Final Results
Highcroft Investments PLC
24 March 2005
Highcroft Investments PLC
Preliminary results for the year ended 31 December 2004
Highlights
• Gross property income up 6.2% to £1,667,000
• Operating profit up 4.8% to £1,624,000
• Basic earnings per share down 3.6% to 24.2p
• Adjusted earnings per share up 6.3% to 23.5p
• Two attractive additions to the property portfolio
• Net asset value per share up 7.8% to 707p, another new high
• Total dividends up 6.3% to 11.7p per share
• Final dividend of 7.65p payable on 8 June 2005
• Annual General Meeting on Wednesday 25 May 2005
Mr Gavin Kingerlee, Chairman of Highcroft Investments plc, commented:
'Our trading performance in 2004 has improved further by comparison with 2003.
Dividends for 2004 are up 6.3%, while net asset value has risen 7.8% to 707p;
this is a continuation of a pleasing trend and we look forward to further
success in 2005.'
Enquiries:
Gavin Kingerlee, Chairman 01865 840 023
Highcroft Investments plc
Freddy Crossley 020 7739 8200
Charles Stanley & Co Ltd
Financial results - operating activities
Operating profit rose to £1,624,000 from £1,549,000 in 2003, an increase of
4.8%. Total income was £1,829,000 as compared with £1,758,000 in 2003. Net
property income rose from £1,457,000 to £1,540,000, an increase of 5.7%.
Gross rents receivable were up 6.2% on 2003 reflecting the impact of the new
investments and of rent reviews in both 2003 and 2004. Property income
represented 84.2% of total income compared with 82.9% in 2003. Residential
repair costs were relatively high in 2004 and so property expenses rose from
£112,000 in 2003 to £127,000 in 2004.
Financial results - capital activities
As we anticipated last year, the cash reserves of £1,079,000 which were held on
31 December 2003 were used on fresh property acquisitions and on 31 December
2004 the group had a medium term loan of £1,568,000 plus a short term overdraft
of £146,000. Net cash inflow from operations was at £1,851,000 in 2004 (2003
£1,977,000), because of the lower decrease in debtors for 2004, and the higher
capital expenditure and financial investment in 2004 led to a decrease in cash
of £1,225,000.
Net assets increased by 7.8% during the year from £33.9 million to £36.6
million. The increase was a steady one throughout the year and stemmed from
both our property and listed investment portfolios.
During the course of the year, the group invested £4,089,000 in property assets
(2003 £1,596,000) and invested £1,016,000 (2003 £624,000) in stock markets. The
net proceeds from property disposals during the year amounted to £246,000 (2003
£660,000) while investment disposals raised £1,249,000 (2003 £1,334,000).
The net gains on these disposals amounted to £48,000 (2003 £158,000), comprising
£9,000 of gains on property disposals and £39,000 of gains on disposal of
investments. The net gain after taxation of £42,000 (2003 £158,000) was
transferred to realised capital reserve.
Property
The property valuation showed a rise from £25.4 million to £30.5 million. Those
properties that remained in the portfolio throughout the period show a rise in
value equivalent to 5.8% (2003 6.1%). There are 20 (2003 18) commercial
properties in the portfolio with an average value of £1,376,000 (2003
£1,244,000). There are 14 residential properties in the portfolio (2003 15).
The average value of these residential investments is £215,000 (2003 £203,000).
Listed investments
2004 was again a better year for equity markets and the FTSE 100 was up from
4,477 to 4,814 a rise of 7.5%. Those listed investments that remained in our
portfolio throughout the period showed a rise in value of 12.0% (2003 12.8%
fall). We continued to review the portfolio in order to make tax efficient
disposals while protecting our dividend income stream.
Summary
Our equity portfolio valuation has risen by 8.3%, having realised net cash of
£233,000. The property portfolio valuation has risen 20.0%, having invested a
net £3,852,000. As a result we are pleased to report that the net asset value
per share has risen by 7.8% to 707p (2003 656p), a record level. Total
shareholders funds were £36,557,000 (2003 £33,901,000).
