Highcroft
Investments PLC
Report & Financial Statements
31 December 2010
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Highcroft Investments PLC Report & Financial Statements 31 December 2010
Highcroft Investments PLC is a Real Estate
Investment Trust (REIT) that has a portfolio
of property and equity investments.
Contents
Chairman’s introduction
Corporate governance
Report of the directors
Directors’ remuneration report
Consolidated statement of
comprehensive income
Consolidated statement of
financial position
Consolidated statement of
changes in equity
01
02
06
14
16
17
18
Consolidated statement of cash flows
Notes to the financial statements
Five year summary
Report of the independent auditor
Company balance sheet
Notes to the company’s
financial statements
Directors and advisers
19
20
32
33
35
36
IBC
Front cover
Top left: Radio station and office building
in Oxford, let to the BBC
Top right: Bank premises in Reigate, let to
Lloyds TSB
Bottom left: Retail unit in Leamington Spa,
let to Thorntons
Bottom right: Retail units in Oxford, let to
Hotel Chocolat and Jigsaw
The report of the directors on pages 6 to 13 and the directors’ remuneration report on pages 14 and 15
have each been drawn up in accordance with the requirements of English law and liability in respect
thereof is also governed by English law. In particular, the responsibility of the directors for these reports is
owed solely to Highcroft Investments PLC.
The directors submit to the members their report and accounts of the group for the year ended
31 December 2010. Pages 1 to 15, including the chairman’s introduction, corporate governance statement,
report of the directors and directors’ remuneration report form part of the report of the directors.
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01
Chairman’s Introduction
Chairman’s introduction
Key Highlights
Gross property income increased by 5.7% to £2,053,000
Profit for the year on revenue activities up 17.7% to £1,965,000
Adjusted earnings per share (on revenue activities) up 17.6% to 38p
Net asset value per share up 7.5% to 716p
Total property income distribution up 10% to 28.6p per share
Cash and liquid equity investments £8,080,000 (2009: £8,343,000)
Dear Shareholder,
I am pleased to introduce our Annual Report and Accounts for
If there is an area of disappointment, it is that we have been
the year ended 31 December 2010 – a year which saw us making
unable to make more than a modest addition to our property
modest progress in a number of areas against a continuing difficult
portfolio – a freehold industrial unit at Leamington Spa which we
background. The highlights were a recovery in our gross property
acquired at the end of the year. The lease length, 6.5% yield,
income and in our net asset value and a further advance in
and the financial strength of the tenant means this acquisition
distributions to shareholders.
fits well into our portfolio strategy. Some of the work done in
2010 will, hopefully, benefit the current year in terms of potential
The background remained very muted in terms of the national
acquisitions during 2011. I am pleased to confirm that we have,
economy with action to reduce the Government deficit and
in 2011, exchanged an agreement to lease on our Yeovil property
the still delicate position of much of the Banking industry
and completed the sale of two of our residential properties.
impacting on consumer confidence, borrowing and general
property activity and values. As far as the latter is concerned,
We hope that our sound year end financial position – no gearing,
the recovery seen in the first half of 2010 tended to tail away in
and cash and liquid equity investments of £8,080,000 – will
the second part of the year and, as I write, market forecasts for
enable us to take advantage of the increasing number of properties
2011 and beyond continue to be guarded.
which seem likely to be coming to the Market in the coming
In such circumstances, we have benefited from the above average
months.
quality of our portfolio (which is focused on the relatively
prosperous areas in South East England) and some good asset
The directors and I look forward to welcoming you to the
AGM on May 11th.
management therein. The latter includes successful rent reviews,
lease extensions, progress on voids and continued close attention
to the financial health of our current and prospective tenants.
This is an important point given the latest statistics showing that
nationally there is a 14% void rate in High Street shops and
challenges facing retailers. I am pleased to report that we have no
significant rent arrears and that the credit score across our portfolio
is 84 – a very respectable rating and some seven points higher than
John Hewitt
Chairman
23 March 2011
a year ago.
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02
Highcroft Investments PLC Report & Financial Statements 31 December 2010
Chairman’s Introduction
Corporate governance
Application of principles
The company has applied the principles of good governance contained in the Combined Code 08 (Principles of Good Governance and
Code of Best Practice) except as noted in the compliance statement below.
Compliance
The company has complied throughout the year with the Code provisions set out in Section 1 of the Combined Code 08 except that no
performance related payments were made to directors, which is not in accordance with Code provision B.1.1. The remuneration committee
and board believe that the directors do not need to have performance related payments in order to be motivated to give their best in serving
the interests of shareholders.
Board effectiveness
The board is responsible for leading and controlling the group activities and, in particular:
approving group objectives, strategy and policies
business planning
review of performance
risk assessment
dividends
appointments
The board meets at least six times a year and has a schedule of matters specifically reserved for its decision. Executive directors are
responsible for the implementation of strategy and policies and the day-to-day decision making and administration.
During 2010 the number of board and committee meetings and individual participation was as follows:
Number of Meetings
J Hewitt
R N Stansfield
C J Clark
J C Kingerlee
D Bowman (to 30 June)
R Miles (from 1 July)
D H Kingerlee
Board
Audit
Remuneration
Nomination
9
9/9
8/9
8/9
9/9
5/5
4/4
9/9
4
4/4
4/4
4/4
N/A
1/1 (part)
3/3 (part)
N/A
1
1/1
1/1
1/1
N/A
N/A
N/A
N/A
1
1/1
1/1
1/1
N/A
N/A
N/A
N/A
The board receives appropriate and timely information and the directors are free to seek any further information they consider necessary.
All directors have access to advice from the company secretary and independent professionals at the company’s expense.
Appropriate training is available for new directors and other directors as necessary.
The board has six directors of which three are executive directors and three are non-executive directors. The chairman is John Hewitt,
the senior independent director is Richard Stansfield and the chief executive is Jonathan Kingerlee. The board members’ biographies
are on page 8.
The independent non-executive directors bring additional experience and knowledge and are independent of management and any business
or other relationship that could interfere with the exercise of their independent judgement. This provides a balance whereby an individual or
small group cannot dominate the board’s decision-making.
All directors are subject to re-election every three years and, on appointment, at the first AGM after appointment. The board has
established a separate nomination committee, comprising the non-executive directors, responsible for making recommendations for
appointments to the board.
Formal procedures appropriate to the size of the business are in use for performance evaluation of the board and its committees.
They include objective-setting and review with the use of an external facilitator.
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03
Chairman’s Introduction
Corporate governance (continued)
Directors’ remuneration
The directors’ remuneration report is on pages 14 and 15. It sets out the company’s policy and the full details of all elements of the
remuneration package of each individual director.
Relations with shareholders
The board values the views of its shareholders and recognises their interest in the company’s strategy and performance, board membership
and quality of management. The AGM is used to communicate with investors and documents are sent to shareholders at least 20 working
days before the meeting. The chairman and chairmen of the audit and remuneration committees are available to answer relevant questions.
Separate resolutions are proposed on each substantial issue so that they can be given proper consideration and there is a resolution to
receive and consider the annual report and financial statements. The company counts all proxy votes and will indicate the level of proxies
lodged on each resolution, after it has been dealt with by a show of hands. We have no institutional shareholders.
Accountability and audit
The board presents a balanced and understandable assessment of the company’s position and prospects in all interim and other
price-sensitive public reports, reports to regulators and information required to be presented by statute. The responsibilities of the directors
as regards the financial statements are described on page 5, and that of the auditor on pages 33 and 34. A statement on going concern
appears on page 4.
The audit committee of the board comprises all the non-executive directors and is chaired by Christopher Clark and includes one member
who has recent and relevant financial experience. The committee meets not less than three times a year to review the scope and findings
of the auditor’s work on audit and non-audit issues, the interim and annual reports prior to their publication, the application of the
company’s accounting policies and any changes to the financial reporting requirements. The audit committee also plays an important part in
reviewing the company’s systems of internal control which are described below. The audit committee reports on each of its meetings at the
next board meeting.
The audit committee reviews the terms of engagement with the external auditor and ensures that the external auditor is independent via
the segregation of audit-related work from other accounting functions. They have also received and reviewed written disclosures from the
auditor regarding independence. The audit committee has referenced audit fees with similar auditors and decides how frequently the audit
should be put out to tender.
Internal control
The board is responsible for establishing and maintaining a sound system of internal control and for reviewing its effectiveness. The system
of internal control is designed to meet the particular needs of the group and the risks to which it is exposed, and by its very nature provides
reasonable, but not absolute assurance against material misstatement or loss. The internal control system was in place for the period under
review up to the date of approving the accounts. There is an ongoing process to identify, evaluate and manage the risks facing the business.
The entire system of internal control was reviewed during the year. This review has been undertaken in accordance with guidance published
by The Institute of Chartered Accountants in England and Wales.
The key procedures, which exist to provide effective internal control, are as follows:
clear limits of authority
annual revenue, cash flow and capital forecasts, reviewed regularly during the year, monthly monitoring of cash flow and capital
expenditure reported to the board, quarterly and half year revenue comparisons with forecasts
financial controls and procedures
clear guidelines for capital expenditure and disposals, including defined levels of authority
two-monthly meetings of the executive directors to authorise share purchases and sales
an audit committee, which approves audit plans and published financial information and reviews reports from the external auditor
arising from the audit and dealing with significant control matters raised
regular board meetings to monitor continuously any areas of concern
annual review of risks and internal controls
annual review of compliance with The Combined Code.
