31st Mar 2008 16:34
Standard Life Invs Property Inc Tst31 March 2008 31 March 2008 Standard Life Investments Property Income Trust Limited Preliminary Results in respect of the year ended 31 December 2007 Financial Highlights •Dividends per share up 1% to 6.76p •Dividend yield of 8.7% based on year end share price •Net Asset Value per share decreased by 15.9% to 111.6p •Value of property portfolio is £178.2m •Six properties disposed over the period for £41.1m Financial Summary 31 December 2007 31 December 2006 % ChangeIFRS Net Asset Value pershare * 113.3p 127.8p -11.3%Published adjusted IFRS NetAsset Value per share ** 111.6p 132.7p -15.9%Price per share 77.8p 125.3p -37.9% Value of total assets £219.4m £253.4m -13.4%Loan to Value *** 27.9% 37.2% -Cash position £34.5m £5.2m - Dividends per share 6.760p 6.695p 1.0% * Calculated under International Financial Reporting Standards. ** Calculated under International Financial Reporting Standards, adjusted toexclude deferred taxation and to include the fourth quarter dividend. *** Including cash offset Extract of the Chairman's Statement "In my interim statement, I mentioned that returns from UK commercial propertywere beginning to slow and were likely to fall in some sectors. Since thatstatement the real estate market has seen a major price correction which had notbeen forecast. This was driven in part by the natural correction of the overpricing following a three year strong bull market, and in part by the impact ofthe credit crunch. The listed sector suffered from falling share prices before the direct marketsaw capital falls, but over the course of the year both direct and indirect hadrespective negative total returns of -5.5% and -36.7% as measured by the IPDmonthly index and FTSE All Share Real Estate Index. Income and Total Return I am pleased to report that within the context of the market generally, yourCompany's property portfolio held up relatively well with a total return of-4.6% over the year (IPD monthly index -5.5%). Your Company continues to providean above average level of income with the property portfolio returning 6.1%income return for 2007 against the IPD monthly index of 4.9%. The interim dividend of 1.69p per share in respect of the quarter ended 31December 2007 was paid on 29 February 2008. Total dividends for the year ended31 December 2007 were 6.76p per share, an increase of 1% on the previous year.At the year end, the Company's ordinary shares provided an attractive dividendyield of 8.7% compared with a yield of 3.0% for the FTSE All-Share Index. Net Asset Value The adjusted IFRS net asset value of the Company was 111.6p at 31 December 2007,representing a decrease of 15.9% over the year. The property portfolio, as measured by IPD, produced a total return of -4.6%,comprising an income return of 6.1% and capital growth of -10.1%. Strategy Review and Activity Following a strategic review of the portfolio, the Company sold a portfolio of 6properties in the summer for £41.1m. The sales were identified as part of adesire to maintain a strong income stream, and to reduce the Company's exposureto shorter leases or properties that the Investment Manager felt had specificrisks for the Company. This action to reduce the gearing level proved to bepropitious in light of the subsequent fall in property values and helped toreduce, to an extent, the negative impact on the asset value. The action takenby the Investment Manager was also consistent with the Board's objective ofmanaging the future income stream from the portfolio. The Company did not acquire any properties over the reporting period, althoughit did exchange on one purchase of an industrial building in Rainham, EastLondon for £7.5m which completed on 14 March 2008. The average unexpired leaseterm for the portfolio was 8.7 years which is slightly longer than the IPD(market) average. As at 31 December 2007, the Company had cash resources of £34.5m (excludingtenant deposits) representing 40.9% of the outstanding borrowings of £84.4m.£9.85m of debt drawn down under the revolving credit facility was repaid in thesummer following the portfolio sale. In the current volatile markets the Boardand Investment Manager are focussed on keeping the Company's gearing levelsdown. Taking account of the present outlook for the UK commercial propertymarket and the Company's current level of gearing, the Board and the InvestmentManager remain confident that the Company is well placed to maintain itsdividend and meet all banking covenants. The Board and the Investment Managerwill keep under review the best use for the Company's cash resources, takingaccount of all market factors, which are currently held in a AAA money marketfund managed by Standard Life Investments. After the reporting period the Company completed on the sale of its largestasset, Wellington