TIDMMKLW
RNS Number : 1754F
Mucklow(A.& J.)Group PLC
18 February 2015
Mucklow (A & J) Group plc
Half-Yearly Report
18 February 2015
Embargoed: 7.00am
Financial Summary
for the six months ended 31 December 2014
Income statement Six months ended Six months
ended
31 December 2014 31 December
2013
-------------------------------------- ----------------- ------------
Statutory pre-tax profit (GBPm) 27.4 14.2
Underlying pre-tax profit (GBPm) (1) 6.5 6.3
Gross rental income received (GBPm) 10.5 10.5
EPRA EPS (p) (2) 10.38 10.41
Interim dividend per share (p) 9.31 9.04
-------------------------------------- ----------------- ------------
Balance sheet 31 December 2014 30 June 2014
---------------------------- ----------------- -------------
Net asset value (GBPm) 245.4 225.0
Basic NAV per share (p) 388 356
EPRA NAV per share (p) (3) 390 358
Net debt (GBPm) 65.4 66.8
Gearing (%) 27 30
---------------------------- ----------------- -------------
Property portfolio 31 December 2014 30 June 2014
-------------------------------------------- ----------------- -------------
Occupancy rate (%) 94.3 93.3
Portfolio value (GBPm) (4) 323.7 298.9
Valuation gain (GBPm) 20.9 27.7
Initial yield on investment properties (%) 6.9 6.8
Equivalent yield (%) 7.5 7.9
-------------------------------------------- ----------------- -------------
The interim dividend of GBP5.89m will be paid on 1 July 2015 to
holders registered on 5 June 2015.
(1) See the investment/development column in the underlying financial
performance tables in note 8 for details.
(2) Excludes the profit on disposal of investment, development and trading
properties and the revaluation of investment and development properties
and financial instruments and tax adjustments. See note 9.
(3) Excludes the fair value of derivative financial instruments and includes
the surplus on trading properties. See note 9.
(4) See note 10.
For further information please contact:
Rupert Mucklow, Chairman
David Wooldridge, Finance Director
A & J Mucklow Group plc
Tel: 0121 550 1841
Fiona Tooley
TooleyStreet Communications
Tel: 07785 703523
Chairman's Statement
I am pleased to report another strong performance by the Group
for the first six months of our financial year. Pre-tax profit
increased by 93% and net asset value per share by 9%.
Half-year Results to 31 December 2014
Statutory pre-tax profit for the first six months was GBP27.4m
compared with GBP14.2m 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, was GBP6.5m (31 December 2013: GBP6.3m).
EPRA net asset value* per Ordinary share increased by 32p to
390p at 31 December 2014 (30 June 2014: 358p). Shareholders' funds
rose to GBP245.4m (30 June 2014: GBP225.0m), while borrowings net
of cash amounted to GBP65.4m (30 June 2014: GBP66.8m). Debt to
equity gearing was lower at 27% (30 June 2014: 30%).
Dividend
The Directors have declared an interim dividend of 9.31p per
ordinary share, an increase of 3% over last year (31 December 2013:
9.04p). The dividend will be paid as a PID on 1 July 2015 to
Shareholders on the register at the close of business on 5 June
2015.
Property Review
The improvement in regional occupier and investment markets that
we reported in the previous half year to 30 June 2014 continued
through to 31 December 2014, which has resulted in a lower vacancy
rate, positive signs of rental growth and further yield
compression.
We completed our 116,000 sq ft pre-let development at Apex Park,
Worcester during the first half year, which was on time and budget.
We also achieved a number of open market lettings on second hand
industrial space at the highest rental levels we have achieved for
15 years.
Property yields are still falling on the back of strong
institutional demand and a shortage of investment stock. Our modern
property portfolio is now valued on a 7.5% equivalent yield and
continues to provide us with a variety of opportunities to add
value and increase rental income.
Regional Occupier Market
Our occupancy rate at 31 December 2014 had risen to 94.3% (30
June 2014: 93.3%) reflecting steady tenant demand for Midlands
industrial property and a tight supply of available space. Quoting
terms on new lettings have hardened. Rental levels have increased
by at least 25p per square foot over the last six months and
incentives have been reduced.
