TIDMMKLW
RNS Number : 7201Y
Mucklow(A.& J.)Group PLC
09 September 2009
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Mucklow (A & J) Group plc
9 September 2009
Results for the year ended 30 June 2009
Embargoed: 7.00am
Rupert Mucklow, Chairman commented "...Mucklow has been the best performing
Company in the UK REIT sector, since the launch of REITs in January 2007." "It
has been a very difficult and challenging year..." "Despite another significant
reduction in the value of our property portfolio during the year, our balance
sheet and underlying profitability remain in good shape." "...Mucklow remains very
well positioned to ride out these turbulent times and benefit from the
distressed market."
Financial Summary
for the year ended 30 June 2009
+-------------------------------------------------+------------------+----------------+
| | | |
+-------------------------------------------------+------------------+----------------+
| Property portfolio | 30 June 2009 | 30 June 2008 |
| | | |
+-------------------------------------------------+------------------+----------------+
| Portfolio value | GBP201.0m | GBP264.4m |
+-------------------------------------------------+------------------+----------------+
| Valuation deficit | GBP(64.7)m | GBP(40.9)m |
+-------------------------------------------------+------------------+----------------+
| Reduction in value | 24% | 13% |
+-------------------------------------------------+------------------+----------------+
| Equivalent yield | 9.5% | 7.2% |
+-------------------------------------------------+------------------+----------------+
| Occupancy rate | 90.5% | 92.9% |
+-------------------------------------------------+------------------+----------------+
+-------------------------------------------------+------------------+----------------+
| Balance sheet | 30 June 2009 | 30 June 2008 |
| | | |
+-------------------------------------------------+------------------+----------------+
| Net asset value | GBP159.7m | GBP222.7m |
+-------------------------------------------------+------------------+----------------+
| Basic NAV per share | 266p | 371p |
+-------------------------------------------------+------------------+----------------+
| Adjusted NAV per share* | 267p | 379p |
+-------------------------------------------------+------------------+----------------+
| Net debt | GBP38.0m | GBP29.2m |
+-------------------------------------------------+------------------+----------------+
| Gearing | 24% | 13% |
+-------------------------------------------------+------------------+----------------+
+-------------------------------------------------+------------------+----------------+
| Income statement | Year ended | Year ended |
+-------------------------------------------------+------------------+----------------+
| | 30 June 2009 | 30 June 2008 |
+-------------------------------------------------+------------------+----------------+
| Pre-tax loss | GBP(52.0)m | GBP(26.7)m |
+-------------------------------------------------+------------------+----------------+
| Net rental income | GBP15.9m | GBP15.2m |
+-------------------------------------------------+------------------+----------------+
| Basic EPS | (86.71)p | (45.44)p |
+-------------------------------------------------+------------------+----------------+
| Adjusted EPS** | 19.12p | 23.13p |
+-------------------------------------------------+------------------+----------------+
| Ordinary dividend | 17.68p | 17.68p |
+-------------------------------------------------+------------------+----------------+
Recommended final dividend of 9.65p, making the total in respect of the year
ended 30 June 2009 17.68p (2008: 17.68p).
*Excludes deferred tax and the mark to market on debt and includes the surplus
on trading properties. **Excludes the profit on disposal of investment
properties, revaluation of investment and development properties and deferred
tax. See note 7 for details.
+------------------------------------+---------+--------------------------------------+
| For further information please | | |
| contact: | | |
+------------------------------------+---------+--------------------------------------+
| Rupert Mucklow, Chairman | Tel: | 0121 504 2121 (direct) |
+------------------------------------+---------+--------------------------------------+
| | Mobile: | 07815 151254 |
+------------------------------------+---------+--------------------------------------+
| David Wooldridge, Finance Director | Tel: | 0121 504 2108 (direct) |
+------------------------------------+---------+--------------------------------------+
| A & J Mucklow Group plc | | |
+------------------------------------+---------+--------------------------------------+
| | | |
+------------------------------------+---------+--------------------------------------+
| Fiona Tooley/Keith Gabriel | Tel: | 0121 362 4035 |
+------------------------------------+---------+--------------------------------------+
| Citigate Dewe Rogerson | | |
+------------------------------------+---------+--------------------------------------+
Chairman's Statement
UK commercial property values fell by 31% during our last financial year,
according to the IPD Index. This follows a reduction of 19% in the previous 12
months. We have witnessed the most severe deterioration in asset values since
the Company began and many property investors, burdened with high levels of
debt, are struggling for survival.
Such a dramatic decline in capital values has inevitably had an impact on our
results. However, I am pleased to report, that Mucklow remains very well
positioned to ride out these turbulent times and benefit from the distressed
market. Despite another significant reduction in the value of our property
portfolio during the year, our balance sheet and underlying profitability remain
in good shape.
Results
Pre-tax loss for the year ended 30 June 2009 was GBP52.0m, compared with a
pre-tax loss of GBP26.7m for the corresponding period last year. The loss is
attributed to a GBP64.2m write down in the value of the Group's investment
properties and development land.
Net rental income for the year increased to GBP15.9m (2008: GBP15.2m), the
increase mainly coming from rent reviews and a newly completed pre-let
industrial unit. The underlying profit before tax*, which excludes the benefit
of any capitalised interest, deficits on the revaluation of the property
portfolio, and profit from the disposal of investment and trading properties,
was GBP11.1m (2008: GBP10.4m).
EPRA diluted earnings per share| decreased during the period from 23.13p to
19.12p per share, mainly due to a smaller contribution of trading profit.
Trading profit totalled GBP0.1m (2008: GBP2.6m), following our decision not to
sell any residential land, at current depressed values.
EPRA (adjusted) net asset value per share|, including the current value of our
trading properties, fell during the year from 379p to 267p per share, as a
consequence of the fall in property values. Shareholders' funds reduced to
GBP159.7m (2008: GBP222.7m), while borrowings net of cash amounted to GBP38.0m
(2008: GBP29.2m), representing 24% of Shareholders' funds (2008: 13%).
Notwithstanding the decline in property values, the Board is recommending the
payment of a final dividend of 9.65p per Ordinary share, making a total for the
year of 17.68p per share. The dividend is being maintained at the same level as
last year. If approved by Shareholders, the dividend will be paid on 4 January
2010, to Shareholders on the register at the close of business on 27 November
2009. The final dividend will consist of a PID (property income distribution) of
7.72p per share and 1.93p per share paid as an ordinary dividend.
Property Review
In what has been a very difficult and challenging year, our priority has been to
maintain occupancy levels above 90% and to protect rental income. We have sought
to achieve this, by working closely with tenants experiencing cash flow problems
and by marketing our vacant properties innovatively to secure new lettings. We
have also been trying to reduce our overheads and prepare the business for the
next phase of the property cycle, which hopefully for Mucklow will mean buying
investment properties near the bottom of the market.
Property market recessionary pressures have caused occupier demand to weaken
throughout the year and this, coupled with a steady rise in tenant defaults, has
been gradually increasing the amount of properties available to let. Letting
incentives started to increase and rental levels fell in the second half of the
year, as tenants had more choice and landlords began to compete aggressively for
lettings, in order to avoid paying void rates.
Our vacant space increased by 68,441 sq ft during the year to 273,507 sq ft,
representing 9.5% of the property portfolio (2008: 7.1%). We agreed new lettings
on 102,971 sq ft of space during the year and took back 171,412 sq ft, mainly
due to insolvencies. Rent collection has generally been better than expected,
although we currently have approximately 6% of our rent roll being paid by
special arrangement.
We sold two mature investment properties during the year in Wolverhampton for
GBP1.7m. The properties were both let on short leases, with a combined income of
GBP0.1m per annum. The properties were sold for GBP0.6m above book value.
The final phase of development at Yorks Park, Dudley was completed in December
2008, comprising a 40,000 sq ft industrial unit, let at a rent of GBP224,000 per
annum. No other developments were carried out during the year.
We finally obtained outline planning consent in May 2009 for a 128,500 sq ft
warehouse club, on our site in Coventry. We hope to start construction later
this year and anticipate additional capital expenditure of around GBP9.0m to
complete the development. The property has been pre-let to Costco, a large
International operator, on a long lease, at an initial rent of GBP1.3m per
annum.
DTZ Debenham Tie Leung reviewed the value of our investment properties at 30
June 2009. The investment portfolio, including development land, was valued at
GBP201.0m, which showed a deficit for the year of GBP64.7m (24%). The initial
yield on the investment properties increased from 6.5% to 8.6% and the
equivalent yield from 7.2% to 9.5%.
We did not acquire any new properties during the year, but have been very
closely monitoring the investment market. There have been very few quality
opportunities available and falling property values and uncertainty over rental
levels has made us cautious over property selection.
Since our year end, we have bought a modern investment property for GBP1.9m. The
building is in a prominent location, close to the Aston Expressway in
Birmingham, and comprises a 35,000 sq ft industrial unit, built in 1996 to a
high specification and let to BSS Group Plc until 2022, at a current rent of
GBP195,000 per annum.
DTZ Debenham Tie Leung also reviewed the value of our trading properties at 30
June 2009. The total value was GBP5.2m (2008: GBP5.7m), which showed a surplus
of GBP4.2m over book value, equivalent to 7p per share.
Total borrowings at 30 June 2009 amounted to GBP40.3m, of which GBP20m is fixed
until 2023 at rate of 5.6%. Gearing net of cash is 24%.
Since the year end we have agreed to renew terms on our GBP35m of existing
banking facilities with HSBC Bank plc, which were due to expire in 2010 and
2012, and taken out an additional GBP25m of new facilities, which are intended
for investment acquisitions and to help fund our pre-let development in
Coventry. The facilities are for a period of 5 years at a margin of 195bp over
Libor.
As part of our programme to reduce costs, we made two employees redundant during
the year and all executive directors and senior management agreed to pay cuts of
around 10%, for a period of 12 months. We have a very good loyal team of 13
employees at Mucklow and I would like to thank them all for their continued
support and hard work during the year.
