23rd Mar 2006 07:01
Highcroft Investments PLC23 March 2006 Highcroft Investments PLC Preliminary results for the year ended 31 December 2005 Highlights •Gross property income up 15.0% to £1,917,000 •Operating profit after tax (excluding capital gains and losses) up 12.8% to £1,366,000 •Basic earnings per share (including capital gains and losses) up 81.1% to 102.3p •Adjusted earnings per share (excluding capital gains and losses) up 12.8% to 26.4p •Net asset value per share up 13.5% to 758p •Total dividends up 8.1% to 12.65p per share •Final dividend of 8.30p payable on 7 June 2006 •Annual General Meeting on Wednesday 24 May 2006 "Net asset value has risen 13.5% to 758p and we have increased dividends inrespect of 2005 by 8.1% over 2004. We look forward to the challenges of 2006." -Gavin Kingerlee, Chairman Enquiries:+---------------------------------------+---------------------------------------+|Gavin Kingerlee, Chairman | 01865 840 023||Highcroft Investments plc | || | |+---------------------------------------+---------------------------------------+|Freddy Crossley | 020 7953 2000||Charles Stanley Securities | |+---------------------------------------+---------------------------------------+ Chairman's Statement Financial results - operating activities Operating profit before taxation (excluding capital gains and losses) increasedto £1,825,000 from £1,624,000 in 2004, an increase of 12.4%. Gross income was£2,256,000 as compared with £1,952,000 in 2004. Gross property income rose from£1,667,000 to £1,917,000, an increase of 15.0%, driven by the first full year ofincome from the recent investments at Cirencester and Southampton and also by arelatively large number of rent reviews. Financial results - capital activities During 2005, there were no investments in property assets (2004 £4,089,000) and£958,000 was invested in equities (2004 £1,016,000). The net proceeds fromproperty disposals during the year amounted to £461,000 (2004 £246,000) whileequity disposals generated £675,000 (2004 £1,249,000). The net gains on these disposals amounted to £39,000 (2004 £48,000), comprising£8,000 of gains on property disposals and £31,000 of gains on disposal ofinvestments. The net gain after taxation of £32,000 (2004 £42,000) wastransferred to realised capital reserve. Property The property valuation showed a rise from £30.5 million to £33.5 million. Thoseproperties that remained in the portfolio throughout the period show a rise invalue equivalent to 11.3% (2004 5.8%). There are 20 (2004 20) commercialproperties in the portfolio with an average value of £1,548,000 (2004£1,376,000). There are 13 residential properties in the portfolio (2004 15). Theaverage value of these residential investments is £192,000 (2004 £200,000). In January 2006 we purchased for £2,825,000 a property located in Stainescomprising three retail units, let to Jessops, Millets and a local pet store,and with office accommodation above, let to Manpower plc. The current income is£153,500 per annum. There is also planning permission, obtained by the previousowner, to extend the property to include nine residential units. We have begunto pursue this opportunity and look forward to the results that it will bring. Listed investments 2005 was a very good year for equity markets and the All-Share index was up from2,410 to 2,847 a rise of 18.1%. Those listed investments that remained in ourportfolio throughout the period showed a rise in value of 18.3% (2004 12.0%). Wehave regularly reviewed the portfolio in order to make prudent and tax efficientdisposals while protecting our dividend income stream. Summary The property portfolio valuation has risen 11.3%, on a like for like basis,having realised £461,000 in sales. Our equity portfolio valuation has risen by18.3%, on a like for like basis, having invested net cash of £283,000. Inaddition we have generated net income after tax of £1,366,000. As a result weare pleased to report that the net asset value per share has risen by 13.5% to758p (2004 668p). This is after taking into account, for the first time underInternational Financial Reporting Standards, the deferred taxation related toour revaluation surpluses. Total shareholders funds were £39,164,000 (2004£34,497,000). The continuing increase in income and operating profits enables us to meet ourtarget of an increase in dividends well above