TIDMSLI
RNS Number : 9577E
Standard Life Invs Property Inc Tst
14 April 2011
STANDARD LIFE INVESTMENTS PROPERTY INCOME TRUST
RESULTS IN RESPECT OF THE YEAR ENDED 31 DECEMBER 2010
Financial Highlights
- Dividend of 4.55p paid in respect of the 12
months to 31 December 2010
- Dividend yield of 6.8% based on year end share price
- 2010 dividend increased by 13.8% from 2009
- Net Asset Value per share increased by
11.3% to 63.0p
Financial Summary
31 December 31 December
2010 2009 % Change
IFRS Net Asset Value per share
1 64.1p 57.6p 11.3%
Published adjusted IFRS Net
Asset Value per share 2 63.0p 56.6p 11.3%
Share Price 64.75p 64.5p 0.4%
Value of total assets GBP177.4m GBP169.1m 4.9%
Loan to value 3 40.8% 39.2%
Cash balance GBP21.2m GBP30.8m
Dividends per share 4 4.55p 4.00p 13.8%
Property Performance
Year ended Year ended
31 December 31 December
2010 2009
Property income return 7.1% 12.3%
IPD property income monthly
index 5 6.4% 8.2%
Property total return (property
only) 16.4% 4.5%
Property total return (property
and cash only) 13.7% 4.3%
IPD property total return
monthly index 5 13.3% 2.2%
1 Calculated under International Financial
Reporting Standards.
2 Calculated under International Financial Reporting Standards,
adjusted to include the dividend of 1.1p per share
in respect of the quarter ending
31 December 2010.
3 Calculated as bank borrowings less full cash balance as a percentage
of the open market value of the property
portfolio as at 31 December 2010.
4 Dividends paid during the 12 months to 31 December
2010.
5 Source: IPD
The Chairman, David Moore, stated:
'Overview of 2010 for the Company
The Company has been very active during 2010 investing its cash
resources to enhance the revenue account whilst remaining within
its targeted loan to value (LTV) range of 35% to 45%.
-- Five properties purchased at an average yield of 8.0% and
five properties sold at an average yield of 6.5%.
-- Net reduction in cash of GBP9.7m through property investment
resulting in an improvement in the dividend cover position.
-- Strong Net Asset Value performance out performing the IPD
Monthly Index.
-- Annualised dividend increased to 4.4p per share from 4.0p per
share.
Market Background
Real Estate values staged a rebound in 2010 with capital values
increasing by 7.0% compared to a reduction in 2009 of 6.4% (source
IPD Monthly). During 2010 central London offices and central London
retail performed best driven by strong fundamentals with both
sectors having limited future supply and recovering demand. Over
the last ten and fifteen years UK real estate has now out performed
equities, gilts and real estate equities.
Strategy
The Company is focussed on providing its shareholders with a
sustainable dividend with scope for growth. The Board believes in a
covered dividend policy, and anticipates at least a covered
dividend for 2011. During 2010 the Company undertook a pre let
development, which did not produce income until completion, and the
Board therefore utilised revenue reserves during the year to
support an increased dividend of 4.4p per share. The Board was able
to increase the dividend given the substantial investment progress
made by the Investment Manager during 2010. The Company still has
over GBP5.1m of retained earnings.
The desire to maintain a strong revenue account drives the
Company's philosophy and approach to the portfolio. The Investment
Manager takes an active approach to managing the portfolio, and has
undertaken purchases and sales to improve the quality of the
portfolio and to increase its income generation. However the strong
revenue reserve position enables the Company to take advantage of
development and other asset management opportunities to generate
capital growth but importantly the longer term revenue position
should also be strengthened.
The Board and its Investment Manager have an objective of
increasing the size of the Company's net assets to at least GBP100m
over the short to medium term to lower the total expense ratio and
improve liquidity in the ordinary shares as well as providing a
stronger base to further increase the Company's size as long as
this is in shareholders interests.
The Board is currently considering proposals to simplify the
capital structure of the Company and to expand its capital base.
The Board hopes to be in a position to recommend proposal to
shareholders in the near future.
Performance: Property Income and Total Return
The Company generated a property income return of 7.1% on its
properties which was slightly ahead of IPD monthly index of 6.4% in
respect of the year ended 31 December 2010. The Company's property
total return was 16.4% compared with the IPD Monthly Index of
13.3%. The Company's total return for its investment portfolio
(property and cash) over the period was 13.7%.
