Highcroft Investments PLC 22 September 2005 Highcroft Investments PLC Interim results for the six months ended 30 June 2005 Chairman's Statement - Profit after taxation, but ignoring capital activities, increased by 13.3% to £658,000 from £581,000 in the period to June 2004 (see note 6). - Profit for the period including valuation gains and losses increased by 67.9% to £1,921,000 from £1,144,000 in the period to June 2004. - Interim dividend increased by 7.4% to 4.35p per share. - Net assets per share up to 697p (June 2004 637p and December 2004 668p). International Financial Reporting Standards This is our first set of results to be prepared, as we are required to do, following International Financial Reporting Standards (IFRS). IFRS require a very different presentation of our results and the differences are fully explained in the notes. There are three key changes as a result of this transition. There are two changes in accounting policies. First, the deferred taxation on revaluation gains is now recognised on the balance sheet as an actual, rather than as a contingent, liability. Second, dividends to shareholders are recognised when paid rather than being deducted from the profits to which they relate. Third, there are many changes in disclosure. The major change for Highcroft is that valuation gains and losses are recognised in the "income statement" (the statement which replaces the profit and loss account). Recent movements in the markets mean that we have primarily had gains and this has significantly added to reported profit. Clearly, in different markets, the reverse would have been the case. Summary In the six months to 30 June 2005, the profit for the period has increased by 67.9% to £1,921,000 from £1,144,000. This calculation of profit includes our net valuation gains on investment property and equity investments. The profit for the period ignoring valuation gains, increased by 13.3% to £658,000 from £581,000. The interim dividend will be 4.35p (2004 4.05p) an increase of 7.4%, continuing our policy of increasing dividend payments by more than inflation. The dividend is payable on 28 October 2005. Net asset value, which now has the liability for deferred taxation on revaluation gains deducted from it, has risen to 697p per share from 637p and this continues to show a positive trend. Operating Activities The profit for the period ignoring valuation gains increased by 13.3% to £658,000. This reflects the underlying income and expenditure of the group, excluding the more volatile short term gains or losses on capital items. The extent of the increase is a little flattering as last year we incurred the cost of extensive repairs to one residential property and this year property operating expenses have so far been proportionately low. Rental income was up by 18.0% reflecting the benefit of new acquisitions and some rent reviews. Investment income was up 16.0% on the equivalent period in 2004, benefiting from a couple of special dividends and a slight shift in timing of dividend payments towards the first half of the year. Capital Activities - investment property The sale of a residential property generated a profit on disposal of £45,000 and the interim valuation of the portfolio produced net valuation gains of £1,156,000 with a slight decline in values of certain residential properties. At 30 June 2005, our investment property portfolio was valued at £31,446,000 (2004 £27,697,000). There continues to be a steady stream of opportunities to invest in new properties but none have been available at prices which we felt offered the group a sufficient return. As well as looking at new properties, we are also exploring opportunities to enhance the value of the existing portfolio by means of modest development projects. Capital Activities - equity investments With our equity investments, we made net gains of £456,000 as compared with net gains of £22,000 in the first half of 2004. We have invested £615,000 in equities and sold various holdings for £375,000, a net injection of £240,000 cash into equities. At 30 June 2005, our equity investments were valued at £9,427,000 (2004 £7,927,000). Net Asset Value At 30 June 2005, net asset value was 697p per share (against 637p at June 2004 and 668p at 31 December 2004). As noted above, these values are restated to take into account, in particular, the deferred tax on revaluation gains but they still show a positive trend. The increase in the first half of 2005 has come from all sources - investment property net gains of £1,201,000, net gains of £456,000 in equity investments and distributable profit after tax of £658,000. The Future We are optimistic about the trading outlook for the group and the prospects for our operating profit in the second half. We have two relatively small commercial properties which we hope to sell by private treaty during the second half of 2005. Investment property and equity markets are outside our control but there are