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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Mucklow (a & J) Group Plc | LSE:MKLW | London | Ordinary Share | GB0006091408 | ORD 25P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 645.00 | 645.00 | 650.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMMKLW
RNS Number : 1754F
Mucklow(A.& J.)Group PLC
18 February 2015
Mucklow (A & J) Group plc
Half-Yearly Report
18 February 2015
Embargoed: 7.00am
Financial Summary
for the six months ended 31 December 2014
Income statement Six months ended Six months ended 31 December 2014 31 December 2013 -------------------------------------- ----------------- ------------ Statutory pre-tax profit (GBPm) 27.4 14.2 Underlying pre-tax profit (GBPm) (1) 6.5 6.3 Gross rental income received (GBPm) 10.5 10.5 EPRA EPS (p) (2) 10.38 10.41 Interim dividend per share (p) 9.31 9.04 -------------------------------------- ----------------- ------------ Balance sheet 31 December 2014 30 June 2014 ---------------------------- ----------------- ------------- Net asset value (GBPm) 245.4 225.0 Basic NAV per share (p) 388 356 EPRA NAV per share (p) (3) 390 358 Net debt (GBPm) 65.4 66.8 Gearing (%) 27 30 ---------------------------- ----------------- ------------- Property portfolio 31 December 2014 30 June 2014 -------------------------------------------- ----------------- ------------- Occupancy rate (%) 94.3 93.3 Portfolio value (GBPm) (4) 323.7 298.9 Valuation gain (GBPm) 20.9 27.7 Initial yield on investment properties (%) 6.9 6.8 Equivalent yield (%) 7.5 7.9 -------------------------------------------- ----------------- -------------
The interim dividend of GBP5.89m will be paid on 1 July 2015 to holders registered on 5 June 2015.
(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
David Wooldridge, Finance Director
A & J Mucklow Group plc
Tel: 0121 550 1841
Fiona Tooley
TooleyStreet Communications
Tel: 07785 703523
Chairman's Statement
I am pleased to report another strong performance by the Group for the first six months of our financial year. Pre-tax profit increased by 93% and net asset value per share by 9%.
Half-year Results to 31 December 2014
Statutory pre-tax profit for the first six months was GBP27.4m compared with GBP14.2m for the corresponding period last year.
The underlying pre-tax profit , which excludes revaluation movements and profit on the sale of investment and trading properties, was GBP6.5m (31 December 2013: GBP6.3m).
EPRA net asset value* per Ordinary share increased by 32p to 390p at 31 December 2014 (30 June 2014: 358p). Shareholders' funds rose to GBP245.4m (30 June 2014: GBP225.0m), while borrowings net of cash amounted to GBP65.4m (30 June 2014: GBP66.8m). Debt to equity gearing was lower at 27% (30 June 2014: 30%).
Dividend
The Directors have declared an interim dividend of 9.31p per ordinary share, an increase of 3% over last year (31 December 2013: 9.04p). The dividend will be paid as a PID on 1 July 2015 to Shareholders on the register at the close of business on 5 June 2015.
Property Review
The improvement in regional occupier and investment markets that we reported in the previous half year to 30 June 2014 continued through to 31 December 2014, which has resulted in a lower vacancy rate, positive signs of rental growth and further yield compression.
We completed our 116,000 sq ft pre-let development at Apex Park, Worcester during the first half year, which was on time and budget. We also achieved a number of open market lettings on second hand industrial space at the highest rental levels we have achieved for 15 years.
Property yields are still falling on the back of strong institutional demand and a shortage of investment stock. Our modern property portfolio is now valued on a 7.5% equivalent yield and continues to provide us with a variety of opportunities to add value and increase rental income.
Regional Occupier Market
Our occupancy rate at 31 December 2014 had risen to 94.3% (30 June 2014: 93.3%) reflecting steady tenant demand for Midlands industrial property and a tight supply of available space. Quoting terms on new lettings have hardened. Rental levels have increased by at least 25p per square foot over the last six months and incentives have been reduced.
The most notable letting during the period was a 36,000 sq ft industrial unit at Redfern Park, Tyseley, Birmingham. The property was acquired with vacant possession in the previous half year for GBP1.54m, including stamp duty and has been refurbished by us to a high standard at a cost of GBP0.2m. The property was let in October 2014 on a 20 year lease without any breaks at a rent of GBP0.21m pa (GBP5.75 psf), which will provide new evidence for other lettings, rent reviews and lease renewals in the Birmingham area.
