Half Yearly Report

RNS Number : 6015K
Highcroft Investments PLC
23 August 2012
 



23 August 2012

 

HIGHCROFT INVESTMENTS PLC

Interim report for the six months ended 30 June 2012

 

HIGHLIGHTS:

-     Net rental income increased 22% to £1,057,000 (2011: £867,000)

-     Profit before tax increased 80% to £2,337,000 (2011: £1,299,000)

-     Basic earnings per  share (on revenue activities) up 30% to 20.9p (2011: 16.1p)

-     Basic earnings per share (on capital activities) increased to 24.4p (2011: 9.0p)

-     Net assets per share increased 3.7% to 747p (June 2011: 724p and December 2011 720p)

-     Interim property income distribution increased 4.3% to 12.0p per share (2011: 11.5p)

-     During the period one residential lease extension completed and contracts exchanged for the sale of our multi-let office building in Victoria.

-     Since the period end the sale of the Victoria property has completed and contracts have been exchanged and completed on the acquisition of an industrial unit in Bedford.

 

Dear Shareholder

 

I am pleased to report that in the 6 months ended 30 June 2012 both net rental income and pre tax profits have risen significantly, whilst our net assets have increased modestly. These results are particularly satisfying considering the difficult circumstances in which much of the property sector finds itself.

 

Results for the period

 

Property: Gross rental income has risen by 9.8%, in part as a result of new income from our property in Andover bought in November 2011.  Our portfolio remains fully let which is encouraging  in the current economic climate.  Property operating expenses halved in the absence of some of the exceptional costs incurred in 2011 relating to our void Yeovil property which we disposed of in 2011. The combined effect of income increasing and costs falling has resulted in an increase of 22% in net rental income.

 

Equities: Dividend income from our equity portfolio was slightly lower than last year at £120,000 (2011: £126,000). However as we had enjoyed an exceptional one-off distribution of £48,000 in 2011 the underlying picture is healthy reflecting, we believe, the modest shift in our portfolio from defensive to more cyclical stocks and the spread of our investments across blue chip international holdings.

 

Financial highlights: With administrative costs well under control, profit before tax on revenue activities has risen by 28%  resulting in earnings per share from revenue activities of 20.9p per share (2011: 16.1p).

 

With the addition of net valuation gains on investment properties of £1,025,000 (2011: £463,000) and net gains on equity investments of £238,000 (2011: loss £31,000) the total earnings per share on all activities has increased to 45.0p (2011: 25.1p).

 

With continuing signs of falling values in many areas of the UK property market, we are particularly pleased that our net asset value per share has increased to 747p (June 2011: 724p, December 2011: 720p).  We believe that this is a reflection of the inherent strength of our balanced portfolios, in terms of the geographic and sector spread of our equities and the type of property investments and their covenant strength.  There were both winners and losers in our equity and property portfolios, as we would expect in the current economic climate.  There were falls in valuations at some of our smaller properties with shorter leases but these were well offset by significant gains elsewhere. Most notable among these was Willow House in Victoria, London, where we have just completed on the sale that we announced to the market in June.  In addition we announced on 21 August that we had completed the acquisition of an industrial unit in Bedford

 

Our cash position at 30 June 2012 was £2,273,000 which has now been enhanced by the proceeds from the sale of Willow House of £4,900,000 and reduced by the purchase of the Bedford unit for a consideration of £1,860,658 net of costs.

 

Dividend: I am pleased to report that we will be paying an interim dividend of 12.0p per share (2011: 11.5p) payable on 20 October 2012.

 

Outlook

 

With no borrowings, the group continues to be in an enviable position. We hope that we will be able to take advantage of the continuing stressed market conditions by investing some of our funds so as to strengthen our future income stream by enhancing our portfolio with the purchase of quality properties.