The most notable letting during the period was a 36,000 sq ft
industrial unit at Redfern Park, Tyseley, Birmingham. The property
was acquired with vacant possession in the previous half year for
GBP1.54m, including stamp duty and has been refurbished by us to a
high standard at a cost of GBP0.2m. The property was let in October
2014 on a 20 year lease without any breaks at a rent of GBP0.21m pa
(GBP5.75 psf), which will provide new evidence for other lettings,
rent reviews and lease renewals in the Birmingham area.
Development
Worcester Bosch are now occupying and paying rent (GBP0.72m pa)
on their new 116,000 sq ft distribution depot at Apex Park,
Worcester which completed in December 2014. The development has
been very successful and we are now looking to progress other
development opportunities in the Midlands.
A planning application will be submitted shortly on our 19 acre
site at Tyseley, Birmingham. The site will accommodate 350,000 sq
ft of industrial and warehouse buildings, ranging in size between
50,000 and 110,000 sq ft. We shall initially be targeting pre-let
development when marketing commences.
Regional Investment Market
The Midlands industrial property market has become very popular
with Institutional investors looking for an attractive income
return with good prospects of rental growth. As a consequence, the
equivalent yield on our investment portfolio has seen a 0.4% shift
in the last six months from 7.9% to 7.5%, while the initial yield
remains virtually unchanged at 6.9%.
We did not buy any investment properties during the first six
months, but have subsequently acquired a modern 28,000 sq ft
industrial investment at Meridian Park, Leicester for GBP2.1m. The
property is let on a long lease at a rent of GBP0.15m pa and is
located next to the M1 motorway.
Property Valuation
DTZ Debenham Tie Leung Ltd revalued our property portfolio at 31
December 2014. The investment properties and development land were
valued at GBP323.7m (30 June 2014: GBP298.9m), which resulted in a
revaluation gain of GBP20.9m (6.9%).
The initial yield on the investment properties was 6.9% (30 June
2014: 6.8%). The equivalent yield was 7.5% (30 June 2014: 7.9%).
Our industrial property increased in value by 8.4%; offices by 5.8%
and retail property by 3.1%.
DTZ Debenham Tie Leung Ltd also revalued our trading properties
at 31 December 2014. The total value was GBP1.9m, which showed an
unrecognised surplus of GBP1.5m against book value.
Finance
Total net borrowings at 31 December 2014 were GBP65.4m (30 June
2014: GBP66.8m). Undrawn banking facilities totalled GBP31.5m,
while net debt to equity gearing had reduced to 27% (30 June 2014:
30%).
Principal Risks and Uncertainties
The process for identifying, assessing and reviewing the risks
faced by the Group is described in the Principal Risks and
Uncertainties section on page 20 of the 2014 annual financial
report, which is available on the Company's website. A summary of
the principal risks and uncertainties is set out below.
-- Investment portfolio - tenant default, change in demand for
space and market pricing affecting value.
-- Financial - reduced availability or increased cost of debt
finance, interest rate sensitivity and REIT compliance.
-- People - retention/recruitment.
-- Development - speculative development exposure on lettings,
cost/time delays on contracts, inability to acquire land and
holding too much development land.
In the view of the Board these principal risks and uncertainties
are as equally applicable to the remaining six months of the
financial year as they were to the six months under review.
Outlook
The value of our property investment portfolio has risen by 15%
over the last 12 months, but still offers a very attractive income
return and scope for further improvement. The equivalent yield at
the peak of the last property cycle in 2007 was 6.0%, compared with
the equivalent yield today of 7.5%.
We expect occupier demand and rental levels to continue to grow
steadily over the next six months and remain on target for another
satisfactory year.
Rupert J Mucklow, Chairman
17 February 2015
See the investment/development column in the underlying
financial performance tables in note 8 for details.
* EPRA (European Public Real Estate Association) net asset
value, including the surplus on trading properties and excluding
the fair value of financial instruments. See note 9 for
details.