Development
Worcester Bosch are now occupying and paying rent (GBP0.72m pa) on their new 116,000 sq ft distribution depot at Apex Park, Worcester which completed in December 2014. The development has been very successful and we are now looking to progress other development opportunities in the Midlands.
A planning application will be submitted shortly on our 19 acre site at Tyseley, Birmingham. The site will accommodate 350,000 sq ft of industrial and warehouse buildings, ranging in size between 50,000 and 110,000 sq ft. We shall initially be targeting pre-let development when marketing commences.
Regional Investment Market
The Midlands industrial property market has become very popular with Institutional investors looking for an attractive income return with good prospects of rental growth. As a consequence, the equivalent yield on our investment portfolio has seen a 0.4% shift in the last six months from 7.9% to 7.5%, while the initial yield remains virtually unchanged at 6.9%.
We did not buy any investment properties during the first six months, but have subsequently acquired a modern 28,000 sq ft industrial investment at Meridian Park, Leicester for GBP2.1m. The property is let on a long lease at a rent of GBP0.15m pa and is located next to the M1 motorway.
Property Valuation
DTZ Debenham Tie Leung Ltd revalued our property portfolio at 31 December 2014. The investment properties and development land were valued at GBP323.7m (30 June 2014: GBP298.9m), which resulted in a revaluation gain of GBP20.9m (6.9%).
The initial yield on the investment properties was 6.9% (30 June 2014: 6.8%). The equivalent yield was 7.5% (30 June 2014: 7.9%). Our industrial property increased in value by 8.4%; offices by 5.8% and retail property by 3.1%.
DTZ Debenham Tie Leung Ltd also revalued our trading properties at 31 December 2014. The total value was GBP1.9m, which showed an unrecognised surplus of GBP1.5m against book value.
Finance
Total net borrowings at 31 December 2014 were GBP65.4m (30 June 2014: GBP66.8m). Undrawn banking facilities totalled GBP31.5m, while net debt to equity gearing had reduced to 27% (30 June 2014: 30%).
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 20 of the 2014 annual financial report, 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
The value of our property investment portfolio has risen by 15% over the last 12 months, but still offers a very attractive income return and scope for further improvement. The equivalent yield at the peak of the last property cycle in 2007 was 6.0%, compared with the equivalent yield today of 7.5%.
We expect occupier demand and rental levels to continue to grow steadily over the next six months and remain on target for another satisfactory year.
Rupert J Mucklow, Chairman
17 February 2015
See the investment/development column in the underlying financial performance tables in note 8 for details.
* EPRA (European Public Real Estate Association) net asset value, including the surplus on trading properties and excluding the fair value of financial instruments. See note 9 for details.
Group Condensed Statement of Comprehensive Income
for the six months ended 31 December 2014
Unaudited Unaudited Audited six months six months year to to to 31 December 31 December 30 June 2014 2013 2014 Notes GBP000 GBP000 GBP000 -------------------------------------------- ------ ------------ ------------ -------- Revenue 2 10,962 10,987 22,082 -------------------------------------------- ------ ------------ ------------ -------- Gross rental income relating to investment properties 2 10,503 10,494 21,141 Property outgoings 3 (657) (501) (1,025) -------------------------------------------- ------ ------------ ------------ -------- Net rental income relating to investment properties 9,846 9,993 20,116 -------------------------------------------- ------ ------------ ------------ -------- Proceeds on sale of trading properties - 45 45 Carrying value of trading properties sold - (13) (13) Property outgoings relating to trading properties (11) (2) (4) -------------------------------------------- ------ ------------ ------------ -------- Net (expenditure on)/income from trading properties (11) 30 28 -------------------------------------------- ------ ------------ ------------ -------- Administration expenses (1,643) (1,693) (3,232) -------------------------------------------- ------ ------------ ------------ -------- Operating profit before net gains on investment and development properties 8,192 8,330 16,912 Profit on disposal of investment and development properties 106 38 271 Revaluation of investment and development properties 20,864 7,672 27,590 -------------------------------------------- ------ ------------ ------------ -------- Operating profit 4 29,162 16,040 44,773 -------------------------------------------- ------ ------------ ------------ -------- Total finance income 5 - 161 1 Total finance costs 5 (1,805) (2,028) (4,071) -------------------------------------------- ------ ------------ ------------ -------- Net finance costs 5 (1,805) (1,867) (4,070) -------------------------------------------- ------ ------------ ------------ -------- Profit before tax 4 27,357 14,173 40,703 -------------------------------------------- ------ ------------ ------------ -------- Tax charge 6 - - - -------------------------------------------- ------ ------------ ------------ -------- Profit for the financial period 27,357 14,173 40,703 -------------------------------------------- ------ ------------ ------------ -------- Other comprehensive income: Items that will not be reclassified subsequently to profit or loss: Revaluation of owner-occupied property 70 5 67 -------------------------------------------- ------ ------------ ------------ -------- Total comprehensive income for the period 27,427 14,178 40,770 -------------------------------------------- ------ ------------ ------------ --------
All operations are continuing.