Performance: Net Asset Value
The Company's published net asset value ("NAV") increased over
the reporting period from 56.6p per share to 63.0p. As can be seen
from the table below, the vast majority of the uplift in published
net asset value related to the increase in the valuation of the
Company's commercial property, including the impact of gearing,
which accounted for 9.3p of the increase in net asset value over
the period. The impact of the movement in the valuation of the
interest rate swap which the Company put in place to fix the
borrowing rate at launch reduced the net asset value by 1.1p. Other
reserve movements reduced the NAV by 1.8p.
Pence per % of opening
share NAV
Published NAV as at 31 December
2009 56.6 100.0
Increase in valuation of property
portfolio 9.3 16.4
Decrease in interest rate SWAP
valuation (1.1) (1.9)
Other reserve movements (1.8) (3.2)
Published NAV as at 31 December
2010 63.0 111.3
The net asset value is calculated under International Financial
Reporting Standards ("IFRS") and includes a provision for the
payment of the fourth interim dividend of 1.10p per ordinary share
for the quarter to 31 December 2010.
Earnings and Dividends
2010 2009
Pence per Pence per
share share
Interim dividend paid in May relating to
quarter ending 31 March 1.10 1.00
Interim dividend paid in August relating
to quarter ending 30 June 1.10 1.00
Interim dividend paid in November relating
to quarter ending 30 September 1.10 1.00
Interim dividend paid in February relating
to quarter ending 31 December 1.10 1.00
Special dividend paid in February relating
to year ending 31 December 0.25
4.40 4.25
During 2010 the Company paid total dividends of 4.55p per share,
including a special dividend of 0.25p per share. This represented
an increase of 13.8% over the dividends paid in 2009. As indicated
in my last statement the Board decided to utilise the exceptional
surrender income of GBP4.2m received during 2009 that significantly
strengthened the revenue position, to help finance dividends paid
in 2010. Now that the pre-let Aberdeen development has been
completed and cash resources have been reduced through investment
in further UK commercial properties the Company expects the level
of annualised dividends (currently 4.4p per share) to be
covered.
The Board has always targeted a high level of dividend cover and
continues to believe that this is an appropriate discipline for the
Company to follow.
Borrowings and Cash Position
As at 31 December 2010 the Company had borrowings of GBP84.4m
and a cash position of GBP21.2m (excluding rent deposits) therefore
cash as a percentage of debt was 25.1%.
As a reminder to shareholders GBP72m of the Company's borrowings
are at a fixed rate of interest until 2013 and the rate on the
remaining GBP12.4m varies with LIBOR plus a margin. Currently the
rate payable on the GBP12.4m is 2.05% and this is being rolled over
monthly. The swap liability as at 31 December 2010 was GBP7.4m.
Loan to Value Ratio
As at 31 December 2010 the LTV ratio (assuming all cash is
placed with RBS as an offset to the loan balance) was 40.8% and the
board is targeting the LTV to remain in the range of 35% to 45%.
The maximum LTV covenant level is 65%, however the Company has no
intention to increase borrowings, and intends to continue operating
with a LTV of 35 - 45% depending on market cycle.
Activity
The Company has been very active during the financial year with
the purchase of five properties for a total consideration of
GBP42.3m at an average yield of 8%.
As reported in the last set of accounts the Company accepted a
bid of GBP19.2m, considerably in excess of the year end valuation,
for its Uxbridge property and has been utilising the proceeds to
invest in other properties at higher yields to enhance the
Company's revenue account. The Company also sold four other
properties for GBP18.5m at an average yield of 6.5%. Further
details of the activity during the year can be found in the
Investment Manager's Report.
Discount and Share Price
The share price at 31 December 2010 of 64.75p per share
represented a premium of 2.8% to the net asset value of 63.0p. At
the date of writing the share price is 67.25p equivalent to a
premium to the 31 December 2010 NAV of 6.7%.
Dividend Yield
The current share price represents an attractive dividend yield
of 6.5%. The current dividend yield compares with bank deposit
rates of around 0.5% and redemption yields on UK gilts of 3.7%.
