REG - Highcroft Invs PLC - Half-year Report
06/09/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220906:nRSF3284Ya&default-theme=true
RNS Number : 3284Y Highcroft Investments PLC 06 September 2022
Highcroft Investments PLC
Interim Report for the six months ended 30 June 2022
Interim management report and statement of directors' responsibilities
Key Highlights:
*Gross rental income decreased 7% to £2,775,000 (2021 £2,977,000)
*Net rental income decreased 7% to £2,538,000 (2021 £2,735,000)
*93% occupancy in the property portfolio (2021 89%) at period end
*100% of Q1 rent, 99% of Q2 rent and 96% of Q3 rent, due to date, collected
*Adjusted earnings per share increased 4% to 29.5p (2021 28.3p)
*Total earnings per share 124.2p (2021 118.8p)
*Property valuation increased by 5.6% on a like-for-like basis to £92,905,000
(December 2021 £87,565,000)
*Net assets per share increased 7.0% to 1364p (June 2021 1185p, December 2021
1275p)
*Loan to value 29.3% (June 2021 31.4%, December 2021 31.1%)
Dear Shareholder
I am writing to report our half year 2022 results. Whilst the impact of the
conflict in Ukraine combined with the lingering Covid-19 pandemic have had a
significant effect on our tenants, their staff and customers, we are pleased
to say our results have held up very well.
In these challenging circumstances, and in a period where we had voids and
planned maintenance work, our performance for the first half of 2022 matched
our expectations with 99% of rent collected for the period and a 7% fall in
both gross and net rental income. The drop in gross rental income primarily
related to our Cardiff property that became void in June 2021 (and where a
refurbishment is now almost complete), along with the sale of our Andover
property in August 2021. Our property costs increased due to the costs of
our void properties, primarily rates, and related dilapidations work, however
this was offset by the reduction in our bad debt charge for the period. A
strong 5.6% increase in property valuation has, in turn, led to a 7.0%
increase in net assets per share to 1364p. This 5.6% increase is made up of a
5.7% negative movement in our high street retail properties which now only
account for 5.0% of our portfolio, and a strong upward movement of 7.0% in our
industrial portfolio and 6.5% in our retail warehouses. Our overall movement
compares with the MSCI All Property Index of 7.2% for the same period. There
were no significant underlying asset management events. At 30 June 2022 two of
our properties remained void, representing 7% of our rental income. We are
negotiating a new lease on one of these units representing 1% of our rental
income, and we are actively engaged in seeking new tenants for the other.
We continue to take a conservative view on managing debt levels and remain
comfortable with our 29.3% LTV position at the period end. During the period
we refinanced the £7.5 million term loan that matured in May 2022 with a new
£7.5 million term loan that matures in May 2029. The secured deposit of
£1.575 million that was in place as bank security at 31 December 2021 was
released by the bank in April 2022 and reclassified as cash at bank.
During the period we substantially completed some renovation and improvement
work at our Cardiff office property, and we are now seeking new tenants. We
are in the final stages of obtaining planning permission for the development
of a warehouse unit on spare land at our site in St Austell and are currently
finalising a pre-let agreement and preparing to go out to tender for the
building works.
During the period we started to market three of our high street retail
properties as part of the strategy to reduce our exposure to this sector and
one of our warehouse properties where we have identified a requirement for
large space occupiers/owners. The marketing processes are ongoing.
Interim management report and statement of directors' responsibilities
(continued)
People
After the period end, on 1 August 2022, David Kingerlee stepped down from the
board after almost 26 years' service, mostly as an executive director and,
since April 2021, as a non-executive director representing the interests of
the Kingerlee Group. The board is grateful to David for the service that he
has given to the company over this time. We were pleased to welcome David
Warlow to the board, on 1 August 2022, as non-executive director. He will
represent the interests of the Kingerlee Group of companies which, together
with its associates, form part of the Kingerlee Concert Party which has an
aggregate beneficial interest of 40.95% in the share capital of the company.
Dividend
I am pleased to report an interim property income distribution of 23p (2021
22p) per share, payable on 14 October 2022 to shareholders on the register at
16 September 2022 (with an ex-dividend date of 15 September 2022).
Outlook
While the first half has been very strong leading to our highest ever net
assets per share the second half has already started showing increasing signs
that the impact of rising interest rates, soaring inflation and increasing
negativity surrounding the economic outlook are starting to push out valuation
yields which could negatively impact valuations.