The board has considered the need for an internal audit function but has decided that the size of the group does not justify it at present.
However, it does review the position annually.
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04
Highcroft Investments PLC Report & Financial Statements 31 December 2010
Chairman’s Introduction
Corporate governance (continued)
Internal control (continued)
The directors have reviewed the operation and effectiveness of the group’s system of internal control, including financial, operational and
compliance controls and risk management for the financial year ended 31 December 2010 and the period up to date of approval of the
financial statements.
The board also has a nomination committee comprising the non-executive directors whose key objective is to ensure that the board
comprises individuals with the requisite skills, knowledge and experience to ensure that it is effective in discharging its responsibilities.
Going concern
The directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the
foreseeable future and consider that there are no material uncertainties that lead to significant doubt upon the group’s ability to continue
as a going concern. Cash flow forecasts are prepared annually as part of the planning and budgeting process and are monitored and
reworked monthly. For this reason, the directors continue to adopt the going concern basis in preparing the financial statements.
Given the continuing economic uncertainties, the directors are aware of the general concern affecting the assessment of the going concern
basis for all businesses and have therefore taken particular care in reviewing the going concern basis this year. The group has no borrowing.
The company does not currently have an overdraft facility or a loan facility. However, contact is maintained with a number of banks which
regard the group as an attractive lending opportunity. The company carefully monitors its forecast cash balances in order to ensure an
overdraft is not required and it has relatively liquid assets, in the form of listed equity investments, which it can draw on if necessary.
Structure of share capital and rights and obligations attaching to shares
The company’s authorised ordinary share capital as at 31 December 2010 was 8,000,000 of which 5,167,240 shares of 25p each were
allotted, called up and fully paid.
Subject to the Companies Act for the time being in force (the Act) the company’s articles of association confer on holders the following
principal rights:
To receive a dividend
The profits of the company available for dividend and resolved to be distributed shall be applied in the payment of dividends to the
members and to persons becoming entitled to shares by transmission, in accordance with their respective rights and priorities.
The company in general meeting may declare dividends accordingly.
To a return of capital or assets if available on liquidation
Upon any winding up of the company, the liquidator may, with the sanction of an extraordinary resolution of the company and any
other sanction required by the statutes, divide among the members in specie the whole or any part of the assets of the company and
may, for that purpose, value any assets and determine how the division shall be carried out as between the members of different classes
of members.
To receive notice of, attend and vote at an AGM
At each AGM upon a show of hands every member present in person shall have one vote, and upon a poll every member present in
person or by proxy shall have one vote for every share of which he or she is the holder.
To have rights in respect of share certificates and share transfers
Every person whose name is entered as a Member in the Register shall be entitled without payment to one certificate for all the shares of
each class held by him or, upon payment of such reasonable out-of-pocket expenses for every certificate after the first as the board shall
from time to time determine, several certificates each for one or more of his shares.
On any transfer of shares, the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in
the register in respect thereof.
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Corporate governance (continued)
Statement of directors’ responsibilities
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law
and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to
prepare the group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union
(IFRSs) and the company financial statements in accordance with United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice). Under company law, the directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs and of the profit or loss of the company and group for that period. In preparing these
financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently
make judgments and estimates that are reasonable and prudent
state whether applicable IFRSs and UK accounting standards have been followed, subject to any material departures
disclosed and explained in the financial statements
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company
will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions
and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial
statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of
the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
In so far as each of the directors is aware:
there is no relevant audit information of which the company’s auditor is unaware; and
the directors have taken all steps that they ought to have taken to make themselves aware of any relevant
audit information and to establish that the auditor is aware of that information.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
To the best of my knowledge:
the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as
a whole; and
the management report includes a fair review of the development and performance of the business and the position of the company and
the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that
they face.
By order of the board
R Miles
Company Secretary
23 March 2011
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06
Highcroft Investments PLC Report & Financial Statements 31 December 2010
Chairman’s Introduction
Report of the directors
Principal activities
Highcroft Investments PLC is a group that invests in property and equity investments.
Directors
The directors are as follows:
John Hewitt:
John Hewitt, 65, worked in the City of London in stockbroking for over 20 years where he became managing director of Scrimgeour Vickers.
He is currently campaign adviser to Wadham College Oxford and a trustee of the Oxfordshire Association for the Blind. He also advises a
number of other local and international businesses and organisations. He was appointed as an independent non-executive director in 1999.
Christopher Clark:
Christopher Clark, 68, was appointed as an independent non-executive director in January 2006. He is also the non-executive chairman of
Brookwell Limited and is a marketing consultant with Monument Securities Limited and with Lehmann Communications plc. He previously
worked as a stockbroker and is a Fellow of the Chartered Institute of Secretaries & Administrators and a Fellow of the Chartered Institute for
Securities & Investment.
Richard Stansfield:
Richard Stansfield, 53, is a chartered surveyor and formerly a director of Savills commercial department based in Oxford where he advised
a number of institutional clients on their commercial property portfolios throughout the UK. He is now Land Agent for Jesus College
Oxford and responsible for a fund of commercial, residential and rural properties located in England and Wales. He was appointed as an
independent non-executive director in 2002.
Jonathan Kingerlee:
Jonathan Kingerlee, 50, became an executive director in 1995 and chief executive in 2001. He is chief executive of the Kingerlee Group of
companies, which trades principally in construction and property development and has various investment interests. Other interests include
companies developing and selling environmental building materials, and he is also a founder member of the Good Homes Alliance which is
a trade association open to property developers committed to improving the performance of newly constructed homes.
David Kingerlee:
David Kingerlee, 49, became an executive director in 1996. He is also an executive director and company secretary of the Kingerlee Group
of companies, which trades principally in construction and property development and has various investment interests.
Roberta Miles:
Roberta Miles, 48, was appointed finance director and company secretary in 2010. She is also a director of Mechadyne Holdings Limited
and acts as company secretary or chief financial officer for a number of other companies.
Richard Stansfield retires by rotation and, being eligible, offers himself for re-election. Roberta Miles who was appointed on 30 June 2010
retires in accordance with article 101 and, being eligible, offers herself for re-election.
John Hewitt, having served more than nine years on the board, submits himself for re-election. Before recommending John for re-election
the other directors have conducted a rigorous appraisal of performance, led by Richard Stansfield as senior independent director.
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Report of the directors (continued)
Interests of the directors in the shares of the company
The beneficial and other interests of the directors, and their families, in the shares of the company at 1 January 2010 and at 31 December
2010 were as follows:
J Hewitt
C J Clark
R N Stansfield
J C Kingerlee
R Miles
D H Kingerlee
31 December 2010
1 January 2010
Non-
Non-
Beneficial
beneficial
Beneficial
beneficial
10,000
4,950
–
130,986
–
–
–
–
–
–
10,000
4,950
–
118,023
–
–
–
–
–
–
88,470
77,780
114,397
77,780
There is no duplication of directors’ shareholdings, except in respect of:
38,890 of the beneficial holding of Jonathan Kingerlee and 38,890 of the non-beneficial holding of David Kingerlee.
There were no changes in the interests of the directors in the period from 1 January 2011 to 23 March 2011.
Substantial shareholders
As at 23 March 2011 the following notifications of interests in three per cent or more of the company’s ordinary share capital in issue at the
date of this report had been received:
D G & M B Conn and associates
The wholly owned subsidiaries of Kingerlee Holdings Limited, total 25.36% :
Kingerlee Limited
Kingerlee Homes Limited
T H Kingerlee & Sons Limited
Number of shares
Non-
Beneficial beneficial
(19.56%) 1,010,867
(9.96%) 515,000
(7.70%) 397,673
(7.70%) 397,674
–
–
–
–
Strategy
The broad objectives of the group are unchanged. These are to enhance shareholder value via a combination of increasing asset value,
increasing profits and increasing dividends. The strategy by which the board of Highcroft seeks to achieve these objectives and our
comments in respect of 2010, including relevant key performance indicators follows. The directors are well aware that the current economic
circumstances are ones which increase the risks for all organisations but continue to believe that the strategy remains appropriate.
To continue to focus on the commercial property portfolio.
Allocation of total investments
Commercial property
Residential property
Equity investments
Total
2010
2009
2008
2007
2006
%
78
7
15
%
72
7
21
%
72
6
22
%
71
6
23
%
73
5
22
100
100
100
100
100
In December 2010 we bought an Industrial unit in Leamington Spa which has a good covenant and yield and an unexpired term that is
longer than the average on our portfolio.
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08
Highcroft Investments PLC Report & Financial Statements 31 December 2010
Chairman’s Introduction
Report of the directors (continued)
Strategy (continued)
To continue to reduce the residential property portfolio when opportunities arise.
Number of residential disposals
Per annum
2010
1
2009
0
2008
1
2007
1
2006
2
We plan for two residential disposals per year but as we sell only with vacant possession the annual rate is not within our control. Since the
year end two properties have already been sold.
To have such a proportion of funds in equity investments which maintains a lower risk profile than would attach to a portfolio
which was 100% invested in property.
We intend that equity investments will represent 15–25% of total investments and the upper limit is a condition of our REIT status.
At 31 December 2010 equity investments represented 15% (2009: 21%) of total investments.
We generated £2,298,000 net cashflow from the equity portfolio and used this to fund a new property purchase and to enhance our cash
reserves. The board will continue to monitor the condition of the equity and property markets in 2011 and would consider making a further
transfer of funds out of the equity investment portfolio and into the property portfolio, consistent with maintaining a lower risk profile.
