21st Apr 2006 16:44
Close High Income Properties PLC21 April 2006 Close High Income Properties PLC ANNUAL REPORT AND FINANCIAL STATEMENTS For the year ended 31 December 2005 HIGHLIGHTS Published Net Asset Value per share has increased for the year to 31 December2005 on the Ordinary and "C" Ordinary Shares by 10.65% and 12.44% respectively. Dividends of 7.75 pence per Ordinary Share and 7.25 pence per "C" Ordinary Sharemaintained. DIRECTORS' REPORT The directors present herewith the Report and Financial Statements of TheCompany and its subsidiaries (together "the Group") for the year ended 31December 2005. The Company The Company is an Isle of Man closed-ended investment company. The Company wasincorporated on 10 June 2002 and its principal activity is that of investment incommercial property. The directors confirm that: • no one property represents more than 15% of the gross assets of the Company; • income receivable from any one tenant, or tenants within the same group, in any one financial year does not exceed 20% of the total rental income of the Company; • at least 90% by value of properties are held in the form of freehold or long leasehold; and • the proportion of the Company's property portfolio which is unoccupied or not producing income or which is in the course of substantial redevelopment or refurbishment does not exceed 25% of the value of the portfolio. Results and dividends The consolidated profit after taxation of the Group for the year ended 31December 2005 amounted to £17,212,497 (31 December 2004: £6,504,020). Interimdividends of 7.75 pence per Ordinary Share (31 December 2004: 5.8125 pence perOrdinary Share) and 7.25 pence per "C" Ordinary Share (31 December 2004: 4.8375pence per "C" Ordinary Share) have been declared and paid leaving £11,012,959 tobe transferred to reserves (2004: £2,812,575). Directors The directors of the company who served during the year and their interests inthe share capital of the Company are shown below: Ordinary Shares at 31 December "C" Ordinary Shares at 31 December 2005 2005Jonathan David Clague - -Geoffrey Paul Raineri Black - -Donald Lake - -Philip Peter Scales - -Mark Glenn Bridgeman Shaw 10,000 - Company Secretary Philip Peter Scales resigned as Company Secretary on 4 January 2006 and wassucceeded by David Parnell. Going concern The directors confirm that the Group continues to be a going concern. Auditors On 30 June 2005 Ernst & Young resigned as auditors and were replaced by Ernst &Young LLC. In accordance with section 12(2) of the Companies Act 1982, Ernst &Young LLC have indicated their willingness to continue in office. Jonathan ClagueChairman18 April 2006 INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF CLOSE HIGH INCOME PROPERTIESPLC We have audited the Group's financial statements for the year ended 31 December2005 which comprise the Consolidated Income Statement, the Consolidated BalanceSheet, the Company Balnace Sheet, the Consolidated Statement of Changes inEquity, the Consolidated Statement of Cashflow, the Ordinary Shares ConsolidatedIncome Statement, the Ordinary Shares Consolidated Balance Sheet, the "C"Ordinary Consolidated Income Statement, the "C" Ordinary Consolidated BalanceSheet and related notes 1 to 19. These financial statements have been preparedon the basis of the accounting policies set out therein. This report is made solely to the Company's members, as a body, pursuant toSection 15 of the Companies Act 1982. Our audit work has been undertaken sothat we might state to the Company's members those matters we are required tostate to them in an audit report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe Company and the Company's members as a body, for our audit work, for thisreport, or for the opinions we have formed. Respective responsibilities of directors and auditors As described in the statement of directors' responsibilities, the Company'sdirectors are responsible for the preparation of