Despite all the doom and gloom in the Real Estate sector, Shareholders may be
interested to know that Mucklow has been the best performing Company in the UK
REIT sector, since the launch of REITs in January 2007. Total Shareholder Return
for the 30 month period to 30 June 2009 for Mucklow was -43.9%, which compares
with the sector average of -66.1%, for the 17 companies who have converted to
REIT status. During the same period, the FTSE All Share Index has fallen 33.5%
and UK commercial capital values by 43.2%.
Outlook
Maintaining rental income and occupancy levels over the next 12 months will
remain our priority, as we do not expect any immediate recovery in the real
estate market. The occupational market will remain weak for some time, but
property values are likely to stabilise, in anticipation of an improvement in
the economy next year. The income return and future capital growth prospects for
commercial property are starting to look very attractive again and we intend to
utilise our new banking facilities to selectively acquire investment properties.
Rupert J Mucklow
Chairman
9 September 2009
| See note 7 for the calculations.
* See the property and financial review for the calculations.
Property and Financial Review
The continuing economic and property market declines over the last twelve months
have led to even more challenging conditions for the Group and the property
market as a whole. The Group's strategy of concentrating our business within the
Midlands region, whilst diversifying the portfolio by sector, not relying on any
single tenant and low gearing continues to put us in a strong position to
benefit from the current property market.
Our financial strength has led us to being one of the few REITs which hasn't had
to issue equity, agree covenant waivers with banks, sell assets at discounted
prices and/or reduce dividends.
Strategy
The Group's long-term investment strategy remains unchanged. Our objective is to
maintain a balanced portfolio of modern, income producing properties with
potential for future rental and capital growth. The three main areas of our
strategy remain:
· Selectively acquiring and disposing of investment properties;
· Developing new properties for long-term investment; and
· Actively managing our assets to enhance value.
We remain a selective developer of well located, quality property and a
counter-cyclical investor in investment property. We believe that the precise
timing of acquisitions and disposals is crucial in boosting returns from our
existing property portfolio. In addition, the proactive approach to the
management of our assets allows us additional opportunity to enhance overall
value.
Investment
Following our conversion to a REIT in July 2007, the decision was made to make
the main geographical focus of our business the Midlands Region.
Given the continued adjustment of pricing in the UK property sector, our
decision to dispose of over GBP100m of secondary, ex-growth assets over the last
few years has proved more than justified. This realigning of our investment
portfolio to better quality stock has allowed us, to some extent, to insulate
ourselves from the worst effects of the pricing adjustment that has affected the
secondary property market, even though we have seen a GBP105.6m write down in
the value of the industrial and commercial portfolio over the last two years.
Our portfolio now comprises mainly modern, securely let properties benefiting
from the following characteristics at 30 June 2009:
· No one tenant represents more than 3% of current passing rent;
· No one building or estate represents more than 7% of the portfolio valuation;
· Diversity of portfolio across the industrial, office and retail sectors;
· The retail element represents only 10% of the portfolio and
comprises
strategically located, single let investments with future
development and asset management potential; and
· Average unexpired lease length in excess of 7·8 years.
Given the steep decline in property values across the UK over the course of
the year, we have adopted a cautious approach to the purchase of investments. We
had expected to encounter more suitable buying opportunities during the
financial year, but there has been a limited amount of well located, quality
property available at attractive prices.
Since the year end we have acquired a 35,000 sq ft industrial unit in Aston,
Birmingham, occupied by The BSS Group plc until 2022, for GBP1.9m.
Despite the weak conditions, we have managed to sell profitably two investment
properties and one old vacant unit in the financial year. The properties were
Paul Street (Wolverhampton), Penn Road (Wolverhampton) and Unit 14 at our
Coleshill Industrial Estate.
Paul Street was an 80,000 sq ft Victorian factory that had a 42 year
occupational lease ending in June 2009. Completion took place just days before
the end of the lease at a price of GBP1.25m, a considerable uplift over the
December 2008 valuation of GBP0.8m.
Penn Road, a 0.4 acre former petrol station site, was sold to the existing
tenant for GBP0.5m. The property was previously let at GBP7,000 pa, with the
lease expiring in June 2009.
Unit 14 Coleshill was a 4,055 sq ft stand alone industrial unit that formed part
of our Coleshill Industrial Estate in Coleshill, Birmingham. The unit became
vacant earlier this year due to the liquidation of the tenant. It was considered
to be more economically viable to dispose of the unit, given the level of
refurbishment required when the unit was handed back by the tenant.
Development
During the year we completed the final pre-let unit (40,000 sq ft) at the third
and final phase of our Yorks Park, Dudley site.
Following agreement of terms to develop a 128,500 sq ft bespoke building for
Costco, a large international operator, in the prior year, we have now been
successful in a planning appeal on our site at Torrington Avenue, Coventry.
Development is expected to be complete in the third quarter of the 2010 calendar
year. The unit will be let on completion to Costco on a 25 year lease. The
development is anticipated to cost a further GBP9.0m to complete.
All the remaining commercial development land, comprising over 30 acres, is
being actively marketed to prospective tenants. Given the present uncertainty of
the occupier market we feel it prudent to put on hold any further speculative
development until a more confident and stable market returns.
Asset management
This aspect of our strategy forms a key focus for the Group. Through a
pro-active, hands-on approach we have sought to drive additional value in terms
of both rental and capital growth. Despite a challenging occupier market we have
managed to maintain our occupancy level above 90% (2009: 90.5%; 2008: 92.9%).
We have continued to review our portfolio for value enhancing opportunities.
During the last financial year we have agreed lease renewals and reviews on
190,192 sq ft, with reviews increasing our rental income by GBP0.3m per annum.
As at 30 June 2009 our investment portfolio, including commercial land and new
developments, was valued at GBP201.0m by DTZ Debenham Tie Leung, which showed a
deficit for the year of GBP64.7m (24%). The average equivalent yield on our
investment properties increased during the year from 7.2% to 9.5%, with
industrial at 9.8%, offices at 9.2% and retail at 8.4% at our year end.
Over the last two financial years the equivalent yield on our investment
portfolio has moved out from 6.0% to 9.5%. The initial yield on our portfolio is
now 8.6%. Although our properties are exceptionally modern, we have been
penalised due to the length of leases, where valuers have taken a harsh view
where less than five years are remaining to the expiry of a lease or a break.
Trading properties
We have not disposed of any trading properties during the twelve months to 30
June 2009, due to weaker market conditions.
The Group's trading properties mainly comprise residential land and were valued
by DTZ Debenham Tie Leung as at 30 June 2009 at GBP5.2m (2008: GBP5.7m), which
shows a surplus of GBP4.2m over book value.
Financial performance
We have again presented our income statement in a three column format, showing
the adjusted income and expense on a consistent basis with previous years,
excluding the impact of revaluation movements and profits on the disposal of
investment properties. At a pre-tax level, the adjusted profit of GBP11.6m
(2008: GBP14.4m) shows a decrease from the prior year of GBP2.8m, mainly
reflecting the GBP2.5m decrease in profit on disposal of trading properties.
The requirement of International Financial Reporting Standards to include
revaluation movements on the investment property portfolio in the income
statement has resulted in a GBP64.2m charge in 2009, against a charge of
GBP41.2m in the prior year. A reconciliation of the movement in our post-tax
results is shown below:
+------------------------------------------------------------------------------+-----------+
| | GBP000 |
+------------------------------------------------------------------------------+-----------+
| Loss for the financial year ended 30 June 2008 | (27,261) |
+------------------------------------------------------------------------------+-----------+
| Increase in net rental income | 704 |
+------------------------------------------------------------------------------+-----------+
| Reduction in profits realised from trading properties | (2,482) |
+------------------------------------------------------------------------------+-----------+
| Increase in administration costs | (220) |
+------------------------------------------------------------------------------+-----------+
| Increase in profit realised from investment properties | 570 |
+------------------------------------------------------------------------------+-----------+
| Movement in property portfolio valuation | (23,016) |
+------------------------------------------------------------------------------+-----------+
| Increase in net finance costs | (849) |
+------------------------------------------------------------------------------+-----------+
| Reduction in current tax payable | 441 |
+------------------------------------------------------------------------------+-----------+
| Other deferred tax movements | 96 |
+------------------------------------------------------------------------------+-----------+
| Loss for the financial year ended 30 June 2009 | (52,017) |
+------------------------------------------------------------------------------+-----------+
We have also presented below an analysis of the Group's underlying rental
performance before tax, which excludes the impact of EPRA adjustments and
presented separately the profit on sale of trading properties. The directors
consider that this further analysis of our income statement gives shareholders a
useful comparison of our underlying performance for periods shown in the
consolidated financial statements.
Our underlying rental performance has improved significantly over last year,
with a 4.6% improvement in net rental income, reflecting the Group's focus on
vacancy levels, letting of completed development properties and improvements in
rent at review and on renewal. No investment properties were acquired in the
year and disposals of rent producing properties had a limited impact on passing
rent. Stripping out the trading profits, revaluation movements and other items,
pre-tax profit rose by GBP0.7m, as shown below. There were no disposals of
trading properties in the financial year as we decided not to sell at current
depressed values. We have received some income from the trading properties in
the year as a result of a retrospective claim for VAT. As disclosed in note 7 to
the accounts, EPRA adjusted earnings decreased by GBP2.4m, with EPRA adjusted
earnings per share ("eps") declining 17%, from 23.13p in 2008 to 19.12p in 2009.
Despite the underlying strength of our business model, our low gearing and
quality property portfolio, we have focused on reducing our cost base. As a
result, we made two employees redundant during the financial year. All of the
senior management team have had their remuneration reduced for the twelve month
period commencing on 1 April 2009 (including a basic pay freeze for the 1 July
2009 review period). The executive directors have not received any bonus
payments in respect of either the 30 June 2008 or 30 June 2009 financial years.
In addition, the Remuneration Committee have decided that even though the
performance condition for full vesting of Justin Parker's transitional award
under the Long Term Incentive Plan was met, the award was not allowed to vest.
Full details of the executive directors remuneration will be provided in the
Board Report on Directors Remuneration in the forthcoming annual report.
