TIDMMKLW
RNS Number : 7758W
Mucklow(A.& J.)Group PLC
14 February 2017
RNS:
14 February 2017
Embargoed: 7.00am
Mucklow (A & J) Group plc
Half-Yearly Report
Financial Summary
for the six months ended 31 December 2016
Income statement Six months Six months
ended ended
31 December 31 December
2016 2015
------------------------------- ------------ ------------
Underlying pre-tax profit (1) GBP7.9m GBP7.5m
Statutory pre-tax profit GBP9.1m GBP14.4m
EPRA EPS (2) 12.54p 11.89p
Basic EPS 14.39p 22.72p
Interim dividend per share 9.88p 9.59p
------------------------------- ------------ ------------
Balance sheet 31 December 30 June
2016 2016
------------------------ ------------ ----------
Net asset value GBP282.3m GBP280.6m
EPRA NAV per share (3) 448p 446p
Basic NAV per share 446p 443p
Net debt GBP79.7m GBP71.2m
Gearing 28% 25%
------------------------ ------------ ----------
Property portfolio 31 December 30 June
2016 2016
---------------------------------------- ------------ ----------
Vacancy rate 4.1% 3.2%
Portfolio value (4) GBP373.6m GBP364.2m
Valuation gain GBP0.5m GBP10.2m
Initial yield on investment properties 6.3% 6.4%
Equivalent yield 7.2% 7.2%
---------------------------------------- ------------ ----------
The interim dividend of 9.88p per share (2015: 9.59p) consists
of two quarterly dividends of 4.94p and 4.94p.
(1) Underlying profit is defined as investment/development
operations of the Group. See the unaudited 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, the revaluation of investment
and development properties and derivative financial
instruments and the early debt repayment costs. See
note 9.
(3) Excludes the fair value of derivative financial instruments
and includes the fair value 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
Mobile: 07785 703523
Tel: 0121 309 0099
Chairman's Statement
I am pleased to report another productive performance by the
Group for the six months ended 31 December 2016. Occupancy levels
have remained high and underlying profit before tax has continued
to grow, through active asset management and prudent investment
acquisitions. We have also taken advantage of current economic
conditions to refinance the majority of our banking facilities,
reducing our average cost of borrowing and extending the terms of
the loans.
Half-Year Results to 31 December 2016
The underlying pre-tax profit* increased by 5.3% during the
first six months to GBP7.9m (31 December 2015: GBP7.5m).
Statutory pre-tax profit for the half year was GBP9.1m (31
December 2015: GBP14.4m), including a revaluation surplus of
GBP0.5m (31 December 2015: GBP6.9m).
EPRA adjusted earnings per ordinary share increased by 5.5% to
12.54p (31 December 2015: 11.89p).
EPRA net asset value per ordinary share increased marginally to
448p (30 June 2016: 446p).
Shareholders' funds rose to GBP282.3m (30 June 2016: GBP280.6m),
while net debt to equity gearing and loan to value (LTV) were 28%
and 21% respectively (30 June 2016: 25% and 20%).
Dividend
The Directors have declared an interim dividend of 9.88p per
ordinary share, an increase of 3% over last year (31 December 2015:
9.59p). The dividend will be paid as a Property Income Distribution
(PID) and split into two quarterly dividends of 4.94p each. The
first quarterly dividend will be paid on 18 April 2017 to
Shareholders on the register at the close of business 17 March 2017
and the second dividend will be paid on 17 July 2017 to
shareholders on the register at the close of business on 16 June
2017.
Property Review
The number of tenant enquiries for Midlands' industrial property
has remained steady during the first six months of our financial
year and, so far, there has been no sign of any slowdown in
activity.
Our vacancy rate at 31 December 2016 was 4.1% (30 June 2016:
3.2%), but would have been a record low of 2.5% if we had not
voluntarily taken back a 64,000 sq ft industrial unit just prior to
our half-year end.
Average rental increases on new lettings and lease renewals have
been maintained at around 10% and, in some popular industrial
locations, rental levels are continuing to rise in excess of this
rate due to the tight supply of available space.
Industrial property values in the Midlands have remained stable
and property yields unchanged since our previous valuation on 30
June 2016. The high yield and growing rental returns offered by
industrial property are still very attractive to investors, but
capital growth has been restricted, mainly due to a limited number
of investment transactions.
