RNS Number:2154R
Standard Life Invs Property Inc Tst
31 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 % Change
IFRS Net Asset Value per
share * 113.3p 127.8p -11.3%
Published adjusted IFRS Net
Asset 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 to
exclude 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 property
were beginning to slow and were likely to fall in some sectors. Since that
statement the real estate market has seen a major price correction which had not
been forecast. This was driven in part by the natural correction of the over
pricing following a three year strong bull market, and in part by the impact of
the credit crunch.
The listed sector suffered from falling share prices before the direct market
saw capital falls, but over the course of the year both direct and indirect had
respective negative total returns of -5.5% and -36.7% as measured by the IPD
monthly 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, your
Company'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 provide
an 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 31
December 2007 was paid on 29 February 2008. Total dividends for the year ended
31 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 dividend
yield 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 6
properties in the summer for �41.1m. The sales were identified as part of a
desire to maintain a strong income stream, and to reduce the Company's exposure
to shorter leases or properties that the Investment Manager felt had specific
risks for the Company. This action to reduce the gearing level proved to be
propitious in light of the subsequent fall in property values and helped to
reduce, to an extent, the negative impact on the asset value. The action taken
by the Investment Manager was also consistent with the Board's objective of
managing the future income stream from the portfolio.
The Company did not acquire any properties over the reporting period, although
it did exchange on one purchase of an industrial building in Rainham, East
London for �7.5m which completed on 14 March 2008. The average unexpired lease
term 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 (excluding
tenant 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 the
summer following the portfolio sale. In the current volatile markets the Board
and Investment Manager are focussed on keeping the Company's gearing levels
down. Taking account of the present outlook for the UK commercial property
market and the Company's current level of gearing, the Board and the Investment
Manager remain confident that the Company is well placed to maintain its
dividend and meet all banking covenants. The Board and the Investment Manager
will keep under review the best use for the Company's cash resources, taking
account of all market factors, which are currently held in a AAA money market
fund managed by Standard Life Investments.
After the reporting period the Company completed on the sale of its largest
asset, Wellington House, London, for �17.65m and the proceeds are being held in
cash. 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 with
high single digit returns forecast for 2009 - 2012. In the short term, 2008 is
likely to remain challenging, with further capital falls in the first half
leading to a negative total return over the year. Tenant demand has held up well
so far and, assuming the economy grows at below trend as forecast, the low level
of supply in most markets should provide a good environment for rental income
growth.
Your Company is well placed to benefit from the current market conditions. It
has low void levels and a secure income stream, and following the sale of assets
that did not meet the desired investment profile for the Company's portfolio, it
now has cash resources to take advantage of the market conditions and acquire
assets that the Board and Investment Manager believe will perform well for the
Company."
David Moore
Chairman
31 March 2008
All enquiries to:
The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Ltd
Trafalgar Court
Les Banques
St Peter Port
Guernsey
Tel: 01481 745001
Richard England
Gordon Humphries
Jason Baggaley
Standard Life Investments
Tel: 0131 225 2345
Standard Life Investments Property Income Trust Limited
Consolidated Income Statement
For the year ended 31 December 2007
Restated
2007 2006
� �
Rental income 14,298,488 14,811,508
Unrealised (loss)/gain arising on adjustment to
fair value of investment properties (19,149,762) 12,701,088
Realised 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 - net
Interest 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 continuing
operations.
