TIDMHCFT
RNS Number : 9785M
Highcroft Investments PLC
25 August 2011
HIGHCROFT INVESTMENTS PLC
Interim report
30 June 2011
Chairman's Statement for the six months ended 30 June 2011
Highlights
-- Rental income up 3.7% to GBP1,040,000 (2010
GBP1,002,000).
-- Profit before tax increased by 7.2% to GBP1,299,000 (2010
GBP1,212,000).
-- Basic earnings per share on all activities was 25.1p (2010
25.4p).
-- Net asset value per share increased to 724p (June 2010 676p
and December 2010 716p).
-- Interim property income distribution increased 4.5% to 11.5p
per share compared with 11.0p in 2010.
-- Net cash GBP3,306,000 (2010 GBP3,065,000) equivalent to 64p
per share (2010 59p per share).
-- During the period three residential properties were disposed
of and one lease extended yielding a total of GBP1,300,000 (2010
GBP297,000).
-- Contracts now exchanged for one further residential disposal
and one commercial acquisition.
Dear Shareholder
The results for the 6 months ended 30 June 2011 are, in the
circumstances of significant economic uncertainty, solid and
reassuring. They show a steady income position and a slight
increase in net asset value.
Gross rental income rose a little compared with 2010, reflecting
improved commercial rental revenue - including that from our new
property in Warwick - offset to a degree by the decline in rent
from residential properties as they become vacant and are sold. Net
rental income fell as a result of necessary expenditure -
particularly in Yeovil - associated with new leases. Dividend
income from our equity portfolio was helped by a special one off
dividend resulting in an increase to GBP126k (2010: GBP101k). The
net effect of this was that the revenue account profits reduced to
GBP832k (2010: GBP862k) resulting in earnings per share of 16.1p
(2010: 16.7p). I can also report that, notwithstanding the GBP19k
costs associated with the general meeting requisitioned by certain
shareholders, our administrative expenses have reduced slightly to
GBP165k (2010: GBP168k).
In capital terms, a mixture of net valuation gains on our
investment properties and a small valuation loss on our equity
portfolio produced a capital profit of GBP467k (2010: GBP453k),
resulting in earnings per share of 9.0p (2010: 8.7p).
Importantly, given the economic uncertainties with which the
world is faced, our balance sheet remains very strong with cash at
the half year end of GBP3.3m, no borrowings, and net assets per
share of 724p (June 2010: 676p, December 2010: 716p). We still
believe that it is right to take a cautious view but continue to
look at properties that fit our criteria for the medium term. We
have recently exchanged contracts for the purchase of an industrial
unit in Andover and this purchase is expected to be completed in
November 2011. The initial yield is 6.4% with an unexpired lease
term of 23 years let to a strong covenant and is representative of
the sort of purchases that we seek. In the first half of 2011 we
have also completed on the sale of three of our residential
properties and completed one lease extension. This has resulted in
net proceeds of GBP1.3m being received. A further residential
property became vacant in February on which we exchanged contracts
for the sale in July and this sale is expected to complete next
month. We have not disposed of any equities in the 6 months and
have made a modest further investment into the market of
GBP378k.
We believe that shareholders can take comfort in these difficult
economic times from the quality of our property portfolio. Our
confidence in the medium term is reflected in our decision to
declare an interim dividend of 11.5p per share (2010 11p per share)
payable on 20 October 2011.
