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Daejan Hldgs PLC (DJAN)

  Print      Mail a friend       Annual reports

Wednesday 12 July, 2017

Daejan Hldgs PLC

Final Results

RNS Number : 7594K
Daejan Holdings PLC
12 July 2017
 

                                                                                                                       

12 July 2017                                                            

 

 

DAEJAN HOLDINGS PLC

UNAUDITED PRELIMINARY RESULTS ANNOUNCEMENT for the year ended 31 March 2017

 

The Chairman, Mr B S E Freshwater, today announced Preliminary Results for the year to 31 March 2017.

 

The financial highlights for the year ended 31 March 2017 are as follows:

                                                                                                                                               

 

2017

 

2016

 

 

£000

 

£000

 

 

 

 

 

 

 

 

Investment property

2,256,800

 

2,009,361

 

Net rental and related income from investment property

                   

         64,800

 

 

68,189

     

Profit before taxation

198,396

 

173,242

 

Total equity

1,655,955

 

1,480,094

 

Equity shareholders' funds per share

£101.61

 

£90.82

 

Earnings per share

£9.93

 

£8.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The revaluation of the investment property portfolio at the year end has resulted in a net valuation surplus for the year of £144,508,000 (2016 - £117,947,000). The board has recommended a final dividend of 63p per share in respect of the year ended 31 March 2017 payable on 10 November 2017 to shareholders on the register on 13 October 2017.  This will make a total dividend for the year of 98p (2016 - 93p).

 

Earnings per share is calculated by reference to profit on ordinary activities after taxation attributable to equity holders of the parent of £161,779,000 (2016 - £142,900,000) and 16,295,357 (2016 - 16,295,357) ordinary shares being the weighted average number of ordinary shares in issue during the year. Equity shareholders' funds per share is calculated by reference to total equity attributable to equity holders of the parent of £1,655,715,000 (2016 - £1,480,025,000) and the ordinary shares detailed above.

 

Daejan Holdings PLC is pleased to announce the following appointments as non-executive directors :

Mr Sander Srulowitz, senior partner of Sonnenschein, Sherman & Deutsch, a New York law firm specialising in property law. Daejan now holds approximately 25% of its assets in the United States and will welcome Mr Srulowitz's wide experience in USA property matters.

Mr Chaim B. Freshwater, who is the son of Mr S. I. Freshwater and currently lectures at a London college. His appointment is a further step in our succession planning.

 

 

 

 

DAEJAN HOLDINGS PLC

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 MARCH 2017

 

 

Year

 

Year

 

ended

 

ended

 

31 March

 

31 March

 

2017

 

2016

 

£000

 

£000

 

 

 

 

 

 

 

 

Gross rental income

125,522

 

117,733

Service charge income

15,216

 

20,464

Total rental and related income from investment property

140,738

 

138,197

 

 

 

 

Property operating expenses

(75,938)

 

(70,008)

Net rental and related income from investment property

64,800

 

68,189

 

 

 

 

Profit on disposal of investment property

14,594

 

11,725

Net valuation gains on investment property

144,508

 

117,947

Administrative expenses

(12,559)

 

(13,041)

Net operating profit before net financing costs

211,343

 

184,820

 

 

 

 

Fair value gains on derivative financial instruments

86

 

 788

Fair value losses on current investments

-

 

      (10)      

Other financial income

499

 

336

Financial expenses

(13,532)

 

(12,692)

Net financing costs

(12,947)

 

(11,578)

 

 

 

 

Profit before taxation

198,396

 

173,242

Income tax

(36,266)

 

(30,237)

Profit for the year

162,130

 

143,005

 

 

 

 

Attributable to:-

 

 

 

Equity holders of the parent

161,779

 

142,900

Non-controlling interest

351

 

105

Profit for the year

162,130

 

143,005

 

 

 

 

Basic and diluted earnings per share

£9.93

 

£8.77

 

 

 

 

 

                                                             

DAEJAN HOLDINGS PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MARCH 2017

 

 

Year ended

Year ended

 

31 March

31 March

 

2017

2016

 

£000

£000

 

 

 

 

 

 

Profit for the year

162,130

143,005

Foreign exchange translation differences

29,076

5,649

Total comprehensive income for the year

191,206

148,654

 

 

 

Attributable to:

 

