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Daejan Holdings PLC  -  DJAN   

Half-year Report

Released 07:00 28-Nov-2018

RNS Number : 6879I
Daejan Holdings PLC
28 November 2018
 

 

28 November 2018

 

DAEJAN HOLDINGS PLC

INTERIM RESULTS ANNOUNCEMENT for the half year ended 30 September 2018

 

The Board is pleased to present the Interim Statement for the half year ended 30 September 2018.

 

 

 

30 Sep 2018


 

30 Sep 2017


 

31 Mar 2018


£000


£000


£000







Profit before tax

61,100


56,643


201,262







Profit after tax

48,858


45,474


202,958







Basic and diluted earnings per share

£2.99


£2.79


£12.45







Equity shareholders' funds per share

£115.77


£103.28


£111.25

 

·    The profit before tax for the period was £61.1 million (2017: £56.6 million) after accounting for the net valuation gain on investment properties of £32.5 million (2017: £29.5 million).

·    The property portfolio has been valued by the Directors based on the recommendations of the Group's external advisers and in the UK continues to show modest growth whilst the USA has been flat following increases in local interest rates.

·    We continue to see some increase in rental income in the UK and USA, primarily driven by the letting of completed development projects.

·    Brexit continues to provide 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 8 March 2019 to shareholders on the register on 8 February 2019.

 

B S E Freshwater

Chairman

28 November 2018

 

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 2018























Unaudited


Unaudited


Audited









Six months


Six months


Year









ended


ended


ended









30 Sep 2018


30 Sep 2017


31 Mar 2018






















£000


£000


£000















Total rental & related income from investment property


73,966


71,270


142,885















Property operating expenses




(37,015)


(38,923)


(76,407)















Net rental & related income from investment property




36,951


32,347


66,478









Profit on disposal of investment property

4,929


6,720


11,893















Net valuation gains on investment property


32,521


29,536


146,438













Administrative expenses





(6,940)


(6,395)


(13,263)















Net operating profit before net financing costs


67,461


62,208


211,546










Fair value gains on derivative financial instruments


840


1,309


1,923


 

Fair value gains on current investments


-


-


6


 

Other financial income





482


266


581













Financial expenses





(7,683)


(7,140)


(12,794)















Net financing expense





(6,361)


(5,565)


(10,284)


























Profit before taxation


61,100


56,643


201,262















Income tax





(12,242)


(11,169)


1,696















Profit for the period





48,858


45,474


       202,958


Attributable to:












Equity holders of the parent




48,789


45,423


202,889


Non-controlling interest





69


51


69















Profit for the period





48,858


45,474


202,958




























Basic and diluted earnings per share


£2.99


£2.79


£12.45


























 

 

 

Consolidated Statement of Comprehensive Income for the six months ended 30 September 2018


















Unaudited


Unaudited


Audited







Six Months


Six Months


Year







ended


ended


ended







30 Sep 2018


30 Sep 2017


31 Mar 2018


















£000


£000


£000












Profit for the period

48,858


45,474


202,958

 

Foreign exchange translation differences

24,830


(18,101)


(29,759)







Total comprehensive income for the period

73,688


27,373


173,199























Attributable to:







Equity holders of the parent

73,612


27,338


173,156

Non-controlling interest

76


35


43












Total comprehensive income for the period

73,688


27,373


173,199












 

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 2018






Equity

Non-



Share

Share

Translation

Retained

shareholders'

controlling

Total


premium

reserve

earnings

funds

interest

equity










£000

£000

£000

£000

£000

£000

£000

 

Balance at 1 April 2017

4,074

555

61,117

1,589,969

1,655,715

240

1,655,955









Profit for the period

-

-

-

202,889

202,889

69

202,958









Foreign exchange translation differences

-

-

(29,733)

-

(29,733)

(26)

(29,759)

 

Payments to non-controlling interest

-

-

-

-

-

(192)

(192)









Dividends to equity shareholders

-

-

-

(15,969)

(15,969)

-

(15,969)
















Balance at 1 April 2018

4,074

555

31,384

1,776,889

1,812,902

91

1,812,993









Profit for the period

-

-

-

48,789

48,789

69

48,858









Foreign exchange translation differences

-

-

24,823

-

24,823

7

24,830

 

Payments to non-controlling interest

-

-

-

-

-

(11)

(11)









Dividends to equity shareholders

-

-

-

-

-

-

-









Balance at 30 September 2018

4,074

555

56,207

1,825,678

1,886,514

156

1,886,670









 








 

 

 

Consolidated Balance Sheet as at 30 September 2018
























Unaudited


Unaudited


Audited








30 Sep 2018


30 Sep 2017


31 Mar 2018




















£000


£000


£000

Assets












Investment property





2,468,822


2,262,773


2,373,184

Deferred tax assets





54


302


197













Total non-current assets





2,468,876


2,263,075


2,373,381

Trade and other receivables




81,398


70,639


62,714

Current investments






154


161


158

Cash and cash equivalents






92,794


79,917


98,752













Total current assets





174,346


150,717


161,624













Total assets






2,643,222


2,413,792


2,535,005

Equity












Share capital






4,074


4,074


4,074

Share premium





555


555


555

Translation reserve





56,207


43,032


31,384

Retained earnings





1,825,678


1,635,392


1,776,889













Total equity attributable to equity









holders of the parent





1,886,514


1,683,053


1,812,902

Non-controlling interest





156


81


91













Total equity






1,886,670


1,683,134


1,812,993

Liabilities











Loans and borrowings



308,746


297,535


296,501

Deferred tax liabilities





287,981


295,713


271,807













Total non-current liabilities




596,727


593,248


568,308












Loans and borrowings



58,035


35,669


53,958

Trade and other payables





54,572


54,734


52,489

Current taxation





47,218


                 47,007


47,257











Total current liabilities





159,825


137,410


153,704












Total liabilities






756,552


730,658


722,012











Total equity and liabilities





2,643,222


2,413,792


2,535,005











Equity shareholders' funds per share





£115.77


£103.28


£111.25











  










