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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 0.0% 705.00 680.00 730.00 705.00 705.00 705.00 0.00 00:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Real Estate Investment Trusts 0.0 3.9 22.3 31.6 36

Highcroft Investments PLC Interim Report

03/09/2020 7:00am

UK Regulatory (RNS & others)


Highcroft Investments (LSE:HCFT)
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From Jul 2020 to Jan 2021

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RNS Number : 8816X

Highcroft Investments PLC

03 September 2020

3 September 2020

Highcroft Investments PLC

Interim Report for the six months ended 30 June 2020

Key Highlights:

*Gross rental income increased 11.74% to GBP3,044,000 (2019 GBP2,726,000)

*Net rental income increased 3.7% to GBP2,777,000 (2019 GBP2,678,000)

*99% occupancy in the property portfolio (2019 100%)

*100% of Q1 rent, 77% of Q2 rent and 81% of Q3 rent, due to date, collected

*Adjusted earnings per share reduced 3.5% to 35.9p (2019 37.2p)

*Total earnings per share reduced to 51.4p loss (2019 21.9p profit)

*Net investment into property GBPnil (2019 net investment GBP11,897,000)

*Property valuation decreased by 5.2% to GBP82,195,000 (December 2019 GBP86,710,000)

*Net assets per share decreased 6.8% to 1095p (December 2019 1175p, June 2019 1195p)

*Loan to value 31.9% (December 2019 30.2%, June 2019 29.5%)

Dear Shareholder

I am writing to report our half year 2020 results. It has been an extremely difficult period which has been unduly impacted by the COVID-19 pandemic. Whilst the business has demonstrated resilience under the circumstances in the 6 months to 30 June 2020, the Board is mindful that there remains a significant amount of risk and uncertainty surrounding the outlook for the remainder of the financial year. Taking all of this into account, and given our focus on active asset management, I feel we have performed well in the first half and, having collected 100% of our Q1 rent, we collected a respectable 77% of Q2 rent and 81% of Q3 rent (due to date) so far. We continue to have a conservative view on debt which stood at 31.9% loan to value at the half year with cash on the balance sheet of GBP1.8m. In addition, all bank loans due for repayment in 2020 have been refinanced with no further debt maturing until 2022, and we have agreed to draw an additional GBP1m of our agreed facility later this year as additional working capital.

The group has not made any new property acquisitions during the period although gross rent has increased by 11.4% as a result of our 2019 acquisitions and rent reviews carried out in the last 12 months. As a result of the COVID-19 pandemic, we have provided for GBP195,000 of bad debts primarily arising from the effect of a small number of CVAs and new lease arrangements. Our external independent property valuation fell by 5.2% during the period with some softening pre COVID which was then further accelerated by the onset of the pandemic. This compares favourably to the All Property index decrease of 6.1% in the same period.

More specifically, our high street retail and leisure asset values, which represent only 20.4% of our overall portfolio, have fallen by 10.9% and 8.5% respectively; however, in-line with our strategy to diversify our exposure and buy quality assets, our office and industrial properties have held up better with both falling by just 2.7%.

Dividend

Whilst the business has performed robustly during the first half of 2020 against a difficult backdrop, we remain mindful of the increased risk brought about by the COVID-19 pandemic and the potential knock-on effect to our tenants. Highcroft has been a public company for several decades and has always prided itself on paying an increased dividend each year. The group is, however, operating in very unusual and unpredictable times and is, as a result, taking a cautious approach to working capital management to ensure that it is able to continue to deliver long term shareholder value post COVID-19. We have therefore decided to defer our decision in relation to the interim dividend until October when we will have the initial indications of our Q4 rent collection and more information as to the anticipated impact of the pandemic during the remainder of this financial year and in to 2021.

Outlook

The group has always taken a prudent approach to its operating model to ensure long term value creation for all stakeholders. I would like to thank my colleagues and our business partners for their pro-active approach which has resulted in a robust performance in the period and we continue to monitor the evolving situation closely. The outlook for the group is likely to be overshadowed by the effects of COVID-19 for some time; however, we continue to work closely with our tenants and all other stakeholders to ensure we protect occupancy levels and limit the short-term impact.

