HCFT.L Regulatory News (HCFT)

1 Apr 2008 15:22

Highcroft Investments PLC01 April 2008 Highcroft Investments PLC Preliminary results for the year ended 31 December 2007 Key highlights • Gross property income up 4.3% to £2,126,000 • Profit for the year on revenue activities up 4.1% to £1,562,000 • Basic loss per share on all activities 8.5p • Adjusted earnings per share (on revenue activities) up 4.1% to 30.2p • Net asset value per share down 2.8% to 807p • Total dividends up 4.0% to 14.25p per share • Final dividend of 9.25p payable on 4 June 2008 • The group converts to a REIT on 1 April 2008 Enquiries: John Hewitt, Chairman 01865 840 023 Highcroft Investments plc Adam Sumner 020 7149 6000 Charles Stanley Securities Chairman's Statement Financial results - revenue activities Profit before taxation on revenue activities decreased to £1,833,000 from£1,956,000 in 2006, a fall of 6.3% which was after incurring costs of £147,000in respect of the potential conversion to a REIT. Gross income was £2,532,000as compared with £2,527,000 in 2006. Gross property income rose from £2,038,000to £2,126,000, an increase of 4.3%. Financial results - capital activities During 2007, there were no property acquisitions (2006 £7,437,000) and £6,000was spent on one property. New investments in equities totalled £1,164,000(2006 £1,029,000). The proceeds from property disposals during the yearamounted to £2,619,000 (2006 £2,032,000) while equity disposals generated£2,429,000 (2006 £1,000,000). The net gains on these disposals amounted to £128,000 (2006 £201,000),comprising £101,000 of net gains on property disposals and £27,000 of net gainson disposal of equity investments. The net gain after taxation of £91,000 (2006£118,000) was transferred to realised capital reserve. Property There was a valuation deficit on the property portfolio of £3,431,000 and, afterdisposals, the value of the portfolio was £35.5 million (2006 £41.5 million). During the year, £1,865,000 was realised by the sale of one commercial officewhich had, effectively, already been replaced by our office acquisition inVictoria in 2006. Listed investments The All Share Index rose by 2% during 2007 and we made several disposals fromthe equity investment portfolio which gave a net gain of £27,000 in the incomestatement. During the course of 2007 there was a net divestment from the equityinvestment portfolio of £1,265,000. Summary Despite difficult markets, the net asset value per share fell by only 2.8% to807p (2006 830p). Total shareholders funds were £41,713,000 (2006 £42,875,000). The continuing increase in income and operating profits enables us to increasedividends in line with the rate of inflation. Proposed dividends for 2007 areup 4.0% on 2006. The basic earnings per share, which take account of capitalactivities, are negative and show a loss per share of 8.5p per share butadjusted earnings per share, adjusted to take out the effect of capitalactivities, are up 4.1% to 30.2p per share. Current trading and prospects The property market fell sharply in the second half of 2007 in what has beenregarded by many as a long awaited correction. We are still looking atpotential investments and will not be averse to making acquisitions which webelieve will give financial return in the medium term. Equity markets were turbulent in the second half of 2007 and this has continuedinto 2008. We do not expect markets to be very different in 2008. Ouractivities in these markets are able to be more short term than those in theproperty market but we do still predominantly seek return in the medium term. Our AGM is always a forum for the expression of views and comment on ourperformance and I suspect that this year will be no different. My fellowdirectors (to whom go my thanks on behalf of shareholders for their hard workand deliberations in a difficult year) and I look forward to seeing you at thisyear's meeting on 21 May 2008. J HEWITTChairman 01 