RNS Number : 7758W
Mucklow(A.& J.)Group PLC
14 February 2017
 

RNS:

14 February 2017

Embargoed: 7.00am

 

Mucklow (A & J) Group plc

Half-Yearly Report

 

Financial Summary

for the six months ended 31 December 2016

 

Income statement

Six months ended

Six months ended

 

31 December 2016

31 December 2015

Underlying pre-tax profit  (1)

£7.9m

£7.5m

Statutory pre-tax profit

£9.1m

£14.4m

EPRA EPS (2)

12.54p

11.89p

Basic EPS

14.39p

22.72p

Interim dividend per share

9.88p

9.59p

 

Balance sheet

31 December 2016

30 June 2016

Net asset value

£282.3m

£280.6m

EPRA NAV per share (3)

448p

446p

Basic NAV per share

446p

443p

Net debt

£79.7m

£71.2m

Gearing

28%

25%

 

Property portfolio

31 December 2016

30 June 2016

Vacancy rate

4.1%

3.2%

Portfolio value  (4)

£373.6m

£364.2m

Valuation gain

£0.5m

£10.2m

Initial yield on investment properties

6.3%

6.4%

Equivalent yield

7.2%

7.2%

 

The interim dividend of 9.88p per share (2015: 9.59p) consists of two quarterly dividends of 4.94p and 4.94p.

 

(1)

Underlying profit is defined as investment/development operations of the Group. See the unaudited investment/development column in the underlying financial performance tables in note 8 for details.

(2)

Excludes the profit on disposal of investment, development and trading properties, the revaluation of investment and development properties and derivative financial instruments and the early debt repayment costs.  See note 9.

(3)

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

(4)

See note 10.

 

For further information please contact:

 

Rupert Mucklow, Chairman

David Wooldridge, Finance Director

A & J Mucklow Group plc

Tel: 0121 550 1841

 

Fiona Tooley

TooleyStreet Communications 

Mobile: 07785 703523

Tel: 0121 309 0099

 

Chairman's Statement

 

I am pleased to report another productive performance by the Group for the six months ended 31 December 2016. Occupancy levels have remained high and underlying profit before tax has continued to grow, through active asset management and prudent investment acquisitions. We have also taken advantage of current economic conditions to refinance the majority of our banking facilities, reducing our average cost of borrowing and extending the terms of the loans.

Half-Year Results to 31 December 2016

The underlying pre-tax profit* increased by 5.3% during the first six months to £7.9m (31 December 2015: £7.5m).

 

Statutory pre-tax profit for the half year was £9.1m (31 December 2015: £14.4m), including a revaluation surplus of £0.5m (31 December 2015: £6.9m).

Dividend

The Directors have declared an interim dividend of 9.88p per ordinary share, an increase of 3% over last year (31 December 2015: 9.59p).  The dividend will be paid as a Property Income Distribution (PID) and split into two quarterly dividends of 4.94p each.  The first quarterly dividend will be paid on 18 April 2017 to Shareholders on the register at the close of business 17 March 2017 and the second dividend will be paid on 17 July 2017 to shareholders on the register at the close of business on 16 June 2017.

 

Property Review

The number of tenant enquiries for Midlands' industrial property has remained steady during the first six months of our financial year and, so far, there has been no sign of any slowdown in activity.

 

Property Valuation

Cushman & Wakefield revalued our property portfolio at 31 December 2016. The investment properties and development land were valued at £373.6m (30 June 2016: £364.2m), which showed a revaluation surplus of £0.5m after acquisitions.

 

Finance

We renewed our £64m banking facilities with HSBC during the half-year for a further 5 years to 2021 on a 30% lower margin.

 

We also repaid a £20m, 5.23% fixed rate loan we had with Lloyds Bank, which was due to expire in 2022, incurring an early debt repayment cost of £1.2m and took out a new £40m term loan facility with Scottish Widows for a period of 15 years, fixed at 3.5%.

 

As such, our weighted average cost of debt has reduced to 3.14% (30 June 2016: 4.1%) and our weighted average term remaining on debt has increased to 8.3 years (30 June 2016: 5.5 years).

Following the refinancing, total net borrowings at 31 December 2016 were £79.7m (30 June 2016: £71.2m), while undrawn banking facilities were £38.5m (30 June 2016: £27.0m).

Net debt to equity gearing at 31 December 2016 was 28% (30 June 2016: 25%) and LTV was 21% (30 June 2016: 20%).