We have a well-balanced portfolio with low gearing, a healthy positive cash position, and strong balance sheet which should position us well to withstand a potentially protracted period of economic weakness.

Charles Butler

Chairman

2 September 2020

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

For further information, contact:

Highcroft Investments PLC

   Charles Butler/Roberta Miles            +44 (0)1865 840023 

N+1 Singer

Peter Steel / Amanda Gray - Corporate Finance

Tom Salvesen - Corporate Broking

+44 (0)20 7496 3000

Condensed consolidated interim statement of comprehensive income (unaudited)

for the six months ended 30 June 2020

 
                                       Unaudited                     Unaudited                      Audited 
                                    First half 2020               First half 2019                Full year 2019 
                        ----  ----------------------------  ----------------------------  ---------------------------- 
                               Revenue   Capital     Total   Revenue   Capital     Total   Revenue   Capital     Total 
                        Note   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Continuing operations 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Gross rental income             3,044         -     3,044     2,726         -     2,726     5,840         -     5,840 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Bad debt provision              (195)         -     (195)         -         -         -         -         -         - 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Property operating 
  expenses                        (72)         -      (72)      (48)         -      (48)     (184)         -     (184) 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Net rental income               2,777         -     2,777     2,678         -     2,678     5,656         -     5,656 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Valuation gains on 
  investment property                -       600       600         -         -         -         -       739       739 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Valuation losses on 
  investment property                -   (5,115)   (5,115)         -     (792)     (792)         -   (3,627)   (3,627) 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Net valuation 
  (losses)/gains 
  on investment 
  property                           -   (4,515)   (4,515)         -     (792)     (792)         -   (2,888)   (2,888) 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Dividend income                     -         -         -         3         -         3         3         -         3 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Gains on investments                -         -         -        53         -        53         -        53        53 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Losses on investments               -         -         -         -         -         -         -         -         - 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Net investment income               -         -         -        56         -        56         3        53        56 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Administrative 
  expenses                       (471)         -     (471)     (411)         -     (411)     (826)         -     (826) 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Operating profit 
  before 
  net financing costs            2,306   (4,515)   (2,209)     2,323     (792)     1,531     4,833   (2,835)     1,998 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Finance income                      2         -         2         5         -         5         6         -         6 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Finance expenses                (458)         -     (458)     (396)         -     (396)     (856)         -     (856) 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Net finance costs               (456)         -     (456)     (391)         -     (391)     (850)         -     (850) 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Profit before tax               1,850   (4,515)   (2,665)     1,932     (792)     1,140     3,983   (2,835)     1,148 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Income tax 
  (charge)/credit          4         8         -         8      (11)         -      (11)        72      (66)         6 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Total profit and 
  comprehensive 
  income for the 
  financial 
  period                         1,858   (4,515)   (2,657)     1,921     (792)     1,129     4,055   (2,901)     1,154 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 Basic and diluted 
  earnings 
  per share                6                       (51.4p)                         21.9p                         22.3p 
                        ----  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 

Condensed consolidated interim statement of financial position (unaudited)