the rate of inflation. Proposeddividends for 2005 are up 8.1% on 2004. Basic earnings per share, which takeaccount of capital activities, are up 81.1% to 102.3p per share and adjustedearnings per share, adjusted to take out the effect of capital activities, areup 12.8% to 26.4p per share. Current trading and prospects We have already made the acquisition in Staines noted above but will continue tolook for good quality property acquisitions which fit well with our propertyportfolio, helping us to meet our broad strategic objectives. We have completedthe sale of a small commercial property, in early 2006, and expect to dispose ofour remaining commercial property valued at less than half million pounds in thenear future. We also have a vacant residential property which is being marketedthrough local agents. Our position on the listed investments portfolio is likelyto remain neutral but we continue to try to take advantage of opportunities andthe progress of the market so that the combined portfolio has a good balance ofrisk and reward. The property market is strong, but perhaps likely to show slower progress thanwe have seen in the last few years, while equity markets look to have apromising year ahead. The business has a solid balance sheet and we are wellplaced to pursue our strategy successfully. I look forward to meeting with shareholders at our AGM on 24 May 2006 for whatwill be my last AGM as chairman as I shall be retiring from the board in October2006. I am delighted to say that the board has voted John Hewitt to be mysuccessor following my retirement and I feel sure that shareholders will be veryhappy with this appointment. G J KINGERLEEChairman 22 March 2006 Consolidated income statementfor the year ended 31 December 2005 Note 2005 2004 £'000 £'000 Gross rental income 1,917 1,667Property operating expenses (125) (127)Net rental income 1,792 1,540 Realised gains on investment property 44 9Realised losses on investment property (36) -Net gain on disposal of investment 8 9property Valuation gains on investment property 3,464 1,545Valuation losses on investment property (65) (310)Net valuation gains on investment 3,399 1,235property Dividend income 339 285Gains on investments 1,748 1,042Losses on investments (142) (139)Net investment income 1,945 1,188 Administration expenses (222) (205) Net operating profit before net financing 6,922 3,767costs Financial income 8 21Financial expenses (92) (17)Net financing costs (84) 4 Profit before tax 6,838 3,771 Income tax expense 1 (1,551) (852) Profit for the year 5,287 2,919 Basic earnings per share 3 102.3p 56.5p All operations are continuing. Balance Sheetat 31 December 2005 The Group Note 2005 2004 £'000 £'000AssetsNon-current assetsInvestment property 4 33,461 30,523Equity investments 5 10,620 8,731Total non-current assets 44,081 39,254 Current assetsTrade and other receivables 301 369Cash and cash equivalents 725 -Total current assets 1,026 369 Total assets 45,107 39,623 LiabilitiesCurrent liabilitiesBank overdraft - 146Interest-bearing loans and 71 69borrowingsCurrent corporation tax 358 278Trade and other payables 725 679Total current liabilities 1,154 1,172 Non-current liabilitiesInterest-bearing loans and 1,429 1,499borrowingsDeferred tax liabilities 3,360 2,455Total non-current liabilities 4,789 3,954 Total liabilities 5,943 5,126 Net assets 39,164 34,497 EquityIssued share capital 1,292 1,292Revaluation reserve - property 8,734 6,322- other 3,902 2,933Capital redemption reserve 95 95Realised capital reserve 15,306 14,766Retained earnings 9,835 9,089Total equity 39,164 34,497 Consolidated statement of cash flowsfor the year ended 31 December 2005 2005 2004 £'000 £'000 Operating activitiesProfit for the period 5,287 2,919Adjustments for:Net valuation gains on investment (3,399) (1,235)propertyProfit on disposal of investment (8) (9)propertyGains on investments (1,606) (903)Finance income (8) (4)Finance expense 92 21Income tax expense 1,551 852Operating cash flow before changes in 1,909 1,641working capital and provisions Decrease in trade and other receivables 68 163Increase in trade and other payables 46 58Cash generated from operations 2,023 1,862 Finance income 8 4Finance expenses (92) (15)Income taxes paid (564) (451)Cash flows from operating activities 1,375 1,400 Investing activitiesPurchase of non-current assets - - (4,089)investment