Replacement: Final Results

This announcement replaces the Final Results announcement released on 14^th September 2016 at 07:00 under RNS Number 7526J to correct an error in Note 5 to the Financial Statements relating to the split of the dividend. The final dividend comprises an ordinary dividend of 3.90p and a Property Income Distribution of 4.00p.

TOWN CENTRE SECURITIES PLC

Final results for the year ended 30 June 2016

RESILIENT PORTFOLIO PERFORMANCE WITH NET ASSETS INCREASED

Town Centre Securities PLC ("TCS"), the Leeds based property investment, development and car parking company, today announces its audited final results for the year ended 30 June 2016.

Financial highlights

·     Net assets per share up 3.8% at 357p (2015: 344p)

·     Dividend up 5.4% to 11.0p (2015: 10.44p), 1.19 times covered

·     Statutory profit before tax of £11.9m (2015: £24.0m) and statutory earnings per share of 22.4p (2015: 45.1p)

·     EPRA profit before tax of £6.6m (2015: £6.5m)

·     EPRA earnings per share of 12.4p (2015: 12.1p)

·    Total shareholder return of minus 3.9% (2015: + 19.1%) vs market of minus 11.7% (2015: + 20.0%) and total property return of 7.8% (2015: 12.2%)

·     All 3 bank facilities total £105m agreed at 50bp reduction in margin

Operating performance

·     Total property return of 7.8% (2015: 12.2%) broadly in line with IPD

·     Passing rent up 2.8% like for like

·     Total ERV up 2.1% like for like

·   Like for like property valuation increase of 2.2% (2015: 7.1%); initial yield of 5.7% (2014: 5.8%) and reversionary yield of 6.4% (2015: 6.8%)

·     Occupancy remains high at 98% (2015: 96%)

Operational highlights

·     Development programme on track to deliver increases of £1.8m pa in income and £10.5m in net assets. Total spend in the year £12.2m, costs to complete £26.0m

o  Merrion House, Leeds - completion December 2017 which will add £0.9m to income and £9m to net  assets

o  Merrion Hotel, Leeds - completion April 2017 will add over £0.6m to annual income

o  Whitehall Road, Leeds - completion April 2017 will add £0.4m to net profit and £1.5m to net assets

·     2 JV's established as start of £240m residential programme at Piccadilly Basin, Manchester

o  91 unit scheme on Tariff Street underway with start on site 2016/17

o  24 unit loft scheme in Brownsfield Mill; JV formed with Urban Splash

·     Active capital recycling through

o  Sales of properties at Albion Place, Leeds and Bothwell Street, Glasgow for a total consideration of  £13.3m, exit yield 6.0% with the sales ahead of valuation

o  3 property acquisitions at a net initial yield of 5.7% for a total cost of £6.3m

·     Good progress with Merrion Centre enhancements

o  Morrisons new store trading well with further expansion through a café in main mall

o  New lettings to Bon Marche and Heron Foods in main mall

o  New letting to Dockyard in Arena Quarter - now 90% let

o  Former cinema refurbishment project underway

·     Expansion of Poundstretcher unit at Rochdale Retail Park and new drive thru created

·     New hotel letting completed at Shandwick Place, Edinburgh

·     £3.3m refurbishment of 3 car parks in Watford

·     CitiPark profits up 30% on prior year both organic and as a result of acquisitions

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

"As I write this statement we are facing an extended period of uncertainty as a result of the Brexit vote on 23 June 2016.

There is no doubt that the market increases in value we have seen in the last couple of years have come to an end, but our portfolio has not seen the Brexit effects reported in central London and the end of year values reflect the hard work we have done in recent times. In fact we have seen excellent valuation results from some of our assets, particularly the development sites.

While the market absorbs the unfolding story of our exit from the European Union we will carry on doing what we have always done - we have an exciting development programme which will add three top quality assets to our investment portfolio while increasing rental income and net assets significantly and we will continue to generate gains through our intensive management activities.

I am particularly pleased to announce a 5.4% increase in our dividend this year; we are now confident that the increases in income from these three schemes will flow through to earnings over the next two to three years".