Principal Risks and Uncertainties

The process for identifying, assessing and reviewing the risks faced by the Group is described in the Principal Risks and Uncertainties section on pages 16 and 17 of the 2016 annual report and financial statements, which is available on the Company's website.

 

A summary of the principal risks and uncertainties is set out below.

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

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

·     People - retention/recruitment.

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

 

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

 

Outlook

It is still too early to predict what the longer-term impact of leaving the EU will have on the UK economy and our business. However, for our second half-year, we expect to continue to benefit from the robust, regional industrial property market and remain positive about prospects for the full year.

 

 

Rupert Mucklow, Chairman

*Excludes the profit on disposal of investment, development and trading properties, the revaluation of investment and development properties and derivative financial instruments and early repayment costs.  See note 8.

 

Group Condensed Statement of Comprehensive Income

for the six months ended 31 December 2016

 

                                                                                                                                                                                                                                                                       

 

Unaudited

Unaudited

Audited

 

 

six months to

six months to

year to

 

 

31 December 2016

31 December 2015

30 June 2016

 

Notes

£m

£m

£m

Gross rental income

2

11.8

11.5

22.9

Service charge income

2

0.5

0.5

0.9

Total revenue

2

12.3

12.0

23.8

Property costs

    3

(1.0)

(1.0)

(1.8)

Net property income

 

11.3

11.0

22.0

Administration expenses

 

(1.6)

(1.6)

(3.3)

Operating profit before net gains on investment and development properties

 

 

9.7

 

9.4

 

18.7

Profit on disposal of investment and development properties

 

1.9

-

-

Revaluation of investment and development properties

 

0.5

6.9

10.2

Operating profit

4

12.1

16.3

28.9

Total finance income

5

-

-

-

Finance costs

 

(1.8)

(1.9)

(3.7)

Early repayment costs

 

(1.2)

-

-

Total finance costs

5

(3.0)

(1.9)

(3.7)

Net finance costs

5

(3.0)

(1.9)

(3.7)

Profit before tax

4

9.1

14.4

25.2

Taxation

6

-

-

-

Profit for the financial period

 

9.1

14.4

25.2

Other comprehensive income:

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

Revaluation of owner-occupied property

 

-

-

-

Total comprehensive income for the period

 

9.1

14.4

25.2

 

All operations are continuing.

 

Basic and diluted earnings per share

9

14.39p

22.72p

39.86p

 

 

Group Condensed Statement of Changes in Equity

for the six months ended 31 December 2016

 

 

Ordinary


Capital


 Share-based



 

share

Share

redemption

 Revaluation

payments

Retained

Total

 

capital

premium

reserve

reserve

reserve

earnings

equity

 

£m

£m

£m

£m

£m

£m

£m

Balance at 1 July 2016

15.8

13.0

11.2

0.3

0.3

240.0

280.6

Retained profit

-

-

-

-

-

9.1

9.1

Other comprehensive income

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Total comprehensive income

 

-

 

-

 

-

 

-

 

-

 

9.1

 

9.1

Share-based payment

-

-

-

-

0.1

-

0.1

Expiry of share options

-

-

-

-

(0.2)

0.2

-

Dividends paid

-

-

-

-

 

(7.5)

(7.5)

Balance at 31 December 2016 (unaudited)

 

15.8

 

13.0

 

11.2

 

0.3

 

0.2

 

241.8

 

282.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2015

15.8

13.0

11.2

0.3

0.3

228.0

268.6

Retained profit

-

-

-

-

-

14.4

14.4

Other comprehensive income

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Total comprehensive income

 

-

 

-

 

-

 

-

 

-

 

14.4

 

14.4

Share-based payment

-

-

-

-

0.1

-

0.1

Expiry of share options

-

-

-

-

(0.2)

0.2

-

Dividends paid

-

-

-

-

-

(7.3)

(7.3)

Balance at 31 December 2015 (unaudited)

 

15.8

 

13.0

 

11.2

 

0.3

 

0.2

 

235.3

 

275.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2015

15.8

13.0

11.2

0.3

0.3

228.0

268.6

Retained profit

-

-

-

-

-

25.2

25.2

Other comprehensive income

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Total comprehensive income

 

-

 

-

 

-

 

-

 

-

 

25.2

 

25.2

Share-based payment

-

-

-

-

0.2

-

0.2

Exercise of share options

-

-

-

-

(0.2)

0.2

-

Dividends paid

-

-

-

-

-

(13.4)

