TIDMMKLW
RNS Number : 3447Y
Mucklow(A.& J.)Group PLC
08 September 2015
Mucklow (A & J) Group plc
8 September 2015
Embargoed: 7.00am
Financial Summary
for the year ended 30 June 2015
Statement of comprehensive income Year ended Year ended
30 June 2015 30 June 2014
----------------------------------- ------------- -------------
Statutory pre-tax profit GBP56.2m GBP40.7m
Underlying pre-tax profit (1) GBP13.9m GBP12.9m
Basic EPS 89.02p 66.45p
EPRA EPS (2) 22.21p 21.09p
Ordinary dividend per share 20.84p 20.23p
----------------------------------- ------------- -------------
Balance sheet 30 June 2015 30 June 2014
------------------------ ------------- -------------
Net asset value GBP268.6m GBP225.0m
Basic NAV per share 424p 356p
EPRA NAV per share (3) 427p 358p
Net debt GBP69.0m GBP66.8m
Gearing 26% 30%
------------------------ ------------- -------------
Property portfolio 30 June 2015 30 June 2014
---------------------------------------- ------------- -------------
Vacancy rate 5.4% 6.7%
Portfolio value (4) GBP349.7m GBP298.9m
Valuation gain GBP42.5m GBP27.7m
Initial yield on investment properties 6.3% 6.8%
Equivalent yield 7.2% 7.9%
---------------------------------------- ------------- -------------
Recommended final dividend of 11.53p per share (2014: 11.19p),
making the total in respect of the year ended 30 June 2015 20.84p
per share (2014: 20.23p). The final dividend will be paid as a
Property Income Distribution (PID).
(1) See the property and finance review for the calculations.
(2) Excludes the profit on disposal of investment, development
and trading properties and the revaluation of investment and
development properties and derivative financial instruments and tax
adjustments. See note 8.
(3) Excludes the fair value of derivative financial instruments
and includes the surplus on trading properties. See note 8.
(4) See note 9.
For further information please
contact:
Rupert Mucklow, Chairman Tel: 0121 550 1841
David Wooldridge, Finance Director
A & J Mucklow Group plc
Fiona Tooley Tel: 0121 309 0099
TooleyStreet Communications Mobile: 07785 703523
Chairman's Statement
Rupert Mucklow
I am pleased to report another strong performance by the Group
for the year ended 30 June 2015.
Results
Statutory pre-tax profit was 38.1% higher at GBP56.2m, compared
with GBP40.7m for the corresponding period last year.
The underlying pre-tax profit, which excludes revaluation
movements and profit on the sale of investment and trading
properties increased by 7.6% to GBP13.9m (2014: GBP12.9m). EPRA
adjusted earnings per Ordinary share was 22.21p (2014: 21.09p).
EPRA net asset value per Ordinary share increased by 19.3%
during the year from 358p to 427p.
Shareholders' funds rose to GBP268.6m (2014: GBP225.0m), while
borrowings net of cash amounted to GBP69.0m (2014: GBP66.8m). Debt
to equity gearing reduced to 26% (2014: 30%) and LTV to 20% (2014:
22%).
Dividend
The Board is recommending the payment of a final dividend of
11.53p per Ordinary share, an increase of 3% over last year (2014:
11.19p), making a total for the year of 20.84p (2014: 20.23p).
Following the approval by shareholders at the AGM, the final
dividend will be paid on 4 January 2016, to shareholders on the
register at the close of business on 4 December 2015. The final
dividend will be paid as a PID.
Property Review
The regional occupier and property investment markets have
continued to improve over the last 12 months. A shortage of quality
industrial space has enabled us to start increasing rental levels
on our vacant properties and when negotiating lease renewals.
Property values have also continued to rise on the back of strong
investor demand and evidence of rental growth.
Our vacancy rate at 30 June 2015 had reduced from 6.7% to 5.4%.
We completed 31 new lettings and 23 lease renewals during the year,
representing 12.8% of our investment portfolio by area. We achieved
average rental levels on new lettings and lease renewals
approximately 3% above our estimated rental values and 11% higher
than when the properties were previously let respectively.
Two investment properties were acquired during the year at a
total cost of GBP4.2m. We bought a 28,000 sq ft industrial unit at
Meridian Business Park, Leicester and a 30,192 sq ft industrial
unit at Nexus Point, Birmingham. The combined rental income for the
two properties is currently GBP0.24m pa (GBP4.14psf), with an
estimated rental value of GBP0.34m pa (GBP5.75psf).
We have acquired a small investment property for GBP2.8m since
the year end, and we are still actively looking to acquire further
investment properties, but it has become more difficult to source
suitably priced opportunities. As a consequence, our focus has now
shifted towards pre-let development, where we are able to create
our own investment properties, on more attractive returns.
We completed our 116,000 sq ft development for Worcester Bosch
at Apex Park, Worcester in December 2014, which is now on rent. Our
proposed 350,000 sq ft industrial development at Mucklow Business
Park, Tyseley, Birmingham has been delayed, while we wait for
Birmingham City Council to commence construction on a new link road
alongside our 20 acre site. We hope to start marketing for pre-let
buildings later this year and are looking for further development
opportunities.
Valuation
DTZ Debenham Tie Leung Ltd revalued our property portfolio at 30
June 2015. The investment properties and development land were
valued at GBP349.7m, which showed a revaluation surplus of GBP42.5m
(13.8%).
The initial yield on the investment properties was 6.3% (30 June
2014: 6.8%), increasing to 6.7% on the expiry of the rent free
periods. The equivalent yield was 7.2% (30 June 2014: 7.9%). Our
industrial property increased in value by 16.1% during the year;
offices by 13.0% and retail by 7.8%.
DTZ Debenham Tie Leung Ltd also revalued our trading properties
at 30 June 2015. The total value was GBP1.9m, which showed an
unrecognised surplus of GBP1.5m.
Finance
Total net borrowings at 30 June 2015 were GBP69.0m (30 June
2014: GBP66.8m). Undrawn banking facilities totalled GBP29.2m,
while net debt to equity gearing had reduced to 26% (30 June 2014:
30%) and loan to value 20% (30 June 2014: 22%).
Outlook
Our investment portfolio is just starting to benefit from rental
growth and should continue to perform well over the next few years
as we continue to renew and re-let space at higher rental levels,
as leases expire.
We are not expecting any significant changes in the Midlands
property market over the next 12 months and remain optimistic about
our future prospects.
Rupert Mucklow
Chairman
7 September 2015
Property and Finance Review
Justin Parker, Managing Director
David Wooldridge, Finance Director
Overview
The Group has delivered a robust performance in 2015.
Revaluation uplifts on the investment and development portfolio
have increased statutory pre-tax profit to GBP56.2m. We have
acquired two further investment properties, completed the pre-let
116,000 sq ft distribution depot in Worcester, increased occupancy
levels and enhanced the existing portfolio through refurbishment,
leading to a GBP1.5m increase in annual rent roll.
The high level of investor demand for property in our markets
has made it more difficult to acquire investment properties on long
leases at an entry price that that will provide the Group with
long-term growth in income and capital to support a progressive
dividend policy. Our focus has been to acquire properties with
opportunities to enhance income through asset management. Two
investment properties, with a combined annual rental income of
GBP0.2m, were acquired in the year in off-market transactions. In
addition, we let the Redfern Park unit, acquired with vacant
possession in March 2014, at an annual rent of GBP0.2m.
Given the weight of money chasing investment properties, and the
lack of supply of industrial stock, our intention is to pursue
pre-let development. During the year we completed the pre-let
116,000 sq ft unit at Worcester in December 2014, increasing our
annual rent roll by GBP0.7m. We are continuing to progress our 20
acre development site at Tyseley, Birmingham.
