Interim Results
Highcroft Investments PLC
20 August 2003
HIGHCROFT
INVESTMENTS
PLC
Interim Report
For the six months ended 30 June 2003
Highlights
• Interim dividend increased by 7.1% to 3.75p per share
• Operating profit increased by 3.3% to £748,000
• Pre tax profit up by 23.3% to £836,000
• Net assets per share up to 635p
Highcroft Investments PLC
Chairman's Statement
for the six months ended 30 June 2003
Summary
I am pleased to report that, in the six months to 30 June 2003, we have achieved
an increase in operating profits compared to the six months to 30 June 2002 and
that our net asset value per share has risen to 635p which is its highest ever
reported value. We have made further moves in altering the balance of our
interests more towards property and our balance sheet remains strong. The
interim dividend is 3.75p per share (2002 3.50p) an increase of 7.1%, continuing
our policy of payments well in excess of inflation. The dividend is payable on
31 October 2003.
Operating Activities
Operating profit - which reflects the underlying income of the Group, excluding
the more volatile short term gains or losses on capital items - increased by
3.3% to £748,000. The comments made at this stage in 2002 bear repeating - good
gains in rental income (and a firm grip on expenses) were offset to a degree by
lower investment income principally as a result of falling interest rates.
Property income now represents almost 84% of total income and we would expect
this to continue to rise as a proportion as we continue to put more emphasis on
our property activities.
Capital Activities
In April 2003, we purchased a property in a good secondary position in Norwich,
let to Austin Reed for 25 years from January 1990. The board feels that this
investment is a valuable part of a continuing programme to enhance the quality
of the Group's property portfolio and will provide good long term rental income.
We continue to look for properties which will enhance the portfolio and secure
rising rental income over the medium to long term.
In line with our practice of disposing of small commercial properties and
selling residential properties when possession becomes available, two
residential and one commercial property have been sold in the first six months
of the year generating a total of £657,000. There was a £1,242,000 surplus on
revaluation of our property portfolio an increase of 5.9% on a like for like
basis.
With our listed investment portfolio, we made investments of £262,000 and sold
holdings of £624,000, a net withdrawal from the portfolio of £362,000. At 30
June 2003, there was a surplus on revaluation of £238,000 - the value of the
portfolio being £7,584,000, an increase of 3.4% on a like for like basis.
Cash balances, mostly on the money market were a little lower than at the year
end but have risen following the receipt of proceeds on completion of the sale
of one property in July. The next property purchase is likely to be part funded
by a medium term loan.
Taxation
Taxation has risen to £186,000 (June 2002 £152,000); net capital losses on
investments will cover the gains on property disposals.
Net Asset Value
At 30 June 2003, net asset value was 635p per share (against 624p at June 2002
and 597p at 31 December 2002). This pleasing increase comes from all sources -
a property portfolio surplus of £1,242,000, a £238,000 rise in the value of
listed investments and retained profits of £368,000. It is also pleasing to
report a highest ever net asset value per share.
Board
In early August, Robert Craig retired as a director of the company on reaching
his 70th birthday. On behalf of the board and shareholders, I thank Robert for
his guidance and leadership as Chairman over the last decade - a period when the
net asset value per share rose 102%, dividends per share increased by 108% and
the share price rose 73%.
The Future
We have a solid trading performance and balance sheet which gives us confidence
as we move towards greater emphasis on our property interests. We believe we
can continue to enhance shareholder value over the medium term and it remains
our intention to raise dividends in real terms year-on-year.
