RNS Number : 1387P
Mucklow(A.& J.)Group PLC
16 February 2016
 

 

Mucklow (A & J) Group plc

Half-Yearly Report

16 February 2016

 

Embargoed: 7.00am                                                                                                               

 

 

Financial Summary

for the six months ended 31 December 2015

 

Income statement

Six months ended

 

31 December 2015

31 December 2014

Statutory pre-tax profit (£m)

14.4

27.4

Underlying pre-tax profit (£m) (1)

7.5

6.5

Gross rental income received (£m)

11.5

10.5

EPRA EPS (p) (2)

11.89

10.38

Interim dividend per share (p)

9.59

9.31

 

Balance sheet

31 December 2015

30 June 2015

Net asset value (£m)

275.8

268.6

Basic NAV per share (p)

436

424

EPRA NAV per share (p) (3)

438

427

Net debt (£m)

70.7

69.0

Gearing (%)

26

26

 

Property portfolio

31 December 2015

30 June 2015

Vacancy rate (%)

4.7

5.4

Portfolio value (£m) (4)

359.8

349.7

Valuation gain (£m)

6.9

42.5

Initial yield on investment properties (%)

6.5

6.3

Equivalent yield (%)

7.1

7.2

 

The interim dividend of £6.07m will be paid on 1 July 2016 to holders registered on 3 June 2016.

 

(1)

See the investment/development column in the underlying financial performance tables in note 8 for details.

(2)

Excludes the profit on disposal of investment, development and trading properties and the revaluation of investment and development properties and financial instruments and tax adjustments.  See note 9.

(3)

Excludes the fair value of derivative financial instruments and includes the surplus on trading properties.  See note 9.

(4)

See note 10.

 

 

For further information please contact:

 

Rupert Mucklow, Chairman                        Tel: 0121 550 1841            Fiona Tooley                                      Tel: 07785 703523

David Wooldridge, Finance Director                                                       TooleyStreet Communications

A & J Mucklow Group plc

 

 

Chairman's Statement

 

I am pleased to report another encouraging performance by the Group for the six months ending 31 December 2015. Our occupancy rate has reached a high of 95.3% and we have achieved further growth in rental income, underlying profit and net asset value per share.

 

Half year Results to 31 December 2015

 

Gross rental income received during the first six months of our financial year was 9.7% higher at £11.5m (31 December 2014: £10.5m).

 

The underlying pre-tax profit, which excludes revaluation movements and profit on the sale of investment and trading properties increased by £1.0m to £7.5m (31 December 2014: £6.5m).

 

IFRS profit before tax for the half year was £14.4m, including a revaluation surplus of £6.9m (31 December 2014: £27.4m with revaluation surplus of £20.9m).

 

EPRA adjusted earnings per ordinary share was 11.89p (31 December 2014: 10.38p).

 

EPRA net asset value per ordinary share increased by 11p to 438p at 31 December 2015 (30 June 2015: 427p).

 

Shareholders' funds rose to £275.8m (30 June 2015: £268.6m), while net debt to equity gearing and loan to value (LTV) remained the same at 26% and 20% respectively.

 

Dividend

 

The Directors have declared an interim dividend of 9.59p per ordinary share, an increase of 3% over last year (31 December 2014: 9.31p). The dividend will be paid as a PID on 1 July 2016 to Shareholders on the register at the close of business on 3 June 2016.

 

Property Review

 

Our vacancy rate at 31 December 2015 had fallen to 4.7% (30 June 2015: 5.4%). The vacancy rate temporarily dropped below 4% at the beginning of December 2015, before we took back three industrial units prior to our half year end.

 

Our Midlands industrial portfolio has continued to benefit from steady occupier demand and a shortage of available, modern space. Approximately one quarter of our vacant space was reserved by prospective tenants at 31 December 2015.

 

New benchmark rental levels set in the previous 12 months are still being achieved on new lettings and lease renewals. Potential rent reversions from higher estimated rental values are also starting to be reflected in the property valuations.

