TIDMHCFT
RNS Number : 7222L
Highcroft Investments PLC
15 August 2013
15 August 2013
Highcroft Investments PLC
Interim Report for the six months ended 30 June 2013
Highlights:
-- Net rental income rose 14% to GBP1,206,000 (2012:
GBP1,057,000)
-- Operating profit from revenue activities rose 6% to
GBP1,139,000 (2012: GBP1,071,000)
-- Basic earnings per share on revenue activities rose 14.4% to
23.9p (2012: 20.9p)
-- Basic earnings per share on capital activities of 8.1p (2012:
24.1p)
-- Net assets per share of 770 p (June 2012: 747p, Dec 2012:
758p)
-- Interim property income distribution increased 4.2% to 12.5 p
(2012: 12.0p)
-- Since the period end a property has been purchased at a cost
of GBP5.7m net of costs and modest gearing has been introduced
Dear Shareholder
I am pleased to report that in the six months ended 30 June
2013, rental income, operating profits and net asset value have all
increased. In recognition of this, we are continuing our
long-established policy of raising dividends ahead of
inflation.
Results for the period
Property: Gross rental income has risen by over 10% and net
rental income by 14%. The increases result primarily from the
increase in yield from our Bedford and Milton Keynes properties
purchased in the second half of 2012 over that from our Victoria
property which we disposed of in the middle of 2012. Property
expenses continued to decline as there were only a small number of
lease events in progress. One of our multi-let units in Staines was
void at the end of the period but has just been re-let, six weeks
after the end of the previous lease. One of our residential
properties, subject to a regulated tenancy, became vacant in May
2013 and is currently under offer. After the period end we
completed the purchase of a retail warehouse in Bicester, let to
Wickes, for a consideration of GBP5,700,000 net of costs. The
initial yield, lease length and good covenant enhances and
complements our portfolio.
Equities: Dividend income from our equity portfolio declined to
GBP110,000 (2012: GBP120,000) as a result of sales from the
portfolio after the strong first quarter performance in the equity
markets. Sales from our equity portfolio resulted in net gains of
GBP169,000 in the half year. This reduction of our holdings was
carried out in anticipation of our property investment in
Bicester.
Financial: Earnings per share on revenue activities rose by 14.4
% to 23.9p (2012: 20.9p). In addition the group benefited from
capital profits from the sale of investments and a gain on the
property and equity valuations at 30 June 2013. The more volatile
measure of total earnings per share which includes capital profits
and valuation gains was 32.0p (2012: 45.0p), lower than last year
when there was a significant valuation gain on our former property
in Victoria which we subsequently sold in August 2012.
The cash position at 30 June 2013 increased to GBP4,586,000
(2012: GBP2,273,000) partially due to the sale of equities referred
to above. Since the period end this has been reduced by the
purchase of Wickes, Bicester for GBP5,700,000 net of costs and
enhanced by a medium term, fixed interest loan of GBP2,500,000.
Dividend: I am pleased to report that we will be paying an
interim property income distribution of 12.5p (2012: 12.0 p) per
share, payable on 18 October 2013 to shareholders registered on 20
September 2013.
Board: As we have previously reported Simon Gill joined the
board as property director on 1 April 2013 and assumed the role of
Chief Executive upon Jonathan Kingerlee's resignation on 31 July
2013. On behalf of the shareholders and the board I would like to
thank Jonathan for the significant contribution that he has made to
the business during his eighteen years as a board member.
Outlook
After a number of years of commenting on the lacklustre nature
of the economy in general, and the difficulties of the property
sector in particular, it is refreshing to sound some notes of
cautious optimism. The economy is showing better overall growth
although the property sector still has some significant issues of
distressed selling, regional patchiness and particular problems
with High Streets and secondary properties.
We have a number of forthcoming rent and lease reviews which we
are currently working on with our advisers. We also continue to
seek high quality property to add to the portfolio and, at this
stage of the cycle, further gearing would be considered.