To seek property development opportunities from within our own property portfolio.
We are continuing to explore potential development opportunities at our properties in High Street Oxford, Staines and in Victoria.
To seek, though not exclusively, new property acquisitions with development opportunities where the development risks can be
counter-balanced by income from the same investment.
This continues to be one of the potential attractions which we seek from new acquisitions, although there were again no suitable
properties identified in 2010. Our new acquisition of an industrial unit at the end of 2010 was chosen because of the combination of its
yield, its covenant and its unexpired lease length.
To use medium term gearing but to a level which would be perceived as cautious by comparison with other real estate businesses.
We maintain contact with a number of banks, to which we are an attractive lending proposition, and we will use those contacts to expand
the property portfolio in the future when we feel that the timing is appropriate to make significant new acquisitions.
Business review
Results and dividends
The trading results for the year and the group’s financial position at the end of the year are shown in the financial statements,
and are discussed further in the business review below.
The board is proposing a final property income distribution on the ordinary shares in respect of 2010 of 17.6p
(2009: 16.0p) per share. The total property income distributions for the year will be 28.6p per share (2009: 26.0p per share).
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Chairman’s Introduction
Report of the directors (continued)
Results and dividends (continued)
The dividends paid to shareholders during 2010 were as follows:
2009 Final: 16.0p per ordinary share (2008: 11.4p)
2010 Interim: 11.0p per ordinary share (2009: 10.0p)
2010
£’000
827
568
2009
£’000
589
518
1,395
1,107
Although we have an ambition continuously to increase distributions to shareholders, adherence to the REIT obligations may cause a less
even pattern than has historically been the case.
Financial performance – revenue activities
Gross income for the year ended 31 December 2010 was £2,287,000 (2009: £2,235,000).
Analysis of gross income
Commercial property income
Residential property income
Gross income from property
Income from equity investments
Total income
2010
£’000
1,995
58
2,053
234
2,287
2009
£’000
1,877
66
1,943
292
2,235
2008
£’000
2,050
74
2,124
450
2,574
2007
£’000
2,062
64
2,126
406
2,532
2006
£’000
1,933
105
2,038
489
2,527
Underlying commercial property income has risen in 2010 because the Warrington property that was void for the majority of 2009 is now
fully let, and there was the benefit of higher income from rent reviews than in 2009. Since the year end an agreement for lease has been
signed for our Yeovil property.
Residential property income reduced in 2010 relative to 2009 because of the sale of one property in the first quarter of 2010, one property
being void throughout 2010, and two others becoming empty during the year. Of these three empty properties the sales of two have
completed in January 2011.
The 2010 income from equity investments fell primarily because of the reduced weighting of equities in our portfolio of assets.
Analysis of administrative and net finance expenses
Directors’ remuneration
Auditor’s remuneration including other services
Fees in respect of conversion to a REIT
Other expenses
Administrative expenses
Net finance (income)/expenses
Total expenses
2010
£’000
156
20
–
154
330
(9)
321
2009
£’000
139
22
–
122
283
18
301
2008
£’000
166
34
47
77
324
61
385
2007
£’000
133
31
147
80
391
209
600
2006
£’000
141
32
–
74
247
188
435
The ongoing running costs of the business remain well controlled. Three factors affected the costs in 2010 compared to 2009:
The directors’ remuneration is higher in 2010 due to the change of finance director during the year and there are some handover costs
included in other expenses.
Other expenses were increased due to increased professional costs incurred during the year.
The lack of any medium term debt reduced net finance expenses and a small amount of income was earned on the net cash balances.
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10
Highcroft Investments PLC Report & Financial Statements 31 December 2010
Report of the directors (continued)
Financial performance – revenue activities (continued)
Summary of profit before tax and income
tax credit/(expense) on revenue activities
Profit before tax
Income tax credit/(expense)
Profit for the year
Financial performance – capital activities
Overview of investment portfolios
2010
£’000
1,821
144
1,965
2009
£’000
1,681
(11)
2008
£’000
1,889
33
1,670
1,922
2007
£’000
1,833
(271)
1,562
2006
£’000
1,956
(456)
1,500
● Retail Property
● Office Property
● Warehouse
● Leisure
● Residential
● Equities
37%
21%
17%
3%
7%
15%
Property investments at 31 December 2010
Commercial:
Multi-let office building in London, SW1
Distribution centre in Kidlington, Oxfordshire, let to Parcelforce
Radio station and office building in Oxford, let to the BBC
Multi-let retail units in Staines, with offices above
Office building in central Bristol, let to Royal & Sun Alliance
Retail unit in Oxford, let to Jigsaw
Distribution centre in Southampton, let to Metabo
Retail unit in Leamington Spa, let to Thorntons
Industrial unit in Leamington Spa, let to Nationwide Crash Repair
Multi-let retail units in Cirencester, with residential above
Retail unit in Norwich, let to Austin Reed
Retail unit in Oxford, let to Britannia Building Society
Bank premises in Petersfield, let to Barclays
Licensed leisure and retail property in Warrington, let to Wetherspoons and Cash Converters
Retail unit in Beckenham, let to Superdrug
Retail unit in Yeovil
Bank premises in Reigate, let to Lloyds TSB
Retail unit in Kingston, let to Kaleido
Eight residential properties
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Valuation
£’000
2,950
2,700
2,600
2,000
1,975
1,875
1,825
1,600
1,475
1,390
1,300
1,100
1,070
1,050
900
825
775
600
28,010
2,695
30,705
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11
Report of the directors (continued)
Financial performance – capital activities (continued)
Analysis of gains and losses on property
Realised gains on investment property
Realised losses on investment property
Revaluation gains on investment property
Revaluation losses on investment property
Analysis of gains and losses on equities – capital activities
Realised gains on equity investments
Realised losses on equity investments
Revaluation gains on equity investments
Revaluation losses on equity investments
Summary of investment activities
Purchase of property
Purchase of equity investments
2010
£’000
108
(8)
100
1,735
(158)
1,577
2010
£’000
69
(136)
(67)
649
(73)
576
2010
£’000
1,558
1,028
2,586
2009
£’000
2008
£’000
2007
£’000
–
–
–
1,616
(416)
1,200
2009
£’000
263
(141)
122
1,416
(93)
1,323
2009
£’000
281
515
796
–
(5)
(5)
59
107
(6)
101
388
(8,985)
(8,926)
(3,819)
(3,431)
2008
£’000
5
(446)
(441)
90
(3,089)
(2,999)
2008
£’000
–
750
750
2007
£’000
272
(245)
27
1,320
(1,045)
275
2007
£’000
6
1,164
1,170
2006
£’000
320
(33)
287
2,732
(398)
2,334
2006
£’000
73
(159)
(86)
1,382
(150)
1,232
2006
£’000
7,437
1,029
8,466
Summary of other key performance indicators
The directors have monitored the progress of the group strategy and the individual strategic elements by reference to certain financial and
non-financial key performance indicators.
Growth in gross income
2010
2009
2008
2007
2006
Commercial property income
Residential property income
Total property income
Income from equity investments
Total revenue income
Cost of voids and bad debts
Voids
Bad debts
%
6
(12)
6
(20)
2
%
(8)
(10)
(9)
(35)
(13)
%
(1)
16
(0)
11
2
%
7
(39)
6
(17)
0
%
5
25
6
44
12
2010
£’000
87
2
2009
£’000
108
26
2008
£’000
136
42
2007
£’000
14
–
2006
£’000
10
–
The retail property in Yeovil was vacant throughout 2010 and, apart from a short-term let before Christmas, throughout 2009. A lease on part
of the leisure property in Warrington was granted in mid-November 2009 and on the remaining part in September 2010.
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12
Highcroft Investments PLC Report & Financial Statements 31 December 2010
Chairman’s Introduction
Report of the directors (continued)
Future developments for the business/Future outlook
The group is in a very sound financial position with no gearing, and cash and liquid equity investments of over £8.5m. The directors
anticipate that there will be an increasing number of properties being marketed in the coming months and that the group is well placed to
take advantage of the right opportunities. The Board is also considering complementary ways of enhancing the property portfolio
(joint ventures, for instance) which it hopes to progress during 2011.
Principal risks and uncertainties
Operational and financial risks facing the business are monitored through a process of regular assessment by the executive directors and by
reporting and discussion at meetings of the audit committee and the board.
The directors are of the opinion that a thorough risk management process is adopted which includes the formal review of all the six risks
identified below. Where possible, processes are in place to monitor and mitigate such risks.
1. Adverse economic environment
The economic uncertainties which remain globally and in the UK are a current concern for all businesses. We expect this to continue to
impact on consumer spending and on the financial health of businesses in which we are investors and businesses who are our tenants.
We assess the credit worthiness of our current and potential tenants and review any rental arrears on a regular basis.
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.
2. Balance of income and assets
Highcroft’s status as a REIT is conditional upon a number of factors, the most critical of which is maintaining a correct balance of income
and assets such that the property side is greater than 75% at the year end. Failure to maintain these balances can lead to exclusion from
the REIT regime. The directors are aware of this risk and it is a key principle underlying our investment decision-making.
3. Business strategy
The success of Highcroft is dependent upon establishing the right business strategy to fulfil shareholder expectations. We are explicit
about our strategy and assess our performance against that strategy in our annual report. In response to this risk, directors use planning
and forecasting of the business to help to ensure that outcomes are satisfactory for shareholders. As noted above, we continue to believe
that our strategy is the right one.