Group Condensed Statement of Comprehensive Income
for the six months ended 31 December 2014
Unaudited Unaudited Audited
six months six months year to
to to
31 December 31 December 30 June
2014 2013 2014
Notes GBP000 GBP000 GBP000
-------------------------------------------- ------ ------------ ------------ --------
Revenue 2 10,962 10,987 22,082
-------------------------------------------- ------ ------------ ------------ --------
Gross rental income relating to investment
properties 2 10,503 10,494 21,141
Property outgoings 3 (657) (501) (1,025)
-------------------------------------------- ------ ------------ ------------ --------
Net rental income relating to investment
properties 9,846 9,993 20,116
-------------------------------------------- ------ ------------ ------------ --------
Proceeds on sale of trading properties - 45 45
Carrying value of trading properties
sold - (13) (13)
Property outgoings relating to trading
properties (11) (2) (4)
-------------------------------------------- ------ ------------ ------------ --------
Net (expenditure on)/income from trading
properties (11) 30 28
-------------------------------------------- ------ ------------ ------------ --------
Administration expenses (1,643) (1,693) (3,232)
-------------------------------------------- ------ ------------ ------------ --------
Operating profit before net gains on
investment and development properties 8,192 8,330 16,912
Profit on disposal of investment and
development properties 106 38 271
Revaluation of investment and development
properties 20,864 7,672 27,590
-------------------------------------------- ------ ------------ ------------ --------
Operating profit 4 29,162 16,040 44,773
-------------------------------------------- ------ ------------ ------------ --------
Total finance income 5 - 161 1
Total finance costs 5 (1,805) (2,028) (4,071)
-------------------------------------------- ------ ------------ ------------ --------
Net finance costs 5 (1,805) (1,867) (4,070)
-------------------------------------------- ------ ------------ ------------ --------
Profit before tax 4 27,357 14,173 40,703
-------------------------------------------- ------ ------------ ------------ --------
Tax charge 6 - - -
-------------------------------------------- ------ ------------ ------------ --------
Profit for the financial period 27,357 14,173 40,703
-------------------------------------------- ------ ------------ ------------ --------
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss:
Revaluation of owner-occupied property 70 5 67
-------------------------------------------- ------ ------------ ------------ --------
Total comprehensive income for the
period 27,427 14,178 40,770
-------------------------------------------- ------ ------------ ------------ --------
All operations are continuing.
Basic and diluted earnings per share 9 43.25p 23.52p 66.45p
-------------------------------------- ------- ------- -------
Group Condensed Statement of Changes in Equity
for the six months ended 31 December 2014
Ordinary Capital Share-based
share Share redemption Revaluation payments Retained Total
capital premium reserve reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Balance at 1 July
2014 15,810 13,017 11,162 181 333 184,468 224,971
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Retained profit - - - - - 27,357 27,357
Other comprehensive
income - - - 70 - - 70
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Total comprehensive
income - - - 70 - 27,357 27,427
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Share-based payment - - - - 101 - 101
Ordinary share issue 13 - - - - - 13
Exercise of share
options - - - - (198) 198 -
Dividends paid - - - - - (7,083) (7,083)
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Balance at 31 December
2014 (unaudited) 15,823 13,017 11,162 251 236 204,940 245,429
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Balance at 1 July
2013 15,060 - 11,162 114 306 155,837 182,479
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Retained profit - - - - - 14,173 14,173
Other comprehensive
income - - - 5 - - 5
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Total comprehensive
income - - - 5 - 14,173 14,178
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Share-based payment - - - - 95 - 95
Ordinary share issue 25 - - - - - 25
Exercise of share
options - - - - (167) 167 -
Lapsed dividend - - - - - 31 31
Dividends paid - - - - - (6,553) (6,553)
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Balance at 31 December
2013 (unaudited) 15,085 - 11,162 119 234 163,655 190,255
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Balance at 1 July
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
(audited)
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Group Condensed Balance Sheet
at 31 December 2014
Unaudited Unaudited Audited
31 December 31 December 30 June
2014 2013 2014
Notes GBP000 GBP000 GBP000
--------------------------------------- ------ ------------ ------------ ---------
Non-current assets
Investment and development properties 10 322,663 277,690 297,916
Property, plant and equipment 1,270 1,220 1,233
Derivative financial instruments 84 512 249
Trade and other receivables 569 709 639
--------------------------------------- ------ ------------ ------------ ---------