(13.4)

Balance at 30 June 2016

(audited)

 

15.8

 

13.0

 

11.2

 

0.3

 

0.3

 

240.0

 

280.6

 

 

Group Condensed Balance Sheet

at 31 December 2016

 

 

 

Unaudited

Unaudited

Audited

 

 

31 December

31 December

30 June

 

 

2016

2015

2016

 

Notes

£m

£m

£m

Non-current assets

 

 

 

 

Investment and development properties

10

372.6

358.8

363.1

Property, plant and equipment

 

1.2

1.3

1.3

Trade and other receivables

 

0.8

0.5

0.5

 

 

374.6

360.6

364.9

Current assets

 

 

 

 

Trading properties

 

0.5

0.5

0.5

Trade and other receivables

 

0.9

1.1

2.4

Cash and cash equivalents

 

6.6

7.5

7.1

 

 

8.0

9.1

10.0

Total assets

 

382.6

369.7

374.9

 

Current liabilities

 

 

 

 

Trade and other payables

 

(13.6)

(15.7)

(16.0)

Current tax liabilities

 

(0.4)

-

-

 

 

(14.0)

(15.7)

(16.0)

Non-current liabilities

 

 

 

 

Borrowings

 

(86.3)

(78.2)

(78.3)

Total liabilities

 

(100.3)

(93.9)

(94.3)

Net assets

 

282.3

275.8

280.6

 

 

 

 

 

Equity

 

 

 

 

Called up ordinary share capital

 

15.8

15.8

15.8

Share premium

 

13.0

13.0

13.0

Revaluation reserve

 

0.3

0.3

0.3

Share-based payment reserve

 

0.2

0.2

0.3

Redemption reserve

 

11.2

11.2

11.2

Retained earnings

 

241.8

235.3

240.0

Total equity

 

282.3

275.8

280.6

 

 

 

 

 

Net asset value per share

 

 

 

 

- Basic and diluted

9

446p

436p

443p

- EPRA

9

448p

438p

446p

 

 

Group Condensed Cash Flow Statement

for the six months ended 31 December 2016

 

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2016

2015

2016

 

£m

£m

£m

Cash flows from operating activities

 

 

 

Operating profit

12.1

16.3

28.9

Adjustments for non-cash items

 

 

 

-

Unrealised net revaluation gains on investment and development properties

 

(0.5)

 

(6.9)

 

(10.2)

-

Profit on disposal of investment properties

(1.9)

-

-

-

Depreciation

-

-

0.1

-

Share-based payments

0.1

0.1

0.2

-

Profit on sale of property, plant and equipment

-

-

-

-

Amortisation of lease incentives

(0.2)

(0.4)

(0.3)

Other movements arising from operations

 

 

 

-

Decrease/(increase) in receivables

1.2

(0.4)

(1.6)

-

Increase/(decrease) in payables

0.1

0.1

1.5

Net cash generated from operations

10.9

8.8

18.6

Interest paid

(2.9)

(1.6)

(3.3)

Preference dividends paid

-

-

-

Net cash inflow from operating activities

8.0

7.2

15.3

 

Cash flows from investing activities

 

 

 

Acquisition of and additions to investment and development properties

 

(11.0)

 

(2.9)

 

(4.1)

Proceeds on disposal of investment and development properties

4.0

-

-

Net expenditure on property, plant and equipment

-

-

(0.1)

Net cash outflow from investing activities

(7.0)

(2.9)

(4.2)

 

Cash flows from financing activities

 

 

 

Repayment of existing borrowings

(20.0)

-

-

New borrowings (net of costs)

39.4

-

-

Net increase in borrowings

(11.7)

2.2

2.3

Equity dividends paid

(9.2)

(5.9)

(13.2)

Net cash outflow from financing activities

(1.5)

(3.7)

(10.9)

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

(0.5)

0.6

0.2

Cash and cash equivalents at beginning of period

7.1

6.9

6.9

Cash and cash equivalents at end of period

6.6

7.5

7.1

 

 

 

Notes to the Half-Yearly Report

 

1. Accounting policies

 

Basis of preparation of half-yearly financial information

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

 

The Group's condensed set of financial statements for the period ended 31 December 2016 were authorised for issue by the Board of directors on 13 February 2017. The half-yearly financial information is unaudited but has been reviewed by KPMG LLP and their report appears on page 16 of this half-yearly report.