 

The regional investment market has become more subdued since November 2015, mainly because some Institutional investors have become more selective and there have only been a limited number of quality buying opportunities.

 

Yields on prime Midlands industrial property are still reducing and values increasing, but at a slower rate, while yields on secondary properties are starting to drift a little, due to a bit of investor caution.

  

We are still actively looking to acquire further modern investment properties in the Midlands with long term income and capital growth potential, but our emphasis is now more focused towards creating our own industrial investments, by carrying out pre-let development while there is good occupier demand.

 

We acquired one investment property during the period for £2.8m. The property is located in Leicester City centre, close to Highcross and comprises a 19,200 sq ft retail warehouse with 80 car parking spaces, let on a long lease at a current rent of £0.18m pa.

 

Since our half year end, we have agreed to acquire, on a forward commitment basis, a pre-let development at Grove Park, Leicester for £4.7m. The property will comprise 20,620 sq ft of high quality offices, with 112 car parking spaces. Letting terms have been agreed at an initial rent of £0.35m pa. Completion of the acquisition is scheduled for December 2016.

 

In November 2015, we entered into an option agreement with Wolverhampton City Council and Staffordshire County Council to promote and develop a prime 15 acre industrial site adjacent to the new Jaguar Land Rover engine manufacturing facility at i54 in Wolverhampton. The land can accommodate up to 275,000 sq ft of advanced manufacturing space and is immediately available for pre-let development.

 

We are still awaiting confirmation from Birmingham City Council on timing for the construction of the new link road which will run alongside our 20 acre industrial site at Mucklow Park, Tyseley. Progress has been slow due to a few technical issues, but we hope to be in a position to start actively marketing this development site later in the year. 

 

Property Valuation

 

Cushman & Wakefield revalued our property portfolio at 31 December 2015. The investment properties and development land were valued at £359.8m (30 June 2015: £349.7m), which resulted in revaluation surplus of £6.9m (2.0%).

 

The initial yield on the investment properties was 6.5% (30 June 2015: 6.3%). The equivalent yield was 7.1% (30 June 2015: 7.2%).

 

Cushman & Wakefield also revalued our trading properties at 31 December 2015. The total value was £1.9m, which showed an unrecognised surplus of £1.5m against book value.

 

Finance

 

Total net borrowings at 31 December 2015 were £70.7m (30 June 2015: £69.0m). Undrawn banking facilities totalled £27.0m, while net debt to equity gearing and LTV remained unchanged since 30 June 2015 at 26% and 20% respectively.

 

Principal risks and Uncertainties

 

The process for identifying, assessing and reviewing the risks faced by the Group is described in the Principal Risks and Uncertainties section on page 15 of the 2015 annual report and financial statements, which is available on the Company's website.  A summary of the principal risks and uncertainties is set out below.

 

· Investment portfolio - tenant default, change in demand for space and market pricing affecting value.

· Financial - reduced availability or increased cost of debt finance, interest rate sensitivity and REIT compliance.

· People - retention/recruitment.

· Development - speculative development exposure on lettings, cost/time delays on contracts, inability to acquire land and holding too much development land.

 

In the view of the Board these principal risks and uncertainties are as equally applicable to the remaining six months of the financial year as they were to the six months under review.

 

Outlook

 

Our second half has started well and we remain optimistic about our prospects for the full year to 30 June 2016. However, it is more difficult to predict what impact the slowdown in the global economy and other macro factors may have on the Midlands property market in the medium term.

 

Our property portfolio has already proved to be very resilient in the past recession. Should circumstances change, we are extremely well positioned to capitalise on any attractive investment opportunities that may arise, but in the meantime, we are very much looking forward to progressing our pre-let development programme over the next couple of years.  

 

Rupert Mucklow

Chairman

15 February 2016

 

† See the investment/development column in the underlying financial performance tables in note 8 for details.