Yours sincerely
J Hewitt
Chairman
25 August 2011
For further information, contact:
Highcroft Investments PLC
John Hewitt / Roberta Miles 01865 840 023
Charles Stanley Securities
Dugald Carlean / Karri Vuori 0207 149 6000
Condensed consolidated interim statement of comprehensive income
(unaudited)
for the six months ended 30 June 2011
First First Full
Half Half Year
2011 2010 2010
Note Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Continuing
operations
Gross rental income 1,040 - 1,040 1,002 - 1,002 2,053 - 2,053
Property operating
expenses (173) - (173) (76) - (76) (245) 0 (245)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net rental income 867 - 867 926 - 926 1,808 - 1,808
Realised gains on
investment property - 58 58 - 42 42 - 108 108
Realised losses on
investment property - (23) (23) - - - - (8) (8)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net gain on disposal of
investment property - 35 35 - 42 42 - 100 100
-------- -------- -------- -------- -------- -------- -------- -------- --------
Valuation gains on
investment property - 563 563 - 755 755 - 1,735 1,735
Valuation losses on
investment property - (100) (100) - (25) (25) - (158) (158)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net valuation
gains/(losses) on
investment property - 463 463 - 730 730 - 1,577 1,577
-------- -------- -------- -------- -------- -------- -------- -------- --------
Dividend income 126 - 126 101 - 101 234 - 234
Gains on investments - 195 195 - 105 105 - 718 718
Losses on investments - (226) (226) - (527) (527) - (209) (209)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net investment
income/(loss) 126 (31) 95 101 (422) (321) 234 509 743
-------- -------- -------- -------- -------- -------- -------- -------- --------
Administrative expenses (165) - (165) (168) - (168) (330) - (330)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Operating
profit/(loss)
before net
financing costs 828 467 1,295 859 350 1,209 1,712 2,186 3,898
Finance income 7 - 7 5 - 5 10 - 10
Finance expenses (3) 0 (3) (2) - (2) (1) - (1)
------ ----- ------ ------ ----- ------ ------ ------ ------
Net finance costs 4 - 4 3 - 3 9 - 9
------ ----- ------ ------ ----- ------ ------ ------ ------
Profit/(loss)
before tax 832 467 1,299 862 350 1,212 1,721 2,186 3,907
Income tax
credit/(expense) 4 - - - - 103 103 144 (89) 55
------ ----- ------ ------ ----- ------ ------ ------ ------
Total
profit/(loss)
and
comprehensive 832 467 1,299 862 453 1,315 1,865 2,097 3,962
------ ----- ------ ------ ----- ------ ------ ------ ------
income/(expense)
for the
financial
period
Basic and diluted 6 16.1p 9.0p 25.1p 16.7p 8.7p 25.4p 36.0p 40.7p 76.7p
earnings/(loss)
per share
Condensed consolidated interim statement of financial position
(unaudited)
as at 30 June 2011
30 June 30 June 31 December
2011 2010 2010
Note GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Investment property 7 29,902 28,300 30,705
Equity investments 8 5,954 5,221 5,608
-------- -------- ------------
Total non-current assets 35,856 33,521 36,313
-------- -------- ------------
Current assets
Trade and other receivables 101 83 93
Cash at bank and in hand 3,306 3,065 2,472
-------- -------- ------------
Total current assets 3,407 3,148 2,565
-------- -------- ------------
Total assets 39,263 36,669 38,878
-------- -------- ------------
Liabilities
Current liabilities
Interest-bearing loans
and borrowings - - -
Current income tax 213 286 215
Trade and other payables 894 792 897
-------- -------- ------------
Total current liabilities 1,107 1,078 1,112
-------- -------- ------------
Non-current liabilities
Interest-bearing loans
and borrowings - - -
Deferred tax liabilities 764 668 764
-------- -------- ------------
Total non-current liabilities 764 668 764
-------- -------- ------------
Total liabilities 1,871 1,746 1,876
-------- -------- ------------
Net assets 37,392 34,923 37,002
-------- -------- ------------
Equity
Issued share capital 1,292 1,292 1,292
Revaluation reserve -
property 5,904 6,442 6,670
Revaluation reserve -
other 1,720 1,630 1,750
Capital redemption reserve 95 95 95
Realised capital reserve 21,099 19,238 19,810
Retained earnings 7,282 6,226 7,385
-------- -------- ------------
Total equity 37,392 34,923 37,002
-------- -------- ------------
Condensed consolidated interim statement of changes in
equity
for the six months ended 30 June 2011