The increase in income and operating profits enables us to propose an increase
in dividends which is well above the rate of inflation. Proposed dividends for
2004 are up 6.3% on 2003, with dividend cover very much the same. Basic
earnings per share, which take account of asset disposals, are down 3.6% to
24.2p per share and adjusted earnings per share, adjusted to take out the effect
of asset disposals, are up 6.3% to 23.5p per share.
Current trading and prospects
In 2005, we are continuing to look for good quality property acquisitions which
will fit well with our present property portfolio, helping us to secure the
group's long term income and capital prospects. In the early part of 2005, a
vacant residential property has been sold. Our position on the listed
investments portfolio is likely to be neutral but we continue to try to take
advantage of opportunities and the progress of the market so that the combined
portfolio has a good balance of risk and reward.
While both property and listed investment markets are never entirely
predictable, the business remains well placed to pursue its strategies and has a
solid balance sheet. We look forward to continuing success in 2005 and to
meeting with shareholders at our AGM on 25 May 2005.
G J KINGERLEE
Chairman 23 March 2005
Group Profit and Loss Account
for the year ended 31 December 2004
2004 2003
£'000 £'000
Income from fixed asset investments
and other interest receivable 1,829 1,758
Administrative expenses 205 209
Operating profit 1,624 1,549
Gains on disposals of assets 1 48 158
Profit on ordinary activities before taxation 1,672 1,707
Taxation 2 419 409
Profit for the financial year 1,253 1,298
Gain on disposals of assets after taxation transferred to
realised capital reserve 1 42 158
Profit available for distribution 1,211 1,140
Dividends 3 604 568
Profit retained 607 572
Earnings per share: 4
Basic 24.2p 25.1p
Adjusted 23.5p 22.1p
All operations are continuing.
Balance Sheet
at 31 December 2004
The Group
Note 2004 2003
£'000 £'000
Fixed assets
Tangible assets 5 30,523 25,436
Investments 6 8,731 8,062
39,254 33,498
Current assets
Debtors 369 532
Cash at bank - 1,079
369 1,611
Creditors
Amounts falling due within
one year 1,567 1,208
Net current (liabilities)/assets (1,198) 403
Total assets less total liabilities 38,056 33,901
Creditors
Amounts falling due after more than
one year 1,499 -
Net assets 36,557 33,901
Capital and reserves
Called up share capital 1,292 1,292
Revaluation reserve - property 7,538 6,560
- other 4,172 3,542
Capital redemption reserve 95 95
Realised capital reserve 14,766 14,325
Profit and loss account 8,694 8,087
Shareholders' funds - equity 36,557 33,901
Group Cash Flow Statement
for the year ended 31 December 2004
Note 2004 2003
£'000 £'000 £'000 £'000
Net cash inflow from operating activities 7 1,851 1,977
Taxation (451) (530)
Capital expenditure and financial investment
Purchase of fixed assets - properties (4,089) (1,596)
- listed (1,016) (624)
investments
Sale of fixed assets - properties 246 660
- listed 1,249 1,334
investments
Net cash outflow from capital expenditure and
financial investment (3,610) (226)
Equity dividends paid (583) (537)
Cash (outflow)/inflow before financing 8 (2,793) 684
Financing
New medium term loan 1,568 -
(Decrease)/increase in cash 8 (1,225) 684
Total Recognised Gains and Losses and Historical Cost Profits and Losses
for the year ended 31 December 2004
Statement of total recognised gains and losses
2004 2003
£'000 £'000
Profit for the financial year 1,253 1,298
Unrealised surplus on revaluation of investment properties 1,235 1,320
Unrealised surplus on revaluation of listed and unlisted investments 864 996
Tax on valuation surplus arising in prior years attributable to properties
sold in year (92) -
Total recognised gains and losses for the year 3,260 3,614
Note of historical cost profits and losses
2004 2003
£'000 £'000
Profit on ordinary activities before taxation 1,672 1,707
Realisation of revaluation gains of previous years