4.
Insolvency of a tenant
Rent collections are continuously reviewed by our property managers and regularly reviewed internally. Tenants’ financial status is
carefully reviewed when a new lease is entered into and when a property is acquired. The present economic environment has increased
the risk of tenant insolvency which leads to bad debts and voids.
The Group has 26 commercial tenants, so that the risks associated with the default of individual tenants are quite well spread.
Our five largest tenants by current passing rent provide 42% of current income. The weighted average credit score of these five tenants is
presently 84. The weighted average credit score of the whole portfolio is currently also 84.
5. Potential for unsatisfactory relationship with property advisers and managers
The performance of the property portfolio is key to our overall success and the professional advice we receive is critical.
We work closely with our advisers to review regularly the performance of the portfolio and also that of the advisers themselves.
As with all our advisers, the work is occasionally put out to tender.
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13
Report of the directors (continued)
Principal risks and uncertainties (continued)
6.
Internal controls become ineffective, irrelevant or incomplete
Potential issues affecting internal control are a continuous part of our thinking. Risks and their control are reviewed annually by the audit
committee and by the whole board.
Corporate environmental and social responsibility policies
In the conduct of the group’s business, the directors aim to act with honesty, integrity and openness and to conduct operations to the highest
standards. We seek to minimise the risk of our activities having any adverse effect on the environment.
Policy on the payment of suppliers
The group normally agrees payment terms with suppliers as part of the establishment of a contract. It is the group’s normal practice to pay
its suppliers before the end of the month following the month of supply. This policy applies at the present time and applied in 2010 when
average creditor days were 30 (2009: 30).
Donations
Donations to charitable organisations amounted to £4,800 (2009: £4,800). There were no political donations.
Financial instruments
Information on financial instruments is included in note 18 .
Auditor
Grant Thornton UK LLP, have expressed willingness to continue in office. In accordance with section 489(4) of the Companies Act 2006 a
resolution to reappoint Grant Thornton UK LLP will be proposed at the Annual General Meeting to be held on 11 May 2011.
By order of the board
R Miles
Company Secretary
23 March 2011
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14
Highcroft Investments PLC Report & Financial Statements 31 December 2010
Chairman’s Introduction
Directors’ remuneration report
The information contained in this report is not subject to audit except where specified.
Composition of the remuneration committee
The members of the committee are Richard Stansfield (chairman), Christopher Clark and John Hewitt. None of the committee has
any personal financial interest in the matters to be decided (other than as shareholders), potential conflicts of interest arising from
cross-directorships nor any day-to-day involvement in running the business.
Terms of reference
The approved terms of reference of the remuneration committee are as follows:
The remuneration committee is established in order to determine the company’s policy on executive directors’ remuneration and the specific
remuneration packages for each of the executive directors, including any pension rights and any compensation payments.
The remuneration committee consults the chief executive about their proposals relating to the remuneration of other executive directors
but he is not present for the discussion of his own remuneration. The committee has access to advice from independent professionals at the
company’s expense.
Policy
Executive directors’ remuneration is reviewed annually having regard to the work done and the profits of the business but without a fixed
relationship between profits and any element of pay. Executive directors are given service contracts not longer than three years, within which
there is a notice period by either party of six months, and with no provision for compensation payments on termination. The contracts of
directors in office have expiry dates as follows, subject to shareholders re-election at annual general meetings when appropriate:
J Hewitt
C J Clark
R N Stansfield
J C Kingerlee
R Miles
D H Kingerlee
Start date
1 July 2010
1 January 2009
1 January 2008
1 July 2008
1 July 2010
1 July 2009
Expiry date
30 June 2013
30 June 2012
30 June 2011
30 June 2011
30 June 2013
30 June 2012
The remuneration of the non-executive directors is determined by the whole board.
Directors’ interests
Directors’ interests are shown in the report of the directors on page 7. They are taken from the company’s register of directors’ interests
which is open to inspection, by appointment, at the registered office.
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15
Directors’ remuneration report (continued)
Performance graph
The graph below shows Highcroft’s Total Shareholder Return (TSR) compared to the All Share index over the last five years. TSR over the last
five years is defined as share price growth plus reinvested dividends. The All Share index provides a basis for comparison as a relevant equity
index of which Highcroft is a constituent member.
TSR Performance Graph
130
120
110
100
90
80
70
60
50
2006
2007
2008
2009
2010
Source: Thomson Datastream
Highcroft Investments PLC - Total Return Index FTSE Allshare - Total Return Index
Directors’ remuneration (audited)
John Hewitt
Christopher Clark
Richard Stansfield
Jonathan Kingerlee
David Bowman (to 30 June 2010)
David Kingerlee
Roberta Miles (from 1 July 2010)
2010
£
16,000
10,700
10,700
34,300
20,800
20,500
29,900
2009
£
16,000
10,700
10,700
34,300
35,200
20,500
–
142,900
127,400
In addition, Roberta Miles was paid £6,267 for her employment prior to her appointment as a director. There were no benefits in kind and
no performance related payments were made. The group does not have a pension scheme for directors nor an executive share option
scheme or other long term incentive plan for directors.
R N Stansfield
Chairman of the remuneration committee
23 March 2011
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Highcroft Investments PLC Report & Financial Statements 31 December 2010
Highcroft Investments PLC Report & Financial Statements 31 December 2010
Consolidated statement of comprehensive income
for the year ended 31 December 2010
Gross rental revenue
Property operating expenses
Net rental revenue
Realised gains on investment property
Realised losses on investment property
Net gains on investment property
Valuation gains on investment property
Valuation losses on investment property
Net valuation gains on investment property
Dividend revenue
Gains on equity investments
Losses on equity investments
Net investment income
Administration expenses
2010
2009
Revenue
Capital
Total
Revenue
Capital
£’000
2,053
(245)
1,808
108
(8)
100
–
–
–
234
–
–
234
(330)
£’000
–
–
–
–
–
–
1,735
(158)
1,577
–
718
(209)
509
–
£’000
2,053
(245)
1,808
108
(8)
100
1,735
(158)
1,577
234
718
(209)
743
(330)
£’000
1,943
(253)
1,690
–
–
–
–
–
–
292
–
–
292
(283)
£’000
–
–
–
–
–
–
1,616
(416)
1,200
–
1,679
(234)
1,445
–
Note
8
8
9
9
3
Net operating profit before net finance income/(expense)
1,812
2,086
3,898
1,699
2,645
Finance income
Finance expenses
Net finance income/(expense)
Profit before tax
Income tax credit/(expense)
Total profit and comprehensive income for the year
Basic and diluted earnings per share
10
(1)
9
1,821
144
1,965
38.0p
–
–
–
10
(1)
9
2
(20)
(18)
2,086
3,907
1,681
(89)
1,997
38.7p
55
3,962
76.7p
(11)
1,670
32.3p
–
–
–
2,645
(377)
2,268
43.9p
5
7
The total column represents the income statement as defined in IAS1.
Total
£’000
1,943
(253)
1,690
–
–
–
1,616
(416)
1,200
292
1,679
(234)
1,737
(283)
4,344
2
(20)
(18)
4,326
(388)
3,938
76.2p
The accompanying notes form an integral part of these financial statements.
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17
Chairman’s Introduction
Consolidated statement of financial position
at 31 December 2010
Note
2010
£’000
2009
£’000
2008
£’000
8
9
10
11
12
13
14
30,705
27,825
26,344
5,608
7,397
7,282
36,313
35,222
33,626
93
2,472
2,565
103
946
223
963
1,049
1,186
38,878
36,271
34,812
–
215
897
1,112
–
764
764
–
90
777
867
–
969
969
1,876
1,836
14
440
826
1,280
1,240
688
1,928
3,208
37,002
34,435
31,604
1,292
6,670
1,750
95
1,292
5,696
2,656
95
1,292
4,080
2,137
95
19,810
18,229
17,773
7,385
6,467
6,227
37,002
34,435
31,604
Assets
Non-current assets
Investment property
Equity investments
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Interest-bearing loan
Current income tax
Trade and other payables
Total current liabilities
Non-current liabilities
Interest-bearing loan
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued share capital
Revaluation reserve – property
– other
Capital redemption reserve
Realised capital reserve
Retained earnings
Total equity
These financial statements were approved by the board of directors on 23 March 2011.
J Hewitt
J C Kingerlee
Directors
Company number – 224271
The accompanying notes form an integral part of these financial statements.