324,586 280,131 300,037
--------------------------------------- ------ ------------ ------------ ---------
Current assets
Trading properties 468 448 468
Trade and other receivables 1,811 1,102 1,447
Cash and cash equivalents 8,218 7,363 6,992
--------------------------------------- ------ ------------ ------------ ---------
10,497 8,913 8,907
--------------------------------------- ------ ------------ ------------ ---------
Total assets 335,083 289,044 308,944
--------------------------------------- ------ ------------ ------------ ---------
Current liabilities
Trade and other payables (15,953) (14,001) (9,497)
Borrowings - (4,203) (4,203)
Tax liabilities (100) (100) (731)
--------------------------------------- ------ ------------ ------------ ---------
(16,053) (18,304) (14,431)
--------------------------------------- ------ ------------ ------------ ---------
Non-current liabilities
Borrowings (73,601) (80,485) (69,542)
--------------------------------------- ------ ------------ ------------ ---------
Total liabilities (89,654) (98,789) (83,973)
--------------------------------------- ------ ------------ ------------ ---------
Net assets 245,429 190,255 224,971
--------------------------------------- ------ ------------ ------------ ---------
Equity
Called up ordinary share capital 15,823 15,085 15,810
Share premium 13,017 - 13,017
Revaluation reserve 251 119 181
Share-based payment reserve 236 234 333
Redemption reserve 11,162 11,162 11,162
Retained earnings 204,940 163,655 184,468
--------------------------------------- ------ ------------ ------------ ---------
Total equity 245,429 190,255 224,971
--------------------------------------- ------ ------------ ------------ ---------
Net asset value per share
- Basic and diluted 9 388p 315p 356p
- EPRA 9 390p 317p 358p
--------------------------------------- ------ ------------ ------------ ---------
Group Condensed Cash Flow Statement
for the six months ended 31 December 2014
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30 June
2014 2013 2014
GBP000 GBP000 GBP000
------------------------------------------------------- ------------ ------------ ----------
Cash flows from operating activities
Operating profit 29,162 16,040 44,773
Adjustments for non-cash items
Unrealised net revaluation gains on investment
- and development properties (20,864) (7,672) (27,590)
- Profit on disposal of investment properties (106) (38) (271)
- Depreciation 47 47 95
- Share-based payments 101 95 194
Loss/(profit) on sale of property, plant
- and equipment 3 (4) (4)
- Amortisation of lease incentives (576) (743) (1,365)
Other movements arising from operations
- Decrease/(increase) in trading properties - 10 (10)
- (Increase)/decrease in receivables (357) 646 300
- (Decrease)/increase in payables (873) (1,603) 822
---- ------------------------------------------------- ------------ ------------ ----------
Net cash generated from operations 6,537 6,778 16,944
Interest received - - 1
Interest paid (1,748) (1,826) (3,580)
Preference dividends paid (24) (24) (47)
Corporation tax refunded - 6 6
------------------------------------------------------- ------------ ------------ ----------
Net cash inflow from operating activities 4,765 4,934 13,324
Cash flows from investing activities
Acquisition of and additions to investment
and development properties (3,723) (7,417) (10,498)
Proceeds on disposal of investment and development
properties 392 38 3,885
Net expenditure on property, plant and equipment (18) (10) (10)
------------------------------------------------------- ------------ ------------ ----------
Net cash outflow from investing activities (3,349) (7,389) (6,623)
Cash flows from financing activities
Net increase/(decrease) in borrowings 4,000 8,500 (2,500)
Repayment of debenture stock (4,203) - -
Equity share issue 13 25 14,235
Cost of equity share issues - - (467)
Equity dividend lapsed - 31 31
Equity dividends paid - - (12,270)
------------------------------------------------------- ------------ ------------ ----------
Net cash (outflow)/inflow from financing
activities (190) 8,556 (971)
Net increase in cash and cash equivalents 1,226 6,101 5,730
------------------------------------------------------- ------------ ------------ ----------
Cash and cash equivalents at beginning of
period 6,992 1,262 1,262
------------------------------------------------------- ------------ ------------ ----------
Cash and cash equivalents at end of period 8,218 7,363 6,992
------------------------------------------------------- ------------ ------------ ----------
Notes to the Half-Yearly Report
1. Accounting policies
Basis of preparation of half-yearly financial information
The annual financial statements of A & J Mucklow Group plc
are prepared in accordance with IFRS's as adopted by the European
Union. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
International Accounting Standard 34 "Interim Financial Reporting",
as adopted by the European Union and the disclosure requirements of
the Listing Rules.
The Group's condensed set of financial statements for the period
ended 31 December 2014 were authorised for issue by the Board of
directors on 17 February 2015. The half-yearly financial
information is unaudited but has been reviewed by Deloitte LLP and
their report appears on page 18 of this half-yearly report.
