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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 |
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.
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
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(END) Dow Jones Newswires
March 24, 2017 03:00 ET (07:00 GMT)
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