 

The information for the year ended 30 June 2016 does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies.  KPMG LLP reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

 

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

 

In August 2016 the Group extended its banking facilities with HSBC.  The Revolving Credit Facility and £20m Term Loan now expire in 2021. As at 31 December 2016 the Group had £38.5m of undrawn banking facilities, comprising the £1.0m overdraft and £37.5m of the £44.0m 2021 Revolving Credit Facility, and had fully drawn down £20.0m from its HSBC 2021 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 remains fully drawn.  In December 2016, the Group redeemed its 2022 £20.0m Term Loan with Lloyds Bank and took out a £40.0m Term Loan with Scottish Widows over 15 years which expires in 2031.  This loan remains fully drawn at 31 December 2016.  Given these facilities, the Group's low gearing level of 28% and £98.9m of unencumbered properties, significant capacity exists to raise additional finance or to provide additional security for existing facilities, should property values fall. The directors have reviewed the current and projected financial position of the Group and compliance with its debt facilities, including a sensitivity analysis. On the basis of this review, the directors continue to adopt the going concern basis in preparing the condensed set of financial statements.

 

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

 

2. Revenue

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2016

2015

2016

 

£m

£m

£m

Gross rental income from investment and development properties

11.8

11.5

22.9

Service charge income

0.5

0.5

0.9

Total revenue

12.3

12.0

23.8

 

3. Property Costs

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2016

2015

2016

 

£m

£m

£m

Service charge expenses

0.6

0.5

1.0

Other property expenses

0.4

0.5

0.8

 

1.0

1.0

1.8

 

4. Segmental analysis

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

 

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2016

2015

2016

 

£m

£m

£m

Investment and development properties

 

 

 

-

Net property income

11.3

11.0

22.0

-

Profit on disposal

1.9

-

-

-

Gain on revaluation of investment properties

0.5

4.9

8.2

-

Gain on revaluation of development properties

-

2.0

2.0

Net income from the property portfolio before administration expenses

 

13.7

 

17.9

 

32.2

Administration expenses

(1.6)

(1.6)

(3.3)

Operating profit

12.1

16.3

28.9

Net financing costs

(3.0)

(1.9)

(3.7)

Profit before tax

9.1

14.4

25.2

 

The property revaluation gain has been recognised as follows:

Within operating profit

 

 

 

-

Investment properties

0.5

4.9

8.2

-

Development properties

-

2.0

2.0

 

0.5

6.9

10.2

Within other comprehensive income

 

 

 

-

Owner-occupied properties

-

-

-

Total revaluation gain for the period

0.5

6.9

10.2

 

4. Segmental analysis (continued)

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

 

Balance sheet

 

 

 

Investment and development properties

 

 

 

-

Segment assets

373.3

359.7

365.5

-

Segment liabilities

(5.3)

(5.3)

(6.8)

-

Net borrowings

(79.7)

(70.7)

(71.2)

 

288.3

283.7

287.5

Trading properties

 

 

 

-

Segment assets

0.5

0.5

0.5

-

Segment liabilities

-

-

-

 

0.5

0.5

0.5

Other activities

 

 

 

-

Unallocated assets

2.1

2.0

1.8

-

Unallocated liabilities

(8.6)

(10.4)

(9.2)

 

(6.5)

(8.4)

(7.4)

Net assets

282.3

275.8

280.6

 

 

 

 

Capital expenditure

 

 

 

Investment and development properties

11.0

2.9

4.0

Other activities

-

-

0.1

 

11.0

2.9

4.1

Depreciation

 

 

 

Other activities

-

-

0.1

 

-

-

0.1

 

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

 

5. Net finance costs

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2016

2015

2016

 

£m

£m

£m

Finance costs on:

 

 

 

Preference share dividend

-

-

0.1

Bank overdraft and loan interest payable

1.8

1.9

3.6

Early repayment costs

1.2

-

-

Total finance costs

3.0

1.9

3.7

Finance income on:

 

 

 

Bank and other interest receivable

-

-

-

Total finance income

-

-

-

Net finance costs

3.0

1.9

3.7

 

The early repayment costs above relate to the refinancing of the Lloyds Bank £20.0m Term Loan 2022 and includes break costs and the release of unamortised costs.

 

6. Taxation

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2016

2015

2016

 

£m

£m

£m

Current tax

 

 

 

-

Corporation tax

-

-

-

-

Adjustment in respect of previous years

-

-

-

Total tax credit in the statement of comprehensive income

-

-

-

                                                                                                                                                                                                  

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

 

The Group became a Real Estate Investment Trust (REIT) on 1 July 2007. As a result of this, rental income and capital gains of the REIT business are not subject to tax. 

