TIDMHCFT
RNS Number : 3844A
Highcroft Investments PLC
20 March 2013
Highcroft Investments PLC
Preliminary results for the year ended 31 December 2012
KEY HIGHLIGHTS
- Gross property income increased by 10% to GBP2,351,000
- Net profit for the year on revenue activities up 80% to GBP3,720,000
- Adjusted earnings per share (on revenue activities) up 80% to 72.0p
- Net asset value per share up from 720p to 759p
- Total property income distribution up 6% to 31.8p per share
- Cash and liquid equity investments GBP8,987,000 (2011 GBP7,524,000)
- Nil gearing (2011 nil)
Enquiries:
Highcroft Investments PLC
John Hewitt / Roberta Miles 01865 840023
Charles Stanley Securities
Dugald J. Carlean / Karri Vuori 0207 149 6000
Dear Shareholder,
I am pleased to announce our preliminary results for the year
ended 31 December 2012 and to invite you to our Annual General
Meeting on 17 May 2013.
Results for the year
I am delighted to report that we have made further progress both
in operating profits from our property portfolio and through
returns from the sale of both property assets and realisations from
our equity portfolio.
Property: Our gross property rental income rose 10% to
GBP2,351,000 (2011 GBP2,129,000), with all this increase being due
to the performance of our commercial portfolio. This growth
includes the effect of a full year's income from the industrial
unit in Andover purchased in November 2011, coupled with the swift
re-investment of monies released by the sale of Willow House,
Victoria into two industrial units let to good covenants with
higher yields and longer unexpired terms. These units are in
Bedford, let to Booker and in Milton Keynes, let to Ikea.
Performance of the portfolio has been excellent with the only void
being a two month period on the ground floor of our Willow House
property, and no bad debts in the period. The sale of Willow House
was particularly pleasing as it had been purchased with a view to
the potential redevelopment opportunities that might enhance its
value and the sale proceeds reflected the realisation of this plan.
The sales proceeds were GBP1,490,000 in excess of the value at 31
December 2011 and also above the purchase price in 2006. During the
second half of the year we also concluded our negotiations for new
leases on two of our Oxford High Street properties which have
resulted in increased rental income in 2012 and increased
valuations.
Equities: Our average income yield of 4.4% on the portfolio,
coupled with a realised net gain of GBP75,000 and an unrealised net
gain of GBP423,000, are a result of the strength of our portfolio
and we have outperformed the FTSE 100 and the All Share
indices.
Administrative expenses: Our ongoingadministrative expenses
reduced by 7% and our costs remain tightly controlled.
Financial highlights: Profit on revenue activities showed an 80%
improvement on 2011, driven particularly by the profit arising on
the sale of Willow House. Turning to our capital performance, the
property portfolio showed a net valuation loss for the year,
although the strength of the underlying assets and the new leases
in Oxford meant that the loss was lower than the market as a whole.
Our year end net asset value per share increased to 759p (2011
720p). Our year end cash position was GBP3,274,000 (2011
GBP1,926,000), whilst readily realisable equity investments
totalled GBP5,713,000 (2011 GBP5,598,000).
Dividend
We are recommending a final dividend of 19.8p per share (2011
18.5p) to be paid on 31 May 2013 to shareholders registered at 3
May 2013, making a total of 31.8p for the year (2011 30p). This
increase of 6% for the year continues our recent record of dividend
increases well in excess of inflation.
Board
As you are aware Chris Clark retired from the Board on 31 May
2012. We have not replaced him as we believe that we have enough
existing board expertise in our equities business which was an area
in which he provided much counsel. The Board will continue to
monitor the need for a third non-executive director having
particular regard to the requirements of the UK Corporate
Governance Code.
Outlook
We continue to regard our position as strong and are determined
to take advantage of weak markets so as to enhance yield and
strengthen covenants. Our success in achieving the group's
objectives and commensurately growing asset values and your
dividend will, to a large extent, depend upon the flow of suitable
properties coming to market and our own management actions. We will
continue to adopt a cautious stance whilst continuing our proactive
approach with our property advisers to step up the pace of
acquisitions to take advantage of market opportunities. We have a
number of lease events taking place over the coming two years and
we will endeavour to conclude these in a manner that enhances both
income and valuation, but recognise that downwards pressure on
rental levels, particularly for High Street Retail units, may
continue for some time. We will carefully consider a modest level
of gearing if we feel that suitable opportunities present
themselves that cannot be financed from our own resources.
