Property developer McKay Securities has seen 32p wiped off net asset value (NAV) at its half-year results thanks to an unrealised £14.4m negative movement in interest rate hedging instruments, resulting in a pre-tax loss of £12m and meaning the hedges are now £37m underwater. The group's interest charge increased by £0.35m to £2.9m and with a long period of low interest rates looking likely, the structure is now "under review".
Underlying profits also suffered, falling 39 per cent to £2.52m thanks to loss of rental income from properties sold off to underpin the balance sheet. Property values remained flat, but McKay's biggest saving grace - its high dividend - was held at 2.7p a share.
On the positive side, voids in the portfolio have been reduced (down to 10.3 per cent from 11.6 per cent in March 2010) and two-thirds of tenants were retained when leases expired or had break clauses. Management report "stability" in their south-eastern marketplace, with an increase in new lettings post period. On a like-for-like basis, gross rents received have increased by £0.33m to £8.4m.
The group has yet to make any meaningful acquisitions, with managing director Simon Perkins noting: "It took six years in the early 1990s for banks to reduce their property exposure, and with that in mind, we shall remain selective."
| MCKAY SECURITIES (MCKS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 125p | MARKET VALUE: | £57m | |
| TOUCH: | 124-127p | 12-MONTH HIGH: | 170p | LOW: 115p |
| DIVIDEND YIELD: | 6.6% | TRADING STOCK: | nil | |
| DISCOUNT TO NAV: | 23% | |||
| INVEST PROPERTIES: | £206m | NET DEBT: | 121% | |
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 177 | 1.9 | 4.1 | 2.7 |
| 2010 | 163 | -12.1 | -26.5 | 2.7 |
| % change | -8 | - | - | - |
Ex-div: 1 Dec Payment: 13 Jan | ||||
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