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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Highcroft Investments Plc | LSE:HCFT | London | Ordinary Share | GB0004254875 | ORD 25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 587.50 | 550.00 | 625.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Investment Trust | 5.61M | -7.12M | -1.3667 | -4.30 | 30.59M |
From Apr 2019 to Apr 2024
TIDMHCFT
RNS Number : 3910A
Highcroft Investments PLC
24 March 2017
Highcroft Investments PLC
Preliminary results for the year ended 31 December 2016
KEY HIGHLIGHTS
-- Final property income distribution up 6.1% to 26.0p per share (2015 24.5p per share) -- Total property income distribution up 5.7% to 41.0p per share (2015 38.8p per share) -- Net asset value per share up 4.4% to 1071p (2015 1026p) -- Gross property income increased by 13.7% to GBP3,906,000 (2015 GBP3,435,000) -- Total earnings per share down 40% to 84p (2015 140p) -- Medium term debt GBP14,900,000 (2015 GBP11,500,000) -- Property acquisitions of GBP9,325,000 (net of costs) and disposal proceeds of GBP3,011,000 -- Investment property valuation up 13.9% to GBP65,997,000 (2015 GBP57,964,000) -- Cash and liquid equity investments GBP5,838,000 (2015 GBP8,007,000)
Dear Shareholder,
I am pleased to announce our preliminary results for the year ended 31 December 2016 and to invite you to our Annual General Meeting on 12 May 2017 which will be held at Thomas House, Langford Locks, Kidlington, Oxfordshire, OX5 1HR at 12 noon.
Results for the year
I am delighted to report that, following a successful year in 2015, we have continued to make progress in delivering our strategy. We have recorded growth in our four key performance indicators; increasing the value of our property assets, our gross property income, our net assets per share and our dividends payable to shareholders. We have completed two property acquisitions, focused on larger lot sizes, and used a limited amount of additional gearing to achieve our objectives. The valuation of our property portfolio on a like-for-like basis has outperformed the market.
Property: Gross property rental income rose 13.7% to GBP3,906,000 (2015 GBP3,435,000), with all of this increase arising from our commercial properties. This growth includes the effect of a full year's income from the Wisbech property purchased in May 2015. It also includes a partial year of income from our new acquisitions in Grantham and Coventry, and allows for reduced income from properties which we sold in the year. All our properties are currently let and there were no bad debts in the period. Operating expenses decreased by GBP131,000 to GBP198,000; primarily due to the 2015 figure including one-off costs at two properties where we undertook programmes of repair and removal of asbestos. We made two acquisitions; firstly two retail warehouses in Grantham let to B&Q PLC and Marks & Spencer P.L.C., and secondly a multi-let leisure unit in Coventry let to three food outlets. We have been very pleased with the performance of our assets, with the combination of two rent reviews in 2016, and a full year of rent reviews and new leases completed in 2015, helping to increase gross rental income and capital values.
The sale of our Kingston and Warwick properties, together with two residential units, yielded gross proceeds of GBP3,011,000 - 6.1% in excess of the December 2015 valuations. These proceeds are being re-invested in line with our strategy. We have experienced difficulty in identifying suitable property investments at attractive yields, with the appropriate property fundamentals, as the market is challenging with competition from overseas investors taking advantage of sterling weakness and also from local authorities. We intend to continue to capitalise on our strong financial position and ability to move rapidly to exploit opportunities in order to continue to develop our property portfolio. The availability of reasonably priced debt, combined with the company's strong financial position, allows us to increase the return on our investments through a prudent use of gearing. Our properties showed a net valuation gain of GBP973,000 for the year, a 2.7% gain on a like-for-like basis, well in excess of the market reduction of 0.8%. The most significant gain related to our retail property in Staines where we obtained planning permission for a residential development above the retail units and where we exchanged contracts for sale prior to the year end. We have subsequently completed the sale in 2017.