The conflict in Ukraine is introducing macro-economic challenges globally and
having negative effects on businesses' cost bases and supply chains. We, as
a board, will continue to take a prudent view and monitor the situation
closely. We will continue to work with our tenants and support them where we
can whilst at the same time keeping our gearing low and a healthy cash balance
to ensure we are well positioned to assess potential opportunities that may
arise as the macro-economic landscape stabilises.
Statement of principal risks and uncertainties
The directors review principal risks at each board meeting and carried out a
mid-year review on 5 September 2022. They consider that there have been no
material changes to the group's principal risks as set out in detail on pages
32 to 37 of the annual report and accounts for the year ended 31 December
2021, other than the risk related to debt refinancing which is no longer
considered to be a principal risk. The current principal risk areas can be
summarised as:
External risks Internal risks
Macro-economic outlook Business strategy
Political and regulatory outlook Key personnel
Occupier demand and tenant default Sustainability
Commercial property investor demand
Related party transactions
Related party transactions are disclosed in note 12. There have been no
material changes in related party transactions in the period. As noted in the
chairman's statement on 1 August 2022 David Warlow was appointed to the board
as a non-independent non-executive director to represent the interests of the
Kingerlee group of companies and David Kingerlee, who held this role
previously, resigned from the board.
Interim management report and statement of directors' responsibilities
(continued)
Statement of directors' responsibilities
The directors confirm that, to the best of their knowledge, the half-year
report and condensed consolidated set of half-year financial statements have
been prepared in accordance with IAS 34. The half-year report and condensed
consolidated set of half-year financial statements give a true and fair view
of the assets, liabilities, financial position and return of the Group. The
half-year report and condensed consolidated set of half-year financial
statements include 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 2022 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
5 September 2022
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 which is part of UK law by virtue of the European
Union (Withdrawal) Act 2018.
For further information, contact:
Highcroft Investments PLC +44 (0)1869 352766
Charles Butler/Roberta Miles
Singer Capital Markets Advisory LLP +44 (0)20 7496 3000
Peter Steel / Amanda Gray - Corporate Finance
Tom Salvesen - Corporate Broking
Independent review report to Highcroft Investments PLC
Conclusion
We have been engaged by Highcroft Investments PLC (the "Company") to review
the financial information for the six months ended 30 June 2022 which
comprises the condensed consolidated interim statement of comprehensive
income, the condensed consolidated interim statement of financial position,
the condensed consolidated interim statement of changes in equity, the
condensed consolidated interim statement of cash flows and related notes 1 to
15.
We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of consolidated financial statements in the
half year financial report for the six months ended 30 June 2022 is not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34 and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and consequently does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with UK adopted IFRSs. The condensed set of financial
statements included in this half year financial report has been prepared in
accordance with UK adopted International Accounting Standard 34, "Interim
Financial Reporting".
Conclusions relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of directors
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with UK adopted
International Accounting Standard 34 and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority, which
requires that the interim report must be prepared and presented in a form
consistent with that which will be adopted in the company's annual accounts
having regard to the accounting standards applicable to such annual accounts.
In preparing the interim financial report, the directors are responsible for
assessing the company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the company or
to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the interim report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the half
year financial report. Our conclusion, including our Conclusions Relating to
Going Concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of this report.
Use of the review report
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK) 2410 issued by the Financial Reporting
Council and our Engagement Letter dated 31 May 2022. Our work has been
undertaken so that we might state to the Company those matters we are required
to state to it in an independent review report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our review work, for this report, or for
the conclusions we have formed.
Mazars LLP
Chartered Accountants
London
5 September 2022
Notes:
The maintenance and integrity of the Highcroft Investments plc's web site is
the responsibility of the directors; the work carried out by us does not
involve consideration of these matters and, accordingly, we accept no
responsibility for any changes that may have occurred to the interim report
since it was initially presented on the web site.
Legislation in the United Kingdom governing the preparation and dissemination
of financial information may differ from legislation in other jurisdictions.