Occupational demand and a lack of available stock in our core
market of Midlands industrial, along with our asset management
initiatives, have led to a reduction in our vacancy rate from 6.7%
to 5.4% over the year, and provided rental evidence for growth on
new lettings and lease renewals. Rental incentives offered to new
and existing tenants have also contracted.
We have continued to invest in refurbishing the existing
portfolio to achieve higher returns from new lettings. This has
resulted in our property outgoings continuing at the elevated
GBP1.0m level we reported last year, but the results are apparent
in our increased occupancy and annual rent roll.
The property investment market has gone from strength to
strength due to continued investor demand for real estate. The
equivalent yield on our portfolio compressed by 0.7%, from 7.9% to
7.2%, increasing the capital value by 13.8% (GBP42.5m) to
GBP349.7m. This led to an increase in our statutory pre-tax profit
to GBP56.2m (2014: GBP40.7m), shareholders' funds by 19.4%
(GBP43.6m) and reduced our balance sheet gearing by 4% to 26%.
Strategy and Business Model
(MORE TO FOLLOW) Dow Jones Newswires
September 08, 2015 02:01 ET (06:01 GMT)
The Group's main objective is the long-term enhancement of
shareholder value through dividend and capital appreciation, whilst
adopting a conservative financial structure.
As a Real Estate Investment Trust, we are committed to
distributing 90% of the profits of our tax exempt business. We
therefore expect dividends to be an important part of the total
shareholder return.
Our long-term objective remains focused on accumulating a
portfolio of high quality, well-located, modern, income producing
properties, with potential for long-term rental and capital growth
which are attractive to both occupiers and investors.
The Group's primary sector focus is industrial. We believe that
by investing mainly in industrial property, which tends to offer a
higher level of income return than offices and retail, at an
attractive margin to our cost of debt, we are able to provide
shareholders with a higher level of dividend yield and the prospect
of long-term dividend growth. Our selective office and retail
properties also offer attractive income returns and capital growth
prospects, as well as diversifying our income stream and tenant
base.
We continue to primarily invest and develop in the Midlands
region, an area we consider to offer attractive long-term rental
and capital growth potential, and where we have over 75 years'
experience. The geographic concentration of our portfolio, and
range of unit sizes and lease expiries, means that we can work
closely with our existing customers to satisfy their space
requirements as their businesses expand, or their requirements
contract, within our existing portfolio.
The three areas of our strategy are:
-- Selectively acquiring and disposing of investment properties;
-- Developing new properties for long-term investment; and
-- Actively managing our assets to enhance value.
We continue to be a counter-cyclical investor in modern, well
located, quality investment properties, where we expect to achieve
attractive returns. Given the long-term and cyclical nature of the
property market, we believe that the precise timing of acquisitions
and disposals is crucial in boosting returns from our existing
property portfolio.
The core of our business is the investment property portfolio,
which represents 98% of the value of the investment and development
properties held. The investment portfolio consists of 58
properties/estates, with 343 units, totalling 3.8m sq ft.
We are also a selective developer of well located, high quality
property, developing properties when the occupier market is
strong.
In addition, our proactive approach to the management of our
assets allows us additional opportunity to enhance overall
value.
Our low cost base, comprising only twelve employees, as well as
three non-executive directors, enables us to pay a high proportion
of our profits as dividends. In addition, the small size of the
team enables us to react quickly to changing market conditions, and
the liquidity of our financing provides us with the ability to
transact quickly.
A conservative financial structure leads to a lower cost base,
in terms of interest payable, and reduces the Group's exposure to
volatility in interest rates and property valuations.
Key performance indicators
As stated above, the Group's main objective is the long-term
enhancement of shareholder value through dividend and capital
appreciation, whilst adopting a conservative financial structure.
As a result, the key performance indicators we use to reflect the
achievement of that objective on an annual basis are: underlying
pre-tax profit; vacant space; dividend growth; and gearing.
Key Performance Indicators
2015 2014
------------------------------------- ------- -------
Underlying pre-tax profit+ (GBP000) 13,885 12,907
Vacant space (%) 5.4 6.7
Dividend growth (%) 3.0 3.0
Gearing (net of cash) (%) 26 30
+See the table on page 9 for the calculations.
Relative total shareholder return, over a three year period, is
the performance measure used for the Group's Performance Share
Plan, aligning the remuneration of the Managing Director and
Finance Director with returns received by shareholders.
Group structure
A & J Mucklow Group plc has four main subsidiaries for
property development and investment. All of the Group's properties
are wholly owned.
Properties let to a single tenant are tenant managed, and
portfolio managers at A & J Mucklow Group plc monitor the
management of the sites regularly.
On multi-let properties the day-to-day management is outsourced
to managing agents, who report to portfolio managers at A & J
Mucklow Group plc.
Acquisition and disposal of investment properties
In January 2015 we acquired a 28,000 sq ft industrial unit at
Meridian Business Park, Leicester at a total cost of GBP2.1m (GBP75
psf capital value). The unit was built in 1995 and is prominently
located on Meridian East, adjacent to Junction 21 of the M1. A ten
year lease was agreed in August 2014 at an annual rent of GBP0.15m
(GBP5.18 psf).
We completed the purchase of a 30,192 sq ft unit at Nexus Point,
Holford, Birmingham in June 2015. The total cost of the acquisition
of GBP2.1m equates to a capital value of GBP69 psf. The ten year
old unit was let on a five year lease in November 2013 at a rent of
GBP0.10m (GBP3.19 psf), which offers significant reversionary
potential. The building is well-located close to Junctions 6 and 7
of the M6, three miles to the north of Birmingham City Centre.
Both of these modern industrial units were acquired at capital
values below their replacement cost. Combined with the potential
for significant increases in rental income to current market rates,
these buildings have the potential for long-term growth in income
and capital value.
In August 2015 we acquired a well-located 19,203 sq ft retail
unit in Leicester City Centre for GBP2.8m in an off-market
transaction. The unit is let to Matalan Retail Limited with an
unexpired term of 8 years with an annual rent of GBP0.18m.
In September 2014 we disposed of a 5,400 sq ft stand-alone
industrial unit forming part of the larger Coleshill Industrial
Estate for GBP0.4m (capital value of GBP74 psf) to a special
purchaser. The unit was previously let at an annual rent of
GBP32,400. A profit on disposal of GBP0.1m has been recognised in
the statement of comprehensive income.
Developing new properties for long-term investment
Completion of the 116,000 sq ft pre-let distribution unit at
Apex Park was achieved in December 2014. Worcester Bosch took
occupation and are paying GBP0.72m pa in rent.
Birmingham City Council will hopefully commence the construction
of a new link road adjacent to our 20 acre Mucklow Business Park,
Tyseley site within the next 12 months. The site will accommodate
up to 350,000 sq ft of industrial and warehouse buildings. We shall
initially be targeting pre-let development.
Actively managing our assets to enhance value
In the first half of the financial year we let a 36,000 sq ft
industrial unit at Redfern Park, Tyseley. The property was acquired
with vacant possession in the second half of the 2014 financial
year for GBP1.54m (including Stamp Duty and costs) and was
refurbished to a high standard at a cost of GBP0.2m. The property
was let in October 2014 on a 20 year lease without breaks at an
annual rent of GBP0.21m (GBP5.75 psf).
As part of the relocation of Worcester Bosch to the Apex Park
development, the tenant vacated our Knightsbridge Park, Worcester
unit (48,145 sq ft) in January 2015. The unit was re-let in April
at GBP0.25m pa (GBP5.19 psf) to Yamazaki Mazak UK Limited on a 10
year lease.
Due to lack of available industrial space in the Midlands, we
agreed the early surrender of a December 2015 lease end of one of
the units at our Wednesbury One estate in order to refurbish the
50,359 sq ft unit and bring the property back to the market early.
The unit was previously let at GBP0.24m pa (GBP4.84 psf).
Refurbishment works were completed in July and marketing is
ongoing.