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18
Highcroft Investments PLC Report & Financial Statements 31 December 2010
Consolidated statement of changes in equity
Revaluation reserves redemption
capital Retained
Capital
Realised
2010
At 1 January 2010
Dividends
Transactions with owners
Profit for the year
Reserve transfers:
Non-distributable items recognised in income statement:
Revaluation gains
Tax on revaluation gains/(losses)
Realised gains
Surplus attributable to assets sold in the year
Excess of cost over revalued amount
taken to retained earnings
Total comprehensive income for the year
Equity
Property
£’000
1,292
£’000
5,696
Other
£’000
2,656
reserve
reserve
earnings
£’000
£’000
95
18,229
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(58)
1,639
–
1,581
95
19,810
£’000
6,467
(1,395)
(1,395)
3,962
(2,149)
93
58
–
349
2,313
7,385
–
–
–
–
–
–
1,577
–
–
572
(93)
–
(254)
(1,385)
(349)
974
–
(906)
1,750
At 31 December 2010
1,292
6,670
2009
At 1 January 2009
Dividends
Transactions with owners
Profit for the year
Reserve transfers:
Non-distributable items recognised in
income statement:
Revaluation gains
Tax on revaluation (losses)/gains
Realised gains
Surplus attributable to assets sold in the year
Excess of cost over revalued amount taken to
retained earnings
Total comprehensive income for the year
Equity
Property
£’000
1,292
£’000
4,080
Revaluation reserves redemption
capital
Retained
Capital
Realised
Other
£’000
2,137
–
–
–
1,230
(343)
–
(368)
–
519
2,656
reserve
reserve
earnings
£’000
£’000
95
17,773
–
–
–
–
–
–
–
–
–
–
–
–
–
–
88
368
–
456
95
18,229
£’000
6,227
(1,107)
(1,107)
3,938
(2,430)
343
(88)
–
(416)
1,347
6,467
–
–
–
1,200
–
–
–
416
1,616
5,696
At 31 December 2009
1,292
Revaluation reserves include annual revaluation gains and losses, less attributable deferred taxation. The realised capital reserve includes
realised revaluation gains and losses, less attributable income tax. In accordance with the articles of association the revaluation and realised
capital reserves are not distributable.
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Total
£’000
34,435
(1,395)
(1,395)
3,962
–
–
–
–
–
3,962
37,002
Total
£’000
31,604
(1,107)
(1,107)
3,938
–
–
–
–
–
3,938
34,435
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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19
Consolidated statement of cash flows
for the year ended 31 December 2010
Operating activities
Profit for the year
Adjustments for:
Net valuation gains on investment property
Gain on disposal of investment property
Gain on investments
Finance income
Finance expense
Income tax (credit)/expense
Operating cash flow before changes in working capital and provisions
Decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Cash generated from operations
Finance income
Finance expenses
Income taxes paid
Net cash flows from operating activities
Investing activities
Purchase of non-current assets – investment property
– equity investments
Sale of non-current assets
– investment property
355
–
– equity investments
Net cash flows from investing activities
Financing activities
Loan repayments
Dividends paid
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January 2010
Cash and cash equivalents at 31 December 2010
2010
£’000
2009
£’000
3,962
3,938
(1,577)
(1,200)
(100)
(509)
(10)
1
(55)
1,712
10
120
–
(1,445)
(2)
20
388
1,699
120
(49)
1,842
1,770
10
(1)
(25)
2
(20)
(457)
1,826
1,295
(1,558)
(1,028)
(281)
(515)
3,326
1,095
1,845
1,049
–
(1,395)
(1,395)
1,526
946
2,472
(1,254)
(1,107)
(2,361)
(17)
963
946
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20
Highcroft Investments PLC Report & Financial Statements 31 December 2010
Notes to the financial statements
for the year ended 31 December 2010
1 Significant accounting policies
Highcroft Investments PLC is a company domiciled in the United Kingdom. The consolidated financial statements of the company
for the year ended 31 December 2010 comprise the company and its subsidiary, together referred to as the group. The accounting
policies remain unchanged except in respect of the new amended standards IFRS 3 and IAS 27 which have no impact on these
financial statements.
Basis of preparation
These financial statements have been prepared on a going concern basis and in accordance with International Financial Reporting
Standards, as adopted by the European Union (“IFRS”) and those parts of the Companies Act 2006 applicable to companies reporting
under IFRS. These 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.
Accounting estimates and judgements
The preparation of financial statements requires management to make judgements, assumptions and estimates that affect the
application of accounting policies and amounts reported in the income statement and balance sheet. Such decisions are made at the
time the financial statements are prepared and adopted based on historical experience and other factors that are believed to be
reasonable at the time. Actual outcomes may be different from initial estimates and are reflected in the financial statements as soon
as they become apparent. The measurement of fair value and carrying investments at fair value through profit and loss constitutes the
principal areas of judgement exercised by the directors in the preparation of these financial statements. The fair valuations of investment
properties and equity investments at fair value are carried out by external advisers who the directors consider to be suitably qualified
to carry out such valuations. The primary source of evidence for property valuations is recent, comparable market transactions on
arms-length terms. However the valuation of the group’s property portfolio is inherently subjective, which may not prove to be accurate,
particularly where there are few comparable transactions. Key assumptions used in the valuation include the value of future rental
income, the outcome of future rent reviews, the rate of voids and the length of such voids. These assumptions were formed on the basis
of historical information of the company and the best judgement of the directors.
New accounting standards and interpretations
The group’s approach to new accounting standards and interpretations issued during the year is set out below.
Standards amendments and interpretations effective in the year ended 31 December 2010 and adopted for the first time with no
impact on these financial statements
IAS 27 (revised) Consolidated and separate financial statements – consequential amendment arising from amendments to IFRS 3.
IFRS 3 (revised) Business Combinations.
Amendments to and interpretations of existing standards that are relevant to the group but are not yet effective and
have not been adopted early
There are no amendments to or interpretations of existing standards that have been published and are mandatory for the group’s future
accounting periods beginning on or after 1 January 2011.
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21
Notes to the financial statements (continued)
for the year ended 31 December 2010
1 Significant accounting policies (continued)
Basis of consolidation
The group financial statements consolidate the financial statements of the company and its 100% subsidiary, Rodenhurst Estates Limited,
which are both made up to 31 December 2010, also following consistent accounting policies. Unrealised profits or losses on intra-group
transactions are eliminated in full.
Rental revenue as a lessor
Investment properties are leased to tenants under operating leases. The rental income receivable under these leases is recognised in
the income statement on a straight line basis over the term of the lease. Any rent free period is spread over the period of the lease.
Since the risks and rewards of ownership have not been transferred to the lessee, the assets held under these leases continue to be
recognised in the company’s accounts.
Dividend revenue
Dividend revenue relating to exchange-traded equity investments is recognised in the income statement on the ex-dividend date.
In some cases, the group may receive dividends in the form of shares rather than cash. In such cases, the group recognises the dividend
income for the amount of cash dividend alternative with a corresponding increase in cost of investments.
Interest income
Interest income and expense is recognised in the income statement under the effective interest method as they accrue.
Interest income is recognised on a gross basis, including withholding tax, if any.
Expenses
All expenses are recognised in the income statement on an accrual basis.
Realised gains and losses
Realised gains and losses are calculated as the difference between the proceeds, less expenses, and the value of the asset at the
beginning of the financial year. The related revaluation gains or losses of previous years are transferred from revaluation reserve to
realised capital reserve.
Income tax
Income tax on the profit and loss for the periods presented comprises current and deferred tax, except where they relate to
items charged directly to equity in which case the related deferred tax is also charged or credited to equity. Income tax is recognised in
the income statement. As a REIT, tax is not payable on the income and gains generated in the tax exempt property business.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance
sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of equity
investments, using tax rates enacted or substantially enacted at the balance sheet date.
Investment property
Investment property is that which is held either to earn rental income or for capital appreciation or for both. Investment property is
stated at fair value. An external, independent valuation company, having an appropriate recognised professional qualification and recent
experience in the location and category of property being valued, values the portfolio every six months. The fair values are based on
market values, being the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer
and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently
and without compulsion.
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22
Highcroft Investments PLC Report & Financial Statements 31 December 2010
Notes to the financial statements (continued)
for the year ended 31 December 2010
1 Significant accounting policies (continued)
Investment property (continued)
In accordance with IAS 40, a property interest under an operating lease is classified and accounted for as an investment property on a
property-by-property basis when the group holds it to earn rentals or for capital appreciation or both. Any such property interest under
an operating lease classified as an investment property is carried at fair value.
Acquisitions and disposals are recognised on the date of completion. Any gain or loss arising from a change in fair value is recognised
in the income statement
Equity investments
The directors have adopted the fair value through profit and loss option for its qualifying financial assets on the basis that to do so is in
accordance with its documented investment strategy. The equity investments are quoted and so are valued at market price.
Trade and other receivables
Trade and other receivables are recognised at fair value on initial recognition and subsequently at amortised cost. An impairment loss
is recognised for the amount by which the receivable’s carrying amount is believed to exceed its recoverable amount. To estimate the
recoverable amount, management considers the payment history of the tenant and takes into account the most recent credit rating
of the tenant.
Cash and cash equivalents
Cash comprises cash available at less than three months notice.
Trade and other payables
Trade and other payables are recognised at fair value on initial recognition and subsequently at amortised cost.
Interest-bearing borrowings
Interest-bearing borrowings are initially recognised at fair value less attributable costs. Thereafter the carrying amount is stated at
amortised cost obtained using the effective interest rate method.
Issued share capital
Ordinary shares are classified as equity because they do not contain an obligation to transfer cash or another financial asset.
Dividends are recognised as a liability in the period in which they are payable.
Segment reporting
The format used for segmental reporting is by operating segment, as the group operates in only one geographical segment.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a
reasonable basis. A segment is a distinguishable component of the group that is engaged in generating income and expenses,
which is subject to risks and rewards that are distinct from those of other segments and whose operating results are regularly reviewed
by the group’s chief operating decision maker.
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Notes to the financial statements (continued)
for the year ended 31 December 2010
2 Segment reporting
The operating segment reporting format identifies the operating segments the performance of which is monitored by the group’s
management using a consistent internal reporting structure. Segment results include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis.