Condensed consolidated interim statement of comprehensive income (unaudited)
for the six months ended 30 June 2022
Unaudited Unaudited
First half 2022 First half 2021
Note Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Continuing operations
Gross rental income 2,775 - 2,775 2,977 - 2,977
Property operating expenses (237) - (237) (242) - (242)
Net rental income 2,538 - 2,538 2,735 - 2,735
Valuation gains on investment property - 5,232 5,232 - 5,275 5,275
Valuation losses on investment property - (320) (320) - (590) (590)
Net valuation gains on investment property 8 - 4,912 4,912 - 4,685 4,685
Administrative expenses (583) - (583) (539) - (539)
Operating profit before net financing costs 1,955 4,912 2,196 4,685 6,881
6,867
Finance income 8 - 8 1 - 1
Finance expenses (422) - (422) (425) - (425)
Net finance costs (414) - (414) (424) - (424)
Profit before tax 1,541 4,912 6,453 1,772 4,685 6,457
Income tax charge 5 (7) - (7) (304) - (304)
Total profit and comprehensive income for the financial period 1,534 4,912 6,446 1,468 4,685 6,153
Basic and diluted earnings 7 124.2p 118.8p
per share
The total column represents the statement of comprehensive income as defined
in IAS1
Condensed consolidated interim statement of financial position (unaudited)
as at 30 June 2022
Note Unaudited Audited
30 June 31 December
2022 2021
£'000 £'000
Assets
Investment property 8 84,040 87,565
Total non-current assets 84,040 87,565
Current assets
Trade and other receivables 1,748 2,876
Cash at bank and in hand 6,201 5,715
7,949 8,591
Assets classified as held for sale 9 8,865 -
Total current assets 16,814 8,591
Total assets 100,854 96,156
Liabilities
Current liabilities
Interest bearing loan 10 - (7,500)
Trade and other payables (2,775) (2,839)
Total current liabilities (2,775) (10,339)
Non-current liabilities
Interest-bearing loans and borrowings 10 (27,200) (19,700)
Total non-current liabilities (27,200) (19,700)
Total liabilities (29,975) (30,039)
Net assets 70,879 66,117
Equity
Issued share capital 1,299 1,296
Share premium 226 117
Share based payment reserve 132 102
Other equity reserve (233) (121)
Revaluation reserve - property 22,822 19,236
Capital redemption reserve 95 95
Realised capital reserve 29,623 29,623
Retained earnings 16,915 15,769
Total equity 70,879 66,117
Condensed consolidated interim statement of changes in equity
for the six months ended 30 June 2022
Issued share Share Share Other Revaluation reserve Capital redemption Realised Retained earnings Total
capital premium based equity reserve property Capital
(note 12) payment
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2022 1,296 117 102 (121) 19,236 95 29,623 15,769 66,117
Transactions with owners:
Dividends - - - - (1,714) (1,714)
- -
Issue of shares 3 109 - (112) - - - - -
3 109 - (112) - - - (1,714) (1,714)
Reserve transfers:
Non-distributable items recognised in income statement:
Revaluation losses - - - - (320) - - 320 -
Revaluation gains - - - - 5,232 - - (5,232) -
Change in excess of cost over fair value through retained earnings - (1,326) - - 1,326 -
- - -
- - - - 3,856 - - (3,856) -
Share award expensed - - 30 - - - - - 30
Total profit and comprehensive income for the period - - - - 6,446 6,446
- - -
At 30 June 2022 1,299 226 132 (233) 22,822 95 29,623 16,915 70,879
Condensed consolidated interim statement of changes in equity
for the six months ended 30 June 2021
Issued share Share Share Other Revaluation reserve Capital redemption Realised Retained earnings Total
capital premium based equity reserve property Capital
(note 12) payment
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2021 1,294 51 43 (53) 12,814 95 28,995 13,882 57,121
Transactions with owners:
Dividends - - - - (1,866) (1,866)
- -
Issue of shares 2 66 - (68) - - - - -
2 66 - (68) - - - (1,866) (1,866)
Reserve transfers:
Non-distributable items recognised in income statement:
Revaluation losses - - - - (590) - - 590 -
Revaluation gains - - - - 5,275 - - (5,275) -
Change in excess of cost over fair value through retained earnings - (696) - - 696 -
- - -
- - - - 3,989 - - (3,989) -
Share award expensed - - 15 - - - - - 15
Total profit and comprehensive income for the period - - - - 6,153 6,153
- - -
At 30 June 2021 1,296 117 58 (121) 16,803 95 28,995 14,180 61,423
Condensed consolidated interim statement of cashflows
for the six months ended 30 June 2022
Unaudited Unaudited
First half First half
2022 2021
£'000 £'000
Operating activities
Profit before tax for the period 6,453 6,457
Adjustments for:
Net valuation gains on investment property (4,912) (4,685)
Share based payment expense 30 15
Finance income received (8) (1)
Finance expense paid 422 425
Operating cash flow before changes in working capital and provisions 1,985 2,211
Decrease in trade and other receivables 1,128 76
Decrease in trade and other payables (64) (216)
Cash generated from operations 3,049 2,071
Finance income received 8 1
Finance expense paid (422) (425)
Income tax paid (7) (304)
Net cash flows from operating activities 2,628 1,343
Investing activities
Purchase of fixed assets - investment property (428) -
Net cash flows from investing activities (428) -
Financing activities
Dividends paid (1,714) (1,866)
Repayment of bank borrowings (7,500) -
New bank borrowings 7,500 -
Net cash flows from financing activities (1,714) (1,866)
Net increase/(decrease) in cash and cash equivalents 486 (523)
Cash and cash equivalents at 1 January 5,715 3,295
Cash and cash equivalents at period end 6,201 2,772
Notes (Unaudited)
for the six months ended 30 June 2022
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 Park Farm
Technology Centre, Akeman Street, Kirtlington, OX5 3JQ. 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 5 September 2022. The financial information for the period ended
30 June 2022 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 2021 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 unaudited condensed consolidated interim financial statements are for
the six months ended 30 June 2022. They have been prepared in accordance with
IAS 34, Interim Financial Reporting and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority. 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 2021.