Basic and diluted earnings per share 9 43.25p 23.52p 66.45p -------------------------------------- ------- ------- -------
Group Condensed Statement of Changes in Equity
for the six months ended 31 December 2014
Ordinary Capital Share-based share Share redemption Revaluation payments Retained Total capital premium reserve reserve reserve earnings equity GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ------------------------ --------- -------- ----------- ------------- ------------- --------- --------- 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 2013 15,060 - 11,162 114 306 155,837 182,479 ------------------------ --------- -------- ----------- ------------- ------------- --------- --------- Retained profit - - - - - 14,173 14,173 Other comprehensive income - - - 5 - - 5 ------------------------ --------- -------- ----------- ------------- ------------- --------- --------- Total comprehensive income - - - 5 - 14,173 14,178 ------------------------ --------- -------- ----------- ------------- ------------- --------- --------- Share-based payment - - - - 95 - 95 Ordinary share issue 25 - - - - - 25 Exercise of share options - - - - (167) 167 - Lapsed dividend - - - - - 31 31 Dividends paid - - - - - (6,553) (6,553) ------------------------ --------- -------- ----------- ------------- ------------- --------- --------- Balance at 31 December 2013 (unaudited) 15,085 - 11,162 119 234 163,655 190,255 ------------------------ --------- -------- ----------- ------------- ------------- --------- --------- Balance at 1 July 2013 15,060 - 11,162 114 306 155,837 182,479 ------------------------ --------- -------- ----------- ------------- ------------- --------- --------- Retained profit - - - - - 40,703 40,703 Other comprehensive income - - - 67 - - 67 ------------------------ --------- -------- ----------- ------------- ------------- --------- --------- Total comprehensive income - - - 67 - 40,703 40,770 ------------------------ --------- -------- ----------- ------------- ------------- --------- --------- Share-based payment - - - - 194 - 194 Ordinary share issue 750 13,017 - - - - 13,767 Exercise of share options - - - - (167) 167 - Lapsed dividend - - - - - 31 31 Dividends paid - - - - - (12,270) (12,270) ------------------------ --------- -------- ----------- ------------- ------------- --------- --------- Balance at 30 June 2014 15,810 13,017 11,162 181 333 184,468 224,971 (audited) ------------------------ --------- -------- ----------- ------------- ------------- --------- ---------
Group Condensed Balance Sheet
at 31 December 2014
Unaudited Unaudited Audited 31 December 31 December 30 June 2014 2013 2014 Notes GBP000 GBP000 GBP000 --------------------------------------- ------ ------------ ------------ --------- Non-current assets Investment and development properties 10 322,663 277,690 297,916 Property, plant and equipment 1,270 1,220 1,233 Derivative financial instruments 84 512 249 Trade and other receivables 569 709 639 --------------------------------------- ------ ------------ ------------ --------- 324,586 280,131 300,037 --------------------------------------- ------ ------------ ------------ --------- Current assets Trading properties 468 448 468 Trade and other receivables 1,811 1,102 1,447 Cash and cash equivalents 8,218 7,363 6,992 --------------------------------------- ------ ------------ ------------ --------- 10,497 8,913 8,907 --------------------------------------- ------ ------------ ------------ --------- Total assets 335,083 289,044 308,944 --------------------------------------- ------ ------------ ------------ --------- Current liabilities Trade and other payables (15,953) (14,001) (9,497) Borrowings - (4,203) (4,203) Tax liabilities (100) (100) (731) --------------------------------------- ------ ------------ ------------ --------- (16,053) (18,304) (14,431) --------------------------------------- ------ ------------ ------------ --------- Non-current liabilities Borrowings (73,601) (80,485) (69,542) --------------------------------------- ------ ------------ ------------ --------- Total liabilities (89,654) (98,789) (83,973) --------------------------------------- ------ ------------ ------------ --------- Net assets 245,429 190,255 224,971 --------------------------------------- ------ ------------ ------------ --------- Equity Called up ordinary share capital 15,823 15,085 15,810 Share premium 13,017 - 13,017 Revaluation reserve 251 119 181 Share-based payment reserve 236 234 333 Redemption reserve 11,162 11,162 11,162 Retained earnings 204,940 163,655 184,468 --------------------------------------- ------ ------------ ------------ --------- Total equity 245,429 190,255 224,971 --------------------------------------- ------ ------------ ------------ --------- Net asset value per share - Basic and diluted 9 388p 315p 356p - EPRA 9 390p 317p 358p --------------------------------------- ------ ------------ ------------ ---------
Group Condensed Cash Flow Statement
for the six months ended 31 December 2014
Unaudited Unaudited Audited six months six months year to to to 31 December 31 December 30 June 2014 2013 2014 GBP000 GBP000 GBP000 ------------------------------------------------------- ------------ ------------ ---------- Cash flows from operating activities Operating profit 29,162 16,040 44,773 Adjustments for non-cash items Unrealised net revaluation gains on investment - and development properties (20,864) (7,672) (27,590) - Profit on disposal of investment properties (106) (38) (271) - Depreciation 47 47 95 - Share-based payments 101 95 194 Loss/(profit) on sale of property, plant - and equipment 3 (4) (4) - Amortisation of lease incentives (576) (743) (1,365) Other movements arising from operations - Decrease/(increase) in trading properties - 10 (10) - (Increase)/decrease in receivables (357) 646 300 - (Decrease)/increase in payables (873) (1,603) 822 ---- ------------------------------------------------- ------------ ------------ ---------- Net cash generated from operations 6,537 6,778 16,944 Interest received - - 1 Interest paid (1,748) (1,826) (3,580) Preference dividends paid (24) (24) (47) Corporation tax refunded - 6 6 ------------------------------------------------------- ------------ ------------ ---------- Net cash inflow from operating activities 4,765 4,934 13,324 Cash flows from investing activities Acquisition of and additions to investment and development properties (3,723) (7,417) (10,498) Proceeds on disposal of investment and development properties 392 38 3,885 Net expenditure on property, plant and equipment (18) (10) (10) ------------------------------------------------------- ------------ ------------ ---------- Net cash outflow from investing activities (3,349) (7,389) (6,623) Cash flows from financing activities Net increase/(decrease) in borrowings 4,000 8,500 (2,500) Repayment of debenture stock (4,203) - - Equity share issue 13 25 14,235 Cost of equity share issues - - (467) Equity dividend lapsed - 31 31 Equity dividends paid - - (12,270) ------------------------------------------------------- ------------ ------------ ---------- Net cash (outflow)/inflow from financing activities (190) 8,556 (971) Net increase in cash and cash equivalents 1,226 6,101 5,730 ------------------------------------------------------- ------------ ------------ ---------- Cash and cash equivalents at beginning of period 6,992 1,262 1,262 ------------------------------------------------------- ------------ ------------ ---------- Cash and cash equivalents at end of period 8,218 7,363 6,992 ------------------------------------------------------- ------------ ------------ ----------
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 2014 were authorised for issue by the Board of directors on 17 February 2015. The half-yearly financial information is unaudited but has been reviewed by Deloitte LLP and their report appears on page 18 of this half-yearly report.
