TIDMHCFT
RNS Number : 4806I
Highcroft Investments PLC
26 March 2015
Highcroft Investments PLC
Preliminary results for the year ended 31 December 2014
KEY HIGHLIGHTS
-- Gross property income increased by 13% to GBP3,079,000 (2013 GBP2,731,000)
-- Total profit for the year up 45% to GBP7,057,000 (2013 GBP4,856,000)
-- Unadjusted earnings per share up 45% to 136.5p
-- Net asset value per share up 12% to 923p (2013 821p)
-- Total property income distribution up 6.7% to 36.0p per share
-- Medium term debt GBP4,000,000 (2013 GBP4,000,000)
-- Cash and liquid equity investments GBP6,571,000 (2013 GBP8,355,000)
Dear Shareholder,
I am pleased to announce our preliminary results for the year
ended 31 December 2014 and to invite you to our Annual General
Meeting on 15 May 2015 which is to be held at Thomas House,
Langford Locks, Kidlington, Oxon, OX5 1HR at 12 noon.
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 property assets and realisations from our
equity portfolio.
Property: Our gross property rental income rose 13% to
GBP3,079,000 (2013 GBP2,731,000), with all of this increase being
due to the performance of our commercial portfolio. This growth
includes the effect of a full year's income from our Bicester and
Cardiff properties purchased in July 2013 and November 2013,
respectively. It also includes a partial year of income from our
new acquisitions net of that on our disposals of our Bristol and
Beckenham properties. Our first acquisition was a freehold
warehouse property in Ash Vale let to SIG Trading Limited for
GBP3,297,000 in July 2014 and the second a freehold retail
warehouse property in Crawley let to Pets at Home Ltd for
GBP2,787,000 in August 2014. We have been very pleased with the
performance of the portfolio with the only void, being a single
floor of our office building in Bristol prior to its disposal.
There were no bad debts in the period. The sale of the Bristol and
Beckenham assets yielded total gross proceeds of GBP3,270,000 that
were 39% in excess of the most recent, half-year, valuations. These
proceeds have been invested in line with our strategy. We have been
successful at identifying property investments at attractive yields
positioned between private investors and larger corporate property
investors and intend to continue taking advantage of our strong
financial position and ability to move fast to exploit such
opportunities. The property portfolio showed a net valuation gain
of GBP3,635,000 for the year.
Equities: Our income of GBP437,000, coupled with a realised net
loss of GBP236,000 and an unrealised net loss of GBP139,000, are a
result of the market conditions and the fact that the Vodafone
de-merger, for which we took the income option, enhanced our income
by GBP220,000 with a corresponding reduction of the capital
performance. We released GBP255,000 in net cash from this portfolio
during the year and have released a further GBP623,000 since the
year end.
Administrative expenses: Our ongoingadministrative expenses
increased by 25% in 2014, due primarily to the introduction of a
performance related bonus scheme for the executive directors. Our
finance costs increased by GBP116,000 due to the effect of a full
year's interest on our bank loans.
Financial highlights: Our total profit for the year showed a 45%
improvement on 2013, driven particularly by the capital performance
of our property portfolio. Our profit on revenue activities
increased by 29% to GBP3,758,000 (2013 GBP2,921,000). Excluding the
realised gains on investment property, the underlying profit on
revenue activities rose by 13%. Our year end net asset value per
share increased to 923p (2013 821p). Our year end cash position was
GBP2,039,000 (2013 GBP3,128,000), whilst readily realisable equity
investments totalled GBP4,532,000 (2013 GBP5,227,000). Our year end
bank loans totalled GBP4,000,000 (2013 GBP4,000,000)
Dividend
We are recommending a final dividend of 22.75p per share (2013
21.25p) to be paid on 5 June 2015 to shareholders registered on 8
May 2015, making a total of 36.0p for the year (2013 33.75p). This
increase of 6.7% for the year continues our recent record of
dividend increases well in excess of inflation.