the financial statements inaccordance with applicable Isle of Man law and appropriate accounting standards. Our responsibility is to audit the financial statements in accordance withrelevant legal and regulatory requirements and International Standards ofAuditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a trueand fair view and are properly prepared in accordance with the Companies Acts1931 to 2004. We also report if, in our opinion, the Group has not kept properaccounting records, if we have not received all the information and explanationswe require for our audit, or if information specified by law or by the ListingRules regarding directors' remuneration and transactions with the Group is notdisclosed. We read other information contained in the Annual Report and consider whether itis consistent with the audited group financial statements. The other informationcomprises only the Directors' Report, the Chairman's Statement, the PropertyInvestment Advisor's Report and the Corporate Governance Statement. We considerthe implications for our report if we become aware of any apparent misstatementsor material inconsistencies with the group financial statements. Ourresponsibilities do not extend to any other information. Basis of audit opinion We conducted our audit in accordance with International Standards of Auditing(UK and Ireland) issued by the Auditing Practices Board. An audit includesexamination, on a test basis, of evidence relevant to the amounts anddisclosures in the financial statements. It also includes an assessment of thesignificant estimates and judgements made by the directors in the preparation ofthe financial statements, and of whether the accounting policies are appropriateto the Group's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information andexplanations which we considered necessary in order to provide us withsufficient evidence to give reasonable assurance that the financial statementsare free from material misstatement, whether caused by fraud or otherirregularity or error. In forming our opinion we also evaluated the overalladequacy of the presentation of information in the financial statements. Opinion In our opinion the financial statements give a true and fair view, in accordancewith International Financial Reporting Standards, of the state of affairs of theCompany and of the Group as at 31 December 2005 and of the profit for the Groupfor the year then ended and have been properly prepared in accordance with theCompanies Acts 1931 to 2004. Ernst & Young LLCChartered AccountantsIsle of Man21 April 2006 CONSOLIDATED INCOME STATEMENTFor the year ended 31 December 2005 31 December 31 December 2005 2004 £ £INCOMERental income from investment properties 12,275,758 9,328,574Other income - 59,413 12,275,758 9,387,987EXPENDITUREProperty investment advisers fee (2,260,867) (1,334,089)Property expenses (1,156,548) (1,101,054)Goodwill amortisation - (134,204)Other expenses (421,811) (571,702)Impairment of Goodwill (518,360) - (4,357,586) (3,141,049) Net operating profit for the year before 7,918,172 6,246,938finance costs Interest receivable 232,019 331,487Interest payable and similar charges (4,621,506) (3,166,904) (4,389,487) (2,835,417) Gains from investmentsRealised gain on disposal of investment 613,938 94,062propertiesUnrealised gain on revaluation of investment 13,180,846 2,524,915properties 13,794,784 2,618,977 Net profit from ordinary activities before 17,323,469 6,030,498taxation Taxation on profit of ordinary activities (110,972) (203,501)Write back of deferred tax - 677,023 (110,972) 473,522 Net profit from ordinary activities after 17,212,497 6,504,020taxation attributableto members Dividends - paid Ordinary (2,564,699) (1,923,541) C Ordinary (3,634,839) (1,767,904) - proposed - - (6,199,538) (3,691,445) CONSOLIDATED BALANCE SHEETAs at 31 December 2005 31 December 31 December 2005 2004 £ £NON-CURRENT ASSETSFixed Investment properties 174,490,000 