The first real signs of rental growth started to come through in
the year. Increases of 25-50p psf have been achieved on 25 year old
buildings, which we have not seen for over 10 years.
In order to obtain those higher rents and attract longer leases,
we have invested in the existing portfolio, particularly at our
smaller, multi-let industrial estates.
In July 2014 we surrendered a lease on a 15,000 sq ft unit at
Mucklow Hill Trading Estate, Halesowen, let at GBP70,000 pa.
Following a refurbishment costing GBP0.1m, including splitting the
unit into two, we agreed lettings on ten year leases to Screwfix
and Toolstation at a combined rent of GBP84,500 pa.
Occupancy
In last year's report we targeted a void level of below 6% by
the end of the current financial year. We ended the year with a
rate of 5.4%, despite taking back the 50,359 sq ft unit at
Wednesbury One (amounting to 1.3% of the investment portfolio).
Valuation
The external valuation of the Group's investment and development
portfolio at 30 June 2015 totalled GBP349.7m (2014: GBP298.9m)
leading to a valuation surplus of GBP42.5m of which GBP42.4m is
recognised in the statement of comprehensive income.
The uplift in value was seen throughout the year, with GBP20.9m
recognised in the interim results to 31 December 2014 and the
balance of GBP21.6m in the second half of the financial year.
(MORE TO FOLLOW) Dow Jones Newswires
September 08, 2015 02:01 ET (06:01 GMT)
Yield breakdown - investment properties
Initial yield Initial yield Equivalent Equivalent
30/06/15 30/06/14 yield yield
30/06/15 30/06/14
------------ -------------- -------------- ----------- -----------
Industrial 6.2% 7.0% 7.3% 8.0%
------------ -------------- -------------- ----------- -----------
Office 7.2% 7.5% 7.6% 8.2%
------------ -------------- -------------- ----------- -----------
Retail 5.9% 5.9% 6.4% 6.9%
------------ -------------- -------------- ----------- -----------
Total 6.3% 6.8% 7.2% 7.9%
------------ -------------- -------------- ----------- -----------
Finance Review
The Group has had another successful year, with profit before
tax hitting a record GBP56.2m, compared with GBP40.7m last year,
and underlying profit before tax increasing by GBP1.0m to GBP13.9m.
EPRA earnings per share increased by 5.3% to 22.21p (2014:
21.09p).
Basic net asset value per share increased by 19.1% to 424p,
mainly as a result of the property valuation surplus of
GBP42.5m.
Over the two years under review our net assets have increased by
GBP86.1m (47%) to GBP268.6m. In the same period we have paid
dividends to Ordinary shareholders of GBP19.3m, with a further
payment of GBP5.9m in July 2015, and raised GBP14.2m of new equity
capital in March 2014.
Income
Gross rental income increased by GBP0.45m to GBP21.6m, with the
income from development (GBP0.38m), acquisitions (GBP0.07m) and
lettings and reviews (GBP0.28m) offset by the sale of the Century
House, Worcester office in May 2014 (2014 rental income:
GBP0.28m).
Property outgoings are virtually unchanged from the prior year,
as we continue to invest in repositioning existing properties to
reap the benefits of rental income and capital value growth in an
improved occupier and investment market.
Net rental income increased by GBP0.46m, from GBP20.12m to
GBP20.58m.
Administration expenses have remained at GBP3.2m.
Interest costs have decreased by GBP0.5m in the year, mainly due
to the redemption of the GBP4.2m of remaining 11.5% Debenture Stock
on 1 July 2014.
As a result of the above, underlying profit before tax increased
from GBP12.9m to GBP13.9m (7.6%).
No trading properties were disposed of in the year. A small
investment property was disposed of in the first half-year for
GBP0.4m, generating a profit of GBP0.1m.
As the Group does not hedge account its derivatives, a fair
value decrease of GBP0.2m (2014: GBP0.1m) in respect of the Group's
interest rate caps has been recognised in the year.
Unrealised property revaluation surpluses increased profit
before tax by GBP42.4m (2014: GBP27.6m) to GBP56.2m (2014:
GBP40.7m).
Taxation
No current tax charge has been recognised in the year, as the
majority of the Group's income is exempt from corporation tax due
to our REIT status. A prior year tax provision of GBP0.1m has been
released in the year under review as the potential liability has
been removed.
We continue to comfortably meet all of the REIT requirements and
maintain our REIT status.
Dividend
An interim dividend of 9.31p per share was paid as a Property
Income Distribution ("PID") on 1 July 2015, just after our
financial year end.
The Board proposes a 3% increase in final dividend, in line with
the increase at the interim stage, to 11.53p per share (2014:
11.19p). The final dividend will be paid as a PID.
If approved, the dividend will be paid on 4 January 2016 to
Shareholders on the register at the close of business on 4 December
2015.
The allocation of future dividends between PID and non-PID may
vary.
The Board's continued intention is to grow the rent roll to
enable a sustainable, covered, increase in dividends over the
long-term, with a view to distributing around 90% of our recurring
profit.
The interim dividend paid and proposed final dividend for the
financial year (20.84p) are covered 1.07 times by EPRA earnings per
share.
Underlying financial performance
Investment/ Trading Other
Total development properties items
2015 GBP000 GBP000 GBP000 GBP000
--------------------------------------------- -------- ------------ ----------- -------
Rental income 21,589 21,589 - -
Property outgoings (1,008) (1,008) - -
--------------------------------------------- -------- ------------ ----------- -------
Net rental income 20,581 20,581 - -
--------------------------------------------- -------- ------------ ----------- -------
Sale of trading properties - - - -
Property outgoings on trading properties (12) - (12) -
--------------------------------------------- -------- ------------ ----------- -------
Net expenditure on trading properties (12) - (12) -
--------------------------------------------- -------- ------------ ----------- -------
Administration expenses (3,232) (3,232) - -
--------------------------------------------- -------- ------------ ----------- -------
Operating profit before net gains on
investment 17,337 17,349 (12) -
Net gains on revaluation 42,369 - - 42,369
Profit on disposal of investment and
development properties 106 - - 106
--------------------------------------------- -------- ------------ ----------- -------
Operating profit 59,812 17,349 (12) 42,475
--------------------------------------------- -------- ------------ ----------- -------
Gross finance costs (3,464) (3,464) - -
Capitalised interest 66 - - 66
Fair value movement on derivative financial
instruments (191) - - (191)
--------------------------------------------- -------- ------------ ----------- -------
Total finance costs (3,589) (3,464) - (125)
Total finance income - - - -
--------------------------------------------- -------- ------------ ----------- -------
Profit before tax 56,223 13,885 (12) 42,350
--------------------------------------------- -------- ------------ ----------- -------
Investment/ Trading Other
Total development properties items
2014 GBP000 GBP000 GBP000 GBP000
------------------------------------------ -------- ------------ ----------- -------
Rental income 21,141 21,141 - -
Property outgoings (1,025) (1,025) - -
------------------------------------------ -------- ------------ ----------- -------
Net rental income 20,116 20,116 - -
------------------------------------------ -------- ------------ ----------- -------
Sale of trading properties 45 - 45 -
Property outgoings on trading properties (17) - (17) -
------------------------------------------ -------- ------------ ----------- -------
Net income from trading properties 28 - 28 -
------------------------------------------ -------- ------------ ----------- -------
Administration expenses (3,232) (3,232) - -
------------------------------------------ -------- ------------ ----------- -------
Operating profit before net gains
on investment 16,912 16,884 28 -
Net gains on revaluation 27,590 - - 27,590
Profit on disposal of investment and
development properties 271 - - 271
------------------------------------------ -------- ------------ ----------- -------
Operating profit 44,773 16,884 28 27,861
------------------------------------------ -------- ------------ ----------- -------
Gross finance costs (3,978) (3,978) - -
Capitalised interest 10 - - 10
Fair value movement on derivative
financial instruments (103) - - (103)
------------------------------------------ -------- ------------ ----------- -------
Total finance costs (4,071) (3,978) - (93)
Total finance income 1 1 - -
------------------------------------------ -------- ------------ ----------- -------
Profit before tax 40,703 12,907 28 27,768
(MORE TO FOLLOW) Dow Jones Newswires
September 08, 2015 02:01 ET (06:01 GMT)
------------------------------------------ -------- ------------ ----------- -------
Presented above is an analysis of the underlying rental
performance before tax, as shown in the investment/development
column, which excludes the impact of EPRA adjustments and
capitalised interest. The directors consider that this further
analysis of our profit before tax gives shareholders a useful
comparison of our underlying performance for the periods shown in
the financial statements.
