TIDMDJAN
RNS Number : 8830P
Daejan Holdings PLC
23 November 2016
23 November 2016
DAEJAN HOLDINGS PLC
INTERIM RESULTS ANNOUNCEMENT for the half year ended 30
September 2016
The Board is pleased to present the Interim Statement for the
half year ended 30 September 2016.
30 Sep 30 Sep 31 Mar
2016 2015 2016
GBP000 GBP000 GBP000
Profit before tax 65,112 58,863 173,242
Profit after tax 61,477 45,820 143,005
Basic and diluted earnings per GBP3.76 GBP2.81 GBP8.77
share
Equity shareholders' funds per GBP95.81 GBP85.17 GBP90.82
share
-- The profit before tax for the period was GBP65.1 million
(2015: GBP58.9 million) after accounting for the net valuation gain
on investment properties of GBP38.6 million (2015: GBP35.5
million).
-- The property portfolio has been valued by the Directors based
on the recommendations of the Group's external advisers and
continues to show modest growth in both the UK and USA.
-- We continue to see some increase in rental income in the UK
and USA. The significant reduction in the sterling/dollar exchange
rate in this period has resulted in USA reported rental income
increasing by GBP2.4 million and has, on the balance sheet,
produced an overall net translation gain of GBP20.0 million (2015:
GBP3.7 million loss).
-- The tax charge in the period has benefited from a one-off
adjustment to the cumulative deferred tax balance following a
reduction in the rate of corporation tax.
-- My last annual report was written shortly after the decision
had been taken for the UK to leave the European Union. Despite some
positive short term indicators since that time, it is still far too
soon to be able to form a balanced judgement as to what lies ahead
for the UK economy as a whole and the property sector in
particular. In the USA we now have the uncertainty of a new and
largely unknown President whose impact on the USA economy and the
property sector cannot be foreseen at this stage. Against this
background we will continue to pursue our long term, low risk
approach to creating growth in net asset value.
-- The principal risk factors affecting the remainder of the
financial year continue to be exposure to movements in the
valuation of the Group's investment properties and financial
instruments, movements in the sterling/dollar currency rate of
exchange and the incidence of voids and bad debts.
-- An interim dividend of 35p per share will be paid on 10 March
2017 to shareholders on the register on 10 February 2017.
B S E Freshwater
Chairman
23 November 2016
For further information please contact:
Mark Jenner Nick Oborne
Company Secretary Weber Shandwick Financial
Daejan Holdings PLC
Tel: 020 7836 1555 Tel: 020 7067 0700
Consolidated Income Statement for the six months ended 30
September 2016
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Mar
30 Sep 2016 30 Sep 2015 2016
------------ ------------ --------------
GBP000 GBP000 GBP000
Total rental & related income
from investment property 70,214 66,220 138,197
Property operating expenses (38,021) (35,282) (70,008)
Net rental & related
income from investment
property 32,193 30,938 68,189
Profit on disposal of investment
property 7,265 3,879 11,725
Net valuation gains on investment
property 38,611 35,513 117,947
Administrative expenses (5,896) (6,185) (13,041)
Net operating profit before net
financing costs 72,173 64,145 184,820
Fair value (losses)/gains on
derivative financial instruments (630) 496 788
Fair value gains/(losses) on
current investments 9 (10) (10)
Other financial income 171 151 336
Financial expenses (6,611) (5,919) (12,692)
Net financing expense (7,061) (5,282) (11,578)
------------ ------------ --------------
Profit before taxation 65,112 58,863 173,242
Income tax (3,635) (13,043) (30,237)
Profit for the period 61,477 45,820 143,005
------------ ------------ --------------
Attributable
to:
Equity holders of the
parent 61,284 45,727 142,900
Non-controlling interest 193 93 105
Profit for the period 61,477 45,820 143,005
------------ ------------ --------------
Basic and diluted earnings per
share GBP3.76 GBP2.81 GBP8.77
------------ ------------ --------------
Consolidated Statement of Comprehensive Income for the six months
ended 30 September 2016
Unaudited Unaudited Audited
Six Months Six Months Year
ended ended ended
30 Sep
2016 30 Sep 2015 31 Mar 2016
---------------- ---------------- --------------
GBP000 GBP000 GBP000
Profit for the period 61,477 45,820 143,005
Foreign exchange translation differences 20,021 (3,651) 5,649
Total comprehensive income for the
period 81,498 42,169 148,654
---------------- ---------------- --------------
Attributable to:
Equity holders of the parent 81,297 42,077 148,547
Non-controlling interest 201 92 107
Total comprehensive income for the
period 81,498 42,169 148,654
---------------- ---------------- --------------
All other comprehensive income may be reclassified as profit and
loss in the future.