as at 30 June 2020

 
                                               Unaudited  Unaudited       Audited 
                                                 30 June    30 June   31 December 
                                                    2020       2019          2019 
                                         Note    GBP'000    GBP'000       GBP'000 
 Assets 
                                         ----  ---------  ---------  ------------ 
 Investment property                        7     82,195     88,805        86,710 
                                         ----  ---------  ---------  ------------ 
 Equity investments                         8          -          9             - 
                                         ----  ---------  ---------  ------------ 
 Total non-current assets                         82,195     88,814        86,710 
                                         ----  ---------  ---------  ------------ 
 Current assets 
                                         ----  ---------  ---------  ------------ 
 Trade and other receivables                       1,526        668         1,147 
                                         ----  ---------  ---------  ------------ 
 Cash at bank and in hand                          1,779        610         1,559 
                                         ----  ---------  ---------  ------------ 
 Total current assets                              3,305      1,278         2,706 
                                         ----  ---------  ---------  ------------ 
 Total assets                                     85,500     90,092        89,416 
                                         ----  ---------  ---------  ------------ 
 Liabilities 
                                         ----  ---------  ---------  ------------ 
 Current liabilities 
                                         ----  ---------  ---------  ------------ 
 Interest bearing loan                             4,000          -         4,000 
                                         ----  ---------  ---------  ------------ 
 Trade and other payables                          2,626      2,123         2,495 
                                         ----  ---------  ---------  ------------ 
 Total current liabilities                         6,626      2,123         6,495 
                                         ----  ---------  ---------  ------------ 
 Non-current liabilities 
                                         ----  ---------  ---------  ------------ 
 Interest-bearing loans and borrowings      9     22,200     26,200        22,200 
                                         ----  ---------  ---------  ------------ 
 Total non-current liabilities                    22,200     26,200        22,200 
                                         ----  ---------  ---------  ------------ 
 Total liabilities                                28,826     28,323        28,695 
                                         ----  ---------  ---------  ------------ 
 Net assets                                       56,674     61,769        60,721 
                                         ----  ---------  ---------  ------------ 
 Equity 
                                         ----  ---------  ---------  ------------ 
 Issued share capital                              1,294      1,292         1,292 
                                         ----  ---------  ---------  ------------ 
 Share premium                                        51          -             - 
                                         ----  ---------  ---------  ------------ 
 Share based payment                                  19          -            12 
                                         ----  ---------  ---------  ------------ 
 Other equity reserve                               (53)          -             - 
                                         ----  ---------  ---------  ------------ 
 Revaluation reserve - property                    9,514     17,456        12,931 
                                         ----  ---------  ---------  ------------ 
 Revaluation reserve - other                           0          5             - 
                                         ----  ---------  ---------  ------------ 
 Capital redemption reserve                           95         95            95 
                                         ----  ---------  ---------  ------------ 
 Realised capital reserve                         28,995     28,990        28,995 
                                         ----  ---------  ---------  ------------ 
 Retained earnings                                16,759     13,931        17,396 
                                         ----  ---------  ---------  ------------ 
 Total equity                                     56,674     61,769        60,721 
                                         ----  ---------  ---------  ------------ 
 

Condensed consolidated interim statement of changes in equity

for the six months ended 30 June 2020

 
                         Issued    Share     Share     Other                   Capital    Realised  Retained    Total 
                          share    premium    based    equity                 redemption   Capital   earnings 
                         capital             payment   reserve  Revaluation 
                          (note                                   reserve 
                           10)                                    property 
                         GBP'000   GBP'000   GBP'000   GBP'000      GBP'000      GBP'000   GBP'000    GBP'000  GBP'000 
                        --------  --------  --------  --------  -----------  -----------  --------  ---------  ------- 
 At 1 January 2020         1,292         -        12         -       12,931           95    28,995     17,396   60,721 
                        --------  --------  --------  --------  -----------  -----------  --------  ---------  ------- 
 Transactions with 
  owners: 
                        --------  --------  --------  --------  -----------  -----------  --------  ---------  ------- 
 