The information for the year ended 30 June 2014 does not
constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditor
reported on those accounts: their report was unqualified, did not
draw attention to any matters by way of emphasis and did not
contain a statement under section 498(2) or (3) of the Companies
Act 2006.
The condensed set of 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.
As at 31 December 2014 the Group had GBP31.5m of undrawn banking
facilities, comprising the GBP1.0m overdraft and GBP30.5m of the
GBP44.0m 2018 Revolving Credit Facility, and had fully drawn down
GBP20.0m from its HSBC 2018 Term Loan. The Group's GBP1.0m
overdraft is the only banking facility due for renewal within 12
months of the date of this document. The Lloyds Bank 2023 GBP20.0m
Term Loan and 2022 GBP20.0m Term Loan remain fully drawn. Given
these facilities, the Group's low gearing level of 27% and
GBP115.9m 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
condensed set of financial statements.
The same accounting policies, presentation and methods of
computation are followed in the condensed set of financial
statements as applied in the Group's latest annual audited
financial statements.
2. Revenue
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30 June
2014 2013 2014
GBP000 GBP000 GBP000
----------------------------------------------------- ------------ ------------ --------
Gross rental income from investment and development
properties 10,503 10,494 21,141
Service charge income 459 448 896
Income received from trading properties - 45 45
----------------------------------------------------- ------------ ------------ --------
10,962 10,987 22,082
Finance income (note 5) - 161 1
----------------------------------------------------- ------------ ------------ --------
Total revenue 10,962 11,148 22,083
----------------------------------------------------- ------------ ------------ --------
3. Property Costs
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30 June
2014 2013 2014
GBP000 GBP000 GBP000
------------------------- ------------ ------------ --------
Service charge income (459) (448) (896)
Service charge expenses 536 500 1,017
Other property expenses 580 449 904
------------------------- ------------ ------------ --------
657 501 1,025
------------------------- ------------ ------------ --------
4. Segmental analysis
The Group has two reportable segments: investment and
development property and trading property.
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30 June
2014 2013 2014
GBP000 GBP000 GBP000
--------------------------------------------------- ------------ ------------ --------
Investment and development properties
- Net rental income 9,846 9,993 20,116
- Profit on disposal 106 38 271
- Gain on revaluation of investment properties 15,835 7,713 27,633
Gain/(deficit) on revaluation of development
- properties 5,029 (41) (43)
30,816 17,703 47,977
--------------------------------------------------- ------------ ------------ --------
Trading properties
- Income received from trading properties - 45 45
- Carrying value on sale - (13) (13)
- Property outgoings (11) (2) (4)
--- ---------------------------------------------- ------------ ------------ --------
(11) 30 28
--------------------------------------------------- ------------ ------------ --------
Net income from property portfolio before
administration expenses 30,805 17,733 48,005
Administration expenses (1,643) (1,693) (3,232)
--------------------------------------------------- ------------ ------------ --------
Operating profit 29,162 16,040 44,773
Net financing costs (1,805) (1,867) (4,070)
--------------------------------------------------- ------------ ------------ --------
Profit before tax 27,357 14,173 40,703
--------------------------------------------------- ------------ ------------ --------
4. Segmental analysis (continued)
The property revaluation gain has been recognised as
follows:
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30 June
2014 2013 2014
GBP000 GBP000 GBP000
------------------------------------------ ------------ ------------ --------
Within operating profit
- Investment properties 15,835 7,713 27,633
- Development properties 5,029 (41) (43)
---- ------------------------------------ ------------ ------------ --------
20,864 7,672 27,590
Within other comprehensive income
- Owner-occupied properties 70 5 67
Total revaluation gain for the period 20,934 7,677 27,657
------------------------------------------ ------------ ------------ --------
Segmental information on assets and liabilities, including a
reconciliation to the results reported in the Group condensed
balance sheet, are as follows:
Balance sheet - segment assets
Investment and development properties
- Segment assets 323,961 278,613 299,160
- Segment liabilities (6,868) (5,183) (5,879)
- Net borrowings (65,383) (77,325) (66,753)
---- ------------------------------------ --------- --------- ---------
251,710 196,105 226,528
------------------------------------------ --------- --------- ---------
Trading properties
- Segment assets 468 448 468
- Segment liabilities - - -
---- ------------------------------------ --------- --------- ---------
468 448 468
------------------------------------------ --------- --------- ---------
Other activities
- Unallocated assets 2,436 2,620 2,324
- Unallocated liabilities (9,185) (8,918) (4,349)
---- ------------------------------------ --------- --------- ---------
(6,749) (6,298) (2,025)
------------------------------------------ --------- --------- ---------
Net assets 245,429 190,255 224,971
------------------------------------------ --------- --------- ---------
Capital expenditure in period
Investment and development properties 3,526 7,488 10,779
Other activities 30 50 50
------------------------------------------ --------- --------- ---------
3,556 7,538 10,829
------------------------------------------ --------- --------- ---------
Depreciation
Other activities 47 47 95
------------------------------------------ --------- --------- ---------
47 47 95
------------------------------------------ --------- --------- ---------
All operations and income are derived from the United Kingdom
and therefore no geographical segmental information is
provided.