During the period we acquired a prominent 70,182 sq ft
industrial/warehouse building in Barton-under-Needwood for GBP5.6m.
The property is located at the front of Barton Business Park, in
the popular A38 corridor, midway between A50 and A5 trunk roads.
Built in 2005, the unit is currently let at a rent of GBP0.41m per
annum.
We also completed the acquisition of a pre-let office
development at Grove Park, Leicester for GBP4.7m. The property
comprises 20,829 sq ft of high quality offices let at an initial
rent of GBP0.35m per annum.
Terms were agreed in November 2016 on our first pre-let
development at i54 Wolverhampton. We shall be building a 44,250 sq
ft industrial unit for Tentec Limited, a subsidiary of Atlas Copco.
Completion is expected in December 2017 and the initial rent will
be GBP0.28m per annum.
We sold a 12,000 sq ft office building in Henley-on-Thames
during the half-year for GBP4.1m. The property became vacant in
August 2016 and attracted considerable interest from local
residential developers. The property was last valued for office use
at GBP2.2m in June 2016.
Property Valuation
Cushman & Wakefield revalued our property portfolio at 31
December 2016. The investment properties and development land were
valued at GBP373.6m (30 June 2016: GBP364.2m), which showed a
revaluation surplus of GBP0.5m after acquisitions.
The initial yield on the investment properties was 6.3% (30 June
2016: 6.4%). The equivalent yield was unchanged at 7.2% (30 June
2016: 7.2%).
Cushman & Wakefield also revalued our trading properties at
31 December 2016. The total value was GBP1.9m, which showed an
unrecognised surplus of GBP1.4m against book value.
Finance
We renewed our GBP64m banking facilities with HSBC during the
half-year for a further 5 years to 2021 on a 30% lower margin.
We also repaid a GBP20m, 5.23% fixed rate loan we had with
Lloyds Bank, which was due to expire in 2022, incurring an early
debt repayment cost of GBP1.2m and took out a new GBP40m term loan
facility with Scottish Widows for a period of 15 years, fixed at
3.5%.
As such, our weighted average cost of debt has reduced to 3.14%
(30 June 2016: 4.1%) and our weighted average term remaining on
debt has increased to 8.3 years (30 June 2016: 5.5 years).
Following the refinancing, total net borrowings at 31 December
2016 were GBP79.7m (30 June 2016: GBP71.2m), while undrawn banking
facilities were GBP38.5m (30 June 2016: GBP27.0m).
Net debt to equity gearing at 31 December 2016 was 28% (30 June
2016: 25%) and LTV was 21% (30 June 2016: 20%).
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 pages 16 and 17 of the 2016 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
It is still too early to predict what the longer-term impact of
leaving the EU will have on the UK economy and our business.
However, for our second half-year, we expect to continue to benefit
from the robust, regional industrial property market and remain
positive about prospects for the full year.
Rupert Mucklow, Chairman
13 February 2017
*Excludes the profit on disposal of investment, development and
trading properties, the revaluation of investment and development
properties and derivative financial instruments and early repayment
costs. See note 8.
Group Condensed Statement of Comprehensive Income
for the six months ended 31 December 2016
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30 June
2016 2015 2016
Notes GBPm GBPm GBPm
-------------------------------------- ------ ------------ ------------ --------
Gross rental income 2 11.8 11.5 22.9
Service charge income 2 0.5 0.5 0.9
-------------------------------------- ------ ------------ ------------ --------
Total revenue 2 12.3 12.0 23.8
Property costs 3 (1.0) (1.0) (1.8)
-------------------------------------- ------ ------------ ------------ --------
Net property income 11.3 11.0 22.0
-------------------------------------- ------ ------------ ------------ --------
Administration expenses (1.6) (1.6) (3.3)
-------------------------------------- ------ ------------ ------------ --------
Operating profit before net
gains on investment and development
properties 9.7 9.4 18.7
Profit on disposal of investment 1.9 - -
and development properties
Revaluation of investment and
development properties 0.5 6.9 10.2
-------------------------------------- ------ ------------ ------------ --------
Operating profit 4 12.1 16.3 28.9
Total finance income 5 - - -
-------------------------------------- ------ ------------ ------------ --------
Finance costs (1.8) (1.9) (3.7)
Early repayment costs (1.2) - -
-------------------------------------- ------ ------------ ------------ --------
Total finance costs 5 (3.0) (1.9) (3.7)
-------------------------------------- ------ ------------ ------------ --------
Net finance costs 5 (3.0) (1.9) (3.7)
-------------------------------------- ------ ------------ ------------ --------
Profit before tax 4 9.1 14.4 25.2
Taxation 6 - - -
-------------------------------------- ------ ------------ ------------ --------
Profit for the financial period 9.1 14.4 25.2
-------------------------------------- ------ ------------ ------------ --------
Other comprehensive income:
Items that will not be reclassified subsequently to
profit or loss:
Revaluation of owner-occupied - - -
property
-------------------------------------- ------ ------------ ------------ --------
Total comprehensive income
for the period 9.1 14.4 25.2
-------------------------------------- ------ ------------ ------------ --------
All operations are continuing.