Net assets
Total equity increased from GBP225.0m to GBP268.6m in the 2015
financial year mainly due to profits before revaluation surplus of
GBP14.0m and investment and development property revaluations of
GBP42.5m, offset by dividends of GBP13.0m.
Financing, cash flow and going concern
Strong cash generation continued in the current year, with
operating cash flow of GBP12.7m (2014: GBP13.3m).
Property acquisitions and developments, net of disposal
proceeds, increased by 16.5% to GBP7.7m (2014: GBP6.6m) and
borrowings increased by GBP2.0m.
Equity dividend payments were lower in 2015 as the interim
dividend was paid on 1 July 2015, just after the balance sheet
date.
2015 2014
GBP000 GBP000
-------------------------------------------------- -------- ---------
Net cash generated from operations 16,031 16,944
-------------------------------------------------- -------- ---------
From investment and development properties 16,043 16,916
From trading properties (12) 28
-------------------------------------------------- -------- ---------
Net interest paid (3,355) (3,626)
Taxation - 6
-------------------------------------------------- -------- ---------
Operating cash flow 12,676 13,324
Property acquisitions and development (8,094) (10,498)
Property disposals 392 3,885
Net expenditure on property, plant and equipment (72) (10)
Movement in borrowings 2,046 (2,500)
Share issue 13 13,768
Equity dividends (7,082) (12,239)
-------------------------------------------------- -------- ---------
Net movement in cash (121) 5,730
-------------------------------------------------- -------- ---------
The Group's debt facilities have remained unchanged since the
redemption of the 11.5% Debenture Stock on 1 July 2014.
Borrowing Expiry year Available Drawn Undrawn
GBPm GBPm GBPm
-------------------------------- ------------- ---------- ------ --------
HSBC overdraft 2015 1.0 - 1.0
HSBC Revolving Credit Facility 2018 44.0 15.8 28.2
HSBC term loan 2018 20.0 20.0 -
Lloyds 15 year term loan 2023 20.0 20.0 -
Lloyds 10 year term loan 2022 20.0 20.0 -
Preference shares - 0.7 0.7 -
-------------------------------- ------------- ---------- ------ --------
105.7 76.5 29.2
---------------------------------------------- ---------- ------ --------
Of the GBP76.5m of drawn debt at 30 June 2015, 99% is at fixed
rates or covered by interest rate caps.
Our average cost of drawn debt at 30 June 2015 was 4.4% (2014:
4.5%) or 4.1% on total debt facilities
(2014: 4.0%). The weighted average term remaining is 5.3 years,
or 4.6 years on total debt facilities.
Analysis of borrowings at 30 June 2015
2015 2014
GBP000 GBP000
-------------------------------------------- -------- --------
11.5% First Mortgage Debenture Stock 2014 - 4,203
Preference Share Capital 675 675
Lloyds Term Loan 2023 19,966 19,962
Lloyds Term Loan 2022 19,712 19,672
HSBC term loan 2018 19,805 19,733
Borrowings from revolving credit facility 15,750 9,500
-------------------------------------------- -------- --------
Debt and Preference Share Capital 75,908 73,745
Cash and short-term deposits (6,871) (6,992)
-------------------------------------------- -------- --------
Net debt and Preference Share Capital 69,037 66,753
-------------------------------------------- -------- --------
Net Assets 268,640 224,971
-------------------------------------------- -------- --------
Gearing (net of cash) 26% 30%
-------------------------------------------- -------- --------
As at 30 June 2015 the Group had GBP28.2m of undrawn term bank
facilities and had drawn GBP15.8m from its HSBC GBP44m 2018
Revolving Credit Facility. The Group's GBP1.0m overdraft, which is
due for renewal within 12 months of the date of this report, was
undrawn. The Group has substantial headroom in its debt covenants
and has a secure income stream from a diversified source pool of
occupiers, without undue reliance on a single tenant.
Given these facilities, the Group's low level of balance sheet
gearing of 26% and GBP128.1m of unencumbered properties,
significant capacity exists to raise additional finance or to
provide additional security for existing facilities, should
property values fall.
The directors have reviewed the current and projected financial
position of the Group and compliance with its debt facilities,
including a sensitivity analysis. On the basis of this review, the
directors continue to adopt the going concern basis in preparing
the annual report and financial statements.
Outlook
The quality and size of the Group's investment portfolio has
been significantly enhanced since we converted to a REIT in 2007,
with the floor area increasing from 2.8m sq ft to 3.8m sq ft, the
annual rent from GBP15.0m to GBP23.1m and the Ordinary dividend per
share from 14.73p to 20.84p (41%).
The 6.3% initial yield on our portfolio has compressed
significantly over the last two years, but still looks very
attractive in the current low interest rate environment. The
property portfolio valuation remains at a discount to both the 5.6%
yield as at June 2007 and the replacement cost of the
buildings.
We expect the rate of yield compression to moderate, but the
weight of money that is targeting real estate and the growth in
rental levels should continue to support valuation increases.
Our existing portfolio offers rental growth potential and our
low gearing provides us with the opportunity to enhance our
underlying profits through continued investment and development to
support the continuation of our progressive dividend policy.
Justin Parker David Wooldridge
Managing Director Finance Director
7 September 2015 7 September 2015
Group Statement of Comprehensive Income
for the year ended 30 June 2015
2015 2014
Notes GBP000 GBP000
------------------------------------------------------- ------ --------- -----------
Revenue 2 22,569 22,082
------------------------------------------------------- ------ --------- -----------
Gross rental income relating to investment
properties 2 21,589 21,141
Property outgoings 3 (1,008) (1,025)
------------------------------------------------------- ------ --------- -----------
Net rental income relating to investment properties 20,581 20,116
------------------------------------------------------- ------ --------- -----------
Proceeds on sale of trading properties 2 - 45
Carrying value of trading properties sold - (13)
Property outgoings relating to trading properties (12) (4)
------------------------------------------------------- ------ --------- -----------
Net (expenditure on)/income from trading properties (12) 28
------------------------------------------------------- ------ --------- -----------
Administration expenses (3,232) (3,232)
------------------------------------------------------- ------ --------- -----------
Operating profit before net gains on investment
and development properties 17,337 16,912
Profit on disposal of investment and development
properties 106 271
Revaluation of investment and development
properties 9 42,369 27,590
------------------------------------------------------- ------ --------- -----------
Operating profit 59,812 44,773
------------------------------------------------------- ------ --------- -----------
Total finance income 5 - 1
Total finance costs 5 (3,589) (4,071)
(MORE TO FOLLOW) Dow Jones Newswires
September 08, 2015 02:01 ET (06:01 GMT)
------------------------------------------------------- ------ --------- -----------
Net finance costs 5 (3,589) (4,070)
------------------------------------------------------- ------ --------- -----------
Profit before tax 56,223 40,703
Tax credit 6 100 -
------------------------------------------------------- ------ --------- -----------
Profit for the financial year 56,323 40,703
------------------------------------------------------- ------ --------- -----------
Other comprehensive income:
Items that will not be reclassified
subsequently to profit and
loss:
Revaluation of owner-occupied
property 108 67
Total comprehensive income
for the year attributable
to the owners of the parent 56,431 40,770
------------------------------------------------------- ------ --------- ---------
All operations are continuing.