positive indications of what the second half of the year has in store. Whatever the markets may or may not deliver, the strength of our balance sheet gives us confidence in our future. G J Kingerlee 21 September 2005 Condensed consolidated income statement (Unaudited) for the six months ended 30 June 2005 First Half First Half Full Year Note 2005 2004 2004 £'000 £'000 £'000 Gross rental income 943 796 1,667 Property operating expenses (57) (65) (127) ----------- ----------- ----------- Net rental income 886 731 1,540 Profit on disposal of investment property 45 - 9 ----------- ----------- ----------- Valuation gains on investment property 1,190 908 1,545 Valuation losses on investment property (34) (246) (310) ----------- ----------- ----------- Net valuation gains on investment property 1,156 662 1,235 ----------- ----------- ----------- Dividend income 155 134 285 Gains on investments 629 358 1,042 Losses on investments (173) (336) (139) ----------- ----------- ----------- Net investment income 611 156 1,188 ----------- ----------- ----------- Administrative expenses 115 112 205 Net operating profit before net financing costs 2,583 1,437 3,767 Financial income 4 20 21 Financial expenses (49) (1) (17) ----------- ----------- ----------- Net financing costs (45) 19 4 ----------- ----------- ----------- Profit before tax 2,538 1,456 3,771 Income tax expense 4 617 312 852 ----------- ----------- ----------- Profit for the financial period 1,921 1,144 2,919 ----------- ----------- ----------- Earnings per share 6 37.2p 22.1p 56.5p Condensed consolidated balance sheet (Unaudited) as at 30 June 2005 30 June 30 June 31 December 2005 2004 2004 Note £'000 £'000 £'000 Assets Investment property 7 31,446 27,697 30,523 Equity investments 8 9,427 7,927 8,731 -------------- -------------- -------------- Total non-current assets 40,873 35,624 39,254 -------------- -------------- -------------- Trade and other receivables 241 400 369 Cash at bank and in hand 201 - - -------------- -------------- -------------- Total current assets 442 400 369 -------------- -------------- -------------- Total assets 41,315 36,024 39,623 -------------- -------------- -------------- Equity Issued share capital 1,292 1,292 1,292 Revaluation reserve - property 9 7,039 6,012 6,322 - other 9 3,091 2,268 2,933 Capital redemption reserve 95 95 95 Realised capital reserve 9 15,154 14,596 14,766 Retained earnings 9 9,353 8,668 9,089 -------------- -------------- -------------- Total equity 36,024 32,931 34,497 -------------- -------------- -------------- Liabilities Interest-bearing loans and borrowings 10 1,465 - 1,499 Deferred tax liabilities 2,712 2,196 2,455 -------------- -------------- -------------- Total non-current liabilities 4,177 2,196 3,954 -------------- -------------- -------------- Bank overdraft - 82 146 Interest-bearing loans and borrowings 69 - 69 Trade and other payables 1,045 815 957 -------------- -------------- -------------- Total current liabilities 1,114 897 1,172 -------------- -------------- -------------- Total liabilities 5,291 3,093 5,126 -------------- -------------- -------------- Total equity and liabilities 41,315 36,024 39,623 -------------- -------------- -------------- Condensed consolidated statement of cash flow (Unaudited) for the six months ended 30 June 2005 First Half First Half Full Year 2005 2004 2004 £'000 £'000 £'000 Operating activities Profit for the period 1,921 1,144 2,919 Adjustments for: Net valuation gains on investment property (1,156) (662) (1,235) Profit on disposal of investment property (45) - (9) Net gains on investments (456) (22) (903) Interest expense 49 1 17 Income tax expense 617 273 852 -------------- -------------- -------------- Operating profit before changes in working 930 734 1,641 capital and provisions Decrease in debtors 129 132 163 (Decrease)/increase in creditors 7 (31) 58 -------------- -------------- -------------- Cash generated from operations 1,066 835 1,862 Interest paid (49) (1) (11) Income tax paid (278) (218) (451) -------------- -------------- -------------- Cash flow from operating activities 739 616 1,400 -------------- -------------- -------------- Investing activities Purchase of fixed assets - investment property - (1,599) (4,089) - equity investments (615) (453) (1,016) Sale of fixed assets - investment property 278 - 246 - equity investments 375 610 1,249 -------------- -------------- -------------- Cash flow from investing activities 38 (1,442) (3,610) Financing activities Medium term loan (34) - 1,568 Dividends paid (395) (374) (583) -------------- -------------- -------------- Cash flow from investing activities (429) (374) 985 -------------- -------------- -------------- Net increase in cash and cash equivalents 347 (1,200) (1,225) Cash and cash equivalents at 1 January 2005 (146) 1,079 1,079 -------------- -------------- -------------- Cash and cash equivalents at 30 June 2005 201 (121) (146) -------------- -------------- -------------- Notes 1. Interim report The results for the six months ended 30 June 2005 are unaudited. This interim report will not appear as an advertisement in any newspaper but copies are being sent to all shareholders and are available at the company's registered office. The interim report does not constitute full accounts as defined by the Companies Act 1985 but should be read in conjunction with the most recent financial statements. Full accounts for 2004 have been delivered to the Registrar of Companies, bearing an unqualified audit opinion. 