Mucklow(A&J)Group. - Half-year Report - six months to 31.12.18

Financial Summary for the six months ended 31 December 2018

Income statement

Six months ended

Six months ended


31 December 2018

31 December 2017

Underlying pre-tax profit (1)



Statutory pre-tax profit






Basic EPS



Interim dividend per share




Balance sheet

31 December 2018

30 June 2018

Net asset value



EPRA NAV per share (1)



Basic NAV per share



Net debt



Net debt to equity gearing




Property portfolio

31 December 2018

30 June 2018

Vacancy rate



Portfolio value (2)



Valuation gain



Initial yield on investment properties



Equivalent yield



 The interim dividend of 10.48p per share (2017: 10.18p) consists of two quarterly dividends of 5.24p each.

Chairman's Statement

Half-year to 31 December 2018

I am pleased to report another good performance by the Group for the six months ended 31 December 2018.

Occupancy levels have remained high and our rent roll has continued to grow, mainly on the back of reletting space and achieving higher rental levels, particularly from our industrial and logistics properties. This has resulted in further improvements in underlying pre-tax profit and net asset value per share.


The underlying pre-tax profit*, which excludes revaluation movements and profit on sale of investment and trading properties, was £0.5m higher at £8.5m (31 December 2017: £8.0m).

Statutory pre-tax profit for the half year was £17.2m (31 December 2017: £29.9m), which included a revaluation surplus of £8.7m (31 December 2017: revaluation surplus of £14.1m and profit on disposal of investment properties of £7.7m).

EPRA earnings per ordinary share increased by 4.4% to 13.45p (31 December 2017: 12.88p).

EPRA net asset value per ordinary share increased by 13p to 572p (30 June 2018: 559p).

Shareholders' funds rose to £361.8m (30 June 2018: £352.4m), while loan to value (LTV) remained low at 16% (30 June 2018: 16%).


The Directors have declared an interim dividend of 10.48p per ordinary share, an increase of 3% over last year (31 December 2017: 10.18p). The dividend will be paid as a Property Income Distribution and split into two quarterly dividends of 5.24p each. The first quarterly dividend will be paid on 15 April 2019 to shareholders on the register at the close of business on 15 March 2019 and the second quarterly dividend will be paid on 15 July 2019 to shareholders on the register at the close of business on 14 June 2019.

Property Review

Our occupancy rate at 31 December 2018 reached another record high of 97.6% (30 June 2018: 97.2%), with a further 1.0% of space reserved. The level of enquiries for our existing industrial and warehouse space in the Midlands remained steady during the first six months of our financial year, despite uncertainty over Brexit. However, occupiers with unsatisfied requirements have become noticeably more cautious about committing to future long-term developments on a pre-let basis.

Property yields and values also remained stable in our first half year. We did not acquire any investment properties, but started to see a reduction in the number of investors competing for industrial property and a few more opportunities becoming available. However, our main focus during the period, was actively to manage our industrial assets, to grow rental income and to commence the first phase of development at Mucklow Park, Tyseley, Birmingham.

Industrial and logistics properties represent approximately 70% of our total property investment portfolio, with a current value of around £300m. We own 3.2m sq ft of predominantly modern industrial and warehouse space, mainly located in the Midlands and built in the last 25 years. The industrial portfolio currently generates gross rental income of around £17.9m per annum (average rent per sq ft £5.73) and has an estimated rental value (ERV) of £19.7m per annum (average rent per sq ft £6.14).

Our industrial and logistics properties have benefited from steady rental growth over the last couple of years and we expect to achieve further rises in ERVs, as we continue to set higher rental levels on new lettings, rent reviews and lease renewals over the next 5 years. The highest rental level so far achieved on an average sized industrial unit of 15,000 sq ft in Birmingham is currently £8.25 psf.

In our first half year, we agreed 11 new lettings, 2 lease renewals and 4 rent reviews on 0.23m sq ft of industrial space with a combined new rent of £1.36m pa. This added approximately £0.6m pa to our rent roll, of which £0.2m pa was rental growth. The average rental growth achieved on our industrial properties during the first six months was 16.7%, approximately 3.4% higher than our ERVs.

Construction of the first phase at Mucklow Park, Tyseley, commenced in November 2018 and will comprise 8 industrial units totalling 135,000 sq ft. Approximately 45% of the space has been pre-let, with completion of the development anticipated in October 2019. The development should generate approximately £0.95m of rent per annum (forecast average rent £7.10 psf)


The Company is in very good health, with a virtually fully let property portfolio valued at £443.3m and a low LTV of 16%. Prospects for the second half year are encouraging, with further rental growth expected, and so far, it would appear that our existing industrial and logistics properties have not been adversely affected by the current uncertainty caused by the Brexit negotiations.

 We are, however, mindful of the fact that leaving the European Union may cause some economic and political volatility, which could have an impact on our business, in terms of loss of tenants, changes in yields and ERVs. However, the Group's portfolio of quality properties, geographically focused on the Midlands, with a diverse tenant base and high occupancy rate, coupled with low gearing and long-term fixed rate debt facilities, gives the directors confidence that our business model provides some protection against these risks.

 We will continue to monitor the situation and adapt our strategy accordingly, if we feel it necessary.

Rupert Mucklow


11 February 2019