For further information, please contact:

Town Centre Securities PLC                                                                                                        www.tcs-plc.com

Edward Ziff, Chairman and Chief Executive                                                                              0113 222 1234

Duncan Syers, Finance Director

MHP Communications 

Reg Hoare / Gina Bell                                                                                                                          020 3128 8100

Chairman and Chief Executive's Statement

Our portfolio has shown its resilience in performing well against a difficult market with like for like increases in valuation (2.2%), passing rent (2.8%) and ERV (2.1%). This bodes well for the difficult times ahead

Portfolio performance

The like for like increase in the value of our investment property portfolio this year has been 2.2% (2015: 7.1%) which reflects a reversionary yield of 6.4% (2015: 6.8%). The total property return of 7.8% is in broadly line with IPD with strong performances by Urban Exchange Retail Park, Manchester up £1.0m or 12.5%, Shandwick Place, Edinburgh up £0.9m or 7.7%, New Dock Car Park, Leeds up £1.0m or 12.5% and the development sites up £5.5m or 23.5%, offset by a 3% fall in the value of Merrion Centre principally relating to a reduction in the car park valuation.

The investment properties, developments, joint ventures and car parks at the year end stood at £375.5m (2015: £360.4m).

Results

Net assets and EPRA net assets at 30 June 2016 were £189.9m, representing 357 pence per share (2015 restated: £182.9m, 344 pence per share).

We report a statutory profit for the year of £11.9m (2015: £24.0m) which includes the property revaluation surplus of £3.5m this year (2015: £14.8m).

Our EPRA profit before tax of £6.6m (2015: £6.5m) (excluding property revaluation and property disposals) is in line with expectations. CitiPark's operating profit (before funding costs) was up £2.2m or 118% on the back of acquisitions over the last 2 years.

Statutory earnings per share (including property revaluation and property disposals) were 22.4p (2015: 45.1p). EPRA earnings per share were 12.4p (2015: 12.1p).

Certain figures in last year's accounts have been restated to bring them into line with current accounting standards and our accounting policies. The restatements did not have a material effect on any of the primary measures.

Dividends

The Board is recommending a final dividend of 7.9 pence per share, which, together with the interim dividend of 3.1 pence per share, gives a total of 11.0 pence per share. We have approved this 5.4% increase because of the increase in earnings which is expected to come from our development programme.

The final dividend comprises a Property Income Distribution of 4.0p and an ordinary dividend of 3.9p per share. The final dividend will be paid on 4 January 2017 to shareholders on the register on 2 December 2016.

Funding

Net debt at 30 June 2016 amounted to £185.8m (2015 restated: £179.1m). This comprised £106.0m of 5.375% First Mortgage Debenture Stock 2031 and £79.8m of revolving credit facilities. The increase in the level of net debt is principally due to capital expenditure on the development schemes. Borrowings represent 49% of property values (2015 restated: 50%).

The group has renewed its bank facilities during the year, all on a 3 year revolving credit basis; the total of the 3 facilities with Lloyds, RBS and Handlesbanken is £105m and these have been renewed with a reduction in the average margin of 50 basis points.

Development programme on track to deliver increases in income and net assets

Last year I reported on an extensive programme of asset management initiatives which have added over £20m to net assets over the last two years.

At the time of this report we are engaged in what is probably the biggest development programme the company has ever had ongoing at one time, at least since the construction of the Merrion Centre in the 1960's.

This development spend is on our existing assets at Merrion Centre Leeds, Whitehall Road Leeds and Piccadilly Basin Manchester. In the current low inflation economic environment investment is essential to create growth and these three projects alone will generate additional annual profits of £1.8m or 3p per share and are expected to increase net assets by around £10.5m and net assets per share by 20p. The first full year of these benefits will be 2018/19. While the income statement has seen no benefit to date these future gains are all contracted and we can be confident they will flow through to the bottom line. It is worth noting that we have fixed the contract price on all these developments during the year so we are not exposed to the current build cost inflation risk.

There is more to come from our land bank. At Whitehall Road Leeds we are marketing the further office opportunities with potential for 400,000 sq ft of space with river frontage. We are also preparing the way to start building work on the 500 space multi-storey car park.