Basic and diluted earnings
per share 9 14.39p 22.72p 39.86p
---------------------------- ------- ------- -------
Group Condensed Statement of Changes in Equity
for the six months ended 31 December 2016
Ordinary Capital Share-based
share Share redemption Revaluation payments Retained Total
capital premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Balance at 1
July 2016 15.8 13.0 11.2 0.3 0.3 240.0 280.6
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Retained profit - - - - - 9.1 9.1
Other comprehensive - - - - - - -
income
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Total comprehensive
income - - - - - 9.1 9.1
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Share-based
payment - - - - 0.1 - 0.1
Expiry of share
options - - - - (0.2) 0.2 -
Dividends paid - - - - (7.5) (7.5)
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Balance at 31
December 2016
(unaudited) 15.8 13.0 11.2 0.3 0.2 241.8 282.3
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Balance at 1
July 2015 15.8 13.0 11.2 0.3 0.3 228.0 268.6
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Retained profit - - - - - 14.4 14.4
Other comprehensive - - - - - - -
income
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Total comprehensive
income - - - - - 14.4 14.4
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Share-based
payment - - - - 0.1 - 0.1
Expiry of share
options - - - - (0.2) 0.2 -
Dividends paid - - - - - (7.3) (7.3)
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Balance at 31
December 2015
(unaudited) 15.8 13.0 11.2 0.3 0.2 235.3 275.8
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Balance at 1
July 2015 15.8 13.0 11.2 0.3 0.3 228.0 268.6
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Retained profit - - - - - 25.2 25.2
Other comprehensive - - - - - - -
income
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Total comprehensive
income - - - - - 25.2 25.2
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Share-based
payment - - - - 0.2 - 0.2
Exercise of
share options - - - - (0.2) 0.2 -
Dividends paid - - - - - (13.4) (13.4)
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Balance at 30
June 2016 15.8 13.0 11.2 0.3 0.3 240.0 280.6
(audited)
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Group Condensed Balance Sheet
at 31 December 2016
Unaudited Unaudited Audited
31 December 31 December 30 June
2016 2015 2016
Notes GBPm GBPm GBPm
------------------------------- ------ ------------ ------------ --------
Non-current assets
Investment and development
properties 10 372.6 358.8 363.1
Property, plant and equipment 1.2 1.3 1.3
Trade and other receivables 0.8 0.5 0.5
------------------------------- ------ ------------ ------------ --------
374.6 360.6 364.9
------------------------------- ------ ------------ ------------ --------
Current assets
Trading properties 0.5 0.5 0.5
Trade and other receivables 0.9 1.1 2.4
Cash and cash equivalents 6.6 7.5 7.1
------------------------------- ------ ------------ ------------ --------
8.0 9.1 10.0
------------------------------- ------ ------------ ------------ --------
Total assets 382.6 369.7 374.9
------------------------------- ------ ------------ ------------ --------
Current liabilities
Trade and other payables (13.6) (15.7) (16.0)
Current tax liabilities (0.4) - -
(14.0) (15.7) (16.0)
------------------------------- ------ ------------ ------------ --------
Non-current liabilities
Borrowings (86.3) (78.2) (78.3)
