27th Apr 2006 16:15
Teesland Advantage Property Inc Tst27 April 2006 TEESLAND ADVANTAGE PROPERTY INCOME TRUST LIMITED PRELIMINARY ANNOUNCEMENT OF ANNUAL RESULTS The Directors announce the statement of results for the year ended 31 December2005 (the "Period") as follows:- CHAIRMAN'S STATEMENT I am pleased to present the results for the maiden year of Teesland AdvantageProperty Income Trust Limited ("TAP") as a listed property investment companyand to report the successful execution of an investment strategy which hascontributed to the total return of over 17.7% from the date of Admission inFebruary 2005 to the end of December 2005. This is composed of dividends paidduring the period of 4.16p per share and net asset value growth from 95p to107.89p. TAP forms part of the relatively new breed of listed property investmentcompanies focused on the UK market. This sector has grown substantially over thelast year and now comprises over £2.7 billion in market capitalisation; a figurewhich is steadily increasing as values grow and new entrants join the market. This sector has continued to be highly attractive to investors because itprovides access to the property market, combined with the benefit of therelative liquidity of shares compared with direct property investment. Thesecompanies are characterised by their high income and the relatively purerelationship between the property investment portfolio and the net asset valueof the company. The Company is distinguished from many of the other similar companies, in that abespoke property portfolio was created for the Company, with investments handpicked for their income growth potential. From the outset the Company has had ahigher than average current income return, based on an annualised dividend yieldof 6.5% at the original flotation price. The property portfolio is managed by Teesland Asset Management Limited("Teesland"), our property fund adviser and part of Teesland plc, an independentfund and asset manager, with a long track record in the use of proactiveproperty asset management to provide enhanced returns. Teesland has adopted asimilar strategy for the Company and the make up of the portfolio has beendesigned to ensure the release of value through a range of asset managementinitiatives. In the autumn of 2005, the Board of directors approved a further Placing inorder to expand the size of the Company, which was one of the smallest in thesector, and to enable the Teesland to secure additional property with assetmanagement opportunities. The equity raising was successfully completed early inJanuary 2006, providing a total of £71 million, which, once geared, will enablethe portfolio to be increased to around £250 million. This will have the effectof putting the Company in the mid range of the sector, which will in itselfimprove market awareness of the Company. The majority of the new equity was immediately invested in a portfolio ofproperties, which was assembled by Teesland on behalf of the Company, andcomprised 33 properties with a value of £79.2 million. This acquisition providesthe portfolio with further diversification and embedded opportunities to addvalue through asset management initiatives. Many of the properties are smallerthan typically found in institutional portfolios and are considered by theProperty Fund Adviser to have been under-managed in recent years. RESULTS The financial performance of the Company has been strong. Net asset valueincreased to 107.89p at the end of the year from 103.1p at the end of September.Since launch in February 2005, the net asset value has increased by 13.6% from95p and this includes the cost of acquiring the Maidenhead property and thenegative mark-to-market value of the interest rate swaps. The interest rateswaps are in place to fix the interest cost of the majority of the Company'sdebt and thus are long term exposures. Shareholders have received dividends totalling 4.16p during the period sincelaunch to the end of December, giving rise to a total return of 17.7% in ten andhalf months. In December, the Company was admitted to the Small Cap section of the FTSE AllShare Index. Following this and the Placing, liquidity in the Company's shareshas increased, as has the number of investors in the Company. DIVIDENDS The Directors propose to maintain the current policy of paying four quarterlydividends in February, May, August and November. GEARING At the end of December, the Company had bank debt of £58.1 million equivalent to41% of gross property assets. Of this, £43.8 million is fixed and £14.3 millionis floating. The total interest cost of this debt is currently 5.8%. After allowing for the inclusion of the impact of the Placing and theacquisition of the additional properties, the total gross assets includinguninvested cash are £246 million, with long-term debt of £96.5 million,equivalent to 43.7% of gross assets. £31 million of the additional debt of£38.4 million has been fixed at 4.59%, before margin, until 2013. The totalinterest cost on the Company's total debt is currently 5.65%. FUTURE PROSPECTS The property market completed another year of strong performance in 2005 andcontinues to provide investors with consistently high income compared with otherinvestment classes. The consensus forecast for UK property for the next yearremains attractive with predicted total returns of over 10% and a longer termforecast of over 7% per