 

 

John Hewitt

23 August 2012

 

 

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 2012

 

 



Unaudited


Unaudited

Audited




First Half 2012


First Half 2011

Full Year 2011


 


Note

Revenue


Capital


Total


Revenue


Capital


Total


Revenue


Capital


Total


 



£'000


£'000


£'000


£'000


£'000


£'000


£'000


£'000


£'000


 

Continuing operations




















 

Gross rental income


1,142


-


1,142


1,040


-


1,040


2,129


-


2,129


 

Property operating expenses


(85)


-


(85)


(173)


-


(173)


(303)


-


(303)


 

Net rental income


1,057


-


1,057


867


-


867


1,826


-


1,826


 





















 

Realised gains on investment property


62




62


-


58


58


360




360


 

Realised losses on investment property


-




-


-


(23)


(23)


(82)




(82)


 

Net gain on disposal of investment property


62


-


62


-


35


35


278


-


278


 





















 

Valuation gains on investment property


-


2,075


2,075


-


563


563


-


801


801


 

Valuation losses on investment property


-


(1,050)


(1,050)


-


(100)


(100)


-


(1,072)


(1,072)


 

Net valuation gains on investment property


-


1,025


1,025


-


463


463


-


(271)


(271)


 





















 

Dividend income


120


-


120


126


-


126


261


-


261


 

Gains on investments


-


348


348


-


195


195


-


397


397


 

Losses on investments


-


(110)


(110)


-


(226)


(226)


-


(587)


(587)


 

Net investment income/(loss)


120


238


358


126


(31)


95


261


(190)


71


 





















 

Administrative expenses


(168)


-


(168)


(165)


-


(165)


(335)


-


(335)


 





















 

Operating profit/(loss) before net financing costs


1,071


1,263


2,334


828


467


1,295


2,030


(461)


1,569


 





















 

Finance income


3


-


3


7


-


7


15


-


15


 

Finance expenses


-


-


-


(3)


-


(3)


-


-


-


 

Net finance costs


3


-


3


4


-


4


15


-


15


 





















 

Profit/(loss) before tax


1,074


1,263


2,337


832


467


1,299


2,045


(461)


1,584


 





















 

Income tax credit/(expense)

4

-


(14)


(14)


-


-


-


21


119


140


 

Total profit/(loss) and comprehensive


1,074


1,263


2,323


832


467


1,299


2,066


(342)


1,724


 

income/(expense) for the financial period




















 

Basic and diluted earnings/(loss) per share

6

20.9

p

24.1

p

45.0

p

16.1

p

9.0

p

25.1

p

40.1

p

(6.7)

p

33.4

p

 

 


Condensed consolidated interim statement of financial position (Unaudited)

as at 30 June 2012

 




 Unaudited


 Unaudited


 Audited




 30 June


 30 June


 31 December




 2012


 2011


 2011


Note


 £'000


 £'000


 £'000

Assets








Investment property

7


31,793


29,902


30,787

Equity investments

8


5,610


5,954


5,598

Total non-current assets



37,403


35,856


36,385









Current assets








Trade and other receivables



504


101


217

Cash at bank and in hand



2,273


3,306


1,926

Total current assets



2,777


3,407


2,143









Total assets



40,180


39,263


38,528









Liabilities








Current liabilities








Current corporation tax



14


213


-

Trade and other payables



952


894


681

Total current liabilities



966


1,107


681









Non-current liabilities








Interest-bearing loans and borrowings



-


-


-

Deferred tax liabilities



624


764


624

Total non-current liabilities



624


764


624









Total liabilities



1,590


1,871


1,305









Net assets



38,590


37,392


37,223









Equity








Issued share capital



1,292


1,292


1,292

Revaluation reserve - property



6,604


5,904


4,904

Revaluation reserve - other



1,816


1,720


1,592

Capital redemption reserve



95


95


95

Realised capital reserve



21,530


21,099


21,428

Retained earnings



7,253


7,282


7,912

Total equity



38,590


37,392


37,223

 


 

Condensed consolidated interim statement of changes in equity

for the six months ended 30 June 2012

 

a) First half 2012 - Unaudited


 Equity

 Revaluation reserves


 Capital

 Realised

 Retained




 Property

 Other

 Redemption

 Capital

 Earnings

 Total


 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

At 1 January 2012

           1,292

       4,904

         1,592

95

21,428

      7,912

    37,223

Dividends

-

-

-

-

-

(956)

(956)

Reserve transfers:








Non-distributable items recognised in income statement:








Revaluation gains/(losses)