2. Significant accounting policies Highcroft Investments PLC is a company domiciled in the United Kingdom. The consolidated financial statements of the company for the six months ended 30 June 2005 comprise the company and its subsidiary, together referred to as the group. a. Statement of compliance This interim report has been prepared in accordance with IAS 34 on Interim Financial Reporting and the requirements of International Financial Reporting Standard (IFRS) 1, First-time adoption of International Financial Reporting Standards relevant to interim reports. The accounting policies are consistent with those that the directors intend to use in the next annual financial statements. There is, however, a possibility that the directors may determine that some changes to these policies are necessary when preparing the full annual financial statements for the first time in accordance with IFRS as adopted for use in the European Union. This is because, as disclosed in note 2i, the directors have anticipated that IAS 39 Financial Instruments: Recognition and Measurement The Fair Value Option, will be so adopted in time to be applicable to the next annual financial statements. b. Basis of preparation The financial statements are presented in pounds sterling, rounded to the nearest thousand. They are prepared on the historical cost basis except that investment property and equity investments are stated at their fair value.. The accounting policies have been consistently applied to the results, other gains and losses, assets, liabilities and cash flows of entities included in the consolidated financial statements and are consistent with those used in the previous year except as follows: 1) Dividend payments are now dealt with when paid as a change of equity in the revenue reserve. Final dividends proposed are not recognised as a liability. This is to comply with IAS 10, Events after the Balance Sheet Date. 2) The deferred tax which would be payable if revalued assets were sold at their revalued amount is now provided for on the balance sheet and not simply noted as a contingent liability. Changes in the provision are recognised in the Income Statement. This is to comply with IAS 12, Income Taxes. 3) All gains and losses and changes in the value of our financial assets are recognised in the Income Statement. This is to comply with IAS 39, Financial Instruments. 4) All gains and losses and changes in the value of our investment properties are recognised in the Income Statement. This is to comply with IAS 40, Investment Properties. The impact of these changes in accounting policy as previously reported at 31 December 2004, 30 June 2004 and 1 January 2004 (the date of transition to IFRS) is, in summary, as follows. More details are contained in note 10. 31 December 30 June 1 January 2004 2004 2004 £'000 £'000 £'000 a) On total equity: As previously reported 36,557 34,918 33,901 Changes in respect of: Dividend payments 395 209 374 Deferred tax (2,455) (2,196) (2,114) ----------------- ----------------- ----------------- Restated 34,497 32,931 32,161 ----------------- ----------------- ----------------- Year to Half year to 31 December 30 June 2004 2004 £'000 £'000 b) On profit for the period: As previously reported 607 372 Changes in respect of: Dividend payments 604 209 Deferred tax (433) (82) Revaluation gains on financial assets 864 21 Realised gains on financial assets 35 1 Revaluation gains on investment properties 1,235 662 Realised gains on investment properties 7 - ----------------- ----------------- Restated 2,919 1,183 ----------------- ----------------- There has been a change in the presentation of the cash flow statement but no fundamental change to the underlying figures. The preparation of financial statements in conformity with IFRS requires management to make judgement, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. c. Basis of consolidation The group financial statements consolidate the financial statements of the company and its subsidiary, Rodenhurst Estates Limited, which are both made up to 30 June 2005. Profits or losses on intra-group transactions are eliminated in full. d. Rental income Rental income from investment property is recognised in the income statement on a straight line basis over the term of the lease. e. Dividend income Dividend income 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. f. Interest income Interest income