 

Equity holders of the parent

190,845

148,547

Non-controlling interest

361

107

Total comprehensive income for the year

191,206

148,654

 

 

DAEJAN HOLDINGS PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2017

 

 

Issued share capital

Share premium

Translation reserve

  Retained earnings

Equity shareholders' funds

Minority interest

Total equity

 

£000

£000

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

 

Balance at 1 April 2015

4,074

555

26,404

1,314,785 

1,345,818

56

1,345,874

Profit for the year

-

-

-

142,900

142,900

105

143,005

Foreign exchange translation differences

-

-

 5,647

-

5,647

2

5,649

Distributions to minority interest

-

-

-

-

-

 (94)

(94)

Dividends to equity shareholders

-

-

-

(14,340)

(14,340)

-

(14,340)

Balance at 31 March 2016

     4,074

555

32,051

1,443,345

1,480,025

69

1,480,094

Profit for the year

-

-

-

161,779

161,779

351

162,130

Foreign exchange translation differences

-

-

29,066

-

29,066

10

29,076

Distributions to minority interest

-

-

-

-

-

(190)

(190)

Dividends to equity shareholders

-

-

-

(15,155)

(15,155)

-

(15,155)

Balance at 31 March 2017

     4,074

555

61,117

1,589,969

1,655,715

240

1,655,955

 

 

DAEJAN HOLDINGS PLC

CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2017

 

 

31 March

 

31 March

 

2017

 

2016

 

£000

 

£000

 

 

 

 

Assets

 

 

 

Investment property

2,256,800

 

2,009,361

Deferred tax assets

524

 

571

Total non-current assets

2,257,324

 

2,009,932

 

 

 

 

Trade and other receivables

65,062

 

63,119

Current investments

162

 

159

Cash and cash equivalents

84,283

 

84,863

Total current assets

149,507

 

148,141

Total assets

2,406,831

 

2,158,073

 

 

 

 

Equity

 

 

 

Share capital

4,074

 

4,074

Share premium

555

 

        555

Translation reserve

61,117

 

32,051

Retained earnings

1,589,969

 

1,443,345

Total equity attributable to equity holders of the parent

1,655,715

 

1,480,025

Non-controlling interest

240

 

     69        

Total equity

1,655,955

 

1,480,094

 

 

 

 

Liabilities

 

 

 

Loans and borrowings

303,242

 

306,412

Deferred tax liabilities

299,756

 

255,296

Total non-current liabilities

602,998

 

561,708

 

 

 

 

 

 

 

 

Loans and borrowings

49,297

 

15,516

Trade and other payables

51,360

 

55,987

Current taxation

47,221

 

44,768

Total current liabilities

147,878

 

116,271

Total liabilities

750,876

 

677,979

Total equity and liabilities

2,406,831

 

2,158,073

 

                                                                                                           

 

 

 

 

DAEJAN HOLDINGS PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 MARCH 2017

 

 

Year

Year

 

ended

ended

 

31 March

31 March

 

2017

2016

 

 

£000

£000

£000

£000

Cash flows from operating activities

 

 

 

 

Cash receipts from rent and service charges

135,926

 

141,487

 

Cash paid to suppliers and employees

(96,776)

 

(79,958)

 

Cash generated from operations

39,150

 

61,529

 

Interest received

500

 

336

 

Interest paid

(13,529)

 

(12,598)

 

Tax paid

(7,132)

 

(772)

 

Net cash from operating activities

 

18,989

  

48,495

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Acquisition and development of investment property

(27,726)

 

(26,939)

 

Proceeds from sale of investment property

18,242

 

12,807

 

Net cash absorbed by investing activities

 

(9,484)

 

(14,132)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Repayment of bank loans                                     

(1,871)

 

(1,302)

 

New bank loans                                                                                                  

-

       

-

 

Repayment of mortgages

(6,899)

 

(21,341)

 

New mortgages

8,057

 

34,379

 

Dividends paid to equity holders of the parent

Payments to non-controlling interest

(15,155)

(190)

 

(14,340)

(94)

 

Net cash absorbed by financing activities

 

(16,058)

 

(2,698)

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

(6,553)

 

31,665

Cash and cash equivalents brought forward

 

84,863

 

52,293

Effect of exchange rate fluctuations on cash held

 