In Manchester we have embarked on the first phase of an exciting residential development programme of 850 units by forming 2 joint ventures with specialist residential developers. The first is with Highgrove Investments and will deliver a 91 unit canal-side scheme with the start on site in the  financial year 2016/7. We have also formed a JV with Urban Splash to create 24 loft style units in the listed Brownsfield Mill. In total the masterplan for this site comprises a £250m programme which will both maximise the value of our existing land asset as well as providing opportunities in the coming years to invest in residential assets and make development profits.

The area around the Piccadilly Basin is improving all the time and we intend to schedule in commercial and leisure development alongside the canal as soon as it is appropriate and the masterplan also includes a further multi-storey car park. We should stress that this site is ideally situated to benefit from the new HS2/3 station in due course.

Intensive asset management activities

We face an exciting future as we work through these schemes but there are also other opportunities around the portfolio. It is not only development which is bringing through gains; we continue to work the portfolio through intensive asset management. We have an excellent and hard-working estates team who have competed 141 transactions during the year moving like for like passing rent forward by 2.8% and the ERV by 2.1%.

In the Merrion Centre we now benefit from the increased rent from the new lease to Morrisons who have expanded their demise this year to include a main mall café area. We have let 2 further units in the Arena Quarter to Smoke BBQ and Dockyard; the scheme is now 90% let and we are currently considering offers on all the remaining units.

We are benefitting from the NHS and Bon Marche lettings concluded last year and have completed a letting to Heron Foods which will consolidate 3 smaller units. We have also recently let a small shop to Leeds United; this will be their only merchandise outlet away from Elland Road. There are further exciting letting discussions ongoing at present and we have every reason to be optimistic about the outlook for the centre maintaining its high occupancy.

We have started on a project to refurbish the former cinema partly as a leisure operation with further office accommodation. The leisure space will have aeroplane and F1 simulators; we have trialled the F1 units in the main mall and demonstrated good levels of demand. We have recently completed the initial preparatory infrastructure works and hope to start work on the refurbishment in 2016/17.

Rochdale Retail Park - this 65,000 sq ft scheme is let to Poundstretcher, Matalan, Halfords and Argos. We have extended the Poundstretcher unit this year which will generate an 8% return on capital employed.

We have continued to improve our assets in Glasgow and Edinburgh. We are now seeing income from the Bella Italia letting at Empire House where we obtained a change of use and significantly increased the income from this unit. We have concluded a letting to a budget hotel operation at Shandwick Place Edinburgh which has been a long and complex project which will also significantly enhance this asset.

At Milngavie Glasgow we are seeing the full year benefit of our new Waitrose supermarket development which opened in June 2015. There are other development opportunities on this site through our control of the access to the West of Scotland Rugby Club land.

Capital recycling

We have continued our capital recycling programme during the year, selling Bothwell Street Glasgow and Albion Street Leeds for a total consideration of £13.3m which equates to an exit yield of 6.0%. The sales were ahead of valuation. We also purchased a retail block in Wood Green London for £6.3m at an initial yield of 5.7%. This activity was all in the first half of the year, we have found the market impossible in recent months as the attention of investors has been focussed almost entirely on the Referendum. This capital recycling will continue in 2016/17 with further disposals of low growth assets and acquisitions in suburban London and the South East.

CitiPark

On the car park side we have continued to consolidate the assets we purchased in 2014/15. We have equipped all the new sites with our integrated parking management system which allows us to manage them from our central control room (the engine room). The £3m refurbishment of the 3 car parks in Watford is now complete and these are trading well. We are now moving on to upgrade our operation at Bell Street London where demand has increased significantly following the closure of an adjacent competitor operation.

The car park portfolio has traded well this year and we continue to benefit from strong income growth.

Outlook

As I write this statement we are facing an extended period of uncertainty as a result of the Brexit vote on 23 June 2016.

There is no doubt that the market increases in value we have seen in the last couple of years have come to an end, but our portfolio has not seen the Brexit effects reported in central London and the end of year values reflect the hard work we have done in recent times.  In fact we have seen some excellent valuation results from some of our assets, particularly the development sites.