 Dividends                     -                   -         -            -            -         -    (1,397)  (1,397) 
                        --------  --------  --------  --------  -----------  -----------  --------  ---------  ------- 
 Issue of shares               2        51         -      (53)            -            -         -          -        - 
                        --------  --------  --------  --------  -----------  -----------  --------  ---------  ------- 
                               2        51         -      (53)            -            -         -    (1,397)  (1,397) 
                        --------  --------  --------  --------  -----------  -----------  --------  ---------  ------- 
 Reserve transfers: 
                        --------  --------  --------  --------  -----------  -----------  --------  ---------  ------- 
 Non-distributable 
  items recognised 
  in income statement: 
                        --------  --------  --------  --------  -----------  -----------  --------  ---------  ------- 
 Revaluation losses            -                   -         -      (4,515)            -         -      4,515        - 
                        --------  --------  --------  --------  -----------  -----------  --------  ---------  ------- 
 Realised gains                -                   -         -            -            -         -          -        - 
                        --------  --------  --------  --------  -----------  -----------  --------  ---------  ------- 
 Excess of cost over 
  revalued amount 
  taken to retained 
  earnings                     -         -         -         -        1,098            -         -    (1,098)        - 
                        --------  --------  --------  --------  -----------  -----------  --------  ---------  ------- 
                               -         -         -         -      (3,417)            -         -      3,417        - 
                        --------  --------  --------  --------  -----------  -----------  --------  ---------  ------- 
 Share award expensed          -         -         7         -            -            -         -          -        7 
                        --------  --------  --------  --------  -----------  -----------  --------  ---------  ------- 
 Loss and total 
  comprehensive 
  income for the 
  period                       -         -         -         -            -            -         -    (2,657)  (2,657) 
                        --------  --------  --------  --------  -----------  -----------  --------  ---------  ------- 
 At 30 June 2020           1,294        51        19      (53)        9,514           95    28,995     16,759   56,674 
                        --------  --------  --------  --------  -----------  -----------  --------  ---------  ------- 
 
 
 First half 2019                                 Revaluation 
  Unaudited                                        reserves 
                                    Issued 
                                     share                          Capital  Realised   Retained 
                                   capital  Property     Other   redemption   capital   earnings     Total 
                                   GBP'000   GBP'000   GBP'000      GBP'000   GBP'000    GBP'000   GBP'000 
                                            --------  -------- 
 At 1 January 2019                   1,292    18,770       574           95    28,378     13,275    62,384 
                                  --------  --------  --------  -----------  --------  ---------  -------- 
 Transactions with owners: 
  Dividends                              -         -         -            -         -    (1,744)   (1,744) 
                                  --------  --------  --------  -----------  --------  ---------  -------- 
 Reserve transfers: 
                                  --------  --------  --------  -----------  --------  ---------  -------- 
 Non-distributable items 
  recognised in income 
  statement: 
                                  --------  --------  --------  -----------  --------  ---------  -------- 
 Revaluation losses                      -     (792)         -            -         -        792         - 
                                  --------  --------  --------  -----------  --------  ---------  -------- 
 Movement in deferred 
  tax on realisation of 
  equities                               -         -        34            -      (34)          -         - 
                                  --------  --------  --------  -----------  --------  ---------  -------- 
 Realised gains                          -         -         -            -        43       (43)         - 
                                  --------  --------  --------  -----------  --------  ---------  -------- 
 Surplus attributable 
  to assets sold                         -         -     (603)            -       603          -         - 
                                  --------  --------  --------  -----------  --------  ---------  -------- 
 Excess of cost over 
  revalued amount taken 
  to retained earnings                   -     (522)         -            -         -        522         - 
                                  --------  --------  --------  -----------  --------  ---------  -------- 
                                         -   (1,314)     (569)            -       612      1,271         - 
                                  --------  --------  --------  -----------  --------  ---------  -------- 
 Profit and total comprehensive 
  income for the period                  -         -         -            -         -      1,129     1,129 
                                  --------  --------  --------  -----------  --------  ---------  -------- 
 At 30 June 2019                     1,292    17,456         5           95    28,990     13,931    61,769 
                                  --------  --------  --------  -----------  --------  ---------  -------- 
 