John Hewitt
Chairman
14 August 2013
For further information, contact:
Highcroft Investments PLC
John Hewitt/Roberta Miles 01865 840023
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 2013
Unaudited Unaudited Audited
First Half 2013 First Half 2012 Full Year 2012
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 1,258 - 1,258 1,142 - 1,142 2,351 - 2,351
Property
operating
expenses (52) - (52) (85) - (85) (184) - (184)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net rental income 1,206 - 1,206 1,057 - 1,057 2,167 - 2,167
Realised gains on
investment
property - - - 62 - 62 1,552 - 1,552
Net gain on
disposal of
investment
property - - - 62 - 62 1,552 - 1,552
-------- -------- -------- -------- -------- -------- -------- -------- --------
Valuation gains
on investment
property - 335 335 - 2,075 2,075 - 1,769 1,769
Valuation losses
on investment
property - (320) (320) - (1,050) (1,050) - (2,355) (2,355)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net valuation
gains/(loss)
on investment
property - 15 15 - 1,025 1,025 - (586) (586)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Dividend income 110 - 110 120 - 120 251 - 251
Gains on
investments - 568 568 - 348 348 - 677 677
Losses on
investments - (132) (132) - (110) (110) - (179) (179)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net investment
income 110 436 546 120 238 358 251 498 749
-------- -------- -------- -------- -------- -------- -------- -------- --------
Administrative
expenses (177) - (177) (168) - (168) (311) - (311)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Operating
profit/(loss)
before
net financing
costs 1,139 451 1,590 1,071 1,263 2,334 3,659 (88) 3,571
Finance income 5 - 5 3 - 3 8 - 8
Profit/(loss)
before tax 1,144 451 1,595 1,074 1,263 2,337 3,667 (88) 3,579
Income tax
credit/(expense) 4 88 (29) 59 - (14) (14) 53 (38) 15
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total
profit/(loss)
and
comprehensive 1,232 422 1,654 1,074 1,249 2,323 3,720 (126) 3,594
-------- -------- -------- -------- -------- -------- -------- -------- --------
income/(expense)
for the financial
period
Basic and diluted
earnings/(loss)
per share 6 23.9 p 8.1 p 32.0 p 20.9 p 24.1 p 45.0 p 72.0 p (2.5) p 69.6 p
Condensed consolidated interim statement of financial position
(Unaudited)
as at 30 June 2013
Unaudited Unaudited Audited
30 June 30 June 31 December
2013 2012 2012
Note GBP'000 GBP'000 GBP'000
Assets
Investment property 7 31,624 31,793 31,609
Equity investments 8 4,872 5,610 5,713
----------- ----------- -------------
Total non-current assets 36,496 37,403 37,322
----------- ----------- -------------
Current assets
Trade and other receivables 369 504 254
Cash at bank and in
hand 4,586 2,273 3,274
----------- ----------- -------------
Total current assets 4,955 2,777 3,528
----------- ----------- -------------
Total assets 41,451 40,180 40,850
----------- ----------- -------------
Liabilities
Current liabilities
Current corporation - 14 -
tax
Trade and other payables 1,019 952 1,000
----------- ----------- -------------
Total current liabilities 1,019 966 1,000
----------- ----------- -------------
Non-current liabilities
Deferred tax liabilities 560 624 609
----------- ----------- -------------
Total non-current liabilities 560 624 609
----------- ----------- -------------
Total liabilities 1,579 1,590 1,609
----------- ----------- -------------
Net assets 39,872 38,590 39,241
----------- ----------- -------------
Equity
Issued share capital 1,292 1,292 1,292
Revaluation reserve
- property 7,265 6,604 7,050
Revaluation reserve
- other 1,704 1,816 1,746
Capital redemption
reserve 95 95 95
Realised capital reserve 22,829 21,530 22,366
Retained earnings 6,687 7,253 6,692
----------- ----------- -------------
Total equity 39,872 38,590 39,241
----------- ----------- -------------
Condensed consolidated interim statement of changes in
equity
for the six months ended 30 June 2013
First half 2013 - Unaudited
Equity Revaluation reserves Capital Realised Retained
Property Other Redemption Capital Earnings Total
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 - - - - - (1,023) (1,023)
Reserve transfers:
Non-distributable
items recognised
in income statement:
Revaluation
gains/(losses) - 15 267 - - (282) -
Tax on revaluation
gains and losses - - - - - - -
Realised gains - - - - 130 (130) -
(Surplus)/deficit
attributable to
assets
sold - - (333) - 333 - -
Excess of cost over
revalued amount
taken to retained
earnings - 200 24 - - (224) -
---------------- ------------- --------- ------------ ---------- ------------ ---------
Transactions with
owners - 215 (42) - 463 (1,659) (1,023)
