MOUNTVIEW ESTATES PLC

Earnings Release • Jun 14, 2018

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RNS Number : 3341R

Mountview Estates PLC

14 June 2018

MOUNTVIEW ESTATES P.L.C.

Preliminary Results for the year ended 31 March 2018

CHIEF EXECUTIVE OFFICER'S STATEMENT

It is always disappointing to report profits that have fallen but in the present uncertain economic climate I consider that my team have given a very good performance.  In uncertain times transactions usually take longer to complete and so it is that during the year ended 31 March 2018 we completed significantly less sales than in the previous financial year.  This fall in the number of sales has caused the fall in profits to a far greater degree than any perceived fall in prices.

Whilst the sales figures have fallen, the cost of the purchases which we have made during this financial year has increased by over 50% compared with the previous year.  It is purchases that are the future of the Company and I am pleased to report that it is not only the quantity of purchases but also the quality of the purchases that has improved.

It is now nearly 30 years since regulated tenancies were last created but this asset class continues to exist in sufficient quantities to be the mainstay of our business.  The percentage of vacant possession value that has to be paid for such assets has increased over the years but, given our low gearing, we believe that we continue to be able to produce the best returns that are available within our area of expertise in the property industry.  We have made modest diversification into life tenancies and as leases become shorter where we are the ground landlord there is money to be made in granting lease extensions. Nevertheless these are only supplementary to our main business of buying residential properties that are subject to regulated tenancies and awaiting vacant possession.

Whilst regulated tenancies continue to exist for longer than may have been anticipated when the 1988 Rent Act became effective a business as narrowly focused as our does have a finite life.  The business will continue to prosper but it will become increasingly difficult to replace stock as it is sold.  Some shareholders may wish to pursue their own avenues of diversification without selling Mountview shares and so the final dividend payable on 13 August 2018 will be increased to 200 pence per share.  This will make a total of 400 pence per share in respect of the Company's year ended 31 March 2018.

Your Board is aware that the taxation of dividend income has changed and, while 400 pence per share is an increase of a third compared with 300 pence per share last year, the 300 pence per share in respect of the Company's year ended 31 March 2016 was worth 333 pence gross in the hands of ordinary rate taxpayers.  Thus your Board are happy to admit that the new total dividend is only an increase of 20% over the total of two years ago.  The new dividend will be nearly twice covered.

This Statement does not seek to deny that profits have fallen but the business remains soundly based and financially secure.  When Brexit negotiations and other economic uncertainties are resolved the purchases we are presently able to make will realise good profits and we can look forward to future increased earnings.

As has always been the case your Board only increase dividends when they are confident of maintaining that increase and so it is reasonable to expect the increase to 400 pence per share to be maintained in future years.

Finally, it is only possible to maintain the Company's high level of performance because of the quality of the personnel in the team that I have around me.  On behalf of all shareholders, I wish to thank all my hard-working and loyal staff and colleagues for the contribution they each make to the continuing well-being of Mountview Estates P.L.C.

Duncan Sinclair

14 June 2018

MOUNTVIEW ESTATES P.L.C.

FINANCIAL HIGHLIGHTS

			2018		2017		(Decrease)/Increase
			£		£		%
Revenue (millions)			70.3		78.2		(10.1)
Gross Profit (millions)			43.4		52.1		(16.7)
Profit Before Tax (millions)			36.9		45.0		(18.0)
Profit Before Tax excluding investment properties revaluation (millions)			37.3		46.0		(18.9)
Equity Holders' Funds (millions)			354.5		336.3		5.4
Earnings per share (pence)			766.4		929.1		(17.5)
Net assets per share (£)			90.91		86.25		5.4
Dividend per share (pence)			400		300		33.3

Mountview Estates P.L.C. advises its shareholders that, following the issue of the final results, the relevant dates in respect of the proposed final dividend payment of 200 pence per share are as follows:

Ex-dividend date	5 July 2018
Record date	6 July 2018
Payment date	13 August 2018

MOUNTVIEW ESTATES P.L.C.

