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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 : 6760I
Highcroft Investments PLC
23 March 2018
Highcroft Investments PLC
Preliminary results for the year ended 31 December 2017
KEY HIGHLIGHTS
-- 22.0% increase in gross property income to GBP4,765,000 (2016 GBP3,906,000) -- 16.8% increase in investment property valuation to GBP77,113,000 (2016 GBP65,997,000) -- Property acquisitions of GBP9,480,000 (net of costs) and disposal proceeds of GBP2,292,000 -- 8.4% increase in net asset value per share to 1161p (2016 1071p) -- 57.5% increase in earnings per share to 132.3p (2016 84.0p) -- Medium term debt GBP19,400,000 (2016 GBP14,900,000); net gearing 29% (2016 21%) -- Cash and liquid equity investments GBP4,035,000 (2016 GBP5,838,000) -- 15.4% increase in final dividend to 30.0p per share (2016 26.0p per share) -- 12.8% increase in total dividend to 46.25p per share (2016 41.0p per share)
Dear Shareholder,
I am pleased to announce our preliminary results for the year ended 31 December 2017 and to invite you to our Annual General Meeting on 17 May 2018 which will be held at Thomas House, Langford Locks, Kidlington, Oxfordshire, OX5 1HR at 12 noon.
Introduction
I am very pleased to be writing my first chairman's statement and reporting such a strong set of results. Before I do so however I must thank John Hewitt for his contribution to Highcroft through the last 18 years of which 11 were as non-executive chairman.
There is no doubt that 2017 has been a year of political events both inside and outside the UK and with that came a year of market uncertainty. Even with this challenging backdrop I am pleased to report that the company has reported excellent property income growth of 22%, an earnings per share increase of 57.5% to 132.3p and a 13% increase in total dividend to 46.25p per share.
Property portfolio
Under the guidance and leadership of Simon Gill we purchased two warehouses during the year which were financed by a combination of existing cashflow, recycled cash from a property sale and a new debt facility which in turn reduced the average cost of debt to 3.64% and left gearing at a modest 29%. At the year end the portfolio stood at 74% warehouses and retail warehouses with a small amount of residual residential and the remainder split between well let retail and offices.
Property rental growth of 22% for the year is the strongest performance over the last 5 years and with contracted rent at the year end being 21% up on the previous year end this shows the increase in rental income continuing into 2018.
We have stringent criteria for new tenant acceptance and at the year end all properties were fully let to a strong tenant base. Through a combination of stable income yields and active asset management I am pleased to report an 8.4% increase in net asset value and 11.9% return on equity for the year (2016 8.0%).
People
I have only been in situ as chairman for a short period however I would like to thank and congratulate the team for their hard work throughout the year. We have a small but dedicated and experienced team at Highcroft and this sets us in good stead for the year ahead.
Dividend
The company's interim dividend was increased by 8.3% and as a result of strong revenue growth, efficient use of debt and administration costs falling as a percentage of revenue we have increased the final dividend to 30.0p per share leading to a total dividend of 46.25p per share - an increase of 12.8%. Our stated strategy is to increase dividends in excess of inflation every year and I am pleased to say we have delivered an inflation busting 45.4% increase over the last 5 years.
Outlook
Highcroft is well positioned with a high quality income producing portfolio. We go into 2018 with positive momentum gained in 2017 and well positioned to continue our portfolio growth. We are however in a very competitive landscape with continuing political uncertainty so we remain cautious and diligent in our approach in ensuring we select the right properties to deliver long term shareholder value.
This announcement contains inside information for the purpose of Article 7 of Regulation (EU) No 596/2014.