a) First half 2011
-Unaudited
Revaluation
Equity reserves Capital Realised Retained
Property Other Redemption Capital Earnings Total
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 - - - - - (909) (909)
-------- --------- -------- ----------- --------- --------- --------
Transactions with
owners - - - - - (909) (909)
Total
comprehensive
profit for the
period - - - - - 1,299 1,299
Identification of
non-distributable
items recognised
in income
statement:
Revaluation
gains/(losses) - 463 (30) - - (433) -
Tax on revaluation
gains and losses - - - - - - -
Realised gains - - - - 35 (35) -
(Surplus)/deficit
attributable to
assets sold - (1,254) - - 1,254 - -
Excess of cost
over revalued
amount taken to
retained
earnings - 25 - - - (25) -
-------- --------- -------- ----------- --------- --------- --------
Total
comprehensive
income for the
period - (766) (30) - 1,289 806 1,299
-------- --------- -------- ----------- --------- --------- --------
At 30 June 2011 1,292 5,904 1,720 95 21,099 7,282 37,392
-------- --------- -------- ----------- --------- --------- --------
b) First half 2010
- Unaudited
Revaluation
Equity reserves Capital Realised Retained
Property Other Redemption Capital Earnings Total
Reserve Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2010 1,292 5,696 2,656 95 18,229 6,467 34,435
Dividends - - - - - (827) (827)
-------- --------- -------- ----------- --------- --------- --------
Transactions with
owners - - - - - (827) (827)
Total
comprehensive
profit for the
period - - - - - 1,315 1,315
Identification of
non-distributable
items recognised
in income
statement:
Revaluation
gains/(losses) - 730 (27) - - (703) -
Tax on revaluation
gains and losses - - 69 - - (69) -
Realised losses - - - - (95) 95 -
(Surplus)/deficit
attributable to
assets sold - (9) (1,095) - 1,104 - -
Excess of cost
over revalued
amount taken to
retained
earnings - 25 27 - - (52) -
-------- --------- -------- ----------- --------- --------- --------
Total
comprehensive
income for the
period - 746 (1,026) - 1,009 586 1,315
-------- --------- -------- ----------- --------- --------- --------
At 30 June 2010 1,292 6,442 1,630 95 19,238 6,226 34,923
-------- --------- -------- ----------- --------- --------- --------
c) Full year 2010
- Audited
Revaluation
Equity reserves Capital Realised Retained
Property Other Redemption Capital Earnings Total
Reserve Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2010 1,292 5,696 2,656 95 18,229 6,467 34,435
Dividends - - - - - (1,395) (1,395)
-------- --------- -------- ----------- --------- --------- --------
Transactions with
owners - - - - - (1,395) (1,395)
Total
comprehensive
profit for the
period - - - - - 3,962 3,962
Identification of
non-distributable
items recognised
in income
statement:
Revaluation
gains/(losses) - 1,577 572 - - (2,149) -
Tax on revaluation
gains and losses - - (93) - - 93 -
Realised gains - - - - (58) 58 -
(Surplus)/deficit
attributable to
assets sold - (254) (1,385) - 1,639 - -
Excess of cost
over revalued
amount taken to
retained
earnings - (349) - - - 349 -
-------- --------- -------- ----------- --------- --------- --------
Total
comprehensive
income for the
year - 974 (906) - 1,581 2,313 3,962
-------- --------- -------- ----------- --------- --------- --------
At 31 December
2010 1,292 6,670 1,750 95 19,810 7,385 37,002
-------- --------- -------- ----------- --------- --------- --------
Condensed consolidated interim statement of cash flows
(Unaudited)
for the six months ended 30 June 2011
First Half First Half Full Year
2011 2010 2010
GBP'000 GBP'000 GBP'000
Operating activities
Profit/(loss) for the period 1,299 1,315 3,962
Adjustments for:
Net valuation (gains)/losses
on investment property (463) (730) (1,577)
Gain on disposal of investment
property (35) (42) (100)
Net losses/(gains) on investments 31 422 (509)
Finance income (7) (5) (10)
Finance expense 3 2 1
Income tax (expense)/credit - (103) (55)
----------- ----------- ----------
Operating cash flow before changes
in working capital and provisions 828 859 1,712
(Increase)/decrease in trade
and other receivables (8) 20 10
(Decrease)/increase in trade
and other payables (3) 13 120
----------- ----------- ----------
Cash generated from operations 817 892 1,842
Finance income 7 5 10
Finance expense (3) (2) (1)
Income tax paid - - (25)
----------- ----------- ----------