---------------- ------------- --------- ------------ ---------- ------------ ---------
Profit and total
comprehensive income
for the period - - - - - 1,654 1,654
---------------- ------------- --------- ------------ ---------- ------------ ---------
At 30 June 2013 1,292 7,265 1,704 95 22,829 6,687 39,872
---------------- ------------- --------- ------------ ---------- ------------ ---------
First half 2012 -
Unaudited
Equity Revaluation reserves Capital Realised Retained
Property Other Redemption Capital Earnings Total
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 - - - - - (956) (956)
Reserve transfers:
Non-distributable
items recognised
in income
statement:
Revaluation
gains/(losses) - 1,025 185 - - (1,210) -
Realised gains - - - - 102 (102) -
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
---------------- ------------- --------- ------------ ---------- ------------- ------------
Full year 2012 - Audited
Equity Revaluation reserves Capital Realised Retained
Property Other Redemption Capital Earnings Total
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
gains/(losses) - (586) 416 - - 170 -
Tax on revaluation gains
and losses - - (20) - - 20 -
Realised gains - - - - 1,608 (1,608) -
(Surplus)/deficit
attributable to assets
sold - 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 period - - - - - 3,594 3,594
---------------- ------------ ---------- ------------ ---------- ---------- ---------
At 31 December 2012 1,292 7,050 1,746 95 22,366 6,692 39,241
---------------- ------------ ---------- ------------ ---------- ---------- ---------
Condensed consolidated interim statement of cash flows
for the six months ended 30 June 2013
Unaudited Unaudited Audited
First
First Half Half Full Year
2013 2012 2012
GBP'000 GBP'000 GBP'000
Operating activities
Profit for the period 1,654 2,323 3,594
Adjustments for:
Net valuation (gains)/losses on
investment property (15) (1,025) 586
Gain on disposal of investment
property - (62) (1,552)
Net gains on investments (436) (238) (498)
Finance income (5) (3) (8)
Income tax expense/(credit) (59) 14 (15)
------------ ------------- -----------
Operating cash flow before changes
in working
capital and provisions 1,139 1,009 2,107
Increase in trade and other receivables (115) (287) (37)
Increase in trade and other payables 19 271 319
------------ ------------- -----------
Cash generated from operations 1,043 993 2,389
Finance income 5 3 8
Income tax received 10 - -
------------ ------------- -----------
Net cash flows from operating activities 1,058 996 2,397
------------ ------------- -----------
Investing activities
Purchase of fixed assets - investment
property - - (4,827)
- equity investments (20) (420) (540)
Sale of fixed assets - investment
property - 81 4,972
- equity investments 1,297 646 922
------------ ------------- -----------
Net cash flows from investing activities 1,277 307 527
------------ ------------- -----------
Financing activities
Dividends paid (1,023) (956) (1,576)
------------ ------------- -----------
Net cash flows from financing activities (1,023) (956) (1,576)
------------ ------------- -----------
Net increase in cash and cash equivalents 1,312 347 1,348
Cash and cash equivalents at 1
January 2013 3,274 1,926 1,926
------------ ------------- -----------
Cash and cash equivalents at 30
June 2013 4,586 2,273 3,274
------------ ------------- -----------
Notes (unaudited)
for the six months ended 30 June 2013
1. Nature of operations and general information
Highcroft Investments PLC ('Highcroft') and its subsidiaries
(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 14 August 2013. The
financial information for the year ended 31 December 2012 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 2012
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 2013. 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
2012.
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 2012.
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 single-let houses flats.
-- Financial assets comprising exchange-traded equity
investments.
First First Full
Half Half Year
2013 2012 2012
GBP'000 GBP'000 GBP'000
Commercial property
Gross income 1,237 1,121 2,308
Profit for the period 917 1,895 2,650
Assets 35,172 32,600 33,369
Liabilities 818 759 856
Residential property
Gross income 21 21 43
Profit for the period 148 101 214
Assets 1,402 1,745 1,266
Liabilities 2 5 2
Financial assets
Gross income 110 120 251
Profitfor the period 589 327 730
Assets 4,877 5,835 6,215
Liabilities 759 826 751
Total
Gross income 1,368 1,262 2,602
Profit for the period 1,654 2,323 3,594
Assets 41,451 40,180 40,850
Liabilities 1,579 1,590 1,609
No tenant represented more than 10% of gross commercial
property income.