+--------------------------------------+--------------+-------------+------------+----------+
| | | Investment/ | Trading | Other |
+--------------------------------------+--------------+-------------+------------+----------+
| | Total | development | properties | items |
+--------------------------------------+--------------+-------------+------------+----------+
| 2009 | GBP000 | GBP000 | GBP000 | GBP000 |
+--------------------------------------+--------------+-------------+------------+----------+
| Rental income | 16,574 | 16,574 | - | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Property outgoings | (689) | (689) | - | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Net rental income | 15,885 | 15,885 | - | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Sale of trading properties | 104 | - | 104 | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Property outgoings on trading | (33) | - | (33) | - |
| properties | | | | |
+--------------------------------------+--------------+-------------+------------+----------+
| Net income from trading properties | 71 | - | 71 | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Administration expenses | (2,998) | (2,998) | - | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Operating profit before net losses | 12,958 | 12,887 | 71 | - |
| on investment | | | | |
+--------------------------------------+--------------+-------------+------------+----------+
| Profit on disposal of investment | 618 | - | - | 618 |
| property | | | | |
+--------------------------------------+--------------+-------------+------------+----------+
| Net losses on revaluation | (64,185) | - | - | (64,185) |
+--------------------------------------+--------------+-------------+------------+----------+
| Operating (loss)/profit | (50,609) | 12,887 | 71 | (63,567) |
+--------------------------------------+--------------+-------------+------------+----------+
| Finance income | 354 | 354 | - | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Gross finance costs | (2,107) | (2,107) | - | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Capitalised interest | 360 | - | - | 360 |
+--------------------------------------+--------------+-------------+------------+----------+
| Total finance costs | (1,747) | (2,107) | - | 360 |
+--------------------------------------+--------------+-------------+------------+----------+
| (Loss)/profit before tax | (52,002) | 11,134 | 71 | (63,207) |
+--------------------------------------+--------------+-------------+------------+----------+
+--------------------------------------+--------------+-------------+------------+----------+
| | | | | |
+--------------------------------------+--------------+-------------+------------+----------+
| 2008 | | | | |
+--------------------------------------+--------------+-------------+------------+----------+
| Rental income | 15,772 | 15,772 | - | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Property outgoings | (591) | (591) | - | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Net rental income | 15,181 | 15,181 | - | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Sale of trading properties | 2,653 | - | 2,653 | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Carrying value of trading properties | (98) | - | (98) | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Property outgoings on trading | (2) | - | (2) | - |
| properties | | | | |
+--------------------------------------+--------------+-------------+------------+----------+
| Net income from trading properties | 2,553 | - | 2,553 | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Administration expenses | (2,778) | (2,778) | - | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Operating profit before net losses | 14,956 | 12,403 | 2,553 | - |
| on investment | | | | |
+--------------------------------------+--------------+-------------+------------+----------+
| Profit on disposal of investment | 48 | - | - | 48 |
| property | | | | |
+--------------------------------------+--------------+-------------+------------+----------+
| Net losses on revaluation | (41,169) | - | - | (41,169) |
+--------------------------------------+--------------+-------------+------------+----------+
| Operating (loss)/profit | (26,165) | 12,403 | 2,553 | (41,121) |
+--------------------------------------+--------------+-------------+------------+----------+
| Finance income | 60 | 60 | - | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Gross finance costs | (2,036) | (2,036) | - | - |
+--------------------------------------+--------------+-------------+------------+----------+
| Capitalised interest | 1,432 | - | - | 1,432 |
+--------------------------------------+--------------+-------------+------------+----------+
| Total finance costs | (604) | (2,036) | - | 1,432 |
+--------------------------------------+--------------+-------------+------------+----------+
| (Loss)/profit before tax | (26,709) | 10,427 | 2,553 | (39,689) |
+--------------------------------------+--------------+-------------+------------+----------+
Presented above is an analysis of the underlying rental performance before tax,
which excludes the impact of EPRA adjustments, capitalised interest and the
profit on sale of trading properties. The directors consider that this further
analysis of our income statement gives shareholders a useful comparison of our
underlying performance for the periods shown in the consolidated financial
statements.
We have saved around GBP2.6m of corporation tax in the current financial year as
a result of our conversion to a Real Estate Investment Trust.
The interim dividend was paid as 100% Property Income Distribution ("PID"),
attracting a 20% withholding tax for shareholders who are not eligible for gross
payment. The final dividend of 9.65p will be paid as 7.72p per share (80%) being
PID and the balance of 1.93p as a normal dividend. The level of dividend that
must be distributed by way of a PID is determined by the tax legislation.
Consequently, the phasing out of Industrial Building Allowances, the reduction
in the rate of capital allowances on plant and machinery from 25% to 20% and the
introduction of the lower 10% rate for integral features will reduce the
adjustments required to profits in order to calculate the minimum PID obligation
in future years.
The interim and proposed final dividends are only just covered by our underlying
profits, mainly due to the reduction in profits realised from our trading
properties. The board's intention is to grow the rent roll to enable a
sustainable, covered, increase in dividends over the long term, with a view to
distributing around 90% of our recurring profit.
Net assets have fallen from GBP222.7m to GBP159.7m, mostly reflecting the
GBP64.2m property portfolio revaluation write down recognised in the income
statement.
Our gearing has increased from 13% to 24%, reflecting GBP38.0m (2008: GBP29.2m)
of net debt. This level of debt equates to only 19% of the DTZ valuation of our
investment and development portfolio of GBP201.0m, a very low level of gearing
compared to other REITs and quoted property companies. This has arisen as a
direct result of our disposal programme in the last few years.
We have not acquired or disposed of any development properties since the year
end.
Financing, cash flow and going concern
During the year we took the opportunity to commence negotiations to refinance
some of our existing variable rate revolving credit drawdowns into longer term,
fixed rate debt. GBP20.0m is being raised from HSBC Bank plc through a five year
loan. Our current HSBC facilities of GBP45.0m (GBP10.0m overdraft, GBP15.0m 2010
Revolving Credit Facility and GBP20.0m 2012 Revolving Credit Facility) are also
being renewed so that we will replace those facilities with a GBP5.0m overdraft
and a GBP40.0m Five Year Revolving Credit Facility, increasing our HSBC
facilities from GBP45.0m to GBP65.0m. The additional money raised will pay off
existing revolving credit facility drawdowns, and increase the level of funds
available for property investment and construction of the Torrington Avenue,
Coventry unit.
As at 30 June 2009 the Group had undrawn banking facilities of GBP29.5m and had
only drawn GBP15.5m from the 2012 Revolving Credit Facility, leaving undrawn
amounts of GBP4.5m from the 2012 facility, GBP15.0m from the 2010 Revolving
Credit Facility and GBP10.0m from the Group's overdraft. All of the remaining
borrowings held by the Group at 30 June 2009 had more than five years to expiry,
with GBP4.2m of debenture stock expiring in 2014, the GBP20.0m term loan ending
in 2023 and GBP675,000 of preference share capital. Following completion of the
legal process for the refinancing of the HSBC facilities, the Group's borrowings
and available facilities will consist of:
+----------------------------------------+------------------------+--------------+
| Borrowing | Expiry year | Amount |
| | | (GBPm) |
+----------------------------------------+------------------------+--------------+
| Overdraft | 2010 | 5.0 |
+----------------------------------------+------------------------+--------------+
| Revolving Credit Facility | 2014 | 40.0 |
+----------------------------------------+------------------------+--------------+
| Term loan | 2014 | 20.0 |
+----------------------------------------+------------------------+--------------+
| 11.5% Debenture Stock | 2014 | 4.2 |
+----------------------------------------+------------------------+--------------+
| Term loan | 2023 | 20.0 |
+----------------------------------------+------------------------+--------------+
| Preference shares | - | 0.7 |
+----------------------------------------+------------------------+--------------+
| | | 89.9 |
+----------------------------------------+------------------------+--------------+
Of the GBP89.9m, GBP24.9m is at fixed rates. The 2014 term loan and part of the
revolving credit facilities will be hedged.
Only the overdraft is due for renewal within twelve months of the date of this
document.
As at the date of this document the Group had GBP63.7m of properties that were
unencumbered, providing significant capacity to raise additional finance, if
required, or to provide additional security for existing facilities, should
property values fall any further. During the 30 June 2009 financial year end we
charged further properties to HSBC and Lloyds Banking Group to protect the loan
to value covenants. We are complying with our banking facilities and the
Directors do not expect this position to alter in the forthcoming twelve months.
Additional information about the going concern assumption is provided in the
accounting policies note of this preliminary announcement.
The Directors have considered our forecast cash flows, the Group's low gearing,
significant portfolio of unencumbered properties and the maturity profile of our
borrowings, and have a reasonable expectation that the Group has adequate
resources to continue for the foreseeable future. Accordingly, the Directors
continue to adopt the going concern basis in preparing the annual report and
accounts.
Analysis of borrowings at 30 June
+------------------------------------------------------------------+------------+-----------+
| | 2009 | 2008 |
+------------------------------------------------------------------+------------+-----------+
| | GBP000 | GBP000 |
+------------------------------------------------------------------+------------+-----------+
| 11·5% First Mortgage Debenture Stock 2014 | 4,203 | 4,203 |
+------------------------------------------------------------------+------------+-----------+
| Preference Share Capital | 675 | 675 |
+------------------------------------------------------------------+------------+-----------+
| Cash and Short-Term Deposits | (2,352) | (2,203) |
+------------------------------------------------------------------+------------+-----------+
| Overdraft | - | 76 |
+------------------------------------------------------------------+------------+-----------+
| Long-term loan | 19,942 | 19,936 |
+------------------------------------------------------------------+------------+-----------+
| Borrowings from revolving credit facility | 15,500 | 6,500 |
+------------------------------------------------------------------+------------+-----------+
| Net Debt and Preference Share Capital | 37,968 | 29,187 |
+------------------------------------------------------------------+------------+-----------+
| Net Assets | 159,734 | 222,680 |
+------------------------------------------------------------------+------------+-----------+
| Gearing (net of cash) | 24% | 13% |
+------------------------------------------------------------------+------------+-----------+
Outlook
Whilst there have been few signs of improving economic and property market
conditions it could be argued that property market values are at or close to the
bottom of the cycle. Conditions remain extremely testing having been exacerbated
by the introduction of void rates, weakening occupier demand and a reduction in
the availability of bank finance for the property sector. We are, without doubt,
well placed to take advantage of this current downturn from our position of low
gearing supported by a modern, quality portfolio. The challenge for us lies in
our ability to find and purchase quality property at the right price and at the
right time in the cycle.
