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RNS
Daejan Holdings PLC  -  DJAN   

Half-year Report

Released 07:00 29-Nov-2017

RNS Number : 7536X
Daejan Holdings PLC
29 November 2017
 

 

29 November 2017

 

 

DAEJAN HOLDINGS PLC

INTERIM RESULTS ANNOUNCEMENT for the half year ended 30 September 2017

 

The Board is pleased to present the Interim Statement for the half year ended
30 September 2017.

 

 

 

30 Sep 2017

 

 

30 Sep 2016

 

 

31 Mar 2017

 

£000

 

£000

 

£000

 

 

 

 

 

 

Profit before tax

56,643

 

65,112

 

198,396

 

 

 

 

 

 

Profit after tax

45,474

 

61,477

 

162,130

 

 

 

 

 

 

Basic and diluted earnings per share

£2.79

 

£3.76

 

£9.93

 

 

 

 

 

 

Equity shareholders' funds per share

£103.28

 

£95.81

 

£101.61

 

 

·     The profit before tax for the period was £56.6 million (2016: £65.1 million) after accounting for the net valuation gain on investment properties of £29.5 million (2016: £38.6 million).

·     The property portfolio has been valued by the Directors based on the recommendations of the Group's external advisers and continues to show modest growth in both the UK and USA.

·     We continue to see some increase in rental income in the UK and USA. The reduction in the sterling/dollar exchange rate in this period has resulted in USA reported rental income increasing by £1.5 million (2016: £2.4 million).

·     Since the Brexit referendum the UK has been dominated by political and economic uncertainty which has led to reduced forecasts for economic growth. This combination of factors will provide a challenging environment for our UK business. In the USA the economic outlook is more encouraging and should provide a positive environment to grow our business.

·     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, movements in the sterling/dollar exchange rate and the incidence of voids and bad debts.

·     An interim dividend of 35p per share will be paid on 9 March 2018 to shareholders on the register on 9 February 2018.

 

 

B S E Freshwater

Chairman

29 November 2017

 

 

 

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 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

 

 

 

 

 

Six months

 

Six months

 

Year

 

 

 

 

 

 

 

 

ended

 

ended

 

ended

 

 

 

 

 

 

 

 

30 Sep 2017

 

30 Sep 2016

 

31 Mar 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

£000

 

£000

 

£000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total rental & related income from investment property

 

71,270

 

70,214

 

140,738

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

 

 

(38,923)

 

(38,021)

 

(75,938)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net rental & related income from investment property

 

 

 

32,347

 

32,193

 

64,800

 

 

 

 

 

 

 

 

Profit on disposal of investment property

6,720

 

7,265

 

14,594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net valuation gains on investment property

 

29,536

 

38,611

 

144,508

 

 

 

 

 

 

 

 

 

 

 

 

Administrative expenses

 

 

 

 

(6,395)

 

(5,896)

 

(12,559)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating profit before net financing costs

 

62,208

 

72,173

 

211,343

 

 

 

 

 

 

 

 

 

Fair value gains/(losses) on derivative financial instruments

 

1,309

 

(630)

 

86

 

Fair value gains on current investments

 

-

 

9

 

-

 

 

Other financial income

 

 

 

 

266

 

171

 

499

 

 

 

 

 

 

 

 

 

 

 

 

Financial expenses

 

 

 

 

(7,140)

 

(6,611)

 

(13,532)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net financing expense

 

 

 

 

(5,565)

 

(7,061)

 

(12,947)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

 

56,643

 

65,112

 

198,396

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

 

(11,169)

 

(3,635)

 

(36,266)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

 

 

 

 

45,474

 

61,477

 

       162,130

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

 

Equity holders of the parent

 

 

 

45,423

 

61,284

 

161,779

 

Non-controlling interest

 

 

 

 

51

 

193

 

351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

 

 

 

 

45,474

 

61,477

 

162,130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per share

 

£2.79

 

£3.76

 

£9.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                           

 

 

 

 

 

 

 

 

 

Consolidated Statement of Comprehensive Income for the six months ended 30 September 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

 

 

 

Six Months

 

Six Months

 

Year

 

 

 

 

 

 

ended

 

ended

 

ended

 

 

 

 

 

 