------------------------------- ------ ------------ ------------ --------
Total liabilities (100.3) (93.9) (94.3)
------------------------------- ------ ------------ ------------ --------
Net assets 282.3 275.8 280.6
------------------------------- ------ ------------ ------------ --------
Equity
Called up ordinary share
capital 15.8 15.8 15.8
Share premium 13.0 13.0 13.0
Revaluation reserve 0.3 0.3 0.3
Share-based payment reserve 0.2 0.2 0.3
Redemption reserve 11.2 11.2 11.2
Retained earnings 241.8 235.3 240.0
------------------------------- ------ ------------ ------------ --------
Total equity 282.3 275.8 280.6
------------------------------- ------ ------------ ------------ --------
Net asset value per share
- Basic and diluted 9 446p 436p 443p
- EPRA 9 448p 438p 446p
------------------------------- ------ ------------ ------------ --------
Group Condensed Cash Flow Statement
for the six months ended 31 December 2016
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30
June
2016 2015 2016
GBPm GBPm GBPm
-------------------------------------------- ------------ ------------ --------
Cash flows from operating activities
Operating profit 12.1 16.3 28.9
Adjustments for non-cash items
Unrealised net revaluation gains
on investment and development
- properties (0.5) (6.9) (10.2)
- Profit on disposal of investment (1.9) - -
properties
- Depreciation - - 0.1
- Share-based payments 0.1 0.1 0.2
- Profit on sale of property, plant - - -
and equipment
- Amortisation of lease incentives (0.2) (0.4) (0.3)
Other movements arising from operations
- Decrease/(increase) in receivables 1.2 (0.4) (1.6)
- Increase/(decrease) in payables 0.1 0.1 1.5
---- -------------------------------------- ------------ ------------ --------
Net cash generated from operations 10.9 8.8 18.6
Interest paid (2.9) (1.6) (3.3)
Preference dividends paid - - -
Net cash inflow from operating
activities 8.0 7.2 15.3
Cash flows from investing activities
Acquisition of and additions to
investment and development properties (11.0) (2.9) (4.1)
Proceeds on disposal of investment 4.0 - -
and development properties
Net expenditure on property, plant
and equipment - - (0.1)
-------------------------------------------- ------------ ------------ --------
Net cash outflow from investing
activities (7.0) (2.9) (4.2)
Cash flows from financing activities
Repayment of existing borrowings (20.0) - -
New borrowings (net of costs) 39.4 - -
Net increase in borrowings (11.7) 2.2 2.3
Equity dividends paid (9.2) (5.9) (13.2)
-------------------------------------------- ------------ ------------ --------
Net cash outflow from financing
activities (1.5) (3.7) (10.9)
Net (decrease)/increase in cash
and cash equivalents (0.5) 0.6 0.2
-------------------------------------------- ------------ ------------ --------
Cash and cash equivalents at beginning
of period 7.1 6.9 6.9
-------------------------------------------- ------------ ------------ --------
Cash and cash equivalents at end
of period 6.6 7.5 7.1
-------------------------------------------- ------------ ------------ --------
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 2016 were authorised for issue by the Board of
directors on 13 February 2017. The half-yearly financial
information is unaudited but has been reviewed by KPMG LLP and
their report appears on page 16 of this half-yearly report.
The information for the year ended 30 June 2016 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. KPMG 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.