and expense is recognised in the income statement as it accrues. Interest income is recognised on a gross basis, including withholding tax, if any. g. Expenses All expenses are recognised in the income statement on an accrual basis. h. Investment property Investment properties are those which are held either to earn rental income or for capital appreciation or for both. Investment properties are 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. Any gain or loss arising from a change in fair value is recognised in the income statement. i. Financial assets IAS 39 introduced new categories of financial instruments (e.g. financial assets and financial liabilities at fair value through the profit and loss account). Under IAS 39, designation of any financial assets at fair value through the profit and loss account may be made upon initial recognition at the group's discretion but subject to certain conditions detailed below arising from the amendment to IAS 39 issued on 16 June 2005. The group shall not reclassify a financial asset into or out of fair value through profit or loss while it is held. Transitional provisions to IAS 39 allow the group a one time opportunity to designate currently held financial assets as a financial asset at fair value through profit or loss despite the requirement to make such designation upon initial recognition. At 1 January 2004, all investments held as fixed assets by the group with the carrying amount and fair value of £8,062,000 were designated at fair value through profit and loss. IAS 39, as amended, allows an entity to designate a financial asset, a financial liability, or a group of financial instruments (financial assets, financial liabilities or both) at a fair value through profit or loss provided that doing so results in more relevant information (as detailed in IAS 39 revised). Designation must be on initial recognition and is irrevocable. The directors have adopted the fair value option for its qualifying financial assets on the basis that to do so is in accordance with its documented investment strategy. j. Trade and other receivables Trade and other receivables are recognised at fair value on initial recognition. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. k. Issued share capital Ordinary shares are classified as equity. Dividends are recognised as a liability in the period in which they are declared. l. Interest-bearing borrowings Interest-bearing borrowings are initially recognised at fair value less attributable costs. Thereafter the carrying amount is stated at amortised cost. m. Trade and other payables Trade and other payables are stated at cost. n. Income tax Income tax on the profit and loss for the periods presented comprises current and deferred tax. Income tax is recognised in profit or loss. 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 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. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. o. Segmental reporting A segment is a distinguishable component of the group that is engaged in generating income and expenses (business segment) which is subject to risks and rewards that are different from those of other segments. The business segment is considered to be the primary reporting segment. 3. Segment reporting Segment information is presented in the consolidated interim financial statements in respect of the group's business segments. The business segment reporting format reflects the group's management and internal reporting structure. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The group is comprised of the following main business segments: - Commercial property comprising retail outlets, offices and warehouses. - Residential property comprising mainly single-let houses. - Financial assets comprising exchange-traded equity investments. First Half First Half Full Year 2005 2004 2004 £'000 £'000 £'000 Commercial property Gross income 906 757 1,586 Profit for the period 1,430 824 1,867 Assets 29,124 24,856 27,856 Liabilities 3,183 1,272 3,098 Residential property Gross income 37 39 81 Profit for the period 13 110 112 Assets 2,753 3,223 3,019 Liabilities 673 748 738 Financial assets Gross income 155 134 285 Profit for the period 478 210 940 Assets 9,438 7,945 8,748 Liabilities 1,435 1,073 1,290 Total Gross income 1,098 930 1,952 Profit for the period 1,921 1,144 2,919 Assets 41,315 36,024 39,623 Liabilities 5,291 3,093 5,126 4. Taxation First Half First Half Full Year 2005 2004 2004 £'000 £'000 £'000 Current tax: On revenue profits 223 191 413 On capital profits 20 - 6 Deferred tax 374 121 433 ----------------- ----------------- ----------------- 617 312 852 ----------------- ----------------- ----------------- The taxation charge has been based on the estimated effective tax rate for the full year. 5. Dividends On 21 September 2005, the directors declared an ordinary interim dividend of 4.35p per share (2004 4.05p) payable on 28 October 2005 to shareholders registered at 7 October 2005. The following dividends have been paid by the group. First Half First Half Full Year 2005 2004 2004 £'000 £'000 £'000 7.65p per ordinary share (2004 7.25p) 395 374 374 4.05p per ordinary share - - 209 ----------------- ----------------- ----------------- 395 374 583 ----------------- ----------------- ----------------- 6. Earnings per share The calculation of earnings per share is based on the profit for the period of £1,921,000 (2004 £1,144,000) and on 5,167,240 shares (2004 5,167,240) which is the weighted average number of shares in issue during the period ended 30 June 2005 and throughout the period since 1 January 2004. 