Basic and diluted earnings
per share 8 89.02p 66.45p
------------------------------------------------------- ------ --------- ---------
Statements of Changes in Equity
for the year ended 30 June 2015
Ordinary Capital Share-based
Share Share redemption Revaluation payments Retained Total
Capital premium reserve reserve reserve earnings equity
Group GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- ---------- --------- ----------- ------------ ------------ --------- ---------
Balance at 30
June 2013 15,060 - 11,162 114 306 155,837 182,479
Retained profit - - - - - 40,703 40,703
---------------------- --------- --------- ----------- ------------ ------------ --------- ---------
Other comprehensive
income - - - 67 - - 67
---------------------- --------- --------- ----------- ------------ ------------ --------- ---------
Total comprehensive
income - - - 67 - 40,703 40,770
---------------------- --------- --------- ----------- ------------ ------------ --------- ---------
Share-based payment - - - - 194 - 194
---------------------- --------- --------- ----------- ------------ ------------ --------- ---------
Ordinary share
issue 750 13,017 - - - - 13,767
Exercise of share
options - - - - (167) 167 -
Lapsed dividend - - - - - 31 31
Dividends paid - - - - - (12,270) (12,270)
Balance at 30
June 2014 15,810 13,017 11,162 181 333 184,468 224,971
---------------------- --------- --------- ----------- ------------ ------------ --------- ---------
Retained profit - - - - - 56,323 56,323
Other comprehensive
income - - - 108 - - 108
---------------------- --------- --------- ----------- ------------ ------------ --------- ---------
Total comprehensive
income - - - 108 - 56,323 56,431
---------------------- --------- --------- ----------- ------------ ------------ --------- ---------
Share-based payment - - - - 200 - 200
Ordinary share
issue 13 - - - - - 13
Exercise of share
options - - - - (198) 198 -
Dividends paid - - - - - (12,975) (12,975)
---------------------- --------- --------- ----------- ------------ ------------ --------- ---------
Balance at 30
June 2015 15,823 13,017 11,162 289 335 228,014 268,640
---------------------- --------- --------- ----------- ------------ ------------ --------- ---------
Group Balance Sheet
at 30 June 2015
2015 2014
Notes GBP000 GBP000
--------------------------------------- ------ --------- ---------
Non-current assets
Investment and development properties 9 348,607 297,916
Property, plant and equipment 1,315 1,233
Derivative financial instruments 58 249
Trade and other receivables 500 639
--------------------------------------- ------ --------- ---------
350,480 300,037
--------------------------------------- ------ --------- ---------
Current assets
Trading properties 468 468
Trade and other receivables 896 1,447
Cash and cash equivalents 6,871 6,992
--------------------------------------- ------ --------- ---------
8,235 8,907
--------------------------------------- ------ --------- ---------
Total assets 358,715 308,944
--------------------------------------- ------ --------- ---------
Current liabilities
Trade and other payables (14,167) (9,497)
Borrowings - (4,203)
Current tax liabilities - (731)
--------------------------------------- ------ --------- ---------
(14,167) (14,431)
--------------------------------------- ------ --------- ---------
Non-current liabilities
Borrowings (75,908) (69,542)
--------------------------------------- ------ --------- ---------
Total liabilities (90,075) (83,973)
--------------------------------------- ------ --------- ---------
Net assets 268,640 224,971
--------------------------------------- ------ --------- ---------
Equity
Called up ordinary share capital 15,823 15,810
Share premium 13,017 13,017
Revaluation reserve 289 181
Share-based payment reserve 335 333
Redemption reserve 11,162 11,162
Retained earnings 228,014 184,468
--------------------------------------- ------ --------- ---------
Total equity 268,640 224,971
--------------------------------------- ------ --------- ---------
Net asset value per share
- Basic and diluted 8 424p 356p
- EPRA 8 427p 358p
--------------------------------------- ------ --------- ---------
Rupert Mucklow
David Wooldridge
Group Cash Flow Statement
for the year ended 30 June 2015
2015 2014
GBP000 GBP000
------------------------------------------------------- ----------- -----------
Cash flows from operating activities
Operating profit 59,812 44,773
Adjustments for non-cash items
Unrealised net revaluation gains on investment
- and development properties (42,369) (27,590)
- Profit on disposal of investment properties (106) (271)
- Depreciation 96 95
- Share based payments 200 194
Loss/(profit) on sale of property, plant
- and equipment 2 (4)
- Amortisation of lease incentives (702) (1,365)
Other movements arising from operations
- Increase in trading properties - (10)
- Decrease in receivables 551 300
- (Decrease)/increase in payables (1,453) 822
---- -------------------------------------------------- ----------- -----------
Net cash generated from operations 16,031 16,944
Interest received - 1
Interest paid (3,308) (3,580)
Preference dividends paid (47) (47)
(MORE TO FOLLOW) Dow Jones Newswires
September 08, 2015 02:01 ET (06:01 GMT)
Corporation tax refunded - 6
------------------------------------------------------- ----------- -----------
Net cash inflow from operating activities 12,676 13,324
Cash flows from investing activities
Acquisition of and additions to investment
and development properties (8,094) (10,498)
Proceeds on disposal of investment and development
properties 392 3,885
Net expenditure on property, plant and equipment (72) (10)
------------------------------------------------------- ----------- -----------
Net cash outflow from investing activities (7,774) (6,623)
Cash flows from financing activities
Net increase/(decrease) in borrowings 6,250 (2,500)
Repayment of debenture stock (4,204) -
Equity share issues 13 14,235
Cost of equity share issue - (467)
Equity dividends lapsed - 31
Equity dividends paid (7,082) (12,270)
------------------------------------------------------- ----------- -----------
Net cash outflow from financing activities (5,023) (971)
Net (decrease)/increase in cash and cash
equivalents (121) 5,730
------------------------------------------------------- ----------- -----------
Cash and cash equivalents at 1 July 6,992 1,262
------------------------------------------------------- ----------- -----------
Cash and cash equivalents at 30 June 6,871 6,992
------------------------------------------------------- ----------- -----------
NOTES TO THE FINANCIAL STATEMENTS
1 Accounting policies
Basis of preparation of financial information
The Group financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRSs) adopted
for use in the European Union and therefore comply with Article 4
of the EU IAS regulation. Whilst the financial information included
in this preliminary announcement has been computed in accordance
with IFRSs, this announcement itself does not contain sufficient
information to comply with IFRSs. The Company expects to publish
full financial statements that comply with IFRSs on 1 October
2015.
The preliminary announcement was approved by the board of
directors on 7 September 2015. The financial information set out in
this announcement does not constitute the Company's statutory
accounts for the years ended 30 June 2015 or 2014 as defined under
Section 435 of the Companies Act 2006. The financial information
for the year ended 30 June 2014 is derived from the statutory
accounts for that year which has been delivered to the Registrar of
Companies and those for 2015 will be delivered following the
Company's annual general meeting. The auditors have reported on
those accounts; their reports were unqualified, did not draw
attention to any matters by way of emphasis without qualifying
their report and did not contain statements under section 498(2) or
(3) of the Companies Act 2006.
The financial statements are prepared under the historical cost
convention, except for the revaluation of investment and
development properties and owner-occupied properties and deferred
tax thereon and certain financial assets, with consistent
accounting policies to the prior year.
Basis of consolidation
The Group financial statements consolidate the financial
statements of the Company and all its subsidiaries. Control is
assumed where the Parent Company has the power to govern the
financial and operational policies of the subsidiary.
Unrealised gains and losses on intra-Group transactions and
intra-Group balances are eliminated from the consolidated
results.