5. Net finance costs
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30 June
2014 2013 2014
GBP000 GBP000 GBP000
--------------------------------------------------------- ------------ ------------ --------
Finance costs on:
Debenture stock - 242 483
Preference share dividend 24 24 47
Fair value movement of derivative financial instruments 165 - 103
Capitalised interest (66) - (10)
Bank overdraft and loan interest payable 1,682 1,762 3,448
--------------------------------------------------------- ------------ ------------ --------
Total finance costs 1,805 2,028 4,071
--------------------------------------------------------- ------------ ------------ --------
Finance income on:
Fair value movement of derivative financial instruments - 160 -
Bank and other interest receivable - 1 1
--------------------------------------------------------- ------------ ------------ --------
Total finance income - 161 1
--------------------------------------------------------- ------------ ------------ --------
Net finance costs 1,805 1,867 4,070
--------------------------------------------------------- ------------ ------------ --------
6. Taxation
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30 June
2014 2013 2014
GBP000 GBP000 GBP000
----------------------------------------------------- ------------ ------------ --------
Current tax
- Corporation tax - - -
Total tax charge in the statement of comprehensive - - -
income
----------------------------------------------------- ------------ ------------ --------
There is no deferred tax charge or credit for any of the periods
stated.
The Company elected to become a Real Estate Investment Trust
(REIT) with effect from 1 July 2007. As a result of this, rental
income and capital gains of the REIT business are not subject to
tax. The tax charge for the periods shown above represents the tax
payable on the non-REIT business, mainly profits on the disposal of
trading properties and interest receivable.
7. Dividends
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30 June
2014 2013 2014
GBP000 GBP000 GBP000
------------------------------------------------------- ------------ ------------ --------
Amounts recognised as distributions to equity holders
in the period:
Final dividend for the year ended 30 June 2014 of
11.19p (2013: 10.86p) per share 7,083 6,553 6,553
Interim dividend for the year ended 30 June 2014
of 9.04p per share - - 5,717
Dividends lapsed - (31) (31)
------------------------------------------------------- ------------ ------------ --------
7,083 6,522 12,239
------------------------------------------------------- ------------ ------------ --------
The directors propose an interim dividend of 9.31p (2013: 9.04p)
per Ordinary share. This dividend has not been included as a
liability in these financial statements.
The interim dividend will be paid on 1 July 2015 to shareholders
on the register at the close of business on 5 June 2015.
8. Underlying financial performance
Presented below is a non-statutory analysis of the underlying
rental performance before tax, as shown in the
investment/development column, which excludes the profit on sale of
investment and trading properties and other items (capitalised
interest, property revaluation movements and the fair value
movement on derivative financial instruments). The directors
consider that this further analysis of our statement of
comprehensive income gives shareholders a useful comparison of our
underlying performance for the periods shown in the condensed set
of financial statements.
