26th Apr 2007 16:37
Close High Income Properties PLC26 April 2007 PRELIMINARY RESULTS For the year ended 31 December 2006 HIGHLIGHTS The consolidated profit after taxation of the Group for the year ended 31December 2006 amounted to £17,850,233 (31 December 2005: £17,212,497). The Company has achieved its annual dividend targets of 7.75 pence per OrdinaryShare, 7.25 pence per "C" Ordinary Share and 6.5 pence per "D" Ordinary Share(on a pro-rata basis since allotment). The Ordinary Share net asset value increased by 10.4% to 145.19 pence. The "C"Ordinary Share net asset value increased by 11.9% to 112.78 pence. The "D"Ordinary Share net asset value increased from its post listing value of 94.25pence to 101.26 pence, an increase of 7.4% to 31 December 2006. CHAIRMAN'S STATEMENT Introduction I am pleased to present the audited results of your Company and its subsidiariesfor the year to 31 December 2006. The year under review has seen a continued strong performance from the Company'sOrdinary and "C" Ordinary Share property portfolios. In addition, the Companysuccessfully raised £26.2 million by way of a "D" Ordinary Share issue which wassubsequently invested in the "D" Ordinary Share property portfolio. The "D"Ordinary Share property portfolio has also performed well since acquisition. All dividend targets have been met during the year and the net asset valuegrowth has exceeded our expectations across each share class. Investment Progress The Ordinary Share and "C" Ordinary Share portfolios are now relatively matureand we are taking advantage of the buoyant market conditions to make selectivedisposals where our active management plans have been completed and where suchassets do not meet our total return targets going forward. Proceeds from suchsales are reinvested in new acquisitions where we can find suitableopportunities. Otherwise they are used to reduce overall debt. A portfolio of office properties was acquired for the "D" Ordinary Shareportfolio in March 2006. This share portfolio retains further cash availablefor additional purchases when we can demonstrate value. Results and dividends The consolidated profit after taxation of the Group for the year ended 31December 2006 amounted to £17,850,233 (31 December 2005: £17,212,497). In the year to 31 December 2006 the Company has declared and paid four interimdividends for a total of 7.75 pence per Ordinary Share, 7.25 pence per "C"Ordinary Share and (on a pro-rata basis since allotment) 6.5 pence per "D"Ordinary Share. This means that the Company has achieved its annual dividendtarget of 7.75 pence per Ordinary Share, 7.25 pence per "C" Ordinary Share and6.5 pence per "D" Ordinary Share (on a pro-rata basis since allotment). In addition to the above dividends, the Ordinary Share net asset value increasedby 10.4% to 145.19 pence. The "C" Ordinary Share net asset value increased by11.9% to 112.78 pence. The "D" Ordinary Share net asset value increased fromits post-listing value of 94.25 pence to 101.26 pence, an increase of 7.4% to 31December 2006. Cancellation of Shares Your Board believes that it is in the interests of all shareholders for it tomanage the discount to net asset values at which the shares trade with a view tominimising this discount as much as possible. In February 2007, your Boardexercised its powers to buy back for cancellation 138,963 Ordinary Shares.Assuming the resolution is passed at the forthcoming Annual General Meeting, theCompany will continue to be active across all three share classes to provideliquidity for shareholders at a reasonable price. Unfortunately, following theintroduction of the Market Abuse Directive, the Company is unable to buy its ownshares during closed periods. This means that for the eight week period