYEE BENEFITS

Wages and salaries (including Directors’ emoluments)

Social security costs

Other pension costs

2020
£000

2,697

325

3,094

2019
£000

3,086

369

3,517

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 £1,955,000 (2019: £1,967,000).

The average monthly number of staff employed during the year was 51 (2019: 56). Disclosures required
by the Companies Act 2006 on Directors’ remuneration, including salaries, share options, pension contributions
and pension entitlement, are included on page 75 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 2020 is included in note 5 to the consolidated
financial statements.

4. TANGIBLE ASSETS
Investment properties

Valuation at 30 June 2019

Additions

Valuation movement

Movement in tenant lease incentives

Valuation at 30 June 2020

Freehold
£000

58,636

6,267

(6,153)

(54)

Long
leasehold
£000

Development
£000

Total
£000

6,990

36,400

102,026

–

(980)

–

348

952

–

6,615

(6,181)

(54)

58,696

6,010

37,700

102,406

The above freehold and long leasehold properties have been valued as at 30 June 2020 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 2019

Additions

Depreciation

Balance at 30 June 2020

Net book value at 30 June 2020

Net book value at 30 June 2019

Total tangible assets

At 30 June 2020

At 30 June 2019

5. FIXED ASSET INVESTMENTS

Shares in Group undertakings

At 1 July

Additions

At 30 June

Other investments

At 1 July

Additions

At 30 June

Interest in joint ventures

At 1 July

Loans advanced

Share of (loss)/profit after tax

At 30 June

Total fixed asset investments

Cost
£000

2,127

–

2,158

Accumulated
depreciation
£000

1,255

–

160

1,415

743

872

103,149

102,898

2020
£000

2019
£000

248,693

–

248,693

2,510

146

2,656

5,595

–

(296)

5,299

256,648

2,125

385

2,510

5,091

372

132

5,595

256,798

126

127

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.

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes to the Company financial statements
(continued)

6. LISTED INVESTMENTS

At 1 July

Increase in value of investments

At 30 June

2020
£000

5,871

(2,363)

3,508

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 (2019: £889,130).

7. DEBTORS

Trade debtors

Less: provision for impairment of debtors

Amounts owed by subsidiary undertakings

Other debtors and prepayments

2020
£000

1,096

(591)

505

92,961

114

93,580

2019
£000

3,530

2,341

5,871

2019
£000

383

(72)

311

95,176

1,139

96,626

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 Company has many tenants spread
across a number of industry sectors. In addition, the tenants’ rents are payable in advance. The provision for
impairment of receivables has been calculated after taking into account the impact of COVID-19 on the economy
and the financial position of tenants.

The expense recognised in relation to the impairment of debtors for the year ended 30 June 2020
was £519,000 (2019: £1,000).

Amounts owed by subsidiary undertakings are unsecured, interest free and repayable on demand.

8. OTHER CREDITORS

Trade payables

Taxation and social security

Amounts owed to subsidiary undertakings

Other payables and accruals

2020
£000

739

313

142,143

3,870

147,065

2019
£000

–

128,807

3,676

132,519

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.

Non-current

Bank borrowings

5.375% First mortgage debenture stock

Current

Bank borrowings

Total borrowings

2020
£000

19,796

105,876

125,672

63,648

189,320

2019
£000

71,862

105,865

177,727

20,337

198,064

The debenture, bank loans and overdrafts are secured by fixed charges on properties, valued
at £314,375,000 (2019: £336,825,000) 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

2020
£000

7,500

15,000

22,500

2019
£000

–

30,500

The availability of undrawn funds is subject to compliance with banking covenants.

Included within facilities expiring in one year or less are overdraft facilities subject to annual review.
There are net cash balances of £5,432,000 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.

128

129

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes to the Company financial statements
(continued)

9. FINANCIAL INSTRUMENTS CONTINUED
Interest rate risk
The interest rate risk of the Company’s financial liabilities is as follows:

11. SUBSIDIARY COMPANIES
The Company’s wholly owned active subsidiary undertakings at 30 June 2020, registered in England or Scotland
and operating in the United Kingdom, are as follows:

Debenture stock

Bank floating rate liabilities

As at 30 June 2020

As at 30 June 2019

Weighted
average
rate
%

Weighted
average
period
Years

5.375

1.78

Nominal
value
£000

106,001

83,822

189,823

Nominal
value
£000

106,001

92,837

198,838

Weighted
average
rate
%

Weighted
average
period
Years

5.375

2.41

Floating rate financial liabilities bear interest at rates for term loans based on LIBOR plus an average margin
of 1.65% 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.