Consolidated Statement of Changes in Equity for the six months ended
30 September 2016
Equity Non-
Share Share Translation Retained shareholders' controlling Total
capital premium reserve earnings funds interest equity
-------- -------- ------------ ---------- -------------- ------------ ----------
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 April
2015 4,074 555 26,404 1,314,785 1,345,818 56 1,345,874
Profit for the period - - - 142,900 142,900 105 143,005
Foreign exchange
translation differences - - 5,647 - 5,647 2 5,649
Payments to non-controlling
interest - - - - - (94) (94)
Dividends to equity
shareholders - - - (14,340) (14,340) - (14,340)
Balance at 1 April
2016 4,074 555 32,051 1,443,345 1,480,025 69 1,480,094
Profit for the period - - - 61,284 61,284 193 61,477
Foreign exchange
translation differences - - 20,013 - 20,013 8 20,021
Payments to non-controlling
interest - - - - - (186) (186)
Dividends to equity
shareholders - - - - - - -
Balance at 30 September
2016 4,074 555 52,064 1,504,629 1,561,322 84 1,561,406
-------- -------- ------------ ---------- -------------- ------------ ----------
Consolidated Balance Sheet as at 30 September
2016
Unaudited Unaudited Audited
30 Sep 31 Mar
2016 30 Sep 2015 2016
---------- ------------------------- ----------
GBP000 GBP000 GBP000
Assets
Investment property 2,117,093 1,887,248 2,009,361
Deferred tax assets 539 692 571
Total non-current assets 2,117,632 1,887,940 2,009,932
---------- ------------------------- ----------
Trade and other receivables 70,700 58,192 63,119
Current investments 145 165 159
Cash and cash equivalents 88,423 68,454 84,863
Total current assets 159,268 126,811 148,141
---------- ------------------------- ----------
Total assets 2,276,900 2,014,751 2,158,073
---------- ------------------------- ----------
Equity
Share capital 4,074 4,074 4,074
Share premium 555 555 555
Translation reserve 52,064 22,754 32,051
Retained earnings 1,504,629 1,360,512 1,443,345
Total equity attributable
to equity
holders of the parent 1,561,322 1,387,895 1,480,025
Non-controlling interest 84 61 69
Total equity 1,561,406 1,387,956 1,480,094
---------- ------------------------- ----------
Liabilities
Loans and borrowings 330,216 282,161 306,412
Deferred tax liabilities 267,578 239,135 255,296
Total non-current liabilities 597,794 521,296 561,708
---------- ------------------------- ----------
Loans and borrowings 17,376 18,449 15,516
Trade and other payables 53,644 45,601 55,987
Current taxation 46,680 41,449 44,768
Total current liabilities 117,700 105,499 116,271
---------- ------------------------- ----------
Total liabilities 715,494 626,795 677,979
---------- ------------------------- ----------
Total equity and liabilities 2,276,900 2,014,751 2,158,073
---------- ------------------------- ----------
Equity shareholders' funds
per share GBP95.81 GBP85.17 GBP90.82
---------- ------------------------- ----------
Consolidated Statement of Cash Flows for the six months ended
30 September 2016
Unaudited Unaudited Audited
Six
months Six months Year
ended ended ended
30 Sep 30 Sep 31 Mar
2016 2015 2016
------------- ---------- --------- -------------- -------------- ---------
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cash flows from operating
activities
Net cash generated from
operations 13,486 21,897 61,529
Interest received 172 151 336
Interest
paid (6,603) (5,817) (12,598)
Payments to non-controlling
interest (186) (87) (94)
Tax (paid)/refund (2,291) 1,684 (772)
Net cash from operating
activities 4,578 17,828 48,401
Cash flows from investing
activities
Acquisition and development
of investment property (16,212) (6,891) (26,939)
Proceeds from sale of investment
property 7,848 5,465 12,807
Net cash absorbed by investing
activities (8,364) (1,426) (14,132)
Cash flows from
financing activities
Repayment of bank loans (832) (651) (1,302)
New bank loans and overdrafts - - -
Repayment of mortgages (3,685) (4,669) (21,341)
New mortgages 7,546 5,694 34,379
Dividends paid - - (14,340)
Net cash generated
from/(absorbed
by) financing activities 3,029 374 (2,604)
---------- -------------- ---------
Net (decrease)/increase
in cash and cash equivalents (757) 16,776 31,665
Cash and cash equivalents brought
forward 84,863 52,293 52,293
Effect of exchange rate fluctuations
on cash held 4,317 (615) 905
Cash and cash equivalents 88,423 68,454 84,863
---------- -------------- ---------
Notes to the Consolidated Interim Financial Statements for the
six months ended 30 September 2016
1. Basis of preparation
This interim financial information has been prepared in
accordance with International Accounting Standard (IAS) 34 Interim
Financial Reporting, applying the accounting policies and
presentation that were applied in the preparation of the Company's
published consolidated financial statements for the year ended 31
March 2016. As required by the Listing Rules of the Financial
Services Authority, the Directors have considered the result of the
endorsement by the EU of new or changed International Financial
Reporting Standards that are applicable or available for early
adoption in the preparation of the Company's next consolidated
financial statements for the year ending 31 March 2017 and
concluded that they have no material effect on either the current
or prior periods.
