TIDMMKLW
RNS Number : 1387P
Mucklow(A.& J.)Group PLC
16 February 2016
Mucklow (A & J) Group plc
Half-Yearly Report
16 February 2016
Embargoed: 7.00am
Financial Summary
for the six months ended 31 December 2015
Income statement Six months ended Six months
ended
31 December 2015 31 December
2014
-------------------------------------- ----------------- ------------
Statutory pre-tax profit (GBPm) 14.4 27.4
Underlying pre-tax profit (GBPm) (1) 7.5 6.5
Gross rental income received (GBPm) 11.5 10.5
EPRA EPS (p) (2) 11.89 10.38
Interim dividend per share (p) 9.59 9.31
-------------------------------------- ----------------- ------------
Balance sheet 31 December 2015 30 June 2015
---------------------------- ----------------- -------------
Net asset value (GBPm) 275.8 268.6
Basic NAV per share (p) 436 424
EPRA NAV per share (p) (3) 438 427
Net debt (GBPm) 70.7 69.0
Gearing (%) 26 26
---------------------------- ----------------- -------------
Property portfolio 31 December 2015 30 June 2015
-------------------------------------------- ----------------- -------------
Vacancy rate (%) 4.7 5.4
Portfolio value (GBPm) (4) 359.8 349.7
Valuation gain (GBPm) 6.9 42.5
Initial yield on investment properties (%) 6.5 6.3
Equivalent yield (%) 7.1 7.2
-------------------------------------------- ----------------- -------------
The interim dividend of GBP6.07m will be paid on 1 July 2016 to
holders registered on 3 June 2016.
(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 Tel: 0121 550 1841 Fiona Tooley
Tel: 07785 703523
David Wooldridge, Finance Director TooleyStreet
Communications
A & J Mucklow Group plc
Chairman's Statement
I am pleased to report another encouraging performance by the
Group for the six months ending 31 December 2015. Our occupancy
rate has reached a high of 95.3% and we have achieved further
growth in rental income, underlying profit and net asset value per
share.
Half year Results to 31 December 2015
Gross rental income received during the first six months of our
financial year was 9.7% higher at GBP11.5m (31 December 2014:
GBP10.5m).
The underlying pre-tax profit , which excludes revaluation
movements and profit on the sale of investment and trading
properties increased by GBP1.0m to GBP7.5m (31 December 2014:
GBP6.5m).
IFRS profit before tax for the half year was GBP14.4m, including
a revaluation surplus of GBP6.9m (31 December 2014: GBP27.4m with
revaluation surplus of GBP20.9m).
EPRA adjusted earnings per ordinary share was 11.89p (31
December 2014: 10.38p).
EPRA net asset value per ordinary share increased by 11p to 438p
at 31 December 2015 (30 June 2015: 427p).
Shareholders' funds rose to GBP275.8m (30 June 2015: GBP268.6m),
while net debt to equity gearing and loan to value (LTV) remained
the same at 26% and 20% respectively.
Dividend
The Directors have declared an interim dividend of 9.59p per
ordinary share, an increase of 3% over last year (31 December 2014:
9.31p). The dividend will be paid as a PID on 1 July 2016 to
Shareholders on the register at the close of business on 3 June
2016.
Property Review
Our vacancy rate at 31 December 2015 had fallen to 4.7% (30 June
2015: 5.4%). The vacancy rate temporarily dropped below 4% at the
beginning of December 2015, before we took back three industrial
units prior to our half year end.
Our Midlands industrial portfolio has continued to benefit from
steady occupier demand and a shortage of available, modern space.
Approximately one quarter of our vacant space was reserved by
prospective tenants at 31 December 2015.
New benchmark rental levels set in the previous 12 months are
still being achieved on new lettings and lease renewals. Potential
rent reversions from higher estimated rental values are also
starting to be reflected in the property valuations.
The regional investment market has become more subdued since
November 2015, mainly because some Institutional investors have
become more selective and there have only been a limited number of
quality buying opportunities.
Yields on prime Midlands industrial property are still reducing
and values increasing, but at a slower rate, while yields on
secondary properties are starting to drift a little, due to a bit
of investor caution.
We are still actively looking to acquire further modern
investment properties in the Midlands with long term income and
capital growth potential, but our emphasis is now more focused
towards creating our own industrial investments, by carrying out
pre-let development while there is good occupier demand.