-

        1,025

185

-

-

(1,210)

-

Tax on revaluation gains and losses

-

-

-

-

-

-

-

Realised gains

-

-

-

-

102

(102)

-

(Surplus)/deficit attributable to assets sold

-

-

-

-

-

-

-

Excess of cost over revalued amount taken to retained earnings

-

675

39

-

-

(714)

-

Transactions with owners

-

       1,700

224

-

102

(2,982)

(956)

Profit and total comprehensive income for the period

-

-

-

-

-

       2,323

      2,323

At 30 June 2012

        1,292

      6,604

         1,816

95

   21,530

      7,253

   38,590











 

b) First half 2011 - Unaudited









 Equity

 Revaluation reserves


 Capital

 Realised

 Retained




 Property

 Other

 Redemption

 Capital

 Earnings

 Total


 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

At 1 January 2011

           1,292

        6,670

         1,750

95

    19,810

     7,385

     37,002

Dividends

-

-

-

-

-

(909)

(909)

Reserve transfers:








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)

-

Transactions with owners

-

(766)

(30)

-

       1,289

(1,402)

(909)

Profit and total comprehensive income for the period

-

-

-

-

-

        1,299

       1,299

At 30 June 2011

      1,292

       5,904

    1,720

95

    21,099

       7,282

     37,392



 









c) Full year 2011 - Audited









 Equity

 Revaluation reserves


 Capital

 Realised

 Retained




 Property

 Other

 Redemption

 Capital

 Earnings

 Total


 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

 £'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 losses

-

(271)

(238)



509

-

Tax on revaluation gains and losses

-

-

109

-

-

(109)

-

Realised gains

-

-

-

-

(40)

40

-

(Surplus)/deficit attributable to assets sold

-

(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 period

-

-

-

-

-

     1,724

   1,724

At 31 December 2011

   1,292

   4,904

         1,592

95

   21,428

    7,912

  37,223

 


Condensed consolidated interim statement of cash flows

for the six months ended 30 June 2012

 


 Unaudited


 Unaudited


 Audited


 First Half


 First Half


 Full Year


 2012


 2011


 2011


 £'000


 £'000


 £'000

Operating activities






Profit for the period

       2,323


    1,299


      1,724

Adjustments for:






Net valuation (gains)/losses on investment property

(1,025)


(463)


271

Gain on disposal of investment property

(62)


(35)


(278)

Net (gains)/losses on investments

(238)


31


190

Finance income

(3)


(7)


(15)

Finance expense

-


3


-

Income tax expense/(credit)

14


-


(140)

Operating cash flow before changes in working






capital and provisions

      1,009


828


       1,752

Increase in trade and other receivables

(287)


(8)


(124)

(Decrease)/increase in trade and other payables

271


(3)


(215)

Cash generated from operations

993


817


       1,413







Finance income

3


7


15

Finance expense

-


(3)


-

Income tax paid

-


-


(216)

Net cash flows from operating activities

996


821


        1,212







Investing activities






Purchase of fixed assets - investment property

-


-


(2,871)

- equity investments

(420)


(378)


(423)

Sale of fixed assets - investment property

81


   1,300


   2,796

- equity investments

646


-


243

Net cash flows from investing activities

307


922


(255)







Financing activities






Loan repayments

-


-


-

Dividends paid

(956)


(909)


(1,503)

Net cash flows from financing activities

(956)


(909)


(1,503)







Net increase in cash and cash equivalents

347


834


(546)

Cash and cash equivalents at 1 January 2012

        1,926


  2,472


     2,472

Cash and cash equivalents at 30 June 2012

     2,273


   3,306


  1,926







 



 

Notes

for the six months ended 30 June 2012

 

1.  Nature of operations and general information

Highcroft Investments PLC ('Highcroft') and its subsidiary's (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 (£), which is also the functional currency of the group. These condensed consolidated interim financial statements have been approved for issue by the directors on 22 August 2012. The financial information for the year ended 31 December 2011 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 2011 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 2012.  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 2011.

 

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 2011.

 

The accounting policies have been applied consistently throughout the group for the purposes of preparation of these condensed consolidated interim financial statements.