While the market absorbs the unfolding story of our exit from the European Union we will carry on doing what we have always done - we have an exciting development programme which will add 3 top quality assets to our investment portfolio while increasing rental income and net assets significantly and we will continue to generate gains through our intensive management activities.

I am particularly pleased to announce a 5.4% increase in our dividend this year; we are now confident that the increases in income from these three schemes will flow through to earnings over the next two to three years.

Detailed property schemes

Merrion House, Leeds - we have signed a GMP contract with BAM Construction for this £41m scheme with Leeds City Council contributing £29m. Construction is well underway with completion scheduled for December 2017 which will trigger a new 25 year CPI linked lease to Leeds City Council with an initial rent of £1.65m adding £0.9m to current income and £9m to net assets.

Merrion Hotel, Leeds - we have a fixed price contract for this £10m build which will deliver a 134 bedroom Ibis Styles 3 star hotel and a Marco Pierre Wright branded restaurant. Work is well underway with completion scheduled for April 2017. The hotel and restaurant will be run by Interstate under a management contract which is expected to deliver over £0.6m of EBITDA in year one rising to over £1.0m pa when mature. The hotel has been empty for some years so this income will all add to earnings. We have also increased rental income by £38k by re-organising and re-letting the ground floor retail units under the hotel.

Whitehall Road, Leeds - this 136 bedroom hotel is let to Premier Inn with the Whitbread covenant under a 25 year CPI linked lease with an initial rent of £0.68m pa. The build cost is fixed at £10m; the work is well underway with completion scheduled for April 2017. This expected to add £0.4m to net income and £1.5m to net assets.

We are marketing up to 400,000 sq ft of office space with river frontage along with a 500 space multi storey car park.

Piccadilly Basin, Manchester - the Council is now considering our Strategic Regional Framework which includes 800 residential units, a 500 space multi-storey car park, hotel and 200,000 sq ft of canal-side commercial/leisure. This area of Manchester has been transformed by the City Council's project along with the owners of Manchester City FC to bring residential and associated regeneration development down from the Etihad Stadium across Great Ancoats Street and into the city centre through the Piccadilly Basin. We have 2 joint ventures already in place with specialist residential developers: with Highgrove Investments for a 91 unit block on Tariff Street and with Urban Splash for a 24 unit loft style development in the listed Brownsfield Mill building. This residential expansion will benefit our existing retail on the site (Urban Exchange Retail Park) and will help to generate demand for further commercial development.

Merrion Centre asset management 

The passing rent has increased by £0.5m pa primarily as a result of an increase in income from the car park. There has also been a shift from retail to leisure as the Arena Quarter income grows which also reflects further fast food presence.

The new 25 year lease which we completed in June 2014 gave Morrisons the opportunity to reveal the first store with a new shopfront design, expanding the store into the adjoining unit and adding £0.5m a year to rental income. This year Morrisons have added further to their floorspace by opening a main mall café area.

We have let 2 further units in the Arena Quarter. Smoke BBQ took a 4,300 sq ft unit in June 2015 under a 15 year lease with a stepped rent averaging £77,000 pa and are trading in line with expectations. Dockyard have taken a 25 year lease with a 15 year break at a base rent of £89,000 pa with turnover top ups; the whole scheme extends to 80,100 sq ft and now is 90% let. We are currently negotiating offers on all of the remaining units with one unit ready to exchange imminently.

Letting activity in the main mall has been high over recent years and we are now benefitting from the lettings to NHS and Bon Marche concluded last year with the stores now open and trading well. We have recently completed a letting to Heron Foods which will consolidate 3 smaller units and further improve the tenant mix. We have also recently let a small shop to Leeds United; this will be their only merchandise outlet away from Elland Road.

There are further exciting letting discussions ongoing at present and we have every reason to be optimistic about the outlook for the centre maintaining its high occupancy.

We have started on a project to refurbish the former cinema partly as a leisure operation with further office accommodation. The leisure space will have aeroplane and F1 simulators; we have trialled the F1 units in the main mall and demonstrated good levels of demand. We have recently completed the initial preparatory infrastructure works and hope to start work on the refurbishment in 2016/17.