30 Sep 2017

 

30 Sep 2016

 

31 Mar 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

£000

 

£000

 

£000

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

45,474

 

61,477

 

162,130

 

Foreign exchange translation differences

(18,101)

 

20,021

 

29,076

 

 

 

 

 

 

Total comprehensive income for the period

27,373

 

81,498

 

191,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

Equity holders of the parent

27,338

 

81,297

 

190,845

Non-controlling interest

35

 

201

 

361

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

27,373

 

81,498

 

191,206

 

 

 

 

 

 

 

 

 

 

 

 

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 2017

 

 

 

 

 

Non-

 

 

Share

Share

Translation

Retained

controlling

Total

 

capital

premium

reserve

earnings

funds

interest

equity

 

 

 

 

 

 

 

 

 

£000

£000

£000

£000

£000

£000

 

Balance at 1 April 2016

4,074

555

32,051

1,443,345

69

1,480,094

 

 

 

 

 

 

 

Profit for the period

-

-

-

161,779

351

162,130

 

 

 

 

 

 

 

Foreign exchange translation differences

-

-

29,066

-

10

29,076

 

Payments to non-controlling interest

-

-

-

-

(190)

(190)

 

 

 

 

 

 

 

Dividends to equity shareholders

-

-

-

(15,155)

-

(15,155)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 April 2017

4,074

555

61,117

1,589,969

240

1,655,955

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

45,423

51

45,474

 

 

 

 

 

 

 

Foreign exchange translation differences

-

-

(18,085)

-

(16)

(18,101)

 

Payments to non-controlling interest

-

-

-

-

(194)

(194)

 

 

 

 

 

 

 

Dividends to equity shareholders

-

-

-

-

-

-

 

 

 

 

 

 

 

Balance at 30 September 2017

4,074

555

43,032

1,635,392

1,683,053

81

1,683,134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheet as at 30 September 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

 

 

 

 

30 Sep 2017

 

30 Sep 2016

 

31 Mar 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

£000

 

£000

 

£000

Assets

 

 

 

 

 

 

 

 

 

 

 

Investment property

 

 

 

 

2,262,773

 

2,117,093

 

2,256,800

Deferred tax assets

 

 

 

 

302

 

539

 

524

 

 

 

 

 

 

 

 

 

 

 

 

Total non-current assets

 

 

 

 

2,263,075

 

2,117,632

 

2,257,324

Trade and other receivables

 

 

 

70,639

 

70,700

 

65,062

Current investments

 

 

 

 

 

161

 

145

 

162

Cash and cash equivalents

 

 

 

 

 

79,917

 

88,423

 

84,283

 

 

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

 

 

150,717

 

159,268

 

149,507

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

 

 

2,413,792

 

2,276,900

 

2,406,831

Equity

 

 

 

 

 

 

 

 

 

 

 

Share capital

 

 

 

 

 

4,074

 

4,074

 

4,074

Share premium

 

 

 

 

555

 

555

 

555

Translation reserve

 

 

 

 

43,032

 

52,064

 

61,117

Retained earnings

 

 

 

 

1,635,392

 

1,504,629

 

1,589,969

 

 

 

 

 

 

 

 

 

 

 

 

Total equity attributable to equity

 

 

 

 

 

 

 

 

holders of the parent

 

 

 

 

1,683,053

 

1,561,322

 

1,655,715

Non-controlling interest

 

 

 

 

81

 

84

 

240

 

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

 

 

 

1,683,134

 

1,561,406

 

1,655,955

Liabilities

 

 

 

 

 

 

 

 

 

 

Loans and borrowings

 

 

297,535

 

330,216

 

303,242

Deferred tax liabilities

 

 

 

 

295,713

 

267,578

 

299,756

 

 

 

 

 

 

 

 

 

 

 

 

Total non-current liabilities

 

 

 

593,248

 

597,794

 

602,998

 

 

 

 

 

 

 

 

 

 

 

Loans and borrowings

 

 

35,669

 

17,376

 

49,297

Trade and other payables

 

 

 

 

54,734

 

53,644

 

51,360

Current taxation

 

 

 

 

47,007

 

                 46,680

 

47,221

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

 

 

 

137,410

 

117,700

 

147,878

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

 

 