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 £658,000 (2004 £581,000) has been calculated. First Half First Half Full Year 2005 2004 2004 £'000 £'000 £'000 Earnings: Basic earnings per share 1,921 1,144 2,919 Adjustments for: Net valuation gains on investment (1,201) (662) (1,244) property Gains and losses on investments (456) (22) (903) Income tax on gains and losses 394 121 439 ----------------- ----------------- ----------------- Adjusted earnings per share 658 581 1,211 ----------------- ----------------- ----------------- Per share amount: Basic earnings per share 37.2p 22.1p 56.5p Adjustments for: Net valuation gains on investment (23.2)p (12.8)p (24.1)p property Gains and losses on investments (8.8)p (0.4)p (17.5)p Income tax on gains and losses 7.6p 2.3p 8.5p ----------------- ----------------- ----------------- Adjusted earnings per share 12.8p 11.2p 23.4p ----------------- ----------------- ----------------- 7. Investment property First Half First Half Full Year 2005 2004 2004 Valuation at 1 January 2005 30,523 25,436 25,436 Additions - 1,599 4,089 Disposals -233 0 Disposals (233) - (237) Surplus on revaluation 1,156 662 1,235 ----------------- ----------------- ----------------- Valuation at 30 June 2005 31,446 27,697 30,523 ----------------- ----------------- ----------------- The directors have used an external independent valuation of properties at 30 June 2005. 8. Equity investments Listed and unlisted First Half First Half Full Year 2005 2004 2004 £'000 £'000 £'000 Valuation at 1 January 2005 8,731 8,062 8,062 Additions 615 453 1,016 Disposals (343) (609) (1,211) Surplus on revaluation 424 21 864 ----------------- ----------------- ----------------- Valuation at 30 June 2005 9,427 7,927 8,731 ----------------- ----------------- ----------------- 9. Reserves a) First half 2005 Non-distributable Distributable Revaluation reserves Realised Retained Property Other Capital Earnings £'000 £'000 £'000 £'000 At 1 January 2005 6,322 2,933 14,766 9,089 Profit for the financial period - - - 1,921 Dividends to shareholders - - - (395) Non-distributable items recognised in income statement: Valuation gains and losses 1,156 424 76 (1,656) Tax on valuation gains and losses (269) (105) (20) 394 Gains attributable to assets sold (233) (214) 448 - Tax on gains attributable to assets sold 63 53 (116) - ----------- ----------- ----------- ----------- At 30 June 2005 7,039 3,091 15,154 9,353 ----------- ----------- ----------- ----------- The nature and purpose of group reserves is as follows: - The property revaluation reserve is for gains and losses on investment property currently held and is non-distributable. - The other revaluation reserve is for gains and losses on investments currently held and is non-distributable. - The realised capital reserve is for gains and losses on investment property and investments no longer held and is non-distributable. b) First half 2004 Non-distributable Distributable Revaluation reserves Realised Retained Property Other Capital Earnings £'000 £'000 £'000 £'000 At 1 January 2004 5,526 2,462 14,325 8,461 Profit for the financial period - - - 1,144 Dividends to shareholders - - - (374) Non-distributable items recognised in income statement: Valuation gains and losses 662 21 1 (684) Tax on valuation gains and losses (176) 55 - 121 Gains attributable to assets sold - (309) 309 - Tax on gains attributable to assets sold - 39 (39) - ------------ ----------- ------------ ------------ At 30 June 2004 6,012 2,268 14,596 8,668 ------------ ----------- ------------ ------------ c) Full year 2004 Non-distributable Distributable Revaluation reserves Realised Retained Property Other Capital Earnings £'000 £'000 £'000 £'000 At 1 January 2004 5,526 2,462 14,325 8,461 Profit for the financial period - - - 2,919 Dividends to shareholders - - - (583) Non-distributable items recognised in income statement: Valuation gains and losses 1,235 864 42 (2,141) Tax on valuation gains and losses (244) (189) - 433 Gains attributable to assets sold (257) (234) 491 - Tax on gains attributable to assets sold 62 30 (92) - ----------- ----------- ----------- ----------- At 31 December 2004 6,322 2,933 14,766 9,089 ----------- ----------- ----------- ----------- 10. Interest-bearing loans and borrowings First Half First Half Full