Rochdale Retail Park - this 65,000 sq ft scheme is let to Poundstretcher, Matalan, Halfords and Argos. We have extended the Poundstretcher unit this year under a new 10 year lease which will generate an additional £75,000 of rental income, an 8% return on capital employed.

Shandwick Place Edinburgh - we have concluded a 30 year lease with Cityroomz with an initial rent of £90,000 pa stepping up to £100,000 and then CPI linked. Previously this part of the property comprised a number of small office suites which were management intensive and in recent years the income has been declining. The incoming tenant will be refurbishing at their cost of over £2m to provide 42 bedrooms.

Detailed portfolio performance

In terms of the investment property portfolio it has been a year of consolidation, with sales totalling £13.3m and purchases of £6.3m. This reflects our strategy of reinvesting in the London Suburban market and disposing of ex-growth properties.

Overall the investment property portfolio has been maintained at £314.0m (2015: £324.3m) with an average initial yield of 5.7% (2015: 5.8%) and an average reversionary yield of 6.4% (2015: 6.8%) which we consider is appropriate for our mixed portfolio as we enter a period of some uncertainty following the Brexit vote. Occupancy of around 98% has been maintained throughout the year.

Portfolio statistics

The most notable gains are Urban Exchange Retail Park, Manchester up £1.0m or 12.5%, Shandwick Place, Edinburgh up £0.9m or 7.7%, Leeds Dock Car Park, Leeds up £1.0m or 12.5% and the development sites up £5.5m or 23.5%, offset by a 3% fall in the value of Merrion Centre principally relating to a reduction in the car park valuation.

PORTFOLIO ANALYSIS

The property values in the above table do not reflect all accounting adjustments within the financial statements.

Financial review

We have increased property rental income in a challenging market and we can be confident we will see substantial increases in income from our development schemes. The car park business has shown excellent growth both organic and from acquisitions.

PROPERTY

The table above sets out the passing rent from the property portfolio of £19.0m. This includes the passing rent from the Merrion Centre car park of £1.4m; whereas in the analysis above Merrion Centre car park revenue is included in the car park figures.

Property expenses comprise 11.3% of gross rentals compared to 9.8% in 2015. This is mainly due to the acquisition/development of 2 long leasehold properties with ground rental payments at Duke Street, London and Waitrose, Milngavie.

Other income  includes sundry property income such as management fees and dilapidations receipts; last year also included £0.2m in respect of lease surrender premiums and £0.3m of advisory fees received which were one off deals.

Administrative expenses of the property business are principally staff costs. These have decreased this year reflecting a gradual restructuring of the property management team.

Net property revenues are up 3% and the current development programme will deliver increases in income as follows:

Merrion House - on completion (scheduled for December 2017) the rent from Leeds City Council increases from £700,000 pa to £1,650,000 pa.

Merrion Hotel - on completion (scheduled for April 2017) the hotel will be run under a management contract; the initial projections are for an EBITDA of £600,000 pa. There is no current income.

Premier Inn - on completion (scheduled for April 2017) the lease provides for a rent of £680,000 pa with a 5 month rent free period. The build cost is fixed at £10m.

This will translate into additional income as follows:

CAR PARKING

Car park net revenue has increased by 34% both through organic growth and as a result of acquisitions as follows:

The organic growth of 25% has come from all sites through strong trading demand and improved efficiency as a result of the central control room. Administrative expenses this year reflect the costs of the control room.

Balance sheet

Our total non current assets of £377.7m (2015: £361.6m) include £350.4m of investment properties (2015: £339.5m) and £25.1m of car parking assets (2015: £20.9m). The Merrion Centre car park is included in the investment property asset. The car parking assets include £4m (2015: £4m) of leasehold car parks which are accounted for under IFRS as goodwill. There are two such car parks with operating leases of 24 and 35 years.

We have continued to invest in our properties with a total of £11.0m of capital expenditure this year and loans to the joint venture of £4.9m. Capital recycling comprised £13.3m of sales and £6.3m of purchases. Along with other cash movements this resulted in an increase in borrowings from £179.1m to £185.8m.