Directors
Sally-Ann (Susie) Farnon was appointed to the board on 30 June
2010 as the audit committee chairman following the resignation on
the same date of John Hallam. The Board would like to thank John
for all his efforts on behalf of the Company and wishes him well
for the future. Susie was a banking and finance partner with KPMG
for over 10 years and is a director of a number of property and
investment companies.
A business acquisition by the Standard Life Group during the
course of 2010 means that I am no longer eligible to act as
Chairman on an ongoing basis. I intend therefore to stand down as
Chairman at the next AGM although I shall continue as a director of
the Company. I am grateful for the support, counsel and guidance I
have received from my fellow Board members during my tenure as
Chairman and I am delighted to report that Paul Orchard-Lisle has
agreed to succeed me as Chairman.
The Articles of Association of the Company are proposed at the
AGM to be amended to bring them into line with changes made to
Guernsey company law since 2008 and a summary of the principal
changes proposed accompany the Notice convening the meeting. The
opportunity is therefore being taken to remove the restriction in
the Articles from the Chairman being a UK resident in order to
enable Paul to take up this post.
Fund Raising
During the year to 31 December 2010, the Company's share capital
remained unchanged. Since the year end, the Company has issued
1,000,000 new ordinary shares at 65p per share.
Investment Outlook
UK Real Estate continues to look reasonably priced relative to
other assets although recent increases in bond yields have reduced
the margin property provides relative to these other assets.
Despite some concerns over the economic recovery in the short term,
the medium term prospects for UK Real Estate look encouraging and
the Board anticipate high single figure total returns over the next
three years, driven by income. The yield margin between prime and
secondary assets is at record levels and continues to reflect the
market's concern about income resilience. These market conditions
should play to the Investment Manager's strengths given their
ability to source attractively values properties and actively
manage these assets for shareholders benefit.'
Jason Baggaley, on behalf of Investment Manager, stated:
'UK Real Estate Market 2010
Generally, 2010 was similar to 2009 in that there were two
distinct halves to the year. However, unlike 2009, capital values
staged a sharp rebound and consequently, total returns at 15.2% for
the year were well ahead of last years 3.4% out-turn. Boosted by
demand from overseas investors and institutions, capital values
rose 8.5% over the year. This compares to -3.8% in 2009. As
illustrated below, the strong rebound led to UK Real Estate being
the best performing major asset class last year. UK real estate has
outperformed equities, gilts and real estate equities over ten and
fifteen year periods also.
Over the year, investor demand was greatest for segments of the
market with the strongest fundamentals. Specifically, central
London offices and also central London retail. Both sectors have
limited future supply and demand is reviving. Central London
offices are generally geared to global recovery and benefitted from
several unusually large deals over the year as a result of a higher
than normal looming number of lease expiries and diminishing new
supply. Some of the large City deals included UBS signing for a
large amount of space at Broadgate and Bloomberg committing to a
sizeable amount of space at the Walbrook. Although central London
retail is a relatively small sector, its outperformance was driven
by a large number of overseas shoppers attracted by favourable
exchange rates and significant overseas retailer demand. Investors
broadly remain risk averse and due to the relatively weak economy
are reluctant to take on assets with significant risk to income.
Hence the market remains polarised between prime/good quality
secondary buildings with an asset management angle and poorer
quality secondary assets. There is also a distinct North/South
divide with assets outside the south suffering from steeper rental
declines and less resilience in prices.
From a pricing perspective, UK property continues to look
reasonably priced relative to other assets although recent
increases in bond yields have reduced the margin property provides
relative to other assets. The yield margin between prime and
secondary assets is at record levels and continues to reflect
on-going concerns about income resilience. Opportunities are
arising to pick up relatively good value secondary assets where the
pricing reflects the risk and the fundamentals of future demand and
supply are positive in the specific location. For prime property,
pricing is beginning to become stretched in some areas, notably the
parts of the market where pricing has rebounded most sharply, i.e.
central London offices and retail warehouses. These areas are
beginning to look fully priced and there is better value in other
parts of the market, for example, offices in the south east. This
is also an area we would expect to benefit further out as the
economic recovery becomes more pronounced.
Outlook
2011 is likely to see a continuation of prime assets
outperforming secondary as investors remain risk adverse and banks
(especially NAMA) release an increased supply of poor quality
stock.
The historically large yield gap between prime and secondary
will, however, increasingly provide opportunity for active
managers. Opportunity funds have already shown a desire to get hold
of assets that they can work, and in a number of markets there is a
low level of supply of good quality accommodation and little
prospect of new development.