-attributable to investment properties 257 202
-attributable to listed and unlisted investments 234 (445)
Historical cost profit on ordinary activities before taxation 2,163 1,464
Historical cost profits retained 1,140 487
Notes
for the year ended 31 December 2004
1 Gains on disposals of assets
2004 2003
Gains on disposals of assets arising on sales of: £'000 £'000
Properties 9 82
Investments 39 76
Net gain on disposals of assets 48 158
Corporation tax on disposals of assets 6 -
Net gain on disposals of assets after taxation 42 158
2 Taxation
The taxation charge at 30% (2003 30%) is based on the profit for the year and is
made up as follows:
2004 2003
£'000 £'000
Corporation tax on operating profit 414 399
Corporation tax on disposals of assets 6 -
Prior year overprovision (1) 10
419 409
3 Dividends
2004 2003
Ordinary shares £'000 £'000
Interim dividend of 4.05p per share paid (2003 3.75p) 209 194
Proposed final dividend of 7.65p per share (2003 7.25p) 395 374
604 568
4 Earnings per share
The calculation of earnings per share is based on the profit for the
financial year of £1,253,000 (2003 £1,298,000) and on 5,167,240 (2003 5,167,240)
ordinary shares of 25p each which is the weighted average number of shares in
issue during the year ended 31 December 2004.
In view of the uneven nature of capital disposals, an adjusted earnings per
share has also been presented, based on the profit available for distribution of
£1,212,000 (2003 £1,140,000). The effect of the adjustment is as follows:
2004 2003
Earnings Weighted Per share Earnings Weighted Per share
average amount pence average amount pence
number of number of
shares shares
£'000 £'000
Basic earnings per share 1,253 5,167,240 24.2 1,298 5,167,240 25.1
Adjustment for gains on
disposals of assets (42) - (0.7) (158) - (3.0)
Adjusted earnings per share 1,211 5,167,240 23.5 1,140 5,167,240 22.1
5 Tangible assets
Land and buildings
(Investment properties)
Total Freeholds Long
leaseholds
£'000 £'000 £'000
Valuation at 1 January 2004 25,436 23,081 2,355
Additions 4,089 4,089 -
Disposals (237) (237) -
Surplus on revaluation 1,235 1,080 155
Valuation at 31 December 2004 30,523 28,013 2,510
6 Investments
Total Listed Unlisted
£'000 £'000 £'000
Valuation at 1 January 2004 8,062 8,058 4
Additions at cost 1,016 1,016 -
Disposals (1,211) (1,211) -
Surplus on revaluation 864 864 -
Valuation at 31 December 2004 8,731 8,727 4
7 Reconciliation of operating profit to net cash flow from operating activities
2004 2003
£'000 £'000
Operating profit 1,624 1,549
Decrease in debtors 163 384
Increase in creditors 64 44
Net cash inflow from operating activities 1,851 1,977
8 Analysis of changes in net funds/ (debt)
1 January Cash flow 31 December
2004 2004
£'000 £'000 £'000
Cash at bank 1,079 (1,079) -
Overdraft - (146) (146)
1,079 (1,225) (146)
Debt:
Loans falling due within one year - (69) (69)
Loans falling due after more than one year - (1,499) (1,499)
Total 1,079 (2,793) (1,714)
9 Accounting convention
The preliminary announcement has been prepared in accordance with applicable
accounting standards as stated in the financial statements for the year ended 31
December 2004 and under the historical cost convention except for the
revaluation of fixed assets. The principal accounting policies of the group
have remained unchanged from the previous year.
10 Annual General Meeting
The Annual General Meeting will be held on 25 May 2005.
11 Final ordinary dividend
A final ordinary dividend of 7.65p per share will be paid on 8 June 2005 to
shareholders registered at the close of business on 6 May 2005.
12 Limitation
The above does not constitute full accounts within the meaning of section
240 of the Companies Act 1985. It is an extract from the full accounts for the
year ended 31 December 2004 on which the auditors have expressed an unqualified
opinion. The accounts will be posted to shareholders on or before 26 April 2005
and subsequently filed at Companies House.
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