Town Centre Securities – a good flow of profits and dividends over the years

PUBLISHED: 23 Aug 2021 @ 11:35 | Comments (0) |

The principle reason for buying shares (at 142.6p, MCap £75.5m) in Town Centre Securities (LSE:TOWN) is that they are selling at half net current asset value, even after adjusting downwards values of retail and leisure property assets – see earlier newsletters. But TOWN also looks very good from the perspective of a deep value investor focused on its earnings and large pay outs to shareholders.

Profits and net asset value

Year to July	Adjusted profit after tax £m	Statutory profit after tax £m	Net asset value per share, p	Number of shares, m
2011	8.0	15.3	341	53.0
2012	7.2	-4.2	294	53.0
2013	7.4	3.6	267	53.0
2014	7.6	27.4	308	53.2
2015	6.5	24.0	344	53.2
2016	6.6	11.9	357	53.2
2017	7.0	6.7	359	53.2
2018	6.9	18.4	384	53.2
2019	6.4	-12.5	354	53.2
2020	2.1	-24.2	292	53.2
Half year to Dec 2020	0.2	-3.5	286	53.2

(Adjusted profit excludes valuation and impairment movements on the properties (including share of JVs) and excludes profits/losses on disposals)

Year to July	Adjusted/underlying EPS, p	Statutory EPS, p	Dividend per share, p
2011	15.1	28.8	10.44
2012	13.6	-7.9	10.44
2013	13.7	6.7	10.44
2014	14.4	51.6	1o.44
2015	12.1	45.1	10.44
2016	12.4	22.4	11.0
2017	13.2	12.7	11.50
2018	13.0	34.6	11.75
2019	12.0	-23.4	11.75
2020	4.9	-45.5	5.0
AVERAGE over 10 years	12.4	12.5	10.3
Half year to Dec 2020	0.4	-6.6	1.75

Statutory earnings per share move around a lot from one year to another depending on revaluations of property and profit/losses on disposals. The measure of EPS that strips out these volatile variables, “adjusted” or “underlying” earnings, and just concentrates on income flowing from the assets is much more stable at around 12p – 13p.

What is significant over the last decade is that the property valuation declines in 2019 (mainly caused by retail property falls) and in 2020 (caused by Covid-19 and further retail declines) wipe out all the gains made through valuation uplifts and realised capital gains of the previous eight years.

Thus, underlying EPS comes out as almost identical to statutory EPS at 12.4p per share – the upward and downward revaluations & gains/losses over the decade pretty well cancel out.

Net asset value per share has generally been i………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

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