TIDMMKLW
RNS Number : 6523E
Mucklow(A.& J.)Group PLC
13 February 2018
Mucklow (A & J) Group plc
Half-Yearly Report
13 February 2018
Embargoed: 7.00am
Financial Summary
for the six months ended 31 December 2017
Income statement Six months Six months
ended ended
31 December 31 December
2017 2016
------------------------------- ------------ ------------
Underlying pre-tax profit (1) GBP8.0m GBP7.9m
Statutory pre-tax profit GBP29.9m GBP9.1m
EPRA EPS (1) 12.88p 12.54p
Basic EPS 47.36p 14.39p
Interim dividend per share 10.18p 9.88p
------------------------------- ------------ ------------
Balance sheet 31 December 30 June
2017 2017
---------------------------- ------------ ----------
Net asset value GBP318.9m GBP296.7m
EPRA NAV per share (1) 506p 471p
Basic NAV per share 504p 469p
Net debt GBP73.6m GBP78.5m
Net debt to equity gearing 23% 26%
---------------------------- ------------ ----------
Property portfolio 31 December 30 June
2017 2017
---------------------------------------- ------------ ----------
Vacancy rate 7.5% 4.2%
Portfolio value (2) GBP402.8m GBP386.9m
Valuation gain GBP14.1m GBP13.0m
Initial yield on investment properties 5.8% 6.2%
Equivalent yield 6.8% 7.0%
---------------------------------------- ------------ ----------
The interim dividend of 10.18p per share (2016: 9.88p) consists
of two quarterly dividends of 5.09p and 5.09p.
1 An alternative performance measure. The Group uses
a number of financial measures to assess and explain
its performance, some of which are considered to
be alternative performance measures as they are
not defined under IFRS. The directors consider that
this further analysis of our performance gives shareholders
a useful comparison of the underlying performance
for the periods shown, consistent with other companies
in the sector. For further details, see the tables
in note 8 and note 9.
2 See note 10.
For further information please contact:
Rupert Mucklow, Chairman Tel: 0121 550 1841 Fiona Tooley
Tel: 0121 309 0099
David Wooldridge, Finance Director TooleyStreet Communications
Mob: 07785 703523
A & J Mucklow Group plc
Legal Entity Identifier (LEI): 21300M1Q89HWSY7ES84
Chairman's Statement
Half-year to 31 December 2017
I am pleased to report another solid performance by the Group
for the six months ended 31 December 2017. Statutory pre-tax profit
increased to GBP29.9m, compared with GBP9.1m for the corresponding
period last year and EPRA net asset value per share rose by 7.4% in
the first half year to 506p.
Half-Year Results to 31 December 2017
Statutory pre-tax profit for the half year was GBP29.9m (31
December 2016: GBP9.1m), which included a revaluation surplus of
GBP14.1m (31 December 2016: GBP0.5m).
The underlying pre-tax profit* for the half year was GBP8.0m (31
December 2016: GBP7.9m).
EPRA earnings per ordinary share increased by 2.7% to 12.88p (31
December 2016: 12.54p).
EPRA net asset value per ordinary share increased by 35p to 506p
(30 June 2017: 471p).
Shareholders' funds rose to GBP318.9m (30 June 2017: GBP296.7m),
while net debt to equity gearing and loan to value (LTV) reduced to
23% and 18% respectively (30 June 2017: 26% and 20%).
Dividend
The Directors have declared an interim dividend of 10.18p per
ordinary share, an increase of 3% over last year (31 December 2016:
9.88p). The dividend will be paid as a Property Income Distribution
(PID) and split into two quarterly dividends of 5.09p each. The
first quarterly dividend will be paid on 16 April 2018 to
shareholders on the register at the close of business on 16 March
2018 and the second quarterly dividend will be paid on 16 July 2018
to shareholders on the register at the close of business on 15 June
2018.
Property Review
Our property portfolio has continued to benefit from steady
occupier demand and rental levels that are still growing, during
the first six months of the financial year. Property values have
also continued to improve on the back of strong investor interest
and a shortage of available stock.
The Group's vacancy rate at 31 December 2017 was 7.5% (30 June
2017: 4.2%). The increase was mainly due to a lease expiry on a
110,000 sq ft warehouse at Worcester, just prior to the half-year
end. Our vacancy rate is likely to reduce significantly in the
second half year as over half our vacant space is currently under
offer, including the Worcester property.