Consolidated Balance Sheet
as at 31 December 2007
Restated
2007 2006
� �
ASSETS
Non-current assets
Freehold investment properties 142,151,538 195,915,863
Leasehold investment properties 39,800,604 47,984,258
Interest rate swap - 501,862
---------- ----------
181,952,142 244,401,983
---------- ----------
Current assets
Trade and other receivables 2,230,660 2,244,201
Cash and cash equivalents 35,171,457 6,705,174
---------- ----------
37,402,117 8,949,375
---------- ----------
---------- ----------
Total assets 219,354,259 253,351,358
========== ==========
EQUITY
Capital and reserves attributable to Company's equity holders
Share capital 1,040,000 1,040,000
Share premium 5,217,022 5,217,022
Retained earnings 2,576,775 2,748,875
Capital reserves 14,635,767 35,961,779
Other distributable reserves 94,371,577 94,801,259
---------- ----------
Total equity 117,841,141 139,768,935
---------- ----------
LIABILITIES
Non-current liabilities
Bank borrowings 84,432,692 84,432,692
Interest rate swap 262,635 -
Redeemable preference shares 7,591,047 7,161,365
Leasehold obligations 4,029,314 4,544,339
---------- ----------
96,315,688 96,138,396
---------- ----------
Current liabilities
Trade and other payables 4,912,163 7,310,579
Bank borrowings - 9,850,000
Leasehold 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 Equity
For the year ended 31 December 2006
Share Share Retained Capital Other Total equity
capital premium earnings reserves distributable
reserves
� � � � � �
Opening balance 1 January 2006
as previously
reported 1,000,000 - (2,334,373) 19,734,918 95,206,619 113,607,164
Prior period adjustment:
Taxation - - 4,446,297 - - 4,446,297
-------- ------- --------- --------- --------- ----------
Opening balance 1 January 2006
as restated 1,000,000 - 2,111,924 19,734,918 95,206,619 118,053,461
======== ======= ========= ========= ========= ==========
Profit for the year as
restated - - 19,630,279 - - 19,630,279
Unrealised gain arising
on adjustment to fair value
of investment properties - - (12,701,088) 12,701,088 - -
Transfer between reserves* - - 405,360 - (405,360) -
Movement on revaluation
of interest rate swap - - - 3,525,773 - 3,525,773
Issue of ordinary share
capital 40,000 - - - - 40,000
Share premium on issue of
ordinary share capital - 5,280,000 - - - 5,280,000
Share issue costs - (62,978) - - - (62,978)
Dividends - - (6,697,600) - - (6,697,600)
-------- -------- ---------- --------- --------- ----------
Balance at 31 December 2006
as 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 the
retained earnings reserve to the other distributable reserves.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2007
Share Share Retained Capital Other Total equity
capital premium earnings reserves distributable
reserves
� � � � � �
Opening balance 1 January 2007
as 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 arising
on adjustment to fair value
of investment properties - - 19,149,762 (19,149,762) - -
Realised loss on disposal of
investment properties - - 1,411,753 (1,411,753) - -
Transfer between reserves* - - 429,682 - (429,682) -
Movement on revaluation of
interest 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 the
retained earnings reserve to the other distributable reserves.
Consolidated Cash Flow Statement
For the year ended 31 December 2007
2007 2006
� �
Cash flows from operating activities
Cash generated from operations 10,221,975 12,038,350
Interest paid (6,738,057) (3,631,250)
--------- ---------
Net cash generated from operating activities 3,483,918 8,407,100
--------- ---------
Cash flows from investing activities
Purchase 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 activities
Proceeds from issuing of new ordinary shares - 5,320,000
Share issue costs - (62,978)
Proceeds from bank borrowings - 9,850,000
Repayments 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 cash
equivalents 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 Statements
For the year ended 31 December 2007
1. The results of the Group were prepared on the basis of International
Financial Reporting Standards.
2. The interim dividend in respect of the quarter ended 31 December 2007 was
declared 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 31
December 2007.
4. The Group results consolidate those of Standard Life Investments Property
Holdings Limited, a wholly owned subsidiary which invests in properties in the
United Kingdom.
5. The total fair value of freehold and leasehold properties shown on the
Balance Sheet is �181,952,142. This differs from the market valuation of the
property portfolio at the year end of �178,200,000 due to adjustments made to
reflect the discounted present value of minimum lease payments and lease
incentives.
6. The accounting policy in respect of deferred tax was changed during the year
so that a 'blended' approach was used when estimating the amount of deferred
income tax arising from the temporary difference between the tax bases of the
assets and liabilities and their carrying amounts in the financial statements.
This new approach represents a change in accounting policy during 2007 and is
considered 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 will
be sent to shareholders in April 2008, and will be available for inspection at
Trafalgar Court, Les Banques, St Peter Port, Guernsey, the registered office of
the Company.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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