Rental growth is likely to remain broadly negative in 2011, but
as the economy recovers through 2012/13 we are likely to see rental
growth in most markets driven by increasing demand and little
supply.
Real estate fundamentals once again come to the fore. Good
quality properties in good locations will be the first to benefit
from rental growth and tenant demand.
Purchases:
The Company had an active year with five purchases during the
period, and one just after. The purchases have all been accretive
to the revenue account:
Focus DIY Unit, Wymondham, Norwich: The Company bought the 2009
built retail warehouse in Jan 2010 for GBP5.0m, reflecting a yield
of 8%. It is let for 24 years.
Hydrasun, Aberdeen:The Company undertook a funding of a pre let
development, which commenced in February 2010 and completed 14
December 2010. The cost to the Company was GBP11.7m, giving a yield
of 8%, and on completion the property was valued at GBP13.2m. It is
let for 20 years with fixed increases in rent every 5 years.
Tesco logistics Unit, Bolton: The Company acquired the
270,000sqft modern logistics unit in January 2010 for GBP14.06m,
reflecting an income yield of 8%. It is let to Tesco until
2016.
B&Q Bury:The Company acquired the 41,280sqft B&Q retail
warehouse store in March 2010 for GBP5.3m, reflecting an income
yield of 7%. The store has an open A1 (non food) planning consent
and is let until 2022.
Monck St, Westminster, London: The Company acquired a mixed use
ground floor parade in November for GBP6.35m, reflecting an income
yield of 8%. The block has residential above, but consists of the
commercial element only, with a restaurant, offices and retail
units including a Tesco metro.
Purchased after year end:
Bourne House Staines:Although the purchase exchanged in December
2010 it did not complete until January 2011. The 26,560sqft office
building is let to UB Group until 2015 and the investment offers
scope for asset management. The purchase price of GBP 8.38m
reflected an income yield of 9.2%.
Sales:
The Company undertook five sales during the period, two of which
were of vacant properties to owner occupiers. The sales have
realised profit and reduced risk to the Company:
Capital Court, Uxbridge:The office was sold in January 2010 for
GBP19.2m, giving a yield of 6.5%, 9 months after it was purchased
for GBP11.5m. GBP2.0m was invested in the building in asset
management initiatives during the period of ownership.
Century Plaza, Edgware:The mixed use retail, leisure, and
residential block were sold for GBP6.4m, giving a yield of 6.9% in
February 2010.
2-4 Bucknall St, London:The office was sold in September 2010
for GBP8.6m, giving a yield of 6.4% to capture the demand for
Central London offices, but reduce exposure to over rented stock
with a lease expiry in 2014.
Kings logistics unit, Skelmersdale: Following the tenant going
into liquidation and receiving GBP1m from the lease guarantor (3
years rent), the property was sold with vacant possession to an
owner occupier for GBP2.8m.
Onslow House Chelmsford:The grade II listed building was sold to
an owner occupier for GBP0.7m.
Initial Yield
Acquisitions Location Type Cost (GBPm) (%)
Retail
January Norwich warehouse 5.0 8.0
Industrial
unit
February Aberdeen development 11.50 8.0
Logistics
February Bolton warehouse 14.1 8.0
Retail
April Manchester warehouse 5.3 7.0
October Westminster Mixed use 6.4 8.0
January 2011 Staines Office 8.4 9.2
Total 50.7
Premium to
Proceeds carrying
Disposals (GBPm) value
January Uxbridge Office 19.2 12.9
February Edgware Mixed use 6.4 12.2
June London Office 8.6 11.0
October Skelmersdale Industrial 2.8 7.6
December Chelmsford Office 0.7 0.0
Total 37.7
Net investment 13.0
Portfolio Valuation:
The Company's portfolio of UK commercial property was valued by
Jones Lang La Salle throughout 2010. At the year end the Company's
investment portfolio was valued at GBP155.0m with cash holdings of
GBP21.2m. This compared to GBP136.8m and GBP30.8m at the beginning
of the reporting period. Since the year end the Company has
completed a further purchase, and the unallocated cash following
the purchase and committed costs on the pre let development in
Aberdeen reduce the cash held to GBP11.5m.