 

7. Dividends

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2016

2015

2016

 

£m

£m

£m

Amounts recognised as distributions to equity holders in the period:

 

 

 

Interim dividend for the year ended 30 June 2016 of 9.59p per share

-

-

6.1

Quarterly dividend for the year ended 30 June 2016 of 5.00p (2015: nil)

 

3.1

 

-

 

-

Final dividend for the year ended 30 June 2016 of 6.88p (2015: 11.53p) per share

 

4.4

 

7.3

 

7.3

 

7.5

7.3

13.4

 

The directors propose an interim dividend of 9.88p (2015: 9.59p) per Ordinary share.  This dividend has not been included as a liability in these financial statements.

 

The interim dividend will be paid as two quarterly dividends of 4.94p each on 18 April 2017 to shareholders on the register at the close of business on 17 March 2017 and on 17 July 2017 to shareholders on the register at the close of business on 16 June 2017.

 

8. Underlying financial performance

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

 

 

 

 

Unaudited

Unaudited

Investment/

Unaudited

Trading

Unaudited

Other

 

Total

development

properties

Items

Six months to 31 December 2016

£m

£m

£m

£m

Gross rental income

11.8

11.8

-

-

Service charge income

0.5

0.5

-

-

Total revenue

12.3

12.3

-

-

Property costs

(1.0)

(1.0)

-

-

Net property income

11.3

11.3

-

-

Administration expenses

(1.6)

(1.6)

-

-

Operating profit before net gains on investment

9.7

9.7

-

-

Net gains on revaluation

0.5

-

-

0.5

Profit on disposal of investment and development properties

 

1.9

 

-

 

-

 

1.9

Operating profit

12.1

9.7

-

2.4

Gross finance costs

(1.8)

(1.8)

-

-

Early repayment costs

(1.2)

-

-

(1.2)

Fair value movement on derivative financial instruments

 

-

 

-

 

-

 

-

Total finance costs

(3.0)

(1.8)

-

(1.2)

Finance income

-

-

-

-

Profit before tax

9.1

7.9

-

1.2

 

 

 

 

Unaudited

Unaudited

Investment/

Unaudited

Trading

Unaudited

Other

 

Total

development

properties

Items

Six months to 31 December 2015

£m

£m

£m

£m

Gross rental income

11.5

11.5

-

-

Service charge income

0.5

0.5

-

-

Total revenue

12.0

12.0

-

-

Property outgoings

(1.0)

(1.0)

-

-

Net rental property income

11.0

11.0

-

-

Administration expenses

(1.6)

(1.6)

-

-

Operating profit before net gains on investment

9.4

9.4

-

-

Net gains on revaluation

6.9

-

-

6.9

Profit on disposal of investment and development properties

 

-

 

-

 

-

 

-

Operating profit

16.3

9.4

-

6.9

Gross finance costs

(1.9)

(1.9)

-

-

Fair value movement on derivative financial instruments

 

-

 

-

 

-

 

-

Total finance costs

(1.9)

(1.9)

-

-

Finance income

-

-

-

-

Profit before tax

14.4

7.5

-

6.9

 

9. Earnings per share and net asset value per share

 

Earnings per share

The basic and diluted earnings per share of 14.39p (31 December 2015: 22.72p; 30 June 2016: 39.86p) has been calculated on the basis of the weighted average of 63,294,833 (31 December 2015: 63,294,833; 30 June 2016: 63,294,833) Ordinary shares and a profit of £9.1m (31 December 2015: £14.4m; 30 June 2016: £25.2m).

 

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

 

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

 

 

Unaudited

Unaudited

Audited

 

six months to

six months to

year to

 

31 December

31 December

30 June

 

2015

2015

2016

 

£m

£m

£m

Earnings

9.1

14.4

25.2

Profit on disposal of investment and development properties

(1.9)

-

-

Net gains on revaluation of investment and development properties

 

(0.5)

 

(6.9)

 

(10.2)

Early repayment costs

1.2

-

-

EPRA earnings

7.9

7.5

15.0

EPRA earnings per share

12.54p

11.89p

23.88p

 

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

 

There are no dilutive shares.  Options over 103,257 Ordinary shares were granted in the period (2015: 94,445 Ordinary shares) under the 2015 Performance Share Plan.  The vesting conditions for these shares have not been met, so they have not been treated as dilutive in these calculations.  The seventh three-year award under the 2007 Performance Share Plan expired in the period, with no Ordinary shares being issued and 112,583 shares lapsed.