We have performed well against our specific property objectives. Our average commercial property lot size has increased to GBP3.3m from GBP2.9m in 2015 and GBP1.5m in 2012. We now have only one pure residential property in the portfolio, reduced from 3 in 2015, and our property sector split has changed as we have spread risk over more sectors of the property market as illustrated below.
Hot Features
Premium
2016 2015 2014 2013 2012
------------- ----- ----- ----- ----- -----
% % % % %
------------- ----- ----- ----- ----- -----
Retail 18 20 23 29 41
------------- ----- ----- ----- ----- -----
Warehouse 29 34 38 33 39
------------- ----- ----- ----- ----- -----
Retail
warehouse 39 33 20 15 -
------------- ----- ----- ----- ----- -----
Office 10 12 14 17 13
------------- ----- ----- ----- ----- -----
Leisure 3 - 2 2 3
------------- ----- ----- ----- ----- -----
Residential 1 1 3 4 4
------------- ----- ----- ----- ----- -----
Equities: A fall in income to GBP144,000 (2015 GBP182,000) and a realised net gain of GBP18,000, are a result of the reduction in the level of our holdings. Unrealised net gains in 2016 amounted to GBP470,000 (2015 revaluation loss GBP346,000). We released GBP1,174,000 of cash from equities during the year and have released a further GBP477,000 since the year end.
Administrative expenses: Ongoing administrative expenses increased by GBP118,000 in 2016, due to a combination of step-changes in certain costs, as the complexity of the business and the regulatory burden continued to increase. Finance costs increased by GBP141,000 due to the effect of increased bank borrowings in the year.
Financial summary: Total profit for the year fell by 40% due primarily to the lower unrealised property valuation gains in 2016. Excluding the realised gains on investment property, the underlying profit on revenue activities increased by 1% to GBP2,912,000 (2015 GBP2,871,000). The year-end net asset value per share increased to 1071p (2015 1026p) and our year-end cash position was GBP3,369,000 (2015 GBP4,852,000). Readily realisable equity investments totalled GBP2,469,000 (2015 GBP3,155,000). Our year end bank loans totalled GBP14,900,000 (2015 GBP11,500,000).
Dividend
We are recommending a final property income distribution of 26.0p per share (2015 24.5p), an increase of 6.1%, to be paid on 2 June 2017 to shareholders registered at 5 May 2017 (with an ex-dividend date of 4 May 2017) making a total of 41.0p for the year (2015 38.8p). This increase of 5.7% for the year continues the recent record of increases well in excess of inflation.
Outlook
We are very pleased with the results for the year and remain optimistic that we start 2017 from a position of strength which will help us to secure further attractive acquisitions. We will continue to reduce our investment in equities in line with our medium term strategy and to re-invest the proceeds in commercial property. We have set ourselves challenging objectives for 2017, and we look forward to improving shareholder value through increased dividends and net asset value.
This announcement contains inside information for the purpose of Article 7 of Regulation (EU) No 596/2014.