In August 2016 the Group extended its banking facilities with
HSBC. The Revolving Credit Facility and GBP20m Term Loan now expire
in 2021. As at 31 December 2016 the Group had GBP38.5m of undrawn
banking facilities, comprising the GBP1.0m overdraft and GBP37.5m
of the GBP44.0m 2021 Revolving Credit Facility, and had fully drawn
down GBP20.0m from its HSBC 2021 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 remains fully drawn. In December 2016, the Group redeemed
its 2022 GBP20.0m Term Loan with Lloyds Bank and took out a
GBP40.0m Term Loan with Scottish Widows over 15 years which expires
in 2031. This loan remains fully drawn at 31 December 2016. Given
these facilities, the Group's low gearing level of 28% and GBP98.9m
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
2016 2015 2016
GBPm GBPm GBPm
----------------------------------------------------- ------------ ------------ --------
Gross rental income from investment and development
properties 11.8 11.5 22.9
Service charge income 0.5 0.5 0.9
Total revenue 12.3 12.0 23.8
----------------------------------------------------- ------------ ------------ --------
3. Property Costs
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30
June
2016 2015 2016
GBPm GBPm GBPm
------------------------- ------------ ------------ --------
Service charge expenses 0.6 0.5 1.0
Other property expenses 0.4 0.5 0.8
------------------------- ------------ ------------ --------
1.0 1.0 1.8
------------------------- ------------ ------------ --------
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
2016 2015 2016
GBPm GBPm GBPm
------------------------------------------- ------------ ------------ --------
Investment and development properties
- Net property income 11.3 11.0 22.0
- Profit on disposal 1.9 - -
Gain on revaluation of investment
- properties 0.5 4.9 8.2
Gain on revaluation of development
- properties - 2.0 2.0
Net income from the property portfolio
before administration expenses 13.7 17.9 32.2
------------------------------------------- ------------ ------------ --------
Administration expenses (1.6) (1.6) (3.3)
------------------------------------------- ------------ ------------ --------
Operating profit 12.1 16.3 28.9
Net financing costs (3.0) (1.9) (3.7)
------------------------------------------- ------------ ------------ --------
Profit before tax 9.1 14.4 25.2
------------------------------------------- ------------ ------------ --------
The property revaluation gain has been recognised as
follows:
Within operating profit
- Investment properties 0.5 4.9 8.2
- Development properties - 2.0 2.0
---- -------------------------------- ---- ---- -----
0.5 6.9 10.2
Within other comprehensive income
- Owner-occupied properties - - -
Total revaluation gain for the
period 0.5 6.9 10.2
-------------------------------------- ---- ---- -----
4. Segmental analysis (continued)
Segmental information on assets and liabilities, including a
reconciliation to the results reported in the Group condensed
balance sheet, are as follows:
Balance sheet
Investment and development properties
- Segment assets 373.3 359.7 365.5
- Segment liabilities (5.3) (5.3) (6.8)
- Net borrowings (79.7) (70.7) (71.2)
---- ------------------------------------ ------- ------- -------
288.3 283.7 287.5
------------------------------------------ ------- ------- -------
Trading properties
- Segment assets 0.5 0.5 0.5
- Segment liabilities - - -
---- ------------------------------------ ------- ------- -------
0.5 0.5 0.5
------------------------------------------ ------- ------- -------
Other activities
- Unallocated assets 2.1 2.0 1.8
- Unallocated liabilities (8.6) (10.4) (9.2)
---- ------------------------------------ ------- ------- -------
(6.5) (8.4) (7.4)
------------------------------------------ ------- ------- -------
Net assets 282.3 275.8 280.6
------------------------------------------ ------- ------- -------
Capital expenditure
Investment and development properties 11.0 2.9 4.0
Other activities - - 0.1
------------------------------------------ ------- ------- -------
11.0 2.9 4.1
------------------------------------------ ------- ------- -------
Depreciation
Other activities - - 0.1
------------------------------------------ ------- ------- -------
- - 0.1
------------------------------------------ ------- ------- -------
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
2016 2015 2016
GBPm GBPm GBPm
------------------------------------------ ------------ ------------ --------
Finance costs on:
Preference share dividend - - 0.1
Bank overdraft and loan interest payable 1.8 1.9 3.6
Early repayment costs 1.2 - -
------------------------------------------ ------------ ------------ --------
Total finance costs 3.0 1.9 3.7
------------------------------------------ ------------ ------------ --------
Finance income on:
Bank and other interest receivable - - -
Total finance income - - -
------------------------------------------ ------------ ------------ --------
Net finance costs 3.0 1.9 3.7
------------------------------------------ ------------ ------------ --------
The early repayment costs above relate to the refinancing of the
Lloyds Bank GBP20.0m Term Loan 2022 and includes break costs and
the release of unamortised costs.
6. Taxation
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30
June
2016 2015 2016
GBPm GBPm GBPm
----------------------------------------------------- ------------ ------------ --------
Current tax
- Corporation tax - - -
- Adjustment in respect of previous - - -
years
Total tax credit in the statement of comprehensive - - -
income
----------------------------------------------------- ------------ ------------ --------
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.
