Daejan Holdings (DJAN)

 

LSE:DJAN: Interim Results

Daejan Holdings

26 Nov 2013 12:48:03

Daejan Hldgs PLC

RNS Number : 9646T
Daejan Holdings PLC
26 November 2013
 



 

26 November 2013

 

DAEJAN HOLDINGS PLC

INTERIM RESULTS ANNOUNCEMENT for the half year ended 30 September 2013

 

The Board is pleased to present the Interim Statement for the half year ended 30 September 2013.

 

 

 

 

 

 

30/9/13

30/9/12

31/3/13

 

 

£000


£000

(Restated*)


£000







Profit before tax

76,533


23,266


111,683







Profit after tax

72,856


22,211


89,760







Basic and diluted earnings per share

£4.45


£1.36


£5.50







Equity shareholders' funds per share

£64.49


£56.78


£60.44

 

      * See Note 1

     

 

 

·    The profit before tax for the period was £76.5 million (2012: £23.3 million) after accounting for the net valuation gain on investment properties of £47.7 million (2012: £11.4 million) and valuation gains on financial instruments of £8.5 million (2012: £3.0 million losses). There was an increase of 4.1% in gross rental income and the underlying net profit before tax, i.e. excluding net valuation movements, was £20.4 million (2012: £14.8 million).

 

·    The property portfolio has been valued by the Directors based on the recommendations of the Group's external advisors. The overall net valuation gain of £47.7 million (2012: £11.4 million) reflects net gains in both the UK and USA portfolios. In the UK, London residential property continues to perform strongly and there is now beginning to be some evidence of improvement in the wider Home Counties residential market and further afield.  London commercial property has shown signs of yield and rental improvement, though there continues to be pressure on provincial office property, particularly in the secondary market.  In the USA, our New York properties continue to perform well and our Boston properties have also seen encouraging growth.

 

·    The redevelopment of Africa House, WC2 was completed in the period and was formally launched to the market in November, generating an encouraging level of letting interest. 

 

·    The principal risk factors affecting the remainder of the financial year continue to be exposure to movements in the valuation of the Group's investment properties and financial instruments and the incidence of voids or bad debts.

 

·    During this period, the UK has joined the USA with early signs of returning confidence and growth.  However, the recovery remains fragile and the commercial lettings market continues to be challenging. We believe that our long term, prudent approach of maintaining a strong balance sheet with relatively low gearing continues to be appropriate in present times and in this context we remain confident that the Group will continue to progress.

 

·    Whilst for many years we have pursued a policy of steady increases in the total annual dividend, the interim payment has remained constant.  The Directors now consider that it is appropriate to increase the proportion of the total dividend paid as an interim distribution.  This should not, however, be taken as any indication of an increase in the total dividend in respect of the current financial year.  Accordingly an interim dividend of 35p per share will be paid on 7 March 2014 to shareholders on the register on 7 February 2014.

 

 

 

 

 

B S E Freshwater

Chairman

26 November 2013

 

For further information please contact:

 

Mark Jenner

Nick Oborne

Company Secretary

Weber Shandwick Financial

Daejan Holdings PLC


Tel: 020 7836 1555

Tel: 020 7067 0700

 

 

 

  

 

 

Consolidated Income Statement for the six months ended 30 September 2013























Unaudited


Unaudited


Audited









Six months


Six months


Year









ended


ended


ended









30/9/13


30/9/12


31/3/13











(Restated*)











£000


£000


£000















Total rental & related income from investment property


56,197


53,301


111,037















Property operating expenses




(33,486)


(32,451)


(67,017)















Net rental & related income from investment property




22,711


20,850


44,020









Profit on disposal of investment property

8,279


4,248


6,612















Net valuation gains on investment property


47,672


11,440


82,694













Administrative expenses





(5,069)


(5,238)


(10,936)















Net operating profit before net financing costs


73,593


31,300


122,390


Fair value gains/(losses) on fixed rate loans and borrowings

6,763


(2,281)



Fair value gains/(losses) on derivative financial instruments


1,729


(704)


(321)


Fair value (losses)/gains on current investments


(2)


(1)


8


 

Other financial income





338


301


740













Financial expenses





(5,888)


(5,349)


(11,098)















Net financing credits/(costs)





2,940


(8,034)


(10,707)


























Profit before taxation


76,533


23,266


111,683















Income tax





(3,677)


(1,055)


(21,923)