beforeresults are published in April and September, the Company is unable to purchaseits own shares. I would like to reiterate that shareholders wishing to sell atany other time should first contact the Property Investment Adviser, CloseInvestments Limited, in the interests of achieving a fair price. Proposed Early Merger of Ordinary Shares and "C" Ordinary Shares Shareholders will be sent with the annual accounts a circular containing noticescalling an Extraordinary General Meeting and Separate Class Meetings of eachshare class to pass resolutions to approve the early merger of the OrdinaryShares and "C" Ordinary Shares. In addition, shareholder approval will besought to make further amendments to the Articles of Association to enable theDirectors to initiate the early conversion of the "D" Ordinary Shares intoOrdinary Shares if the Directors decide that it is appropriate at a future date. If the resolutions set out in the notices of an Extraordinary General Meetingand of Separate Class Meetings which will be attached to the circular arepassed: - Ordinary Shareholders on the register on the Special Dividend RecordDate (being the close of business on 8 June 2007) are expected to receive on 22June 2007 a Special Dividend of 20.08 pence per share; - on conversion, which is expected to become effective on 11 June2007, "C" Ordinary Shareholders will receive, for every 10 "C" Ordinary Sharesheld by them on the Conversion Record Date (close of business on 8 June 2007) 9Ordinary Shares and 1 Deferred Share. This is equivalent to 9 Ordinary Sharesfor every 10 "C" Ordinary Shares held. The Deferred Shares will have minimalrights attaching to them and will be practically worthless; and - the annual target dividend for the New Ordinary Shares (being theOrdinary Shares and the "C" Ordinary Shares following their conversion intoOrdinary Shares) will be 8.5 pence per New Ordinary Share representing anincrease of 10 per cent and 15.51 per cent respectively on the current annualtarget dividends for the Ordinary Shares and "C" Ordinary Shares respectively. The annual target dividend above is for illustrative purposes only, and is basedon the Assumptions which will be contained in the circular and should not beregarded as a forecast. Originally it was intended that the merger of Ordinary Shares and "C" OrdinaryShares would take place using the audited 31 December 2007 net asset values ofthe two share classes. As both the Ordinary Share and "C" Ordinary Shareportfolios are now relatively mature and their net asset values have movedbroadly in tandem over the last two years, the Board has decided, with advicefrom its professional advisers, to bring forward the date of the merger of thetwo share classes in order to seek to improve the overall liquidity of theshares. The Board trusts that this together with the share buyback policy willreduce the discount in the market price to net asset value. Further details on the Conversion process will be made available on publicationof the circular. Future Prospects The Directors and the Property Investment Adviser to the Company continue toreview the entire property portfolios on a regular basis. Selected disposalswill be made when all opportunities to enhance value through active managementhave been exhausted or the property is unlikely to achieve our target overallreturn going forward. Proceeds from disposals will be used to reduce debt untilsuitable acquisitions can be found. We expect future returns to the Company will be as a result of rental growth andactive management rather than any ongoing yield compression within the market. Overall we look forward to building the successful progress made by the Companyto date. Jonathan Clague Chairman 25 April 2007 CONSOLIDATED