These unaudited 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 2021 which were prepared in
accordance with the Companies Act 2006 and International Financial Reporting
Standards (IFRS) as adopted for use in the United Kingdom and have been
prepared under the historical cost convention, as modified by the revaluation
of investment properties.
The accounting policies have been applied consistently throughout the group
for the purposes of preparation of these unaudited condensed consolidated
interim financial statements.
In light of the ongoing impact of Covid-19 and the conflict in Ukraine on the
UK economy, and the sectors in which the group and company operates, the
directors have placed a particular focus on the appropriateness of adopting
the going concern basis in preparing the group's and company's financial
statements for the period ended 30 June 2022. The group's and company's going
concern assessment considers the group's and company's principal risks, and is
dependent on a number of factors, including cashflow and liquidity, continued
access to borrowing facilities and the ability to continue to operate the
group's and company's borrowings within its financial covenants. The debt has
a number of financial covenants that the group is required to comply with
including an LTV covenant a 12-month historical interest cover ratio, and the
facility agreements have cure provisions in the event of a breach. The going
concern assessment is based on a 12-month outlook from the date of the
approval of these financial statements, using the group's five-year forecast.
This forecast is based on a reasonable scenario, which includes the following
key sensitivities occurring either separately or together:
− 20% reduction in net income from our portfolio.
− A 25% increase in the forecast proposed capital expenditure.
Under this scenario, the group and company are forecast to maintain sufficient
cash and liquidity resources and remain compliant with its financial
covenants.
Based on the consideration above, the board believes that the group and
company have the ability to continue in business at least 12 months from the
date of approval of this interim statement for the period ended 30 June 2022,
and therefore have adopted the going concern basis in the preparation of this
financial information.
3. Analysis of statement of comprehensive income
The profit or loss section of the statement of comprehensive income is
analysed into two columns, being revenue and capital. The capital column
comprises valuation gains and losses on property, profits and losses on
disposal of property, and all gains and losses on financial assets and the
related tax impact. The revenue column includes all other items.
4. Segment reporting
The group has one main business segment, property investment which is based in
England and Wales.
In the first six months of 2022 the largest tenant represented 13% (2021 12%)
and the second largest tenant represented 11% (2021 9%) of gross commercial
property income for the period.
5. Income tax charge
First half First half
2022 2021
£'000 £'000
Current tax:
On revenue profits - prior year 7 304
current - -
year
Total tax 7
304
The current year 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.
During the first half of 2021 the group took advantage of HMRC Covid-19
concessions and wrote £1.6m off its outstanding Property Income Dividend pool
which resulted in a tax charge of £304,000.
6. Dividends
On 5 September 2022, the directors declared a property income distribution of
23p per share (2021 22p per share) payable on 14 October 2022 to shareholders
registered at 16 September 2022.
The following property income distributions have been paid by the company:
First half First half
2022 2021
£'000 £'000
2021: final 33p per ordinary share (2020 final 30p and special 6p) 1,714 1,866
7. Earnings per share
The calculation of earnings per share is based on the profit for the period of
£6,446,000 (2021 £6,153,000) and on 5,189,362 shares which is the weighted
average number of shares in issue during the period ended 30 June 2022 (2021
5,178,943).
