Final Results
Highcroft Investments PLC
24 March 2004
Highcroft Investments PLC
Preliminary announcement
2003 - the year in brief
Highlights
• Gross property income up 3.4% to £1,569,000
• Operating profit up 3.5% to £1,549,000
• Basic earnings per share up 11.1% to 25.1p
• Adjusted earnings per share up 6.3% to 22.1p
• Continuing emphasis on the property portfolio
• Net asset value per share up 9.9% to 656p, its highest ever level
• Total dividends up 8.4% to 11.0p per share
• Final dividend of 7.25p payable on 26 May 2004
• Annual General Meeting on Wednesday 19 May 2004
Mr Gavin Kingerlee, Chairman of Highcroft Investments plc; commented:
'I am pleased to report a pleasing trading performance which shows an improved
performance over the same period last year. Dividends for 2003 are up 8.4% on
2002. We look forward to another successful year in 2004.'
Enquiries:
Gavin Kingerlee, Chairman 01865 840 023
Highcroft Investments plc
Russell Cook 020 7739 8200
Charles Stanley & Co Ltd
Financial results - operating activities
Operating profit rose to £1,549,000 from £1,496,000 in 2002, an increase of
3.5%. Total income, including interest on cash deposits, was £1,758,000 as
compared with £1,717,000 in 2002. Net property income rose from £1,395,000 to
£1,457,000, an increase of 4.4%.
Gross rents receivable were up 3.4% on 2002 reflecting the impact of the new
investments and of rent reviews in both 2002 and 2003. Property income
represented 82.6% of total income compared with 81.2% in 2002.
Financial results - capital activities
Net assets increased by 9.7% during the year from £30.9 million to £33.9
million. The increase, which was a steady one throughout the year, stemmed from
both our property and listed investment portfolios.
During the course of the year, the group invested £1,596,000 in property assets
(2002 £1,504,000) and invested £624,000 (2002 £935,000) in stock markets. The
net proceeds from property disposals during the year amounted to £660,000 (2002
£1,537,000) while investment disposals raised £1,334,000 (2002 £884,000).
The net gains on these disposals amounted to £158,000 (2002 £154,000),
comprising £82,000 of gains on property disposals and £76,000 of gains on
disposal of investments. The net gain after taxation of £158,000 (2002 £94,000)
was transferred to realised capital reserve.
Cash reserves increased from £395,000 to £1,079,000 during 2003 which we
anticipate using on fresh property acquisitions.
Property
The property valuation showed a rise from £23.1 million to £25.4 million. Those
properties that remained in the portfolio throughout the period show a rise in
value equivalent to 6.1% (2002 1.5%). There are 18 (2002 18) commercial
properties in the portfolio with an average value of £1,244,000 (2002
£1,122,000). There are 15 residential properties in the portfolio and ground
rent investments (2002 17). The average value of these residential investments
is £203,000 (2002 £171,000).
Listed investments
2003 was a much better year for equity markets and the FTSE 100 was up from
3,940 to 4,477 over the 12 months to 31 December 2003 a rise of 13.6%. Those
listed investments that remained in our portfolio throughout the period showed a
rise in value of 12.8% (2002 20.1% fall). We continued to review the portfolio
in order to make tax efficient disposals while protecting our dividend income
stream.
Summary
We have reported an equity portfolio valuation which has risen by 4.7%, despite
having made sales of £710,000. The property portfolio valuation has risen
10.1%, having invested a net £936,000. As a result we are pleased to report
that the net asset value per share has risen by 9.9% to 656p (2002:597p), a
record level. Total shareholders funds were £33,901,000 (2002 £30,855,000).
Income has shown a further satisfactory increase and the rise in operating
profits enables us to propose another significant increase in dividends well
above the rate of inflation. Proposed dividends for 2003 are up 8.4% on 2002,
with virtually no change to the dividend cover. Basic earnings per share are up
11.1% to 25.1p per share and adjusted earnings per share (adjusted to take out
the effect of asset disposals) are up 6.2% to 22.1p per share.