Condensed consolidated interim statement of changes in equity (continued)

for the six months ended 30 June 2020

 
 Full year 2019                         Share 
  Audited                               Based 
                                      payment 
                                      reserve           Revaluation 
                                      GBP'000             reserves 
                             Issued 
                              share                                       Capital  Realised   Retained 
                            capital              Property      Other   redemption   capital   earnings     Total 
                            GBP'000               GBP'000    GBP'000      GBP'000   GBP'000    GBP'000   GBP'000 
                                               ----------  --------- 
 At 1 January 2019            1,292         -      18,770        574           95    28,378     13,275    62,384 
                           --------  --------  ----------  ---------  -----------  --------  ---------  -------- 
 Transactions with 
  owners: 
  Dividends                       -         -           -          -            -         -    (2,829)   (2,829) 
                           --------  --------  ----------  ---------  -----------  --------  ---------  -------- 
 Reserve transfers: 
                           --------  --------  ----------  ---------  -----------  --------  ---------  -------- 
 Non-distributable 
  items recognised 
  in income statement: 
                           --------  --------  ----------  ---------  -----------  --------  ---------  -------- 
 Revaluation (losses)             -         -     (2,888)          -            -         -      2,888         - 
                           --------  --------  ----------  ---------  -----------  --------  ---------  -------- 
 Realised gains/(losses)          -         -           -          -            -        43       (43)         - 
                           --------  --------  ----------  ---------  -----------  --------  ---------  -------- 
 Movement in deferred 
  tax on realisation 
  of equities                     -         -           -         29            -      (29)          -         - 
                           --------  --------  ----------  ---------  -----------  --------  ---------  -------- 
 Surplus attributable 
  to assets sold 
  in the year                     -         -           -      (603)            -       603          -         - 
                           --------  --------  ----------  ---------  -----------  --------  ---------  -------- 
 Reassessment of 
  carrying value 
  of reserves                     -         -     (4,168)                                        4,168 
                           --------  --------  ----------  ---------  -----------  --------  ---------  -------- 
 Excess of cost 
  over revalued amount 
  taken to retained 
  earnings                        -         -       1,217          -            -         -    (1,217)         - 
                           --------  --------  ----------  ---------  -----------  --------  ---------  -------- 
                                  -         -     (5,839)      (574)            -       617      5,796         - 
                           --------  --------  ----------  ---------  -----------  --------  ---------  -------- 
 Share award expenses                      12                                                                 12 
                           --------  --------  ----------  ---------  -----------  --------  ---------  -------- 
 Profit and total 
  comprehensive income 
  for the period                  -         -           -          -            -         -      1,154     1,154 
                           --------  --------  ----------  ---------  -----------  --------  ---------  -------- 
 At 31 December 
  2019                        1,292        12      12,931          -           95    28,995     17,396    60,721 
                           --------  --------  ----------  ---------  -----------  --------  ---------  -------- 
 