7. Dividends
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30
June
2016 2015 2016
GBPm GBPm GBPm
--------------------------------------- ------------ ------------ --------
Amounts recognised as distributions
to equity holders in the period:
Interim dividend for the year
ended 30 June 2016 of 9.59p per
share - - 6.1
Quarterly dividend for the year 3.1 - -
ended 30 June 2016 of 5.00p (2015:
nil)
Final dividend for the year ended
30 June 2016 of 6.88p (2015: 11.53p)
per share 4.4 7.3 7.3
7.5 7.3 13.4
--------------------------------------- ------------ ------------ --------
The directors propose an interim dividend of 9.88p (2015: 9.59p)
per Ordinary share. This dividend has not been included as a
liability in these financial statements.
The interim dividend will be paid as two quarterly dividends of
4.94p each on 18 April 2017 to shareholders on the register at the
close of business on 17 March 2017 and on 17 July 2017 to
shareholders on the register at the close of business on 16 June
2017.
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 and early repayment
costs). 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 GBPm GBPm GBPm GBPm
2016
----------------------------------- ----------- ------------- ----------- ----------
Gross rental income 11.8 11.8 - -
Service charge income 0.5 0.5 - -
----------------------------------- ----------- ------------- ----------- ----------
Total revenue 12.3 12.3 - -
Property costs (1.0) (1.0) - -
----------------------------------- ----------- ------------- ----------- ----------
Net property income 11.3 11.3 - -
----------------------------------- ----------- ------------- ----------- ----------
Administration expenses (1.6) (1.6) - -
----------------------------------- ----------- ------------- ----------- ----------
Operating profit before
net gains on investment 9.7 9.7 - -
Net gains on revaluation 0.5 - - 0.5
Profit on disposal of investment
and development properties 1.9 - - 1.9
Operating profit 12.1 9.7 - 2.4
----------------------------------- ----------
Gross finance costs (1.8) (1.8) - -
Early repayment costs (1.2) - - (1.2)
Fair value movement on derivative - - - -
financial instruments
----------------------------------- ----------- ------------- ----------- ----------
Total finance costs (3.0) (1.8) - (1.2)
----------------------------------- ----------- ------------- ----------- ----------
Finance income - - - -
----------------------------------- ----------- ------------- ----------- ----------
Profit before tax 9.1 7.9 - 1.2
----------------------------------- ----------- ------------- ----------- ----------
Unaudited Unaudited Unaudited Unaudited
Investment/ Trading Other
Total development properties Items
Six months to 31 December GBPm GBPm GBPm GBPm
2015
----------------------------------- ----------- ------------- ----------- ----------
Gross rental income 11.5 11.5 - -
Service charge income 0.5 0.5 - -
----------------------------------- ----------- ------------- ----------- ----------
Total revenue 12.0 12.0 - -
----------------------------------- ----------- ------------- ----------- ----------
Property outgoings (1.0) (1.0) - -
----------------------------------- ----------- ------------- ----------- ----------
Net rental property income 11.0 11.0 - -
----------------------------------- ----------- ------------- ----------- ----------
Administration expenses (1.6) (1.6) - -
----------------------------------- ----------- ------------- ----------- ----------
Operating profit before
net gains on investment 9.4 9.4 - -
Net gains on revaluation 6.9 - - 6.9
Profit on disposal of investment - - - -
and development properties
Operating profit 16.3 9.4 - 6.9
----------------------------------- ----------
Gross finance costs (1.9) (1.9) - -
Fair value movement on derivative - - - -
financial instruments
----------------------------------- ----------- ------------- ----------- ----------
Total finance costs (1.9) (1.9) - -
----------------------------------- ----------- ------------- ----------- ----------
Finance income - - - -
----------------------------------- ----------- ------------- ----------- ----------
Profit before tax 14.4 7.5 - 6.9
----------------------------------- ----------- ------------- ----------- ----------
9. Earnings per share and net asset value per share
Earnings per share
The basic and diluted earnings per share of 14.39p (31 December
2015: 22.72p; 30 June 2016: 39.86p) has been calculated on the
basis of the weighted average of 63,294,833 (31 December 2015:
63,294,833; 30 June 2016: 63,294,833) Ordinary shares and a profit
of GBP9.1m (31 December 2015: GBP14.4m; 30 June 2016:
GBP25.2m).