At the year end the property portfolio had an initial yield of
7.8%, similar to last year's value of 7.7%. The Company has however
reduced the level of voids in the portfolio from 6.5% at December
2009 to 3.3% in December 2010.
Asset Management:
The Investment Manager is focused on protecting and enhancing
the income stream through active asset management. During the
reporting period three voids were let securing future income of
circa GBP435,000pa, 2 leases were renewed protecting just over
GBP100,000pa, and several rent reviews were settled at an
uplift.
In addition, a lease break in 2012 has been removed to protect
future income, and all leases expiring in 2011 have been renewed
(two are subject to formal documentation being completed at time of
reporting). Discussions have started with all tenants with lease
events in 2012 and 2013.
As at the year end the Company had approximately GBP10m
available to invest, and we will seek to find a suitable investment
in the first quarter of 2011. We will also maintain the drive to
capture profit and rebalance the portfolio through sales where
appropriate, but as the chart below shows, cash has underperformed
over the last 18 months, and will, we believe, continue to do so
over the medium term.
Although we focus on income, capital growth is important, and
through 2010 we maintained strong growth in the NAV even although
the share price performance was weak compared to peers - driven by
our small premium to NAV during the year remaining broadly static
whilst many of the Trusts on larger discounts at the beginning of
the period have seen a partial re rating.
Debt and Cash Management:
The Company currently has GBP84.4m of debt from RBS under a
facility maturing in December 2013. The facility is fully drawn
down. The Company has an interest rate hedge in place of GBP72.0m
giving a fixed rate of 5.015% plus the margin of 150bps. The
remaining debt is floating on 1 month LIBOR plus margin of 150bps.
The interest rate swap is held in the accounts at a liability of
GBP7.4m at the year end compared to a liability of GBP6.1m in
December 2009. Assuming it is held until maturity the SWAP will be
worth GBPnil on maturity, thus adding approximately 6.5p (2009:
5.4p) per share.
The bank facility has a LTV covenant of 65% and interest cover
ratio ("ICR") of 170%. The Company is comfortably within these
limits with a year end LTV of 40.8% (if all Group cash was
deposited with RBS) and ICR of 233%.
RBS has informed the Company that the loan will be transferred
to Santander Bank during 2011. The transfer is a consequence of an
agreement RBS reached with the European Commission in December 2009
to reduce RBS share of the UK banking market as a result of the
state aid RBS received. The Company has already made contact with
Santander and does not believe there is any adverse impact for the
Company.'
All enquires to:
The Company Secretary
Northern Trust International Fund Administration Services
(Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3Ql
Tel: 01481 745001
Fax: 01481 745051
Gordon Humphries
Standard Life Investments Limited
Tel: 0131 245 2735
Jason Baggaely
Standard Life Investments Limited
Tel : 0131 245 2833
Statement of Directors' Responsibilities
The Directors are responsible for preparing Financial Statements
for each year which give a true and fair view, in accordance with
the applicable Guernsey law and International Financial Reporting
Standards adopted by the European Union, of the state of affairs of
the Group and of the profit or loss of the Group for that year. In
preparing those Financial Statements, the Directors are required
to:
-- Select suitable accounting policies and then apply them
consistently;
-- Make judgements and estimates that are reasonable and
prudent;
-- State whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the Financial Statements; and
-- Prepare the Financial Statements in a going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors confirm that they have complied with the above
requirements in preparing the Financial Statements.
The Directors are responsible for keeping proper accounting
records, which disclose with reasonable accuracy at any time, the
financial position of the Group and to enable them to ensure that
the Financial Statements comply with The Companies (Guernsey) Law,
2008. They are also responsible for safeguarding the assets of the
Group and hence for taking reasonable steps for the prevention and
detection of fraud, error and non compliance with law and
regulations.
The maintenance and integrity of the Company's website is the
responsibility of the Directors; the work carried out by the
auditors does not involve considerations of these matters and,
accordingly, the auditors accept no responsibility for any change
that may have occurred to the Financial Statements since that were
initially presented on the website. Legislation in Guernsey
governing the preparation and dissemination of the financial
statements may differ from legislation in other jurisdictions.
Responsibility Statement of the Directors' in respect of the
Consolidated Annual Report
The Directors each confirm to the best of their knowledge
that:
(a) the Consolidated Financial Statements, prepared in
accordance with IFRSs as adopted by European Union, give a true and
fair view of the assets, liabilities, financial position and net
return of the Group; and
(b) the Annual Report includes a fair review of the development
and performance of the business and the position of the Group,
together with a description of the principal risks and
uncertainties faced.