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 £1,534,000 (2021 £1,468,000) has
been calculated.
First half First half
2022 2021
£'000 £'000
Earnings:
Basic earnings 6,446 6,153
Adjustments for:
Net valuation gains on investment property (4,912) (4,685)
Adjusted earnings 1,534 1,468
Per share amount:
Earnings per share (unadjusted) 124.2p 118.8p
Adjustments for:
Net valuation gains on investment property (94.7p) (90.5p)
Adjusted earnings per share 29.5p 28.3p
8. Investment property
First half Full year
2022 2021
£'000 £'000
Valuation at 1 January 87,565 82,060
Additions 428 -
Disposals - (3,250)
Gain on revaluation 4,912 8,755
Valuation at period end 92,905 87,565
Less property held for sale categorised as current asset (note 9) (8,865) -
Property categorised as fixed asset 84,040 87,565
The directors have used an external independent valuation of properties at 30
June 2022 which has been carried out consistently with the annual valuation.
8. Investment property (continued)
Valuation technique
The fair value of the property portfolio has been determined using an income
capitalisation technique whereby contracted and market rental values are
capitalised with a market capitalisation rate. The resulting valuations are
cross checked against the equivalent yields and the fair market values per
square foot derived from comparable recent market transactions on arm's-length
terms.
These techniques are consistent with the principles in IFRS 13 Fair Value
Measurement and use significant unobservable inputs such that the fair value
measurement of each property within the portfolio has been classified as level
3 in the fair value hierarchy. The following tables analyse quantitative
information about these inputs.
30 June 2022 Warehouse Retail warehouse Leisure Office High street retail Total
Valuation technique Income capitalisation
Fair value of property portfolio £'000 42,575 25,825 11,175 8,650 4,680 92,905
Area* Sq ft 583,499 133,726 88,145 29,567 12,622 847,559
Gross estimated rental value (ERV) £'000 3,442 1,610 812 610 364 6,838
ERV per sq ft
Minimum £ 2.40 10.79 7.37 20.00 20.90
Maximum £ 11.00 24.50 26.32 23.50 125.00
Weighted average £ 8.42 13.05 11.57 21.46 86.78
Net initial yield
Minimum % 3.98 4.78 2.78 0.00 0.00
Maximum % 11.98 7.40 7.34 4.22 9.31
Weighted average % 7.95 6.03 4.97 1.76 4.74
Reversionary yield
Minimum % 4.32 5.01 5.95 4.72 6.57
Maximum % 19.88 7.09 7.73 9.22 9.05
Weighted average % 11.27 5.98 6.92 7.35 7.43
Equivalent yield
Minimum % 4.28 4.97 6.01 4.50 6.54
Maximum % 9.00 6.75 7.70 7.70 7.72
Weighted average % 6.74 5.84 6.90 6.37 7.10
*During the period the floor areas were reassessed, this has resulted in a
0.2% difference in the disclosed areas.
8. Investment property (continued)
30 December 2021 Warehouse Retail warehouse Leisure Office High street retail Total
Valuation technique Income capitalisation
Fair value of property portfolio £'000 39,800 24,250 10,750 7,800 4,965 87,565
Area Sq ft 581,386 133,746 87,955 29,323 16,433 848,843
Gross estimated rental value (ERV) £'000 3,297 1,557 812 600 382 6,648
ERV per sq ft
Minimum £ 2.40 11.33 7.50 20.00 70.00
Maximum £ 12.00 24.50 28.85 22.50 125.00
Weighted average £ 8.18 13.37 12.12 21.02 102.55
Net initial yield
Minimum % 4.31 5.02 2.93 0.00 0.00
Maximum % 11.98 8.44 7.73 4.39 8.94
Weighted average % 8.31 6.45 5.16 1.78 5.12
Reversionary yield
Minimum % 4.57 5.29 6.10 4.71 6.57
Maximum % 19.24 7.31 8.15 11.27 7.69
Weighted average % 11.22 6.13 7.22 8.61 7.31
Equivalent yield
Minimum % 4.51 5.25 6.15 4.66 6.50
Maximum % 8.49 7.23 7.92 7.51 7.46
Weighted average % 6.73 6.10 7.12 6.35 7.01
8. Investment property (continued)
Information about the impact of changes in unobservable inputs on the fair
value of the group's property portfolio
Sensitivities for changes in assumptions have been set out below at +/- 5% for
ERV and +/- 50bps for EY, which are deemed to be the levels that give a
reasonable worst-case scenario given the like-for-like valuation rise of 5.61%
already recognised in the period.