Against this backdrop it is paramount that we maintain strong discipline in both
the management of our business and the employment of our resources. The Group
remains lean, efficient and tightly managed and despite the current challenges
and the recent write down in the value of the portfolio, our aim remains to
maximise long-term returns for shareholders through actively managing income and
keeping occupancy levels high.
We remain steadfast and confident in our strategy and business model. Our
prudent approach has, most importantly, left us in the enviable position of low
gearing with available cash resources in a market starved of finance. We look
forward to taking advantage of this position during the course of the 2009/2010
Financial Year.
Justin Parker David Wooldridge
Managing Director Finance Director
9 September 2009
CONSOLIDATED INCOME STATEMENT
+-------------------------------+--------+------------+------------+--------+--+-------+--+----------+-------------+
| For the year ended 30 June 2009 | 2009 | | 2008 |
+----------------------------------------+----------------------------------+----------+---------------------------+
| | | Adjusted | | Total | Adjusted | | Total |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| | | income & | Adjust- | income | income | Adjust- | income & |
| | | | | & | & | | |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| | | expense | ments | expense | expense | ments | expense |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| | | unaudited | unaudited | unaudited | audited | audited | audited |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| | Notes | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Revenue | 2 | 16,678 | - | 16,678 | 18,425 | - | 18,425 |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Gross rental income relating | | | | | | | |
| to investment properties | 2 | 16,574 | - | 16,574 | 15,772 | - | 15,772 |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Property outgoings | | (689) | - | (689) | (591) | - | (591) |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Net rental income relating to | | | | | | | |
| investment properties | | 15,885 | - | 15,885 | 15,181 | - | 15,181 |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Proceeds on sale of trading | | | | | | | |
| properties | 2 | 104 | - | 104 | 2,653 | - | 2,653 |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Carrying value of trading | | | | | (98) | | |
| properties sold | | - | - | - | | - | (98) |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Property outgoings relating | | | | | | | |
| to trading properties | | (33) | - | (33) | (2) | - | (2) |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Net income from trading | | | | | | | |
| properties | | 71 | - | 71 | 2,553 | - | 2,553 |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Administration expenses | | (2,998) | - | (2,998) | (2,778) | - | (2,778) |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Operating profit before net | | | | | | | |
| (losses)/gains on investment | | 12,958 | - | 12,958 | 14,956 | - | 14,956 |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Profit on disposal of | | | | | | | |
| investment properties | | - | 618 | 618 | - | 48 | 48 |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Net losses on revaluation of | | | | | | | |
| investment and development | | | | | | | |
| properties | 3 | - | (64,185) | (64,185) | - | (41,169) | (41,169) |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Operating profit/(loss) | 3 | 12,958 | (63,567) | (50,609) | 14,956 | (41,121) | (26,165) |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Net finance costs | 4 | (1,393) | - | (1,393) | (544) | - | (544) |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Profit/(loss) before tax | | 11,565 | (63,567) | (52,002) | 14,412 | (41,121) | (26,709) |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Current tax | | (94) | - | (94) | (535) | - | (535) |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Deferred tax credit/(charge) | | - | 79 | 79 | - | (17) | (17) |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Total tax (charge)/credit | 5 | (94) | 79 | (15) | (535) | (17) | (552) |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| Profit/(loss) for the | | | | | | | |
| financial period | | 11,471 | (63,488) | (52,017) | 13,877 | (41,138) | (27,261) |
+-------------------------------+--------+------------+------------+-----------+----------+----------+-------------+
| | | | | | | | |
+-------------------------------+--------+------------+------------+--------+--+-------+--+----------+-------------+
+-------------------------------+--------+------------+------------+------------+------------+------------+-----------+
| | | | | | | | |
| Basic and diluted loss per | 7 | | | (86.71p) | | | (45.44p) |
| share | | | | | | | |
+-------------------------------+--------+------------+------------+------------+------------+------------+-----------+
| | | | | | | | |
+-------------------------------+--------+------------+------------+------------+------------+------------+-----------+
| All operations are | | | | | | | |
| continuing. | | | | | | | |
+-------------------------------+--------+------------+------------+------------+------------+------------+-----------+
Notes
The Group has presented the income statement in a three-column format, so as to
present adjusted amounts to exclude the impact of EPRA adjustments and related
tax. The directors consider that the adjusted figures give a useful comparison
for the periods shown in the consolidated financial statements.
+-----------------------------------------+----------+------------+----+--------------+
| | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| CONSOLIDATED BALANCE SHEET | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| at 30 June 2009 | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| | | 2009 | | 2008 |
+-----------------------------------------+----------+------------+----+--------------+
| | | unaudited | | audited |
+-----------------------------------------+----------+------------+----+--------------+
| | Notes | GBP000 | | GBP000 |
+-----------------------------------------+----------+------------+----+--------------+
| Non-current assets | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| Investment and development properties | 8 | 199,664 | | 262,991 |
+-----------------------------------------+----------+------------+----+--------------+
| Property, plant and equipment | | 1,323 | | 1,657 |
+-----------------------------------------+----------+------------+----+--------------+
| Trade and other receivables | | 315 | | 332 |
+-----------------------------------------+----------+------------+----+--------------+
| | | 201,302 | | 264,980 |
+-----------------------------------------+----------+------------+----+--------------+
| | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| Current assets | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| Trading properties | | 965 | | 912 |
+-----------------------------------------+----------+------------+----+--------------+
| Trade and other receivables | | 4,931 | | 3,993 |
+-----------------------------------------+----------+------------+----+--------------+
| Cash and cash equivalents | | 2,352 | | 2,203 |
+-----------------------------------------+----------+------------+----+--------------+
| | | 8,248 | | 7,108 |
+-----------------------------------------+----------+------------+----+--------------+
| | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| Total assets | | 209,550 | | 272,088 |
+-----------------------------------------+----------+------------+----+--------------+
| | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| Current liabilities | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| Trade and other payables | | (7,894) | | (13,410) |
+-----------------------------------------+----------+------------+----+--------------+
| Borrowings | | - | | (76) |
+-----------------------------------------+----------+------------+----+--------------+
| Tax liabilities | | (1,602) | | (4,464) |
+-----------------------------------------+----------+------------+----+--------------+
| | | (9,496) | | (17,950) |
+-----------------------------------------+----------+------------+----+--------------+
| | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| Non-current liabilities | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| Borrowings | | (40,320) | | (31,314) |
+-----------------------------------------+----------+------------+----+--------------+
| Deferred tax | | - | | (144) |
+-----------------------------------------+----------+------------+----+--------------+
| | | (40,320) | | (31,458) |
+-----------------------------------------+----------+------------+----+--------------+
| | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| Total liabilities | | (49,816) | | (49,408) |
+-----------------------------------------+----------+------------+----+--------------+
| | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| Net assets | | 159,734 | | 222,680 |
+-----------------------------------------+----------+------------+----+--------------+
| | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| Equity | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| Called up ordinary share capital | | 14,998 | | 14,998 |
+-----------------------------------------+----------+------------+----+--------------+
| Revaluation reserve | | 605 | | 1,055 |
+-----------------------------------------+----------+------------+----+--------------+
| Share based payment reserve | | 109 | | 48 |
+-----------------------------------------+----------+------------+----+--------------+
| Redemption reserve | | 11,162 | | 11,162 |
+-----------------------------------------+----------+------------+----+--------------+
| Retained earnings | | 132,860 | | 195,417 |
+-----------------------------------------+----------+------------+----+--------------+
| Total equity | 9 | 159,734 | | 222,680 |
+-----------------------------------------+----------+------------+----+--------------+
| | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| Net assets per Ordinary share | | | | |
+-----------------------------------------+----------+------------+----+--------------+
| - Basic and diluted | 7 | 266p | | 371p |
+-----------------------------------------+----------+------------+----+--------------+
| - Adjusted | 7 | 267p | | 379p |
+-----------------------------------------+----------+------------+----+--------------+
| | | | | |
+-----------------------------------------+----------+------------+----+--------------+
+----------------------------+------+----------+--------+------------+----+--------------+
| CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE |
+----------------------------------------------------------------------------------------+
| For the year ended 30 June 2009 |
+----------------------------------------------------------------------------------------+
| | | | | | | |
+----------------------------+------+----------+--------+------------+----+--------------+
| | | | | 2009 | | 2008 |
+----------------------------+------+----------+--------+------------+----+--------------+
| | | | | unaudited | | audited |
+----------------------------+------+----------+--------+------------+----+--------------+
| | | | Notes | GBP000 | | GBP000 |
+----------------------------+------+----------+--------+------------+----+--------------+
| | | | | | | |
+----------------------------+------+----------+--------+------------+----+--------------+
| (Deficit)/gain on revaluation of development | 3 | (516) | | 236 |
| and owner occupied properties | | | | |
+----------------------------------------------+--------+------------+----+--------------+
| | | | | |
+----------------------------------------------+--------+------------+----+--------------+
| Cancellation of share options | | 66 | | - |
+----------------------------------------------+--------+------------+----+--------------+
| | | | | |
+----------------------------------------------+--------+------------+----+--------------+
| Deferred tax liability on items taken to | 5 | 65 | | 6 |
| equity | | | | |
+----------------------------------------------+--------+------------+----+--------------+
| Net (deficit)/gain recognised directly in | | (385) | | 242 |
| equity | | | | |
+----------------------------------------------+--------+------------+----+--------------+
| | | | | | | |
+----------------------------+------+----------+--------+------------+----+--------------+
| Loss for the year | | (52,017) | | (27,261) |
+----------------------------------------------+--------+------------+----+--------------+
| | | | | | | |
+----------------------------+------+----------+--------+------------+----+--------------+
| Total recognised income and expense for the | 9 | (52,402) | | (27,019) |
| year | | | | |