We acquired one investment property during the period for
GBP2.8m. The property is located in Leicester City centre, close to
Highcross and comprises a 19,200 sq ft retail warehouse with 80 car
parking spaces, let on a long lease at a current rent of GBP0.18m
pa.
Since our half year end, we have agreed to acquire, on a forward
commitment basis, a pre-let development at Grove Park, Leicester
for GBP4.7m. The property will comprise 20,620 sq ft of high
quality offices, with 112 car parking spaces. Letting terms have
been agreed at an initial rent of GBP0.35m pa. Completion of the
acquisition is scheduled for December 2016.
In November 2015, we entered into an option agreement with
Wolverhampton City Council and Staffordshire County Council to
promote and develop a prime 15 acre industrial site adjacent to the
new Jaguar Land Rover engine manufacturing facility at i54 in
Wolverhampton. The land can accommodate up to 275,000 sq ft of
advanced manufacturing space and is immediately available for
pre-let development.
We are still awaiting confirmation from Birmingham City Council
on timing for the construction of the new link road which will run
alongside our 20 acre industrial site at Mucklow Park, Tyseley.
Progress has been slow due to a few technical issues, but we hope
to be in a position to start actively marketing this development
site later in the year.
Property Valuation
Cushman & Wakefield revalued our property portfolio at 31
December 2015. The investment properties and development land were
valued at GBP359.8m (30 June 2015: GBP349.7m), which resulted in
revaluation surplus of GBP6.9m (2.0%).
The initial yield on the investment properties was 6.5% (30 June
2015: 6.3%). The equivalent yield was 7.1% (30 June 2015:
7.2%).
Cushman & Wakefield also revalued our trading properties at
31 December 2015. The total value was GBP1.9m, which showed an
unrecognised surplus of GBP1.5m against book value.
Finance
Total net borrowings at 31 December 2015 were GBP70.7m (30 June
2015: GBP69.0m). Undrawn banking facilities totalled GBP27.0m,
while net debt to equity gearing and LTV remained unchanged since
30 June 2015 at 26% and 20% respectively.
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 15 of the 2015 annual report and
financial statements, 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
Our second half has started well and we remain optimistic about
our prospects for the full year to 30 June 2016. However, it is
more difficult to predict what impact the slowdown in the global
economy and other macro factors may have on the Midlands property
market in the medium term.
Our property portfolio has already proved to be very resilient
in the past recession. Should circumstances change, we are
extremely well positioned to capitalise on any attractive
investment opportunities that may arise, but in the meantime, we
are very much looking forward to progressing our pre-let
development programme over the next couple of years.
Rupert Mucklow
Chairman
15 February 2016
See the investment/development column in the underlying
financial performance tables in note 8 for details.
Group Condensed Statement of Comprehensive Income
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for the six months ended 31 December 2015
Unaudited Unaudited Audited
six months six months year to
to to
31 December 31 December 30 June
2015 2014 2015
Notes GBP000 GBP000 GBP000
-------------------------------------------- ------ ------------ ------------ --------
Revenue 2 11,977 10,962 22,569
-------------------------------------------- ------ ------------ ------------ --------
Gross rental income relating to investment
properties 2 11,523 10,503 21,589
Property outgoings 3 (528) (657) (1,008)
-------------------------------------------- ------ ------------ ------------ --------
Net rental income relating to investment
properties 10,995 9,846 20,581
-------------------------------------------- ------ ------------ ------------ --------
Proceeds on sale of trading properties - - -
Carrying value of trading properties - - -
sold
Property outgoings relating to trading
properties - (11) (12)
-------------------------------------------- ------ ------------ ------------ --------
Net expenditure on trading properties - (11) (12)
-------------------------------------------- ------ ------------ ------------ --------
Administration expenses (1,637) (1,643) (3,232)
-------------------------------------------- ------ ------------ ------------ --------
Operating profit before net gains on
investment and development properties 9,358 8,192 17,337
Profit on disposal of investment and
development properties - 106 106
Revaluation of investment and development
properties 6,902 20,864 42,369
-------------------------------------------- ------ ------------ ------------ --------
Operating profit 4 16,260 29,162 59,812
-------------------------------------------- ------ ------------ ------------ --------
Total finance income 5 - - -
Total finance costs 5 (1,879) (1,805) (3,589)
-------------------------------------------- ------ ------------ ------------ --------
Net finance costs 5 (1,879) (1,805) (3,589)
-------------------------------------------- ------ ------------ ------------ --------
Profit before tax 4 14,381 27,357 56,223
-------------------------------------------- ------ ------------ ------------ --------
Tax credit 6 - - 100
-------------------------------------------- ------ ------------ ------------ --------
Profit for the financial period 14,381 27,357 56,323
-------------------------------------------- ------ ------------ ------------ --------
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss:
Revaluation of owner-occupied property 5 70 108
-------------------------------------------- ------ ------------ ------------ --------
Total comprehensive income for the period 14,386 27,427 56,431
-------------------------------------------- ------ ------------ ------------ --------
All operations are continuing.