 

3.  Segment 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.

 



 


 First Half


 First Half


 Full Year


 2012


 2011


 2011


 £'000


 £'000


 £'000

Commercial property






Gross income

    1,121


     1,020


     2,086

Profit/(loss) for the period

   1,895


    859


  1,070

Assets

 32,600


  31,560


 31,714

Liabilities

759


713


549

Residential property






Gross income

21


20


43

Profit for the period

101


365


503

Assets

    1,745


    1,742


   1,149

Liabilities

5


10


1

Financial assets






Gross income

120


126


261

Profit/(loss) for the period

327


75


151

Assets

   5,835


    5,961


   5,665

Liabilities

826


    1,148


755

Total






Gross income

   1,262


   1,166


  2,390

Profit for the period

   2,323


   1,299


  1,724

Assets

40,180


  39,263


  38,528

Liabilities

    1,590


  1,871


  1,305







No tenant represents more than 10% of gross commercial property income.

 

 

4.  Income tax expense/(credit)

 


First Half


First Half


Full Year


2012


2011


2011


£'000


£'000


£'000

Current tax:






On revenue profits

-


-


(20)

On capital profits

14


-


15

Prior year under provision

-


-


(1)


14


-


(6)

Deferred tax

-


-


(134)


14


-


(140)

 

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 22 August 2012, the directors declared a property income dividend of 12.0p per share (2011: 11.50p interim dividend) payable on 20 October 2012 to shareholders.

 

The following property income distributions have been paid by the company.

 


First Half


First Half


Full Year


2012


2011


2011


£'000


£'000


£'000

2011 final: 18.5p per ordinary share (2010 final: 17.6p )

956


909


909

2011 interim 11.5p per ordinary share

-


-


594


956


909


1,503

 

6. Earnings per share

 

The calculation of earnings per share is based on the profit for the period of £2,323,000 (2011:  £1,299,000) and on 5,167,240 shares (2011: 5,167,240) which is the weighted average number of shares in issue during the period ended 30 June 2012 and throughout the period since 1 January 2011.

 

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 £998,000 (2011 £832,000) has been calculated.

 


First Half



First Half



Full Year



2012



2011



2011



£'000



£'000



£'000


Earnings:









Basic earnings

2,323



1,299



1,724


Adjustments for:









Net valuation profits on investment property

(1,025)



(498)



271


Gains and losses on investments

(238)



31



190


Income tax on gains and losses

14



-



(119)


Adjusted earnings

1,074



832



2,066











Per share amount:









Basic earnings per share

45.0

p


25.1

p


33.4

p

Adjustments for:









Net valuation gains on investment property

(19.8)

p


(9.6)

p


5.3

p

Gains and losses on investments

(4.6)

p


0.6

p


3.7

p

Income tax on gains and losses

0.3

p


-

p


(2.3)

p

Adjusted earnings per share

20.9

p


16.1

p


40.1

p

 

7. Investment Property

 


First Half


First Half


Full Year


2012


2011


2011


£'000


£'000


£'000

Valuation at 1 January 2012

30,787


30,705


30,705

Additions

-


-


2,871

Disposals

(19)


(1,266)


(2,518)

Gain /(loss) on revaluation

1,025


463


(271)

Valuation at 30 June 2012

31,793


29,902


30,787

 

 

8. Equity investments

 


First Half


First Half


Full Year


2012


2011


2011


£'000


£'000


£'000

Valuation at 1 January 2012

5,598


5,608


5,608

Additions

420


378


423

Disposals

(593)


-


(186)

Surplus/(deficit)  on revaluation in excess of cost

225


(30)


(238)

Revaluation decrease below cost

(46)


(11)


(15)

Revaluation increase still below cost

6


9


6

Valuation at 30 June 2012

5,610


5,954


5,598

 

 

9. Related party transactions

 

Kingerlee Holdings Limited owns, through its wholly owned subsidiaries, 25.4% (2011: 25.4%) of the company's shares and D H Kingerlee and J C Kingerlee are directors of both 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 £7,000 (2011: £7,000). The amount owed at 30 June 2012 was nil (2011: nil).  All transactions were undertaken on an arm's length basis.

 

 


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