Board
As has already been announced, Richard Stansfield is retiring
from the Board as Senior Non- Executive Director as from the date
of the AGM. Richard has been a Director for 12 years , a period
which has seen significant progress and benefit to shareholders. We
are grateful to him for bringing his expertise and common sense to
our deliberations. The Board is well advanced on the process of
choosing a successor and an announcement will be made as soon as
possible.
Outlook
We are very pleased with the results for the year and remain
optimistic that we start 2015 from a position of strength upon
which we hope to build through further attractive acquisitions. We
will continue to reduce the equity portfolio in line with our
strategy. We have set ourselves some challenging objectives for
2015 and we expect that our actions will continue to improve
shareholder value via increased dividends and asset values.
J HEWITT
Chairman
25 March 2015
Enquiries:
Highcroft Investments PLC
John Hewitt / Roberta Miles 01865 840023
Charles Stanley Securities
Dugald J. Carlean / Karri Vuori 0207 149 6000
Consolidated statement of comprehensive income
for the year ended 31 December 2014
Note 2014 2013
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gross rental revenue 3,079 - 3,079 2,731 - 2,731
Property operating
expenses (158) - (158) (151) - (151)
-------- -------- -------- -------- -------- --------
Net rental income 2,921 - 2,921 2,580 - 2,580
-------- -------- -------- -------- -------- --------
Realised gains on
investment property 941 - 941 415 - 415
Realised losses
on investment property (4) - (4) - - -
-------- -------- -------- -------- -------- --------
Net gains on investment
property 937 - 937 415 - 415
-------- -------- -------- -------- -------- --------
Valuation gains
on investment property - 3,785 3,785 - 1,833 1,833
Valuation losses
on investment property - (150) (150) - (590) (590)
-------- -------- -------- -------- -------- --------
Net valuation gains
on investment property - 3,635 3,635 - 1,243 1,243
-------- -------- -------- -------- -------- --------
Dividend revenue 437 - 437 234 - 234
Gains on equity
investments - 231 231 - 832 832
Losses on equity
investments - (606) (606) - (63) (63)
-------- -------- -------- -------- -------- --------
Net investment income/(expense) 437 (375) 62 234 769 1,003
-------- -------- -------- -------- -------- --------
Administration expenses (432) - (432) (345) - (345)
-------- -------- -------- -------- -------- --------
Net operating profit
before net finance
income 3,863 3,260 7,123 2,884 2,012 4,896
-------- -------- -------- -------- -------- --------
Finance income 8 - 8 7 - 7
Finance expense (178) - (178) (61) - (61)
Net finance expenses (170) - (170) (54) - (54)
-------- -------- -------- -------- -------- --------
Profit before tax 3,693 3,260 6,953 2,830 2,012 4,842
Income tax credit/(expense) 1 65 39 104 91 (77) 14
Total profit and
comprehensive income
for the year attributable
to the owners of
the parent 3,758 3,299 7,057 2,921 1,935 4,856
-------- -------- -------- -------- -------- --------
Basic and diluted
earnings per share 72.7p 63.8p 136.5p 56.5p 37.5p 94.0p
Consolidated statement of financial position
at 31 December 2014
Note 2014 2013
GBP'000 GBP'000
Assets
Non-current assets
Investment property 4 46,523 39,415
Equity investments 5 4,532 5,227
-------- --------
Total non-current assets 51,055 44,642
-------- --------
Current assets
Trade and other receivables 415 422
Cash and cash equivalents 2,039 3,128
--------
Total current assets 2,454 3,550
Total assets 53,509 48,192
-------- --------
Liabilities
Current liabilities
Trade and other payables 1,312 1,160
-------- --------
Total current liabilities 1,312 1,160
-------- --------
Non-current liabilities
Interest bearing loan 6 4,000 4,000
Deferred tax liabilities 495 604
-------- --------
Total non-current liabilities 4,495 4,604
-------- --------
Total liabilities 5,807 5,764
Net assets 47,702 42,428
Equity
Issued share capital 1,292 1,292
Revaluation reserve
- property 11,332 7,353
- other 1,335 1,972
Capital redemption reserve 95 95
Realised capital reserve 24,785 24,220