Current trading and prospects
Looking to 2004, we hope to start to see the results of our changed approach to
seeking property which will help secure the group's long term income and
capital. As far as listed investments are concerned, while our stance is likely
to be neutral, we continue to try to take advantage of opportunities but to
balance such opportunities against our property investment and borrowing
strategy.
While both property and listed investment markets are always uncertain, the
business is well placed to pursue its strategies and has a healthy balance
sheet. We look forward to another successful year in 2004 and I look forward to
welcoming and updating shareholders at our AGM on 19 May 2004.
G J KINGERLEE
Chairman 24 March 2004
Group Profit and Loss Account
for the year ended 31 December 2003
Note 2003 2002
£'000 £'000
Income from fixed asset investments
and other interest receivable 1,758 1,717
Administrative expenses 209 221
Operating profit 1,549 1,496
Gains on disposals of assets 1 158 154
Profit on ordinary activities before taxation 1,707 1,650
Taxation 2 409 482
Profit for the financial year 1,298 1,168
Gain on disposals of assets after taxation transferred to
realised capital reserve 1 158 94
Profit available for distribution 1,140 1,074
Dividends 3 568 524
Profit retained 572 550
Earnings per share: 4
Basic 25.1p 22.6p
Adjusted 22.1p 20.8p
All operations are continuing.
Balance Sheets
at 31 December 2003
The Group The Company
Note 2003 2002 2003 2002
£'000 £'000 £'000 £'000
Fixed assets
Tangible assets 5 25,436 23,098 - -
Investments 6 8,062 7,700 33,853 31,619
33,498 30,798 33,853 31,619
Current assets
Debtors 532 916 455 380
Cash at bank 1,079 395 1,079 395
1,611 1,311 1,534 775
Creditors
Amounts falling due within
one year 1,208 1,254 1,486 1,539
Net current assets/(liabilities) 403 57 48 (764)
Net assets 33,901 30,855 33,901 30,855
Capital and reserves
Called up share capital 1,292 1,292 1,292 1,292
Revaluation reserve - property 6,560 5,442 - -
- other 3,542 2,101 29,005 25,692
Capital redemption reserve 95 95 95 95
Realised capital reserve 14,325 14,410 2,789 3,054
Profit and loss account 8,087 7,515 720 722
Shareholders' funds - equity 33,901 30,855 33,901 30,855
Group Cash Flow Statement
for the year ended 31 December 2003
Note 2003 2002
£'000 £'000 £'000 £'000
Net cash inflow from operating activities 7 1,977 1,001
Taxation
Taxation paid (530) (513)
Capital expenditure and financial investment
Purchase of fixed assets - properties (1,596) (1,504)
- listed (624) (935)
investments
Sale of fixed assets - properties 660 1,537
- listed investments 1,334 884
Net cash outflow from capital expenditure and (226) (18)
financial investment
Dividends
Equity dividends paid (537) (494)
Increase/(decrease) in cash 8 684 (24)
Total Recognised Gains and Losses and Historical Cost Profits and Losses
for the year ended 31 December 2003
Statement of total recognised gains and losses
2003 2002
£'000 £'000
Profit for the financial year 1,298 1,168
Unrealised surplus on revaluation of investment properties 1,320 161
Unrealised surplus on revaluation of listed and unlisted investments 996 (1,916)
Tax on valuation surplus arising in prior years attributable to properties - (52)
sold in year
Total recognised gains and losses for the year 3,614 (639)
Note of historical cost profits and losses
2003 2002
£'000 £'000
Profit on ordinary activities before taxation 1,707 1,650
Realisation of revaluation gains of previous years
-attributable to investment properties 202 432
-attributable to listed and unlisted investments (445) 114
Historical cost profit on ordinary activities before taxation 1,464 2,196
Historical cost profits retained 487 1,138
Notes
for the year ended 31 December 2003
1 Gains on disposals of assets
2003 2002
Gains/(losses) on disposals of assets arising on sales of: £'000 £'000
Properties 82 243
Investments 76 (89)
Net gain on disposals of assets 158 154
Corporation tax on disposals of assets - (60)
Net gain on disposals of assets after taxation 158 94
2 Taxation
The taxation charge at 30% (2002 30%) is based on the profit for the year and is
made up as follows:
2003 2002
£'000 £'000
Corporation tax on operating profit 399 395
Corporation tax on disposals of assets - 60
Prior year underprovision 10 27
409 482
3 Dividends
2003 2002
Ordinary shares £'000 £'000
Interim dividend of 3.75p per share paid (2002 3.5p) 194 181
Proposed final dividend of 7.25p per share (2002 6.65p) 374 343
568 524
4 Earnings per share
The calculation of earnings per share is based on the profit for the financial
year of £1,298,000 (2002 £1,168,000) and on 5,167,240 (2002 5,167,240) ordinary
shares of 25p each which is the weighted average number of shares in issue
during the year ended 31 December 2003.