annum for the next five years. TAP has a diversified, balanced portfolio which is expected to perform in linewith the property market as a whole, with good prospects for additionalperformance to be provided through the release of value created though assetmanagement opportunities within the portfolio. The equity raising providedadditional investment capacity for the Company of at least £25 million, and theProperty Fund Adviser is actively considering a number of possible investmentsfor recommendation to the Board. The portfolio continues to provide good income returns at over 6.4% of currentvalue, which supports the Directors' dividend policy. With prospects for furthermarket growth during 2006 and beyond, the prospects for growth in returns toshareholders look promising. DIRECTORS AND ADVISORS I would like to thank my fellow directors and the Teesland management team fortheir contributions to the successful progress of the Company. I must also record my appreciation of our professional advisers for theircontinued help and support. CHRISTOPHER N FISHChairman 27 April 2006 GROUP INCOME STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2005 Period Year to 31 16 June to 31 December 2005 December 2004 £ £RevenueRental income from investment properties 9,385,211 3,252,857 ExpenditureProperty outgoings (485,623) (103,482)Asset manager's fee (1,075,034) (50,000)Other expenses (428,132) (64,601)Set up costs (514,254) (148,152) (2,503,043) (366,235)Net operating profit for the year/periodbeforefinance costs 6,882,168 2,886,622 Finance income / (costs)Interest receivable 238,588 58,648Interest payable and similar charges (3,202,871) (3,637,196)Amortised debt issue costs (85,707) (569,000) (3,049,990) (4,147,548) Net profit /(loss) on ordinary activities 3,832,178 (1,260,926)before taxation Taxation on net profit / (loss) on ordinary (366,005) 66,949activities Net profit /(loss) on ordinary activities 3,466,173 (1,193,977)after taxation Profit / (Loss) from investmentsProfit / (Loss) on revaluation of investmentproperties 11,482,293 (609,720) Net profit / (loss) for the year / period 14,948,466 (1,803,697) Dividend per share 4.16 p - Earnings per share (diluted & undiluted) 21.95 p - Net asset value per share 107.89 p - GROUP BALANCE SHEET AS AT 31 DECEMBER 2005 As at 31 As at 31 December 2005 December 2004 £ £Non-current assetsInvestment properties 137,087,117 104,895,000Reverse lease premium 4,527,883 - 141,615,000 104,895,000 Current assetsCash and cash equivalents 2,983,110 633,727Debtors 2,371,722 1,745,669 5,354,832 2,379,396Total assets 146,969,832 107,274,396 Current liabilitiesCreditors due within one year (5,336,200) (109,073,038)Income tax payable (94,460) (5,053) (5,430,660) (109,078,091) Non-current liabilitiesBank loan (58,062,000) -Fair value of swap instrument (2,266,253) -Debt issue costs 785,980 - (59,542,273) -Net Assets / (Liabilities) 81,996,899 (1,803,695) Represented by:Share capital 760,002 2Reserves 81,236,897 (1,803,697) Shareholders' funds / (deficit) 81,996,899 (1,803,695) GROUP STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2005 Issued Share Share Revenue Other Capital Premium Reserve Reserve Total £ £ £ £ £ Opening at 1 2 - (1,193,977) (609,720) (1,803,695)January2005 Shares 760,000 75,240,000 - - 76,000,000issued inthe year Share issue - (1,721,532) - - (1,721,532)expense Reduction of - (73,518,468) 73,518,468 - -sharepremium Net profit - - 3,466,173 - 3,466,173for theyear Gain onrevaluationofinvestment - - - 11,482,293 11,482,293property Loss on fairvalue ofSWAPinstrument - - - (2,266,253) (2,266,253) Dividends - - (3,160,087) - (3,160,087)paid At 31 760,002 - 72,630,577 8,606,320 81,996,899December2005 GROUP STATEMENT OF CHANGES IN EQUITYFOR THE PERIOD FROM 16 JUNE TO 31 DECEMBER 2004 Shares issued on 2 - - - 2incorporationNet loss for the period - - (1,193,977) (609,720) (1,803,697) At 31 December 2004 2 - (1,193,977) (609,720) (1,803,695) GROUP CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2005 Period Year to 31 16 June to 31 December 2005 December 2004 £ £ Operating activities Net operating profit for the period before 6,882,168 2,886,622finance costsAdjustment for:Increase in operating debtors (626,053) (1,673,667)(Decrease) / Increase in operating creditors 352,421 2,501,514Reverse premium amortisation 159,963 -Debt issue amortisation 85,707 - 6,854,206 3,714,469Interest received 238,588 58,648Interest paid (4,319,787) (1,701,114)Taxation Paid (178,341) - Net cash inflow from operating activities 2,594,666 2,072,003 Investing activitiesPurchase of investment properties (20,709,824) (105,425,585)Reverse premium paid (3,287,846) - Net cash outflow from investing activities (23,997,670) (105,425,585) Financing activitiesProceeds from issue of ordinary share 76,000,000 2capitalShare Issue costs (1,721,532) -Loans from shareholders (10,890,500) 10,890,500(Repayment) / Drawdown of bank loans (35,603,807) 94,014,500Dividends Paid (3,160,086) -Debt issue costs (871,687) (917,693) Net cash inflow from financing activities 23,752,388 103,987,309 Net increase in cash and cash equivalents 2,349,384 633,727Opening cash and cash equivalents 633,727 - Closing cash and cash equivalents 2,983,111 633,727 For further information contact: Anson Fund Managers LimitedCompany Secretary Tel: Guernsey 01481 722260 27 April 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
TAP.L