Approved by the Board on 13 April 2011.
David Moore Sally-Ann Farnon
Chairman Director
AUDITED FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2010
2010 2009
GBP GBP
Rental income 11,450,575 11,428,246
Surrender premium income - 4,248,793
Gain / (loss) on valuation on investment
properties 6,909,885 (10,834,835)
Gain / (loss) on disposal of investment
properties 3,795,227 (27,391)
Investment management fee (1,263,779) (1,086,828)
Head lease payments (500) (500)
Surrender premium expense - (100,000)
Other direct property operating
expenses (1,182,564) (878,096)
Directors' fees and expenses (112,091) (104,053)
Valuer's fee (37,936) (23,520)
Auditor's fee (33,500) (44,700)
Other administration expenses (181,521) (287,808)
Operating profit 19,343,796 2,289,308
Finance income 91,338 454,917
Finance cost (5,539,955) (4,924,425)
Profit / (loss) for the year 13,895,179 (2,180,200)
Other comprehensive income
Valuation (loss) / profit on cash
flow hedges (1,287,454) 1,468,003
Total comprehensive income for
the year, net of tax 12,607,725 (712,197)
Earnings per share:
Basic and diluted earnings / (losses)
per share 12.15 (2.06)
pence Pence
All items in the above Consolidated Statement of Comprehensive
Income derive from continuing operations.
Consolidated Balance Sheet
as at 31 December 2010
2010 2009
GBP GBP
ASSETS
Non-current assets
Freehold investment properties 119,911,195 108,475,658
Leasehold investment properties 31,481,594 24,316,594
Lease incentives 3,273,974 3,878,541
154,666,763 136,670,793
Current assets
Trade and other receivables 1,607,101 1,608,329
Cash and cash equivalents 21,170,716 30,796,998
22,777,817 32,405,327
Total assets 177,444,580 169,076,120
EQUITY
Capital and reserves attributable
to Company's equity holders
Share capital 6,671,438 6,671,438
Share premium - 5,217,022
Retained earnings 5,158,901 6,662,276
Capital reserves (36,638,104) (46,055,762)
Other distributable reserves 98,138,586 93,433,322
Total equity 73,330,821 65,928,296
LIABILITIES
Non-current liabilities
Bank borrowings 84,140,896 84,043,766
Interest rate swap 4,578,987 3,032,234
Redeemable preference shares 9,041,060 8,529,302
Leasehold obligations 6,094 6,094
97,767,037 95,611,396
Current liabilities
Trade and other payables 3,530,557 4,460,964
Interest rate swap 2,815,665 3,074,964
Leasehold obligations 500 500
6,346,722 7,536,428
Total liabilities 104,113,759 103,147,824
Total equity and liabilities 177,444,580 169,076,120
Approved by the Board of Directors on 13 April 2011
Consolidated Statement of Charges in Equity
for the year ended 31 December 2010
Other
Share Share Retained Capital distributable
Total
capital premium earnings reserves reserves equity
GBP GBP GBP GBP GBP GBP
Opening
balance 1
January 2010 6,671,438 5,217,022 6,662,276 (46,055,762) 93,433,322 65,928,296
Profit for
the year - - 13,895,179 - - 13,895,179
Valuation loss
on cash flow
hedges - - - (1,287,454) - (1,287,454)
Total
comprehensive
income for
the year - - 13,895,179 (1,287,454) - 12,607,725
Dividends (5,205,200) (5,205,200)
Gain on
valuation of
investment
properties - - (6,909,885) 6,909,885 - -
Gain on
disposal of
investment
properties - - (3,795,227) 3,795,227 - -
Transfer
between
reserves* - - 511,758 - (511,758) -
Transfer
between
reserves** - (5,217,022) - - 5,217,022 -
Balance as at
31 December
2010 6,671,438 - 5,158,901 (36,638,104) 98,138,586 73,330,821
*this is a transfer to move redeemable preference share finance
costs from the retained earnings reserve to the other distributable
reserves
** on 18 March 2010 the Audit Committee approved the
re-categorisation of the share premium to other distributable
reserves under the provisions of The Companies (Guernsey) Law,
2008.