Charles Butler
Chairman
23 March 2018
Enquiries:
Highcroft Investments PLC
Charles Butler / Roberta Miles
01865 840023
Panmure Gordon (UK) Limited
Fabien Holler / Andrew Potts
0207 886 2500
Consolidated statement of comprehensive income
for the year ended 31 December 2017
Hot Features
Premium
Note 2017 2016
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gross rental revenue 4,765 - 4,765 3,906 - 3,906
Property operating
expenses (259) - (259) (198) - (198)
-------- -------- -------- -------- -------- --------
Net rental income 4,506 - 4,506 3,708 - 3,708
Net gains on disposal
of investment property 1 - 1 134 - 134
-------- -------- -------- -------- -------- --------
Valuation gains
on investment property - 3,365 3,365 - 2,509 2,509
Valuation losses
on investment property - (77) (77) - (1,536) (1,536)
-------- -------- -------- -------- -------- --------
Net valuation gains
on investment property - 3,288 3,288 - 973 973
-------- -------- -------- -------- -------- --------
Dividend revenue 92 - 92 144 - 144
Gains on equity
investments - 230 230 - 546 546
Losses on equity
investments - (91) (91) - (58) (58)
-------- -------- -------- -------- -------- --------
Net investment income 92 139 231 144 488 632
-------- -------- -------- -------- -------- --------
Administration expenses (663) - (663) (651) - (651)
-------- -------- -------- -------- -------- --------
Net operating profit
before net finance
income 3,936 3,427 7,363 3,335 1,461 4,796
-------- -------- -------- -------- -------- --------
Finance income 2 - 2 11 - 11
Finance expense (651) - (651) (506) - (506)
Net finance expense (649) - (649) (495) - (495)
-------- -------- -------- -------- -------- --------
Profit before tax 3,287 3,427 6,714 2,840 1,461 4,301
Income tax credit 1 61 60 121 72 (30) 42
Total profit and
comprehensive income
for the year attributable
to the owners of
the parent 3,348 3,487 6,835 2,912 1,431 4,343
-------- -------- -------- -------- -------- --------
Basic and diluted
earnings per share 132.3p 84.0p
Consolidated statement of financial position
at 31 December 2017
Restated
Note 2017 2016
GBP'000 GBP'000
Assets
Non-current assets
Investment property 4 76,315 63,739
Equity investments 5 2,131 2,469
-------- ---------
Total non-current assets 68,466 68,466
-------- ---------
Current assets
Investment property 798 2,258
Trade and other receivables 537 631
Cash and cash equivalents 1,904 3,369
--------
Total current assets 3,239 4,000
Total assets 81,685 72,466
-------- ---------
Liabilities
Current liabilities
Trade and other payables 2,054 1,866
-------- ---------
Total current liabilities 1,866 1,866
-------- ---------
Non-current liabilities
Interest bearing loan 6 19,400 14,900
Deferred tax liabilities 254 375
-------- ---------
Total non-current liabilities 19,654 15,275
-------- ---------
Total liabilities 21,708 17,141
Net assets 59,977 55,325
Equity
Issued share capital 1,292 1,292
Revaluation reserve
- property 18,015 14,276
- other 538 659
Capital redemption reserve 95 95
Realised capital reserve 26,611 27,020
Retained earnings 13,426 11,983
-------- ---------
Total equity attributable
to the owners of the
parent 59,977 55,325
--------
Consolidated statement of changes in equity
2017 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
2017 1,292 14,276 659 95 27,020 11,983 55,325
-------- --------- -------- ----------- --------- --------- --------
Transactions
with owners:
Dividends - - - - - (2,183) (2,183)
-------- --------- -------- ----------- --------- --------- --------
Reserve transfers:
Non-distributable
items recognised
in statement
of
comprehensive
income:
Revaluation
gains - 3,288 124 - - (3,412) -
Tax on revaluation
gains/(losses) - - 64 - - (64) -
Realised gains - - - - 16 (16) -
(Surplus)/loss
attributable
to assets
sold in the
year - 734 (309) - (425) - -
Excess of
cost over
revalued amount
taken to retained
earnings - (283) - - - 283 -
-------- --------- -------- ----------- --------- --------- --------
- 3,739 (121) - (409) (3,209) -
-------- --------- -------- ----------- --------- --------- --------
Profit and
total comprehensive
income for
the year - - - - - 6,835 6,835
-------- --------- -------- ----------- --------- --------- --------
At 31 December
2017 1,292 18,015 538 95 26,611 13,426 59,977
======== ========= ======== =========== ========= ========= ========
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
-------- --------- -------- ----------- --------- --------- --------
Transactions
with owners:
Dividends - - - - - (2,041) (2,041)
-------- --------- -------- ----------- --------- --------- --------
Reserve transfers:
Non-distributable
items recognised
in statement
of
comprehensive
income:
Revaluation
losses - 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 -
- (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
======== ========= ======== =========== ========= ========= ========
Consolidated statement of cash flows
for the year ended 31 December 2017
2017 2016
GBP'000 GBP'000
Operating activities
Profit before tax on ordinary
activities 6,714 4,301
Adjustments for:
Net valuation gains on investment
property (3,288) (973)
Net gain on disposal of investment
property (1) (134)
Net loss on investments (139) (488)
Finance income (2) (11)
Finance expense 651 506
Operating cash flow before
changes in working capital
and provisions 3,935 3,201
Decrease/(increase) in trade
and other receivables 94 10
Increase in trade and other
payables 196 193
--------- --------
Cash generated from operations 4,225 3,404
Finance income 2 11
Finance expense (651) (506)
Income taxes paid (8) -
--------- --------
Net cash flows from operating
activities 3,568 2,909
--------- --------
Investing activities
Purchase of non-current assets
- investment property (10,086) (9,896)
- equity investments - (3)
Sale of non-current assets
- investment property 2,259 2,972
- equity investments 477 1,176
--------- --------
Net cash flows from investing
activities (7,350) (5,751)
--------- --------
Financing activities
Dividends paid (2,183) (2,041)
New bank borrowings 4,500 3,400
--------- --------
Net cash flows from financing
activities 1,359 1,359
--------- --------
Net decrease in cash and cash
equivalents (1,483) (1,483)
Cash and cash equivalents at
1 January 2017 3,369 4,852
--------- --------
Cash and cash equivalents at
31 December 2017 1,904 3,369
--------- --------
Notes
for the year ended 31 December 2017
1 Income tax credit
2017 2016
GBP'000 GBP'000
Current tax:
On revenue profits (61) 12
On capital profits 3 (80)
(58) (68)
Deferred tax (63) 26
-------- --------
Income tax credit (121) (42)
-------- --------
The tax assessed for the year differs from the standard rate of corporation tax in the UK of 19% (2016 20%).