The information for the year ended 30 June 2014 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 auditor 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 2014 the Group had GBP31.5m of undrawn banking facilities, comprising the GBP1.0m overdraft and GBP30.5m of the GBP44.0m 2018 Revolving Credit Facility, and had fully drawn down GBP20.0m from its HSBC 2018 Term Loan. The Group's GBP1.0m overdraft is the only banking facility due for renewal within 12 months of the date of this document. The Lloyds Bank 2023 GBP20.0m Term Loan and 2022 GBP20.0m Term Loan remain fully drawn. Given these facilities, the Group's low gearing level of 27% and GBP115.9m 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 six months year to to to 31 December 31 December 30 June 2014 2013 2014 GBP000 GBP000 GBP000 ----------------------------------------------------- ------------ ------------ -------- Gross rental income from investment and development properties 10,503 10,494 21,141 Service charge income 459 448 896 Income received from trading properties - 45 45 ----------------------------------------------------- ------------ ------------ -------- 10,962 10,987 22,082 Finance income (note 5) - 161 1 ----------------------------------------------------- ------------ ------------ -------- Total revenue 10,962 11,148 22,083 ----------------------------------------------------- ------------ ------------ --------
3. Property Costs
Unaudited Unaudited Audited six months six months year to to to 31 December 31 December 30 June 2014 2013 2014 GBP000 GBP000 GBP000 ------------------------- ------------ ------------ -------- Service charge income (459) (448) (896) Service charge expenses 536 500 1,017 Other property expenses 580 449 904 ------------------------- ------------ ------------ -------- 657 501 1,025 ------------------------- ------------ ------------ --------
4. Segmental analysis
The Group has two reportable segments: investment and development property and trading property.
Unaudited Unaudited Audited six months six months year to to to 31 December 31 December 30 June 2014 2013 2014 GBP000 GBP000 GBP000 --------------------------------------------------- ------------ ------------ -------- Investment and development properties - Net rental income 9,846 9,993 20,116 - Profit on disposal 106 38 271 - Gain on revaluation of investment properties 15,835 7,713 27,633 Gain/(deficit) on revaluation of development - properties 5,029 (41) (43) 30,816 17,703 47,977 --------------------------------------------------- ------------ ------------ -------- Trading properties - Income received from trading properties - 45 45 - Carrying value on sale - (13) (13) - Property outgoings (11) (2) (4) --- ---------------------------------------------- ------------ ------------ -------- (11) 30 28 --------------------------------------------------- ------------ ------------ -------- Net income from property portfolio before administration expenses 30,805 17,733 48,005 Administration expenses (1,643) (1,693) (3,232) --------------------------------------------------- ------------ ------------ -------- Operating profit 29,162 16,040 44,773 Net financing costs (1,805) (1,867) (4,070) --------------------------------------------------- ------------ ------------ -------- Profit before tax 27,357 14,173 40,703 --------------------------------------------------- ------------ ------------ --------
4. Segmental analysis (continued)
The property revaluation gain has been recognised as follows:
Unaudited Unaudited Audited six months six months year to to to 31 December 31 December 30 June 2014 2013 2014 GBP000 GBP000 GBP000 ------------------------------------------ ------------ ------------ -------- Within operating profit - Investment properties 15,835 7,713 27,633 - Development properties 5,029 (41) (43) ---- ------------------------------------ ------------ ------------ -------- 20,864 7,672 27,590 Within other comprehensive income - Owner-occupied properties 70 5 67 Total revaluation gain for the period 20,934 7,677 27,657 ------------------------------------------ ------------ ------------ --------
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 323,961 278,613 299,160 - Segment liabilities (6,868) (5,183) (5,879) - Net borrowings (65,383) (77,325) (66,753) ---- ------------------------------------ --------- --------- --------- 251,710 196,105 226,528 ------------------------------------------ --------- --------- --------- Trading properties - Segment assets 468 448 468 - Segment liabilities - - - ---- ------------------------------------ --------- --------- --------- 468 448 468 ------------------------------------------ --------- --------- --------- Other activities - Unallocated assets 2,436 2,620 2,324 - Unallocated liabilities (9,185) (8,918) (4,349) ---- ------------------------------------ --------- --------- --------- (6,749) (6,298) (2,025) ------------------------------------------ --------- --------- --------- Net assets 245,429 190,255 224,971 ------------------------------------------ --------- --------- --------- Capital expenditure in period Investment and development properties 3,526 7,488 10,779 Other activities 30 50 50 ------------------------------------------ --------- --------- --------- 3,556 7,538 10,829 ------------------------------------------ --------- --------- --------- Depreciation Other activities 47 47 95 ------------------------------------------ --------- --------- --------- 47 47 95 ------------------------------------------ --------- --------- ---------
All operations and income are derived from the United Kingdom and therefore no geographical segmental information is provided.