Condensed consolidated interim statement of cashflows

for the six months ended 30 June 2020

 
                                                        Unaudited  Unaudited 
                                                            First      First     Audited 
                                                             half       half   Full year 
                                                             2020       2019        2019 
                                                          GBP'000    GBP'000     GBP'000 
 Operating activities 
                                                        ---------  ---------  ---------- 
 Profit before tax for the period                         (2,665)      1,140       1,148 
                                                        ---------  ---------  ---------- 
 Adjustments for: 
                                                        ---------  ---------  ---------- 
 Net valuation losses on investment property                4,515        792       2,888 
                                                        ---------  ---------  ---------- 
 Net gains on investments                                       -       (53)        (53) 
                                                        ---------  ---------  ---------- 
 Share based payment expense                                    7          -          12 
                                                        ---------  ---------  ---------- 
 Finance income                                               (2)        (5)         (6) 
                                                        ---------  ---------  ---------- 
 Finance expense                                              458        396         856 
                                                        ---------  ---------  ---------- 
 Operating cash flow before changes in working 
  capital and provisions                                    2,313      2,270       4,845 
                                                        ---------  ---------  ---------- 
 (Increase)/decrease in trade and other receivables         (393)      (197)       (667) 
                                                        ---------  ---------  ---------- 
 Increase/(decrease) in trade and other payables              131      (156)         325 
                                                        ---------  ---------  ---------- 
 Cash generated from operations                             2,051      1,917       4,503 
                                                        ---------  ---------  ---------- 
 Finance income                                                 2          5           6 
                                                        ---------  ---------  ---------- 
 Finance expense                                            (458)      (396)       (856) 
                                                        ---------  ---------  ---------- 
 Income tax received/(paid)                                    22          -        (93) 
                                                        ---------  ---------  ---------- 
 Net cash flows from operating activities                   1,617      1,526       3,560 
                                                        ---------  ---------  ---------- 
 Investing activities 
                                                        ---------  ---------  ---------- 
 Purchase of fixed assets - investment property                 -   (11,897)    (11,898) 
                                                        ---------  ---------  ---------- 
 Sale of fixed assets - equity investments                      -        723         724 
                                                        ---------  ---------  ---------- 
 Net cash flows from investing activities                       -   (11,174)    (11,174) 
                                                        ---------  ---------  ---------- 
 Financing activities 
                                                        ---------  ---------  ---------- 
 Dividends paid                                           (1,397)    (1,744)     (2,829) 
                                                        ---------  ---------  ---------- 
 New bank borrowings                                            -      6,800       6,800 
                                                        ---------  ---------  ---------- 
 Net cash flows from financing activities                 (1,397)      5,056       3,971 
                                                        ---------  ---------  ---------- 
 Net (decrease)/increase in cash and cash equivalents         220    (4,592)     (3,643) 
                                                        ---------  ---------  ---------- 
 Cash and cash equivalents at 1 January                     1,559      5,202       5,202 
                                                        ---------  ---------  ---------- 
 Cash and cash equivalents at period end                    1,779        610       1,559 
                                                        ---------  ---------  ---------- 
 

Notes (Unaudited)

for the six months ended 30 June 2020

1. Nature of operations and general information

Highcroft Investments PLC ('Highcroft' or 'company') and its subsidiaries' (together 'the group') principal activity is investment in property. It is incorporated and domiciled in Great Britain. The address of Highcroft's registered office, which is also its principal place of business, is Thomas House, Langford Locks, Kidlington, OX5 1HR. Highcroft's condensed consolidated interim financial statements are presented in Pounds Sterling (GBP), which is also the functional currency of the group. These condensed consolidated interim financial statements have been approved for issue by the directors on 2 September 2020. The financial information for the period ended 30 June 2020 set out in this interim report does not constitute statutory accounts as defined in Section 404 of the Companies Act 2006. The group's statutory financial statements for the year ended 31 December 2019 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain statements under Section 498(2) or Section 498(5) of the Companies Act 2006.

2. Basis of preparation

These condensed consolidated interim financial statements are for the six months ended 30 June 2020. They have been prepared in accordance with IAS 34, Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the group for the year ended 31 December 2019.

These condensed consolidated interim financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment properties and the measurement of equity investments at fair value. These condensed consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31 December 2019.

The accounting policies have been applied consistently throughout the group for the purposes of preparation of these condensed consolidated interim financial statements.

The financial statements are drawn up on a going concern basis. The directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future and consider that there are no material uncertainties that lead to significant doubt upon the group's ability to continue as a going concern. Cash flow forecasts are prepared annually as part of the planning and budgeting process and are monitored and reworked regularly. The group has fixed-term non-amortising borrowing and has additional headroom available.

3. Segment reporting

The group has one main business segment - property.

In 2020 the largest tenant represented 11% (2019 9%) and the second largest tenant represented 7% (2019 7%) of gross commercial property income for the period.

4. Income tax credit/(charge)

 
                         First     First 
                          half      half  Full year 
                          2020      2019       2019 
                       GBP'000   GBP'000    GBP'000 
 Current tax: 
                      --------  --------  --------- 
 On revenue profits          8         -         72 
                      --------  --------  --------- 
 On capital profits          -      (11)       (99) 
                      --------  --------  --------- 
                             8      (11)       (27) 
                      --------  --------  --------- 
 Deferred tax                -         -         33 
                      --------  --------  --------- 
 Total tax                   8      (11)          6 
                      --------  --------  --------- 
 

The taxation charge has been based on the estimated effective tax rate for the full year. As a Real Estate Investment Trust the group does not pay corporation tax on its profits and gains from its property activities.