 

 

Group Condensed Statement of Comprehensive Income

for the six months ended 31 December 2015

 

                                                                                                                

 

Unaudited

Unaudited

Audited

 

 

six months to

six months to

year to

 

 

31 December 2015

31 December 2014

30 June 2015

 

Notes

£000

£000

£000

Revenue

2

11,977

10,962

22,569

Gross rental income relating to investment properties

2

11,523

10,503

21,589

Property outgoings

    3

(528)

(657)

(1,008)

Net rental income relating to investment properties

 

10,995

9,846

20,581

Proceeds on sale of trading properties

 

-

-

-

Carrying value of trading properties sold

 

-

-

-

Property outgoings relating to trading properties

 

-

(11)

(12)

Net expenditure on trading properties

 

-

(11)

(12)

Administration expenses

 

(1,637)

(1,643)

(3,232)

Operating profit before net gains on investment and development properties

 

 

9,358

 

8,192

 

17,337

Profit on disposal of investment and development properties

 

-

106

106

Revaluation of investment and development properties

 

6,902

20,864

42,369

Operating profit

4

16,260

29,162

59,812

Total finance income

5

-

-

-

Total finance costs

5

(1,879)

(1,805)

(3,589)

Net finance costs

5

(1,879)

(1,805)

(3,589)

Profit before tax

4

14,381

27,357

56,223

Tax credit

6

-

-

100

Profit for the financial period

 

14,381

27,357

56,323

 

Other comprehensive income:

Items that will not be reclassified subsequently to profit or loss:

Revaluation of owner-occupied property

 

5

70

108

Total comprehensive income for the period

 

14,386

27,427

56,431

 

All operations are continuing.

 

Basic and diluted earnings per share

9

22.72p

43.25p

89.02p

 

 

Group Condensed Statement of Changes in Equity

for the six months ended 31 December 2015

 

 

Ordinary

 

Capital

 

 Share-based

 

 

 

share

Share

redemption

 Revaluation

payments

Retained

Total

 

capital

premium

reserve

reserve

reserve

earnings

equity

 

£000

£000

£000

£000

£000

£000

£000

Balance at 1 July 2015

15,823

13,017

11,162

289

335

228,014

268,640

Retained profit

-

-

-

-

-

14,381

14,381

Other comprehensive income

 

-

 

-

 

-

 

5

 

-

 

-

 

5

Total comprehensive income

 

-

 

-

 

-

 

5

 

-

 

14,381

 

14,386

Share-based payment

-

-

-

-

91

-

91

Expiry of share options

-

-

-

-

(172)

172

-

Dividends paid

-

-

-

-

-

(7,298)

(7,298)

Balance at 31 December 2015 (unaudited)

 

15,823

 

13,017

 

11,162

 

294

 

254

 

235,269

 

275,819

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2014

15,810

13,017

11,162

181

333

184,468

224,971

Retained profit

-

-

-

-

-

27,357

27,357

Other comprehensive income

 

-

 

-

 

-

 

70

 

-

 

-

 

70

Total comprehensive income

 

-

 

-

 

-

 

70

 

-

 

27,357

 

27,427

Share-based payment

-

-

-

-

101

-

101

Ordinary share issue

13

-

-

-

-

-

13

Exercise of share options

-

-

-

-

(198)

198

-

Dividends paid

-

-

-

-

-

(7,083)

(7,083)

Balance at 31 December 2014 (unaudited)

 

15,823

 

13,017

 

11,162

 

251

 

236

 

204,940

 

245,429

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2014

15,810

13,017

11,162

181

333

184,468

224,971

Retained profit

-

-

-

-

-

56,323

56,323

Other comprehensive income

 

-

 

-

 

-

 

108

 

-

 

-

 

108

Total comprehensive income

 

-

 

-

 

-

 

108

 

-

 

56,323

 

56,431

Share-based payment

-

-

-

-

200

-

200

Ordinary share issue

13

-

-

-

-

-

13

Exercise of share options

-

-

-

-

(198)

198

-

Dividends paid

-

-

-

-

-

(12,975)

(12,975)

Balance at 30 June 2015

(audited)

 

15,823

 

13,017

 