property- equity investments (958) (1,016)Sale of non-current assets - investment 469 246property- equity investments 675 1,249Cash flows from investing activities 186 (3,610) Financing activitiesNew medium term loan - 1,568Loan repayments (70) -Dividends paid (620) (583)Cash flows from financing activities (690) 985 Net increase in cash and cash 871 (1,225)equivalentsCash and cash equivalents at 1 January (146) 1,0792005Cash and cash equivalents at 31 December 725 (146)2005 Notesfor the year ended 31 December 2005 1 Taxation 2005 2004 £'000 £'000Current tax:On revenue profits 461 414On capital profits 8 6Prior year overprovision (1) (1)Deferred tax 1,083 433 1,551 852 The tax assessed for the period differs from the standard rate of corporationtax in the UK of 30% (2004 30%). The differences are explained as follows: 2005 2004 £'000 £'000Profit before tax 6,838 3,771Profit before tax multiplied by standardrate of corporation tax in the UK of 30 %( 2,051 1,1312004 30%).Effect of:Income/expenses not chargeable ordeductible for tax purposes (87) (72)Chargeable gains less than accounting (412) (206)profitAdjustments to tax charge in respect of (1) (1)prior periodsIncome tax expense 1,551 852 2 Dividends On 22 March 2006, the directors declared an ordinary interim dividend of 8.30pper share (2004 7.65p) payable on 7 June 2006 to shareholders registered at 5May 2006. The following dividends have been paid by the group. 2005 2004 £'000 £'000 2004 Final: 7.65p per ordinary share (2004 395 3747.25p)2005 Interim: 4.35p per ordinary share 225 209(2004 4.05p) 620 583 3 Earnings per share The calculation of earnings per share is based on the profit for the period of£5,287,000 (2004 £2,919,000) and on 5,167,240 shares (2004 5,167,240) which isthe weighted average number of shares in issue during the period ended 31December 2005 and throughout the period since 1 January 2004. In order to draw attention to the impact of valuation gains and losses which areincluded in the income statement but not available for distribution under thecompany's articles of association, an adjusted earnings per share based on theprofit available for distribution of £1,366,000 (2004 £1,211,000) has beencalculated. 2005 2004 £'000 £'000Earnings:Basic earnings 5,287 2,919Adjustments for:Net valuation gains on investment property (3,407) (1,244)Gains and losses on investments (1,606) (903)Income tax on gains and losses 1,092 439Adjusted earnings 1,366 1,211 Per share amount:Basic earnings per share 102.3p 56.5pAdjustments for:Net valuation gains on investment property (65.9)p (24.1)pGains and losses on investments (31.1)p (17.5)pIncome tax on gains and losses 21.1p 8.5pAdjusted earnings per share 26.4p 23.4p 4 Investment property 2005 2004 Valuation at 1 January 2005 30,523 25,436Additions - 4,089Disposals (461) (237)Surplus on revaluation 3,399 1,235Valuation at 31 December 2005 33,461 30,523 In accordance with IAS 40, Jones Lang LaSalle have valued freehold and leaseholdproperties. The valuation has been conducted by them as external valuers and hasbeen prepared as at 31 December 2005, in accordance with the Appraisal &Valuation Standards of the Royal Institution of Chartered Surveyors, on thebasis of market value. This value has been incorporated into the financialstatements. 5 Equity investments 2005 2004 £'000 £'000Valuation at 1 January 2005 8,731 8,062Additions 958 1,016Disposals (643) (1,211)Surplus on revaluation 1,574 864Valuation at 31 December 2005 10,620 8,731 6 Accounting conventionThe preliminary announcement has been prepared in accordance with applicableaccounting standards as stated in the interim financial statements for the halfyear ended 30 June 2005. 7 Annual General MeetingThe Annual General Meeting will be held on 24 May 2006. 8 Final ordinary dividendA final ordinary dividend of 8.30p per share will be paid on 7 June 2006 toshareholders registered at the close of business on 5 May 2006. 9 LimitationThe above does not constitute full accounts within the meaning of section 240 ofthe Companies Act 1985. It is an extract from the full accounts for the yearended 31 December 2005 on which the auditors have expressed an unqualifiedopinion. The accounts will be posted to shareholders on or before 25 April 2006and subsequently filed at Companies House. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
HCFT.L