154,947,384 INTANGIBLE ASSETSGoodwill - 518,360 - 518,360 CURRENT ASSETSTrade and other receivables 3,418,747 5,302,161Cash and cash equivalents 1,490,286 1,405,567 4,909,033 6,707,728 Total Assets 179,399,033 162,173,472 NON-CURRENT LIABILITIESProvision for Incentive fee 1,537,378 645,000Bank loans 79,479,017 71,957,578 81,016,395 72,602,578 CURRENT LIABILITIESTrade and other payables 4,350,319 6,111,534 4,350,319 6,111,534 Total liabilities 85,366,714 78,714,112 CAPITAL AND RESERVESShare capital - Ordinary 330,928 330,928 - C Ordinary 501,357 501,357Share premium - Ordinary 30,859,127 30,859,127 - C Ordinary 46,751,511 46,751,511Revenue reserves 16,198,037 5,185,078Hedge reserves (608,641) (168,641) 94,032,319 83,459,360 179,399,033 162,173,472 These financial statements were approved by the Board of Directors on 18 April2006 signed on its behalf by: J D Clague P P Scales CONSOLIDATED STATEMENT OF CASHFLOWFor the year ended 31 December 2005 31 December 31 December 2005 2004 £ £Cash flows from operating activitiesNet operating profit before financing 7,918,172 6,246,938Goodwill amortised/impaired 518,360 134,204Amortised borrowing costs 107,937 104,134Decrease/(Increase) in debtors 1,517,625 (2,305,697)(Decrease)/Increase in creditors (747,577) 2,493,637 Cash generated from operating activities 9,314,517 6,673,216 Interest received 232,019 331,487Interest paid (4,628,640) (3,166,904)Taxation paid (299,306) (45,859) Net Cash inflow from operations 4,618,590 3,791,940 Cash flow from investing activitiesPayment for the purchase of properties (10,990,000) (86,971,181)Proceeds from the sale of property 8,685,488 1,868,546Subsequent expenditure (3,443,321) (1,953,803) Net cash outflow from investing activities (5,747,833) (87,056,438) Cash flow from financingProceeds from the issue of "C" Ordinary Shares - 49,483,060Share issue costs paid - (2,882,849)Equity dividends paid (6,199,538) (4,332,620)Proceeds from long term borrowing 7,425,000 42,550,500Issue costs of long term borrowing (11,500) (225,000) Net cash inflow from financing activities 1,213,962 84,593,091 Net increase in cash 84,719 1,328,593Cash arising on purchase of subsidiary - - Cash at 1 January 1,405,567 76,974 Cash at 31 December 1,490,286 1,405,567 CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the year ended 31 December 2005 Share Share Hedge Retained Total Capital Premium Reserve profit £ £ £ £ £As at 1 January 2004 330,928 30,859,127 835,900 1,486,697 33,512,652Net profit for the year - - - 6,504,020 6,504,020Dividends declared and paid - - - (3,691,445) (3,691,445)Adjustment to include leasehold property at - - - 885,806 885,806fair values as at 31/12/03Issue of "C" Ordinary Shares 501,357 49,634,360 - - 50,135,717Share issue costs - (2,882,849) - - (2,882,849)Movement in unrealised gains on revaluation - - (1,004,541) - (1,004,541)of interest rate swaps As at 31 December 2004 832,285 77,610,638 (168,641) 5,185,078 83,459,360 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 revaluation - - (440,000) - (440,000)of interest rate swaps As at 31 December 2005 832,285 77,610,638 (608,641) 16,198,037 94,032,319 COMPANY BALANCE SHEETAs at 31 December 2005 31 December 31 December 2005 2004 £ £FIXED ASSETSFixed asset investments 14,828,451 14,828,447 14,828,451 14,828,447 CURRENT ASSETS Trade and other 66,608,783 68,049,571receivablesCash at bank 527,896 301,678 67,136,679 68,351,249 TOTAL ASSETS 81,965,130 83,179,696 CURRENT LIABILITIES Trade and other payables 131,216 1,425,491 131,216 1,425,491 Capital and ReservesShare Capital - Ordinary 330,928 330,928 - C Ordinary 501,357 501,357Share Premium - Ordinary 30,859,127 30,859,127 - C Ordinary 46,751,511 46,751,511Revenue reserves 3,390,991 3,311,282 81,833,914 81,754,205 81,965,130 83,179,696 This financial statement was approved by the Board of Directors on 18 April 2006and signed on its behalf by: J D Clague P P Scales ORDINARY SHARESCONSOLIDATED INCOME