11,162

 

289

 

335

 

228,014

 

268,640

 

 

Group Condensed Balance Sheet

at 31 December 2015

 

 

 

Unaudited

Unaudited

Audited

 

 

31 December

31 December

30 June

 

 

2015

2014

2015

 

Notes

£000

£000

£000

Non-current assets

 

 

 

 

Investment and development properties

10

358,765

322,663

348,607

Property, plant and equipment

 

1,296

1,270

1,315

Derivative financial instruments

 

10

84

58

Trade and other receivables

 

541

569

500

 

 

360,612

324,586

350,480

Current assets

 

 

 

 

Trading properties

 

468

468

468

Trade and other receivables

 

1,154

1,811

896

Cash and cash equivalents

 

7,511

8,218

6,871

 

 

9,133

10,497

8,235

Total assets

 

369,745

335,083

358,715

 

Current liabilities

 

 

 

 

Trade and other payables

 

(15,709)

(15,953)

(14,167)

Tax liabilities

 

-

(100)

-

 

 

(15,709)

(16,053)

(14,167)

Non-current liabilities

 

 

 

 

Borrowings

 

(78,217)

(73,601)

(75,908)

Total liabilities

 

(93,926)

(89,654)

(90,075)

Net assets

 

275,819

245,429

268,640

 

 

 

 

 

Equity

 

 

 

 

Called up ordinary share capital

 

15,823

15,823

15,823

Share premium

 

13,017

13,017

13,017

Revaluation reserve

 

294

251

289

Share-based payment reserve

 

254

236

335

Redemption reserve

 

11,162

11,162

11,162

Retained earnings

 

235,269

204,940

228,014

Total equity

 

275,819

245,429

268,640

 

 

 

 

 

Net asset value per share

 

 

 

 

- Basic and diluted

9

436p

388p

424p

- EPRA

9

438p

390p

427p

 

 

Group Condensed Cash Flow Statement

for the six months ended 31 December 2015

 

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2015

2014

2015

 

£000

£000

£000

Cash flows from operating activities

 

 

 

Operating profit

16,260

29,162

59,812

Adjustments for non-cash items

 

 

 

-

Unrealised net revaluation gains on investment and development properties

 

(6,902)

 

(20,864)

 

(42,369)

-

Profit on disposal of investment properties

-

(106)

(106)

-

Depreciation

49

47

96

-

Share-based payments

91

101

200

-

(Profit)/loss on sale of property, plant and equipment

(5)

3

2

-

Amortisation of lease incentives

(381)

(576)

(702)

Other movements arising from operations

 

 

 

-

(Increase)/decrease in receivables

(369)

(357)

551

-

Increase/(decrease) in payables

108

(873)

(1,453)

Net cash generated from operations

8,851

6,537

16,031

Interest paid

(1,623)

(1,748)

(3,308)

Preference dividends paid

(24)

(24)

(47)

Net cash inflow from operating activities

7,204

4,765

12,676

 

Cash flows from investing activities

 

 

 

Acquisition of and additions to investment and development properties

 

(2,902)

 

(3,723)

 

(8,094)

Proceeds on disposal of investment and development properties

-

392

392

Net expenditure on property, plant and equipment

(19)

(18)

(72)

Net cash outflow from investing activities

(2,921)

(3,349)

(7,774)

 

Cash flows from financing activities

 

 

 

Net increase in borrowings

2,250

4,000

6,250

Repayment of debenture stock

-

(4,203)

(4,204)

Equity share issue

-

13

13

Equity dividends paid

(5,893)

-

(7,082)

Net cash outflow from financing activities

(3,643)

(190)

(5,023)

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

640

1,226

(121)

Cash and cash equivalents at beginning of period

6,871

6,992

6,992

Cash and cash equivalents at end of period

7,511

8,218

6,871

 

 

Notes to the Half-Yearly Report

 

1. Accounting policies

 

Basis of preparation of half-yearly financial information

The annual financial statements of A & J Mucklow Group plc are prepared in accordance with IFRS's as adopted by the European Union.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting", as adopted by the European Union and the disclosure requirements of the Listing Rules.