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 MARCH 2018

	Year		Year
	ended		ended
	31.03.2018		31.03.2017
	£'000		£'000
REVENUE	70,272		78,232
Cost of sales	(26,915)		(26,176)
GROSS PROFIT	43,357		52,056
Administrative expenses	(5,507)		(5,231)
Gain on sale of investment properties	145		0
Operating profit before changes in fair value of investment properties	37,995		46,825
(Decrease) in fair value of investment  properties	(376)		(1,020)
PROFIT FROM OPERATIONS	37,619		45,805
Net finance costs	(714)		(819)
PROFIT BEFORE TAXATION	36,905		44,986
Taxation - current	(7,197)		(9,234)
Taxation - deferred	173		473
Taxation	(7,024)		(8,761)
PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS	29,881		36,225
Basic and diluted earnings per share (pence)	766.4p		929.1p

MOUNTVIEW ESTATES P.L.C.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

FOR THE YEAR ENDED 31 MARCH 2018

		As at	As at
		31.03.2018	31.03.2017
		£'000	£'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment		1,771	1,833
Investment properties		27,825	28,741
		29,596	30,574
CURRENT ASSETS
Inventories of trading properties		376,879	347,380
Trade and other receivables		1,859	1,613
Cash at bank		5,368	825
		384,106	349,818
TOTAL ASSETS		413,702	380,392
EQUITY AND LIABILITIES
Share capital		195	195
Capital redemption reserve		55	55
Capital reserve		25	25
Other reserve		56	56
Retained earnings		354,131	335,948
		354,462	336,279
NON-CURRENT LIABILITIES
Long-term borrowings		49,900	29,000
Deferred tax		4,696	4,869
		54,596	33,869
CURRENT LIABILITIES
Bank overdrafts and short-term loans		463	3,042
Trade and other payables		1,843	1,951
Current tax payable		2,338	5,251
		4,644	10,244
TOTAL LIABILITIES		59,240	44,113
TOTAL EQUITY AND LIABILITIES		413,702	380,392

MOUNTVIEW ESTATES P.L.C.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2018

			Capital
	Share	Capital	Redemption	Other	Retained
	Capital	Reserve	Reserve	Reserves	Earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 April 2016	195	25	55	56	311,421	311,752
Profit for the year					36,225	36,225
Dividends					(11,698)	(11,698)
Balance as at 31 March  2017	195	25	55	56	335,948	336,279

			Capital
	Share	Capital	Redemption	Other	Retained
	Capital	Reserve	Reserve	Reserves	Earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 April 2017	195	25	55	56	335,948	336,279
Profit for the year					29,881	29,881
Dividends					(11,698)	(11,698)
Balance as at 31 March  2018	195	25	55	56	354,131	354,462

MOUNTVIEW ESTATES P.L.C.

GROUP CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2018

			Year		Year
			ended		ended
			31.03.2018		31.03.2017
					£'000
Cash flow from operating activities
Operating profit			37,619		45,805
Adjustment for:
Depreciation			66		79
Gain on disposal of investment properties			(145)		-
Decrease in fair value of investment properties			376		1,020
Cash flow from operations before changes in working capital			37,916		46,904
(Increase) in inventories			(29,499)		(13,272)
(Increase)Decrease in receivables			(246)		107
(Decrease) in payables			(108)		(1,049)
Cash generated from operations			8,063		32,690
Interest paid			(714)		(819)
Income taxes paid			(10,110)		(9,458)
Net cash (outflow)/ inflow from operating activities			(2,761)		22,413
Investing activities
Proceeds from disposal of investment properties			685		-
Capital expenditure on investment properties			-		(312)
Purchase of property, plant and equipment			(4)		(1)
Net cash inflow/(outflow) from investing activities			681		(313)
Cash flow from financing activities
Increase/(Repayment) of borrowings			20,483		(9,820)
Equity dividend paid			(11,698)		(11,698)
Net cash inflow/(outflow) from financing activities			8,785		(21,518)
Net  increase in cash and cash equivalents			6,705		582
Opening cash and cash equivalents			(1,337)		(1,919)
Cash and cash equivalents at the end of the year			5,368		(1,337)

Notes to the Preliminary Announcement

1.   Financial Information

The financial information presented within this document does not comprise the statutory accounts for the financial years ended 31 March 2018 and 31 March 2017, but represents extracts from them.

The statutory accounts for the financial year ended 31 March 2017 have been filed with the Registrar of Companies.  The auditor reported on those accounts: their report was (i) unqualified, (ii) did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying the reports and (iii) did not contain statements under section 498(2) or (3) of the Companies Act 2006.

The statutory accounts for the year ended 31 March 2018 are expected to be finalised and signed following approval by the Board of Directors and delivered to the Registrar of Companies following the Company's Annual General Meeting on 8 August 2018.

2.   Basis of Preparation

The preliminary announcement has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS") but does not contain sufficient information to comply fully with IFRS.  The Financial Statements to be presented to Members at the 2018 AGM are expected to comply fully with IFRS.

~ Ends ~

This announcement contains information which, prior to its disclosure, was inside information for the purposes of the Market Abuse Regulation.

For further information on the Company, visit: www.mountviewplc.co.uk 

SPARK Advisory Partners Limited (Financial Advisor)   www.sparkadvisorypartners.com 

Miriam Greenwood                                                      0203 368 3553

Mark Brady                                                                  0203 368 3551

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