We declined to buy any investment properties during the period.
In October 2017, we sold our Bull Ring Trading Estate in Birmingham
for GBP13.0m, significantly above our 30 June 2017 valuation of
GBP5.4m. We also exchanged contracts to sell another industrial
property at Camp Hill, Birmingham for GBP7.0m, which was previously
valued at GBP5.3m at 30 June 2017. The completion of the sale of
Camp Hill will take place in April 2018.
Our 44,250 sq ft pre-let industrial development at i54
Wolverhampton is progressing well and due to complete in March
2018. The substantial refurbishment of our 25,190 sq ft office
building at Trinity Central, close to Birmingham International
railway station, should also complete in March 2018 and is now
under offer to a single tenant.
Construction of a new trunk road by Birmingham City Council,
alongside our 20 acre development site at Mucklow Park, Tyseley, is
due to commence in March 2018, enabling us to start actively
pursuing pre-lets for the proposed first phase of the development
comprising 130,000 sq ft. We are also actively marketing the
remaining 11 acres of land at i54 Wolverhampton.
Property Valuation
Cushman & Wakefield revalued our property portfolio at 31
December 2017. The investment properties and development land were
valued at GBP402.8m (30 June 2017: GBP386.9m), recognising a
revaluation surplus of GBP14.1m (3.6%).
The initial yield on the investment properties was 5.8% (30 June
2017: 6.2%). The equivalent yield was 6.8% (30 June 2017:
7.0%).
Cushman & Wakefield also revalued our trading properties at
31 December 2017. The total value was GBP2.0m, which showed an
unrecognised surplus of GBP1.5m against book value.
Finance
Total net borrowings at 31 December 2017 were GBP73.6m (30 June
2017: GBP78.5m). Undrawn term banking facilities totalled GBP44.0m,
whilst net debt to equity gearing had reduced to 23% (30 June 2017:
26%) and LTV 18% (30 June 2017: 20%).
Principal Risks and Uncertainties
The process for identifying, assessing and reviewing the risks
faced by the Group is described in the Principal Risks and
Uncertainties section on pages 16 and 17 of the 2017 annual report
and financial statements, which is available on the Company's
website.
These risks comprise tenant default, changes in demand for space
and market pricing affecting value in the investment portfolio;
reduced availability or increased cost of debt finance, interest
rate sensitivity and REIT compliance; recruitment and retention of
people; and speculative development exposure on lettings, cost/time
delays on contracts, inability to acquire land and holding too much
development land.
In the view of the Board these principal risks and uncertainties
are as equally applicable to the remaining six months of the
financial year as they were to the six months under review.
The Board considers that there are no significant elements of
seasonality or cyclicality in the underlying operations of the
business.
Outlook
Market conditions for industrial and commercial property in the
Midlands continue to look favourable for the second half year.
Assuming all lettings currently under offer complete, the
additional rental income we should receive from a reduction in
vacant space, will comfortably offset the annual rental income lost
from the GBP20m of property disposals agreed in the first half
year. We remain optimistic about our prospects for the full
year.
Rupert Mucklow
Chairman
12 February 2018
*Excludes the profit on disposal of investment, development and
trading properties, the revaluation of investment and development
properties and derivative financial instruments, capitalised
interest and early repayment costs. See note 8.
Group Condensed Statement of Comprehensive Income
for the six months ended 31 December 2017
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30 June
2017 2016 2017
Notes GBPm GBPm GBPm
-------------------------------------- ------ ------------ ------------ --------
Gross rental income 2 12.0 11.8 23.7
Service charge income 2 0.5 0.5 1.0
-------------------------------------- ------ ------------ ------------ --------
Total revenue 2 12.5 12.3 24.7
Property costs 3 (1.2) (1.0) (2.0)
-------------------------------------- ------ ------------ ------------ --------
Net property income 11.3 11.3 22.7
-------------------------------------- ------ ------------ ------------ --------
Administration expenses (1.6) (1.6) (3.4)
-------------------------------------- ------ ------------ ------------ --------
Operating profit before net
gains on investment and development
properties 9.7 9.7 19.3
Profit on disposal of investment
and development properties 7.7 1.9 1.9
Revaluation of investment and
development properties 14.1 0.5 13.0
-------------------------------------- ------ ------------ ------------ --------
Operating profit 4 31.5 12.1 34.2
Total finance income 5 - - -
-------------------------------------- ------ ------------ ------------ --------
Finance costs (1.6) (1.8) (3.4)
Early repayment costs - (1.2) (1.2)
-------------------------------------- ------ ------------ ------------ --------
Total finance costs 5 (1.6) (3.0) (4.6)
-------------------------------------- ------ ------------ ------------ --------
Net finance costs 5 (1.6) (3.0) (4.6)
-------------------------------------- ------ ------------ ------------ --------
Profit before tax 4 29.9 9.1 29.6
Taxation 6 - - -
-------------------------------------- ------ ------------ ------------ --------
Profit for the financial period 29.9 9.1 29.6
-------------------------------------- ------ ------------ ------------ --------
Other comprehensive income:
Items that will not be reclassified subsequently to
profit or loss:
Revaluation of owner-occupied - - -
property
-------------------------------------- ------ ------------ ------------ --------
Total comprehensive income
for the period 29.9 9.1 29.6
-------------------------------------- ------ ------------ ------------ --------
All operations are continuing.