5. Net finance costs
Unaudited Unaudited Audited six months six months year to to to 31 December 31 December 30 June 2014 2013 2014 GBP000 GBP000 GBP000 --------------------------------------------------------- ------------ ------------ -------- Finance costs on: Debenture stock - 242 483 Preference share dividend 24 24 47 Fair value movement of derivative financial instruments 165 - 103 Capitalised interest (66) - (10) Bank overdraft and loan interest payable 1,682 1,762 3,448 --------------------------------------------------------- ------------ ------------ -------- Total finance costs 1,805 2,028 4,071 --------------------------------------------------------- ------------ ------------ -------- Finance income on: Fair value movement of derivative financial instruments - 160 - Bank and other interest receivable - 1 1 --------------------------------------------------------- ------------ ------------ -------- Total finance income - 161 1 --------------------------------------------------------- ------------ ------------ -------- Net finance costs 1,805 1,867 4,070 --------------------------------------------------------- ------------ ------------ --------
6. Taxation
Unaudited Unaudited Audited six months six months year to to to 31 December 31 December 30 June 2014 2013 2014 GBP000 GBP000 GBP000 ----------------------------------------------------- ------------ ------------ -------- Current tax - Corporation tax - - - Total tax charge in the statement of comprehensive - - - income ----------------------------------------------------- ------------ ------------ --------
There is no deferred tax charge or credit for any of the periods stated.
The Company elected to become a Real Estate Investment Trust (REIT) with effect from 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 six months year to to to 31 December 31 December 30 June 2014 2013 2014 GBP000 GBP000 GBP000 ------------------------------------------------------- ------------ ------------ -------- Amounts recognised as distributions to equity holders in the period: Final dividend for the year ended 30 June 2014 of 11.19p (2013: 10.86p) per share 7,083 6,553 6,553 Interim dividend for the year ended 30 June 2014 of 9.04p per share - - 5,717 Dividends lapsed - (31) (31) ------------------------------------------------------- ------------ ------------ -------- 7,083 6,522 12,239 ------------------------------------------------------- ------------ ------------ --------
The directors propose an interim dividend of 9.31p (2013: 9.04p) 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 2015 to shareholders on the register at the close of business on 5 June 2015.
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 Unaudited Unaudited Investment/ Trading Other Total development properties Items Six months to 31 December 2014 GBP000 GBP000 GBP000 GBP000 ------------------------------------------ ----------- ------------- ----------- ---------- 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 ------------------------------------------ ----------- ------------- ----------- ----------
8. Underlying financial performance (continued)
Unaudited Unaudited Unaudited Unaudited Investment/ Trading Other Total development properties Items Six months to 31 December 2013 GBP000 GBP000 GBP000 GBP000 ------------------------------------------ ----------- ------------- ----------- ---------- Rental income 10,494 10,494 - - Property outgoings (501) (501) - - ------------------------------------------ ----------- ------------- ----------- ---------- Net rental income 9,993 9,993 - - ------------------------------------------ ----------- ------------- ----------- ---------- Sale of trading properties 45 - 45 - Carrying value of trading properties sold (13) - (13) - Property outgoings on trading properties (2) - (2) - ------------------------------------------ ----------- ------------- ----------- ---------- Net income from trading properties 30 - 30 - ------------------------------------------ ----------- ------------- ----------- ---------- Administration expenses (1,693) (1,693) - - ------------------------------------------ ----------- ------------- ----------- ---------- Operating profit before net gains on investment 8,330 8,300 30 - Net gains on revaluation 7,672 - - 7,672 Profit on disposal of investment and development properties 38 - - 38 ------------------------------------------ Operating profit 16,040 8,300 30 7,710 ------------------------------------------ ----------- ------------- ----------- ---------- Gross finance income 1 1 - - Fair value movement on derivative financial instruments 160 - - 160 ------------------------------------------ ----------- ------------- ----------- ---------- Total finance income 161 1 - 160 Finance costs (2,028) (2,028) - - ------------------------------------------ ----------- ------------- ----------- ---------- Profit before tax 14,173 6,273 30 7,870 ------------------------------------------ ----------- ------------- ----------- ----------
9. Earnings per share and net asset value per share
Earnings per share
The basic and diluted earnings per share of 43.25p (31 December 2013: 23.52p; 30 June 2014: 66.45p) has been calculated on the basis of the weighted average of 63,253,908 (31 December 2013: 60,268,438; 30 June 2014: 61,250,268) Ordinary shares and a profit of GBP27.36m (31 December 2013: GBP14.17m; 30 June 2014: GBP40.70m).