The property and car parking balances reflect valuation gains of £3.0m in respect of the investment properties and £1.0m in respect of car parks (which includes £0.5m which is shown in the Statement of Changes in Equity as other comprehensive income).

All of our bank facilities have been renewed during the year and are now £105m in total from Lloyds, RBS and Handelsbanken. They are all 3 year revolving credit facilities secured on our investment properties and expire between September 2018 and February 2019. The quoted debenture stock is £106m secured against investment property and car parking assets and expires in November 2031.

Going concern and headroom

One of the most critical judgements for the Board is the headroom in the Group's bank 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 is currently £27.7m (2015: £27.3m) and is considered to be sufficient to support our going concern conclusions.

Other finance issues

We have adopted EPRA (European Public Real Estate Association) this year for earnings per share and net assets per share replacing our non GAAP measures which we previously described as "underlying".

Total shareholder return and total property return

Total shareholder return of minus 3.9% (2015: 19.1%) is calculated as the total of dividends paid during the financial year of 10.44p (2015: 10.44p) and the movement in the share price between 30 June 2015 (297p) and 30 June 2016 (275p). Most of the sector comparable companies have negative TSR's this year and the FTSE REIT index is minus 11.7% (2015: 20.0%) for the same period.

The Group's concentration on maximising income from our portfolio has led to long term out-performance of the relevant indices over 3, 5, 15, 20 and 25 years.

Total property return is calculated as the operating profit from the property rental business adding back administrative expenses and adjusting for the Merrion Centre car park income as a percentage of the opening investment properties excluding developments.

Risk

The directors have carried out a robust assessment of the principal risks facing the Group, including those that would threaten the business model, future performance, solvency or liquidity.

Key performance indicators

Our business model is predicated on delivering maximum returns to shareholders so that Total Shareholder Return is the main KPI. The table below shows a detailed exposition of the various components which contribute to the Total Shareholder Return along with some other statistics on our performance over the last 2 years.

Car parking

At CitiPark, our car parking business, we have continued to consolidate the assets we purchased in 2014 & 2015. We have upgraded all of the new branches with our integrated parking management system, which allows us to manage all locations remotely from our Engine Room. The Engine Room is the 24/7 control centre that provides constant customer service and support to our patrons via an intercom system and a web chat service. The launching of the Engine Room in July 2016 has allowed us to rationalise staff levels from 41 permanent branch staff down to 34.

The £3m refurbishment of the three car parks in Watford is now complete and these are trading well and above expectation. Our next phase is to upgrade our operation at Bell Street, London where demand has increased significantly following the closure of an adjacent competitor car park.

Leeds Dock, formerly Clarence Dock, is now trading at full capacity due to increased corporate and individual season ticket sales largely as a result of several businesses moving into the vicinity. We have made recent improvements to this car park including the installation of Electric Vehicle Chargers, including a partnership with Tesla to have their Destination Chargers installed. We have plans to introduce our new partnership with Tesla at four other branches imminently.

Other generic electric vehicle charging points have been installed at the Merrion Centre in Leeds, with a plan to start rolling this out to all branches to cater for the ever-growing demand for electric vehicle charging.

Technological enhancements

Further technological developments have been made across our branch network with the introduction of contactless payment and Apple Pay. Online season ticket orders and pre-booking of parking spaces continues to operate well using our built-in-house booking platform BaySentry; entry and exit from our branches using QR Code technology can be integrated with mobile technologies such as iBeacon, Apple & Google Wallet to assist and improve customer service and efficiency. This works in the same way as an e-Boarding Pass does for an airplane journey.

We also have new products in the pipeline to ensure we are constantly improving our service. This includes a new CitiPass card which is a credit top-up payment service which works in the same way as the Oyster card and an emissions based tariff structure that would be especially beneficial in the central London branches and in areas where we work with local authorities where they charge for parking based on the emissions of the vehicle, not time.

Overall, the car park business has traded well this year and we continue to benefit from strong income growth.

TCS Energy

We believe passionately in operating the most sustainable and environmentally friendly business that we can, rather than focussing solely on minimising our waste output and maximising our recycling capabilities. At TCS we also seek to manage our consumption of natural resources and use energy, where we can, from renewable sources.