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

2020

2.1%

1.78%

2019

2.75%

2.41%

5.375%

Fair values of current borrowings
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

Debenture stock

Long-term bank borrowings

10. CALLED UP SHARE CAPITAL
Authorised
164,879,000 (2019: 164,879,000) Ordinary Shares of 25p each.

Issued and fully paid up

At 30 June 2019 and 30 June 2020

2020

2019

Book value
£000

Fair value
£000

Book value
£000

Fair value
£000

105,876

123,578

105,865

80,122

71,862

116,518

71,862

Number
of shares
000

53,162

Nominal value
£000

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.

130

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

Bay Sentry Solutions 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

Company number

Activity

2271353

3672365

647309

8837214

8696141

3946495

5281225

Property investment

Car park operations

Property investment

Management company

3112923

Trustee for employee benefit plans

2831154

9922032

10139127

09929851

10291290

10380988

12133595

6879596

8077103

8837203

8561356

4077297

2740190

1544918

SC464805

3873683

0226678

4104688

4317396

4329860

7712764

7712123

4847697

6554827

3108777

3060862

0814845

0221003

3946549

0129485

Property investment

Hotel operator

Car park operations

Dormant

131

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial StatementsNotes to the Company financial statements
(continued)

11. SUBSIDIARY COMPANIES CONTINUED

Company number

Town Centre Securities (Scotland) Limited

Town Centre Services Limited

TCS plc

TCS (EX TCCP) plc

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

0748937

2285764

4329979

3385312

3684812

3684827

5494592

6219875

6391627

8561354

5983938

4240551

6430444

4569350

4413344

4413343

4768830

4768845

4414144

4413341

4249007

5113915

Activity

Dormant

Property investment

Car park operations

Property investment

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:

Proportion of
ordinary shares
held
%

Activity

Property Investment

50 Software Development

Belgravia Living Group Limited

Bay Sentry Limited

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.

132

133

Town Centre Securities PLCAnnual Report & Accounts 202003. Financial Statements

Notice of Annual General Meeting

Notice is hereby given that the 2020 Annual General
Meeting (the “Meeting”) of Town Centre Securities Plc
(the “Company”) will be held virtually and streamed to all
shareholders from Town Centre House, The Merrion Centre
on Tuesday, 17 November 2020 at 10:00am. To consider and
if thought fit 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.

Due to ongoing uncertainties caused by the COVID-19
outbreak, we have put in place measures to allow
shareholders to view the AGM proceedings remotely.
Shareholders will not be able to attend the AGM in person
this year. Instead, shareholders are strongly encouraged
to join the AGM electronically and join the audio webcast.
Information on how to join the Meeting electronically can
be found under the explanatory notes.

We encourage all shareholders to vote via proxy in
advance of the AGM as you will not be able to vote on the
day of the Meeting. Your vote is important, and you are
encouraged to use it. Shareholders should vote by way
of proxy in advance of the Meeting. To ensure your vote
is counted, you should appoint the ‘Chair of the Meeting’
as your proxy. Whilst shareholders will be able to ask
questions of the Board via the webcast if you cannot
attend or would like to submit questions in advance of
the Meeting please send these to AGM@tcs-plc.co.uk
by Friday 13th November 2020.

Shareholders should refer to our website tcs-plc.co.uk/
investors/AGM for any notifications relating to measures
required for the AGM arrangements in light of the recent
COVID-19 outbreak.

This notice includes the resolutions (‘Resolutions’)
to be discussed at the AGM. You are requested to vote
electronically using the link www.signalshares.com, or
request and submit a Form of Proxy as soon as possible
whether you intend to attend the AGM electronically or not.
In any event, the Proxy instruction should reach
the Company’s Registrar by 10.00am on Friday,
13th November 2020.

Completion of a Form of Proxy will not preclude you
from attending the AGM electronically by following the
joining instructions set out later in this Notice, however
you must vote in advance of the Meeting for your vote
to be counted.

Ordinary resolutions
Resolution 1: Annual Financial Statements
and Directors’ Report

To receive the Company’s annual financial statements
(together with the Directors’ Report and the Auditors’
Report) for the financial year ended 30 June 2020.

Resolution 2: Directors’ Remuneration Report

2. To approve the Directors’ Remuneration Report set out
on pages 72–79 of the Company’s 2020 Annual Report
for the year ended 30 June 2020 (excluding the Directors’
Remuneration Policy included in the report).