The European Public Real Estate Association (EPRA) has issued recommended bases for the calculation of earnings and net asset value per share information and these are included in the following tables.
The EPRA earnings per share has been amended from the basic and diluted earnings per share by the following:
Unaudited Unaudited Audited six months six months year to to to 31 December 31 December 30 June 2014 2013 2014 GBP000 GBP000 GBP000 -------------------------------------------------- ------------ ------------ ---------- Earnings 27,357 14,173 40,703 Profit on disposal of investment and development properties (106) (38) (271) Net gains on revaluation of investment and development properties (20,864) (7,672) (27,590) Net expenditure on/(income from) trading properties 11 (30) (28) Fair value movement on derivative financial instruments 165 (160) 103 Tax adjustments - - - -------------------------------------------------- ------------ ------------ ---------- EPRA earnings 6,563 6,273 12,917 -------------------------------------------------- ------------ ------------ ---------- EPRA earnings per share 10.38p 10.41p 21.09p -------------------------------------------------- ------------ ------------ ----------
9. Earnings per share and net asset value per share (continued)
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 105,418 Ordinary shares were granted in the period (2013: 87,606 Ordinary shares) under the 2007 Performance Share Plan. The vesting conditions for these shares have not been met, so they have not been treated as dilutive in these calculations. The fifth three-year award under the 2007 Performance Share Plan vested in the period, with 53,495 Ordinary shares being issued and 69,965 shares lapsed.
Net asset value per share
The net asset value per share of 388p (31 December 2013: 315p; 30 June 2014: 356p) has been calculated on the basis of the number of equity shares in issue of 63,294,833 (31 December 2013: 60,341,338; 30 June 2014: 63,241,338) and net assets of GBP245.4m (31 December 2013: GBP190.3m; 30 June 2014: GBP225.0m).
The EPRA net asset value per share has been calculated as follows:
Unaudited Unaudited Audited six months six months year to to to 31 December 31 December 30 June 2014 2013 2014 GBP000 GBP000 GBP000 ------------------------------------------------ ------------ ------------ -------- Equity shareholders' funds 245,429 190,255 224,971 Valuation of land held as trading properties 1,942 1,871 1,942 Book value of land held as trading properties (468) (448) (468) Fair value of derivative financial instruments (84) (512) (249) ------------------------------------------------ ------------ ------------ -------- EPRA net asset value 246,819 191,166 226,196 ------------------------------------------------ ------------ ------------ -------- EPRA net asset value per share 390p 317p 358p ------------------------------------------------ ------------ ------------ --------
10. Properties
Unaudited GBP000 ------------------------------------------------------------------- ---------- DTZ valuation as at 31 December 2014 323,710 Owner-occupied property included in property, plant and equipment (1,070) Other adjustments 23 ------------------------------------------------------------------- ---------- Investment and development properties as at 31 December 2014 322,663 ------------------------------------------------------------------- ----------
The properties are stated at their 31 December 2014 fair value and are valued by DTZ Debenham Tie Leung Limited, professionally qualified external valuers, in accordance with the RICS Valuation - Professional Standards published by the Royal Institution of Chartered Surveyors. DTZ Debenham Tie Leung Limited 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 GBP20.9m of valuation gains which represent unrealised movements on investment property.
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 2014 Level 1 Level 2 Level 3 Total GBP000 GBP000 GBP000 GBP000 --------- -------- -------- -------- 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 --------- -------- -------- -------- Unaudited 31 December 2013 Level 1 Level 2 Level 3 Total GBP000 GBP000 GBP000 GBP000 --------- -------- -------- -------- Investment and development properties - - 277,690 277,690 Financial assets at FVTPL - interest rate caps - 512 - 512 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 2014 valuation, the yields used ranged from 5.2% to 9.6% (December 2013 - 5.5% to 11.0%; June 2014 - 5.3% to 10.5%). Valuation reports are based on both information provided by the company, e.g. current rents and lease terms which is derived from the company's financial and property management systems and is 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 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 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 17 February 2015.
Rupert J Mucklow
Chairman
David Wooldridge
Finance Director
Independent Review Report to A & J Mucklow Group plc
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 2014 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 related notes 1 to 12. 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 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. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review 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 formed.
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 Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs 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.
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 United Kingdom. A review of interim financial information consists of making inquiries, 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 2014 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
Birmingham, United Kingdom
17 February 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
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