730,658

 

715,494

 

750,876

 

 

 

 

 

 

 

 

 

 

Total equity and liabilities

 

 

 

 

2,413,792

 

2,276,900

 

2,406,831

 

 

 

 

 

 

 

 

 

 

Equity shareholders' funds per share

 

 

 

 

£103.28

 

£95.81

 

£101.61

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Cash Flows for the six months ended 30 September 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

 

Unaudited

 

 

Audited

 

 

 

 

 

 

 

Six months

 

 

Six months

 

 

Year

 

 

 

 

 

 

 

ended

 

 

ended

 

 

ended

 

 

 

 

 

 

 

30 Sep 2017

 

 

30 Sep 2016

 

 

31 Mar 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

£000

£000

 

£000

£000

 

£000

£000

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net cash generated from operations

25,417

 

 

13,486

 

 

39,150

 

Interest received

266

 

 

172

 

 

500

 

Interest paid

 

 

 

 

(7,134)

 

 

(6,603)

 

 

(13,529)

 

Tax paid

(4,841)

 

 

(2,291)

 

 

(7,132)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash from operating activities

 

13,708

 

 

4,764

 

 

18,989

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Acquisition and development of investment property

(18,205)

 

 

(16,212)

 

 

(27,726)

 

Proceeds from sale of investment property

7,079

 

 

7,848

 

 

18,242

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash absorbed by investing activities

 

(11,126)

 

 

(8,364)

 

 

(9,484)

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

Repayment of bank loans

(1,362)

 

 

(832)

 

 

(1,871)

 

New bank loans and overdrafts

-

 

 

-

 

 

-

 

Repayment of mortgages

(13,819)

 

 

(3,685)

 

 

(6,899)

 

New mortgages

12,005

 

 

7,546

 

 

8,057

 

Dividends paid

-

 

 

-

 

 

(15,155)

 

Payments to non-controlling interest

(194)

 

 

(186)

 

 

(190)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (absorbed by) / generated from financing activities

 

(3,370)

 

 

  2,843

 

 

(16,058)

 

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

(788)

 

 

(757)

 

 

(6,553)

 

 

 

 

 

 

 

 

Cash and cash equivalents brought forward

84,283

 

 

84,863

 

 

84,863

 

 

 

 

 

 

 

 

Effect of exchange rate fluctuations on cash held

(3,578)

 

 

4,317

 

 

5,973

 

 

 

 

 

 

 

 

Cash and cash equivalents

79,917

 

 

88,423

 

 

84,283

 

 

 

 

 

 

 

 

Notes to the Consolidated Interim Financial Statements for the six months ended 30 September 2017

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 2017. 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 2018 and concluded that they have no material effect on either the current or prior periods.

The Directors have reviewed the current and projected financial position of the Group and are satisfied that the Group has adequate resources to cover current liabilities.  Therefore, the Directors continue to adopt the going concern basis in preparing the half year report.

2.   Status of the interim financial information

The interim financial information in this statement has not been audited or reviewed by auditors pursuant to the Auditing Practices Board guidance on review of interim financial information and does not constitute statutory accounts, as defined in section 435 of the Companies Act 2006. The auditors' report on the statutory accounts for the year ended 31 March 2017 was unqualified and did not contain a statement under section 498 of the Companies Act 2006.  Statutory accounts for the year ended 31 March 2017 have been delivered to the Registrar of Companies.  The interim financial statements were approved by the Board of Directors on 28 November 2017. 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 2017

£000

£000

£000

£000

Rental and related income

45,602

25,668

-

71,270

 

 

 

 

 

Property operating expenses

(25,051)

(13,872)

-

(38,923)

 

 

 

 

 

Profit on disposal of property

6,527

193

-

6,720

 

 

 

 

 

Net valuation movements on property

24,103

5,433

-

29,536

 

 

 

 

 

Administrative expenses

(6,085)

(310)

-

(6,395)

 

 

 

 

 

Profit before finance costs

45,096

17,112

-

62,208

 

 

 

 

 

Net financing expense

(1,296)

(4,269)

-

(5,565)

 

 

 

 

 

Profit before taxation

43,800

12,843

-

56,643

 

 

 

 

 

Income tax charge

(6,032)

(5,137)