April 2008 Consolidated income statementfor the year ended 31 December 2007 Note 2007 2006 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Gross rental revenue 2,126 - 2,126 2,038 - 2,038Property operating expenses (99) - (99) (136) - (136)Net rental revenue 2,027 - 2,027 1,902 - 1,902 Realised gains on investment property - 107 107 - 320 320Realised losses on investment property - (6) (6) - (33) (33)Net realised gain on investment property - 101 101 - 287 287 Valuation gains on investment property - 388 388 - 2,732 2,732Valuation losses on investment property - (3,819) (3,819) - (398) (398)Net valuation (losses)/gains on investment - (3,431) (3,431) - 2,334 2,334property Dividend revenue 406 - 406 489 - 489Gains on equity investments - 1,592 1,592 - 1,455 1,455Losses on equity investments - (1,290) (1,290) - (309) (309)Net investment income 406 302 708 489 1,146 1,635 Administration expenses (391) - (391) (247) - (247)Net operating profit/(loss) before net finance 2,042 (3,028) (986) 2,144 3,767 5,911expenses Finance income 28 - 28 13 - 13Finance expenses (237) - (237) (201) - (201)Net finance expenses (209) - (209) (188) - (188) Profit/(loss) before tax 1,833 (3,028) (1,195) 1,956 3,767 5,723 Income tax (expense)/credit 1 (271) 1,027 756 (456) (884) (1,340) Profit/(loss) for the year 1,562 (2,001) (439) 1,500 2,883 4,383 Basic and diluted earnings/(loss) per share 3 30.2p (38.7p) (8.5p) 29.0p 55.8p 84.8p The total column represents the income statement as defined in IAS1. Consolidated balance sheetat 31 December 2007 Note 2007 2006 £'000 £'000AssetsNon-current assetsInvestment property 4 35,545 41,487Equity investments 5 10,830 11,794Total non-current assets 46,375 53,281 Current assetsTrade and other receivables 326 489Cash 813 281Total current assets 1,139 770 Total assets 47,514 54,051 LiabilitiesCurrent liabilitiesInterest-bearing loans and borrowings 18 246Current income tax 426 196Trade and other payables 743 838Total current liabilities 1,187 1,280 Non-current liabilitiesInterest-bearing loans and borrowings 1,909 5,685Deferred tax liabilities 2,705 4,211Total non-current liabilities 4,614 9,896 Total liabilities 5,801 11,176 Net assets 41,713 42,875 EquityIssued share capital 1,292 1,292Revaluation reserve - property 7,094 10,169 - other 4,203 4,601Capital redemption reserve 95 95Realised capital reserve 17,527 16,055Retained earnings 11,502 10,663Total equity 41,713 42,875 Consolidated statement of cash flowsfor the year ended 31 December 2007 2007 2006 £'000 £'000 Operating activities(Loss)/profit for the year (439) 4,383Adjustments for:Net valuation losses/(gains) on investment 3,431 (2,334)propertyProfit on disposal of investment property (101) (287)Gains on investments (302) (1,146)Finance income (28) (13)Finance expense 237 201Income tax (credit)/expense (756) 1,340Operating cash flow before changes in working 2,042 2,144capital and provisions Decrease/(increase) in trade and other receivables 163 (188)(Decrease)/increase in trade and other payables (94) 113Cash generated from operations 2,111 2,069 Finance income 28 13Finance expenses (237) (201)Income taxes paid (521) (650)Net cash flows from operating activities 1,381 1,231 Investing activitiesPurchase of non-current assets - investment (6) (7,437)property - (1,164) (1,029)equity investmentsSale of non-current assets - investment 2,619 2,032property - 2,429 1,000equity investmentsNet cash flows from investing activities 3,878 (5,434) Financing activitiesNew medium term loans - 4,470Loan repayments (4,004) (39)Dividends paid (723) (672)Net cash flows from financing activities (4,727) 3,759 Net increase in cash 532 (444)Cash at 1 January 2007 281 725Cash at 31 December 2007 813 281 Notes for the year ended 31 December 2007 1 Taxation 2007 2006 £'000 £'000Current tax:On revenue profits 341 363On capital profits 37 83Prior year overprovision (31) (11) 347 435Deferred tax (1,103) 905 (756) 1,340 The tax