 

The Group's condensed set of financial statements for the period ended 31 December 2015 were authorised for issue by the Board of directors on 15 February 2016. The half-yearly financial information is unaudited but has been reviewed by KPMG LLP and their report appears on page 19 of this half-yearly report.

 

The information for the year ended 30 June 2015 does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies.  The previous auditor (Deloitte LLP) reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

 

The condensed set of financial statements are prepared under the historical cost convention, except for the revaluation of investment and development properties and owner-occupied properties and deferred tax thereon and certain financial assets, with consistent accounting policies to the prior year.

 

As at 31 December 2015 the Group had £27.0m of undrawn banking facilities, comprising the £1.0m overdraft and £26.0m of the £44.0m 2018 Revolving Credit Facility, and had fully drawn down £20.0m from its HSBC 2018 Term Loan. The Group's £1.0m overdraft is the only banking facility due for renewal within 12 months of the date of this document.  The Lloyds Bank 2023 £20.0m Term Loan and 2022 £20.0m Term Loan remain fully drawn. Given these facilities, the Group's low gearing level of 26% and £135.1m of unencumbered properties, significant capacity exists to raise additional finance or to provide additional security for existing facilities, should property values fall. The directors have reviewed the current and projected financial position of the Group and compliance with its debt facilities, including a sensitivity analysis. On the basis of this review, the directors continue to adopt the going concern basis in preparing the condensed set of financial statements.

 

The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements.

 

 

2. Revenue

 

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2015

2014

2015

 

£000

£000

£000

Gross rental income from investment and development properties

11,523

10,503

21,589

Service charge income

454

459

980

Income received from trading properties

-

-

-

 

11,977

10,962

22,569

Finance income (note 5)

-

-

-

Total revenue

11,977

10,962

22,569

 

3. Property Costs

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2015

2014

2015

 

£000

£000

£000

Service charge income

(454)

(459)

(980)

Service charge expenses

515

536

1,074

Other property expenses

467

580

914

 

528

657

1,008

 

4. Segmental analysis

 

The Group has two reportable segments: investment and development property and trading property.

 

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2015

2014

2015

 

£000

£000

£000

Investment and development properties

 

 

 

-

Net rental income

10,995

9,846

20,581

-

Profit on disposal

-

106

106

-

Gain on revaluation of investment properties

4,925

15,835

37,340

-

Gain on revaluation of development properties

1,977

5,029

5,029

 

17,897

30,816

63,056

Trading properties

 

 

 

-

Income received from trading properties

-

-

-

-

Carrying value on sale

-

-

-

-

Property outgoings

-

(11)

(12)

 

-

(11)

(12)

Net income from property portfolio before administration expenses

17,897

30,805

63,044

Administration expenses

(1,637)

(1,643)

(3,232)

Operating profit

16,260

29,162

59,812

Net financing costs

(1,879)

(1,805)

(3,589)

Profit before tax

14,381

27,357

56,223

 

 

The property revaluation gain has been recognised as follows:

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2015

2014

2015

 

£000

£000

£000

Within operating profit

 

 

 

-

Investment properties

4,925

15,835

37,340

-

Development properties

1,977

5,029

5,029

 

6,902

20,864

42,369

Within other comprehensive income

 

 

 

-

Owner-occupied properties

5

70

108

Total revaluation gain for the period

6,907

20,934

42,477

 

 

Segmental information on assets and liabilities, including a reconciliation to the results reported in the Group condensed balance sheet, are as follows:

 

Balance sheet - segment assets

 

 

 

Investment and development properties

 

 

 

-

Segment assets

359,680

323,961

349,253

-

Segment liabilities

(5,280)

(6,868)

(5,134)

-

Net borrowings

(70,706)

(65,383)

(69,037)

 

283,694

251,710

275,082

Trading properties

 

 

 

-

Segment assets

468

468

468

-

Segment liabilities

-

-

-

 