The group is comprised of the following main operating segments:
commercial property comprising retail outlets, offices and warehouses
residential property comprising mainly single-let houses
financial assets comprising exchange-traded equity investments
Commercial property
Gross income
Profit for the year
Assets
Liabilities
Residential property
Gross income
Profit for the year
Assets
Liabilities
Financial assets
Gross income
Profit for the year
Assets
Liabilities
Total
Gross income
Profit for the year
Assets
Liabilities
2010
£’000
1,995
2,690
2009
£’000
1,877
2,236
28,655
26,485
743
58
654
656
66
375
2,695
2,386
23
3
234
618
7,528
1,110
2,287
3,962
292
1,327
7,400
1,177
2,235
3,938
38,878
36,271
1,876
1,836
21% (2009: 22%) of gross commercial property income arises from two tenants each representing more than 10% of income.
3 Administrative expenses
Directors (note 4)
Auditor’s fees
Fees payable to the company’s auditor for the audit of the company’s annual accounts
Fees payable to the company’s auditor for other services:
Other services pursuant to legislation
Other expenses
2010
£’000
156
2009
£’000
139
19
1
154
330
19
3
122
283
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Highcroft Investments PLC Report & Financial Statements 31 December 2010
Notes to the financial statements (continued)
for the year ended 31 December 2010
4 Directors
Remuneration in respect of directors was as follows:
Remuneration
Social security costs
2010
£’000
2009
£’000
143
13
156
127
12
139
The average number of employees, all of whom were directors, of the group during the year was 6 (2009: 6). All directors are
considered to be key managers of the company. More detailed information concerning directors’ remuneration is shown in the directors’
remuneration report.
5
Income tax (credit)/expense
Current tax:
On revenue profits
On capital profits
Prior year (over)/underprovision
Deferred tax (note 13)
Income tax (credit)/expense
The tax assessed for the year differs from the standard rate of corporation tax in the UK of 28% (2009: 28%).
The differences are explained as follows:
Profit before tax
Profit before tax multiplied by standard rate of corporation tax in the UK of 28% (2009: 28%).
Effect of:
Tax exempt revenues
Profit not taxable as a result of REIT conversion
Chargeable gains/losses (more)/less than accounting profit
Adjustments to tax charge in respect of prior periods
Income tax (credit)/expense
6 Dividends
In 2010 the following dividends have been paid by the company:
2009 Final: 16.0p per ordinary share (2008: 11.4p)
2010 Interim: 11.0p per ordinary share (2009: 10.0p)
2010
£’000
2009
£’000
(60)
(19)
(69)
(148)
93
(55)
2010
£’000
3,907
1,094
(66)
(976)
(38)
(69)
(55)
–
34
11
45
343
388
2009
£’000
4,326
1,211
(66)
(809)
41
11
388
2010
£’000
827
568
2009
£’000
589
518
1,395
1,107
On 23 March 2011 the directors declared a property income distribution of 17.6p per share (2009: 16.0p) payable on 2 June 2011 to
shareholders registered at 6 May 2011.
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Notes to the financial statements (continued)
for the year ended 31 December 2010
7 Earnings per share
The calculation of earnings per share is based on the total profit for the year of £3,962,000 (2009: £3,938,000) and on 5,167,240 shares
(2009: 5,167,240) which is the weighted average number of shares in issue during the year ended 31 December 2010 and throughout
the period since 1 January 2010. 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
£1,965,000 (2009: £1,670,000) has been calculated.
Earnings:
Basic profit for the year
Adjustments for:
Net valuation gains on investment property
Gains on investments
Income tax on gains
Adjusted earnings
Per share amount:
Profit per share
Adjustments for:
Net valuation gains on investment property
Gains on investments
Income tax on gains
Adjusted earnings per share
8 Investment property
Valuation at 1 January
Additions
Disposals
Revaluation gains/(losses )
Valuation at 31 December
2010
£’000
2009
£’000
3,962
3,938
(1,577)
(509)
89
1,965
(1,200)
(1,445)
377
1,670
76.7p
76.2p
(30.5p)
(9.9p)
1.7p
38.0p
(23.2p)
(28.0p)
7.3p
32.3p
2010
£’000
2009
£’000
2008
£’000
27,825
26,344
35,545
1,558
(255)
1,577
281
–
–
(275)
1,200
(8,926)
30,705
27,825
26,344
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 has been prepared as at 31 December 2010, 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.
At 31 December 2010 investment property with a carrying amount of £4,950,000 is charged to Lloyds TSB Bank plc to provide security
for any future borrowings.
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Highcroft Investments PLC Report & Financial Statements 31 December 2010
Notes to the financial statements (continued)
for the year ended 31 December 2010
8 Investment property (continued)
The group leases out its commercial investment property under operating leases. The future minimum lease payments receivable under
non-cancellable leases are as follows:
Less than one year
Between one and five years
More than five years
Property operating expenses are analysed as follows:
Arising from generating rental income
Not arising from generating rental income
9 Equity investments
Valuation at 1 January
Additions
Disposals
Surplus/(deficit) on revaluation in excess of cost
Revaluation decrease below cost
Revaluation increase still less than cost
Valuation at 31 December
The analysis of gains and losses on equity investments shown in the income statement is as follows:
Realised gains on equity investments
Revaluation gains on equity investments
Realised losses on equity investments
Revaluation losses on equity investments
10 Trade and other receivables
Trade receivables
Bad debt provision
Net trade receivables
Other receivables
2010
£’000
2,001
6,025
6,332
2009
£’000
1,881
6,910
7,374
2008
£’000
1,828
6,786
9,525
14,358
16,165
18,139
2010
£’000
159
86
245
2010
£’000
7,397
1,028
2009
£’000
123
130
253
2009
£’000
7,282
515
(3,393)
(1,723)
572
1,230
(6)
10
(18)
111
2008
£’000
183
117
300
2008
£’000
10,830
750
(1,299)
(2,539)
(460)
–
5,608
7,397
7,282
2010
£’000
69
649
718
2010
£’000
136
73
209
2010
£’000
124
(44)
80
13
93
2009
£’000
263
1,416
1,679
2009
£’000
141
93
234
2008
£’000
5
90
95
2008
£’000
446
3,089
3,535
2009
£’000
2008
£’000
137
(61)
76
27
103
194
(41)
153
70
223
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27
Notes to the financial statements (continued)
for the year ended 31 December 2010
10 Trade and other receivables (continued)
Amounts due from tenants at each year end include amounts invoiced on 25 December in respect of rents in advance for the period
25 December to 24 March. At 31 December 2010 amounts due from tenants which were more than 90 days overdue, which related to
rents for 2010 or earlier, totalled £52,000 (2009: £70,000). Provisions against these overdue amounts totalled £61,000 at the beginning
of the year, of which £3,000 was released, £17,000 was written off and to which a further £3,000 was added to give a provision of
£44,000 at 31 December 2010.
11 Trade and other payables
Deferred income
Social security and other taxes
Other payables
2010
£’000
485
138
274
897
2009
£’000
467
115
195
777
The directors consider that the carrying value of trade and other payables approximates to their fair value.
12 Interest bearing loan
Medium term bank loan
The medium term bank loan comprises amounts falling due as follows:
Between one and two years
Between two and five years
Over five years
13 Deferred tax liabilities
2010
£’000
2009
£’000
–
–
–
–
–
–
–
–
–
–
2008
£’000
466
104
256
826
2008
£’000
1,240
28
165
1,047
1,240
Deferred taxation, arising from revaluation gains, provided for in the financial statements is set out below and is calculated using a
tax rate of 27% (2009: 28%).
2010
At 1 January 2010
Realised in the year
Provided in the year
At 31 December 2010
2009
At 1 January 2009
Reversed in the year
Provided in the year
At 31 December 2009
Equity
investments
£’000
969
(298)
933
764
Equity
investments
£’000
688
(62)
343
969
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Highcroft Investments PLC Report & Financial Statements 31 December 2010
Notes to the financial statements (continued)
for the year ended 31 December 2010
14 Share capital
Authorised 8,000,000 ordinary shares of 25p each
Allotted, called up and fully paid 5,167,240 (2009: 5,167,240) ordinary shares of 25p each
2010
2009
2008
£’000
2,000
1,292
£’000
2,000
1,292
£’000
2,000
1,292
The directors monitor capital on the basis of total equity and operate within the requirements of the articles of association, which permit
borrowings of up to 50% of total equity shown in the latest available audited financial statements. The directors manage the group’s
working capital to take advantage of suitable commercial opportunities as they arise whilst maintaining a relatively low cost capital base.
This capital management is principally carried out by the realisation of liquid equity investments, the sale of vacant residential properties
and the use of surplus cash. In the medium term the directors may again use medium term debt to finance future commercial property
acquisitions in line with its long term strategy.
Total equity
Medium term debt
Medium term debt as a percentage of total equity
15 Capital commitments
There were no capital commitments at 31 December 2010 or at 31 December 2009.
16 Contingent liabilities
There were no contingent liabilities at 31 December 2010 or 31 December 2009.