Basic and diluted earnings
per share 9 47.36p 14.39p 46.63p
---------------------------- ---------------- --------- --------- -------------
Group Condensed Statement of Changes in Equity
for the six months ended 31 December 2017
Ordinary Capital Share-based
share Share redemption Revaluation payments Retained Total
capital premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Balance at 1
July 2017 15.8 13.0 11.2 0.3 0.3 256.1 296.7
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Retained profit - - - - - 29.9 29.9
Other comprehensive - - - - - - -
income
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Total comprehensive
income - - - - - 29.9 29.9
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Share-based
payment - - - - 0.1 - 0.1
Expiry of share
options - - - - (0.2) 0.2 -
Dividends paid - - - - - (7.8) (7.8)
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Balance at 31
December 2017
(unaudited) 15.8 13.0 11.2 0.3 0.2 278.4 318.9
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Balance at 1
July 2016 15.8 13.0 11.2 0.3 0.3 240.0 280.6
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Retained profit - - - - - 9.1 9.1
Other comprehensive - - - - - - -
income
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Total comprehensive
income - - - - - 9.1 9.1
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Share-based
payment - - - - 0.1 - 0.1
Expiry of share
options - - - - (0.2) 0.2 -
Dividends paid - - - - (7.5) (7.5)
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Balance at 31
December 2016
(unaudited) 15.8 13.0 11.2 0.3 0.2 241.8 282.3
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Balance at 1
July 2016 15.8 13.0 11.2 0.3 0.3 240.0 280.6
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Retained profit - - - - - 29.6 29.6
Other comprehensive - - - - - - -
income
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Total comprehensive
income - - - - - 29.6 29.6
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Share-based
payment - - - - 0.2 - 0.2
Expiry of share
options - - - - (0.2) 0.2 -
Dividends paid (13.7) (13.7)
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Balance at 30
June 2017 15.8 13.0 11.2 0.3 0.3 256.1 296.7
(audited)
--------------------- --------- -------- ----------- ------------- ------------- --------- -------
Group Condensed Balance Sheet
at 31 December 2017
Unaudited Unaudited Audited
31 December 31 December 30 June
2017 2016 2017
Notes GBPm GBPm GBPm
------------------------------- ------ ------------ ------------ --------
Non-current assets
Investment and development
properties 10 394.7 372.6 386.8
Property, plant and equipment 1.3 1.2 1.3
Trade and other receivables 0.5 0.8 0.6
------------------------------- ------ ------------ ------------ --------
396.5 374.6 388.7
------------------------------- ------ ------------ ------------ --------
Current assets
Available for sale asset 10 7.0 - -
Trading properties 0.5 0.5 0.5
Trade and other receivables 2.9 0.9 1.6
Cash and cash equivalents 6.3 6.6 5.8
------------------------------- ------ ------------ ------------ --------
16.7 8.0 7.9
------------------------------- ------ ------------ ------------ --------
Total assets 413.2 382.6 396.6
------------------------------- ------ ------------ ------------ --------
Current liabilities
Trade and other payables (14.0) (13.6) (15.2)
Current tax liabilities (0.4) (0.4) (0.4)
(14.4) (14.0) (15.6)
------------------------------- ------ ------------ ------------ --------
Non-current liabilities
Borrowings (79.9) (86.3) (84.3)
------------------------------- ------ ------------ ------------ --------
Total liabilities (94.3) (100.3) (99.9)
------------------------------- ------ ------------ ------------ --------
Net assets 318.9 282.3 296.7
------------------------------- ------ ------------ ------------ --------
Equity
Called up ordinary share
capital 15.8 15.8 15.8
Share premium 13.0 13.0 13.0
Revaluation reserve 0.3 0.3 0.3
Share-based payment reserve 0.2 0.2 0.3