G J Kingerlee
20 August 2003
Group Profit and Loss Account (Unaudited)
for the six months ended 30 June 2003
First Half First Half Full Year
Note 2003 2002 2002
£'000 £'000 £'000
Income from fixed asset investments
and other interest receivable
From properties 725 685 1,395
From investments, including net interest receivable 143 154 322
868 839 1,717
Administrative expenses 120 115 221
Operating profit 748 724 1,496
Gain/(loss) on disposals of assets 2 88 (46) 154
Profit on ordinary activities before taxation 836 678 1,650
Taxation 3 186 152 482
Profit for the financial period 650 526 1,168
(Gain)/loss on disposals of assets after taxation
transferred (to)/from realised capital reserve (88) 20 (94)
Profit available for distribution 562 546 1,074
Dividends 4 194 181 524
Profit retained 368 365 550
Earnings per share 5
Including gains on disposals of assets 12.6 p 10.2 p 22.6 p
Excluding gains on disposals of assets 10.9 p 10.6 p 20.8 p
Group Balance Sheet (Unaudited)
as at 30 June 2003
30 June 30 June 31 December
2003 2002 2002
Note £'000 £'000 £'000
Fixed assets
Tangible assets 6 25,358 22,737 23,098
Investments 7 7,584 9,389 7,700
32,942 32,126 30,798
Current assets
Debtors 471 724 916
Cash at bank and in hand 366 413 395
837 1,137 1,311
Creditors
Amounts falling due within one year 989 1,043 1,254
Net current (liabilities)/assets (152) 94 57
Total assets less current liabilities 32,790 32,220 30,855
Capital and reserves
Called up share capital 1,292 1,292 1,292
Revaluation reserve - property 6,187 6,094 5,442
- other 2,708 3,585 2,101
Capital redemption reserve 95 95 95
Realised capital reserve 14,625 13,824 14,410
Profit and loss account 7,883 7,330 7,515
Shareholders' funds 32,790 32,220 30,855
Group Cash Flow Statement (Unaudited)
for the six months ended 30 June 2003
First Half First Half Full Year
2003 2002 2002
£'000 £'000 £'000
Net cash inflow from operating activities 1,227 937 1,001
Taxation
Taxation paid (336) (258) (513)
Capital expenditure and financial investment
Purchase of fixed assets - properties (1,596) - (1,504)
- listed investments (262) (792) (935)
Sale of fixed assets - properties 657 - 1,537
- listed investments 624 420 884
Net cash outflow from capital expenditure (577) (372) (18)
and financial investment
Net cash outflow from servicing of finance
Dividends paid (343) (313) (494)
Decrease in cash (29) (6) (24)
Reconciliation of operating profit to net
cash flow from operating activities
Operating profit 748 724 1,496
Decrease/(increase) in debtors 443 188 (454)
Increase/(decrease) in creditors 36 25 (41)
1,227 937 1,001
Statement of Total Recognised Gains and Losses
First Half First Half Full Year
2003 2002 2002
£'000 £'000 £'000
Profit for the financial period 650 526 1,168
Unrealised surplus/(deficit) on revaluation of:
investment properties 1,242 460 161
listed and unlisted investments 238 (604) (1,916)
Tax on prior years' surplus realised in year - - (52)
Total recognised gains and losses for the period 2,130 382 (639)
Notes (Unaudited)
for the six months ended 30 June 2003
1. Interim report
This interim report will not appear as an advertisement in any newspaper but copies are being
sent to all shareholders and are available at the company's registered office. The results for the
six months ended 30 June 2003 are unaudited but have been prepared on the basis of
accounting policies consistent with those set out in the audited report and financial statements
for the year ended 31 December 2002.
The interim report does not constitute full accounts as defined by the Companies Act 1985 but
should be read in conjunction with the most recent financial statements. Full accounts for 2002
have been delivered to the Registrar of Companies, bearing an unqualified audit opinion.
2. Gain on disposals of assets
First Half First Half Full Year
2003 2002 2002
£'000 £'000 £'000
Gain/(loss) on disposals of assets arising on sales of:
Properties 80 (13) 243
Investments 8 (33) (89)
88 (46) 154
3. Taxation
First Half First Half Full Year
2003 2002 2002
£'000 £'000 £'000
Corporation tax 186 178 395
Corporation tax on disposals of assets - (26) 60
Prior year underprovision - - 27
186 152 482
The taxation charge has been based on the estimated effective tax rate for the full year.
4. Dividends
The Board has declared an ordinary interim dividend of 3.75p per share (2002 3.50p) payable
on 31 October 2003 to shareholders registered at 3 October 2003.
Notes (Unaudited)
for the six months ended 30 June 2003
5. Earnings per share
The calculation of earnings per share is based on the profit for the period of £650,000 (2002
£526,000) and on 5,167,240 shares (2002 5,167,240) which is the weighted average
number of shares in issue during the period ended 30 June 2003 and throughout the period
since 1 January 2002.
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 £562,000 (2002 £546,000).
First Half First Half Full Year
2003 2002 2002
£'000 £'000 £'000
Earnings:
Basic earnings per share 650 526 1,168
Adjustment for (gain)/loss on disposals of assets (88) 20 (94)
Adjusted earnings per share 562 546 1,074
Per share amount:
Basic earnings per share 12.6 p 10.2 p 22.6
Adjustment for (gain)/loss on disposals of assets (1.7) p 0.4 p (1.8)
Adjusted earnings per share 10.9 p 10.6 p 20.8
6. Tangible assets
Land and buildings (Investment properties) Total
£'000
Valuation at 1 January 2003 23,098
Additions 1,596
Disposals (578)
Surplus on revaluation 1,242
Valuation at 30 June 2003 25,358
The directors have used a valuation of properties at 30 June 2003, the basis of which
they believe to be consistent with the valuation prepared for 31 December 2002.
7. Investments
Listed and unlisted Total
£'000
Valuation at 1 January 2003 7,700
Additions 262
Disposals (616)
Surplus on revaluation 238
Valuation at 30 June 2003 7,584
END
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