The Directors have reviewed the current and projected financial
position of the Group and are satisfied that the Group has adequate
resources to cover current liabilities. Therefore, the Directors
continue to adopt the going concern basis in preparing the half
year report.
2. Status of the interim financial information
The interim financial information in this statement has not been
audited or reviewed by auditors pursuant to the Auditing Practices
Board guidance on review of interim financial information and does
not constitute statutory accounts, as defined in section 435 of the
Companies Act 2006. The auditors' report on the statutory accounts
for the year ended 31 March 2016 was unqualified and did not
contain a statement under section 498 of the Companies Act 2006.
Statutory accounts for the year ended 31 March 2016 have been
delivered to the Registrar of Companies. The interim financial
statements were approved by the Board of Directors on 22 November
2016. The preparation of the interim financial information requires
management to make assumptions and estimates about future events
which are uncertain, the actual outcome of which may result in a
materially different outcome from that anticipated.
3. Segmental Analysis
UK USA Eliminations Total
---------- ---------- ------------- ----------
For the six months ended 30 GBP000 GBP000 GBP000 GBP000
September 2016
Rental and related income 46,436 23,778 - 70,214
Property operating expenses (25,131) (12,890) - (38,021)
Profit/(loss) on disposal
of property 7,502 (237) - 7,265
Net valuation movements on
property 36,731 1,880 - 38,611
Administrative expenses (5,495) (401) - (5,896)
Profit before finance costs 60,043 12,130 - 72,173
Net financing expense (3,088) (3,973) - (7,061)
Profit before taxation 56,955 8,157 - 65,112
Income tax charge (1,292) (2,343) - (3,635)
Profit for the period 55,663 5,814 - 61,477
---------- ---------- ------------- ----------
Capital expenditure 13,273 2,939 - 16,212
---------- ---------- ------------- ----------
As at 30 September 2016
Investment property 1,572,623 544,470 - 2,117,093
Other assets 94,583 76,601 (11,377) 159,807
---------- ---------- ------------- ----------
Total segment assets 1,667,206 621,071 (11,377) 2,276,900
Total segment liabilities (350,247) (376,624) 11,377 (715,494)
---------- ---------- ------------- ----------
Capital employed 1,316,959 244,447 - 1,561,406
---------- ---------- ------------- ----------
UK USA Eliminations Total
---------- ---------- ------------- ----------
For the six months ended 30 GBP000 GBP000 GBP000 GBP000
September 2015
Rental and related income 46,465 19,755 - 66,220
Property operating expenses (23,556) (11,726) - (35,282)
Profit/(loss) on disposal
of property 4,126 (247) - 3,879
Net valuation movements on
property 35,513 - - 35,513
Administrative expenses (5,807) (378) - (6,185)
Profit before finance costs 56,741 7,404 - 64,145
Net financing expense (2,058) (3,224) - (5,282)
Profit before taxation 54,683 4,180 - 58,863
Income tax charge (10,197) (2,846) - (13,043)
Profit for the period 44,486 1,334 - 45,820
---------- ---------- ------------- ----------
Capital expenditure 3,840 3,051 - 6,891
---------- ---------- ------------- ----------
As at 30 September 2015
Investment property 1,476,441 410,807 - 1,887,248
Other assets 85,336 51,748 (9,581) 127,503
---------- ---------- ------------- ----------
Total segment assets 1,561,777 462,555 (9,581) 2,014,751
Total segment liabilities (351,740) (284,636) 9,581 (626,795)
---------- ---------- ------------- ----------
Capital employed 1,210,037 177,919 - 1,387,956
---------- ---------- ------------- ----------
4. Taxation
The tax charge in the interim statement has benefited from a one
off credit of GBP7.7 million arising from the enactment of a
reduction in the future UK corporation tax rate from 18% to 17%
(effective 1 April 2020) which has reduced our cumulative net
deferred tax liabilities. The tax charge for year ending 31 March
2016 benefited from a one off credit of GBP13.8 million arising
from the enactment of a reduction in the future UK corporation tax
rate from 20% to 18%.