2010
£’000
2009
£’000
2008
£’000
37,002
34,435
31,604
–
–
–
–
1,254
4.0%
17 Related party transactions
Kingerlee Holdings Limited owns, through its subsidiaries, 25.36% (2009: 25.36%) of the company’s shares and D H Kingerlee and
J C Kingerlee are directors and shareholders of both the company and Kingerlee Holdings Limited. The transactions between the
company and Kingerlee Holdings Limited or its subsidiaries were as follows:
Property income distribution or dividend
Service charge in relation to services provided at Thomas House, Kidlington
Repairs to properties
Amounts outstanding at the end of the year
2010
£’000
354
14
2
2
The company owns 100% of Rodenhurst Estates Limited. The transactions between the company and Rodenhurst Estates Limited
were as follows:
Dividend received
Management charge receivable
Interest receivable on intercompany loan
Amounts outstanding at the end of the year
2010
£’000
–
118
5
359
2009
£’000
280
14
–
–
2009
£’000
1,000
116
50
1,040
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Notes to the financial statements (continued)
for the year ended 31 December 2010
18 Financial instruments and financial risk
The following table presents financial instruments measured at fair value in the statement of financial position in accordance with fair
value hierarchy. This hierarchy groups financial instruments into three levels based on the significance of issues used in measuring the fair
value of the financial instruments. The fair value hierarchy has the following levels:
Level 1: quoted prices in active markets for identical assets or liabilities. The fair value of financial instruments traded in active
markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and
regularly available, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: the fair value of financial instruments that are not traded in an active market, for example, investments in unquoted
companies, is determined by reference to the last known price at which shares were traded.
There have been no transfers between these classifications in the year (2009: none). The change in fair value for the current and previous
years is recognised through the consolidated statement of comprehensive income.
IFRS 7 measurement classification – 2010
Opening cost
Opening unrealised (loss)/gain
Opening fair value at 1 January 2010
Additions at cost
Disposal proceeds
Net loss realised on disposal
Change in fair value in the year on assets held at 31 December 2010
Closing fair value at 31 December 2010
Closing cost
Closing unrealised gain
At 31 December 2010
IFRS 7 measurement classification – 2009
Opening cost
Opening unrealised (loss)/gain
Opening fair value at 1 January 2009
Additions at cost
Disposal proceeds
Net profit realised on disposal
Change in fair value in the year on assets held at 31 December 2009
Closing fair value at 31 December 2009
Closing cost
Closing unrealised gain
At 31 December 2009
Level 3
Level 1
Total
Unquoted Quoted
Quoted
equity
equity
and
investments investments unquoted
£’000
4
5
9
–
–
–
–
9
4
5
9
£’000
3,371
4,017
7,388
1,028
£’000
3,375
4,022
7,397
1,028
(3,326)
(3,326)
(67)
576
5,599
2,390
3,209
5,599
(67)
576
5,608
2,394
3,214
5,608
Level 3
Level 1
Total
Unquoted Quoted
Quoted
equity
equity
and
investments investments unquoted
£’000
4
5
9
–
–
–
–
9
4
5
9
£’000
4,212
3,061
7,273
515
£’000
4,216
3,066
7,282
515
(1,845)
(1,845)
122
1,323
7,388
3,371
4,017
7,388
122
1,323
7,397
3,375
4,022
7,397
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Highcroft Investments PLC Report & Financial Statements 31 December 2010
Notes to the financial statements (continued)
for the year ended 31 December 2010
18 Financial instruments and financial risk (continued)
Categories of financial instruments
Financial assets designated at fair value through the income statement
Equity investments
Loans and receivables
Trade and other receivables
Cash and cash equivalents
Financial liabilities measured at amortised cost
Trade and other payables
2010 2009
Carrying
Income/
Carrying
Income/
amount
(expense)
amount
(expense)
£’000
£’000
£’000
£’000
5,608
576
7,397
1,323
93
2,472
2,565
897
897
–
–
–
–
–
103
946
1,049
777
777
–
–
–
–
–
Fair value and maturity of financial instruments
The group has no derivative financial instruments. Exposure to credit, liquidity and market risks arises in the normal course of the group’s
business. At 31 December 2010 the group had no borrowings and fair values were not materially different from book values.
Market risk
Market risk arises from the group’s activities as investors in properties and equities. The valuation of these investments is the principal
area of judgement exercised by the directors and in so doing they take the valuations of external advisers, carried out at the balance
sheet date but in the knowledge that market conditions change from time to time.
Credit risk
The group’s credit risk, i.e. the risk of financial loss due to a third party failing to discharge its obligation, primarily affects its trade
receivables. Creditworthiness of potential tenants is assessed before entering into contractual arrangements. The amount of trade
receivables presented in the balance sheet is calculated after any allowances for doubtful receivables, estimated by the directors.
The allowance as at 31 December 2010 was £44,000 (2009: £61,000).
The group has no significant concentration of credit risk, with exposure spread over a number of tenants. The credit status of tenants
is continuously monitored and particularly reviewed before properties are acquired, before properties are let and before new leases
are granted.
The group’s cash holdings are mainly in Lloyds TSB Bank plc and cash is also held by the group’s property managers and brokers acting
as agents, though not for long periods of time.
Liquidity risk
The group’s liquidity risk, i.e. the risk that it might encounter difficulty in meeting its obligations, applies to its trade payables and
medium term borrowings. The group has not encountered any difficulty in paying its trade payables in good time.
Interest rate risk
The group finances its operations through retained profits and medium term borrowings. Neither fixed rate instruments nor interest rate
swaps have been used. The group places any cash balances on deposit at rates which are fixed in the short term but for sufficiently short
periods that there is no need to hedge against the implied risk.
When medium term borrowings are used variable rates of interest apply. There were no borrowings in 2010.
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Notes to the financial statements (continued)
for the year ended 31 December 2010
18 Financial instruments and financial risk (continued)
Currency exchange risk
The group is not directly exposed to currency risk as it does not trade in foreign currencies. However, most of the group’s equity
investments are held in international companies and 24.8% (2009: 22.5%) of the equity investment portfolio comprises overseas
holdings. The inherent currency risk affecting those holdings is an indistinguishable factor in determining their market value and is taken
into consideration as part of the overall assessment of investment risk.
Maturity of group financial liabilities
At 31 December 2010 there were no group financial liabilities at variable rates (2009: £nil).
Borrowing facilities
The group has no undrawn committed borrowing facilities.
19 Net assets per share
Net assets
Ordinary shares in issue
Basic net assets per share
20 Post balance sheet events
2010
£’000
2009
£’000
37,002
34,435
5,167,240 5,167,240
716p
666p
Following the year end two residential properties were sold at their year end fair values which totalled £821,000.
In addition an agreement for lease has been exchanged for the Yeovil property.
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Highcroft Investments PLC Report & Financial Statements 31 December 2010
Five year summary
for the year ended 31 December 2010
Investment properties – at annual valuation
Equity investments – at market value
Total net assets
Net asset value per share in issue at end of each year
Revenue (excluding gains/losses on disposals of assets)
Gross income from property
Dividend income
Profit available for distribution
Share capital
Average number in issue (000s)
Basic earnings/(loss) per ordinary share
Adjusted earnings per ordinary share
Dividends paid per ordinary share
All-Share Index
Highcroft year end share price
2010
£’000
2009
£’000
2008
£’000
30,705
27,825
26,344
5,608
7,397
7,282
37,002
34,435
31,604
716p
666p
612p
£’000
1,943
292
1,670
£’000
2,124
450
1,922
2007
£’000
35,545
10,830
41,713
807p
£’000
2,126
406
1,562
£’000
2,053
234
1,965
5,167
76.7p
38.0p
5,167
76.2p
32.3p
5,167
(179.3p)
37.3p
5,167
(8.5p)
30.2p
28.60p
26.00p
18.40p
14.25p
13.70p
3,063
495p
2,761
445p
2,141
305p
3,287
717p
3,221
732p
2006
£’000
41,487
11,794
42,875
830p
£’000
2,038
489
1,500
5,167
84.8p
29.0p
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Report of the Independent Auditor to the members of Highcroft Investments PLC
for the year ended 31 December 2010
Independent auditor’s report to the members of Highcroft Investments PLC
We have audited the financial statements of Highcroft Investments PLC for the year ended 31 December 2010 which comprise the
consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes
in equity, the consolidated statement of cash flows, the notes to the financial statements, the parent company balance sheet , the parent
company reconciliation of movements in shareholders’ funds and the notes to the parent company financial statements. The financial
reporting framework that has been applied in the preparation of the group financial statements is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of
the parent company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted
Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an
auditor’s 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 and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors’ responsibilities set out on page 5, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us
to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2010
and of the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union;
the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the group
financial statements, Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006;
the information given in the report of the directors’ for the financial year for which the financial statements are prepared is consistent with
the financial statements; and
the information given in the corporate governance statement set out on pages 4 to 5 with respect to internal control and risk management
systems in relation to financial reporting processes and about share capital structures is consistent with the financial statements.
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Highcroft Investments PLC Report & Financial Statements 31 December 2010
Report of the Independent Auditor to the members of Highcroft Investments PLC (continued)
for the year ended 31 December 2010
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from
branches not visited by us; or
the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit; or
a corporate governance statement has not been prepared by the company.
Under the Listing Rules, we are required to review:
the directors’ statement, set out on page 6, in relation to going concern;
the part of the Corporate Governance Statement relating to the company’s compliance with the nine provisions of the June 2008
Combined Code specified for our review; and
certain elements of the report to shareholders by the board on directors’ remuneration
Nicholas Watson
Senior statutory auditor
for and on behalf of Grant Thornton UK LLP
statutory auditor, chartered accountants
Oxford
23 March 2011
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35
Note 2010 2009
£’000
£’000
£’000
£’000
5
6
378
1,917
2,295
35,819
34,267
1,939
37,758
1,292
1,047
299
1,346
208
4,679
95
26,808
2,531
1,138
35,405
1,292
36,466
37,758
34,113
35,405
Company balance sheet
at 31 December 2010
Fixed assets
Investments
Current assets
Debtors
Cash at bank
Creditors – amounts falling due within one year
7
356
Net current assets
Total assets less current liabilities
Capital and reserves
Called up share capital
Reserves
– Realised capital
– Capital redemption
– Revaluation
– Retained earnings
Shareholders’ funds
8
9
9
9
11
5,717
95
29,340
1,314
These financial statements were approved by the board of directors on 23 March 2011.