Notes (Unaudited) (continued)

for the six months ended 30 June 2020

5. Dividends

The following property income distributions have been paid by the company:

 
                                                  First     First 
                                                   half      half  Full year 
                                                   2020      2019       2019 
                                                GBP'000   GBP'000    GBP'000 
 2019 final: 27.00p per ordinary share (2018 
  final 33.75p)                                   1,397     1,744      1,744 
                                               --------  --------  --------- 
 2019 interim: 21.00p per ordinary share              -         -      1,085 
                                               --------  --------  --------- 
                                                  1,397     1,744      2,829 
                                               --------  --------  --------- 
 

6. Earnings per share

The calculation of earnings per share is based on the loss for the period of GBP2,657,000 (2019 profit GBP1,129,000) and on 5,169,695 shares which is the weighted average number of shares in issue during the period ended 30 June 2020, (2019 5,167,240) .

In order to draw attention to the impact of valuation gains and losses which are included in the income statement 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 GBP1,858,000 (2019 GBP1,921,000) has been calculated.

 
                                                  First     First 
                                                   half      half  Full year 
                                                   2020      2019       2019 
                                                GBP'000   GBP'000    GBP'000 
 Earnings: 
                                               --------  --------  --------- 
 Basic earnings                                 (2,657)     1,129      1,154 
                                               --------  --------  --------- 
 Adjustments for: 
                                               --------  --------  --------- 
 Net valuation losses on investment property      4,515       792      2,888 
                                               --------  --------  --------- 
 Gains/(losses) on investments                        -         -       (53) 
                                               --------  --------  --------- 
 Income tax on profits                                -         -         66 
                                               --------  --------  --------- 
 Adjusted earnings                                1,858     1,921      4,055 
                                               --------  --------  --------- 
 Per share amount: 
                                               --------  --------  --------- 
 Earnings per share (unadjusted)                (51.4p)     21.9p      22.3p 
                                               --------  --------  --------- 
 Adjustments for: 
                                               --------  --------  --------- 
 Net valuation losses on investment property      87.3p     15.3p      55.9p 
                                               --------  --------  --------- 
 (Gains) / losses on investments                      -         -     (1.0p) 
                                               --------  --------  --------- 
 Income tax on profits                                -         -       1.3p 
                                               --------  --------  --------- 
 Adjusted earnings per share                      35.9p     37.2p      78.5p 
                                               --------  --------  --------- 
 

Notes (Unaudited) (continued)

for the six months ended 30 June 2020

7. Investment property

 
                                 First     First 
                                  half      half  Full year 
                                  2020      2019       2019 
                               GBP'000   GBP'000    GBP'000 
 Valuation at 1 January         86,710    77,700     77,700 
                              --------  --------  --------- 
 Additions                           -    11,897     11,898 
                              --------  --------  --------- 
 Disposals                           -         -          - 
                              --------  --------  --------- 
 (Loss)/gain on revaluation    (4,515)     (792)    (2,888) 
                              --------  --------  --------- 
 Valuation at period end        82,195    88,805     86,710 
                              --------  --------  --------- 
 

The directors have used an external independent valuation of properties at 30 June 2020 which has been carried out consistently with the annual valuation. The independent valuer, Knight Frank LLP, included a material uncertainty clause in their valuation reports relating to assets valued at GBP52,820,000, 64%, of the total valuation. This clause indicates that, due to the impact of COVID-19, less certainty, and a higher degree of caution, should be attached to the valuations of those assets to which the clause applies than would otherwise be the case.