John Hewitt
Chairman
23 March 2017
Enquiries:
Highcroft Investments PLC
John Hewitt / Roberta Miles
01865 840023
Panmure Gordon (UK) Limited
Karri Vuori / Fabien Holler
0207 886 2500
Consolidated statement of comprehensive income
for the year ended 31 December 2016
Note 2016 2015
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gross rental revenue 3,906 - 3,906 3,435 - 3,435
Property operating
expenses (198) - (198) (329) - (329)
-------- -------- -------- -------- -------- --------
Net rental income 3,708 - 3,708 3,106 - 3,106
-------- -------- -------- -------- -------- --------
Realised gains on
investment property 134 - 134 418 - 418
Realised losses - - - - - -
on investment property
-------- -------- -------- -------- -------- --------
Net gains on investment
property 134 - 134 418 - 418
-------- -------- -------- -------- -------- --------
Valuation gains
on investment property - 2,509 2,509 - 4,840 4,840
Valuation losses
on investment property - (1,536) (1,536) - (75) (75)
-------- -------- -------- -------- -------- --------
Net valuation gains
on investment property - 973 973 - 4,765 4,765
-------- -------- -------- -------- -------- --------
Dividend revenue 144 - 144 182 - 182
Gains on equity
investments - 546 546 - 87 87
Losses on equity
investments - (58) (58) - (502) (502)
-------- -------- -------- -------- -------- --------
Net investment income/(expense) 144 488 632 182 (415) (233)
-------- -------- -------- -------- -------- --------
Administration expenses (651) - (651) (533) - (533)
-------- -------- -------- -------- -------- --------
Net operating profit
before net finance
income 3,335 1,461 4,796 3,173 4,350 7,523
-------- -------- -------- -------- -------- --------
Finance income 11 - 11 7 - 7
Finance expense (506) - (506) (365) - (365)
Net finance expense (495) - (495) (358) - (358)
-------- -------- -------- -------- -------- --------
Profit before tax 2,840 1,461 4,301 2,815 4,350 7,165
Income tax credit 1 72 (30) 42 56 14 70
Total profit and
comprehensive income
for the year attributable
to the owners of
the parent 2,912 1,431 4,343 2,871 4,364 7,235
-------- -------- -------- -------- -------- --------
Basic and diluted
earnings per share 55.7p 28.3p 84.0p 55.6p 84.4p 140.0p
Consolidated statement of financial position
at 31 December 2016
Note 2016 2015
GBP'000 GBP'000
Assets
Non-current assets
Investment property 4 65,997 57,964
Equity investments 5 2,469 3,155
-------- --------
Total non-current assets 68,466 61,119
-------- --------
Current assets
Trade and other receivables 631 641
Cash and cash equivalents 3,369 4,852
--------
Total current assets 4,000 5,493
Total assets 72,466 66,612
-------- --------
Liabilities
Current liabilities
Trade and other payables 1,866 1,664
-------- --------
Total current liabilities 1,866 1,664
-------- --------
Non-current liabilities
Interest bearing loan 6 14,900 11,500
Deferred tax liabilities 375 425
-------- --------
Total non-current liabilities 15,275 11,925
-------- --------
Total liabilities 17,141 13,589
Net assets 55,325 53,023
Equity
Issued share capital 1,292 1,292
Revaluation reserve
- property 14,276 14,764
- other 659 667
Capital redemption reserve 95 95
Realised capital reserve 27,020 25,586
Retained earnings 11,983 10,619
-------- --------
Total equity attributable
to the owners of the
parent 55,325 53,023
--------
Consolidated statement of changes in equity
2016 Issued Revaluation Capital Realised Retained
reserves
share Property Other redemption capital earnings Total
capital reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2016 1,292 14,764 667 95 25,586 10,619 53,023
-------- --------- -------- ----------- --------- --------- --------
Dividends - - - - - (2,041) (2,041)
Reserve transfers:
Non-distributable
items recognised
in statement
of
comprehensive
income:
Revaluation
gains - 973 467 - - (1,440) -
Tax on revaluation
gains/(losses) - - (26) - - 26 -
Realised gains - - - - 149 (149) -
Surplus attributable
to assets
sold in the
year - (836) (449) - 1,285 - -
Excess of
cost over
revalued amount
taken to retained
earnings - (625) - - - 625 -
-------- --------- -------- ----------- --------- --------- --------
Transactions
with owners - (488) (8) - 1,434 (2,979) (2,041)