Cash flows from operating activities 821 895 1,826
----------- ----------- ----------
Investing activities
Purchase of fixed assets - investment
property - - (1,558)
- equity investments (378) (727) (1,028)
Sale of fixed assets - investment
property 1,300 297 355
- equity investments - 2,481 3,326
----------- ----------- ----------
Cash flows from investing activities 922 2,051 1,095
Financing activities
Loan repayments - - -
Dividends paid (909) (827) (1,395)
----------- ----------- ----------
Cash flows used in financing
activities (909) (827) (1,395)
----------- ----------- ----------
Net increase in cash and cash
equivalents 834 2,119 1,526
Cash and cash equivalents at
1 January 2011 2,472 946 946
----------- ----------- ----------
Cash and cash equivalents at
30 June 2011 3,306 3,065 2,472
NOTES (unaudited)
1. Nature of operations and general information
Highcroft Investments PLC ('Highcroft') and its subsidiary
(together 'the group') principal activities are investment in
property and equities. It is incorporated and domiciled in Great
Britain. The address of Highcroft Investments PLC's registered
office, which is also its principal place of business, is Thomas
House, Langford Locks, Kidlington, OX5 1HR. Highcroft's condensed
consolidated interim financial statements are presented in Pounds
Sterling (GBP), which is also the functional currency of the group.
These condensed consolidated interim financial statements have been
approved for issue by the directors on 25 August 2011. The
financial information for the year ended 31 December 2010 set out
in this interim report does not constitute statutory accounts as
defined in Section 404 of the Companies Act 2006. The group's
statutory financial statements for the year ended 31 December 2010
have been filed with the Registrar of Companies. The auditor's
report on those financial statements was unqualified and did not
contain statements under Section 498(2) or Section 498(5) of the
Companies Act 2006.
2. Basis of preparation
These condensed consolidated interim financial statements are
for the six months ended 30 June 2011. They have been prepared in
accordance with IAS 34, Interim Financial Reporting. They do not
include all of the information required for full annual financial
statements, and should be read in conjunction with the consolidated
financial statements of the Group for the year ended 31 December
2010.
These condensed consolidated interim financial statements have
been prepared under the historical cost convention, as modified by
the revaluation of investment properties and the measurement of
equity investments at fair value. These condensed consolidated
interim financial statements have been prepared in accordance with
the accounting policies adopted in the last annual financial
statements for the year to 31 December 2010.
The accounting policies have been applied consistently
throughout the group for the purposes of preparation of these
condensed consolidated interim financial statements.
3. Segmental reporting
Segmental information is presented in the condensed consolidated
interim financial statements in respect of the group's business
segments. The business segment reporting format reflects the
group's management and internal reporting structure. Segment
results include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. All gross income
is from external tenants or external investments.
The group is comprised of the following main business
segments:
* Commercial property comprising retail outlets, offices and
warehouses.
* Residential property comprising mainly single-let houses.
* Financial assets comprising exchange-traded equity
investments.
3. Segmental reporting (continued)
First First
Half Half Full Year
2011 2010 2010
GBP'000 GBP'000 GBP'000
Commercial property
Gross income 1,020 970 1,995
Profit/(loss) for the period 859 1,212 2,690
Assets 31,560 29,024 28,655
Liabilities 713 630 743
Residential property
Gross income 20 32 58
Profit for the period 365 338 654
Assets 1,742 2,423 2,695
Liabilities 10 10 23
Financial assets
Gross income 126 101 234
Profit/(loss) for the period 75 (235) 618
Assets 5,961 5,222 7,528
Liabilities 1,148 1,106 1,110
Total
Gross income 1,166 1,103 2,287
Profit for the period 1,299 1,315 3,962
Assets 39,263 36,669 38,878
Liabilities 1,871 1,746 1,876
The largest tenant represents 10% of gross commercial property
income.