4. Income tax (credit)/expense
First First Full
Half Half Year
2013 2012 2012
GBP'000 GBP'000 GBP'000
Current tax:
On revenue profits (88) - (53)
On capital profits 87 14 18
Prior year overprovision (9) - -
-------- -------- --------
(10) 14 (35)
Deferred tax (49) - 20
-------- -------- --------
(59) 14 (15)
-------- -------- --------
The taxation charge has been based on the estimate 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 14 August 2013, the directors declared a property income
dividend of 12.5p per share (2012: 12.0p interim dividend) payable
on 18 October 2013 to shareholders registered on 20 September
2013
The following property income distributions have been paid by
the company:
First First Full
Half Half Year
2013 2012 2012
GBP'000 GBP'000 GBP'000
2012 final: 19.8p per ordinary share
(2011 final: 18.5p) 1,023 956 956
2012 interim: 12.0p per ordinary share - - 620
-------- -------- --------
1,023 956 1,576
-------- -------- --------
6. Earnings per share
The calculation of earnings per share is based on the profit for
the period of GBP1,654,000 (2012: 2,323,000) and on 5,167,240
shares (2012: 5,167,240) which is the weighted average number of
shares in issue during the period ended 30 June 2013 and throughout
the period since 1 January 2012.
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 GBP1,232,000 (2012: GBP1,074,000) has been
calculated.
First Half First Half Full Year
2013 2012 2012
GBP'000 GBP'000 GBP'000
Earnings:
Basic earnings 1,654 2,323 3,594
Adjustments for:
Net valuation gains on investment
property (15) (1,025) 586
Gains and losses on investments (436) (238) (498)
Income tax on gains and losses 29 14 38
----------- ----------- ----------
Adjusted earnings 1,232 1,074 3,720
----------- ----------- ----------
Per share amount:
Basic earnings per share 32.0 p 45.0 p 69.6 p
Adjustments for:
Net valuation gains on investment
property (0.3) p (19.8) p 11.3 p
Gains and losses on investments (8.4) p (4.6) p (9.6) p
Income tax on gains and losses 0.6 p 0.3 p 0.7 p
----------- ----------- ----------
Adjusted earnings per share 23.9 p 20.9 p 72.0 p
----------- ----------- ----------
7. Investment property
First
First Half Half Full Year
2013 2012 2012
GBP'000 GBP'000 GBP'000
Valuation at 1 January 2013 31,609 30,787 30,787
Additions - - 4,827
Disposals - (19) (3,419)
Gain /(loss) on revaluation 15 1,025 (586)
----------- -------- ----------
Valuation at 30 June 2013 31,624 31,793 31,609
----------- -------- ----------
The directors have used an external independent valuation of
properties at 30 June 2013 which has been carried out consistently
with the annual valuation.
8. Equity investments
First Full
First Half Half Year
2013 2012 2012
GBP'000 GBP'000 GBP'000
Valuation at 1 January 2013 5,713 5,598 5,598
Additions 20 420 540
Disposals (1,128) (593) (849)
Surplus on revaluation in excess
of cost 291 225 416
Revaluation decrease below cost (24) (46) (17)
Revaluation increase still below
cost - 6 25
----------- -------- --------
Valuation at 30 June 2013 4,872 5,610 5,713
----------- -------- --------
9. Related party transactions
Kingerlee Holdings Limited owns, through its wholly owned
subsidiaries, 25.4% (2012: 25.4%) of the company's shares and D H
Kingerlee and J C Kingerlee were directors of both the company and
Kingerlee Holdings Limited during the period.
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 (2012:
GBP7,000). The amount owed at 30 June 2013 was nil (2012: nil). All
transactions were undertaken on an arm's length basis.
10. Events after the reporting date
On 3 July 2013 the group purchased a single retail warehouse
unit in Bicester, Oxfordshire let to Wickes Building Supplies
Limited with an unexpired lease term of 17 years and 3 months. The
consideration was GBP5,700,000 net of costs and the current rent is
GBP371,853 per annum which represents 13% of group rental income.
On the same date the company drew a 7 year fixed term,
non-amortising, fixed interest rate loan of GBP2,500,000 from
Svenska Handelsbanken AB (publ).
Statement of directors' responsibilities
The directors confirm that, to the best of their knowledge, this
condensed consolidated set of half-year financial statements has
been prepared in accordance with IAS 34. The half-year management
report includes a fair review of the information required by 4.2.7
and 4.2.8 of the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority, namely:
-- an indication of the important events that have occurred
during the first six months of the financial year ending 31
December 2013 and their impact on the condensed consolidated set of
half-year financial statements and a description of the principal
risks and uncertainties for the remaining six months of the
financial year; and
-- disclosure of material related party transactions in the
first six months of the financial year and any material changes in
the related party transactions described in the last Annual
Report.
A list of current directors is maintained on the Highcroft
Investments PLC website: www.highcroftplc.com.
By order of the board
John Hewitt
Chairman
14 August 2013
This information is provided by RNS
The company news service from the London Stock Exchange
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