+----------------------------------------------+--------+------------+----+--------------+
| | | | | | | |
+----------------------------+------+----------+--------+------------+----+--------------+
+-----------------------------------------------------+------------+----+------------+
| CONSOLIDATED CASH FLOW STATEMENT | | | |
+-----------------------------------------------------+------------+----+------------+
| For the year ended 30 June 2009 | | | |
+-----------------------------------------------------+------------+----+------------+
| | 2009 | | 2008 |
+-----------------------------------------------------+------------+----+------------+
| | unaudited | | audited |
+-----------------------------------------------------+------------+----+------------+
| | GBP000 | | GBP000 |
+-----------------------------------------------------+------------+----+------------+
| Cash flows from operating activities | | | |
+-----------------------------------------------------+------------+----+------------+
| Operating loss | (50,609) | | (26,165) |
+-----------------------------------------------------+------------+----+------------+
| Adjustments for non-cash items | | | |
+-----------------------------------------------------+------------+----+------------+
| - Unrealised net revaluation losses on investment | 64,185 | | 41,169 |
| and development properties | | | |
+-----------------------------------------------------+------------+----+------------+
| - Profit on disposal of investment properties | (618) | | (48) |
+-----------------------------------------------------+------------+----+------------+
| - Depreciation and other non-cash items | 95 | | 93 |
+-----------------------------------------------------+------------+----+------------+
| - Profit on sale of fixed assets | - | | (23) |
+-----------------------------------------------------+------------+----+------------+
| Other movements arising from operations | | | |
+-----------------------------------------------------+------------+----+------------+
| - (Increase)/decrease in trading properties | (56) | | 47 |
+-----------------------------------------------------+------------+----+------------+
| - (Increase)/decrease in receivables | (748) | | 367 |
+-----------------------------------------------------+------------+----+------------+
| - Increase/(decrease) in payables | 793 | | (678) |
+-----------------------------------------------------+------------+----+------------+
| Net cash generated from operations | 13,042 | | 14,762 |
+-----------------------------------------------------+------------+----+------------+
| | | | |
+-----------------------------------------------------+------------+----+------------+
| Interest received | 339 | | 42 |
+-----------------------------------------------------+------------+----+------------+
| Interest paid | (2,101) | | (1,522) |
+-----------------------------------------------------+------------+----+------------+
| Preference dividends paid | (47) | | (47) |
+-----------------------------------------------------+------------+----+------------+
| Corporation tax paid | (3,586) | | (5,367) |
+-----------------------------------------------------+------------+----+------------+
| Net cash inflow from operating activities | 7,647 | | 7,868 |
+-----------------------------------------------------+------------+----+------------+
| | | | |
+-----------------------------------------------------+------------+----+------------+
| Cash flows from investing activities | | | |
+-----------------------------------------------------+------------+----+------------+
| Acquisition and property development | (3,579) | | (14,859) |
+-----------------------------------------------------+------------+----+------------+
| Grants received | 34 | | 293 |
+-----------------------------------------------------+------------+----+------------+
| Sales of investment properties | 1,915 | | 48 |
+-----------------------------------------------------+------------+----+------------+
| Expenditure on property, plant and equipment | - | | (89) |
+-----------------------------------------------------+------------+----+------------+
| Net cash outflow from investing activities | (1,630) | | (14,607) |
+-----------------------------------------------------+------------+----+------------+
| | | | |
+-----------------------------------------------------+------------+----+------------+
| Cash flows from financing activities | | | |
+-----------------------------------------------------+------------+----+------------+
| Net increase in borrowings | 8,924 | | 12,513 |
+-----------------------------------------------------+------------+----+------------+
| Equity dividends paid | (14,792) | | (4,823) |
+-----------------------------------------------------+------------+----+------------+
| Net cash (outflow)/inflow from financing activities | (5,868) | | 7,690 |
+-----------------------------------------------------+------------+----+------------+
| | | | |
+-----------------------------------------------------+------------+----+------------+
| Net increase in cash and cash equivalents | 149 | | 951 |
+-----------------------------------------------------+------------+----+------------+
| | | | |
+-----------------------------------------------------+------------+----+------------+
| Cash and cash equivalents at 1 July | 2,203 | | 1,252 |
+-----------------------------------------------------+------------+----+------------+
| | | | |
+-----------------------------------------------------+------------+----+------------+
| Cash and cash equivalents at 30 June | 2,352 | | 2,203 |
+-----------------------------------------------------+------------+----+------------+
| | | | |
+-----------------------------------------------------+------------+----+------------+
| | | | |
+-----------------------------------------------------+------------+----+------------+
NOTES TO THE ACCOUNTS
1 Accounting policies
Basis of preparation of financial information
The financial statements are prepared in accordance with International Financial
Reporting Standards (IFRSs) adopted for use in the European Union and therefore
comply with Article 4 of the EU IAS regulation. Whilst the financial information
included in this preliminary announcement has been computed in accordance with
IFRSs, this announcement itself does not contain sufficient information to
comply with IFRSs. The Company expects to publish full financial statements that
comply with IFRSs on 1 October 2009.
The preliminary accounts were approved by the board of directors on 8 September
2009. The financial information set out in the announcement does not constitute
the company's statutory accounts for the years ended 30 June 2009 or 2008 as
defined under Section 434 of the Companies Act 2006. The financial information
for the year ended 30 June 2008 is derived from the statutory accounts for that
year which have been delivered to the Registrar of Companies. The auditors
reported on those accounts; their report was unqualified, did not draw attention
to any matters by way of emphasis without qualifying their report and did not
contain a statement under section 498 of the Companies Act 2006. The audit of
the statutory accounts for the year ended 30 June 2009 is not yet complete. The
statutory accounts for the year ended 30 June 2009 will be finalised on the
basis of the financial information presented by the directors in this
preliminary announcement and will be delivered to the Registrar of Companies
following the company's annual general meeting.
The financial statements are prepared under the historical cost convention,
except for the revaluation of investment properties, development properties and
owner occupied properties and deferred tax thereon and certain financial assets,
with consistent accounting policies to the prior year.
The preparation of financial statements requires the use of estimates and
assumptions that affect reported amounts of assets and liabilities during the
reporting period. These estimates and assumptions are based on management's best
knowledge of the amount, events or actions. Actual results may differ from
those amounts.
As at 30 June 2009 the Group had GBP29.5m of undrawn banking facilities and had
drawn down GBP15.5m from its HSBC GBP20m 2012 Revolving Credit Facility. The
Group's GBP10m overdraft and GBP15m 2010 Revolving Credit Facility, both of
which were due for renewal within 12 months of the date of this document, were
undrawn. Since the year end the Group has agreed terms with HSBC to renew all of
the Group's HSBC banking facilities, and in addition to take out a five year
GBP20m term loan. The legal work required is ongoing and is expected to be
completed within the next couple of months. The Group's new GBP40m of revolving
credit facilities will expire in 2014 and the revised GBP5m overdraft was
renewed for a twelve month period. Given these new facilities, the Group's low
gearing level of 24% and GBP63.7m of unencumbered properties (after taking into
account properties pledged to HSBC for the new facilities), significant capacity
exists to raise additional finance or to provide additional security for
existing facilities, should property values fall further. Accordingly, the
Directors continue to adopt the going concern basis in preparing the annual
report and accounts.
The Group financial statements consolidate the financial statements of the
Company and all its subsidiaries. Control is assumed where the parent company
has the power to govern the financial and operational policies of the
subsidiary.
Unrealised gains and losses on intra-group transactions and intra-group balances
are eliminated from the consolidated results.
At the date of this announcement, the following Standards and Interpretations
which have not been applied in these financial statements were in issue but not
yet effective:
+--------------+---------------------------------------------------------+
| IAS 1 | Presentation of financial statements |
| (revised) | |
+--------------+---------------------------------------------------------+
| IAS 23 | Borrowing costs |
| (revised) | |
+--------------+---------------------------------------------------------+
| IAS 27 | Consolidated and separate financial statements |
| (revised) | |
+--------------+---------------------------------------------------------+
| IAS 40 | Investment Property (amendment) |
+--------------+---------------------------------------------------------+
| IFRS 1 | First Time Adoption of IFRS |
| (revised) | |
+--------------+---------------------------------------------------------+
| IFRS 2 | Share based payments (amendment) |
+--------------+---------------------------------------------------------+
| IFRS 3 | Business Combinations |
| (revised) | |
+--------------+---------------------------------------------------------+
| IFRS 7 | Improving Disclosures about Financial Instruments |
+--------------+---------------------------------------------------------+
| IFRS 8 | Operating segments |
+--------------+---------------------------------------------------------+
| IFRIC 9 | Reassessment of embedded derivatives |
+--------------+---------------------------------------------------------+
| IFRIC 15 | Agreements for the Construction of Real Estate |
+--------------+---------------------------------------------------------+
| IFRIC 16 | Hedges of a net investment in a foreign operation |
+--------------+---------------------------------------------------------+
| IFRIC 17 | Distributions of Non-Cash Assets to Owners |
+--------------+---------------------------------------------------------+
| IFRIC 18 | Transfers of Assets from Customers |
+--------------+---------------------------------------------------------+
In addition, Improvements to IFRSs, issued in April 2009 is the current year
tranche of the Improvements to IFRS project and has a number of minor amendments
to existing IAS and IFRS, which require implementation from 1 July 2009.
IAS 1 (revised) and the amendment to IAS 40 are the only changes that are
expected to have a material impact on the financial statements of the Group.
This revision to IAS 1 is applicable from 1 July 2009, and is expected to affect
the presentation and classification of certain items within the Group's
financial statements. An amendment to IAS 40 'Investment Property' will mean
that, with effect from the next reporting period commencing 1 July 2009,
property under construction or development for future use as an investment
property will be recognised in investment property and measured at fair value
through the income statement. This replaces the current treatment under IAS 16,
where properties acquired to be developed for future use as an investment
property are treated as development property until completion, with any fair
value movement recorded in the Statement of Recognised Income and Expense. It is
not possible to estimate the impact that this is likely to have on the Group,
but the effect will be on profit before tax, with no change in net assets.