In view of the uneven nature of capital disposals, an adjusted earnings per
share has also been presented, based on the profit available for distribution of
£1,140,000 (2002 £1,074,000). The effect of the adjustment is as follows:
2003 2002
Earnings Weighted Per share Earnings Weighted Per share
average amount pence average amount pence
number of number of
shares shares
£'000 £'000
Basic earnings per share 1,298 5,167,240 25.1 1,168 5,167,240 22.6
Adjustment for gains on (158) - (3.0) (94) - (1.8)
disposals of assets
Adjusted earnings per share 1,140 5,167,240 22.1 1,074 5,167,240 20.8
Notes
for the year ended 31 December 2003
5 Tangible assets
Land and buildings
(Investment properties)
Total Freeholds Long
leaseholds
£'000 £'000 £'000
Valuation at 1 January 2003 23,098 20,778 2,320
Additions 1,596 1,596 -
Disposals (578) (578) -
Surplus on revaluation 1,320 1,285 35
Valuation at 31 December 2003 25,436 23,081 2,355
6 Investments
Total Listed Unlisted
£'000 £'000 £'000
Valuation at 1 January 2003 7,700 7,696 4
Additions at cost 624 624 -
Disposals (1,258) (1,258) -
Surplus on revaluation 996 996 -
Valuation at 31 December 2003 8,062 8,058 4
7 Reconciliation of operating profit to net cash flow from operating
activities
2003 2002
£'000 £'000
Operating profit 1,549 1,496
Decrease/(increase) in debtors 384 (454)
Increase/(decrease) in creditors 44 (41)
Net cash inflow from operating activities 1,977 1,001
8 Analysis of changes in net funds
2003 2002
Cash at bank £'000 £'000
At 1 January 2003 395 419
Net cash (outflow)/inflow 684 (24)
At 31 December 2003 1,079 395
9 Accounting convention
The financial statements have been prepared in accordance with applicable
accounting standards up to and including FRS19 and under the historical cost
convention except for the revaluation of fixed assets and fixed asset
investments.
The principal accounting policies of the group have remained unchanged from the
previous year, with the exception of disposal of investment properties which has
been updated to comply with FRS5 (Application Note G). Disposal of investment
properties are now recognised at the date of completion rather than the date of
exchange. No prior year adjustment has been made on the grounds of materiality.
10 Annual General Meeting
The Annual General Meeting will be held on 19 May 2004.
11 Final ordinary dividend
A final ordinary dividend of 7.25p per share will be paid on 26 May 2004 to
shareholders registered at the close of business on 30 April 2004.
12 Limitation
The above does not constitute full accounts within the meaning of section
240 of the Companies Act 1985. It is an extract from the full accounts for the
year ended 31 December 2003 on which the auditors have not reported. The
accounts will be posted to shareholders on or before 30 April 2004 and
subsequently filed at Companies House.
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Tuesday, 14th May 2024
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