468

468

468

Other activities

 

 

 

-

Unallocated assets

2,085

2,436

2,123

-

Unallocated liabilities

(10,428)

(9,185)

(9,033)

 

(8,343)

(6,749)

(6,910)

Net assets

275,819

245,429

268,640

 

 

 

 

Capital expenditure in period

 

 

 

Investment and development properties

2,875

3,526

7,840

Other activities

33

30

110

 

2,908

3,556

7,950

Depreciation

 

 

 

Other activities

49

47

96

 

49

47

96

 

All operations and income are derived from the United Kingdom and therefore no geographical segmental information is provided.

 

5. Net finance costs

 

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2015

2014

2015

 

£000

£000

£000

Finance costs on:

 

 

 

Preference share dividend

24

24

47

Fair value movement of derivative financial instruments

48

165

191

Capitalised interest

-

(66)

(66)

Bank overdraft and loan interest payable

1,807

1,682

3,417

Total finance costs

1,879

1,805

3,589

Finance income on:

 

 

 

Fair value movement of derivative financial instruments

-

-

-

Bank and other interest receivable

-

-

-

Total finance income

-

-

-

Net finance costs

1,879

1,805

3,589

 

6. Taxation

 

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2015

2014

2015

 

£000

£000

£000

Current tax

 

 

 

-

Corporation tax

-

-

-

-

Adjustment in respect of previous years

-

-

(100)

Total tax credit  in the statement of comprehensive income

-

-

(100)

                                                                                                                                                                                                  

There is no deferred tax charge or credit for any of the periods stated.

 

The Group became a Real Estate Investment Trust (REIT) on 1 July 2007. As a result of this, rental income and capital gains of the REIT business are not subject to tax.  The tax charge for the periods shown above represents the tax payable on the non-REIT business, mainly profits on the disposal of trading properties and interest receivable.

 

7. Dividends

 

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2015

2014

2015

 

£000

£000

£000

Amounts recognised as distributions to equity holders in the period:

 

 

 

Final dividend for the year ended 30 June 2015 of 11.53p (2014: 11.19p) per share

 

7,298

 

7,083

 

7,083

Interim dividend for the year ended 30 June 2015 of 9.31p per share

-

-

5,892

 

7,298

7,083

12,975

 

The directors propose an interim dividend of 9.59p (2014: 9.31p) per Ordinary share.  This dividend has not been included as a liability in these financial statements.

 

The interim dividend will be paid on 1 July 2016 to shareholders on the register at the close of business on 3 June 2016.

 

8. Underlying financial performance

 

Presented below is a non-statutory analysis of the underlying rental performance before tax, as shown in the investment/development column, which excludes the profit on sale of investment and trading properties and other items (capitalised interest, property revaluation movements and the fair value movement on derivative financial instruments). The directors consider that this further analysis of our statement of comprehensive income gives shareholders a useful comparison of our underlying performance for the periods shown in the condensed set of financial statements.

 

 

 

 

Unaudited

Unaudited

Investment/

Unaudited

Trading

Unaudited

Other

 

Total

development

properties

Items

Six months to 31 December 2015

£000

£000

£000

£000

Rental income

11,523

11,523

-

-

Property outgoings

(528)

(528)

-

-

Net rental income

10,995

10,995

-

-

Sale of trading properties

-

-

-

-

Carrying value of trading properties sold

-

-

-

-

Property outgoings on trading properties

-

-

-

-

Net expenditure on trading properties

-

-

-

-

Administration expenses

(1,637)

(1,637)

-

-

Operating profit before net gains on investment

9,358

9,358

-

-

Net gains on revaluation

6,902

-

-

6,902

Profit on disposal of investment and development properties

 

-

 

-

 

-

 

-

Operating profit

16,260

9,358

-

6,902

Gross finance costs

(1,831)

(1,831)

-

-

Fair value movement on derivative financial instruments

 

(48)

 

-

 

-

 

(48)

Total finance costs

(1,879)

(1,831)

-

(48)