30 June 2022 Warehouse Retail warehouse Leisure Office High street retail Total
Fair value of property portfolio £'000 42,575 25,825 11,175 8,650 4,680 92,905
Impact on valuation of:
+5% on ERV 2,145 1,290 557 433 232 4,657
- 5% on ERV (2,144) (1,290) (557) (433) (232) (4,656)
-50bps on IY 419 229 129 80 29 886
+50bps on IY (409) (225) (126) (78) (28) (866)
31 December 2021 Warehouse Retail warehouse Leisure Office High street retail Total
Fair value of property portfolio £'000 39,800 24,250 10,750 7,800 4,965 87,565
Impact on valuation of:
+5% on ERV 1,989 1,210 536 390 245 4,370
- 5% on ERV (1,989) (1,210) (536) (390) (245) (4,370)
-50bps on IY 354 204 119 69 50 796
+50bps on IY (347) (200) (116) (68) (49) (780)
9. Assets classified as held for sale
30 June 31 December
2022 2021
£'000 £'000
Assets held for sale 8,865 -
During the period the directors decided to market three of our high street
retail properties as part of the strategy to reduce our exposure to this
sector and also to market one of our warehouse properties where a requirement
for large space occupiers/owners has been identified.
10. Interest bearing loans
30 June 31 December
2022 2021
£'000 £'000
Short-term bank loans due within one year - 7,500
Medium-term loans 27,200 19,700
The medium-term bank loans comprise amounts falling due as follows:
Between one and two years - -
Between two and five years 7,900 3,400
Over five years 19,300 16,300
The debt is secured on certain assets within the group's property portfolio.
During the period the £7,500,000 facility that matured in May 2022 was
replaced with a new 7-year facility expiring in May 2029 and a secured deposit
classified as other receivables at 31 December 2021 was released as security
by the bank and therefore reclassified as cash at bank.
11. Share capital
First half Full year
2022 2021
Allotted, called up and fully paid ordinary shares of 25p each
At 1 January 5,183,699 5,175,175
Issued in the year in connection with the Highcroft incentive plan 11,264 8,524
At period end 5,194,963 5,183,699
12. Related party transactions
Kingerlee Holdings Limited owns, through its wholly owned subsidiaries, 27.1%
(2021 27.2%) of the company's shares and D H Kingerlee is a director of both
the company and Kingerlee Holdings Limited.
During the prior 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, the previous registered office of the
company £1,000. There were no such purchases in 2022. The amount owed at 30
June 2022 was £nil (2021 £nil). In addition, the group recharged
professional fees of £13,080 to Kingerlee Holdings Limited in connection with
additional fees connected with the group reporting requirement for the 2021
audit (2021 £12,000). The amount owed at 30 June 2022 was £nil (2021
£nil). All transactions were undertaken on an arm's length basis.
During the period £465,000 (2021 £507,000) of dividend was paid to the
wholly owned subsidiaries of Kingerlee Holdings Limited in respect of their
shareholdings.
During the period ordinary shares of 25p each were issued under the Highcroft
incentive plan to the following directors of the company: Simon Gill 5,984
(2021 4,534) and Roberta Miles 5,280 (2021 3,990).
During the period the following dividends were paid to directors of the
company in respect of their shareholdings:
First half First half
2022 2021
£'000 £'000
Simon Gill 5 3
David Kingerlee 30 32
Roberta Miles 6 5
13. Net assets per share
First half First half Full year
2022 2021 2021
Net assets £70,879,000 £61,423,000 £66,117,000
Ordinary shares in issue 5,194,963 5,183,699 5,183,699
Basic net assets per share 1364p 1185p 1275p
14. Fair value of financial instruments
The fair values of loans and receivables and financial liabilities held at
amortised cost were not materially different from book values.
15. Capital commitments
There were capital commitments of £19,000 at 30 June 2022 (2021 £nil).
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FLFEEAEIEIIFRecent news on Highcroft Investments
See all newsREG - Official List - Removal - HIGHCROFT INVESTMENTS PLC
AnnouncementREG - Stock Exch Notice Highcroft Invs PLC - Cancellation - Highcroft Investments PLC
AnnouncementREG - FTSE Russell Highcroft Invs PLC - Highcroft Investments
AnnouncementREG - Highcroft Invs PLC - Result of General Meeting
AnnouncementREG - Highcroft Invs PLC - Holding(s) in Company
Announcement