Resolution 3: Directors’ Remuneration Policy

3. To approve the Directors’ Remuneration Policy,

which can be found on pages 73–74.

Resolution 4: Final Dividend

4. To declare a final cash dividend recommended
by the Board for the year ended 30 June 2020
of 1.75 pence per Ordinary Share, to be paid on
5 January 2021, to shareholders whose names
appear on the register at close of business on
on 4 December 2020.

Resolutions 5 to 11: Re-election of Directors

5. To re-elect Michael Ziff as a Non-Executive Director

of the Company.

6. To re-elect Ian Marcus as a Non-Executive Director

of the Company.

To re-elect Paul Huberman as a Non-Executive Director
of the Company.

8. To re-elect Jeremy Collins as a Non-Executive Director

of the Company.

9. To re-elect Edward Ziff as an Executive Director

of the Company.

10. To re-elect Benjamin Ziff as an Executive Director

of the Company.

11. To re-elect Mark Dilley as an Executive Director

of the Company.

Resolution 12: Reappointment of Auditors

12. To reappoint 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.

04. Shareholder Information

Resolution 13: Remuneration of Auditors

13. To authorise the Directors to determine the
remuneration of the Company’s auditors.

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)

(b)

make political donations to political parties
and/or independent election candidates;

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 2021. 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 2021, or 17 February 2022, 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.

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

134

135

Town Centre Securities PLCAnnual Report & Accounts 2020

Notice of Annual General Meeting

continued

(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 2021, or
17 February 2022, 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 2021, or 17 February
2022, 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 18: Authority to purchase Company’s
own shares

Explanatory notes

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)

(b)

(c)

(d)

the maximum number of Ordinary Shares which
may be purchased is 7,974,292;

the minimum price, exclusive of any expenses,
which may be paid for each Ordinary Share is £0.25;

the maximum price, exclusive of any expenses,
which may be paid for each Ordinary Share is
an amount equal to the higher of:

(i)

(ii)

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

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.

this authority shall expire on the date of the next
Annual General Meeting of the Company or on
17 February 2022, 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
22 September 2020

Registered Office:
Town Centre House,
The Merrion Centre,
Leeds LS2 8LY

Registered in England and Wales No. 00623364

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 2020
Annual Report and Financial Statements for the year ended
30 June 2020 (the ‘Annual Report’), which was circulated at
the time of this Notice and is also available on the Company’s
website at tcs-plc.co.uk.

Resolution 2: Directors’ Remuneration Report
(excluding the Directors’ Remuneration Policy) for the
year ended 30 June 2020.

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 72–79 of the Annual Report. Resolution 2
is an advisory vote only and the Directors’ entitlement to
remuneration is not conditional on it.

Resolution 3: Directors’ Remuneration Policy

The Act also requires that a resolution be put to
shareholders, at intervals of not more than three years,
to approve the Directors’ Remuneration Policy, which can
be found on pages 73–74 of the Annual Report. This is a
binding policy and, after it takes effect, the Directors will
not be entitled to remuneration unless that payment is
consistent with the approved policy or has been approved
by a resolution of the shareholders of the Company. Due
to the current economic climate and financial uncertainty,
the Company feels that it would be unwise to amend the
remuneration policy this year and therefore proposes an
unchanged policy. However, once the Company is able
to make more reliable financial predictions, it will propose
a revised policy at the 2021 Annual General Meeting.
If Resolution 3 is approved, the policy will take effect
from the date of the AGM.

Resolution 4: Final Dividend

The Board proposes a final dividend of 1.75 pence per
share in respect of the year ended 30 June 2020.
If approved, the recommended final dividend will be paid
on 5 January 2021 to all Ordinary Shareholders who are
on the register of members on 4 December 2020.

04. Shareholder Information

Resolutions 5 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. In addition, the Board confirms that
each Non-Executive Director is able to commit sufficient time
to meet their Board responsibilities. The biographical details
of the Directors seeking re-election at the Meeting are set
out on pages 58–59 of the Annual Report.

None of the 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.

Resolutions 6, 7 and 8 relate to the re-election of Ian Marcus,
Paul Huberman and Jeremy Collins who are Non-Executive
Directors for the purposes of the UK Corporate Governance
Code. These resolutions are proposed as ordinary resolutions
and can be voted on by all shareholders of the Company.
However, in addition to this, the votes cast by independent
shareholders will be counted separately in accordance with
the UKLA Listing Rules.

Resolution 12: Reappointment 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 reappointment
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.