We believe that the company is well placed to take actions which
will secure medium term growth for its shareholders.
J HEWITT
Chairman
19 March 2013
Consolidated statement of comprehensive income
for the year ended 31 December 2012
Note 2012 2011
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gross rental revenue 2,351 - 2,351 2,129 - 2,129
Property operating
expenses (184) - (184) (303) - (303)
-------- -------- -------- -------- -------- --------
Net rental income 2,167 - 2,167 1,826 - 1,826
-------- -------- -------- -------- -------- --------
Realised gains on
investment property 1,552 - 1,552 360 - 360
Realised losses
on investment property - - - (82) - (82)
-------- -------- -------- -------- -------- --------
Net gains on investment
property 1,552 - 1,552 278 - 278
-------- -------- -------- -------- -------- --------
Valuation gains
on investment property - 1,769 1,769 - 801 801
Valuation losses
on investment property - (2,355) (2,355) - (1,072) (1,072)
-------- -------- -------- -------- -------- --------
Net valuation (losses)/gains
on investment property - (586) (586) - (271) (271)
-------- -------- -------- -------- -------- --------
Dividend revenue 251 - 251 261 - 261
Gains on equity
investments - 677 677 - 397 397
Losses on equity
investments - (179) (179) - (587) (587)
-------- -------- -------- -------- -------- --------
Net investment income/(expense) 251 498 749 261 (190) 71
-------- -------- -------- -------- -------- --------
Administration expenses (311) - (311) (335) - (335)
-------- -------- -------- -------- -------- --------
Net operating profit
before net finance
income 3,659 (88) 3,571 2,030 (461) 1,569
-------- -------- -------- -------- -------- --------
Finance income 8 - 8 15 - 15
Net finance income 8 - 8 15 - 15
-------- -------- -------- -------- -------- --------
Profit/(loss) before
tax 3,667 (88) 3,579 2,045 (461) 1,584
Income tax credit/(expense) 1 53 (38) 15 21 119 140
Total profit and
comprehensive income
for the year 3,720 (126) 3,594 2,066 (342) 1,724
-------- -------- -------- -------- -------- --------
Basic and diluted
earnings per share 3 72.0p (2.5p) 69.6p 40.1p (6.7p) 33.4p
Consolidated statement of financial position
at 31 December 2012
Note 2012 2011
GBP'000 GBP'000
Assets
Non-current assets
Investment property 4 31,609 30,787
Equity investments 5 5,713 5,598
-------- --------
Total non-current assets 37,322 36,385
-------- --------
Current assets
Trade and other receivables 254 217
Cash and cash equivalents 3,274 1,926
--------
Total current assets 3,528 2,143
Total assets 40,850 38,528
-------- --------
Liabilities
Current liabilities
Current income tax - -
Trade and other payables 1,000 681
-------- --------
Total current liabilities 1,000 681
-------- --------
Non-current liabilities
Deferred tax liabilities 609 624
-------- --------
Total non-current liabilities 609 624
-------- --------
Total liabilities 1,609 1,305
-------- --------
Net assets 39,241 37,223
--------
Equity
Issued share capital 1,292 1,292
Revaluation reserve
- property 7,050 4,904
- other 1,746 1,592
Capital redemption reserve 95 95
Realised capital reserve 22,366 21,428
Retained earnings 6,692 7,912
--------
Total equity 39,241 37,223
--------
Consolidated statement of changes in equity
2012 Issued Revaluation Capital Realised Retained
reserves
share Property Other redemption capital earnings Total
capital reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2012 1,292 4,904 1,592 95 21,428 7,912 37,223
-------- --------- -------- ----------- --------- --------- --------
Dividends - - - - - (1,576) (1,576)
Reserve transfers:
Non-distributable
items recognised
in income
statement:
Revaluation