TCS Energy was established in April 2002. Since then we have installed 3 Solar Photovoltaic (PV) Farms. These are situated at Leeds Dock Car Park and Urban Exchange, Manchester.

In total, the electric energy that we have generated would enable 1,048,422 full kettles to boil, or an electric car to go 1,284,971 miles or would provide 28.41 households of 4 people with electricity for one year. It has also reduced CO₂ emissions by 141.16 tonnes for one year  (all figures are approximate and taken from best available sources).

Leeds Dock

The Solar PV system at Leeds Dock MSCP consists of 641 Solyndra 200W Solar Modules mounted on feet above the white painted top deck of the Multi Storey Car Park. The system went live in 2011.

The system is connected to the Car Park electrical system via 9 Solarmax 13MT 13kW solar inverters.

The total system size is 128.2 kWp.

Production to date by calendar year is shown below:

2011 from September= 13,630kWh

2012= 97,780 kWh

2013= 94,480 kWh

2014 = 95,100 kWh

2015= 100,220 kWh

2016 to date. = 67,770 kWh

Urban Exchange - Array 1

The Phase 1 Solar PV system at Urban Exchange, Manchester consists of:240 REC 240W Solar PV modules. These are connected to the electrical system of the property via 3 Solarmax 15MT 15kW Solar inverters.The modules are mounted by a ballasted frame on the membrane roof of the premises.

The system size is 49.68kWp.

Production to date by calendar year has been:

2012 (from 5th July) = 16,746 kWh

2013= 40,887 kWh

2014= 39,882 kWh

2015 = 39,333 kWh

2016 (to 17th August) = 29,389 KWh

Urban Exchange - Array 2

The Solar PV system at Urban Exchange Phase 2 consists of:562 Canadian Solar 255W Solar PV modules mounted on a ballasted frame on the membrane roof of the building.

The modules are connected to the electrical system of the building via 3 Solarmax 30HT4, 30kW inverters and 1 Solarmax 15MT 15kW inverter.

The system size is: 143.82 kWp.

Production to date by calendar year has been:

2015 (from 4th February) = 67,833 kWh

2016 (to 17th August) = 75,426 kWh

Chairman & Chief Executive's Statement approved by the Board on 14 September 2016

Edward Ziff - Chairman & Chief Executive
 

Audited preliminary results announcements

The financial information for the year ended 30 June 2016 and the year ended 30 June 2015 does not constitute the company's statutory accounts for those years.

Statutory accounts for the year ended 30 June 2015 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 30 June 2016 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

The auditors' reports on the accounts for 30 June 2016 and 30 June 2015 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

All results are derived from activities conducted in the United Kingdom.

The results for the car park operations 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 2016, arising from car park operations, was £3,052,000. After allowing for an allocation of administrative expenses, the operating profit at these sites was £2,201,000.

An interim dividend in respect of the year ended 30 June 2016 of 3.1p per share was paid to shareholders on 24 June 2016. This dividend was paid entirely as a Property Income Distribution (PID).

A final dividend in respect of the year ended 30 June 2016 of 7.90p per share is proposed. This dividend, based on the shares in issue at 14 September 2016, amounts to £4.2m which has not been reflected in these accounts and will be paid on 4 January 2017 to shareholders on the register on 2 December 2016. This dividend will comprise an ordinary dividend of 3.90p per share and a PID of 4.00p.

(b) Freehold and leasehold properties - car park activities

The historical cost of freehold and leasehold properties relating to car park activities is £21,747,000.

The Company occupies an office suite in part of the Merrion Centre. 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, Jones Lang LaSalle and Sanderson Weatherall. The remainder of the portfolio has been valued by the Property Director.

Valuations are performed bi-annually and are performed consistently across the Group's whole portfolio of properties. At each reporting date appropriately qualified employees verify all significant inputs and review computational outputs. The external valuers submit and present summary reports to the Property Director and the Board on the outcome of each valuation round.

Valuations take into account tenure, lease terms and structural condition. The inputs underlying the valuations include market rents or business profitability, incentives offered to tenants, forecast growth rates, market yields and discount rates and selling costs including stamp duty.