assessed for the year differs from the standard rate of corporation taxin the UK of 30% (2006 30%). The differences are explained as follows: 2007 2006 £'000 £'000 (Loss)/profit before tax (1,195) 5,723(Loss)/profit before tax multiplied by standard rate of (358) 1,716corporation tax in the UK of 30% (2006 30%).Effect of:Tax exempt revenues (93) (119)Deferred taxation now at 28% (281) -Chargeable gains more than accounting profit 7 (246)Adjustments to tax charge in respect of prior periods (31) (11)Income tax (credit)/expense (756) 1,340 2 Dividends On 1 April 2008, the directors declared an ordinary dividend of 9.25p per share(2006 9.0p) payable on 4 June 2008 to shareholders registered at 9 May 2008. The following dividends have been paid by the group. 2007 2006 £'000 £'000 2006 Final: 9.00p per ordinary share (2005 8.30p) 465 4292007 Interim: 5.00p per ordinary share (2006 4.70p) 258 243 723 672 3 (Loss)/earnings per share The calculation of earnings per share is based on the total loss for the year of£439,000 (2006 £4,383,000 profit) and on 5,167,240 shares (2006 5,167,240) whichis the weighted average number of shares in issue during the year ended 31December 2007 and throughout the period since 1 January 2006. There are nodilutive instruments. In order to draw attention to the impact of valuation gains and losses which areincluded in the income statement but not available for distribution under thecompany's articles of association, an adjusted earnings per share based on theprofit available for distribution of £1,562,000 (2006 £1,500,000) has beencalculated. 2007 2006 £'000 £'000Earnings: Basic earnings ((loss)/profit for the year (439) 4,383Adjustments for:Net valuation losses/(gains) on investment property 3,330 (2,621)Gains and losses on investments (302) (1,146)Income tax on gains and losses (1,027) 884Adjusted earnings (operating profit) 1,562 1,500Per share amount:Basic (loss)/earnings per share (8.5p) 84.8pAdjustments for:Net valuation losses and gains on investment property 64.4p (50.7p)Gains and losses on investments (5.8p) (22.2p)Income tax on gains and losses (19.9p) 17.1pAdjusted earnings per share 30.2p 29.0p 4 Investment property 2007 2006 £'000 £'000 Valuation at 1 January 2007 41,487 33,461Additions 6 7,437Disposals (2,517) (1,745)Revaluation (losses)/gains (3,431) 2,334Valuation at 31 December 2007 35,545 41,487 In accordance with IAS 40, the carrying value of investment properties is thefair value of the property as determined by Jones Lang LaSalle. The valuationhas been conducted by them as external valuers and has been prepared as at 31December 2007, in accordance with the Appraisal & Valuation Standards of theRoyal Institution of Chartered Surveyors, on the basis of market value. Thisvalue has been incorporated into the financial statements. 5 Equity investments 2007 2006 £'000 £'000 Valuation at 1 January 2007 11,794 10,620Additions 1,164 1,029Disposals (2,403) (1,087)Revaluation gains 275 1,232Valuation at 31 December 2007 10,830 11,794 6 Basis of preparation The preliminary announcement has been prepared in accordance with applicableaccounting standards as stated in the financial statements for the year ended 31December 2006. 7 Annual General Meeting The Annual General Meeting will be held on 21 May 2008. 8 Final ordinary dividend A final ordinary dividend of 9.25p per share will be paid on 4 June 2008 to shareholders registered at the close of business on 9 May 2008. 9 Publication of non-statutory accounts The above does not constitute statutory accounts within the meaning of section240 of the Companies Act 1985. It is an extract from the full accounts for theyear ended 31 December 2007 on which the auditor has expressed an unqualifiedopinion. The accounts will be posted to shareholders on or before 21 April 2008and subsequently filed at Companies House. This information is provided by RNS The company news service from the London Stock Exchange