Other than the revision to IAS 1 and the amendment to IAS 40, the directors
anticipate that the adoption of these Standards, Amendments and Interpretations
in future periods will have no material impact on the financial statements of
the Group.
Revenue recognition
Rental income
Gross rental income represents rents receivable for the year. Rent increases
arising from rent reviews due during the year are taken into account only to the
extent that such reviews have been agreed with tenants at the accounting date.
Rental income from operating leases is recognised on a straight-line basis over
the term of the lease.
Lease incentives are amortised on a straight-line basis over the lease term.
Property operating expenses are expensed as incurred. Service charges and other
recoverables are credited against the related expense.
Revenue and profits on sale of investment and trading properties
Revenue and profits on sale of investment properties and trading properties are
taken into account on the completion of contracts.
The amount of profit recognised is the difference between sale proceeds and the
carrying amount.
Dividends and interest income
Dividend income from investments in subsidiaries is recognised when
shareholders' rights to receive payment have been established.
Interest income is recognised on an accruals basis when it falls due.
Cost of properties
An amount equivalent to the total development outgoings, including interest,
attributable to properties held for development is added to the cost of such
properties. A property is regarded as being in the course of development until
practical completion.
Interest associated with direct expenditure on investment properties which are
undergoing development or major refurbishment and development properties is
capitalised. Direct expenditure includes the purchase cost of a site or property
for development properties, but does not include the original book cost of
investment property under development or refurbishment. Interest is capitalised
gross from the start of the development work until the date of practical
completion, but is suspended if there are prolonged periods when development
activity is interrupted. The rate used is the rate on specific associated
borrowings or, for that part of the development costs financed out of general
funds, the average rate.
Valuation of properties
Investment properties are valued at the balance sheet date at market value.
Where investment properties are being redeveloped the property continues to be
treated as an investment property. Surpluses and deficits attributable to the
Group arising from revaluation are recognised in the income statement. Valuation
surpluses reflected in retained earnings are not distributable until realised on
sale.
Properties under development, which were not previously classified as investment
properties, are valued at market value until practical completion, when they are
transferred to investment properties. Valuation surpluses and deficits
attributable to properties under development are taken to revaluation reserve
until completion, when they are transferred to retained earnings. Where the
valuation is below historic cost, the deficit is recognised in the income
statement.
Owner-occupied properties are valued at the balance sheet date at market value.
Valuation changes in owner-occupied property are taken to revaluation reserve.
Where the valuation is below historic cost, the deficit is recognised in the
income statement.
Trading properties held for resale are stated at the lower of cost and net
realisable value.
Critical accounting judgements and key sources of estimation uncertainty
Management has made judgements over the valuation of properties that has a
significant effect on the amounts recognised in the financial statements.
Management has used the valuation performed by its independent valuers as the
fair value of its investment, development, owner-occupied and trading
properties. The valuation is based upon assumptions including future rental
income and an appropriate discount rate. The valuers also use market evidence of
transaction prices for similar properties.
Property, plant and equipment
Land and buildings held for use in the production or supply of goods or
services, or for administrative purposes, are stated in the balance sheet at
their revalued amounts, being the fair value at the date of revaluation, less
any subsequent accumulated depreciation and subsequent accumulated impairment
losses. Revaluations are performed with sufficient regularity such that the
carrying amount does not differ materially from that which would be determined
using fair values at the balance sheet date.
Any revaluation increase arising on the revaluation of such land and buildings
is credited to the properties revaluation reserve, except to the extent that it
reverses a revaluation decrease for the same asset previously recognised as an
expense, in which case the increase is credited to the income statement to the
extent of the decrease previously charged. A decrease in carrying amount arising
on the revaluation of such land and buildings is charged as an expense to the
extent that it exceeds the balance, if any, held in the properties revaluation
reserve relating to a previous revaluation of that asset.
Depreciation on revalued buildings is charged to income. On the subsequent sale
or retirement of a revalued property, the attributable revaluation surplus
remaining in the properties revaluation reserve is transferred directly to
retained earnings.
Plant and equipment is stated at cost less accumulated depreciation, less any
recognised impairment.
Depreciation
Depreciation is provided on buildings, motor vehicles and fixtures and fittings
on a straight-line basis over the estimated useful lives of between two and
twenty-five years. Investment properties are not depreciated.
Government grants
Capital grants received relating to the cost of building or refurbishing
investment properties are deducted from the cost of the relevant property.
Revenue grants are deducted from the related expenditure.
Share-based payments
The cost of granting equity-settled share options and other share-based
remuneration is recognised in the income statement at their fair value at grant
date. They are expensed straight-line over the vesting period, based on
estimates of the shares or options that eventually vest. Options are valued
using the Monte Carlo simulation model.
Deferred taxation
Deferred taxation is provided in full on temporary differences that result in an
obligation to pay more tax, or a right to pay less tax, at a future date, at
rates expected to apply when they crystallise based on current tax rates and
law. Temporary differences arise from the inclusion of items in taxation
computations in periods different from when they are included in the financial
statements. Deferred tax is provided on temporary differences arising from the
revaluation of fixed assets. Deferred tax assets are recognised to the extent
that it is regarded as more likely than not that they will be recovered.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax. The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income and expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Tax is recognised in the income statement except for items that are reflected
directly in equity, where the tax is also recognised in equity.
Pension costs
The cost to the Group of contributions made to defined contribution plans is
expensed when the contributions fall due.
Acquisitions
On the acquisition of a business, including an interest in an associated
undertaking, fair values are attributed to the Group's share of separable net
assets. Where the fair value of the cost of acquisition exceeds the fair value
attributable to such assets, the difference is treated as purchased goodwill and
capitalised in the balance sheet in the year of acquisition.
Goodwill is reviewed annually for impairment. Under the Group's previous policy,
GBP134,728 of goodwill has been written off directly to reserves as a matter of
accounting policy. This would be credited to the income statement on disposal of
the business to which it related.
Group undertakings
Investments are included in the balance sheet at cost less any permanent
diminution in value.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance
sheet when the Group becomes a party to the contractual provisions of the
instrument. The Group derecognises a financial asset only when the contractual
rights to the cash flows from the asset expire; or it transfers the financial
asset and substantially all the risks and rewards of ownership of the asset to
another entity. If the Group neither transfers nor retains substantially all the
risks and rewards of ownership and continues to control the transferred asset,
the Group recognises its retained interest in the asset and an associated
liability for any amounts it may have to pay. If the Group retains substantially
all the risks and rewards of ownership of a transferred financial asset, the
Group continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received. The Group derecognises
financial liabilities when, and only when, the Group's obligations are
discharged, cancelled, or they expire.
Trade receivables
Trade receivables are measured at initial recognition at fair value, and are
subsequently measured at amortised cost using the effective interest rate
method. Appropriate allowances for estimated irrecoverable amounts are
recognised in the income statement when there is objective evidence that the
asset is impaired. The allowance recognised is measured as the difference
between the asset's carrying amount and the present value of future cash flows
discounted at the effective rate computed at initial recognition.
Available for sale assets
Mortgages receivable held by the Group are classified as being available for
sale and are stated at fair value. Fair value is determined in the manner
described in note 12 to the annual report. Gains and losses arising from changes
in fair value are recognised directly in equity in the investments revaluation
reserve with the exception of impairment losses, which are recognised directly
in the income statement.
Where the investment is disposed of or is determined to be impaired, the
cumulative gain or loss recognised in the investments revaluation reserve is
included in profit or loss for the period.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits, and other
short-term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs. Finance charges, including premiums payable
on settlements or redemption and direct issue costs, are accounted for on an
accrual basis in the income statement using the effective interest rate method
and are added to the carrying amount of the instrument to the extent that they
are not settled in the period in which they arise.
Trade payables
Trade payables are initially measured at fair value, and are subsequently
measured at amortised cost, using the effective interest rate method.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received,
net of direct issue costs.