Basic and diluted earnings per share 9 22.72p 43.25p 89.02p
-------------------------------------- ------- ------- -------
Group Condensed Statement of Changes in Equity
for the six months ended 31 December 2015
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
2015 15,823 13,017 11,162 289 335 228,014 268,640
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Retained profit - - - - - 14,381 14,381
Other comprehensive
income - - - 5 - - 5
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Total comprehensive
income - - - 5 - 14,381 14,386
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Share-based payment - - - - 91 - 91
Expiry of share
options - - - - (172) 172 -
Dividends paid - - - - - (7,298) (7,298)
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Balance at 31 December
2015 (unaudited) 15,823 13,017 11,162 294 254 235,269 275,819
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
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
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
(audited)
------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Group Condensed Balance Sheet
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at 31 December 2015
Unaudited Unaudited Audited
31 December 31 December 30 June
2015 2014 2015
Notes GBP000 GBP000 GBP000
--------------------------------------- ------ ------------ ------------ ---------
Non-current assets
Investment and development properties 10 358,765 322,663 348,607
Property, plant and equipment 1,296 1,270 1,315
Derivative financial instruments 10 84 58
Trade and other receivables 541 569 500
--------------------------------------- ------ ------------ ------------ ---------
360,612 324,586 350,480
--------------------------------------- ------ ------------ ------------ ---------
Current assets
Trading properties 468 468 468
Trade and other receivables 1,154 1,811 896
Cash and cash equivalents 7,511 8,218 6,871
--------------------------------------- ------ ------------ ------------ ---------
9,133 10,497 8,235
--------------------------------------- ------ ------------ ------------ ---------
Total assets 369,745 335,083 358,715
--------------------------------------- ------ ------------ ------------ ---------
Current liabilities
Trade and other payables (15,709) (15,953) (14,167)
Tax liabilities - (100) -
--------------------------------------- ------ ------------ ------------ ---------
(15,709) (16,053) (14,167)
--------------------------------------- ------ ------------ ------------ ---------
Non-current liabilities
Borrowings (78,217) (73,601) (75,908)
--------------------------------------- ------ ------------ ------------ ---------
Total liabilities (93,926) (89,654) (90,075)
--------------------------------------- ------ ------------ ------------ ---------
Net assets 275,819 245,429 268,640
--------------------------------------- ------ ------------ ------------ ---------
Equity
Called up ordinary share capital 15,823 15,823 15,823
Share premium 13,017 13,017 13,017
Revaluation reserve 294 251 289
Share-based payment reserve 254 236 335
Redemption reserve 11,162 11,162 11,162
Retained earnings 235,269 204,940 228,014
--------------------------------------- ------ ------------ ------------ ---------
Total equity 275,819 245,429 268,640
--------------------------------------- ------ ------------ ------------ ---------
Net asset value per share
- Basic and diluted 9 436p 388p 424p
- EPRA 9 438p 390p 427p
--------------------------------------- ------ ------------ ------------ ---------
Group Condensed Cash Flow Statement
for the six months ended 31 December 2015
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30 June
2015 2014 2015
GBP000 GBP000 GBP000
------------------------------------------------------- ------------ ------------ ----------
Cash flows from operating activities
Operating profit 16,260 29,162 59,812
Adjustments for non-cash items
Unrealised net revaluation gains on investment
- and development properties (6,902) (20,864) (42,369)
- Profit on disposal of investment properties - (106) (106)
- Depreciation 49 47 96
- Share-based payments 91 101 200
(Profit)/loss on sale of property, plant
- and equipment (5) 3 2
- Amortisation of lease incentives (381) (576) (702)
Other movements arising from operations
- (Increase)/decrease in receivables (369) (357) 551
- Increase/(decrease) in payables 108 (873) (1,453)
---- ------------------------------------------------- ------------ ------------ ----------
Net cash generated from operations 8,851 6,537 16,031
Interest paid (1,623) (1,748) (3,308)
Preference dividends paid (24) (24) (47)