Retained earnings 8,863 7,496
-------- --------
Total equity attributable
to the owners of the
parent 47,702 42,428
--------
Consolidated statement of changes in equity
2014 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
2014 1,292 7,353 1,972 95 24,220 7,496 42,428
-------- --------- -------- ----------- --------- --------- --------
Dividends - - - - - (1,783) (1,783)
Reserve transfers:
Non-distributable
items recognised
in income
statement:
Revaluation
gains - 3,635 (65) - - (3,570) -
Tax on revaluation
gains/(losses) - - (7) - - 7 -
Realised gains - - - - 756 (756) -
Loss/(surplus)
attributable
to assets
sold in the
year - 756 (565) - (191) - -
Excess of
cost over
revalued amount
taken to retained
earnings - (412) - - - 412 -
-------- --------- -------- ----------- --------- --------- --------
Transactions
with owners - 3,979 (637) - 565 (5,690) (1,783)
-------- --------- -------- ----------- --------- --------- --------
Profit and
total comprehensive
income for
the year - - - - - 7,057 7,057
-------- --------- -------- ----------- --------- --------- --------
At 31 December
2014 1,292 11,332 1,335 95 24,785 8,863 47,702
======== ========= ======== =========== ========= ========= ========
2013 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
2013 1,292 7,050 1,746 95 22,366 6,692 39,241
-------- --------- -------- ----------- --------- --------- --------
Dividends - - - - - (1,669) (1,669)
Reserve transfers:
Non-distributable
items recognised
in income
statement:
Revaluation
losses - 1,243 610 - - (1,853) -
Tax on revaluation
gains/(losses) - - (43) - - 43 -
Realised gains - - - - 527 (527) -
Surplus attributable
to assets
sold in the
year - (986) (341) - 1,327 - -
Excess of
cost over
revalued amount
taken to retained
earnings - 46 - - - (46) -
Transactions
with owners - 303 226 - 1,854 (4,052) (1,669)
-------- --------- -------- ----------- --------- --------- --------
Profit and
total comprehensive
income for
the year - - - - - 4,856 4,856
-------- --------- -------- ----------- --------- --------- --------
At 31 December
2013 1,292 7,353 1,972 95 24,220 7,496 42,428
======== ========= ======== =========== ========= ========= ========
Consolidated statement of cash flows
for the year ended 31 December 2014
2014 2013
GBP'000 GBP'000
Operating activities
Profit for the year 7,057 4,856
Adjustments for:
Net valuation gains on investment
property (3,635) (1,243)
Net gain on disposal of
investment property (937) (415)
Net loss/(gain) on investments 375 (769)
Finance income (8) (7)
Finance expense 178 61
Income tax credit (104) (14)
-------- --------
Operating cash flow before
changes in working capital
and provisions 2,926 2,469
Decrease/(increase) in trade
and other receivables 7 (168)
Increase in trade and other
payables 153 126
-------- --------
Cash generated from operations 3,086 2,427
Finance income 7 7
Finance expense (178) (27)
Income taxes (paid)/received (5) 7
-------- --------
Net cash flows from operating
activities 2,910 2,414
-------- --------
Investing activities
Purchase of non-current
assets - investment property (6,084) (8,488)
- equity investments (649) (125)
Sale of non-current assets
- investment property 3,548 2,340
- equity investments 969 1,382
-------- --------
Net cash flows from investing
activities (2,216) (4,891)
-------- --------
Financing activities
Dividends paid (1,783) (1,669)
New bank borrowings - 4,000
-------- --------
Net cash flows from financing
activities (1,783) 2,331
-------- --------
Net decrease in cash and
cash equivalents (1,089) (146)
Cash and cash equivalents
at 1 January 2014 3,128 3,274
-------- --------
Cash and cash equivalents
at 31 December 2014 2,039 3,128
-------- --------
Notes
for the year ended 31 December 2014
1 Income tax credit
2014 2013
GBP'000 GBP'000
Current tax:
On revenue profits (65) (82)
On capital profits (51) 34
Prior year underprovision/(overprovision)
on capital profits 5 (9)
-------- --------
(111) (57)
Deferred tax 7 43
-------- --------
Income tax credit (104) (14)
-------- --------
The tax assessed for the year differs from the standard rate of
corporation tax in the UK of 21.5% (2013 23.25%).