Finance income

-

-

-

-

Profit before tax

14,381

7,527

-

6,854

 

 

 

 

 

Unaudited

Unaudited

Investment/

Unaudited

Trading

Unaudited

Other

 

Total

development

properties

Items

Six months to 31 December 2014

£000

£000

£000

£000

Rental income

10,503

10,503

-

-

Property outgoings

(657)

(657)

-

-

Net rental income

9,846

9,846

-

-

Sale of trading properties

-

-

-

-

Carrying value of trading properties sold

-

-

-

-

Property outgoings on trading properties

(11)

-

(11)

-

Net expenditure on trading properties

(11)

-

(11)

-

Administration expenses

(1,643)

(1,643)

-

-

Operating profit before net gains on investment

8,192

8,203

(11)

-

Net gains on revaluation

20,864

-

-

20,864

Profit on disposal of investment and development properties

 

106

 

-

 

-

 

106

Operating profit

29,162

8,203

(11)

20,970

Gross finance costs

(1,706)

(1,706)

-

-

Capitalised interest

66

-

-

66

Fair value movement on derivative financial instruments

 

(165)

 

-

 

-

 

(165)

Total finance costs

(1,805)

(1,706)

-

(99)

Finance income

-

-

-

-

Profit before tax

27,357

6,497

(11)

20,871

 

9. Earnings per share and net asset value per share

 

Earnings per share

 

The basic and diluted earnings per share of 22.72p (31 December 2014: 43.25p; 30 June 2015: 89.02p) has been calculated on the basis of the weighted average of 63,294,833 (31 December 2014: 63,253,908; 30 June 2015: 63,273,435) Ordinary shares and a profit of £14.38m (31 December 2014: £27.36m; 30 June 2015: £56.32m).

 

The European Public Real Estate Association (EPRA) has issued recommended bases for the calculation of earnings  and net asset value per share information and these are included in the following tables.

 

The EPRA earnings per share has been amended from the basic and diluted earnings per share by the following:

 

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2015

2014

2015

 

£000

£000

£000

Earnings

14,381

27,357

56,323

Profit on disposal of investment and development properties

-

(106)

(106)

Net gains on revaluation of investment and development properties

 

(6,902)

 

(20,864)

 

(42,369)

Net expenditure on trading properties

-

11

12

Fair value movement on derivative financial instruments

48

165

191

Tax adjustments

-

-

-

EPRA earnings

7,527

6,563

14,051

EPRA earnings per share

11.89p

10.38p

22.21p

 

The Group presents an EPRA earnings per share figure as the directors consider that this is a better indicator of the performance of the Group.

 

There are no dilutive shares.  Options over 94,445 Ordinary shares were granted in the period (2014: 105,418 Ordinary shares) under the 2015 Performance Share Plan (2014: 2007 Performance Share Plan).  The vesting conditions for these shares have not been met, so they have not been treated as dilutive in these calculations.  The sixth three-year award under the 2007 Performance Share Plan expired in the period, with no Ordinary shares being issued and 112,583 shares lapsed.

 

Net asset value per share

 

The net asset value per share of 436p (31 December 2014: 388p; 30 June 2015: 424p) has been calculated on the basis of the number of equity shares in issue of 63,294,833 (31 December 2014: 63,294,833; 30 June 2015: 63,294,833) and net assets of £275.8m (31 December 2014: £245.4m; 30 June 2015: £268.6m).

 

The EPRA net asset value per share has been calculated as follows:

 

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2015

2014

2015

 

£000

£000

£000

Equity shareholders' funds

275,819

245,429

268,640

Valuation of land held as trading properties

1,942

1,942

1,942

Book value of land held as trading properties

(468)

(468)

(468)

Fair value of derivative financial instruments

(10)

(84)

(58)

EPRA net asset value

277,283

246,819

270,056

EPRA net asset value per share

438p

390p

427p

 

10. Properties

 

 

Unaudited

 

£000

Cushman & Wakefield valuation as at 31 December 2015

359,810

Owner-occupied property included in property, plant and equipment

(1,113)