Profit for the period





72,856


22,211


       89,760


Attributable to :












Equity holders of the parent




72,560


22,156


89,601


Minority interest





296


55


159















Profit for the period





72,856


22,211


89,760




























Basic and diluted earnings per share


£4.45


£1.36


£5.50















* See Note 1











 

 

 

 

 

 

Consolidated Statement of Other Comprehensive Income for the six months ended 30 September 2013


















Unaudited


Unaudited


Audited







Six Months


Six Months


Year







ended


ended


ended







30/9/13


30/9/12


31/3/13









(Restated*)









£000


£000


£000



















Profit for the period

72,856


22,211


89,760

 

Foreign exchange translation differences

(6,516)


(760)


3,847







Total comprehensive income for the period

66,340


21,451


93,607























Attributable to :







Equity holders of the parent

66,044


21,396


93,448

Minority interest

296


55


159












Total comprehensive income for the period

66,340


21,451


93,607












 

All other comprehensive income may be reclassified as profit and loss in the future.

 

 

 

Consolidated Statement of Changes in Equity for the six months ended 30 September 2013


Issued

Share



Equity




share

premium

Translation

Retained

shareholders'

Minority

Total


capital

account

reserve

earnings

funds

interest

equity










£000

£000

£000

£000

£000

£000

£000









Balance at 1 April 2012

4,074

555

18,620

880,557

903,806

318

904,124









Profit for the year

-

-

-

89,601

89,601

159

89,760









Foreign exchange translation differences

-

-

3,847

-

3,847

-

3,847









Movements in  minority interest

-

-

-

-

-

(394)

(394)









Dividends to equity shareholders

-

-

-

(12,384)

(12,384)

-

(12,384)

















Balance at 1 April 2013

4,074

555

22,467

957,774

984,870

83

984,953









Profit for the period

-

-

-

72,560

72,560

296

72,856









Foreign exchange translation differences

-

-

(6,516)

-

(6,516)

-

(6,516)









Movements in  minority interest

-

-

-

-

-

(306)

(306)









Dividends to equity shareholders

-

-

-

-

-

-

-









Balance at 30 September 2013

4,074

555

15,951

1,030,334

1,050,914

73

1,050,987

















* See Note 1








 

 

 

 

 

Consolidated Balance Sheet as at 30 September 2013
























Unaudited


Unaudited


Audited








30/9/13


30/9/12


31/3/13










(Restated*)










£000


£000


£000

Assets












Investment property





1,452,159


1,273,463


1,407,544

Deferred tax assets





5,143


9,227


8,741













Total non-current assets





1,457,302


1,282,690


1,416,285

Trade and other receivables




50,343


50,911


43,150

Current investments






237


217


236

Cash and cash equivalents






51,390


54,858


63,513













Total current assets





101,970


105,986


106,899













Total assets






1,559,272


1,388,676


1,523,184

Equity












Share capital






4,074


4,074


4,074

Share premium





555


555


555

Translation reserve





15,951


17,860


22,467

Retained earnings





1,030,334


902,713


957,774













Total equity attributable to equity









holders of the parent





1,050,914


925,202


984,870

Minority interest





73


172


83













Total equity






1,050,987


925,374


984,953

Liabilities











Loans and borrowings



249,545


210,872


268,943

Deferred tax liabilities





165,990


151,030


174,017













Total non-current liabilities




415,535


361,902


442,960












Bank overdrafts



3


-


-

Loans and borrowings



9,683


20,124


18,256

Trade and other payables





44,259


46,009


41,844

Current taxation





38,805


                 35,267


35,171











Total current liabilities





92,750


101,400


95,271












Total liabilities






508,285


463,302


538,231











Total equity and liabilities





1,559,272


1,388,676


1,523,184











Equity shareholders' funds per share





£64.49


£56.78


£60.44





















* See Note 1










 

 

 

 

 

 

Consolidated Statement of Cash Flows for the six months ended 30 September 2013























Unaudited



Unaudited



Audited








Six months



Six months



Year








ended



ended



ended








30/9/13



30/9/12



31/3/13





















£000

£000


£000

£000


£000

£000

Cash flows from operating activities









Net cash generated from operations

13,565



13,989



35,379


Interest received

786



164



303


Interest paid





(5,796)



(5,342)



(11,014)


Distributions to minority interest

(306)



(201)



(394)


UK corporation tax paid

(926)



-



-


Overseas tax paid

-



(90)