Redemption reserve 11.2 11.2 11.2
Retained earnings 278.4 241.8 256.1
------------------------------- ------ ------------ ------------ --------
Total equity 318.9 282.3 296.7
------------------------------- ------ ------------ ------------ --------
Net asset value per share
- Basic and diluted 9 504p 446p 469p
- EPRA 9 506p 448p 471p
------------------------------- ------ ------------ ------------ --------
Group Condensed Cash Flow Statement
for the six months ended 31 December 2017
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30
June
2017 2016 2017
GBPm GBPm GBPm
-------------------------------------------- ------------ ------------ --------
Cash flows from operating activities
Operating profit 31.5 12.1 34.2
Adjustments for non-cash items
Unrealised net revaluation gains
on investment and development
- properties (14.1) (0.5) (13.0)
Profit on disposal of investment
- properties (7.7) (1.9) (1.9)
- Depreciation - - 0.1
- Share-based payments 0.1 0.1 0.2
- Amortisation of lease incentives (0.3) (0.2) (0.4)
Other movements arising from operations
- (Increase)/decrease in receivables (1.0) 1.2 0.3
- (Decrease)/increase in payables (1.5) 0.1 1.8
---- -------------------------------------- ------------ ------------ --------
Net cash generated from operations 7.0 10.9 21.3
Interest paid (1.5) (2.9) (4.2)
Net cash inflow from operating
activities 5.5 8.0 17.1
Cash flows from investing activities
Acquisition of and additions to
investment and development properties (6.9) (11.0) (11.4)
Proceeds on disposal of investment
and development properties 12.8 4.0 4.0
Net cash inflow/(outflow) from
investing activities 5.9 (7.0) (7.4)
Cash flows from financing activities
Repayment of existing borrowings - (20.0) (20.0)
New borrowings (net of costs) - 39.4 39.4
Net decrease in borrowings (4.5) (11.7) (13.7)
Equity dividends paid (6.4) (9.2) (16.7)
-------------------------------------------- ------------ ------------ --------
Net cash outflow from financing
activities (10.9) (1.5) (11.0)
Net increase/(decrease) in cash
and cash equivalents 0.5 (0.5) (1.3)
-------------------------------------------- ------------ ------------ --------
Cash and cash equivalents at beginning
of period 5.8 7.1 7.1
-------------------------------------------- ------------ ------------ --------
Cash and cash equivalents at end
of period 6.3 6.6 5.8
-------------------------------------------- ------------ ------------ --------
Notes to the Half-Yearly Report
1 Accounting policies
Basis of preparation of half-yearly financial information
The annual financial statements of A & J Mucklow Group plc
are prepared in accordance with IFRS's as adopted by the European
Union. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
International Accounting Standard 34 "Interim Financial Reporting",
as adopted by the European Union and the disclosure requirements of
the Listing Rules.
The Group's condensed set of financial statements for the period
ended 31 December 2017 were authorised for issue by the Board of
directors on 12 February 2018. The half-yearly financial
information is unaudited but has been reviewed by KPMG LLP and
their report appears on page 18 of this half-yearly report.
The information for the year ended 30 June 2017 does not
constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. KPMG LLP reported
on those accounts: their report was unqualified, did not draw
attention to any matters by emphasis of matter and did not contain
a statement under section 498(2) or (3) of the Companies Act
2006.
Investment properties reclassified as held for sale in
accordance with IFRS 5 are transferred at fair value and continue
to be measured at fair value as per the requirements of IAS 40.
The condensed set of financial statements are prepared under the
historical cost convention, except for the revaluation of
investment and development properties and owner-occupied
properties, deferred tax thereon, assets held for sale and certain
financial assets.