Unaudited Unaudited Unaudited Unaudited
Investment/ Trading Other
Total development properties Items
Six months to 31 December 2014 GBP000 GBP000 GBP000 GBP000
------------------------------------------ ----------- ------------- ----------- ----------
Rental income 10,503 10,503 - -
Property outgoings (657) (657) - -
------------------------------------------ ----------- ------------- ----------- ----------
Net rental income 9,846 9,846 - -
------------------------------------------ ----------- ------------- ----------- ----------
Sale of trading properties - - - -
Carrying value of trading properties - - - -
sold
Property outgoings on trading properties (11) - (11) -
------------------------------------------ ----------- ------------- ----------- ----------
Net expenditure on trading properties (11) - (11) -
------------------------------------------ ----------- ------------- ----------- ----------
Administration expenses (1,643) (1,643) - -
------------------------------------------ ----------- ------------- ----------- ----------
Operating profit before net gains
on investment 8,192 8,203 (11) -
Net gains on revaluation 20,864 - - 20,864
Profit on disposal of investment and
development properties 106 - - 106
Operating profit 29,162 8,203 (11) 20,970
------------------------------------------ ----------
Gross finance costs (1,706) (1,706) - -
Capitalised interest 66 - - 66
Fair value movement on derivative
financial instruments (165) - - (165)
------------------------------------------ ----------- ------------- ----------- ----------
Total finance costs (1,805) (1,706) - (99)
Finance income - - - -
------------------------------------------ ----------- ------------- ----------- ----------
Profit before tax 27,357 6,497 (11) 20,871
------------------------------------------ ----------- ------------- ----------- ----------
8. Underlying financial performance (continued)
Unaudited Unaudited Unaudited Unaudited
Investment/ Trading Other
Total development properties Items
Six months to 31 December 2013 GBP000 GBP000 GBP000 GBP000
------------------------------------------ ----------- ------------- ----------- ----------
Rental income 10,494 10,494 - -
Property outgoings (501) (501) - -
------------------------------------------ ----------- ------------- ----------- ----------
Net rental income 9,993 9,993 - -
------------------------------------------ ----------- ------------- ----------- ----------
Sale of trading properties 45 - 45 -
Carrying value of trading properties
sold (13) - (13) -
Property outgoings on trading properties (2) - (2) -
------------------------------------------ ----------- ------------- ----------- ----------
Net income from trading properties 30 - 30 -
------------------------------------------ ----------- ------------- ----------- ----------
Administration expenses (1,693) (1,693) - -
------------------------------------------ ----------- ------------- ----------- ----------
Operating profit before net gains
on investment 8,330 8,300 30 -
Net gains on revaluation 7,672 - - 7,672
Profit on disposal of investment
and development properties 38 - - 38
------------------------------------------
Operating profit 16,040 8,300 30 7,710
------------------------------------------ ----------- ------------- ----------- ----------
Gross finance income 1 1 - -
Fair value movement on derivative
financial instruments 160 - - 160
------------------------------------------ ----------- ------------- ----------- ----------
Total finance income 161 1 - 160
Finance costs (2,028) (2,028) - -
------------------------------------------ ----------- ------------- ----------- ----------
Profit before tax 14,173 6,273 30 7,870
------------------------------------------ ----------- ------------- ----------- ----------
9. Earnings per share and net asset value per share
Earnings per share
The basic and diluted earnings per share of 43.25p (31 December
2013: 23.52p; 30 June 2014: 66.45p) has been calculated on the
basis of the weighted average of 63,253,908 (31 December 2013:
60,268,438; 30 June 2014: 61,250,268) Ordinary shares and a profit
of GBP27.36m (31 December 2013: GBP14.17m; 30 June 2014:
GBP40.70m).
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:
Unaudited Unaudited Audited
six months six months year to
to to
31 December 31 December 30 June
2014 2013 2014
GBP000 GBP000 GBP000
-------------------------------------------------- ------------ ------------ ----------
Earnings 27,357 14,173 40,703
Profit on disposal of investment and development
properties (106) (38) (271)
Net gains on revaluation of investment
and development properties (20,864) (7,672) (27,590)
Net expenditure on/(income from) trading
properties 11 (30) (28)
Fair value movement on derivative financial
instruments 165 (160) 103
Tax adjustments - - -
-------------------------------------------------- ------------ ------------ ----------
EPRA earnings 6,563 6,273 12,917
-------------------------------------------------- ------------ ------------ ----------
EPRA earnings per share 10.38p 10.41p 21.09p
-------------------------------------------------- ------------ ------------ ----------
9. Earnings per share and net asset value per share
(continued)
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 period (2013: 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 fifth three-year award under
the 2007 Performance Share Plan vested in the period, with 53,495
Ordinary shares being issued and 69,965 shares lapsed.
Net asset value per share
The net asset value per share of 388p (31 December 2013: 315p;
30 June 2014: 356p) has been calculated on the basis of the number
of equity shares in issue of 63,294,833 (31 December 2013:
60,341,338; 30 June 2014: 63,241,338) and net assets of GBP245.4m
(31 December 2013: GBP190.3m; 30 June 2014: GBP225.0m).