8. Equity investments

 
                                                First     First 
                                                 half      half  Full year 
                                                 2020      2019       2019 
                                              GBP'000   GBP'000    GBP'000 
 Valuation at 1 January                             -       679        679 
                                             --------  --------  --------- 
 Additions                                          -         -          - 
                                             --------  --------  --------- 
 Disposals                                          -     (670)      (670) 
                                             --------  --------  --------- 
                                                    -         -          9 
                                             --------  --------  --------- 
 Unlisted investments transferred to other 
  receivables                                       -         -        (9) 
                                             --------  --------  --------- 
 Valuation at period end                            -         9          0 
                                             --------  --------  --------- 
 

9. Interest bearing loans

 
                                                  First     First 
                                                   half      half  Full year 
                                                   2020      2019       2019 
                                                GBP'000   GBP'000    GBP'000 
 Short-term bank loans due within one year        4,000         -      4,000 
                                               --------  --------  --------- 
 Medium-term loans                               22,200    26,200     22,200 
                                               --------  --------  --------- 
 The medium-term bank loans comprise amounts 
  falling due as follows: 
                                               --------  --------  --------- 
 Between one and two years                        7,500     4,000          - 
                                               --------  --------  --------- 
 Between two and five years                           -     7,500      7,500 
                                               --------  --------  --------- 
 Over five years                                 14,700    14,700     14,700 
                                               --------  --------  --------- 
 

The debt is secured on certain assets within the group's property portfolio. GBP2,500,000 of the amounts falling due within one year were re-financed on 3 July 2020 and a facility letter is in place to re-finance the remaining GBP1,500,000 on the maturity date in November 2020.

Notes (Unaudited) (continued)

for the six months ended 30 June 2020

10. Share capital

 
                                                       First      First 
                                                        half       half  Full year 
                                                        2020       2019       2019 
 Allotted, called up and fully paid ordinary 
  shares of 25p each 
                                                   ---------  ---------  --------- 
 At I January                                      5,167,240  5,167,240  5,167,240 
                                                   ---------  ---------  --------- 
 Issued in the year in connection with Highcroft 
  incentive plan                                       7,935          -          - 
                                                   ---------  ---------  --------- 
 At period end                                     5,175,175  5,167,240  5,167,240 
                                                   ---------  ---------  --------- 
 

11. Related party transactions

Kingerlee Holdings Limited owns, through its wholly owned subsidiaries, 27.2% (2019 27.2%) of the company's shares and D H Kingerlee is a director of both the company and Kingerlee Holdings Limited.

During the period, the group made purchases from Kingerlee Limited, a subsidiary of Kingerlee Holdings Limited, being a service charge in relation to services at Thomas House, Kidlington of GBP7,000 (2019 GBP7,000) and a recharge of computer and courier costs totalling GBPnil (2019 GBP530). The amount owed at 30 June 2020 was GBPnil (2019 GBPnil). All transactions were undertaken on an arm's length basis.

12. Net assets per share

 
                                      First          First 
                                       half           half      Full year 
                                       2020           2019           2019 
 Net assets                   GBP56,674,000  GBP61,769,000  GBP60,721,000 
                              -------------  -------------  ------------- 
 Ordinary shares in issue         5,175,175      5,167,240      5,167,240 
                              -------------  -------------  ------------- 
 Basic net assets per share           1095p          1195p          1175p 
                              -------------  -------------  ------------- 
 

Statement of directors' responsibilities

The directors confirm that, to the best of their knowledge, this condensed consolidated set of half-year financial statements has been prepared in accordance with IAS 34. The half-year management report includes a fair review of the information required by 4.2.7 and 4.2.8 of the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority, namely:

-- an indication of the important events that have occurred during the first six months of the financial year ending 31 December 2020 and their impact on the condensed consolidated set of half-year financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

-- disclosure of material related party transactions in the first six months of the financial year, and any material changes in the related party transactions described in the last annual report.

A list of current directors is maintained on the Highcroft Investments PLC website: www.highcroftplc.com.

By order of the board.

Charles Butler

Chairman

2 September 2020

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END

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