HCFT.L Regulatory News (HCFT)

Highcroft Investments PLC

Preliminary results for the year ended 31 December 2011

KEY HIGHLIGHTS

·; Gross property income increased by 4% to £2,129,000

·; Profit for the year on revenue activities up 5% to £2,066,000

·; Adjusted earnings per share (on revenue activities) up 6% to 40.1p

·; Net asset value per share up to 720p from 716p

·; Total property income distribution up 5% to 30.0p per share

·; Cash and liquid equity investments £7,524,000 (2009: £8,080,000)

Enquiries:

Highcroft Investments PLC

John Hewitt / Roberta Miles 01865 840023

Charles Stanley Securities

Dugald J. Carlean / Karri Vuori 0207 149 6000

Dear Shareholder,

I am pleased to introduce our Preliminary Results for the year ended 31 December 2011. I fear that shareholders reading this statement may experience a sense of déjà vu as my cautionary comments a year ago - about the national economy, the lack of prospects for growth, the subdued consumer attitude and resultant impact on retailers and commercial rents - apply equally today, with a European sovereign debt crisis thrown in for good measure. That said, I think I can echo my words of last year in that we have acquitted ourselves reasonably well in the circumstances.

Results for the year

I am pleased to report that we have made further, albeit modest, progress in a number of areas.

Property: Our gross property income rose 4% to £2,129,000 (2010: £2,053,000), despite falling residential property income as a result of disposals. Sales of vacant residential houses and flats produced nearly £2,086,000 of cash, very significantly above cost and £393,000 above the December 2010 valuations. Our commercial property in Yeovil, which had been vacant since 2009, was re-let in July and we then disposed of it in November. We benefited from a full year of rental income from the freehold industrial unit in Warwick that we purchased at the end of 2010. I can now confirm the completion of the purchase of an industrial unit in Andover which was mentioned in our interim report. This has a strong covenant, is let on a 23 year lease, and currently yields 6.4%, Again, we have to express our disappointment at the relative lack of success in being able to buy properties of the quality which we are seeking for our portfolio. The general recession in national property prices has tended to result in lower-quality portfolios being sold, often by banks, while the competition for properties matching our criteria (lot size, lease length, yield, and tenant strength) is still quite strong.

Equities: Our average income yield of 4.7% on the portfolio, coupled with a realised net gain of £57,000 and an unrealised net loss of £247,000, are a result of the strength of our portfolio during what has been a turbulent period for the equities markets.

Administrative expenses: Our ongoingadministrative expenses declined by 4% when normalised for the £20,000 of one-off costs associated with the General Meeting in May.

Financial highlights: Profit on revenue activities showed a 5% improvement on 2010. Turning to our capital performance, both our property and equity portfolios showed net valuation losses for the year, although the defensive strength of the underlying assets in both classes cushioned us from the significant losses that have been seen in some sectors.

Our year end net asset value edged ahead very marginally to 720p (2010: 716p), held back by the fall in property valuations in the second half of the year. Our year-end cash position was £1,926,000 (2010: £2,472,000), whilst readily realisable equity investments totalled £5,598,000 (2010: £5,608,000).

Dividend

We are recommending a final dividend of 18.5p per share (17.6p 2010) to be paid on 1 June 2012, making a total of 30p for the year (2010: 28.6p). This increase of 5% for the year continues our recent record of dividend increases in excess of inflation.

Board

It is with regret that I inform you that Christopher Clark has given notice that he wishes to retire from the Board on 31 May 2012, having reached his 70th birthday. Christopher has served on the Board, as chairman of the audit committee and as a member of the nomination and remuneration committees since 1 January 2006, and I would like to thank him for his loyal and diligent service during this period and wish him well in his retirement.

Outlook

Our property portfolio currently has no voids, the ground floor at Victoria having been let as from 1 March. Recent industry surveys show that retail voids are running nationally at 14.3% with evidence of trading stress in many High Streets. We continue to monitor closely the health of our existing and potential tenants. The location of the bulk of our property investments, both in terms of dominance in the southern counties and location within prime areas of most cities and towns in which we are represented, continues to result in a better than average experience in values, rents and voids. We continue to manage our assets well and are alert to possible opportunities within the portfolio. We see our principal task in the next year or two as being to take advantage of the weak market to invest in properties which will enable us to continue to grow revenues and asset values over the medium term. We have the financial strength and the borrowing capacity; we continue though to be prudent and do not want to compromise on our criteria. In continuing uncertain times, I hope shareholders will draw comfort from our strategy.

J HEWITT

Chairman

14 March 2012

Consolidated statement of comprehensive income

for the year ended 31 December 2011

Consolidated statement of financial position

at 31 December 2011

Consolidated statement of changes in equity

Consolidated statement of cash flows

for the year ended 31 December 2011

Notes

for the year ended 31 December 2011

1 Income tax credit

The tax assessed for the year differs from the standard rate of corporation tax in the UK of 26.25% (2010 28%). The differences are explained as follows:

2 Dividends

In 2011 the following dividends have been paid by the company:

On 14 March 2012 the directors declared a property income distribution of £956,000, 18.5p per share (2010 £909,000, 17.6p per share) payable on 1 June 2012 to shareholders registered at 4 May 2012.

3 Earnings per share

The calculation of earnings per share is based on the total profit for the year of £1,724,000 (2010 £3,962,000) and on 5,167,240 shares (2010 5,167,240) which is the weighted average number of shares in issue during the year ended 31 December 2011 and throughout the period since 1 January 2011. There are no dilutive instruments.

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 £2,066,000 (2010 £1,965,000) has been calculated.

4 Investment property

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 Jones Lang LaSalle, and Cluttons (for our new 2011 acquisition only), as external valuers and has been prepared as at 31 December 2011, 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 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

6 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 2010, The accounting policies remain unchanged except in respect of the new amended standard IFRS 24 which has no impact on this announcement.

7 Annual General Meeting

The Annual General Meeting will be held on 10 May 2012.

8 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 2011 on which the auditor has expressed an unqualified 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 11 April 2012 and subsequently filed at Companies House.