+-----+--------------------------------------------------+------------+---+------------+
| 2 | Revenue | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | | 2009 | | 2008 |
+-----+--------------------------------------------------+------------+---+------------+
| | | unaudited | | audited |
+-----+--------------------------------------------------+------------+---+------------+
| | | GBP000 | | GBP000 |
+-----+--------------------------------------------------+------------+---+------------+
| | | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | Total rental income from investment and | 16,574 | | 15,772 |
| | development properties | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | Income received from trading properties | 104 | | 2,653 |
+-----+--------------------------------------------------+------------+---+------------+
| | | 16,678 | | 18,425 |
+-----+--------------------------------------------------+------------+---+------------+
| | | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | Finance income (note 4) | 354 | | 60 |
+-----+--------------------------------------------------+------------+---+------------+
| | | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | Total revenue | 17,032 | | 18,485 |
+-----+--------------------------------------------------+------------+---+------------+
+-----+--------------------------------------------------+------------+---+------------+
| 3 | Segmental analysis - primary segments |
| | |
+-----+--------------------------------------------------------------------------------+
| | | 2009 | | 2008 |
+-----+--------------------------------------------------+------------+---+------------+
| | | unaudited | | audited |
+-----+--------------------------------------------------+------------+---+------------+
| | | GBP000 | | GBP000 |
+-----+--------------------------------------------------+------------+---+------------+
| | Investment and development properties | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | - Net rental income | 15,885 | | 15,181 |
+-----+--------------------------------------------------+------------+---+------------+
| | - Profit on disposal | 618 | | 48 |
+-----+--------------------------------------------------+------------+---+------------+
| | - Deficit on revaluation of investment | (57,184) | | (38,440) |
| | properties | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | - Deficit on revaluation of development | (7,001) | | (2,729) |
| | properties | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | | (47,682) | | (25,940) |
+-----+--------------------------------------------------+------------+---+------------+
| | Trading properties | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | - Income received from trading properties | 104 | | 2,653 |
+-----+--------------------------------------------------+------------+---+------------+
| | - Carrying value on sales | - | | (98) |
+-----+--------------------------------------------------+------------+---+------------+
| | - Property outgoings | (33) | | (2) |
+-----+--------------------------------------------------+------------+---+------------+
| | | 71 | | 2,553 |
+-----+--------------------------------------------------+------------+---+------------+
| | | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | Administration expenses | (2,998) | | (2,778) |
+-----+--------------------------------------------------+------------+---+------------+
| | | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | Operating loss | (50,609) | | (26,165) |
+-----+--------------------------------------------------+------------+---+------------+
| | | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | Net financing costs | (1,393) | | (544) |
+-----+--------------------------------------------------+------------+---+------------+
| | | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | Loss before tax | (52,002) | | (26,709) |
+-----+--------------------------------------------------+------------+---+------------+
| | | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | The property revaluation (deficit)/surplus has been recognised as follows: |
+-----+--------------------------------------------------------------------------------+
| | Income statement | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | - Investment properties | (57,184) | | (38,440) |
+-----+--------------------------------------------------+------------+---+------------+
| | - Development properties | (7,001) | | (2,729) |
+-----+--------------------------------------------------+------------+---+------------+
| | | (64,185) | | (41,169) |
+-----+--------------------------------------------------+------------+---+------------+
| | Statement of recognised income and expense |
+-----+--------------------------------------------------------------------------------+
| | - Development and owner occupied properties | (516) | | 236 |
+-----+--------------------------------------------------+------------+---+------------+
| | | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | Total revaluation deficit for the period | (64,701) | | (40,933) |
+-----+--------------------------------------------------+------------+---+------------+
| | | | | |
+-----+--------------------------------------------------+------------+---+------------+
| | All operations and income are derived from the United Kingdom. |
+-----+--------------------------------------------------+------------+---+------------+
+----+---------------------------------------------------+------------+---+------------+
| 4 | Net financing costs | | | |
+----+---------------------------------------------------+------------+---+------------+
| | | 2009 | | 2008 |
+----+---------------------------------------------------+------------+---+------------+
| | | unaudited | | audited |
+----+---------------------------------------------------+------------+---+------------+
| | | GBP000 | | GBP000 |
+----+---------------------------------------------------+------------+---+------------+
| | Finance costs on: | | | |
+----+---------------------------------------------------+------------+---+------------+
| | Debenture stock | 483 | | 483 |
+----+---------------------------------------------------+------------+---+------------+
| | Preference share dividend | 47 | | 47 |
+----+---------------------------------------------------+------------+---+------------+
| | Capitalised interest | (360) | | (1,432) |
+----+---------------------------------------------------+------------+---+------------+
| | Bank overdraft and loan interest payable | 1,577 | | 1,506 |
+----+---------------------------------------------------+------------+---+------------+
| | Total finance costs | 1,747 | | 604 |
+----+---------------------------------------------------+------------+---+------------+
| | | | | |
+----+---------------------------------------------------+------------+---+------------+
| | Finance income on: | | | |
+----+---------------------------------------------------+------------+---+------------+
| | Short-term deposits | 2 | | 6 |
+----+---------------------------------------------------+------------+---+------------+
| | Bank and other interest receivable | 352 | | 54 |
+----+---------------------------------------------------+------------+---+------------+
| | Total finance income | 354 | | 60 |
+----+---------------------------------------------------+------------+---+------------+
| | | | | |
+----+---------------------------------------------------+------------+---+------------+
| | Net finance costs | 1,393 | | 544 |
+----+---------------------------------------------------+------------+---+------------+
+----+---------------------------------------------------+------------+---+------------+
| | | | | |
+----+---------------------------------------------------+------------+---+------------+
| 5 | Taxation | | | |
+----+---------------------------------------------------+------------+---+------------+
| | | 2009 | | 2008 |
+----+---------------------------------------------------+------------+---+------------+
| | | unaudited | | audited |
+----+---------------------------------------------------+------------+---+------------+
| | | GBP000 | | GBP000 |
+----+---------------------------------------------------+------------+---+------------+
| | Tax charge | | | |
+----+---------------------------------------------------+------------+---+------------+
| | Current tax | | | |
+----+---------------------------------------------------+------------+---+------------+
| | - Corporation tax charged at 28% (2008: 29.5%) | 171 | | 877 |
+----+---------------------------------------------------+------------+---+------------+
| | - Prior year adjustment | (77) | | (342) |
+----+---------------------------------------------------+------------+---+------------+
| | Total current tax | 94 | | 535 |
+----+---------------------------------------------------+------------+---+------------+
| | | | | |
+----+---------------------------------------------------+------------+---+------------+
| | Deferred tax | | | |
+----+---------------------------------------------------+------------+---+------------+
| | - Other deferred tax | - | | 17 |
+----+---------------------------------------------------+------------+---+------------+
| | - Prior year adjustment | (79) | | - |
+----+---------------------------------------------------+------------+---+------------+
| | Deferred tax (credit)/charge | (79) | | 17 |
+----+---------------------------------------------------+------------+---+------------+
| | | | | |
+----+---------------------------------------------------+------------+---+------------+
| | Total tax charge in the income statement | 15 | | 552 |
+----+---------------------------------------------------+------------+---+------------+
| | | | | |
+----+---------------------------------------------------+------------+---+------------+
| | Tax recognised in equity | | | |
+----+---------------------------------------------------+------------+---+------------+
| | Deferred tax | (65) | | (6) |
+----+---------------------------------------------------+------------+---+------------+
+----+----------------------------------------------------+-----------+---+------------+
| 6 | Dividends | | | |
+----+----------------------------------------------------+-----------+---+------------+
| | | 2009 | | 2008 |
+----+----------------------------------------------------+-----------+---+------------+
| | | unaudited | | audited |
+----+----------------------------------------------------+-----------+---+------------+
| | | GBP000 | | GBP000 |
+----+----------------------------------------------------+-----------+---+------------+
| | Amounts recognised as distributions to equity | | | |
| | holders in the year: | | | |
+----+----------------------------------------------------+-----------+---+------------+
| | Final dividend for the year ended 30 June 2008 of | 5,787 | | 4,823 |
| | 9.65p (2007: 8.04p) per share | | | |
+----+----------------------------------------------------+-----------+---+------------+
| | Interim dividend for the year ended 30 June 2009 | 4,818 | | 4,818 |
| | of 8.03p (2008: 8.03p) per share | | | |
+----+----------------------------------------------------+-----------+---+------------+
| | | 10,605 | | 9,641 |
+----+----------------------------------------------------+-----------+---+------------+
| | | | | |
+----+----------------------------------------------------+-----------+---+------------+
| | The directors propose a final dividend for the year ended 30 June 2009 of |
| | 9.65p (2008: 9.65p) per Ordinary share, totalling GBP5.8m. |
+----+---------------------------------------------------------------------------------+
| | |
+----+---------------------------------------------------------------------------------+
| | The proposed final dividend is subject to approval by Shareholders at the |
| | Annual General Meeting and has therefore not been included as a liability in |
| | these financial statements. |
| | The final dividend, if approved, will be paid on 4 January |
| | 2010 to Shareholders on the register at the close of business on 27 November |
| | 2009. |
+----+----------------------------------------------------+-----------+---+------------+
+----+--+---------------------------------------------------+------------+---+------------+
| | |
+-------+---------------------------------------------------------------------------------+
| 7 | (Loss)/profit, earnings per share and net asset value per share |
+-------+---------------------------------------------------------------------------------+
| | |
+-------+---------------------------------------------------------------------------------+
| | (Loss)/profit before tax |
+-------+---------------------------------------------------------------------------------+
| | The adjusted profit before tax has been amended from the loss before tax as |
| | follows: |
+-------+---------------------------------------------------------------------------------+
| | |
+-------+---------------------------------------------------------------------------------+
| | | 2009 | | 2008 |
+-------+---------------------------------------------------+------------+---+------------+
| | | unaudited | | audited |
+-------+---------------------------------------------------+------------+---+------------+
| | | GBP000 | | GBP000 |
+-------+---------------------------------------------------+------------+---+------------+
| | Loss before tax | (52,002) | | (26,709) |
+-------+---------------------------------------------------+------------+---+------------+
| | Profit on disposal of investment properties | (618) | | (48) |
+-------+---------------------------------------------------+------------+---+------------+
| | Net losses on revaluation of investment and | 64,185 | | 41,169 |
| | development properties | | | |
+-------+---------------------------------------------------+------------+---+------------+
| | Adjusted profit before tax | 11,565 | | 14,412 |
+-------+---------------------------------------------------+------------+---+------------+
| | | | | |
+-------+---------------------------------------------------+------------+---+------------+
| | Earnings per share | | | |
+-------+---------------------------------------------------+------------+---+------------+