As at 31 December 2017 the Group had GBP45.0m of undrawn banking
facilities, comprising the GBP1.0m overdraft and GBP44.0m of the
GBP44.0m 2021 Revolving Credit Facility, and had fully drawn down
GBP20.0m from its HSBC 2021 Term Loan. The Group's GBP1.0m
overdraft is the only banking facility due for renewal within 12
months of the date of this document. The Lloyds Bank 2023 GBP20.0m
Term Loan and the GBP40.0m Scottish Widows Term Loan remain fully
drawn. Given these facilities, the Group's low gearing level of 23%
and GBP108.2m of unencumbered properties, significant capacity
exists to raise additional finance or to provide additional
security for existing facilities, should property values fall. The
directors have reviewed the current and projected financial
position of the Group and compliance with its debt facilities,
including a sensitivity analysis. On the basis of this review, the
directors continue to adopt the going concern basis in preparing
the condensed set of financial statements.
Excepting the above disclosure regarding the treatment of
investment properties reclassified as held for sale, the same
accounting policies, presentation and methods of computation are
followed in the condensed set of financial statements as applied in
the Group's latest annual audited financial statements.
2 Revenue
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30
June
2017 2016 2017
GBPm GBPm GBPm
----------------------------------------------------- ------------ ------------ --------
Gross rental income from investment and development
properties 12.0 11.8 23.7
Service charge income 0.5 0.5 1.0
Total revenue 12.5 12.3 24.7
----------------------------------------------------- ------------ ------------ --------
3 Property Costs
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30
June
2017 2016 2017
GBPm GBPm GBPm
------------------------- ------------ ------------ --------
Service charge expenses 0.5 0.6 1.0
Other property expenses 0.7 0.4 1.0
------------------------- ------------ ------------ --------
1.2 1.0 2.0
------------------------- ------------ ------------ --------
4 Segmental analysis
The Group has two reportable segments: investment and
development property and trading property.
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30
June
2017 2016 2017
GBPm GBPm GBPm
------------------------------------------- ------------ ------------ --------
Investment and development properties
- Net property income 11.3 11.3 22.7
- Profit on disposal 7.7 1.9 1.9
Gain on revaluation of investment
- and development properties 14.1 0.5 13.0
Net income from the property portfolio
before administration expenses 33.1 13.7 37.6
------------------------------------------- ------------ ------------ --------
Administration expenses (1.6) (1.6) (3.4)
------------------------------------------- ------------ ------------ --------
Operating profit 31.5 12.1 34.2
Net financing costs (1.6) (3.0) (4.6)
------------------------------------------- ------------ ------------ --------
Profit before tax 29.9 9.1 29.6
------------------------------------------- ------------ ------------ --------
The property revaluation gain has been recognised as
follows:
Within operating profit
- Investment properties 13.4 0.5 13.0
- Development properties 0.7 - -
---- -------------------------------- ----- ---- -----
14.1 0.5 13.0
Within other comprehensive income
- Owner-occupied properties - - -
Total revaluation gain for the
period 14.1 0.5 13.0
-------------------------------------- ----- ---- -----
Segmental information on assets and liabilities, including a
reconciliation to the results reported in the Group condensed
balance sheet, are as follows:
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30
June
2017 2016 2017
GBPm GBPm GBPm
---------------------------------------- ---------------------------------- ------------ --------
Balance sheet
Investment and development properties
- Segment assets 404.4 373.3 388.3
- Segment liabilities (5.7) (5.3) (6.9)
- Net borrowings (73.6) (79.7) (78.5)
--------------------------------------- -------------------------- ------- ------------ --------
325.1 288.3 302.9
------------------------------------------------------------------- ------- ------------ --------
Trading properties
- Segment assets 0.5 0.5 0.5
- Segment liabilities - - -
--------------------------------------- -------------------------- ------- ------------ --------
0.5 0.5 0.5
------------------------------------------------------------------- ------- ------------ --------
Other activities
- Unallocated assets 2.0 2.1 2.0
- Unallocated liabilities (8.7) (8.6) (8.7)
--------------------------------------- -------------------------- ------- ------------ --------
(6.7) (6.5) (6.7)
------------------------------------------------------------------- ------- ------------ --------
Net assets 318.9 282.3 296.7
------------------------------------------------------------------- ------- ------------ --------
Capital expenditure
Investment and development properties 5.7 11.0 12.6
Other activities - - 0.1
------------------------------------------------------------------- ------- ------------ --------
5.7 11.0 12.7
------------------------------------------------------------------- ------- ------------ --------
Depreciation
Other activities - - 0.1
------------------------------------------------------------------- ------- ------------ --------
- - 0.1
------------------------------------------------------------------- ------- ------------ --------
All operations and income are derived from the United Kingdom
and therefore no geographical segmental information is
provided.