INCOME STATEMENTFor the year ended 31 December 2006 31 December 31 December 2006 2005 £ £INCOMERental income from investment properties 14,879,334 12,275,758Other income 14,092 - 14,893,426 12,275,758EXPENDITUREProperty investment adviser's fee (2,869,320) (2,260,867)Property expenses (2,033,477) (1,156,548)Other expenses (598,854) (421,811)Impairment of Goodwill - (518,360) (5,501,651) (4,357,586) Net operating profit for the year before 9,391,775 7,918,172finance costs Interest receivable 270,287 232,019Interest payable and similar charges (6,182,172) (4,621,506) (5,911,885) (4,389,487) Gains from investmentsRealised gain on disposal of investment 1,734,440 613,938propertiesUnrealised gain on revaluation of investment 12,514,227 13,180,846properties 14,248,667 13,794,784 Net profit from ordinary activities before 17,728,557 17,323,469taxation Taxation on profit of ordinary activities 121,676 (110,972) 121,676 (110,972) Net profit from ordinary activities after 17,850,233 17,212,497taxation attributableto members Dividends - paid Ordinary (2,564,700) (2,564,699) "C" Ordinary (3,634,839) (3,634,839) "D" Ordinary (690,555) - (6,890,094) (6,199,538) CONSOLIDATED BALANCE SHEETAs at 31 December 2006 31 December 31 December 2006 2005 £ £NON-CURRENT ASSETSFixed Investment properties 225,985,000 174,490,000 225,985,000 174,490,000 CURRENT ASSETSTrade and other receivables 5,320,184 3,418,747Cash and cash equivalents 7,904,825 1,490,286 13,225,009 4,909,033Total Assets 239,210,009 179,399,033 NON-CURRENT LIABILITIESProvision for Incentive fee 2,642,125 1,537,378Bank loans 101,221,452 79,479,017 103,863,577 81,016,395 CURRENT LIABILITIESTrade and other payables 4,155,796 4,350,321 4,155,796 4,350,321Total liabilities 108,019,373 85,366,716 CAPITAL AND RESERVESShare capital - Ordinary 330,928 330,928 - "C" Ordinary 501,357 501,357 - "D" Ordinary 262,686 -Share premium - Ordinary - 30,859,127 - "C" Ordinary - 46,751,511 - "D" Ordinary 24,475,852 -Capital reserve - Ordinary 30,859,127 - - "C" Ordinary 46,751,511 -Revenue reserves 27,158,174 16,198,035Hedge reserves 851,001 (608,641) 131,190,636 94,032,017 239,210,009 179,399,033 These financial statements were approved by the Board of Directors on 25 April2007 and signed on its behalf by: J D Clague P P Scales CONSOLIDATED STATEMENT OF CASHFLOWFor the year ended 31 December 2006 31 December 31 December 2006 2005 £ £Cash flows from operating activitiesNet operating profit before financing 9,391,775 7,918,172Goodwill amortised/impaired - 518,360Amortised borrowing costs 158,278 107,937Decrease/(Increase) in debtors (1,116,405) 1,517,625Increase/(Decrease) in creditors 1,539,050 (747,577) Cash generated from operating activities 10,026,698 9,314,517 Interest received 270,287 232,019Interest paid (5,867,809) (4,628,640)Taxation paid (30,466) (299,306) Net Cash inflow from operations 4,398,710 4,618,590 Cash flow from investing activitiesPayment for the purchase of properties and (49,031,545) (14,433,321)subsequent costsProceeds from the sale of property 11,752,973 8,685,488Property deposit paid (138,200) - Net cash outflow from investing activities (37,416,772) (5,747,833) Cash flow from financingProceeds from the issue of "D" Ordinary Shares 26,268,589 -Share issue costs paid (1,530,051) -Equity dividends paid (6,890,094) (6,199,538)Proceeds from long term borrowing 21,875,000 7,425,000Issue costs of long term borrowing (290,843) (11,500) Net cash inflow from financing activities 39,432,601 1,213,962 Net increase in cash 6,414,539 84,719 Cash at 1 January 1,490,286 1,405,567 Cash at 31 December 7,904,825 1,490,286 CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the year ended 31 December 2006 Share Share Premium Capital Hedge Reserve Retained Total