Other adjustments

68

Investment and development properties as at 31 December 2015

358,765

 

The properties are stated at their 31 December 2015 fair value and are valued by Cushman and Wakefield, professionally qualified external valuers, in accordance with the RICS Valuation - Professional Standards published by the Royal Institution of Chartered Surveyors.  Cushman and Wakefield have recent experience in the relevant location and category of the properties being valued. All properties are categorised as Level 3 in the IFRS 13 fair value hierarchy. Included within the Group condensed statement of comprehensive income is £6.9m of valuation gains which represent unrealised movements on investment and development properties. Cushman and Wakefield is the trading name of DTZ Debenham Tie Leung Limited.

 

11. Fair value measurements recognised in the statement of financial position

 

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which fair value is observable:

 

·      Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets and liabilities;

·      Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly  (i.e. as prices) or indirectly (i.e. derived from prices); and

·      Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 

 

Unaudited

31 December 2015

 

Level 1

Level 2

Level 3

Total

 

£000

£000

£000

£000

 

 

 

 

 

Investment and development properties

-

-

358,765

358,765

Financial assets at FVTPL - interest rate caps

-

10

-

10

Available-for-sale assets - mortgage receivables

-

122

-

122

 

  

 

Unaudited

31 December 2014

 

Level 1

Level 2

Level 3

Total

 

£000

£000

£000

£000

 

 

 

 

 

Investment and development properties

-

-

322,663

322,663

Financial assets at FVTPL - interest rate caps

-

84

-

84

Available-for-sale assets - mortgage receivables

-

122

-

122

 

 

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 2015 valuation, the yields used ranged from 5.0% to 8.8% (December 2014 - 5.2% to 9.6%; June 2015 - 5.0% to 8.9%).  Valuation reports are based on both information provided by the company, e.g. current rents and lease terms which are derived from the company's financial and property management systems and are subject to the company's overall control environment, and assumptions applied by the valuers, e.g. ERVs and yields.  These assumptions are based on market observation and the valuers professional judgement.

 

An increase or decrease in rental values will increase or decrease valuations, and a decrease/increase in yields will increase/decrease the valuation.  There are interrelationships between these inputs as they are determined by market conditions.  The valuation movement in a period depends on the balance of those inputs.  Where the inputs move in opposite directions (yields decrease and rental values increase), the valuation movement is magnified.  If the inputs move in the same direction (yields increase and rental values decrease), they may offset each other.

 

The fair value of the mortgage receivables is determined by discounting the expected future value of repayments.  Interest rate caps are externally valued based on the present value of future cash flows estimated and discounted based on the applicable yield curves derived from quoted interest rates at the balance sheet date.

 

There were no transfers in categories in the current or prior period.

 

12. Related party transactions

 

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

 

 

Responsibility Statement

 

We confirm that to the best of our knowledge:

 

a)    the condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting";

b)    the half-yearly report includes a fair review of the information required by the Disclosure and Transparency Rules ("the DTR") 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

c)    the half-yearly report includes a fair review of the information required by the DTR 4.2.8R (disclosure of related parties' transaction and changes therein).

 

Signed on behalf of the Board who approved the half-yearly report on 15 February 2016.

 

Rupert J Mucklow

Chairman

 

David Wooldridge

Finance Director

 

 

INDEPENDENT REVIEW REPORT TO A & J MUCKLOW GROUP PLC 

Introduction 

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2015 which comprises the Group Condensed Statement of Comprehensive Income, the Group Condensed Statement of Changes in Equity, the Group Condensed Balance Sheet, the Group Condensed Cash Flow Statement and the related explanatory notes.  We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").  Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached. 

Directors' responsibilities 

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA. 

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU

Our responsibility 

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. 

Scope of review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion. 

Conclusion 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2015 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA. 

Michael Froom (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants 

One Snowhill

Snow Hill Queensway

Birmingham

B4 6GH

 

15 February 2016


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR BIGDDDBBBGLU