(294)
















Net cash from operating activities


7,323



8,520



23,980










Cash flows from investing activities









Acquisition and development of investment property

(15,790)



(10,690)



(57,668)


Proceeds from sale of investment property

9,241



25,680



28,454
















Net cash (absorbed by)/generated from investing activities


(6,549)



14,990



(29,214)











Cash flows from financing activities










Repayment of bank loans

(15,692)



(837)



(1,525)


New bank loans and overdrafts

3



-



44,611


Repayment of mortgages

(18,596)



(8,206)



(24,363)


New mortgages

22,662



7,933



29,374


Dividends paid

-



-



(12,384)
















Net cash (absorbed by)/generated from financing activities


(11,623)



  (1,110)



35,713










Net (decrease)/increase in cash and cash equivalents


(10,849)



22,400



30,479









Cash and cash equivalents brought forward

63,513



32,324



32,324









Effect of exchange rate fluctuations on cash held

(1,277)



134



710









Cash and cash equivalents

51,387



54,858



63,513

  

Notes to the Consolidated Interim Financial Statements for the six months ended 30 September 2013

1.   Basis of preparation 

This interim financial information has been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting, applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 March 2013.  As required by the Listing Rules of the Financial Services Authority, the Directors have considered the result of the endorsement by the EU of new or changed International Financial Reporting Standards that are applicable or available for early adoption in the preparation of the Company's next consolidated financial statements for the year ending 31 March 2014 and concluded that they have no material effect on either the current or prior periods.

With effect from 1 April 2012, the Group adopted Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12) and changed its accounting policy on measuring deferred tax arising from investment property that is measured using the fair value model in IAS 40 Investment Property.  This change in accounting policy was applied retrospectively and full details of the change and its effect on the consolidated balance sheet as at 1 April 2011 and the subsequent annual consolidated statements of comprehensive income and consolidated balance sheets were set out in the Group's Annual Report for the year ended 31 March 2013.  The effect on the consolidated statement of comprehensive income for the six months ended 30 September 2012 has been to recognise a tax expense of £0.6 million and the effect of this change on basic and diluted earnings per share in the same period has been a decrease of £0.04.  The effect on the consolidated balance sheet at 30 September 2012 has been an increase in retained earnings and a corresponding decrease in deferred tax liabilities of £41.1 million.

       2.   Status of the interim financial information

The interim financial information in this statement has not been audited or reviewed by auditors pursuant to the Auditing Practices Board guidance on review of interim financial information and does not constitute statutory accounts, as defined in section 435 of the Companies Act 2006. The auditors' report on the statutory accounts for the year ended 31 March 2013 was unqualified and did not contain a statement under section 498 of the Companies Act 2006.  Statutory accounts for the year ended 31 March 2013 have been delivered to the Registrar of Companies.  The interim financial statements were approved by the Board of Directors on 25 November 2013. The preparation of the interim financial information requires management to make assumptions and estimates about future events which are uncertain, the actual outcome of which may result in a materially different outcome from that anticipated.

 

 

 

3.   Segmental Analysis

 

 

UK

USA

Eliminations

Total

For the six months ended 30 September 2013

£000

£000

£000

£000

Rental and related income

39,432

16,765

-

56,197






Property operating expenses

(22,607)

(10,879)

-

(33,486)






Profit on disposal of property

8,272

7

-

8,279






Net valuation movements on property

43,969

3,703

-

47,672






Administrative expenses

(4,749)

(320)

-

(5,069)






Profit before finance costs

64,317

9,276

-

73,593






Net financing credits

1,921

1,019

-

2,940






Profit before taxation

66,238

10,295

-

76,533






Income tax credit/(charge)

1,112

(4,789)

-

(3,677)






Profit for the period

67,350

5,506

-

72,856






Capital expenditure

12,153

3,637

-

15,790

As at 30 September 2013





Investment property

1,156,770

295,389

-

1,452,159

Other assets

68,461

46,929

(8,277)

107,113

Total segment assets

1,225,231

342,318

(8,277)

1,559,272

Total segment liabilities

(287,062)

(229,500)

8,277

(508,285)

Capital employed

938,169

112,818

-

1,050,987

 

 

 

 

 

 

 

 

UK

USA

Eliminations

Total

For the six months ended 30 September 2012

£000

(Restated*)

£000

£000

£000

(Restated*)