136

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Town Centre Securities PLCAnnual Report & Accounts 2020

Notice of Annual General Meeting

continued

Resolution 14: Authority to make political donations

The Company does not currently hold any shares in treasury.

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.

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 15 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 25 November 2019, which expires at the end
of the 2020 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 22 September 2020, 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 22 September 2020 (being the latest
practicable date prior to publication of this document).

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 2021 or 17 February 2022, whichever is earlier.

Special resolutions
Resolution 16: Authority to Dis-apply Pre-emption Rights

At the Annual General Meeting held on 25 November
2019, the Directors were given the authority to issue equity
securities of the Company and sell treasury shares in
exchange for cash until the 2020 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 22 September 2020, 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 2021 or 17 February 2022, whichever is earlier.

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.

04. Shareholder 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.

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.

The Directors believe that this resolution will assist them
in taking advantage of business opportunities as they arise.

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 2021 or on 17 February 2022, 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 134–142 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.

Electronic Attendance and Voting

You may attend the AGM online using your smartphone,
tablet or computer. You will be able to view and listen
to a live webcast of the Meeting and ask the Directors
questions, however as explained above you will not be
able to vote at the event.

To join the Meeting electronically, you will need to visit:
tcs-plc.co.uk/investors/AGM

To log in to the Meeting, you must register in advance
with your unique login ID (which is your full 11 digit IVC
number including any zeros) and your PIN code (which
is the last 4 digits of your IVC). You will be able to access
the link 15 minutes before the start of the Meeting.

If you are not in receipt of your IVC this can be found on
a share certificate or dividend tax voucher or alternatively
you can sign in to www.signalshares.com to obtain your
IVC code. If however you cannot find your IVC and don’t
have access to www.signalshares.com then please contact
the Company’s registrar, Link Market Services Limited,
The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU
on telephone number 0371 277 1020 before 16th November
2020 to obtain your IVC in order to log into the Meeting,
lines are open 9.00 a.m. to 5.30 p.m. GMT excluding
non-workings days.

Any shareholder attending the Meeting is eligible to ask
questions. If you wish to ask questions at the Meeting,
please do so by entering your question in the Q&A box in
the webcast player during the event. Shareholders can also
submit questions to the Board in advance of the AGM by
writing to the Group Company Secretary at Town Centre
House or by e-mailing the Company at AGM@tcs-plc.co.uk.

For general enquiries on how to join the AGM electronically
please contact Link registrars on telephone number
0371 277 1020 or write to Link Asset Services, The Registry,
34 Beckenham Road, Beckenham, Kent, BR3 4TU.

Further Information

Further information relating to the Company can be found
on the Company’s website tcs-plc.co.uk.

138

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Town Centre Securities PLCAnnual Report & Accounts 2020

Notice of Annual General Meeting

continued

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.

Important notes
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.

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 Friday,
13th November 2020 (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.

2. In order to gain admittance to the Meeting, members will

be required to sign up, in advance, using their IVC number
at the following link: tcs-plc.co.uk/investors/AGM.

3. 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. You can vote either:

- by logging on to www.signalshares.com where full

instructions can be found;

- by requesting a hard copy form of proxy directly from

the registrar, Link Asset Services, on Tel: 0371 664 0300.
Calls are charged at the standard geographic rate and
will vary by provider. Calls outside the United Kingdom
will be charged at the applicable international rate. Lines
are open between 09:00 and 17:30, Monday to Friday
excluding public holidays in England and Wales; or

- in the case of CREST members, by utilising the
CREST electronic proxy appointment service in
accordance with the procedures set out below.

For an electronic proxy appointment to be valid,
the appointment must be received by the Company’s
registrar by no later than 10.00am on Friday 13th
November 2020 (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).

For a hard copy form of proxy 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 10.00am on Friday 13th
November 2020 (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.

5. If you return more than one proxy appointment,

either by paper or electronic communication, the
appointment received last by the registrar before the
latest time for the receipt of proxies will take precedence.
You are advised to read the terms and conditions of use
carefully. Electronic communication facilities are open
to all shareholders and those who use them will not
be disadvantaged.

6. The return of a completed proxy form, electronic

filing or any CREST Proxy Instructions will not prevent
a shareholder from attending the Meeting and voting
in person if he/she wishes to do so.