5 Net finance costs
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30
June
2017 2016 2017
GBPm GBPm GBPm
------------------------------------------ ------------ ------------ --------
Finance costs on:
Bank overdraft and loan interest payable 1.7 1.8 3.4
Capitalised interest (0.1) - -
Early repayment costs - 1.2 1.2
------------------------------------------ ------------ ------------ --------
Total finance costs 1.6 3.0 4.6
------------------------------------------ ------------ ------------ --------
Finance income on:
Bank and other interest receivable - - -
Total finance income - - -
------------------------------------------ ------------ ------------ --------
Net finance costs 1.6 3.0 4.6
------------------------------------------ ------------ ------------ --------
The early repayment costs above relate to the refinancing of the
Lloyds Bank GBP20.0m Term Loan 2022 and includes break costs and
the release of unamortised costs.
6 Taxation
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30
June
2017 2016 2017
GBPm GBPm GBPm
----------------------------------------------------- ------------ ------------ --------
Current tax
- Corporation tax - - -
Total tax credit in the statement of comprehensive - - -
income
----------------------------------------------------- ------------ ------------ --------
There is no deferred tax charge or credit for any of the periods
stated.
The Group became a Real Estate Investment Trust (REIT) on 1 July
2007. As a result of this, rental income and capital gains of the
REIT business are not subject to tax.
7 Dividends
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30
June
2017 2016 2017
GBPm GBPm GBPm
-------------------------------------- ------------ ------------ --------
Amounts recognised as distributions
to equity holders in the year:
First quarterly dividend for the
year ended 30 June 2017 of 4.94p
(2016: nil) per share - - 3.1
Second quarterly dividend for
the year ended 30 June 2017 of
4.94p (2016: nil) per share - - 3.1
Third quarterly dividend for the
year ended 30 June 2017 of 5.15p
(2016: 5.00p) per share 3.3 3.1 3.1
Final dividend for the year ended
30 June 2017 of 7.09p (2016: 6.88p)
per share 4.5 4.4 4.4
-------------------------------------- ------------ ------------ --------
7.8 7.5 13.7
-------------------------------------- ------------ ------------ --------
The directors propose an interim dividend of 10.18p (2016:
9.88p) per Ordinary share. This dividend has not been included as a
liability in these financial statements.
The interim dividend will be paid as two quarterly dividends of
5.09p each. The first quarterly dividend will be paid on 16 April
2018 to shareholders on the register at the close of business on 16
March 2018 and the second quarterly dividend will be paid on 16
July 2018 to shareholders on the register at the close of business
on 15 June 2018.
8 Underlying financial performance
Presented below is a non-statutory analysis of the underlying
rental performance before tax, as shown in the
investment/development column, which excludes the profit on sale of
investment and trading properties and other items (capitalised
interest, property revaluation movements and the fair value
movement on derivative financial instruments and early repayment
costs). The directors consider that this further analysis of our
statement of comprehensive income gives shareholders a useful
comparison of our underlying performance for the periods shown in
the condensed set of financial statements.
