Condensed consolidated interim statement of cash flows

for the six months ended 30 June 2013

 

	Unaudited		Unaudited		Audited
	First Half		First Half		Full Year
	2013		2012		2012
	£'000		£'000		£'000
Operating activities
Profit for the period	1,654		2,323		3,594
Adjustments for:
Net valuation (gains)/losses on investment property	(15)		(1,025)		586
Gain on disposal of investment property	-		(62)		(1,552)
Net gains on investments	(436)		(238)		(498)
Finance income	(5)		(3)		(8)
Income tax expense/(credit)	(59)		14		(15)
Operating cash flow before changes in working
capital and provisions	1,139		1,009		2,107
Increase in trade and other receivables	(115)		(287)		(37)
Increase in trade and other payables	19		271		319
Cash generated from operations	1,043		993		2,389
Finance income	5		3		8
Income tax received	10		-		-
Net cash flows from operating activities	1,058		996		2,397
Investing activities
Purchase of fixed assets   - investment property	-		-		(4,827)
- equity investments	(20)		(420)		(540)
Sale of fixed assets           - investment property	-		81		4,972
- equity investments	1,297		646		922
Net cash flows from investing activities	1,277		307		527
Financing activities
Dividends paid	(1,023)		(956)		(1,576)
Net cash flows from financing activities	(1,023)		(956)		(1,576)
Net increase in cash and cash equivalents	1,312		347		1,348
Cash and cash equivalents at 1 January 2013	3,274		1,926		1,926
Cash and cash equivalents at 30 June 2013	4,586		2,273		3,274

 

 

 

Notes (unaudited)

for the six months ended 30 June 2013

 

1.       Nature of operations and general information

Highcroft Investments PLC ('Highcroft') and its subsidiaries (together 'the group') principal activities are investment in property and equities. It is incorporated and domiciled in Great Britain.  The address of Highcroft Investments PLC'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 (£), which is also the functional currency of the group. These condensed consolidated interim financial statements have been approved for issue by the directors on 14 August 2013. The financial information for the year ended 31 December 2012 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 2012 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 2013.  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 2012.

 

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 2012.

 

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

 

3.       Segment reporting

Segmental information is presented in the condensed consolidated interim financial statements in respect of the group's business segments.  The business segment reporting format reflects the group's management and internal reporting structure. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.  All gross income is from external tenants or external investments.                                                                    

The group is comprised of the following main business segments:

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

§ Commercial property comprising retail outlets, offices and warehouses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

§ Residential property comprising single-let houses flats.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

§ Financial assets comprising exchange-traded equity investments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

 

	First Half		First Half		Full Year
	2013		2012		2012
	£'000		£'000		£'000
Commercial property
Gross income	1,237		1,121		2,308
Profit for the period	917		1,895		2,650
Assets	35,172		32,600		33,369
Liabilities	818		759		856
Residential property
Gross income	21		21		43
Profit for the period	148		101		214
Assets	1,402		1,745		1,266
Liabilities	2		5		2
Financial assets
Gross income	110		120		251
Profitfor the period	589		327		730
Assets	4,877		5,835		6,215
Liabilities	759		826		751
Total
Gross income	1,368		1,262		2,602
Profit for the period	1,654		2,323		3,594
Assets	41,451		40,180		40,850
Liabilities	1,579		1,590		1,609
No tenant represented more than 10% of gross commercial property income.

 

4.       Income tax (credit)/expense

 

	First Half		First Half		Full Year
	2013		2012		2012
	£'000		£'000		£'000
Current tax:
On revenue profits	(88)		-		(53)
On capital profits	87		14		18
Prior year overprovision	(9)		-		-
	(10)		14		(35)
Deferred tax	(49)		-		20
	(59)		14		(15)

 

The taxation charge has been based on the estimate 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 commercial and residential property activities.

 

5.       Dividends

On 14 August 2013, the directors declared a property income dividend of 12.5p per share (2012: 12.0p interim dividend) payable on 18 October 2013 to shareholders registered on 20 September 2013

 

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

 

	First Half		First Half		Full Year
	2013		2012		2012
	£'000		£'000		£'000
2012 final: 19.8p per ordinary share (2011 final: 18.5p)	1,023		956		956
2012 interim: 12.0p per ordinary share	-		-		620
	1,023		956		1,576

 

6.       Earnings per share

The calculation of earnings per share is based on the profit for the period of £1,654,000 (2012: 2,323,000) and on 5,167,240 shares (2012: 5,167,240) which is the weighted average number of shares in issue during the period ended 30 June 2013 and throughout the period since 1 January 2012.                                                                                                                                                                                          

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 £1,232,000 (2012: £1,074,000) has been calculated.

 

	First Half			First Half			Full Year
	2013			2012			2012
	£'000			£'000			£'000
Earnings:
Basic earnings	1,654			2,323			3,594
Adjustments for:
Net valuation gains on investment property	(15)			(1,025)			586
Gains and losses on investments	(436)			(238)			(498)
Income tax on gains and losses	29			14			38
Adjusted earnings	1,232			1,074			3,720
Per share amount:
Basic earnings per share	32.0	p		45.0	p		69.6	p
Adjustments for:
Net valuation gains on investment property	(0.3)	p		(19.8)	p		11.3	p
Gains and losses on investments	(8.4)	p		(4.6)	p		(9.6)	p
Income tax on gains and losses	0.6	p		0.3	p		0.7	p
Adjusted earnings per share	23.9	p		20.9	p		72.0	p

 

7.       Investment property

 

	First Half		First Half		Full Year
	2013		2012		2012
	£'000		£'000		£'000
Valuation at 1 January 2013	31,609		30,787		30,787
Additions	-		-		4,827
Disposals	-		(19)		(3,419)
Gain /(loss) on revaluation	15		1,025		(586)
Valuation at 30 June 2013	31,624		31,793		31,609

 

The directors have used an external independent valuation of properties at 30 June 2013 which has been carried out consistently with the annual valuation.

 

8.       Equity investments

 

	First Half		First Half		Full Year
	2013		2012		2012
	£'000		£'000		£'000
Valuation at 1 January 2013	5,713		5,598		5,598
Additions	20		420		540
Disposals	(1,128)		(593)		(849)
Surplus on revaluation in excess of cost	291		225		416
Revaluation decrease below cost	(24)		(46)		(17)
Revaluation increase still below cost	-		6		25
Valuation at 30 June 2013	4,872		5,610		5,713

 

 

 

9.       Related party transactions

Kingerlee Holdings Limited owns, through its wholly owned subsidiaries, 25.4% (2012: 25.4%) of the company's shares and D H Kingerlee and J C Kingerlee were directors of both the company and Kingerlee Holdings Limited during the period.

 

During the period, the group made purchases from Kingerlee Holdings Limited or its subsidiaries, being a service charge in relation to services at Thomas House, Kidlington of £7,000 (2012: £7,000). The amount owed at 30 June 2013 was nil (2012: nil).  All transactions were undertaken on an arm's length basis.

 

10.     Events after the reporting date                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

On 3 July 2013 the group purchased a single retail warehouse unit in Bicester, Oxfordshire let to Wickes Building Supplies Limited with an unexpired lease term of 17 years and 3 months. The consideration was £5,700,000 net of costs and the current rent is £371,853 per annum which represents 13% of group rental income.  On the same date the company drew a 7 year fixed term, non-amortising, fixed interest rate loan of £2,500,000 from Svenska Handelsbanken AB (publ). 

 

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 2013 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

 

 

John Hewitt

Chairman

14 August 2013