The EPRA net asset value per share has been calculated as
follows:
Unaudited Unaudited Audited
six months six months year to
to to
31 December 31 December 30 June
2014 2013 2014
GBP000 GBP000 GBP000
------------------------------------------------ ------------ ------------ --------
Equity shareholders' funds 245,429 190,255 224,971
Valuation of land held as trading properties 1,942 1,871 1,942
Book value of land held as trading properties (468) (448) (468)
Fair value of derivative financial instruments (84) (512) (249)
------------------------------------------------ ------------ ------------ --------
EPRA net asset value 246,819 191,166 226,196
------------------------------------------------ ------------ ------------ --------
EPRA net asset value per share 390p 317p 358p
------------------------------------------------ ------------ ------------ --------
10. Properties
Unaudited
GBP000
------------------------------------------------------------------- ----------
DTZ valuation as at 31 December 2014 323,710
Owner-occupied property included in property, plant and equipment (1,070)
Other adjustments 23
------------------------------------------------------------------- ----------
Investment and development properties as at 31 December 2014 322,663
------------------------------------------------------------------- ----------
The properties are stated at their 31 December 2014 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. All properties are categorised as Level 3 in the IFRS
13 fair value hierarchy. Included within the Group condensed
statement of comprehensive income is GBP20.9m of valuation gains
which represent unrealised movements on investment property.
11. Fair value measurements recognised in the statement of
financial position
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 to 3 based on the degree to which
fair value is observable:
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets and
liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
Unaudited
31 December 2014
Level 1 Level 2 Level 3 Total
GBP000 GBP000 GBP000 GBP000
--------- -------- -------- --------
Investment and development properties - - 322,663 322,663
Financial assets at FVTPL - interest
rate caps - 84 - 84
Available-for-sale assets - mortgage
receivables - 122 - 122
--------- -------- -------- --------
Unaudited
31 December 2013
Level 1 Level 2 Level 3 Total
GBP000 GBP000 GBP000 GBP000
--------- -------- -------- --------
Investment and development properties - - 277,690 277,690
Financial assets at FVTPL - interest
rate caps - 512 - 512
Available-for-sale assets - mortgage
receivables - 122 - 122
--------- -------- -------- --------
Investment properties have been valued using the investment
method which involves applying a yield to rental income streams.
Inputs include yield, current rent and ERV. For the December 2014
valuation, the yields used ranged from 5.2% to 9.6% (December 2013
- 5.5% to 11.0%; June 2014 - 5.3% to 10.5%). Valuation reports are
based on both information provided by the company, e.g. current
rents and lease terms which is derived from the company's financial
and property management systems and is subject to the company's
overall control environment, and assumptions applied by the
valuers, e.g. ERVs and yields. These assumptions are based on
market observation and the valuers professional judgement.
An increase or decrease in rental values will increase or
decrease valuations, and a decrease/increase in yields will
increase/decrease the valuation. There are interrelationships
between these inputs as they are determined by market conditions.
The valuation movement in a period depends on the balance of those
inputs. Where the inputs move in opposite directions (yields
decrease and rental values increase), the valuation movement is
magnified. If the inputs move in the same direction (yields
increase and rental values decrease), they may offset each
other.
The fair value of the mortgage receivables is determined by
discounting the expected future value of repayments. Interest rate
caps are externally valued based on the present value of future
cash flows estimated and discounted based on the applicable yield
curves derived from quoted interest rates at the balance sheet
date.
There were no transfers in categories in the current or prior
period.
12. Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
Responsibility Statement
We confirm that to the best of our knowledge:
a) the condensed set of financial statements has been prepared
in accordance with IAS 34 "Interim Financial Reporting";
b) the half-yearly report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
c) the half-yearly report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transaction and changes therein).
Signed on behalf of the Board who approved the half-yearly
report on 17 February 2015.
Rupert J Mucklow
Chairman
David Wooldridge
Finance Director
Independent Review Report to A & J Mucklow Group plc
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 December 2014 which comprises the Group
condensed statement of comprehensive income, the Group condensed
statement of changes in equity, the Group condensed balance sheet,
the Group condensed cash flow statement and related notes 1 to 12.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
December 2014 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
Birmingham, United Kingdom
17 February 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BIGDDBGBBGUR
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