4. Income tax (credit) / expense
First First
Half Half Full Year
2011 2010 2010
GBP'000 GBP'000 GBP'000
Current tax:
On revenue profits - - (60)
On capital profits - (34) (19)
Prior year underprovision - - (69)
-------- -------- ----------
- (34) (148)
Deferred tax - (69) 93
-------- -------- ----------
- (103) (55)
-------- -------- ----------
The taxation charge has been based on the estimated effective
tax rate for the full year. As a Real Estate Investment Trust the
group does not pay corporation tax on its profits and gains from
its commercial and residential property activities.
5. Dividends
On 25 August 2011, the directors declared a property income
dividend of 11.50p per share (2010 11.00p interim dividend) payable
on 20 October 2011 to shareholders registered at 23 September
2011.
The following property income distributions have been paid by
the company.
First First Full
Half Half Year
2011 2010 2010
GBP'000 GBP'000 GBP'000
2010 final: 17.60p per ordinary
share (2009 final 16.00p ) 909 827 827
2010 interim: 11.00p per ordinary
share - - 568
-------- -------- --------
909 827 1,395
-------- -------- --------
6. Earnings per share
The calculation of earnings per share is based on the profit for
the period of GBP1,295,000 (2010 GBP1,315,000) and on 5,167,240
shares (2009 5,167,240) which is the weighted average number of
shares in issue during the period ended 30 June 2011 and throughout
the period since 1 January 2010.
The allocation differs to that disclosed in the year end
published accounts to better reflect the designation of realised
investment gains as capital in nature and to ensure consistency
with prior years. There is no impact on the total year end
results.
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 GBP828,000 (2010 GBP862,000) has been
calculated.
First First Full
Half Half Year
2011 2010 2010
GBP'000 GBP'000 GBP'000
Earnings:
Basic earnings 1,299 1,315 3,962
Adjustments for:
Net valuation (profits)/losses
on investment property (498) (772) (1,677)
Gains and losses on investments 31 422 (509)
Income tax on (gains)/losses - (103) 89
-------- -------- --------
Adjusted earnings 832 862 1,865
-------- -------- --------
Per share amount:
Basic earnings per share 25.1p 25.4p 76.7p
Adjustments for:
Net valuation gains on investment
property (9.6)p (14.9)p (32.5)p
Gains and losses on investments 0.6p 8.2p (9.9)p
Income tax on gains and losses 0.0p (2.0)p 1.7p
-------- -------- --------
Adjusted earnings per share 16.1p 16.7p 36.0p
-------- -------- --------
7. Investment property
First First Full
Half Half Year
2011 2010 2010
GBP'000 GBP'000 GBP'000
Valuation at 1 January 2011 30,705 27,825 27,825
Additions - - 1,558
Disposals (1,266) (255) (255)
Gain on revaluation 463 730 1,577
-------- -------- --------
Valuation at 30 June 2011 29,902 28,300 30,705
-------- -------- --------
The directors have used an external independent valuation of
properties at 30 June 2011 which has been carried out consistently
with the annual valuation.
8. Equity Investments
First First Full
Listed and unlisted Half Half Year
2011 2010 2010
GBP'000 GBP'000 GBP'000
Valuation at 1 January 2011 5,608 7,397 7,397
Additions 378 727 1,028
Disposals - (2,601) (3,393)
(Deficit)/surplus on revaluation
in excess of cost (30) (290) 572
Revaluation decrease below cost (11) (27) (6)
Revaluation increase still below
cost 9 15 10
-------- -------- --------
Valuation at 30 June 2011 5,954 5,221 5,608
-------- -------- --------
9. Related party transactions
Kingerlee Holdings Limited owns, through its wholly owned
subsidiaries, 25.4% (2010: 25.4%) of the company's shares and D H
Kingerlee and J C Kingerlee are directors of the company, Kingerlee
Holdings Limited and its wholly owned subsidiaries and shareholders
of the company and Kingerlee Holdings Limited.
During the period, the group made purchases from Kingerlee
Holdings Limited or its subsidiaries, being a service charge in
relation to services at Thomas House, Kidlington of GBP7,000 (2010:
GBP7,000). The amount owed at 30 June 2011 was nil (2010: nil). All
transactions were undertaken on an arm's length basis.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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