Year 2005 2004 2004 £'000 £'000 £'000 Medium term bank loan 1,465 - 1,499 The medium term bank loan comprises amounts falling due as follows: Between one and two years 71 - 71 Between two and five years 238 - 238 Over five years 1,156 - 1,190 1,465 - 1,499 11. Explanation of transition to IFRS As stated in note 2(a), these are the group's first consolidated interim financial statements for part of the period covered by the first IFRS annual consolidated financial statements prepared in accordance with IFRS. The accounting policies in note 2 have been applied in preparing the consolidated interim financial statements for the six months ended 30 June 2005, the financial statements for the year ended 31 December 2004 and the preparation of an opening IFRS balance sheet at 1 January 2004 (the group's date of transition). In preparing its opening IFRS balance sheet, comparative information for the six months ended 30 June 2004 and financial statements for the year ended 31 December 2004, the group has adjusted amounts reported previously in financial statements prepared in accordance with previous GAAP. An explanation of how the transition from previous GAAP to IFRS has affected the group's financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables. Previous Effect of GAAP transition to IFRS IFRS At 1 January 2004 £'000 £'000 £'000 Assets Investment property 25,436 - 25,436 Equity investments 8,062 - 8,062 ---------------- ---------------- --------------- Total non current assets 33,498 - 33,498 ---------------- ---------------- --------------- Trade and other receivables 532 - 532 Cash at bank and in hand 1,079 - 1,079 ---------------- ---------------- --------------- Total current assets 1,611 - 1,611 ---------------- ---------------- --------------- Total assets 35,109 - 35,109 ========= ========= ========= Previous Effect of GAAP transition Notes to IFRS IFRS At 1 January 2004 £'000 £'000 £'000 Equity Issued share capital 1,292 - 1,292 Revaluation reserve '- property a. 6,560 (1,034) 5,526 - other a. 3,542 (1,080) 2,462 Capital redemption reserve 95 - 95 Realised capital reserve 14,325 - 14,325 Profit and loss account b. 8,087 374 8,461 -------------- -------------- -------------- Total equity 33,901 (1,740) 32,161 -------------- -------------- -------------- Liabilities Interest-bearing loans and borrowings - - - Deferred tax liabilities a. - 2,114 2,114 -------------- -------------- -------------- Total non-current liabilities - 2,114 2,114 -------------- -------------- -------------- Bank overdraft - - - Interest-bearing loans and borrowings - - - Trade and other payables b. 1,208 (374) 834 -------------- -------------- -------------- Total current liabilities 1,208 (374) 834 -------------- -------------- -------------- Total liabilities 1,208 1,740 2,948 -------------- -------------- -------------- Total equity and liabilities 35,109 - 35,109 ======== ======== ======== Previous Effect of GAAP transition Notes to IFRS IFRS At 30 June 2004 £'000 £'000 £'000 Assets Investment property 27,697 - 27,697 Equity investments 7,927 - 7,927 -------------- -------------- -------------- Total non current assets 35,624 - 35,624 -------------- -------------- -------------- Trade and other receivables 400 - 400 Cash at bank and in hand - - - -------------- -------------- -------------- Total current assets 400 - 400 -------------- -------------- -------------- Total assets 36,024 - 36,024 ======== ======== ======== Previous Effect of GAAP transition to IFRS IFRS At 30 June 2004 £'000 £'000 £'000 Equity Issued share capital 1,292 - 1,292 Revaluation reserve '- property a. 7,222 (1,210) 6,012 - other a. 3,254 (986) 2,268 Capital redemption reserve 95 - 95 Realised capital reserve 14,596 - 14,596 Profit and loss account b. 8,459 209 8,668 -------------- -------------- -------------- Total equity 34,918 (1,987) 32,931 -------------- -------------- -------------- Liabilities Interest-bearing loans and borrowings - - - Deferred tax liabilities a. - 2,196 2,196 -------------- -------------- -------------- Total non-current liabilities - 2,196 2,196 -------------- -------------- -------------- Bank overdraft - - - Interest-bearing loans and borrowings - - - Trade and other payables b. 1,106 (209) 897 -------------- -------------- -------------- Total current liabilities 1,106 (209) 897 -------------- -------------- -------------- Total liabilities 1,106 1,987 3,093 -------------- -------------- -------------- Total equity and liabilities 36,024 - 36,024 ======== ======== ======== Previous Effect of GAAP transition to IFRS IFRS At 31 December 2004 £'000 £'000 £'000 Assets Investment property 30,523 - 30,523 Equity investments 8,731 - 8,731 -------------- -------------- -------------- Total non current assets 39,254 - 39,254 -------------- -------------- -------------- Trade and other receivables 369 - 369 Cash at bank and in hand - - - -------------- -------------- -------------- Total current assets 369 - 369 -------------- -------------- -------------- Total assets 39,623 - 39,623 ======== ======== ======== Previous Effect of GAAP transition to IFRS IFRS At 31 December 2004 £'000 £'000 £'000 Equity Issued share capital 1,292 - 1,292 Revaluation reserve '- property a. 7,538 (1,216) 6,322 - other a. 4,172 (1,239) 2,933 Capital redemption reserve 95 - 95 Realised capital reserve 14,766 - 14,766 Profit and loss account b. 8,694 395 9,089 -------------- -------------- -------------- Total equity 36,557 (2,060) 34,497 -------------- -------------- -------------- Liabilities Interest-bearing loans and borrowings 1,499 - 1,499 Deferred tax liabilities a. - 2,455 2,455 -------------- -------------- -------------- Total non-current liabilities 1,499 2,455 3,954 -------------- -------------- -------------- Bank overdraft 146 - 146 Interest-bearing loans and borrowings 69 - 69 Trade and other payables b. 1,352 (395) 957 -------------- -------------- -------------- Total current liabilities 1,567 (395) 1,172 -------------- -------------- -------------- Total liabilities 3,066 2,060 5,126 -------------- -------------- -------------- Total equity and liabilities 39,623 - 39,623 ======== ======== ======== a. Under previous GAAP, deferred tax on sale of assets at their balance sheet value was noted as a contingent liability. The group has applied IAS 12 on Income Taxes which requires full provision for this potential liability. b. Under previous GAAP, dividends declared in respect of an accounting period were recognised as a liability at the end of that accounting period. The group has applied IAS 10 which requires dividends proposed before the financial statements are authorised to be disclosed as a note only. Previous Effect of GAAP transition to IFRS IFRS Reconciliation of profit for half year to 30 June 2004 £'000 £'000 £'000 Gross rental income 796 - 796 Property operating expenses (65) - (65) ----------- ----------- ----------- Net rental income 731 - 731 Profit on disposal of investment property - - - ----------- ----------- ----------- Valuation gains on investment property - 908 908 Valuation losses on investment property - (246) (246) ----------- ----------- ----------- Net valuation gains on investment property - 662 662 ----------- ----------- ----------- Dividend income 134 - 134 Gains on investments - 358 358 Losses on investments - (336) (336) ----------- ----------- ----------- Net investment income 134 22 156 ----------- ----------- ----------- Administrative expenses 112 - 112 ----------- ----------- ----------- Net operating profit before net financing costs 753 684 1,437 ----------- ----------- ----------- Financial income 20 - 20 Financial expenses (1) - (1) ----------- ----------- ----------- Net financing costs 19 - 19 ----------- ----------- ----------- Profit before tax 772 684 1,456 Income tax expense 191 82 273 ----------- ----------- ----------- Profit for the financial period 581 602 1,183 ----------- ----------- ----------- Earnings per share 11.3p 11.6p 22.9p Reconciliation of profit for year to 31 December 2004 £'000 £'000 £'000 Gross rental income 1,667 - 1,667 Property operating expenses (127) - (127) ----------- ----------- ----------- Net rental income 1,540 - 1,540 Profit on disposal of investment property 9 - 9 ----------- ----------- ----------- Valuation gains on investment property - 1,545 1,545 Valuation losses on investment property - (310) (310) ----------- ----------- ----------- Net valuation gains on investment property - 1,235 1,235 Dividend income 285 - 285 Gains on investments 39 1,003 1,042 Losses on investments - (139) (139) ----------- ----------- ----------- Net investment income 324 864 1,188 ----------- ----------- ----------- Administrative expenses 205 - 205 ----------- ----------- ----------- Net operating profit before net financing costs 1,668 2,099 3,767 ----------- ----------- ----------- Financial income 21 - 21 Financial expenses (17) - (17) ----------- ----------- ----------- Net financing costs 4 - 4 ----------- ----------- ----------- Profit before tax 1,672 2,099 3,771 Income tax expense 419 433 852 ----------- ----------- ----------- Profit for the financial period 1,253 1,666 2,919 ----------- ----------- ----------- Earnings per share 24.2p 32.3p 56.5p 12. Related party transactions Kingerlee Holdings Limited owns 24.5% (2004 24.4%) of the company's shares and D H Kingerlee, G J Kingerlee and J C Kingerlee are directors and shareholders of both the company and Kingerlee Holdings Limited. During the period, the group made purchases from Kingerlee Holdings Limited or its subsidiaries, being repairs to properties of £1,000 (2004 £15,000) and a service charge in relation to services at Thomas House, Kidlington of £7,000 (2004 £7,000). The amount owed at 30 June 2005 was £7,000 (2004 £1,000). All transactions were undertaken on an arm's length basis. This information is provided by RNS The company news service from the London Stock Exchange