 

Net asset value per share

The net asset value per share of 446p (31 December 2015: 436p; 30 June 2016: 443p) has been calculated on the basis of the number of equity shares in issue of 63,294,833 (31 December 2015: 63,294,833; 30 June 2016: 63,294,833) and net assets of £282.3m (31 December 2015: £275.8m; 30 June 2016: £280.6m).

 

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

 

2016

2015

2016

 

£m

£m

£m

Equity shareholders' funds

282.3

275.8

280.6

Valuation of land held as trading properties

1.9

1.9

1.9

Book value of land held as trading properties

(0.5)

(0.5)

(0.5)

Fair value of derivative financial instruments

-

-

-

EPRA net asset value

283.7

277.2

282.0

EPRA net asset value per share

448p

438p

446p

 

10. Properties

 

Unaudited

 

£m

Cushman & Wakefield valuation as at 31 December 2016

373.6

Owner-occupied property included in property, plant and equipment

(1.1)

Other adjustments

0.1

Investment and development properties as at 31 December 2016

372.6

 

The properties are stated at their 31 December 2016 fair value and are valued by Cushman and Wakefield, professionally qualified external valuers, in accordance with the RICS Valuation Professional Standards published by the Royal Institution of Chartered Surveyors.  Cushman and Wakefield have recent experience in the relevant location and category of the properties being valued. All properties are categorised as Level 3 in the IFRS 13 fair value hierarchy. Included within the Group condensed statement of comprehensive income is £0.5m of valuation gains which represent unrealised movements on investment and development properties. Cushman and Wakefield is the trading name of DTZ Debenham Tie Leung Limited.

 

Following the Referendum held on 23 June 2016 concerning the UK's membership of the EU, a decision was taken to exit the EU.  Since that date Cushman & Wakefield have monitored market transactions and market sentiment in arriving at their opinion of Market Value/Fair Value.  After an initial period of uncertainty and an absence of activity, transactional volumes and available evidence has risen in most sectors of the market and liquidity is returning to more normal levels. This has led to a generally more stable outlook for the market.

 

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

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

 

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

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

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

 

 

Unaudited

31 December 2016

 

Level 1

Level 2

Level 3

Total

 

£m

£m

£m

£m

 

 

 

 

 

Investment and development properties

-

-

372.6

372.6

Financial assets at FVTPL - interest rate caps

-

-

-

-

Available-for-sale assets - mortgage receivables

-

0.1

-

0.1

 

 

 

Unaudited

31 December 2015

 

Level 1

Level 2

Level 3

Total

 

£m

£m

£m

£m

 

 

 

 

 

Investment and development properties

-

-

358.8

358.8

Financial assets at FVTPL - interest rate caps

-

-

-

-

Available-for-sale assets - mortgage receivables

-

0.1

-

0.1

 

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

Investment properties have been valued using the investment method which involves applying a yield to rental income streams.  Inputs include yield, current rent and ERV. For the December 2016 valuation, the yields used ranged from 5.0% to 8.8% (December 2015 - 5.0% to 8.8%; June 2016 - 5.0% to 8.8%).  Valuation reports are based on both information provided by the Company, e.g. current rents and lease terms which are derived from the Company's financial and property management systems and are subject to the Company's overall control environment, and assumptions applied by the valuers, e.g. ERVs and yields.  These assumptions are based on market observation and the valuers professional judgement.

 

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

 

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

 

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

 

12. Related party transactions

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

 

 

Responsibility Statement

 

We confirm that to the best of our knowledge:

 

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

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

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

 

Signed on behalf of the Board who approved the half-yearly report on 13 February 2017.

 

Rupert J Mucklow

Chairman

 

David Wooldridge

Finance Director

 

 

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 2016 which comprises the Group Condensed Statement of Comprehensive Income, the Group Condensed Statement of Changes in Equity, the Group Condensed Balance Sheet, the Group Condensed Cash Flow Statement and the related explanatory notes.  We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

 

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

Directors' responsibilities 

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

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

Our responsibility 

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

 

Scope of review 

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

 

Conclusion 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2016 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA. 

 

 

Michael Froom (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants 

One Snowhill

Snow Hill Queensway

Birmingham

B4 6GH

 

13 February 2017


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