Net cash inflow from operating activities 7,204 4,765 12,676
Cash flows from investing activities
Acquisition of and additions to investment
and development properties (2,902) (3,723) (8,094)
Proceeds on disposal of investment and development
properties - 392 392
Net expenditure on property, plant and equipment (19) (18) (72)
------------------------------------------------------- ------------ ------------ ----------
Net cash outflow from investing activities (2,921) (3,349) (7,774)
Cash flows from financing activities
Net increase in borrowings 2,250 4,000 6,250
Repayment of debenture stock - (4,203) (4,204)
Equity share issue - 13 13
Equity dividends paid (5,893) - (7,082)
------------------------------------------------------- ------------ ------------ ----------
Net cash outflow from financing activities (3,643) (190) (5,023)
Net increase/(decrease) in cash and cash
equivalents 640 1,226 (121)
------------------------------------------------------- ------------ ------------ ----------
Cash and cash equivalents at beginning of
period 6,871 6,992 6,992
------------------------------------------------------- ------------ ------------ ----------
Cash and cash equivalents at end of period 7,511 8,218 6,871
------------------------------------------------------- ------------ ------------ ----------
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 2015 were authorised for issue by the Board of
directors on 15 February 2016. The half-yearly financial
information is unaudited but has been reviewed by KPMG LLP and
their report appears on page 19 of this half-yearly report.
The information for the year ended 30 June 2015 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 previous
auditor (Deloitte LLP) 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.
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As at 31 December 2015 the Group had GBP27.0m of undrawn banking
facilities, comprising the GBP1.0m overdraft and GBP26.0m 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 26% and
GBP135.1m 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
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
2015 2014 2015
GBP000 GBP000 GBP000
----------------------------------------------------- ------------ ------------ --------
Gross rental income from investment and development
properties 11,523 10,503 21,589
Service charge income 454 459 980
Income received from trading properties - - -
----------------------------------------------------- ------------ ------------ --------
11,977 10,962 22,569
Finance income (note 5) - - -
----------------------------------------------------- ------------ ------------ --------
Total revenue 11,977 10,962 22,569
----------------------------------------------------- ------------ ------------ --------
3. Property Costs
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30 June
2015 2014 2015
GBP000 GBP000 GBP000
------------------------- ------------ ------------ --------
Service charge income (454) (459) (980)
Service charge expenses 515 536 1,074
Other property expenses 467 580 914
------------------------- ------------ ------------ --------
528 657 1,008
------------------------- ------------ ------------ --------
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
2015 2014 2015
GBP000 GBP000 GBP000
---------------------------------------------------- ------------ ------------ --------
Investment and development properties
- Net rental income 10,995 9,846 20,581
- Profit on disposal - 106 106
- Gain on revaluation of investment properties 4,925 15,835 37,340
- Gain on revaluation of development properties 1,977 5,029 5,029
17,897 30,816 63,056
---------------------------------------------------- ------------ ------------ --------
Trading properties
- Income received from trading properties - - -
- Carrying value on sale - - -
- Property outgoings - (11) (12)
--- ----------------------------------------------- ------------ ------------ --------
- (11) (12)
---------------------------------------------------- ------------ ------------ --------
Net income from property portfolio before
administration expenses 17,897 30,805 63,044
Administration expenses (1,637) (1,643) (3,232)
---------------------------------------------------- ------------ ------------ --------
Operating profit 16,260 29,162 59,812
Net financing costs (1,879) (1,805) (3,589)
---------------------------------------------------- ------------ ------------ --------
Profit before tax 14,381 27,357 56,223
---------------------------------------------------- ------------ ------------ --------