-------- --------- -------- ----------- --------- --------- --------
Profit and
total comprehensive
income for
the year - - - - - 4,343 4,343
-------- --------- -------- ----------- --------- --------- --------
At 31 December
2016 1,292 14,276 659 95 27,020 11,983 55,325
======== ========= ======== =========== ========= ========= ========
2015 Issued Revaluation Capital Realised Retained
reserves
share Property Other redemption capital earnings Total
capital reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2015 1,292 11,332 1,335 95 24,785 8,863 47,702
-------- --------- -------- ----------- --------- --------- --------
Dividends - - - - - (1,914) (1,914)
Reserve transfers:
Non-distributable
items recognised
in statement
of
comprehensive
income:
Revaluation
losses - 4,765 (278) - - (4,487) -
Tax on revaluation
gains/(losses) - - 14 - - (14) -
Realised gains - - - - 364 (364) -
Surplus attributable
to assets
sold in the
year - (33) (404) - 437 - -
Excess of
cost over
revalued amount
taken to retained
earnings - (1,300) - - - 1,300 -
Transactions
with owners - 3,432 (668) - 801 (5,479) (1,914)
-------- --------- -------- ----------- --------- --------- --------
Profit and
total comprehensive
income for
the year - - - - - 7,235 7,235
-------- --------- -------- ----------- --------- --------- --------
At 31 December
2015 1,292 14,764 667 95 25,586 10,619 53,023
======== ========= ======== =========== ========= ========= ========
Consolidated statement of cash flows
for the year ended 31 December 2016
2016 2015
GBP'000 GBP'000
Operating activities
Profit before tax on ordinary
activities 4,301 7,165
Adjustments for:
Net valuation gains on investment
property (973) (4,765)
Net gain on disposal of investment
property (134) (418)
Net loss on investments (488) 415
Finance income (11) (7)
Finance expense 506 365
Operating cash flow before
changes in working capital
and provisions 3,201 2,755
Decrease/(increase) in trade
and other receivables 10 (226)
Increase in trade and other
payables 193 352
-------- --------
Cash generated from operations 3,404 2,881
Finance income 11 7
Finance expense (506) (365)
Net cash flows from operating
activities 2,909 2,523
-------- --------
Investing activities
Purchase of non-current assets
- investment property (9,896) (8,590)
- equity investments (3) (7)
Sale of non-current assets
- investment property 2,972 2,332
- equity investments 1,176 969
-------- --------
Net cash flows from investing
activities (5,751) (5,296)
-------- --------
Financing activities
Dividends paid (2,041) (1,914)
New bank borrowings 3,400 7,500
-------- --------
Net cash flows from financing
activities 1,359 5,586
-------- --------
Net increase/(decrease) in
cash and cash equivalents 1,483 2,813
Cash and cash equivalents at
1 January 2016 4,852 2,039
-------- --------
Cash and cash equivalents at
31 December 2016 3,369 4,852
-------- --------
Notes
for the year ended 31 December 2016
1 Income tax credit
2016 2015
GBP'000 GBP'000
Current tax:
On revenue profits 12 (13)
On capital profits (80) (43)
(68) (56)
Deferred tax 26 (14)
-------- --------
Income tax credit (42) (70)
-------- --------
The tax assessed for the year differs from the standard rate of corporation tax in the UK of 20% (2015 21.5%).
The differences are explained as follows:
2016 2015
GBP'000 GBP'000
Profit before tax 4,301 7,165
-------- --------
Profit before tax multiplied
by the standard rate of corporation
tax in the UK of 20% (2015
20%) 860 1,433
Effect of:
Tax exempt revenues (123) 33
Profit not taxable as a result
of REIT status (963) (1,635)
Chargeable gains less than
accounting profit 59 56
Use of management expenses 125 57
Effect of change in tax rate
on deferred tax liability - (14)
Income tax credit (42) (70)
-------- --------
2 Dividends
In 2016 the following dividends have been paid by the company:
2016 2015
GBP'000 GBP'000
2015 Final: 24.50p per ordinary
share (2014 22.75p) 1,266 1,175
2016 Interim: 15.0p per ordinary
share (2015 14.30p) 775 739
----------- -----------
2,041 1,914
----------- -----------
The directors recommend a property income distribution of GBP1,343,000, 26.00p per share (2015 GBP1,266,000, 24.50p per share) payable on 2 June 2017 to shareholders registered at 5 May 2017.