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 2015 2016
GBPm GBPm GBPm
---------------------------------------- ------------ ------------ --------
Earnings 9.1 14.4 25.2
Profit on disposal of investment (1.9) - -
and development properties
Net gains on revaluation of investment
and development properties (0.5) (6.9) (10.2)
Early repayment costs 1.2 - -
EPRA earnings 7.9 7.5 15.0
---------------------------------------- ------------ ------------ --------
EPRA earnings per share 12.54p 11.89p 23.88p
---------------------------------------- ------------ ------------ --------
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 103,257 Ordinary
shares were granted in the period (2015: 94,445 Ordinary shares)
under the 2015 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 seventh 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 446p (31 December 2015: 436p;
30 June 2016: 443p) has been calculated on the basis of the number
of equity shares in issue of 63,294,833 (31 December 2015:
63,294,833; 30 June 2016: 63,294,833) and net assets of GBP282.3m
(31 December 2015: GBP275.8m; 30 June 2016: GBP280.6m).
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
2016 2015 2016
GBPm GBPm GBPm
------------------------------------ ------------ ------------ --------
Equity shareholders' funds 282.3 275.8 280.6
Valuation of land held as trading
properties 1.9 1.9 1.9
Book value of land held as trading
properties (0.5) (0.5) (0.5)
Fair value of derivative financial - - -
instruments
------------------------------------ ------------ ------------ --------
EPRA net asset value 283.7 277.2 282.0
------------------------------------ ------------ ------------ --------
EPRA net asset value per share 448p 438p 446p
------------------------------------ ------------ ------------ --------
10. Properties
Unaudited
GBPm
------------------------------------------------- ----------
Cushman & Wakefield valuation as at 31 December
2016 373.6
Owner-occupied property included in property,
plant and equipment (1.1)
Other adjustments 0.1
------------------------------------------------- ----------
Investment and development properties as at
31 December 2016 372.6
------------------------------------------------- ----------
The properties are stated at their 31 December 2016 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 GBP0.5m 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.
Following the Referendum held on 23 June 2016 concerning the
UK's membership of the EU, a decision was taken to exit the EU.
Since that date Cushman & Wakefield have monitored market
transactions and market sentiment in arriving at their opinion of
Market Value/Fair Value. After an initial period of uncertainty and
an absence of activity, transactional volumes and available
evidence has risen in most sectors of the market and liquidity is
returning to more normal levels. This has led to a generally more
stable outlook for the market.
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 2016
Level Level Level Total
1 2 3
GBPm GBPm GBPm GBPm
------- ------ ------ ------
Investment and development
properties - - 372.6 372.6
Financial assets at FVTPL - - - -
- interest rate caps
Available-for-sale assets
- mortgage receivables - 0.1 - 0.1
------- ------ ------ ------
Unaudited
31 December 2015
Level Level Level Total
1 2 3
GBPm GBPm GBPm GBPm
------- ------ ------ ------
Investment and development
properties - - 358.8 358.8
Financial assets at FVTPL - - - -
- interest rate caps
Available-for-sale assets
- mortgage receivables - 0.1 - 0.1
------- ------ ------ ------
11. Fair value measurements recognised in the statement of
financial position (continued)
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 2016
valuation, the yields used ranged from 5.0% to 8.8% (December 2015
- 5.0% to 8.8%; June 2016 - 5.0% to 8.8%). Valuation reports are
based on both information provided by the Company, e.g. current
rents and lease terms which are derived from the Company's
financial and property management systems and are 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 the Disclosure and Transparency Rules ("the
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 the 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 13 February 2017.
Rupert J Mucklow
Chairman
David Wooldridge
Finance Director
INDEPENT REVIEW REPORT TO A & J MUCKLOW GROUP PLC
Introduction
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 2016 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 the related explanatory
notes. 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 the
terms of our engagement to assist the company in meeting the
requirements of the Disclosure and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA"). Our review
has been undertaken so that we might state to the company those
matters we are required to state to it in this 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 reached.
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 DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the EU.
The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
IAS 34 Interim Financial Reporting as adopted by the EU.
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
UK. A review of interim financial information consists of making
enquiries, 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 2016 is not prepared, in all material respects, in
accordance with IAS 34 as adopted by the EU and the DTR of the UK
FCA.
Michael Froom (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
One Snowhill
Snow Hill Queensway
Birmingham
B4 6GH
13 February 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KXLFFDLFFBBB
(END) Dow Jones Newswires
February 14, 2017 02:00 ET (07:00 GMT)
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