 

5,973

 

 

 

905

Cash and cash equivalents

 

84,283

 

84,863

 

 

 

 

DAEJAN HOLDINGS PLC

 

Notes

1.   The financial information set out in this Preliminary Announcement does not constitute the Company's statutory accounts for the years ended 31 March 2017 or 2016.  The financial information for 2016 is derived from the statutory accounts for 2016 which have been delivered to the Registrar of Companies. The Auditors have reported on the 2016 accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.  The statutory accounts for 2017 will be finalised on the basis of the financial information presented by the Directors in this Preliminary Announcement and using policies consistent in all material respects with the policies applied in the Company's statutory accounts for 2016, as set out in those accounts as delivered to the Registrar of Companies. The statutory accounts for 2017 will be delivered to the Registrar of Companies following the Company's next Annual General Meeting.

 

 

2.   Significant judgements and estimates

 

In preparing the financial information the Group must make a number of judgements and estimates. Management consider the following judgements and estimates to be particularly significant because of the level of complexity, judgement or estimation involved in their application and their impact on the financial information.

 

i.    Property valuations

The valuation of the Group's property portfolio is inherently subjective, depending on many factors, including the individual nature of each property, its location and expected future net rental values, market yields and comparable market transactions. Therefore the valuations are subject to a degree of uncertainty and are made on the basis of assumptions which may not prove to be accurate, particularly in periods of difficult market or economic conditions following the EU Referendum and UK general election. All the Group's properties are valued by external valuers with appropriate qualifications and experience.

 

In the UK the aggregate amount of the valuation is £1,668,630,000 at 31 March 2017 and in the US the aggregate amount of the valuation is £602,466,000 at 31 March 2017. Both are based on the open market values assessed in accordance with professional standards. The aggregate professional valuations included in the balance sheet have been reduced by an amount of £14,296,000 relating to lease incentives included in Trade and other receivables.

 

ii.    Income taxes

The tax treatment of some transactions and calculations cannot be determined until a formal resolution has been reached with the relevant tax authorities. In particular, the Group is discussing the treatment of historical financing arrangements with tax authorites. In such cases, a best estimate of the relevant tax charge or credit is made, having regard to the extent of uncertainties associated with it. Where the final outcome of such matters is different from amounts initially recorded, those differences will be reflected in the income and deferred tax amounts at the time of the formal resolution.

 

Additionally, judgement has been exercised in relation to the recognition of deferred tax assets where the utilisation of the underlying tax losses is uncertain. Such resolution can take a long time to achieve due to the complexity of tax legislation.

 

 

3.   Segmental Analysis

 

 

UK

USA

Eliminations

Total

For the year ended 31 March 2017

£000

£000

£000

£000

Rental and related income

91,859

48,879

-

140,738

 

 

 

 

 

Property operating expenses

(48,334)

(27,604)

-

(75,938)

 

 

 

 

 

Profit on disposal of property

14,204

390

-

14,594

 

 

 

 

 

Net valuation movements on property

109,987

34,521

-

144,508

 

 

 

 

 

Administrative expenses

(11,782)

(777)

-

(12,559)

 

 

 

 

 

Profit before finance costs

155,934

55,409

-

211,343

 

 

 

 

 

Net financing expense

(4,952)

(7,995)

-

(12,947)

 

 

 

 

 

Profit before taxation

150,982

47,414

-

198,396

 

 

 

 

 

Income tax charge

(17,028)

(19,238)

-

(36,266)

 

 

 

 

 

Profit for the year

133,954

28,176

-

162,130

 

 

 

 

 

Capital expenditure

23,322

6,856

-

30,178

As at 31 March 2017

 

 

 

 

Investment property

1,655,922

600,878

-

2,256,800

Other assets

82,730

79,205

(11,904)

150,031

Total segment assets

1,738,652

680,083

(11,904)

2,406,831

Total segment liabilities

(359,078)

(403,702)

          11,904

(750,876)

Capital employed

1,379,574

276,381

-

1,655,955

 

 

UK

USA

Eliminations

Total

For the year ended 31 March 2016

£000

£000

£000

£000

Rental and related income

97,079

41,118

-

138,197

 

 

 

 

 

Property operating expenses

(46,390)

(23,618)

-

(70,008)

 

 

 

 

 