The differences are explained as follows:
2017 2016
GBP'000 GBP'000
Profit before tax 6,714 4,301
-------- --------
Profit before tax multiplied
by the standard rate of corporation
tax in the UK of 20% (2015
20%) 1,276 860
Effect of:
Tax exempt revenues (40) (123)
Profit not taxable as a result
of REIT status (1,481) (963)
Chargeable gains less than
accounting profit 55 59
Use of management expenses 82 125
Effect of change in tax rate 13 -
on deferred tax liability
Income tax credit (121) (42)
-------- --------
2 Dividends
In 2017 the following dividends have been paid by the company:
2017 2016
GBP'000 GBP'000
2016 Final: 26.0p per ordinary
share (2015 24.50p) 1,343 1,266
2017 Interim: 16.25p per
ordinary share (2016 15.0p) 840 775
----------- -----------
2,183 2,041
----------- -----------
The directors recommend a property income distribution of GBP1,550,000, 30.0p per share (2016 GBP1,343,000, 26.0p per share) payable on 1 June 2018 to shareholders registered at 4 May 2018.
3 Earnings per share
The calculation of earnings per share is based on the total profit for the year of GBP6,835,000 (2016 GBP4,343,000) and on 5,167,240 shares (2016 5,167,240) which is the weighted average number of shares in issue during the year ended 31 December 2017 and throughout the period since 1 January 2016. 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 GBP3,348,000 (2015 GBP2,912,000) has been calculated.
2017 2016
GBP'000 GBP'000
Earnings:
Basic profit for the year 6,835 4,343
Adjustments for:
Net valuation gains on investment
property (3,288) (974)
Gains/(losses) on investments (139) (488)
Income tax on (profits)/losses (60) 30
------------------ -----------------
Adjusted earnings 3,348 2,912
------------------ -----------------
Per share amount:
Earnings per share (unadjusted) 132.3p 84.0p
Adjustments for:
Net valuation gains on investment
property (63.6p) (18.9p)
Gains/(losses) on investments (2.7p) (9.4p)
Income tax on losses (1.2p) 0.6p
------------------ -----------------
Adjusted earnings per share 64.8p 56.3p
------------------ -----------------
4 Investment property
2017 2016
GBP'000 GBP'000
Valuation at 1 January 65,997 57,964
Additions 10,086 9,896
Disposals (2,258) (2,836)
Revaluation gains/(losses) 3,288 973
----------- -----------
Valuation at 31 December 77,113 65,997
----------- -----------
Less property categorised
as current asset (798) (2,258)
----------- -----------
Property categorised as fixed
asset 76,315 63,739
----------- -----------
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 2017, 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
2017 2016
GBP'000 GBP'000
Valuation at 1 January 2,469 3,155
Additions - 3
Disposals (459) (1,159)
Surplus/(deficit) on revaluation
in excess of cost 124 467
Revaluation decrease below
cost (3) (11)
Revaluation increase still
less than cost - 14
-------- --------
Valuation at 31 December 2,131 2,469
-------- --------
6 Interest bearing loans
2017 2016
GBP'000 GBP'000
Medium term bank loans 19,400 14,900
-------- --------
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 15,400 10,900
-------- --------
19,400 14,900
-------- --------
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 2016. The accounting policies remain unchanged.
8 Annual General Meeting
The Annual General Meeting will be held on 17 May 2018.
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 2017 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 23 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 UUUBRWAAOUAR
(END) Dow Jones Newswires
March 23, 2018 03:00 ET (07:00 GMT)
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