The differences are explained as follows:
2014 2013
GBP'000 GBP'000
Profit before tax 6,953 4,842
-------- --------
Profit before tax multiplied
by the standard rate of corporation
tax in the UK of 21.5% (2013
23.25%) 1,495 1,126
Effect of:
Tax exempt revenues (64) (199)
Profit not taxable as a result
of REIT status (1,611) (985)
Chargeable gains less than
accounting profit 116 48
Losses carried forward (36) 12
Effect of change in tax rate
on deferred tax liability (9) (7)
Adjustments to tax charge
in respect of prior periods 5 (9)
Income tax credit (104) (14)
-------- --------
2 Dividends
In 2014 the following dividends have been paid by the
company:
2014 2013
GBP'000 GBP'000
2013 Final: 21.25p per ordinary
share (2012 19.8p) 1,098 1,023
2014 Interim: 13.25p per
ordinary share (2013 12.5p) 685 646
----------- -----------
1,783 1,669
----------- -----------
On 25 March 2015 the directors declared a property income
distribution of GBP1,176,000, 22.75p per share (2013 GBP1,098,000,
19.8p per share) payable on 5 June 2015 to shareholders registered
at 8 May 2015.
3 Earnings per share
The calculation of earnings per share is based on the total
profit for the year of GBP7,057,000 (2013 GBP4,856,000) and on
5,167,240 shares (2013 5,167,240) which is the weighted average
number of shares in issue during the year ended 31 December 2014
and throughout the period since 1 January 2014. There are no
dilutive instruments.
In order to draw attention to the impact of valuation gains and
losses which are included in the statement of comprehensive income
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 GBP3,758,000 (2013 GBP2,921,000) has
been calculated.
2014 2013
GBP'000 GBP'000
Earnings:
Basic profit for the year 7,057 4,856
Adjustments for:
Net valuation gains on investment
property (3,635) (1,243)
Losses/(gains) on investments 375 (769)
Income tax on (losses)/gains (39) 77
------------------ -----------
Adjusted earnings 3,758 2,921
------------------ -----------
Per share amount:
Earnings per share (unadjusted) 136.5p 94.0p
Adjustments for:
Net valuation gains on investment
property (70.3p) (24.1p)
Losses/(gains) on investments 7.2p (14.9p)
Income tax on (losses)/gains (0.7p) 1.5p
------------------ -----------
Adjusted earnings per share 72.7p 56.5p
------------------ -----------
4 Investment property
2014 2013
GBP'000 GBP'000
Valuation at 1 January 39,415 31,609
Additions 6,084 8,488
Disposals (2,611) (1,925)
Revaluation gains/(losses) 3,635 1,243
----------- -----------
Valuation at 31 December 46,523 39,415
----------- -----------
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 2014, 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
2014 2013
GBP'000 GBP'000
Valuation at 1 January 5,227 5,713
Additions 649 127
Disposals (1,205) (1,236)
(Deficit)/surplus on revaluation
in excess of cost (65) 610
Revaluation decrease below
cost (76) (4)
Revaluation increase still
less than cost 2 17
-------- --------
Valuation at 31 December 4,532 5,227
-------- --------
6 Interest bearing loan
2014 2013
GBP'000 GBP'000
Medium term bank loans 4,000 4,000
-------- --------
The medium term bank loans
comprise amounts falling
due as follows:
Between one and two years - -
Between two and five years - -
Over five years 4,000 4,000
-------- --------
4,000 4,000
-------- --------
7 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 2013. The accounting
policies remain unchanged.
8 Annual General Meeting
The Annual General Meeting will be held on 15 May 2015.
9 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 2014 on which the auditor
has expressed an unmodified 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 15 April 2015 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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