Going concern
As at 30 June 2015 the Group had GBP29.25m of undrawn banking
facilities and had drawn down GBP15.75m from its HSBC GBP44m 2018
Revolving Credit Facility. The Group's GBP1.0m overdraft, which is
due for renewal within 12 months of the date of this document, was
undrawn. Given these facilities, the Group's low gearing level of
26% and GBP128.1m of unencumbered properties, significant capacity
exists to raise additional finance or to provide additional
security for existing facilities, should property values fall.
Accordingly, the directors continue to adopt the going concern
basis in preparing the annual report and financial statements.
Critical accounting judgements and key sources of estimation
uncertainty
The preparation of financial statements requires the use of
estimates and assumptions that affect reported amounts of assets
and liabilities during the reporting period. These estimates and
assumptions are based on management's best knowledge of the amount,
event or actions. Actual results may differ from those amounts.
Management has made judgements over the valuation of properties
that has a significant effect on the amounts recognised in the
financial statements. Management has used the valuation performed
by its independent valuers as the fair value of its investment,
development, owner-occupied and trading properties. The valuation
is based upon assumptions including future rental income and an
appropriate discount rate. The valuers also use market evidence of
transaction prices for similar properties.
Standards in issue but not yet effective
At the date of authorisation of these financial statements, the
following Standards, Amendments and Interpretations which have not
been applied in these financial statements were in issue but not
yet effective (and in some cases had not yet been adopted by the
EU):
IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
Amendments to IFRS 11 Accounting for Acquisitions of Interests
in Joint Operations
Amendments to IAS 16 and Clarification of Acceptable Methods of
IAS 38 Depreciation and Amortisation
Amendments to IAS 16 and Agriculture: Bearer Plants
IAS 41
Amendments to IFRSs Annual Improvements to IFRSs 2010-2012
Cycle
The adoption of these Standards, Amendments and Interpretations
will either result in changes to presentation and disclosure, or
are not expected to have a material impact on the financial
statements.
Revenue recognition
Rental income
Gross rental income represents rents receivable for the year.
Rent increases arising from rent reviews due during the year are
taken into account only to the extent that such reviews have been
agreed with tenants at the accounting date.
Rental income from operating leases is recognised on a
straight-line basis over the term of the lease.
Lease incentives are amortised on a straight-line basis over the
lease term.
Property operating expenses are expensed as incurred. Service
charges and other recoverables are credited against the related
expense.
Revenue and profits on sale of investment, development and
trading properties
Revenue and profits on sale of investment, development and
trading properties are taken into account on the completion of
contracts.
The amount of profit recognised is the difference between sale
proceeds and the carrying amount.
Dividends and interest income
Dividend income from investments in subsidiaries is recognised
when shareholders' rights to receive payment have been
established.
Interest income is recognised on an accruals basis when it falls
due.
Cost of properties
An amount equivalent to the total development outgoings,
including interest, attributable to properties held for development
is added to the cost of such properties. A property is regarded as
being in the course of development until practical completion.
Interest associated with direct expenditure on investment
properties which are undergoing development or major refurbishment
and development properties is capitalised. Direct expenditure
includes the purchase cost of a site or property for development
properties, but does not include the original book cost of
investment property under development or refurbishment. Interest is
capitalised gross from the start of the development work until the
date of practical completion, but is suspended if there are
prolonged periods when development activity is interrupted. The
rate used is the rate on specific associated borrowings or, for
that part of the development costs financed out of general funds,
the average rate.
Valuation of properties
Investment properties are valued at the balance sheet date at
fair value. Where investment properties are being redeveloped the
property continues to be treated as an investment property.
Surpluses and deficits attributable to the Group arising from
revaluation are recognised in the statement of comprehensive
income. Valuation surpluses reflected in retained earnings are not
distributable until realised on sale.
Properties under development, which were not previously
classified as investment properties, are valued at fair value until
practical completion, when they are transferred to investment
properties. Valuation surpluses and deficits attributable to
properties under development are recognised in the statement of
comprehensive income.
Owner-occupied properties are valued at the balance sheet date
at fair value. Valuation changes in owner-occupied property are
taken to revaluation reserve through other comprehensive income.
Where the valuation is below historic cost, the deficit is
recognised in the statement of comprehensive income.
Trading properties held for resale are stated at the lower of
cost and net realisable value.
Property, plant and equipment
(MORE TO FOLLOW) Dow Jones Newswires
September 08, 2015 02:01 ET (06:01 GMT)
Land and buildings held for use in the production or supply of
goods or services, or for administrative purposes, are stated in
the balance sheet at their revalued amounts, being the fair value
at the date of revaluation, less any subsequent accumulated
depreciation and subsequent accumulated impairment losses.
Revaluations are performed with sufficient regularity such that the
carrying amount does not differ materially from that which would be
determined using fair values at the balance sheet date.
Any revaluation increase arising on the revaluation of such land
and buildings is credited to the properties revaluation reserve
through other comprehensive income, except to the extent that it
reverses a revaluation decrease for the same asset previously
recognised as an expense, in which case the increase is credited to
the statement of comprehensive income to the extent of the decrease
previously charged. A decrease in carrying amount arising on the
revaluation of such land and buildings is charged as an expense to
the extent that it exceeds the balance, if any, held in the
properties revaluation reserve relating to a previous revaluation
of that asset.
Depreciation on revalued buildings is charged to income. On the
subsequent sale or retirement of a revalued property, the
attributable revaluation surplus remaining in the properties
revaluation reserve is transferred directly to retained
earnings.
Plant and equipment is stated at cost less accumulated
depreciation, less any recognised impairment.
Depreciation
Depreciation is provided on buildings, motor vehicles and
fixtures and fittings on a straight-line basis over the estimated
useful lives of between two and twenty-five years. Investment
properties are not depreciated.
Capital grants
Capital grants received relating to the cost of building or
refurbishing investment properties are deducted from the cost of
the relevant property. Revenue grants are deducted from the related
expenditure.
Share-based payments
The cost of granting equity-settled share options and other
share-based remuneration is recognised in the statement of
comprehensive income at their fair value at grant date. They are
expensed straight-line over the vesting period, based on estimates
of the shares or options that eventually vest. Options are valued
using the Monte Carlo simulation model.
Deferred taxation
Deferred taxation is provided in full on temporary differences
that result in an obligation to pay more tax, or a right to pay
less tax, at a future date, at rates expected to apply when they
crystallise based on current tax rates and law. Temporary
differences arise from the inclusion of items in taxation
computations in periods different from when they are included in
the financial statements. Deferred tax is provided on temporary
differences arising from the revaluation of fixed assets. Deferred
tax assets are recognised to the extent that it is regarded as more
likely than not that they will be recovered.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax. The tax currently payable is based on taxable
profit for the year. Taxable profit differs from net profit as
reported in the statement of comprehensive income because it
excludes items of income and expense that are taxable or deductible
in other years and it further excludes items that are never taxable
or deductible. The Group's liability for current tax is calculated
using tax rates that have been enacted or substantively enacted by
the balance sheet date.
Tax is recognised in the statement of comprehensive income
except for items that are reflected directly in equity, where the
tax is also recognised in equity.
Pension costs
The cost to the Group of contributions made to defined
contribution plans is expensed when the contributions fall due.
Acquisitions
On the acquisition of a business, including an interest in an
associated undertaking, fair values are attributed to the Group's
share of separable net assets. Where the fair value of the cost of
acquisition exceeds the fair value attributable to such assets, the
difference is treated as purchased goodwill and capitalised in the
balance sheet in the year of acquisition.
Under the Group's previous policy, GBP0.13m of goodwill has been
written off directly to reserves as a matter of accounting policy.
This would be credited to the statement of comprehensive income on
disposal of the business to which it related.
Group undertakings
Investments are included in the balance sheet at cost less any
provision for impairment.