House, London, for £17.65m and the proceeds are being held incash. Following the sale the loan to value ratio of the Company's portfolio(with cash offset) is 20.2%. Outlook The medium term outlook for the UK commercial property market is positive withhigh single digit returns forecast for 2009 - 2012. In the short term, 2008 islikely to remain challenging, with further capital falls in the first halfleading to a negative total return over the year. Tenant demand has held up wellso far and, assuming the economy grows at below trend as forecast, the low levelof supply in most markets should provide a good environment for rental incomegrowth. Your Company is well placed to benefit from the current market conditions. Ithas low void levels and a secure income stream, and following the sale of assetsthat did not meet the desired investment profile for the Company's portfolio, itnow has cash resources to take advantage of the market conditions and acquireassets that the Board and Investment Manager believe will perform well for theCompany." David Moore Chairman 31 March 2008 All enquiries to: The Company SecretaryNorthern Trust International Fund Administration Services (Guernsey) LtdTrafalgar CourtLes BanquesSt Peter PortGuernseyTel: 01481 745001 Richard EnglandGordon HumphriesJason BaggaleyStandard Life InvestmentsTel: 0131 225 2345 Standard Life Investments Property Income Trust Limited Consolidated Income StatementFor the year ended 31 December 2007 Restated 2007 2006 £ £ Rental income 14,298,488 14,811,508Unrealised (loss)/gain arising on adjustment tofair value of investment properties (19,149,762) 12,701,088Realised loss on disposal of investment properties (1,411,753) -Investment management fees (1,963,426) (1,915,571)Head lease payments (285,706) (283,854)Other direct property costs (396,478) (302,323)Directors' fees and subsistence (84,658) (83,022)Valuation fees (55,073) (81,500)Audit fees (50,000) (40,600)Other administration expenses (204,314) (131,564) ---------- ---------Operating (loss)/profit (9,302,682) 24,674,162 Finance costs - netInterest payable (5,828,933) (5,375,415)Interest receivable 998,718 331,532 ---------- ---------(Loss)/profit for the year (14,132,897) 19,630,279 ---------- --------- (Loss)/earnings per share for the year attributable to the equity holders of the Company Basic and diluted (13.59) 19.41 pence pence (restated) All items in the above Consolidated Income Statement derive from continuingoperations. Consolidated Balance Sheetas at 31 December 2007 Restated 2007 2006 £ £ASSETSNon-current assetsFreehold investment properties 142,151,538 195,915,863Leasehold investment properties 39,800,604 47,984,258Interest rate swap - 501,862 ---------- ---------- 181,952,142 244,401,983 ---------- ----------Current assetsTrade and other receivables 2,230,660 2,244,201Cash and cash equivalents 35,171,457 6,705,174 ---------- ---------- 37,402,117 8,949,375 ---------- ---------- ---------- ----------Total assets 219,354,259 253,351,358 ========== ========== EQUITYCapital and reserves attributable to Company's equity holdersShare capital 1,040,000 1,040,000Share premium 5,217,022 5,217,022Retained earnings 2,576,775 2,748,875Capital reserves 14,635,767 35,961,779Other distributable reserves 94,371,577 94,801,259 ---------- ----------Total equity 117,841,141 139,768,935 ---------- ---------- LIABILITIESNon-current liabilitiesBank borrowings 84,432,692 84,432,692Interest rate swap 262,635 -Redeemable preference shares 7,591,047 7,161,365Leasehold obligations 4,029,314 4,544,339 ---------- ---------- 96,315,688 96,138,396 ---------- ---------- Current liabilitiesTrade and other payables 4,912,163 7,310,579Bank borrowings - 9,850,000Leasehold obligations 285,267 283,448 ---------- ---------- 5,197,430 17,444,027 ---------- ---------- ---------- ----------Total liabilities 101,513,118 113,582,423 ---------- ---------- ---------- ----------Total equity and liabilities 219,354,259 253,351,358 ========== ========== Consolidated Statement of Changes in EquityFor the year ended 31 December 2006 Share Share Retained Capital Other Total equity capital premium earnings reserves distributable reserves £ £ £ £ £ £ Opening balance 1 January 2006as previouslyreported 1,000,000 - (2,334,373) 19,734,918 95,206,619 113,607,164Prior period adjustment:Taxation - - 4,446,297 - - 4,446,297 -------- ------- --------- --------- --------- ----------Opening balance 1 January 2006as restated 1,000,000 - 2,111,924 19,734,918 95,206,619 118,053,461 ======== ======= ========= ========= ========= ========== Profit for the year asrestated - - 19,630,279 - - 19,630,279Unrealised gain arisingon adjustment to fair valueof investment properties - - (12,701,088) 12,701,088 - -Transfer between reserves* - - 405,360 - (405,360) -Movement on revaluationof