Unaudited Unaudited Unaudited Unaudited
Investment/ Trading Other
Total development properties Items
Six months to 31 December GBPm GBPm GBPm GBPm
2017
---------------------------------- ----------- ------------- ----------- ----------
Gross rental income 12.0 12.0 - -
Service charge income 0.5 0.5 - -
---------------------------------- ----------- ------------- ----------- ----------
Total revenue 12.5 12.5 - -
Property costs (1.2) (1.2) - -
---------------------------------- ----------- ------------- ----------- ----------
Net property income 11.3 11.3 - -
---------------------------------- ----------- ------------- ----------- ----------
Administration expenses (1.6) (1.6) - -
---------------------------------- ----------- ------------- ----------- ----------
Operating profit before
net gains on investment 9.7 9.7 - -
Net gains on revaluation 14.1 - - 14.1
Profit on disposal of investment
and development properties 7.7 - - 7.7
Operating profit 31.5 9.7 - 21.8
---------------------------------- ----------
Gross finance costs (1.7) (1.7) - -
Capitalised interest 0.1 - - 0.1
Total finance costs (1.6) (1.7) - 0.1
---------------------------------- ----------- ------------- ----------- ----------
Finance income - - - -
---------------------------------- ----------- ------------- ----------- ----------
Profit before tax 29.9 8.0 - 21.9
---------------------------------- ----------- ------------- ----------- ----------
Unaudited Unaudited Unaudited Unaudited
Investment/ Trading Other
Total development properties Items
Six months to 31 December GBPm GBPm GBPm GBPm
2016
---------------------------------- ----------- ------------- ----------- ----------
Gross rental income 11.8 11.8 - -
Service charge income 0.5 0.5 - -
---------------------------------- ----------- ------------- ----------- ----------
Total revenue 12.3 12.3 - -
Property costs (1.0) (1.0) - -
---------------------------------- ----------- ------------- ----------- ----------
Net property income 11.3 11.3 - -
---------------------------------- ----------- ------------- ----------- ----------
Administration expenses (1.6) (1.6) - -
---------------------------------- ----------- ------------- ----------- ----------
Operating profit before
net gains on investment 9.7 9.7 - -
Net gains on revaluation 0.5 - - 0.5
Profit on disposal of investment
and development properties 1.9 - - 1.9
Operating profit 12.1 9.7 - 2.4
---------------------------------- ----------
Gross finance costs (1.8) (1.8) - -
Early repayment costs (1.2) - - (1.2)
Total finance costs (3.0) (1.8) - (1.2)
---------------------------------- ----------- ------------- ----------- ----------
Finance income - - - -
---------------------------------- ----------- ------------- ----------- ----------
Profit before tax 9.1 7.9 - 1.2
---------------------------------- ----------- ------------- ----------- ----------
9 Earnings per share and net asset value per share
Earnings per share
The basic and diluted earnings per share of 47.36p (31 December
2016: 14.39p; 30 June 2017: 46.63p) has been calculated on the
basis of the weighted average of 63,294,833 (31 December 2016:
63,294,833; 30 June 2017: 63,294,833) Ordinary shares and a profit
of GBP29.9m (31 December 2016: GBP9.1m; 30 June 2017:
GBP29.6m).
The European Public Real Estate Association (EPRA) has issued
recommended bases for the calculation of earnings and net asset
value per share information and these are included in the following
tables.
The EPRA earnings per share has been amended from the basic and
diluted earnings per share by the following:
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30 June
2017 2016 2017
GBPm GBPm GBPm
---------------------------------------- ------------ ------------ --------
Earnings 29.9 9.1 29.6
Profit on disposal of investment
and development properties (7.7) (1.9) (1.9)
Net gains on revaluation of investment
and development properties (14.1) (0.5) (13.0)
Early repayment costs - 1.2 1.2
EPRA earnings 8.1 7.9 15.9
---------------------------------------- ------------ ------------ --------
EPRA earnings per share 12.88p 12.54p 25.05p
---------------------------------------- ------------ ------------ --------
The Group presents an EPRA earnings per share figure as the
directors consider that this is a better indicator of the
performance of the Group.
There are no dilutive shares. Options over 108,998 Ordinary
shares were granted in the period (2016: 103,257 Ordinary shares)
under the 2015 Performance Share Plan. The vesting conditions for
these shares have not been met, so they have not been treated as
dilutive in these calculations. The eighth three-year award under
the 2007 Performance Share Plan expired in the period, with no
Ordinary shares being issued and 105,418 shares lapsed.
Net asset value per share
The net asset value per share of 504p (31 December 2016: 446p;
30 June 2017: 469p) has been calculated on the basis of the number
of equity shares in issue of 63,294,833 (31 December 2016:
63,294,833; 30 June 2017: 63,294,833) and net assets of GBP318.9m
(31 December 2016: GBP282.3m; 30 June 2017: GBP296.7m).