Capital profit Reserve £ £ £ £ £ £As at 1 January 2005 832,285 77,610,638 - (168,641) 5,185,076 83,459,358 Net profit for the year - - - - 17,212,497 17,212,497Dividends declared and paid - - - - (6,199,538) (6,199,538)Movement in unrealised gains on - - - (440,000) - (440,000)revaluation of interest rateswaps As at 31 December 2005 832,285 77,610,638 - (608,641) 16,198,035 94,032,317 Calculation of share premium - (77,610,638) 77,610,638Net profit for the year - - - - 17,850,233 17,850,233Dividends declared and paid - - - - (6,890,094) (6,890,094)Movement in unrealised gains on - - - 1,459,642 - 1,459,642revaluation of interest rateswapsIssue of "D" Ordinary Shares 262,686 26,005,903 - - - 26,268,589Issue costs - (1,530,051) - - - (1,530,051) As at 31 December 2006 1,094,971 24,475,853 77,610,638 851,001 27,158,174 131,190,636 In accordance with the Articles of Association and by order of the High Court ofJustice of the Isle of Man Chancery Division pursuant to Section 56 of theCompanies Act 1931, the Share Capital of the Company was reduced by £77,610,638of the amount standing to the credit of the share premium account andre-designated as capital reserve, a reserve capable of distribution to themembers of the Company. COMPANY BALANCE SHEETAs at 31 December 2006 Notes 31 December 31 December 2006 2005 £ £FIXED ASSETSFixed asset investments 16 18,403,632 14,828,451 18,403,632 14,828,451 CURRENT ASSETSTrade and other 10 97,184,477 66,608,783receivablesCash at bank 5,025,453 527,896 102,209,930 67,136,679 TOTAL ASSETS 120,613,562 81,965,130 CURRENT LIABILITIES Trade and other payables 13 91,257 131,216 91,257 131,216 Capital and ReservesShare Capital - Ordinary 14 330,928 330,928 - "C" Ordinary 14 501,357 501,357 - D Ordinary 14 262,686 -Share Premium - Ordinary - 30,859,127 - "C" Ordinary - 46,751,511 - D Ordinary 24,475,852 -Capital Reserve - Ordinary 30,859,127 - - "C" Ordinary 46,751,511 -Revenue reserves 15 17,340,844 3,390,991 120,522,305 81,833,914 120,613,562 81,965,130 This financial statement was approved by the Board of Directors on 25 April 2007and signed on its behalf by: J D Clague P P Scales ORDINARY SHARESCONSOLIDATED INCOME STATEMENTFor the year ended 31 December 2006 31 December 31 December 2006 2005 £ £INCOMERental Income from investment properties 5,469,106 5,461,137 5,469,106 5,461,137EXPENDITUREProperty investment adviser's fee (1,561,147) (1,495,362)Property expenses (861,661) (507,524)Other expenses (273,099) (208,847)Impairment of goodwill - (518,360) (2,695,907) (2,730,093) Net operating profit for the year before 2,773,199 2,731,044finance costs Interest receivable 255,469 215,895Interest payable and similar charges (2,019,831) (1,947,748) (1,764,362) (1,731,853) Gains from investmentsRealised gain on disposal of investment 445,879 125,801propertiesUnrealised gain on revaluation of investment 5,213,007 6,836,458properties 5,658,886 6,962,259 Net profit from ordinary activities before 6,667,723 7,961,450taxation Taxation on profit from ordinary activities 112,188 (110,972) 112,188 (110,972) Net profit from ordinary activities after 6,799,911 7,850,478taxation attributable to members Dividends - paid (2,564,700) (2,564,699) Basic and diluted earnings per Ordinary Share 20.55 23.72(pence) ORDINARY SHARESCONSOLIDATED BALANCE SHEETAs at 31 December 2006 31 December 31 December 2006 2005 £ £NON-CURRENT ASSETSFixed Investment properties 84,275,000 76,805,000 84,275,000 76,805,000CURRENT ASSETSTrade and other receivables 2,375,031 1,667,190Cash and cash equivalents 621,649 1,222,053 2,996,680 2,889,243 Total Assets 87,271,680 79,694,243 NON-CURRENT LIABILITIESProvision for incentive fee 2,422,549 1,537,378Bank loans 35,067,495 33,018,282 37,490,044 34,555,660 CURRENT