| | | | | |
+-------+---------------------------------------------------+------------+---+------------+
| | The basic and diluted loss per share of 86.71p (2008 loss: 45.44p) has been |
| | calculated on the basis of the weighted average of 59,991,990 Ordinary shares |
| | and loss of GBP52.0m (2008 loss: GBP27.3m). The adjusted earnings per share has |
| | been amended from the basic and diluted earnings per share by the following: |
+-------+---------------------------------------------------------------------------------+
| | |
+-------+---------------------------------------------------------------------------------+
| | | 2009 | | 2008 |
+-------+---------------------------------------------------+------------+---+------------+
| | | unaudited | | audited |
+-------+---------------------------------------------------+------------+---+------------+
| | | GBP000 | | GBP000 |
+-------+---------------------------------------------------+------------+---+------------+
| | Earnings | (52,017) | | (27,261) |
+-------+---------------------------------------------------+------------+---+------------+
| | Profit on disposal of investment properties | (618) | | (48) |
+-------+---------------------------------------------------+------------+---+------------+
| | Net losses/(gains) on revaluation of investment | 64,185 | | 41,169 |
| | and development properties | | | |
+-------+---------------------------------------------------+------------+---+------------+
| | Deferred tax | (79) | | 17 |
+-------+---------------------------------------------------+------------+---+------------+
| | EPRA adjusted and adjusted earnings | 11,471 | | 13,877 |
+-------+---------------------------------------------------+------------+---+------------+
| | | | | |
+-------+---------------------------------------------------+------------+---+------------+
| | EPRA diluted earnings per share | 19.12p | | 23.13p |
+-------+---------------------------------------------------+------------+---+------------+
| | Adjusted (and adjusted diluted) earnings per | 19.12p | | 23.13p |
| | share | | | |
+-------+---------------------------------------------------+------------+---+------------+
| | | | | |
+-------+---------------------------------------------------+------------+---+------------+
| | The Group presents an adjusted 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 105,411 Ordinary shares were |
| | granted in the year (2008: 176,628 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. 56,200 Ordinary |
| | shares from the 2007 award have lapsed in the year. |
+-------+---------------------------------------------------------------------------------+
| | |
+----+------------------------------------------------------------------------------------+
| | Net asset value per share |
+----+------------------------------------------------------------------------------------+
| | The net asset value per share of 266p (2008: 371p) has been calculated on the |
| | basis of the number of equity shares in issue of 59,991,990 and net assets of |
| | GBP159.73m (2008: GBP222.68m). The adjusted net asset value per share has been |
| | calculated as follows: |
+----+--+---------------------------------------------------+------------+---+------------+
+----+----------------------------------+------------+----+-------------+---+------------+
| | | 2009 | | 2008 |
+----+----------------------------------------------------+-------------+---+------------+
| | | unaudited | | audited |
+----+----------------------------------------------------+-------------+---+------------+
| | | GBP000 | | GBP000 |
+----+----------------------------------------------------+-------------+---+------------+
| | Equity shareholders funds | 159,734 | | 222,680 |
+----+----------------------------------------------------+-------------+---+------------+
| | Valuation of land held as trading properties | 5,178 | | 5,748 |
+----+----------------------------------------------------+-------------+---+------------+
| | Book value of land held as trading properties | (965) | | (912) |
+----+----------------------------------------------------+-------------+---+------------+
| | Mark to market on debt | (3,875) | | (500) |
+----+----------------------------------------------------+-------------+---+------------+
| | Deferred tax | - | | 144 |
+----+----------------------------------------------------+-------------+---+------------+
| | | 160,072 | | 227,160 |
+----+----------------------------------------------------+-------------+---+------------+
| | | | | |
+----+----------------------------------------------------+-------------+---+------------+
| | EPRA (adjusted) net asset value per share | 267p | | 379p |
+----+----------------------------------------------------+-------------+---+------------+
| | |
+----+-----------------------------------------------------------------------------------+
| 8 | Investment and development properties |
+----+-----------------------------------------------------------------------------------+
| | | Investment | | Development | | Total |
+----+----------------------------------+------------+----+-------------+---+------------+
| | | GBP000 | | GBP000 | | GBP000 |
+----+----------------------------------+------------+----+-------------+---+------------+
| | At 1 July 2008 | 234,391 | | 28,600 | | 262,991 |
+----+----------------------------------+------------+----+-------------+---+------------+
| | Additions | 81 | | 2,025 | | 2,106 |
+----+----------------------------------+------------+----+-------------+---+------------+
| | Capitalised interest | - | | 360 | | 360 |
+----+----------------------------------+------------+----+-------------+---+------------+
| | Transfer | 6,652 | | (6,652) | | - |
+----+----------------------------------+------------+----+-------------+---+------------+
| | Grant | (34) | | - | | (34) |
+----+----------------------------------+------------+----+-------------+---+------------+
| | Disposals | (1,297) | | - | | (1,297) |
+----+----------------------------------+------------+----+-------------+---+------------+
| | Revaluation deficit | (57,184) | | (7,278) | | (64,462) |
+----+----------------------------------+------------+----+-------------+---+------------+
| | At 30 June 2009 | 182,609 | | 17,055 | | 199,664 |
+----+----------------------------------+------------+----+-------------+---+------------+
| | | | | | | |
+----+----------------------------------+------------+----+-------------+---+------------+
| | The above comprises GBP188.4m (2008: GBP248.0m) of freehold and GBP11.3m (2008: |
| | GBP15.0m) of leasehold properties. |
+----+-----------------------------------------------------------------------------------+
| | | | | | | |
+----+----------------------------------+------------+----+-------------+---+------------+
| | | Freehold | | Leasehold | | Total |
+----+----------------------------------+------------+----+-------------+---+------------+
| | | GBP000 | | GBP000 | | GBP000 |
+----+----------------------------------+------------+----+-------------+---+------------+
| | Properties held at valuation: | | | | | |
+----+----------------------------------+------------+----+-------------+---+------------+
| | Cost | 146,550 | | 13,461 | | 160,011 |
+----+----------------------------------+------------+----+-------------+---+------------+
| | Valuation surplus/(deficit) | 41,804 | | (2,151) | | 39,653 |
+----+----------------------------------+------------+----+-------------+---+------------+
| | Valuation | 188,354 | | 11,310 | | 199,664 |
+----+----------------------------------+------------+----+-------------+---+------------+
| | | | | | | |
+----+----------------------------------+------------+----+-------------+---+------------+
| | Investment and development properties have been included at market value after |
| | having deducted an amount of GBP0.3m (2008: GBP0.2m) in respect of lease |
| | incentives and letting fees included in trade and other receivables. |
+----+-----------------------------------------------------------------------------------+
| | |
+----+-----------------------------------------------------------------------------------+
| | The properties are stated at their 30 June 2009 market value and are valued by |
| | DTZ Debenham Tie Leung, professionally qualified external valuers, in accordance |
| | with the RICS Appraisal and Valuation Standards published by the Royal |
| | Institution of Chartered Surveyors. DTZ Debenham Tie Leung have recent |
| | experience in the relevant location and category of the properties being valued. |
| | In their valuation report the valuers have noted, in accordance with Guidance |
| | Note 5 of the Standards, that the primary source of evidence for valuations |
| | should be recent, comparable market transactions on arms length terms. The |
| | current economic climate means that there have been few transactions of the type |
| | of property owned by Mucklows. Consequently, there is a greater degree of |
| | uncertainty in respect of the figures reported by our valuers. Until the number |
| | and consistency of comparable transactions increases, this situation is likely |
| | to remain. A reconciliation to the amount included above is set out below. |
+----+-----------------------------------------------------------------------------------+
| | | |
+----+----------------------------------------------------------------------+------------+
| | | GBP000 |
+----+----------------------------------------------------------------------+------------+
| | DTZ valuation as at 30 June 2009 | 200,990 |
+----+----------------------------------------------------------------------+------------+
| | Owner-occupied property included in property, plant and equipment | (982) |
+----+----------------------------------------------------------------------+------------+
| | Lease inducements | (284) |
+----+----------------------------------------------------------------------+------------+
| | Other adjustments | (60) |
+----+----------------------------------------------------------------------+------------+
| | Investment and development properties as at 30 June 2009 | 199,664 |
+----+----------------------------------------------------------------------+------------+
| | | |
+----+----------------------------------------------------------------------+------------+
| | Additions to freehold and leasehold properties include capitalised interest of |
| | GBP0.36m (2008: GBP1.43m). The capitalisation rate used was 4.61% (2008: 6.5%). |
| | The total amount of interest capitalised included in freehold and leasehold |
| | properties is GBP5.00m (2008: GBP4.64m). |
+----+-----------------------------------------------------------------------------------+
| | |
+----+-----------------------------------------------------------------------------------+
| | Properties valued at GBP97.05m (2008: GBP107.24m) were subject to a security |
| | interest. |
+----+----------------------------------+------------+----+-------------+---+------------+
+----+---------------------------------------------------+------------+---+------------+
| 9 | Reconciliation of movements in equity | | | |
+----+---------------------------------------------------+------------+---+------------+
| | | 2009 | | 2008 |
+----+---------------------------------------------------+------------+---+------------+
| | | unaudited | | audited |
+----+---------------------------------------------------+------------+---+------------+
| | | GBP000 | | GBP000 |
+----+---------------------------------------------------+------------+---+------------+
| | Opening net assets | 222,680 | | 259,292 |
+----+---------------------------------------------------+------------+---+------------+
| | Total recognised income and expense | (52,402) | | (27,019) |
+----+---------------------------------------------------+------------+---+------------+
| | Shares to be issued | 61 | | 48 |
+----+---------------------------------------------------+------------+---+------------+
| | Dividends | (10,605) | | (9,641) |
+----+---------------------------------------------------+------------+---+------------+
| | Closing net assets | 159,734 | | 222,680 |
+----+---------------------------------------------------+------------+---+------------+
+----+--------------------------+----+----------------------------------------+
| 10 | Directors and Company Secretary |
+----+------------------------------------------------------------------------+
| | | | |
+----+--------------------------+----+----------------------------------------+
| | Rupert J Mucklow BSc | - | Chairman |
+----+--------------------------+----+----------------------------------------+
| | Justin Parker BSc MRICS | - | Managing Director |
+----+--------------------------+----+----------------------------------------+
| | David Wooldridge FCCA | - | Finance Director and Company |
| | ACIS | | Secretary |
+----+--------------------------+----+----------------------------------------+
| | David F Austin FRICS* | - | Senior Independent Non-Executive |
+----+--------------------------+----+----------------------------------------+
| | Paul A Ludlow FRICS* | - | Independent Non-Executive |
+----+--------------------------+----+----------------------------------------+
| | Stephen Gilmore LLB* | - | Independent Non-Executive |
+----+--------------------------+----+----------------------------------------+
| | | | |
+----+--------------------------+----+----------------------------------------+
| | *Member of Remuneration Committee and Audit Committee. |
+----+--------------------------+----+----------------------------------------+
DATES
Annual General Meeting
The Annual General Meeting will be held on Tuesday 10 November 2009 at the
Birmingham Botanical Gardens, Westbourne Road, Edgbaston, Birmingham, B15 3TR.
Dividend
The final dividend, if approved, will be paid on 4 January 2010 to Ordinary
shareholders on the register on 27 November 2009.
Report and Accounts
The full report and accounts for the year ended 30 June 2009 will be available
on 1 October 2009.
A copy of this document is available on the Company's website, www.mucklow.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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