Rental and related income

37,260

16,041

-

53,301






Property operating expenses

(22,358)

(10,093)

-

(32,451)






Profit/(loss) on disposal of property

4,546

(298)

-

4,248






Net valuation movements on property

9,892

1,548

-

11,440






Administrative expenses

(4,806)

(432)

-

(5,238)






Profit before finance costs

24,534

6,766

-

31,300






Net financing costs

(3,822)

(4,212)

-

(8,034)






Profit before taxation

20,712

2,554

-

23,266






Income tax credit/(charge)

293

(1,348)

-

(1,055)






Profit for the period

21,005

1,206

-

22,211






Capital expenditure

9,548

1,142

-

10,690

As at 30 September 2012





Investment property

1,010,968

262,495

-

1,273,463

Other assets

79,962

39,922

(4,671)

115,213

Total segment assets

1,090,930

302,417

(4,671)

1,388,676

Total segment liabilities

(257,630)

(210,343)

4,671

(463,302)

Capital employed

833,300

92,074

-

925,374

*See Note 1

 

 

 

 

4.   Dividends 

No dividends were paid in the six months ended 30 September 2013 (six months ended 30 September 2012: £Nil).

5.   Investment properties

The Directors have estimated the value of the investment properties at 30 September 2013 after consultation with the Group's advisers.  A full valuation of the Group's properties will be carried out by independent professional valuers at 31 March 2014.

6.   Financial Instruments - fair value disclosure

 

The Group seeks to reduce interest rate risk by fixing rates on the majority of its loans and borrowings, either through the use of fixed rate mortgage finance or through interest rate swaps.  The Group does not speculate in treasury products.

 

The Group does not hedge account and all its mortgages and interest rate swaps are initially recognised, and subsequently recorded, at fair value, with any movement being recorded in the consolidated income statement.  The fair values of all these financial instruments are determined by reference to observable inputs that are classified as Level 2 in the fair value hierarchy set out in International Financial Reporting Standard 13 Fair Value Measurement. Fair values have been determined by discounting expected future cash flows using market interest rates and yield curves over the remaining term of the instrument, as adjusted to reflect the credit risk attributable to the Group and, where relevant, its counterparty.

 

Fair value measurements are as follows:

 


Unaudited

Unaudited

Audited


30/9/13

30/9/12

31/3/13


£000

£000

£000





Interest rate swaps

4,741

6,853

6,470

Mortgages

178,399

178,402

190,681


183,140

185,255

197,151





Current

13,049

25,602

23,351

Non-current

170,091

159,653

173,800


183,140

185,255

197,151





 

In both 2013 and 2012 there were no non-recurring fair value measurements and there were no material differences between the fair value and carrying amounts of all the other financial assets of the Group.

7.   Related party transactions

Day-to-day management of the Group's properties in the UK is mainly carried out by Highdorn Co. Limited and by Freshwater Property Management Limited.  Mr BSE Freshwater and Mr SI Freshwater are directors of both companies.  They have no beneficial interest in the share capital of Highdorn Co. Limited.  Mr BSE Freshwater, Mr SI Freshwater and Mr D Davis are directors of the parent company of Freshwater Property Management Limited but have no beneficial interest in either company.  Mr RE Freshwater has a beneficial interest in a trust holding interests in shares in Highdorn Co. Limited.

In their capacity as managing agents, Highdorn Co. Limited and Freshwater Property Management Limited collect rents and incur direct property expenses on behalf of the Group.  At 30 September 2013, the aggregate net amounts due to the Group from Highdorn Co. Limited and Freshwater Property Management Limited in relation to such agency receipts and payments was £5.5 million (2012: £3.0 million).  These amounts are not secured and are payable on demand.  No guarantees have been given or received and the amounts are settled in cash.

The amounts paid by the Group during the period for the provision of property and other management services by Highdorn Co. Limited and Freshwater Property Management Limited, not included above, were £2.1 million (six months ended 30 September 2012: £1.7 million).

The board considers that the Directors are the key management personnel of the Group and their remuneration is disclosed in the Daejan Holdings PLC Annual Report for 31 March 2013.

8.   Statement of Directors' responsibilities

The Directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8.

The Directors of Daejan Holdings PLC are listed in the Daejan Holdings PLC Annual Report for 31 March 2013. A list of current Directors is maintained on the Daejan Holdings PLC website www.daejanholdings.com.

 

B S E Freshwater

Chairman

26 November 2013


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