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
2015 2014 2015
GBP000 GBP000 GBP000
------------------------------------------ ------------ ------------ --------
Within operating profit
- Investment properties 4,925 15,835 37,340
- Development properties 1,977 5,029 5,029
---- ------------------------------------ ------------ ------------ --------
6,902 20,864 42,369
Within other comprehensive income
- Owner-occupied properties 5 70 108
Total revaluation gain for the period 6,907 20,934 42,477
------------------------------------------ ------------ ------------ --------
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 359,680 323,961 349,253
- Segment liabilities (5,280) (6,868) (5,134)
- Net borrowings (70,706) (65,383) (69,037)
---- ------------------------------------ --------- --------- ---------
283,694 251,710 275,082
------------------------------------------ --------- --------- ---------
Trading properties
- Segment assets 468 468 468
- Segment liabilities - - -
---- ------------------------------------ --------- --------- ---------
468 468 468
------------------------------------------ --------- --------- ---------
Other activities
- Unallocated assets 2,085 2,436 2,123
- Unallocated liabilities (10,428) (9,185) (9,033)
---- ------------------------------------ --------- --------- ---------
(8,343) (6,749) (6,910)
------------------------------------------ --------- --------- ---------
Net assets 275,819 245,429 268,640
------------------------------------------ --------- --------- ---------
Capital expenditure in period
Investment and development properties 2,875 3,526 7,840
Other activities 33 30 110
------------------------------------------ --------- --------- ---------
2,908 3,556 7,950
------------------------------------------ --------- --------- ---------
Depreciation
Other activities 49 47 96
------------------------------------------ --------- --------- ---------
49 47 96
------------------------------------------ --------- --------- ---------
All operations and income are derived from the United Kingdom
and therefore no geographical segmental information is
provided.
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5. Net finance costs
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30 June
2015 2014 2015
GBP000 GBP000 GBP000
--------------------------------------------------------- ------------ ------------ --------
Finance costs on:
Preference share dividend 24 24 47
Fair value movement of derivative financial instruments 48 165 191
Capitalised interest - (66) (66)
Bank overdraft and loan interest payable 1,807 1,682 3,417
--------------------------------------------------------- ------------ ------------ --------
Total finance costs 1,879 1,805 3,589
--------------------------------------------------------- ------------ ------------ --------
Finance income on:
Fair value movement of derivative financial instruments - - -
Bank and other interest receivable - - -
--------------------------------------------------------- ------------ ------------ --------
Total finance income - - -
--------------------------------------------------------- ------------ ------------ --------
Net finance costs 1,879 1,805 3,589
--------------------------------------------------------- ------------ ------------ --------
6. Taxation
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30 June
2015 2014 2015
GBP000 GBP000 GBP000
------------------------------------------------------- ------------- ------------- --------
Current tax
- Corporation tax - - -
- Adjustment in respect of previous years - - (100)
Total tax credit in the statement of comprehensive
income - - (100)
------------------------------------------------------- ------------- ------------- --------
There is no deferred tax charge or credit for any of the periods
stated.
The Group became a Real Estate Investment Trust (REIT) on 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
2015 2014 2015
GBP000 GBP000 GBP000
------------------------------------------------------- ------------ ------------ --------
Amounts recognised as distributions to equity holders
in the period:
Final dividend for the year ended 30 June 2015 of
11.53p (2014: 11.19p) per share 7,298 7,083 7,083
Interim dividend for the year ended 30 June 2015
of 9.31p per share - - 5,892
7,298 7,083 12,975
------------------------------------------------------- ------------ ------------ --------
The directors propose an interim dividend of 9.59p (2014: 9.31p)
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 2016 to shareholders
on the register at the close of business on 3 June 2016.