interest rate swap - - - 3,525,773 - 3,525,773Issue of ordinary sharecapital 40,000 - - - - 40,000Share premium on issue ofordinary share capital - 5,280,000 - - - 5,280,000Share issue costs - (62,978) - - - (62,978)Dividends - - (6,697,600) - - (6,697,600) -------- -------- ---------- --------- --------- ----------Balance at 31 December 2006as restated 1,040,000 5,217,022 2,748,875 35,961,779 94,801,259 139,768,935 ======== ======== ========== ========= ========= ========== * this is a transfer to move redeemable preference share finance costs from theretained earnings reserve to the other distributable reserves. Consolidated Statement of Changes in EquityFor the year ended 31 December 2007 Share Share Retained Capital Other Total equity capital premium earnings reserves distributable reserves £ £ £ £ £ £ Opening balance 1 January 2007as restated 1,040,000 5,217,022 2,748,875 35,961,779 94,801,259 139,768,935 Loss for the year - - (14,132,897) - - (14,132,897)Unrealised loss arisingon adjustment to fair valueof investment properties - - 19,149,762 (19,149,762) - -Realised loss on disposal ofinvestment properties - - 1,411,753 (1,411,753) - -Transfer between reserves* - - 429,682 - (429,682) -Movement on revaluation ofinterest rate swap - - - (764,497) - (764,497)Dividends - - (7,030,400) - - (7,030,400) ------- ------- --------- --------- --------- ---------Balance at 31 December 2007 1,040,000 5,217,022 2,576,775 14,635,767 94,371,577 117,841,141 ======= ======= ========= ========= ========= ========= * this is a transfer to move redeemable preference share finance costs from theretained earnings reserve to the other distributable reserves. Consolidated Cash Flow StatementFor the year ended 31 December 2007 2007 2006 £ £ Cash flows from operating activitiesCash generated from operations 10,221,975 12,038,350Interest paid (6,738,057) (3,631,250) --------- ---------Net cash generated from operating activities 3,483,918 8,407,100 --------- --------- Cash flows from investing activitiesPurchase of investment properties - (24,091,397)Capital expenditure on investment properties (189,200) (63,116)Proceeds from disposal of investment properties 41,053,247 -Interest received 998,718 331,532 --------- ----------Net cash generated/(used) in investing activities 41,862,765 (23,822,981) --------- ---------- Cash flows from financing activitiesProceeds from issuing of new ordinary shares - 5,320,000Share issue costs - (62,978)Proceeds from bank borrowings - 9,850,000Repayments of bank borrowings (9,850,000) -Dividends paid to the Company's shareholders (7,030,400) (6,697,600) --------- ----------Net cash (used)/generated from financing activities (16,880,400) 8,409,422 --------- ---------- ---------- ----------Net increase/(decrease) in cash and cashequivalents in the year 28,466,283 (7,006,459) ========== ========== Cash and cash equivalents at beginning of year 6,705,174 13,711,633 ---------- ----------Cash and cash equivalents at end of year 35,171,457 6,705,174 ========== ========== Standard Life Investments Property Income Trust Limited Notes to the Consolidated Financial StatementsFor the year ended 31 December 2007 1. The results of the Group were prepared on the basis of InternationalFinancial Reporting Standards. 2. The interim dividend in respect of the quarter ended 31 December 2007 wasdeclared on 7 February 2008 and paid on 29 February 2008 to shareholders. 3. There were 104,000,000 Ordinary Shares in issue throughout the year to 31December 2007. 4. The Group results consolidate those of Standard Life Investments PropertyHoldings Limited, a wholly owned subsidiary which invests in properties in theUnited Kingdom. 5. The total fair value of freehold and leasehold properties shown on theBalance Sheet is £181,952,142. This differs from the market valuation of theproperty portfolio at the year end of £178,200,000 due to adjustments made toreflect the discounted present value of minimum lease payments and leaseincentives. 6. The accounting policy in respect of deferred tax was changed during the yearso that a 'blended' approach was used when estimating the amount of deferredincome tax arising from the temporary difference between the tax bases of theassets and liabilities and their carrying amounts in the financial statements.This new approach represents a change in accounting policy during 2007 and isconsidered to provide a better estimate of the Group's deferred tax position.This change in accounting policy has led to a prior year adjustment. The full audited Financial Statements for the year ended 31 December 2007 willbe sent to shareholders in April 2008, and will be available for inspection atTrafalgar Court, Les Banques, St Peter Port, Guernsey, the registered office ofthe Company. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SLI.L