The development properties principally comprise land in Leeds and Manchester. These have also been valued by appropriately qualified external valuers Sanderson Weatherall, 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.

The effect on the valuation of applying a different yield and a different ERV would be as follows:

Valuation in the Consolidated Financial Statements at an initial yield of 6.8% - £304.2m, Valuation at 4.8% - £409.4m.

Valuation in the Consolidated Financial Statements at a reversionary yield of 7.2% - £306.6m, Valuation at 5.2% - £404.5m.

Property valuations can be reconciled to the carrying value of the properties in the balance sheet as follows:

Leasehold improvements primarily relate to expenditure incurred on the refurbishment of three car parks in Watford that are held under operating leases.

All investment properties measured at fair value in the consolidated balance sheet are categorised as level 3 in the fair value hierarchy as defined in IFRS13 as one or more inputs to the valuation are partly based on unobservable market data. In arriving at their valuation for each property (as in prior years) both the independent valuers and the Property Director have used the actual rent passing and have also formed an opinion as to the two significant unobservable inputs being the market rental for that property and the yield (i.e. the discount rate) which a potential purchaser would apply in arriving at the market value. Both these inputs are arrived at using market comparables for the type, location and condition of the property.

7. Investments in joint ventures

Investments in joint ventures primarily relate to the Group's interest in the partnership capital of Merrion House LLP. This joint venture owns a long leasehold interest over a property that is let to the Group's joint venture partner, Leeds City Council ('LCC'). The property is currently in the process of a complete refurbishment. Under the arrangement LCC is required to contribute a fixed amount in cash and the Group is required to contribute the property and the balance of refurbishment cost. The net commitment from the Group in relation to this arrangement that has not yet been incurred is £8,890,000. 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 share of profits after tax of £1.4m includes an adjustment of £2.5m in respect of the property transferred to Merrion House LLP in the prior year, less the share of losses in the current period of £1.2m.

The net assets of Merrion House LLP for the current and previous year are as stated below:

The profits of Merrion House LLP for the current and previous year are as stated below:

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.

The Group's joint ventures, which are registered in England and operate in the United Kingdom, are as follows:

Authorised

The authorised share capital of the company is 164,879,000 (2015: 164,879,000) ordinary shares of 25p each. The nominal value of authorised share capital is £41,219,750 (2015: £41,219,750).

Issued and fully paid up

The Company has only one type of ordinary share class in issue. 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 2016.

The Basic and EPRA net asset values are the same, as set out in the table below.

11. Restatement of prior year figures

As reported in our interim report, a detailed review has recently been performed to ensure all of the Group's accounting policies are being applied appropriately. This review has identified certain areas that have previously not been accounted for in accordance with those accounting policies. These areas are summarised as follows:

a)      Unamortised lease incentives have historically been recognised as a separate asset within the balance sheet. An adjustment of £4.0m has been made to the previously reported figures to de-recognise this asset and offset the movement in lease incentives against the valuation surplus on investment properties in each period.

b)      Two of the properties held under long leasehold agreements have historically not been recognised as finance leases. The discounted value of rents payable on these leases amounting to £4.5m has now been recognised within financial liabilities with a corresponding increase in the fair value of long leasehold properties within investment properties.

c)      The Group's development land assets have previously not been recognised at fair value. These assets have therefore been revalued based on fair value, resulting in an increase of £4.0m to the valuation at 30 June 2015.

d)      Previously, three properties used in the car park business have been classified within investment properties. The fair value of these assets at 30 June 2015 of £13.3m has been re-classified from investment properties to freehold and leasehold properties.

e)      Consideration paid for the acquisition of two car park businesses has previously been recognised within tangible fixed assets as lease premiums. These acquisitions are considered to be Business Combinations under IFRS3 (revised). The consideration is considered to represent goodwill on acquisition and £4.0m at 30 June 2015 has therefore been reclassified accordingly.

The impact on total assets and total liabilities as a result of the accounting adjustments arising from the above is set out in the table below. There has been no impact on the net assets or earnings per share as a result of these adjustments.