Financial instruments
Financial assets and financial liabilities are recognised on the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument. The Group derecognises a
financial asset only when the contractual rights to the cash flows
from the asset expire; or it transfers the financial asset and
substantially all the risks and rewards of ownership of the asset
to another entity. If the Group neither transfers nor retains
substantially all the risks and rewards of ownership and continues
to control the transferred asset, the Group recognises its retained
interest in the asset and an associated liability for any amounts
it may have to pay. If the Group retains substantially all the
risks and rewards of ownership of a transferred financial asset,
the Group continues to recognise the financial asset and also
recognises a collateralised borrowing for the proceeds received.
The Group derecognises financial liabilities when, and only when,
the Group's obligations are discharged, cancelled, or they
expire.
Trade receivables
Trade receivables are measured at initial recognition at fair
value, and are subsequently measured at amortised cost using the
effective interest rate method. Appropriate allowances for
estimated irrecoverable amounts are recognised in the statement of
comprehensive income when there is objective evidence that the
asset is impaired. The allowance recognised is measured as the
difference between the asset's carrying amount and the present
value of future cash flows discounted at the effective rate
computed at initial recognition.
Available-for-sale assets
Mortgage receivables held by the Group are classified as being
available-for-sale and are stated at fair value. Fair value is
determined in the manner described in note 13 to the Annual Report.
Gains and losses arising from changes in fair value are recognised
directly in equity in the investments revaluation reserve with the
exception of impairment losses, which are recognised directly in
the statement of comprehensive income.
Where the investment is disposed of or is determined to be
impaired, the cumulative gain or loss recognised in the investments
revaluation reserve is included in profit or loss for the
period.
Financial assets at FVTPL
Financial assets are classified as at 'fair value through profit
or loss' where it is a derivative that is not designated and
effective as a hedging instrument. The interest rate caps are
classified as FVTPL.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand
deposits, and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Group after deducting all of
its liabilities.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the
proceeds received, net of direct issue costs. Finance charges,
including premiums payable on settlements or redemption and direct
issue costs, are accounted for on an accrual basis in the statement
of comprehensive income using the effective interest rate method
and are added to the carrying amount of the instrument to the
extent that they are not settled in the period in which they
arise.
Trade payables
Trade payables are initially measured at fair value, and are
subsequently measured at amortised cost, using the effective
interest rate method.
Equity instruments
Equity instruments issued by the Company are recorded at the
proceeds received, net of direct issue costs.
2 Revenue
2015 2014
GBP000 GBP000
----------------------------------------------------- ------- -------
Gross rental income from investment and development
properties 21,589 21,141
Service charge income 980 896
Income received from trading properties - 45
----------------------------------------------------- ------- -------
22,569 22,082
Finance income (note 5) - 1
----------------------------------------------------- ------- -------
Total revenue 22,569 22,083
----------------------------------------------------- ------- -------
3 Property costs
2015 2014
GBP000 GBP000
------------------------- ------- -------
Service charge income (980) (896)
Service charge expenses 1,074 1,017
Other property expenses 914 904
------------------------- ------- -------
1,008 1,025
------------------------- ------- -------
4 Segmental analysis
The Group has two reportable segments: investment and
development property and trading property.
(MORE TO FOLLOW) Dow Jones Newswires
September 08, 2015 02:01 ET (06:01 GMT)
These two segments are considered appropriate for reporting
under IFRS 8 "Operating Segments" as these are regularly reviewed
by the chief operating decision maker to allocate resources to the
segments and to assess their performance. The Group has a large and
diverse customer base and there is no significant reliance on any
single customer.
The measure of profit or loss that is reported to the Board of
Directors for the segments is profit before tax. A segmental
analysis of income from the two segments is presented below, which
includes a reconciliation to the results reported in the Group
statement of comprehensive income.
2015 2014
GBP000 GBP000
-------------------------------------------------------- -------- --------
Investment and development properties
- Net rental income 20,581 20,116
- Profit on disposal 106 271
- Gain on revaluation of investment properties 37,340 27,633
Gain/(deficit) on revaluation of development
- properties 5,029 (43)
---- -------------------------------------------------- -------- --------
63,056 47,977
-------------------------------------------------------- -------- --------
Trading properties
- Income received from trading properties - 45
- Carrying value on sale - (13)
- Property outgoings (12) (4)
---- -------------------------------------------------- -------- --------
(12) 28
-------------------------------------------------------- -------- --------
Net income from the property portfolio before
administration expenses 63,044 48,005
Administration expenses (3,232) (3,232)
-------------------------------------------------------- -------- --------
Operating profit 59,812 44,773
Net financing costs (3,589) (4,070)
-------------------------------------------------------- -------- --------
Profit before tax 56,223 40,703
-------------------------------------------------------- -------- --------
The property revaluation gain has been recognised
as follows:
Within operating profit
- Investment properties 37,340 27,633
- Development properties 5,029 (43)
---- -------------------------------------------------- -------- --------
42,369 27,590
Within other comprehensive income
- Owner-occupied properties 108 67
---- -------------------------------------------------- -------- --------
Total revaluation gain for the period 42,477 27,657
-------------------------------------------------------- -------- --------
Segmental information on assets and liabilities, including a
reconciliation to the results reported in the Group balance sheet,
are as follows:
2015 2014
GBP000 GBP000
------------------------------------------ --------- ---------
Balance sheet
Investment and development properties
- Segment assets 349,253 299,160
- Segment liabilities (5,134) (5,879)
- Net borrowings (69,037) (66,753)
---- ------------------------------------ --------- ---------
275,082 226,528
------------------------------------------ --------- ---------
Trading properties
- Segment assets 468 468
- Segment liabilities - -
---- ------------------------------------ --------- ---------
468 468
------------------------------------------ --------- ---------
Other activities
- Unallocated assets 2,123 2,324
- Unallocated liabilities (9,033) (4,349)
(6,910) (2,025)
------------------------------------------ --------- ---------
Net assets 268,640 224,971
------------------------------------------ --------- ---------
Capital expenditure
Investment and development properties 7,840 10,779
Other activities 110 50
------------------------------------------ --------- ---------
7,950 10,829
Depreciation
Other activities 96 95
------------------------------------------ --------- ---------
96 95
------------------------------------------ --------- ---------
All operations and income are derived from the United Kingdom
and therefore no geographical segmental information is
provided.
5 Net finance costs
2015 2014
GBP000 GBP000
--------------------------------------------------------- ------- -------
Finance costs on:
Debenture stock - 483
Preference share dividend 47 47
Fair value movement of derivative financial instruments 191 103
Capitalised interest (66) (10)
Bank overdraft and loan interest payable 3,417 3,448
--------------------------------------------------------- ------- -------
Total finance costs 3,589 4,071
--------------------------------------------------------- ------- -------
Finance income on:
Short-term deposits - -
Fair value movement of derivative financial instruments - -
Bank and other interest receivable - 1
--------------------------------------------------------- ------- -------
Total finance income - 1
--------------------------------------------------------- ------- -------
Net finance costs 3,589 4,070
--------------------------------------------------------- ------- -------
6 Taxation
2015 2014
GBP000 GBP000
--------------------------------------------------- ------- -------
Current tax
- Corporation tax - -
- Adjustment in respect of previous years 100 -
--------------------------------------------------- ------- -------
100 -
--------------------------------------------------- ------- -------
Deferred tax - -
--------------------------------------------------- ------- -------
Total tax credit in the statement of comprehensive 100 -
income
--------------------------------------------------- ------- -------
The tax credit in the current financial year reflects the
removal of provisions in respect of prior year liabilities.