The EPRA net asset value per share has been calculated as
follows:
Unaudited Unaudited Audited
six months six months year
to to to
31 December 31 December 30 June
2017 2016 2017
GBPm GBPm GBPm
------------------------------------ ------------ ------------ --------
Equity shareholders' funds 318.9 282.3 296.7
Valuation of land held as trading
properties 2.0 1.9 1.9
Book value of land held as trading
properties (0.5) (0.5) (0.5)
EPRA net asset value 320.4 283.7 298.1
------------------------------------ ------------ ------------ --------
EPRA net asset value per share 506p 448p 471p
------------------------------------ ------------ ------------ --------
10 Properties
Unaudited
GBPm
------------------------------------------------- ----------
Cushman & Wakefield valuation as at 31 December
2017 402.8
Owner-occupied property included in property,
plant and equipment (1.1)
Available for sale asset (7.0)
Other adjustments -
------------------------------------------------- ----------
Investment and development properties as at 31
December 2017 394.7
------------------------------------------------- ----------
The properties are stated at their 31 December 2017 fair value
and are valued by Cushman and Wakefield, professionally qualified
external valuers, in accordance with the RICS Valuation
Professional Standards published by the Royal Institution of
Chartered Surveyors. Cushman and Wakefield have recent experience
in the relevant location and category of the properties being
valued. All properties are categorised as Level 3 in the IFRS 13
fair value hierarchy except for available for sale assets. Included
within the Group condensed statement of comprehensive income is
GBP14.1m of valuation gains which represent unrealised movements on
investment and development properties. Cushman and Wakefield is the
trading name of Cushman & Wakefield Debenham Tie Leung
Limited.
11 Fair value measurements recognised in the statement of
financial position
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 to 3 based on the degree to which
fair value is observable:
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets and
liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
Unaudited
31 December 2017
Level Level Level Total
1 2 3
GBPm GBPm GBPm GBPm
------- ------ ------ ------
Investment and development
properties - - 394.7 394.7
Available-for-sale assets 7.0 - 7.0
Available-for-sale assets
- mortgage receivables - 0.1 - 0.1
------- ------ ------ ------
Unaudited
31 December 2016
Level Level Level Total
1 2 3
GBPm GBPm GBPm GBPm
------- ------ ------ ------
Investment and development
properties - - 372.6 372.6
Available-for-sale assets
- mortgage receivables - 0.1 - 0.1
------- ------ ------ ------
Investment properties have been valued using the investment
method which involves applying a yield to rental income streams.
Inputs include yield, current rent and ERV. For the December 2017
valuation, the yields used ranged from 4.4% to 8.3% (December 2016
- 5.0% to 8.8%; June 2017 - 5.0% to 8.7%) and the ERVs used ranged
from GBP3.80 psf to GBP37.29 psf (December 2016 - GBP3.32 psf to
GBP35.57 psf; June 2017 - GBP3.32 psf to GBP37.29 psf). Valuation
reports are based on both information provided by the Company, e.g.
current rents and lease terms which are derived from the Company's
financial and property management systems and are subject to the
Company's overall control environment, and assumptions applied by
the valuers, e.g. ERVs and yields. These assumptions are based on
market observation and the valuers professional judgement.
An increase or decrease in rental values will increase or
decrease valuations, and a decrease/increase in yields will
increase/decrease the valuation. There are interrelationships
between these inputs as they are determined by market conditions.
The valuation movement in a period depends on the balance of those
inputs. Where the inputs move in opposite directions (yields
decrease and rental values increase), the valuation movement is
magnified. If the inputs move in the same direction (yields
increase and rental values decrease), they may offset each
other.
The fair value of the mortgage receivables is determined by
discounting the expected future value of repayments. Interest rate
caps are externally valued based on the present value of future
cash flows estimated and discounted based on the applicable yield
curves derived from quoted interest rates at the balance sheet
date.
The investment property reclassified to held for sale assets at
the period end has been transferred from Level 3 to Level 2 in the
period. The transfer reflects the existence of an observable price
for the held for sale asset derived from the contractually agreed
price.
12 Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
Responsibility Statement
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU;
-- the interim management report includes a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
Signed on behalf of the Board who approved the half-yearly
report on 12 February 2018.
Rupert Mucklow
Chairman
David Wooldridge
Finance Director
INDEPENDENT REVIEW REPORT TO A & J MUCKLOW GROUP PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 December 2017 which comprises the Group
Condensed Statement of Comprehensive Income, the Group Condensed
Statement of Changes in Equity, the Group Condensed Balance Sheet,
the Group Condensed Cash Flow Statement and the related explanatory
notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
December 2017 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU and the Disclosure Guidance and Transparency Rules ("the
DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Michael Froom (Senior Statutory Auditor)
for and on behalf of KPMG LLP
Chartered Accountants
One Snowhill
Snow Hill Queensway
Birmingham
B4 6GH
12 February 2018
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFEAFVIFLIT
(END) Dow Jones Newswires
February 13, 2018 02:00 ET (07:00 GMT)
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