 

 

 

Consolidated Statement of Cash Flows for the six months ended 30 September 2018























Unaudited



Unaudited



Audited








Six months



Six months



Year








ended



ended



ended








30 Sep 2018



30 Sep 2017



31 Mar 2018





















£000

£000


£000

£000


£000

£000

Cash flows from operating activities









Net cash generated from operations

17,186



25,417



56,480


Interest received

481



266



581


Interest paid





(7,559)



(7,134)



(12,592)


Tax paid

(4,553)



(4,841)



(8,967)
















Net cash from operating activities


5,555



13,708



35,502










Cash flows from investing activities









Acquisition and development of investment property

(21,725)



(18,205)



(39,424)


Proceeds from sale of investment property

6,286



7,079



16,085
















Net cash absorbed by investing activities


(15,439)



(11,126)



(23,339)











Cash flows from financing activities










Repayment of bank loans

(1,049)



(1,362)



(2,509)


New bank loans and overdrafts

-



-



15,000


Repayment of mortgages

(9,775)



(13,819)



(58,398)


New mortgages

9,737



12,005



70,216


Dividends paid

-



-



(15,969)


Payments to non-controlling interest

(11)



(194)



(192)
















Net cash (absorbed by) / generated from financing activities


(1,098)



  (3,370)



8,148










Net (decrease) / increase in cash and cash equivalents


(10,982)



(788)



20,311









Cash and cash equivalents brought forward

98,752



84,283



84,283









Effect of exchange rate fluctuations on cash held

5,024



(3,578)



(5,842)









Cash and cash equivalents

92,794



79,917



98,752

 

 

Notes to the Consolidated Interim Financial Statements for the six months ended 30 September 2018

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 2018. 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 2019 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 2018 was unqualified and did not contain a statement under section 498 of the Companies Act 2006.  Statutory accounts for the year ended 31 March 2018 have been delivered to the Registrar of Companies.  The interim financial statements were approved by the Board of Directors on 27 November 2018. 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 2018

£000

£000

£000

£000

Rental and related income

47,822

26,144

-

73,966






Property operating expenses

(22,923)

(14,092)

-

(37,015)






Profit/(loss) on disposal of property

5,620

(691)

-

4,929






Net valuation movements on property

32,521

-

-

32,521






Administrative expenses

(6,468)

(472)

-

(6,940)






Profit before finance costs

56,572

10,889

-

67,461






Net financing expense

(2,876)

(3,485)

-

(6,361)






Profit before taxation

53,696

7,404

-

61,100






Income tax charge

(10,362)

(1,880)

-

(12,242)






Profit for the period

43,334

5,524

-

48,858






Capital expenditure

15,856

3,057

-

18,913

As at 30 September 2018





Investment property

1,831,882

636,940

-

2,468,822

Other assets

83,476

102,618

(11,694)

174,400

Total segment assets

1,915,358

739,558

(11,694)

2,643,222

Total segment liabilities

(389,979)

(378,267)

11,694

(756,552)

Capital employed

1,525,379

361,291

-

1,886,670

 

 

 

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


 

 

 

 

4.   Taxation

The tax charge in the interim statement is in line with the current UK statutory rate. The higher rate on our US generated profits is offset by a lower future tax rate on our UK deferred property valuation gains.

5.   Dividends 

No dividends were paid in the six months ended 30 September 2018 (six months ended 30 September 2017: £Nil).

6.   Investment properties

The Directors have estimated the value of the investment properties at 30 September 2018 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 2019.

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 2018

Unaudited

30 Sep 2017

Audited

31 Mar 2018



Book Value

Fair Value

Book Value

Fair Value

Book Value

Fair Value


£000

£000

£000

£000

£000

£000








Loans and borrowings

366,781

371,328

333,204

345,403

350,459

358,199

Interest rate swaps

321

321

1,775

1,775

1,161

1,161









367,102

371,649

334,979

347,178

351,620

359,360








Current

58,356

58,639

37,444

38,992

55,119

55,898

Non-current

308,746

313,010

297,535

308,186

296,501

303,462









367,102

371,649

334,979

347,178

351,620

359,360






















 

In both 2018 and 2017 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 CB Freshwater and Mr RE Freshwater have 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 2018, 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 £9.4 million (2017: £3.9 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 charged 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 £2.6 million (six months ended 30 September 2017: £3.0 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 2018.

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 2018. A list of current Directors is maintained on the Daejan Holdings PLC website www.daejanholdings.com.

 

B S E Freshwater

Chairman

28 November 2018


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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Half-year Report - RNS