-

(11,169)

 

 

 

 

 

Profit for the period

37,768

7,706

-

45,474

 

 

 

 

 

Capital expenditure

15,086

2,866

-

17,952

As at 30 September 2017

 

 

 

 

Investment property

1,694,357

568,416

-

2,262,773

Other assets

84,627

77,588

(11,196)

151,019

Total segment assets

1,778,984

646,004

(11,196)

2,413,792

Total segment liabilities

(360,768)

(381,086)

11,196

(730,658)

Capital employed

1,418,216

264,918

-

1,683,134

 

 

 

UK

USA

Eliminations

Total

For the six months ended 30 September 2016

£000

£000

£000

£000

Rental and related income

46,436

23,778

-

70,214

 

 

 

 

 

Property operating expenses

(25,131)

(12,890)

-

(38,021)

 

 

 

 

 

Profit/(loss) on disposal of property

7,502

(237)

-

7,265

 

 

 

 

 

Net valuation movements on property

36,731

1,880

-

38,611

 

 

 

 

 

Administrative expenses

(5,495)

(401)

-

(5,896)

 

 

 

 

 

Profit before finance costs

60,043

12,130

-

72,173

 

 

 

 

 

Net financing expense

(3,088)

(3,973)

-

(7,061)

 

 

 

 

 

Profit before taxation

56,955

8,157

-

65,112

 

 

 

 

 

Income tax charge

(1,292)

(2,343)

-

(3,635)

 

 

 

 

 

Profit for the period

55,663

5,814

-

61,477

 

 

 

 

 

Capital expenditure

13,273

2,939

-

16,212

As at 30 September 2016

 

 

 

 

Investment property

1,572,623

544,470

-

2,117,093

Other assets

94,583

76,601

(11,377)

159,807

Total segment assets

1,667,206

621,071

(11,377)

2,276,900

Total segment liabilities

(350,247)

(376,624)

11,377

(715,494)

Capital employed

1,316,959

244,447

-

1,561,406

 

 

 

 

 

 

 

 

 

4.   Taxation

The tax charge in the interim statement is in line with the UK statutory rate. The higher rate on our US generated profits is offset by an indexation credit on the UK deferred property valuation gains.

5.   Dividends 

No dividends were paid in the six months ended 30 September 2017 (six months ended 30 September 2016: £Nil).

6.   Investment properties

The Directors have estimated the value of the investment properties at 30 September 2017 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 2018.

7.   Financial Instruments - fair value disclosure

 

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

 

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

 

Fair value measurements are as follows:

 

 

Unaudited

30 Sep 2017

Unaudited

30 Sep 2016

Audited

31 Mar 2017

 

 

Book Value

Fair Value

Book Value

Fair Value

Book Value

Fair Value

 

£000

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

Loans and borrowings

333,204

345,403

347,592

371,301

352,539

367,579

Interest rate swaps

1,775

1,775

3,800

3,800

3,084

3,084

 

 

 

 

 

 

 

 

334,979

347,178

351,392

375,101

355,623

370,663

 

 

 

 

 

 

 

Current

37,444

38,992

21,176

24,961

52,381

54,661

Non-current

297,535

308,186

330,216

350,140

303,242

316,002

 

 

 

 

 

 

 

 

334,979

347,178

351,392

375,101

355,623

370,663

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In both 2017 and 2016 there were no non-recurring fair value measurements and there were no material differences between the fair value and carrying amounts of all the other financial assets of the Group.

8.   Related party transactions

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

In their capacity as managing agents, Highdorn Co. Limited and Freshwater Property Management Limited collect rents and incur direct property expenses on behalf of the Group.  At 30 September 2017, the aggregate net amounts due to the Group to Highdorn Co. Limited and Freshwater Property Management Limited in relation to such agency receipts and payments was £3.9 million (2016: £1.1 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 were £3.0 million (six months ended 30 September 2016: £3.9 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 2017.

9.   Statement of Directors' responsibilities

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

The Directors of Daejan Holdings PLC are listed in the Daejan Holdings PLC Annual Report for
31 March 2017. A list of current Directors is maintained on the Daejan Holdings PLC website www.daejanholdings.com.

 

B S E Freshwater

Chairman

29 November 2017


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