STATEMENTFor the year ended 31 December 2005 31 December 31 December 2005 2004 £ £INCOMERental Income from investment properties 5,461,137 5,426,462 5,461,137 5,426,462EXPENDITUREProperty investment advisers fee (1,495,362) (839,289)Property expenses (507,523) (662,949)Goodwill amortisation - (134,204)Other expenses (208,847) (238,512)Impairment of goodwill (518,360) - (2,730,093) (1,874,954) Net operating profit for the year before 2,731,044 3,551,508finance costs Interest receivable 215,895 144,907Interest payable and similar charges (1,947,748) (1,790,745) (1,731,853) (1,645,838) Gains from investmentsRealised gain on disposal of investment 125,801 94,062propertiesUnrealised gain on revaluation of investment 6,836,458 3,878,831properties 6,962,259 3,972,893 Net profit from ordinary activities before 7,961,450 5,878,563taxation Taxation on profit of ordinary activities (110,972) (194,013)Write back of deferred tax - 677,023 (110,972) 483,010 Net profit from ordinary activities after 7,850,478 6,361,573taxation attributable to members Dividends - paid (2,564,699) (1,923,541) Basic and diluted earnings per Ordinary Share 23.723 19.223(pence) ORDINARY SHARESCONSOLIDATED BALANCE SHEETAs at 31 December 2005 31 December 31 December 2005 2004 £ £NON-CURRENT ASSETSFixed Investment properties 76,805,000 69,646,531 76,805,000 69,646,531INTANGIBLE ASSETSGoodwill - 518,360 - 518,360 CURRENT ASSETSTrade and other receivables 1,667,190 2,502,964Cash and cash equivalents 1,222,053 336,285 2,889,243 2,839,249 Total Assets 79,694,243 73,004,140 NON-CURRENT LIABILITIESProvision for incentive fee 1,537,378 645,000Bank loans 33,018,282 31,046,844 34,555,660 31,691,844 CURRENT LIABILITIESTrade and other payables 1,626,854 2,720,555 1,626,854 2,720,555 Total liabilities 36,182,514 34,412,399 CAPITAL AND RESERVESShare capital 330,928 330,928Share premium 30,859,127 30,859,127Revenue reserves 12,096,312 6,810,535Hedge reserves 225,362 591,151 43,511,729 38,591,741 79,694,243 73,004,140 "C" ORDINARY SHARESCONSOLIDATED INCOME STATEMENTFor the year ended 31 December 2005 31 December 31 December 2005 2004INCOME £ £ Rental Income from investment properties 6,814,621 3,902,112Other income - 59,413 6,814,621 3,961,525EXPENDITUREProperty investment advisers fee (765,505) (494,800)Property expenses (649,025) (438,105)Other expenses (212,963) (333,190) (1,627,493) (1,266,095) Net operating profit for the year before 5,187,128 2,695,430finance costs Interest receivable 16,124 186,580Interest payable and similar charges (2,673,758) (1,376,159) (2,657,634) (1,189,579) Gains from investmentsRealised gain on disposal of investment 488,137 -propertiesUnrealised gain on revaluation of investment 6,344,388 (1,353,916)properties 6,832,525 (1,353,916) Net profit from ordinary activities before 9,362,019 151,935taxation Taxation on profit of ordinary activities - (9,488) - (9,488) Net profit from ordinary activities after 9,362,019 142,447taxation attributable to members Dividends - paid (3,634,839) (1,767,904) Basic and diluted earnings per "C" Ordinary 18.673 0.386Share (pence) "C" ORDINARY SHARESCONSOLIDATED BALANCE SHEETAs at 31 December 2005 31 December 31 December 2005 2004 £ £NON-CURRENT ASSETSFixed Investment properties 97,685,000 85,300,853 97,685,000 85,300,853 CURRENT ASSETSTrade and other receivables 1,767,781 2,882,076Cash and cash equivalents 268,233 1,069,282 2,036,014 3,951,358 Total Assets 99,721,014 89,252,211 NON-CURRENT LIABILITIESBank loans 46,460,735 40,910,734 46,460,735 40,910,734 CURRENT LIABILITIESTrade and other payables 2,739,691 3,473,858 2,739,691 3,473,858 Total liabilities 49,200,426 44,384,592 CAPITAL AND RESERVESShare capital 501,357 501,357Share premium 46,751,511 46,751,511Revenue reserves 4,101,723 (1,625,457)Hedge reserves (834,003) (759,792) 50,520,588 44,867,619 99,721,014 89,252,211 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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