Consolidated Statement of Charges in Equity
for the year ended 31 December 2009
Other
Share Share Retained Capital distributable
Total
capital premium earnings reserves reserves equity
GBP GBP GBP GBP GBP GBP
Opening
balance 1
January 2009 1,040,000 5,217,022 1,717,458 (36,661,539) 93,916,114 65,229,055
Loss for the
year - - (2,180,200) - - (2,180,200)
Valuation gain
on cash flow
hedges - - - 1,468,003 - 1,468,003
Total
comprehensive
income for
the year - - (2,180,200) 1,468,003 - (712,197)
Ordinary
shares
issued 5,631,438 - - - - 5,631,438
Dividends - - (4,220,000) - - (4,220,000)
Loss on
valuation of
investment
properties - - 10,834,835 (10,834,835) - -
Loss on
disposal of
investment
properties - - 27,391 (27,391) - -
Transfer
between
reserves* - - 482,792 - (482,792) -
Balance as at
31 December
2009 6,671,438 5,217,022 6,662,276 (46,055,762) 93,433,322 65,928,296
* 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 2010
2010 2009
GBP GBP
Cash flows from operating activities 8,291,372 11,548,205
Cash flows from investing activities
Interest received 91,338 454,917
Purchase of investment property (32,430,642) (22,092,080)
Capital expenditure on investment properties (10,767,410) (136,534)
Proceeds from / (costs of) disposal of
investment properties 35,325,327 (27,391)
Net cash used in investing activities (7,781,387) (21,801,088)
Cash flows from financing activities
Proceeds from issue of shares - 5,631,438
Arrangement costs of amended bank borrowing
facility - (422,164)
Interest paid on bank borrowings (1,719,974) (1,460,332)
Interest rate swap cost (3,211,093) (2,948,063)
Dividends paid to the Company's shareholders (5,205,200) (4,220,000)
Net cash used in financing activities (10,136,267) (3,419,121)
Net decrease in cash and cash equivalents
in the year (9,626,282) (13,672,004)
Cash and cash equivalents at beginning
of the year 30,796,998 44,469,002
Cash and cash equivalents at end of year 21,170,716 30,796,998
Standard Life Investments Property Income Trust Limited
Notes to the Consolidated Financial Statements
For the year ended 31 December 2010
1. Accounting Polices
The accounting policies adopted are consistent with those of the
previous financial year, except that the group has adopted the
following new and amended IFRS interpretations as of 1 January
2010:
IFRS 3 Business Combinations (Revised)
IAS 27 Consolidated and Separate Financial Statements
IAS 17 Leases - amendment
2. Significant accounting judgements, estimates and
assumptions
The preparation of the Group's financial statements requires
management to make judgements, estimates and assumptions that
affect the reported amounts of revenue, expenses, assets and
liabilities and the disclosure of contingent liabilities at the
reporting date. However, uncertainty about these assumptions and
estimates could result in outcomes that could require material
adjustment to the carrying amount of the asset or liability
affected in the future periods.
Going Concern
The Group's management has made an assessment of the Group's
ability to continue as a going concern and is satisfied that the
Group has the resources to continue in business for the foreseeable
future. Furthermore, management is not aware of any material
uncertainties that may cast significant doubt upon the Group's
ability to continue as a going concern. Therefore, the financial
statements continue to be prepared on the going concern basis.
Fair value of investment properties
Investment property is stated at fair value as at the balance
sheet date. Gains or losses arising from changes in fair values are
included in the Consolidation Statement of Comprehensive Income in
the year in which they arise. The fair value of investments
properties is determined by independent real estate valuation
experts using recognised valuation techniques. The fair values are
determined based on recent real estate transactions with similar
characteristics and location to those of the Group's assets.
The determination of the fair value of investment properties
requires the use of estimates such as future cash flows from the
assets. The estimate of the future cash flows will consider the
repair and conditions of the property, lease terms, future lease
events, as well as other relevant factors for the particular
investment. These estimates are based on local market conditions
existing at balance sheet date.
Fair value of financial instruments
When the fair value of financial assets and financial
liabilities recorded in the Consolidated Balance Sheet cannot be
derived from active markets, they are determined using a variety of
valuation techniques that include the use of mathematical models.