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 2015 GBP000 GBP000 GBP000 GBP000
------------------------------------------ ----------- ------------- ----------- ----------
Rental income 11,523 11,523 - -
Property outgoings (528) (528) - -
------------------------------------------ ----------- ------------- ----------- ----------
Net rental income 10,995 10,995 - -
------------------------------------------ ----------- ------------- ----------- ----------
Sale of trading properties - - - -
Carrying value of trading properties - - - -
sold
Property outgoings on trading properties - - - -
------------------------------------------ ----------- ------------- ----------- ----------
Net expenditure on trading properties - - - -
------------------------------------------ ----------- ------------- ----------- ----------
Administration expenses (1,637) (1,637) - -
------------------------------------------ ----------- ------------- ----------- ----------
Operating profit before net gains
on investment 9,358 9,358 - -
Net gains on revaluation 6,902 - - 6,902
Profit on disposal of investment - - - -
and development properties
Operating profit 16,260 9,358 - 6,902
------------------------------------------ ----------
Gross finance costs (1,831) (1,831) - -
Fair value movement on derivative
financial instruments (48) - - (48)
------------------------------------------ ----------- ------------- ----------- ----------
Total finance costs (1,879) (1,831) - (48)
Finance income - - - -
------------------------------------------ ----------- ------------- ----------- ----------
Profit before tax 14,381 7,527 - 6,854
------------------------------------------ ----------- ------------- ----------- ----------
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
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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
------------------------------------------ ----------- ------------- ----------- ----------
9. Earnings per share and net asset value per share
Earnings per share
The basic and diluted earnings per share of 22.72p (31 December
2014: 43.25p; 30 June 2015: 89.02p) has been calculated on the
basis of the weighted average of 63,294,833 (31 December 2014:
63,253,908; 30 June 2015: 63,273,435) Ordinary shares and a profit
of GBP14.38m (31 December 2014: GBP27.36m; 30 June 2015:
GBP56.32m).
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
2015 2014 2015
GBP000 GBP000 GBP000
-------------------------------------------------- ------------ ------------ ----------
Earnings 14,381 27,357 56,323
Profit on disposal of investment and development
properties - (106) (106)
Net gains on revaluation of investment
and development properties (6,902) (20,864) (42,369)
Net expenditure on trading properties - 11 12
Fair value movement on derivative financial
instruments 48 165 191
Tax adjustments - - -
-------------------------------------------------- ------------ ------------ ----------
EPRA earnings 7,527 6,563 14,051
-------------------------------------------------- ------------ ------------ ----------
EPRA earnings per share 11.89p 10.38p 22.21p
-------------------------------------------------- ------------ ------------ ----------
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 94,445 Ordinary
shares were granted in the period (2014: 105,418 Ordinary shares)
under the 2015 Performance Share Plan (2014: 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 sixth three-year award under the 2007 Performance Share Plan
expired in the period, with no Ordinary shares being issued and
112,583 shares lapsed.
Net asset value per share
The net asset value per share of 436p (31 December 2014: 388p;
30 June 2015: 424p) has been calculated on the basis of the number
of equity shares in issue of 63,294,833 (31 December 2014:
63,294,833; 30 June 2015: 63,294,833) and net assets of GBP275.8m
(31 December 2014: GBP245.4m; 30 June 2015: GBP268.6m).
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
2015 2014 2015
GBP000 GBP000 GBP000
------------------------------------------------ ------------ ------------ --------
Equity shareholders' funds 275,819 245,429 268,640
Valuation of land held as trading properties 1,942 1,942 1,942
Book value of land held as trading properties (468) (468) (468)
Fair value of derivative financial instruments (10) (84) (58)
------------------------------------------------ ------------ ------------ --------
EPRA net asset value 277,283 246,819 270,056
------------------------------------------------ ------------ ------------ --------
EPRA net asset value per share 438p 390p 427p
------------------------------------------------ ------------ ------------ --------
10. Properties
Unaudited
GBP000
------------------------------------------------------------------- ----------
Cushman & Wakefield valuation as at 31 December 2015 359,810
Owner-occupied property included in property, plant and equipment (1,113)
Other adjustments 68
------------------------------------------------------------------- ----------
Investment and development properties as at 31 December 2015 358,765
------------------------------------------------------------------- ----------
The properties are stated at their 31 December 2015 fair value
and are valued by Cushman and Wakefield, professionally qualified
external valuers, in accordance with the RICS Valuation -
Professional Standards published by the Royal Institution of
Chartered Surveyors. Cushman and Wakefield 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 GBP6.9m of valuation gains which
represent unrealised movements on investment and development
properties. Cushman and Wakefield is the trading name of DTZ
Debenham Tie Leung Limited.
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 2015
Level 1 Level 2 Level 3 Total
GBP000 GBP000 GBP000 GBP000
--------- -------- -------- --------
Investment and development properties - - 358,765 358,765
Financial assets at FVTPL - interest
rate caps - 10 - 10
Available-for-sale assets - mortgage
receivables - 122 - 122
--------- -------- -------- --------
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