losses - (586) 416 - - 170 -
Tax on revaluation
gains/(losses) - - (20) - - 20 -
Realised gains - - - - 1,608 (1,608) -
Surplus attributable
to assets
sold in the
year - 912 (242) - (670) - -
Excess of
cost over
revalued amount
taken to retained
earnings - 1,820 - - - (1,820) -
-------- --------- -------- ----------- --------- --------- --------
Transactions
with owners - 2,146 154 - 938 (4,814) (1,576)
-------- --------- -------- ----------- --------- --------- --------
Profit and
total comprehensive
income for
the year - - - - - 3,594 3,594
-------- --------- -------- ----------- --------- --------- --------
At 31 December
2012 1,292 7,050 1,746 95 22,366 6,692 39,241
======== ========= ======== =========== ========= ========= ========
2011 Issued Revaluation Capital Realised Retained
reserves
share Property Other redemption capital earnings Total
capital reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2011 1,292 6,670 1,750 95 19,810 7,385 37,002
-------- --------- -------- ----------- --------- --------- --------
Dividends - - - - - (1,503) (1,503)
Reserve transfers:
Non-distributable
items recognised
in income
statement:
Revaluation
gains - (271) (238) - - 509 -
Tax on revaluation
gains/(losses) - - 109 - - (109) -
Realised gains - - - - (40) 40 -
Surplus attributable
to assets
sold in the
year - (1,629) (29) - 1,658 - -
Excess of
cost over
revalued amount
taken to retained
earnings - 134 - - - (134) -
Transactions
with owners - (1,766) (158) - 1,618 (1,197) (1,503)
-------- --------- -------- ----------- --------- --------- --------
Profit and
total comprehensive
income for
the year - - - - - 1,724 1,724
-------- --------- -------- ----------- --------- --------- --------
At 31 December
2011 1,292 4,904 1,592 95 21,428 7,912 37,223
======== ========= ======== =========== ========= ========= ========
Consolidated statement of cash flows
for the year ended 31 December 2012
2012 2011
GBP'000 GBP'000
Operating activities
Profit for the year 3,594 1,724
Adjustments for:
Net valuation losses/(gains)
on investment property 586 271
Gain on disposal of investment
property (1,552) (278)
(Gain)/loss on investments (498) 190
Finance income (8) (15)
Income tax credit (15) (140)
-------- --------
Operating cash flow before
changes in working capital
and provisions 2,107 1,752
Increase in trade and other
receivables (37) (124)
Increase/(decrease) in trade
and other payables 319 (215)
-------- --------
Cash generated from operations 2,389 1,413
Finance income 8 15
Income taxes paid - (216)
-------- --------
Net cash flows from operating
activities 2,397 1,212
-------- --------
Investing activities
Purchase of non-current
assets - investment property (4,827) (2,871)
- equity investments (540) (423)
Sale of non-current assets
- investment property 4,972 2,796
- equity investments 922 243
-------- --------
Net cash flows from investing
activities 527 (255)
-------- --------
Financing activities
Dividends paid (1,576) (1,503)
-------- --------
Net cash flows from financing
activities (1,576) (1,503)
-------- --------
Net increase/(decrease)
in cash and cash equivalents 1,348 (546)
Cash and cash equivalents
at 1 January 2012 1,926 2,472
-------- --------
Cash and cash equivalents
at 31 December 2012 3,274 1,926
-------- --------
Notes
for the year ended 31 December 2012
1 Income tax credit
2012 2011
GBP'000 GBP'000
Current tax:
On revenue profits (53) (20)
On capital profits 18 15
Prior year overprovision - (1)
-------- --------
(35) (6)
Deferred tax 20 (134)
-------- --------
Income tax credit (15) (140)
-------- --------
The tax assessed for the year differs from the standard rate of
corporation tax in the UK of 24.5% (2011 26.25%).