LIABILITIESTrade and other payables 1,735,315 1,626,854 1,735,315 1,626,854 Total liabilities 39,225,359 36,182,514 CAPITAL AND RESERVESShare capital 330,928 330,928Share premium - 30,859,127Capital reserve 30,859,127 -Revenue reserves 16,311,523 12,096,312Hedge reserves 544,743 225,362 48,046,321 43,511,729 87,271,680 79,694,243 "C" ORDINARY SHARESCONSOLIDATED INCOME STATEMENTFor the year ended 31 December 2006 31 December 31 December 2006 2005INCOME £ £ Rental Income from investment properties 6,685,175 6,814,621 6,685,175 6,814,621EXPENDITUREProperty investment adviser's fee (1,073,300) (765,505)Property expenses (835,912) (649,025)Other expenses (204,123) (212,963) (2,113,335) (1,627,493) Net operating profit for the year before 4,571,840 5,187,128finance costs Interest receivable 154,723 16,124Interest payable and similar charges (3,092,273) (2,673,758) (2,937,550) (2,657,634) Gains from investmentsRealised gain on disposal of investment 1,288,561 488,137propertiesUnrealised gain on revaluation of investment 5,858,639 6,344,388properties 7,147,200 6,832,525 Net profit from ordinary activities before 8,781,490 9,362,019taxation Taxation on profit of ordinary activities 9,488 - 9,488 - Net profit from ordinary activities after 8,790,978 9,362,019taxation attributable to members Dividends - paid (3,634,839) (3,634,839) Basic and diluted earnings per "C" Ordinary 17.53 18.67Share (pence) "C" ORDINARY SHARESCONSOLIDATED BALANCE SHEETAs at 31 December 2006 31 December 31 December 2006 2005 £ £NON-CURRENT ASSETSFixed Investment properties 99,100,000 97,685,000 99,100,000 97,685,000 CURRENT ASSETSTrade and other receivables 2,102,605 1,767,781Cash and cash equivalents 3,883,285 268,233 5,985,890 2,036,014 Total Assets 105,085,890 99,721,014 NON-CURRENT LIABILITIESProvision for incentive fee 219,576 -Bank loans 46,504,446 46,460,735 46,724,022 46,460,735 CURRENT LIABILITIESTrade and other payables 1,818,381 2,739,691 1,818,381 2,739,691 Total liabilities 48,542,403 49,200,426 CAPITAL AND RESERVESShare capital 501,357 501,357Share premium - 46,751,511Capital reserve 46,751,511 -Revenue reserves 9,257,862 4,101,723Hedge reserves 32,757 (834,003) 56,543,487 50,520,588 105,085,890 99,721,014 "D" ORDINARY SHARESCONSOLIDATED INCOME STATEMENTFor the period ended 31 December 2006 31 December 2006INCOME £ Rental Income from investment properties 2,725,053Other income 14,092 2,739,145EXPENDITUREProperty investment adviser's fee (234,873)Property expenses (335,904)Other expenses (121,632) (692,409) Net operating profit for the year before 2,046,736finance costs Interest receivable 74,995Interest payable and similar charges (1,284,968) (1,209,973)Gains from investmentsRealised gain on disposal of investment -propertiesUnrealised gain on revaluation of investment 1,442,581properties 1,442,581 Net profit from ordinary activities before 2,279,344taxation Taxation on profit of ordinary activities - - Net profit from ordinary activities after 2,279,344taxation attributable to members Dividends - paid (690,555) Basic and diluted earnings per "D" Ordinary 13.34Share (pence) "D" ORDINARY SHARESCONSOLIDATED BALANCE SHEETAs at 31 December 2006 31 December 2006 £NON-CURRENT ASSETSFixed Investment properties 42,610,000 42,610,000 CURRENT ASSETSTrade and other receivables 842,548Cash and cash equivalents 3,399,891 4,242,439 Total Assets 46,852,439 NON-CURRENT LIABILITIESBank loans 19,649,511 19,649,511CURRENT LIABILITIESTrade and other payables 602,100 602,100 Total liabilities 20,251,611 CAPITAL AND RESERVESShare capital 262,686Share premium 24,475,852Revenue reserves 1,588,789Hedge reserves 273,501 26,600,828 46,852,439 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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