3 Earnings per share
The calculation of earnings per share is based on the total profit for the year of GBP4,343,000 (2015 GBP7,235,000) and on 5,167,240 shares (2015 5,167,240) which is the weighted average number of shares in issue during the year ended 31 December 2016 and throughout the period since 1 January 2015. There are no dilutive instruments.
In order to draw attention to the impact of valuation gains and losses which are included in the statement of comprehensive income but not available for distribution under the company's articles of association, an adjusted earnings per share based on the profit available for distribution of GBP2,877,000 (2015 GBP2,871,000) has been calculated.
2016 2015
GBP'000 GBP'000
Earnings:
Basic profit for the year 4,343 7,235
Adjustments for:
Net valuation gains on investment
property (974) (4,765)
Gains/(losses) on investments (488) 415
Income tax on losses (4) (14)
----------------- -----------
Adjusted earnings 2,877 2,871
----------------- -----------
Per share amount:
Earnings per share (unadjusted) 84.0p 140.0p
Adjustments for:
Net valuation gains on investment
property (18.9p) (92.2p)
Gains/(losses) on investments (9.4p) 8.0p
Income tax on losses - (0.2p)
----------------- -----------
Adjusted earnings per share 55.7p 55.6p
----------------- -----------
4 Investment property
2016 2015
GBP'000 GBP'000
Valuation at 1 January 57,964 46,523
Additions 9,896 8,590
Disposals (2,836) (1,914)
Revaluation gains/(losses) 973 4,765
----------- -----------
Valuation at 31 December 65,997 57,964
----------- -----------
In accordance with IAS 40 the carrying value of investment properties is their fair value as determined by external valuers. This valuation has been conducted by Knight Frank LLP, as external valuers, and has been prepared as at 31 December 2016, in accordance with the Appraisal & Valuation Standards of the Royal Institution of Chartered Surveyors, on the basis of market value. This value has been incorporated into the financial statements.
The independent valuation of all property assets uses market evidence and also includes assumptions regarding income expectations and yields that investors would expect to achieve on those assets over time. Many external economic and market factors, such as interest rate expectations, bond yields, the availability and cost of finance and the relative attraction of property against other asset classes, could lead to a reappraisal of the assumptions used to arrive at current valuations. In adverse conditions, this reappraisal can lead to a reduction in property values and a loss in net asset value.
5 Equity investments
2016 2015
GBP'000 GBP'000
Valuation at 1 January 3,155 4,532
Additions 3 7
Disposals (1,159) (1,038)
Surplus/(deficit) on revaluation
in excess of cost 467 (277)
Revaluation decrease below
cost (11) (71)
Revaluation increase still
less than cost 14 2
-------- --------
Valuation at 31 December 2,469 3,155
-------- --------
6 Interest bearing loans
2016 2015
GBP'000 GBP'000
Medium term bank loans 14,900 11,500
-------- --------
The medium term bank loans comprise
amounts falling due as follows:
Between one and two years - -
Between two and five years 4,000 4,000
Over five years 10,900 7,500
-------- --------
14,900 11,500
-------- --------
7 Basis of preparation
The preliminary announcement has been prepared in accordance with applicable accounting standards as stated in the financial statements for the year ended 31 December 2015. The accounting policies remain unchanged.
8 Annual General Meeting
The Annual General Meeting will be held on 12 May 2017.
9 Publication of non-statutory accounts
The above does not constitute statutory accounts within the meaning of the Companies Act 2006. It is an extract from the full accounts for the year ended 31 December 2016 on which the auditor has expressed an unmodified opinion and does not include any statement under section 498 of the Companies Act 2006. The accounts will be posted to shareholders on or before 18 April 2017 and subsequently filed at Companies House.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR KMGZFVFDGNZM
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March 24, 2017 03:00 ET (07:00 GMT)
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