The input to these models is taken from observable markets where
possible, but where this is not feasible, a degree of judgement is
required in establishing fair value. The judgements include
consideration of liquidity and model inputs such as credit risk
(both own and counterparty's), correlation and volatility. Changes
in assumption about these factors could affect the reported fair
value of financial instruments. The models are calibrated regularly
and tested for validity using prices from any observable current
market transactions in the same instrument (without modification or
repackaging) or based on any available observable market data.
3. Related party disclosure
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the other party in making financial or operational
decisions.
Redeemable preference shares
On 19 December 2003 the Company issued 6,000,000 25p redeemable
zero dividend preference shares for GBP6,000,000 to The Standard
Life Assurance Company. On 10 July 2006 these shares were
transferred to Standard Life Assurance Limited. Theses shares have
a nominal value of GBP1,500,000 and are redeemable by the Company
on the tenth anniversary of admission at a redemption price of
GBP1,7908. These shares do not carry any voting rights.
Ordinary share capital
Standard life Investment Funds Limited held 16,644,609 of the
issued ordinary shares at the balance sheet on behalf of its Unit
Linked Property Funds (2009:21,769,609). This equates to 14.5%
(2009:19.0%) of the ordinary share capital in issue at the balance
sheet date, however, Standard Life Investment Funds Limited is not
considered to exercise control of the Group. Those parties related
to the Investment Manager waived their rights to commission on the
initial purchase of these shares in order to maintain the fairness
of the transaction to all parties.
Director's remuneration
2010 2009
GBP GBP
David Moore 26,875 25,000
Richard Barfield 20,625 18,750
John Hallam (resigned 30
June 2010) 9,375 18,750
Sally Ann Farnon (appointed
30 June 2010) 11,250 -
Shelagh Mason 20,625 18,750
Paul Orchard-Lisle 20,625 18,750
109,375 100,000
David Moore is a partner of Mourant Ozannes Advocates and
Notaries Public (Guernsey) who are the Group's solicitors. As at 31
December 2010, the fees paid during the year to Mourant Ozannes
Advocates and Notaries Public (Guernsey) were GBP1,252
(2009:GBP5,446).
Investment Manager
Standard Life Investments (Corporate Funds) Limited is the
Investment Manager.
4 COMMITMENTS
As at 31 December 2010, the Group has agreed construction
contracts with third parties and is committed to future expenditure
of GBP1.0m (31 December 2009: GBPnil) for Hydrasun, Aberdeen.
As at 31 December 2010, the Group had exchange contracts with
third parties and is committed to purchase an office investment in
Staines for GBP8.375m.
5 EVENTS AFTER THE BALANCE SHEET DATE
Property Sales and Purchases
On 11 January 2011 the Group completed the purchase of an office
investment in Staines for GBP8.375m. The 25,650sq ft office was
built in 1991 and is let to UB Group Ltd on an FRI lease expiring
in 2016 at a current rent of GBP816,000 pa. The purchase price
reflects an initial yield of 9.2%
Dividend and Shares
On 15 February 2011 the Company obtained approval from the UK
Listing Authority to allot shares pursuant to a block listing
facility of 11,439,998 ordinary shares.
ON 16 February 2011 the Company approved the allotment of
500,000 ordinary shares from the block listing facility to
Winterflood Securities Limited at an issue price of 65.0p per
share.
On 25 February 2011 a dividend of GBP1,258,400 (2009:
GBP1,430,000) in respect of the quarter to 31 December 2010 was
paid.
On 7 March 2011 the Company approved the allotment of 500,000
ordinary shares from the block listing facility to Winterflood
Securities Limited at an issue price of 65.0p per share.
Additional Notes to the Annual Financial Report
This Annual Financial Report announcement is not the Company's
statutory accounts for the year ended 31 December 2010. The
statutory accounts for the year ended 31 December 210 received an
audit report which was unqualified and did not include a reference
to any matters to which the auditors drew attention by way of
emphasis without qualifying their report.
The statutory accounts for the financial year ended 31 December
2010 were approved by the Directors on 13 April 2011. The Company's
AGM is to be held on the 24 May 2011. The Annual Report and Notice
of AGM will be sent to shareholders in April 2011 and can be
downloaded from the Company's website hosted by the Investment
Manager (www.standardlifeinvestments.co.uk/its) .
Please note that past performance is not necessarily a guide to
the future and that the value of investments and the income from
them may fall as well as rise. Investors may not get back the
amount they originally invested.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFLFMLFFSESL
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