John Hewitt
J C Kingerlee
Directors
Company number – 224271
The accompanying notes form an integral part of these financial statements.
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36
Highcroft Investments PLC Report & Financial Statements 31 December 2010
Notes to the company’s financial statements
for the year ended 31 December 2010
1 Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with applicable UK GAAP accounting standards and under the historical cost
convention except for the revaluation of fixed assets. The principal accounting policies of the company have remained unchanged from
the previous year.
Income from fixed asset investments
Income from fixed asset investments includes dividends received in the year and interest receivable for the year.
Dividends payable
Dividend payments are dealt with when paid as a change of equity in the revenue reserve. Final dividends proposed are not recognised
as a liability.
Investments
Investments are included at the following valuations:
shares in subsidiary undertaking – at market value (net assets as shown by its financial statements are taken as a reasonable estimate
of market value),
equity investments (all listed on a recognised investment exchange) – at market value,
unlisted investments – at market value estimated by the directors.
The directors manage and evaluate performance on a fair value basis and therefore have designated qualifying financial assets at fair
value through the profit and loss account.
Deferred taxation
Deferred tax is recognised on all timing differences where the transactions or events that give the company an obligation to pay more tax
in the future, or a right to pay less tax in the future, have occurred by the balance sheet date. Deferred tax assets are recognised when it
is more likely than not that they will be recovered. Deferred tax is measured using rates of tax that have been enacted or substantively
enacted by the balance sheet date.
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences
reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
Unprovided deferred taxation would crystallise on the sale of assets at their balance sheet value.
Gains on disposals of assets
Gains on disposals of assets are the excess of net proceeds over the valuation at the beginning of the year. They are not available for
distribution under the company’s articles of association and are taken to realised capital reserve.
2 Company profit for the year after tax
The company has not presented its own profit and loss account as permitted under section 408 of the Companies Act 2006. The profit
after tax for the year was £754,000 (2009: £2,490,000). Information regarding directors’ remuneration appears on pages 14 and 15 of the
consolidated financial statements.
3 Auditor’s fees
Fees payable to the company’s auditor for the audit of the company’s annual accounts
Fees payable to the company’s auditor for other services:
Other services pursuant to legislation
2010
£’000
19
1
20
2009
£’000
19
3
22
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37
Notes to the company’s financial statements (continued)
for the year ended 31 December 2010
4 Dividends
In 2010 the following dividends have been paid by the company:
2009 Final: 16.0p per ordinary share (2008: 11.4p)
2010 Interim: 11.0p per ordinary share (2009: 10.0p)
2010
£’000
827
568
2009
£’000
589
518
1,395
1,107
On 23 March 2011, the directors declared a property income distribution of 17.6p per share (2009: 16.0p) payable on 2 June 2011 to
shareholders registered at 6 May 2011.
5 Equity investments
Valuation at 1 January 2010
Additions at cost
Disposals
Surplus on revaluation in excess of cost
Revaluation decrease below cost
Revaluation increase still less than cost
Valuation at 31 December 2010
Shares in
subsidiary Other investments
Total undertaking
Listed Unlisted
£’000
£’000
34,267
26,870
1,028
(3,393)
3,913
(6)
10
–
–
3,341
–
–
£’000
7,388
1,028
(3,393)
572
(6)
10
35,819
30,211
5,599
£’000
9
–
–
–
–
–
9
Equity investments are included at their market value. If investments had not been revalued they would have been included on the
historical cost basis at the following amounts:
Cost at 31 December 2010
Cost at 31 December 2009
Shares in
subsidiary Other investments
Total undertaking
Listed Unlisted
£’000
6,148
7,129
£’000
3,754
3,754
£’000
2,390
3,371
£’000
4
4
At 31 December 2010, the company held 100% of the allotted ordinary share capital and voting rights of Rodenhurst Estates Limited
which is a property owning company, registered in England and Wales and operating in England.
6 Debtors
Owed by subsidiary undertaking
Other debtors
2010
£’000
359
19
378
2009
£’000
1,044
3
1,047
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Highcroft Investments PLC Report & Financial Statements 31 December 2010
Notes to the company’s financial statements (continued)
for the year ended 31 December 2010
7 Creditors – amounts falling due within one year
Corporation tax
Other taxes and social security
Other creditors
8 Share capital
Authorised 8,000,000 ordinary shares of 25p each
Allotted, called up and fully paid 5,167,240 (2009: 5,167,240) ordinary shares of 25p each
9 Reserves
At 1 January 2010
Profit retained
Dividends paid
Revaluation surplus – equities
Revaluation surplus – Rodenhurst Estates Limited
Realised losses
Tax on realised gains
Surplus attributable to assets sold in the year
At 31 December 2010
2010
£’000
215
7
134
356
2009
£’000
90
1
117
208
2010
2009
£’000
2,000
1,292
£’000
2,000
1,292
Revaluation
Realised
Retained
capital
earnings
£’000
26,808
£’000
4,679
–
–
576
3,341
–
–
(1,385)
29,340
–
–
–
–
(49)
(298)
1,385
5,717
£’000
2,531
754
(1,395)
(576)
–
–
–
–
1,314
The revaluation reserve includes annual revaluation gains and losses, less attributable taxation. The realised capital reserve includes
realised revaluation gains and losses, less attributable taxation. In accordance with the articles of association the revaluation and realised
capital reserves are not distributable.
10 Deferred taxation
Deferred taxation provided and unprovided for in the financial statements is set out below and is calculated using a tax rate of 27%
(2009: 28%). Unprovided deferred taxation would crystallise if equity investments were sold at their balance sheet value.
Unrealised capital gains
Provided Unprovided
2010
£’000
–
2009
£’000
–
2010
£’000
6,764
2009
£’000
6,353
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39
Notes to the company’s financial statements (continued)
for the year ended 31 December 2010
11 Reconciliation of movements in shareholders’ funds
Profit for the financial year
Dividends
Other recognised gains and losses:
Surplus on revaluation of assets
Realised (losses)/gains
Tax on prior years’ surplus now realised
Net increase in shareholders’ funds
Shareholders’ funds at 1 January 2010
Shareholders’ funds at 31 December 2010
2010
£’000
754
2009
£’000
2,490
(1,395)
(1,107)
(641)
1,383
3,341
1,705
(49)
(298)
2,353
35,405
37,758
88
(63)
3,113
32,292
35,405
12 Capital commitments
There were no capital commitments at 31 December 2010 or at 31 December 2009.
13 Contingent liabilities
There were no contingent liabilities at 31 December 2010 or at 31 December 2009.
14 Related party transactions
Kingerlee Holdings Limited through its subsidiaries owns 25.36% (2009: 25.36%) of the company’s shares and D H Kingerlee and
J C Kingerlee are directors and shareholders of both the company and Kingerlee Holdings Limited. The transactions between the
company and Kingerlee Holdings Limited or its subsidiaries, all of which were undertaken on an arm’s length basis, were as follows:
Property income distribution or dividend
Service charge in relation to services provided at Thomas House, Kidlington
Amounts outstanding at the end of the year
2010
£’000
354
14
–
2009
£’000
280
14
–
Under the provision of FRS 8, transactions between Highcroft Investments PLC and Rodenhurst Estates Limited are exempt from these
disclosure requirements as Rodenhurst is a wholly-owned subsidiary.
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Highcroft Investments PLC Report & Financial Statements 31 December 2010
Shareholder notes
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Chairman’s Introduction
Directors and advisers
Company number
224271
Directors
John Hewitt, MA (non-executive chairman)
Christopher Clark, BA FCSI (non-executive)
Richard Stansfield, BSc FRICS (non-executive)
Jonathan Kingerlee (chief executive)
Roberta Miles, MA FCA (finance)
David Kingerlee (executive)
Company secretary
Roberta Miles, MA FCA
Independent auditor
Bankers
Corporate finance advisers
Property advisers
Independent valuers
Registrars
Solicitors
Registered office
Grant Thornton UK LLP
Registered Auditor
Chartered Accountants
3140 Rowan Place
John Smith Drive
Oxford Business Park South
Oxford OX4 2WB
Lloyds TSB Bank plc
The Atrium
Davidson House
Forbury Square
Reading RG1 3EU
Charles Stanley Securities
131 Finsbury Pavement
London EC2A 1NT
King Sturge LLP
30 Warwick Street
London W1B 5NH
Jones Lang LaSalle
22 Hanover Square
London W1A 2BN
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Clarkslegal LLP
One Forbury Square
The Forbury
Reading RG1 3EB
Thomas House
Langford Locks
Kidlington
Oxon OX5 1HR
www.highcroftplc.com
Back cover
Top: Distribution centre in Kidlington, let to Parcelforce
Bottom: Industrial unit in Leamington Spa, let to
Nationwide Crash Repair
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Highcroft Investments PLC
Thomas House
Langford Locks
Kidlington
Oxon
OX5 1HR
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