5. Dividends
No dividends were paid in the six months ended 30 September 2016
(six months ended 30 September 2015: GBPNil).
6. Investment properties
The Directors have estimated the value of the investment
properties at 30 September 2016 after consultation with the Group's
advisers. A full valuation of the Group's properties will be
carried out by independent professional valuers at 31 March
2017.
7. Financial Instruments - fair value disclosure
The Group seeks to reduce interest rate risk by fixing rates on
the majority of its loans and borrowings, either through the use of
fixed rate mortgage finance or through interest rate swaps. The
Group does not speculate in treasury products.
The Group does not hedge account and all its mortgages and
interest rate swaps are initially recognised at fair value.
Mortgages are subsequently recorded at amortised cost whilst
interest rate swaps are subsequently recorded at fair value, with
any movement being recorded in the consolidated income statement.
The fair values of all these financial instruments are determined
by reference to observable inputs that are classified as Level 2 in
the fair value hierarchy set out in International Financial
Reporting Standard 13 Fair Value Measurement. Fair values have been
determined by discounting expected future cash flows using market
interest rates and yield curves over the remaining term of the
instrument, as adjusted to reflect the credit risk attributable to
the Group and, where relevant, its counterparty.
Fair value measurements are as follows:
Unaudited Unaudited Audited
30 Sep 2016 30 Sep 2015 31 Mar 2016
Book Value Fair Book Value Fair Book Value Fair
Value Value Value
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Loans and borrowings 347,592 371,301 300,610 317,957 321,928 342,156
Interest rate
swaps 3,800 3,800 3,462 3,462 3,170 3,170
351,392 375,101 304,072 321,419 325,098 345,326
----------- -------- ----------- -------- ----------- --------
Current 21,176 24,961 21,911 25,243 18,686 22,108
Non-current 330,216 350,140 282,161 296,176 306,412 323,218
351,392 375,101 304,072 321,419 325,098 345,326
----------- -------- ----------- -------- ----------- --------
In both 2016 and 2015 there were no non-recurring fair value
measurements and there were no material differences between the
fair value and carrying amounts of all the other financial assets
of the Group.
8. Related party transactions
Day-to-day management of the Group's properties in the UK is
mainly carried out by Highdorn Co. Limited and by Freshwater
Property Management Limited. Mr BSE Freshwater and Mr SI Freshwater
are directors of both companies. They have no beneficial interest
in the share capital of Highdorn Co. Limited. Mr BSE Freshwater, Mr
SI Freshwater and Mr D Davis are directors of the parent company of
Freshwater Property Management Limited but have no beneficial
interest in either company. Mr RE Freshwater has a beneficial
interest in a trust holding interests in shares in Highdorn Co.
Limited.
In their capacity as managing agents, Highdorn Co. Limited and
Freshwater Property Management Limited collect rents and incur
direct property expenses on behalf of the Group. At 30 September
2016, the aggregate net amounts due to the Group from Highdorn Co.
Limited and Freshwater Property Management Limited in relation to
such agency receipts and payments was GBP1.1 million (2015: GBP0.2
million due from the Group). These amounts are not secured and are
payable on demand. No guarantees have been given or received and
the amounts are settled in cash.
The amounts paid by the Group during the period for the
provision of property and other management services by Highdorn Co.
Limited and Freshwater Property Management Limited were GBP3.9
million (six months ended 30 September 2015: GBP2.6 million).
The board considers that the Directors are the key management
personnel of the Group and their remuneration is disclosed in the
Daejan Holdings PLC Annual Report for 31 March 2016.
9. Statement of Directors' responsibilities
The Directors confirm that this condensed set of financial
statements has been prepared in accordance with IAS 34 as adopted
by the European Union, and that the interim management report
herein includes a fair review of the information required by DTR
4.2.7 and DTR 4.2.8.
The Directors of Daejan Holdings PLC are listed in the Daejan
Holdings PLC Annual Report for
31 March 2016. A list of current Directors is maintained on the
Daejan Holdings PLC website www.daejanholdings.com.
B S E Freshwater
Chairman
23 November 2016
This information is provided by RNS
The company news service from the London Stock Exchange
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