Profit on disposal of property

11,352

373

-

11,725

 

 

 

 

 

Net valuation movements on property

75,829

42,118

-

117,947

 

 

 

 

 

Administrative expenses

(12,341)

(700)

-

(13,041)

 

 

 

 

 

Profit before finance costs

125,529

59,291

-

184,820

 

 

 

 

 

Net financing expense

(4,306)

(7,272)

-

(11,578)

 

 

 

 

 

Profit before taxation

121,223

52,019

-

173,242

 

 

 

 

 

Income tax charge

(9,688)

(20,549)

-

(30,237)

 

 

 

 

 

Profit for the year

111,535

31,470

-

143,005

 

 

 

 

 

Capital expenditure

11,065

15,874

-

26,939

As at 31 March 2016

 

 

 

 

Investment property

1,522,621

486,740

-

2,009,361

Other assets

98,125

60,761

(10,174)

148,712

Total segment assets

1,620,746

547,501

(10,174)

2,158,073

Total segment liabilities

(361,923)

(326,230)

10,174

(677,979)

Capital employed

1,258,823

221,271

-

1,480,094

 

 

 

 

 

 

 

4.   Taxation

 

The Group's overall effective tax rate was 18.3% (2016 - 17.5%). In the UK, the effective tax rate was 11.3% (2016 - 8.0%); 2016 benefited from a reduction in the rate of future deferred tax from 20% to 18%. A further, but smaller, reduction of the future deferred tax rate from 18% to 17% took place in 2017(effective 1 April 2020). In the USA, the effective rate has remained consistent and in line with the statutory rate at 40.6% (2016 - 39.5%).

 

 

5.   Dividends

 

Dividends of £15.2m (2016:£14.3m) were paid in the year ended 31 March 2017.

 

 

6.   Investment Properties

 

A full valuation of the Group's properties has been carried out by individual professional valuers at 31 March 2017.

 

 

2017

 

2016

 

£000

 

£000

Opening valuation

2,009,361

 

1,855,230

New acquisitions

472

 

10,380

Additions to existing properties

29,706

 

16,559

Disposals

(1,192)

 

(3,682)

 

2,038,347

 

1,878,487

Revaluation gain

144,508

 

117,947

Foreign exchange gain

73,945

 

12,927

Closing valuation

2,256,800

 

2,009,361

 

 

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 the 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 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 interest rate swaps and fixed rate loans 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.

 

 

Unaudited

 

Audited

 

31 March 2017

 

31 March 2016

 

Book Value

Fair Value

 

Book Value

Fair Value

 

£000

£000

 

£000

£000

Loans and borrowings

352,539

366,968

 

321,928

342,156

Interest rate swaps

3,084

3,084

 

3,170

3,170

 

355,623

370,052

 

325,098

345,326

 

 

 

 

 

 

Current

52,381

54,551

 

18,686

22,108

Non-current

303,242

315,501

 

306,412

323,218

 

355,623

370,052

 

325,098

345,326

 

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 ("Highdorn") and by Freshwater Property Management Limited ("FPM"). Mr BSE Freshwater and Mr SI Freshwater are directors of both companies. They have no beneficial interest in the share capital of Highdorn. Mr BSE Freshwater, Mr SI Freshwater and Mr D Davis are directors of the parent company of FPM but have no beneficial interest in either company. Mr RE Freshwater has a beneficial interest in a trust holding interests in shares in Highdorn.

 

In their capacity as property managing agents, Highdorn and FPM collect rents and incur direct property expenses on behalf of the Group. At 31 March 2017, the aggregate net amount due to the Group from Highdorn and FPM was £6.6 million (2016 - £7.7 million due to Highdorn and FPM). 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 amount charged to the Group for the provision of property and other management services by Highdorn and FPM for the year ended 31 March 2017 was £4.5 million (2016 - £4.0 million).

 

 

9.   The Annual General Meeting will be held at 2:00 pm on Tuesday 12 September 2017 in The Grand Saloon, Theatre Royal, Drury Lane, Catherine Street, London WC2B 5JF.

 

 

 

 

 

For further information call:

 

Mark Jenner

Company Secretary

Daejan Holdings PLC

020 7836 1555

 

Nick Oborne / Tom Jenkins

Weber Shandwick Financial

020 7067 0700


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