04. Shareholder Information

7. CREST members who wish to appoint a proxy or

proxies through the CREST electronic proxy appointment
service may do so for the Meeting (and any adjournment
of the Meeting) by using the procedures described in
the CREST manual (available from euroclear.com/site/
public/EUI). CREST Personal Members or other CREST
sponsored members, and those CREST members who
have appointed a service provider(s), should refer
to their CREST sponsor or voting service provider(s),
who will be able to take the appropriate action on
their behalf.

8. In order for a proxy appointment or instruction made

by means of CREST to be valid, the appropriate CREST
message (a CREST Proxy Instruction) must be properly
authenticated in accordance with Euroclear UK &
Ireland Limited’s specifications, and must contain the
information required for such instructions, as described
in the CREST manual. The message must be transmitted
so as to be received by the issuer’s agent (ID RA10) by
10:00 on 16 November 2020. For this purpose, the time
of receipt will be taken to mean the time (as determined
by the timestamp applied to the message by the CREST
Application Host) from which the issuer’s agent is able to
retrieve the message by enquiry to CREST in the manner
prescribed by CREST. After this time any change of
instructions to proxies appointed through CREST should
be communicated to the appointee through other means.

9. CREST members and, where applicable, their CREST

sponsors, or voting service providers should note that
Euroclear UK & Ireland Limited does not make available
special procedures in CREST for any particular message.
Normal system timings and limitations will, therefore,
apply in relation to the input of CREST Proxy Instructions.
It is the responsibility of the CREST member concerned
to take (or, if the CREST member is a CREST personal
member, or sponsored member, or has appointed a
voting service provider(s), to procure that his CREST
sponsor or voting service provider(s) take(s)) such
action as shall be necessary to ensure that a message
is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and,
where applicable, their CREST sponsors or voting system
providers are referred, in particular, to those sections
of the CREST Manual concerning practical limitations
of the CREST system and timings. The Company
may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.

10. A shareholder or shareholders having a right to vote
at the Meeting and holding at least 5 per cent of the
total voting rights of the Company (see Note 12 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:

10.1

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;

10.2 comply with the requirements set out in

Note 11 below; and

10.3 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:

10.4 it may not require the shareholder(s) making
the request to pay any expenses incurred by
the Company in complying with the request;

10.5 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

10.6 the statement may be dealt with as part

of the business of the Meeting.

11. Any request by a shareholder or shareholders

to require the Company to publish audit concerns
as set out in Note 10 above:

11.1

may be made either:

11.1.1 in hard copy, by sending it to the Company
Secretary, Town Centre House, The Merrion
Centre, Leeds LS2 8LY; or

11.1.2 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);

11.2

must state the full name(s) and address(es)
of the shareholder(s); and

11.3

(where the request is made in hard copy from
or by fax) must be signed by the shareholder(s).

12. As at 22 September 2020 (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 22 September 2020 are 53,161,950.

140

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Town Centre Securities PLCAnnual Report & Accounts 2020

Notice of Annual General Meeting

continued

Investor information

04. Shareholder Information

17.2

copies of the letters of appointment of the
Non-Executive Directors.

18. 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
tcs-plc.co.uk.

13. 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:

13.1

to do so would interfere unduly with the
preparation for the Meeting or would involve
the disclosure of confidential information;

13.2 the answer has already been given on a website

in the form of an answer to a question; or

13.3 it is undesirable in the interests of the Company

or the good order of the Meeting that the question
be answered.

14. 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’):

14.1

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

14.2 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.

15. Biographical details of all those Directors who are

offering themselves for appointment or reappointment
at the Meeting are set out on pages 58–59 of the
Annual Report and Accounts.

16. 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.

17. 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:

17.1

copies of the service contracts of the Executive
Directors; and

Registrar
All general enquiries concerning shareholdings in
Town Centre Securities PLC should be addressed to:

Dividends
Interim dividend: 3.25p per share paid on 26 June 2020
to shareholders on the register on 29 May 2020.

Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU

Telephone: +44 (0) 371 664 0300

(Calls are charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable international rate.

Lines are open from 9.00am–5.30pm, Monday to Friday excluding public holidays
in England and Wales.)

Telephone outside United Kingdom:
+44 (0) 371 664 0300

Email: shareholderenquiries@linkgroup.co.uk

Website: linkassetservices.com

Final dividend: 1.75p per share to be paid on 5 January 2021
to shareholders on the register on 4 December 2020.

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
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 Limited
c/o Apex Corporate Trustees (UK) Limited
6th Floor
125 Wood Street
London EC2V 7AN

142

143

Town Centre Securities PLCAnnual Report & Accounts 2020

Town Centre Securities PLC

Notes

Annual Report & Accounts 2020

144

145

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

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