The differences are explained as follows:
2012 2011
GBP'000 GBP'000
Profit before tax 3,579 1,584
-------- --------
Profit before tax multiplied
by the standard rate of corporation
tax in the UK of 24.5% (2011
26.25%) 877 416
Effect of:
Tax exempt revenues (62) (69)
Profit not taxable as a result
of REIT status (768) (431)
Chargeable gains/losses less/(more)
than accounting profit 10 20
Losses carried forward (22) (25)
Effect of change in tax rate
on deferred tax liability (50) (50)
Adjustments to tax charge
in respect of prior periods - (1)
Income tax credit (15) (140)
-------- --------
2 Dividends
In 2012 the following dividends have been paid by the
company:
2012 2011
GBP'000 GBP'000
2011 Final: 18.5p per ordinary
share (2010 17.6p) 956 909
2012 Interim: 12.0p per ordinary
share (2011 11.5p) 620 594
----------- -----------
1,576 1,503
----------- -----------
On 19 March 2013 the directors declared a property income
distribution of GBP1,023,000, 19.8p per share (2011 GBP956,000,
18.5p per share) payable on 31 May 2013 to shareholders registered
at 3 May 2013.
3 Earnings per share
The calculation of earnings per share is based on the total
profit for the year of GBP3,594,000 (2011 GBP1,724,000) and on
5,167,240 shares (2011 5,167,240) which is the weighted average
number of shares in issue during the year ended 31 December 2012
and throughout the period since 1 January 2012. There are no
dilutive instruments.
In order to draw attention to the impact of valuation gains and
losses which are included in the income statement but not available
for distribution under the company's articles of association, an
adjusted earnings per share based on the profit available for
distribution of GBP3,720,000 (2011 GBP2,066,000) has been
calculated.
2012 2011
GBP'000 GBP'000
Earnings:
Basic profit for the year 3,594 1,724
Adjustments for:
Net valuation losses on investment
property 586 271
(Gains)/losses on investments (498) 190
Income tax on gains/(losses) 38 (119)
------------------- -------------------
Adjusted earnings 3,720 2,066
------------------- -------------------
Per share amount:
Earnings per share (unadjusted) 69.6p 33.4p
Adjustments for:
Net valuation losses on investment
property 11.3p 5.3p
Losses/(gains) on investments (9.6p) 3.7p
Income tax on (losses)/gains 0.7p (2.3p)
------------------- -------------------
Adjusted earnings per share 72.0p 40.1p
------------------- -------------------
4 Investment property
2012 2011
GBP'000 GBP'000
Valuation at 1 January 30,787 30,705
Additions 4,827 2,871
Disposals (3,419) (2,518)
Revaluation (losses)/gains (586) (271)
----------- -----------
Valuation at 31 December 31,609 30,787
----------- -----------
In accordance with IAS 40 the carrying value of investment
properties is their fair value as determined by external valuers.
This valuation has been conducted by Knight Frank LLP, as external
valuers, and has been prepared as at 31 December 2012, in
accordance with the Appraisal & Valuation Standards of the
Royal Institution of Chartered Surveyors, on the basis of market
value. This value has been incorporated into the financial
statements.
The independent valuation of all property assets uses market
evidence and also includes assumptions regarding income
expectations and yields that investors would expect to achieve on
those assets over time. Many external economic and market factors,
such as interest rate expectations, bond yields, the availability
and cost of finance and the relative attraction of property against
other asset classes, could lead to a reappraisal of the assumptions
used to arrive at current valuations. In adverse conditions, this
reappraisal can lead to a reduction in property values and a loss
in net asset value.
5 Equity investments
2012 2011
GBP'000 GBP'000
Valuation at 1 January 5,598 5,608
Additions 540 423
Disposals (849) (186)
Surplus/(deficit) on revaluation
in excess of cost 416 (238)
Revaluation decrease below cost (17) (15)
Revaluation increase still less
than cost 25 6
-------- --------
Valuation at 31 December 5,713 5,598
-------- --------
6 Basis of preparation
The preliminary announcement has been prepared in accordance
with applicable accounting standards as stated in the financial
statements for the year ended 31 December 2011. The accounting
policies remain unchanged.
7 Annual General Meeting
The Annual General Meeting will be held on 17 May 2013.
8 Publication of non-statutory accounts
The above does not constitute statutory accounts within the
meaning of the Companies Act 2006. It is an extract from the full
accounts for the year ended 31 December 2012 on which the auditor
has expressed an unqualified opinion and does not include any
statement under section 498 of the Companies Act 2006. The accounts
will be posted to shareholders on or before 18 April 2012 and
subsequently filed at Companies House.
This information is provided by RNS
The company news service from the London Stock Exchange
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