The tax credit for the year can be reconciled to the profit per
the statement of comprehensive income as follows:
2015 2014
GBP000 GBP000
--------------------------------------------------- --------- --------
Profit before tax 56,223 40,703
--------------------------------------------------- --------- --------
Profit before tax multiplied by the standard rate
of
UK corporation tax of 20.75% (2014: 22.5%) 11,666 9,158
Effect of:
REIT exempt income and gains (11,867) (9,415)
Losses not recognised 160 213
Share based payments 41 44
Adjustments in respect of prior years 100 -
--------------------------------------------------- --------- --------
100 -
--------------------------------------------------- --------- --------
A reduction in the main rate of corporation tax from 21% to 20%
with effect from 1 April 2015 was substantively enacted on 2 July
2013 and as such deferred tax at the balance sheet date has been
recognised at the reduced rate and current tax for the year ended
30 June 2015 has been calculated at the blended rate of 20.75%.
(MORE TO FOLLOW) Dow Jones Newswires
September 08, 2015 02:01 ET (06:01 GMT)
The Group became a Real Estate Investment Trust (REIT) on 1 July
2007. Under the tax rules which apply to REITs properties which are
developed and sold within three years of completion do not benefit
from the normal REIT tax exemption on disposal gains. The Group
currently owns GBP13.6m (2014: GBPNil) of properties which have
completed development during the previous three years. If these
properties had been disposed of at their 30 June 2015 valuation,
then tax of GBP0.4m (2014: GBPNil) would have become payable. No
deferred tax has been provided in respect of this potential tax
liability as the Group had no plans to dispose of these properties
at the balance sheet date.
7 Dividends
2015 2014
GBP000 GBP000
------------------------------------------------------- -------- -------
Amounts recognised as distributions to equity holders
in the year:
Final dividend for the year ended 30 June 2014 of
11.19p (2013: 10.86p) per share 7,083 6,553
Interim dividend for the year ended 30 June 2015
of 9.31p (2014: 9.04p) per share 5,892 5,717
Dividends lapsed - (31)
------------------------------------------------------- -------- -------
12,975 12,239
------------------------------------------------------- -------- -------
The directors propose a final dividend for the year ended 30
June 2015 of 11.53p (2014: 11.19p) per Ordinary share, totalling
GBP7.3m.
The proposed final dividend is subject to approval by
shareholders at the Annual General Meeting and has therefore not
been included as a liability in these financial statements.
The final dividend, if approved, will be paid on 4 January 2016
to shareholders on the register at the close of business on 4
December 2015.
8 Earnings per share and net asset value per share
Earnings per share
The basic and diluted earnings per share of 89.02p (2014:
66.45p) has been calculated on the basis of the weighted average of
63,273,435 Ordinary shares (2014: 61,250,268 Ordinary shares) and
profit of GBP56.3m (2014: GBP40.7m).
The European Public Real Estate Association (EPRA) has issued
recommended bases for the calculation of earnings and net asset
value per share information and these are included in the following
tables.
The EPRA earnings per share has been amended from the basic and
diluted earnings per share by the following:
2015 2014
GBP000 GBP000
------------------------------------------------------------- --------- ---------
Earnings 56,323 40,703
Profit on disposal of investment and development properties (106) (271)
Net gains on revaluation of investment and development
properties (42,369) (27,590)
Net expenditure on/(income from) trading properties 12 (28)
Fair value movement on derivative financial instruments 191 103
Tax adjustments - -
EPRA earnings 14,051 12,917
------------------------------------------------------------- --------- ---------
EPRA earnings per share 22.21p 21.09p
------------------------------------------------------------- --------- ---------
The Group presents an EPRA earnings per share figure as the
directors consider that this is a better indicator of the
performance of the Group.
There are no dilutive shares. Options over 105,418 Ordinary
shares were granted in the year (2014: 87,606 Ordinary shares)
under the 2007 Performance Share Plan. The vesting conditions for
these shares have not been met, so they have not been treated as
dilutive in these calculations. The fourth three year award under
the 2007 Performance Share Plan vested in the period, with 53,495
Ordinary shares being issued and with 69,965 shares lapsed.
Net asset value per share
The net asset value per share of 424p (2014: 356p) has been
calculated on the basis of the number of equity shares in issue of
63,294,833 (2014: 63,241,338) and net assets of GBP268.6m (2014:
GBP225.0m). The EPRA net asset value per share has been calculated
as follows:
2015 2014
GBP000 GBP000
------------------------------------------------ -------- --------
Equity shareholders' funds 268,640 224,971
Valuation of land held as trading properties 1,942 1,942
Book value of land held as trading properties (468) (468)
Fair value of derivative financial instruments (58) (249)
------------------------------------------------ -------- --------
EPRA net asset value 270,056 226,196
------------------------------------------------ -------- --------
EPRA net asset value per share 427p 358p
------------------------------------------------ -------- --------
9 Investment and development properties
Investment Development Total
GBP000 GBP000 GBP000
---------------------- ----------- ------------ --------
At 30 June 2013 253,780 8,007 261,787
Additions 9,053 1,726 10,779
Lease incentives 1,365 - 1,365
Capitalised interest - 10 10
Disposals (3,615) - (3,615)
Revaluation gain 27,633 (43) 27,590
At 1 July 2014 288,216 9,700 297,916
Additions 4,342 3,498 7,840
Lease incentives 622 80 702
Capitalised interest - 66 66
Transfer 12,300 (12,300) -
Disposals (286) - (286)
Revaluation gain 37,340 5,029 42,369
At 30 June 2015 342,534 6,073 348,607
---------------------- ----------- ------------ --------
The closing book value shown above comprises GBP327.2m (2014:
GBP279.1m) of freehold and GBP21.4m (2014: GBP18.8m) of leasehold
properties.
Freehold Leasehold Total
GBP000 GBP000 GBP000
----------------------------------------- --------- ---------- --------
Properties held at valuation on 30 June
2015:
Cost 205,619 21,567 227,186
Valuation surplus/(deficit) 121,618 (197) 121,421
----------------------------------------- --------- ---------- --------
Valuation 327,237 21,370 348,607
----------------------------------------- --------- ---------- --------
Freehold Leasehold Total
GBP000 GBP000 GBP000
----------------------------------------- --------- ---------- --------
Properties held at valuation on 30 June
2014:
Cost 197,679 21,483 219,162
Valuation surplus/(deficit) 81,472 (2,718) 78,754
----------------------------------------- --------- ---------- --------
Valuation 279,151 18,765 297,916
----------------------------------------- --------- ---------- --------
The properties are stated at their 30 June 2015 fair value and
are valued by DTZ Debenham Tie Leung Limited, professionally
qualified external valuers, in accordance with the RICS Valuation
Professional Standards published by the Royal Institution of
Chartered Surveyors. DTZ Debenham Tie Leung Limited have recent
experience in the relevant location and category of the properties
being valued.
2015 2014
GBP000 GBP000
----------------------------------------------- -------- --------
DTZ valuation 349,652 298,937
Owner-occupied property included in property,
plant and equipment (1,108) (1,000)
Other adjustments 63 (21)
----------------------------------------------- -------- --------
Investment and development properties as at
30 June 2015 348,607 297,916
----------------------------------------------- -------- --------
Additions to freehold and leasehold properties include
capitalised interest of GBP0.07m (2014: GBP0.01m). The total amount
of interest capitalised included in freehold and leasehold
properties is GBP5.4m (2014: GBP5.3m). Properties valued at
GBP221.5m (2014: GBP205.3m) were subject to a security
interest.
10 Directors and Company Secretary
Rupert Mucklow BSc - Chairman
Justin Parker BSc FRICS - Managing Director
David Wooldridge FCCA - Finance Director and Company Secretary
ACIS
Paul Ludlow* - Senior Independent Non-Executive
Stephen Gilmore LLB* - Independent Non-Executive
Jock Lennox LLB CA* - Independent Non-Executive
*Member of Remuneration Committee and Audit Committee.
Responsibility statement of the directors on the annual
report
(MORE TO FOLLOW) Dow Jones Newswires
September 08, 2015 02:01 ET (06:01 GMT)
Mucklow (a & J) (LSE:MKLW)
Historical Stock Chart
From Feb 2024 to Mar 2024
Mucklow (a & J) (LSE:MKLW)
Historical Stock Chart
From Mar 2023 to Mar 2024