27 AUGUST
2015
STANDARD LIFE INVESTMENTS PROPERTY
INCOME TRUST
RESULTS IN RESPECT OF THE PERIOD ENDED
30 JUNE 2015
Financial Highlights
- Net Asset Value total return of 6.6% for the six months ended
30 June 2015.
- Share price increased by 7.0% over the six months ended
30 June 2015 to 83.8p.
- Dividend yield of 5.5% based on 30 June
2015 share price of 83.8p.
- 2 properties purchased for £20.4m excluding costs and 4
properties sold for £11.6m excluding costs.
- £34.8m of new equity raised over the six months ended
30 June 2015 at an average premium to
Net Asset Value of 5.4%, increasing the number of shares in issue
by 18.1%.
|
Total Returns (with dividends re-invested) |
|
6
months to 30 June 2015 |
| Net
Asset Value per share* |
|
+6.6% |
| Share
Price total return* |
|
+10.0% |
|
*Source: Winterfloods |
|
|
|
|
Capital Values |
30
June
2015 |
31
December
2014 |
% Change |
| Net Asset Value per
share 1 |
78.5p |
75.5p |
+4.0% |
| EPRA* Net Asset
Value per share 2 |
79.2p |
76.6p |
+3.4% |
| Share Price |
83.8p |
78.3p |
+7.0% |
| Premium of Share
Price to Net Asset Value |
6.8% |
3.7% |
– |
| Total Assets |
£320.4m |
£278.7m |
+15.0% |
| Loan to Value
3 |
19.8% |
29.2% |
– |
| Cash Balance |
£27.3m |
£5.4m |
– |
|
|
|
|
|
Dividends |
|
30
June
2015 |
30
June
2014 |
| Dividends per share
4 |
|
2.322p |
2.294p |
| Dividend yield |
|
5.5% |
6.1% |
|
|
|
|
| Property
Returns |
|
6
months to 30 June 2015 |
12
months to 31 December 2014 |
| Property income
return 5 |
|
3.1% |
7.5% |
| IPD property income
monthly index 6 |
|
2.5% |
5.6% |
| Property total
return (property only) 7 |
|
5.8% |
18.0% |
| IPD property total
return monthly index 6 |
|
6.3% |
17.9% |
|
|
|
|
|
1 Calculated under
International Financial Reporting Standards.
2 EPRA NAV represents
the value of an entity’s equity on a long-term basis. Some items,
such as fair value of derivatives, are therefore excluded.
3 Calculated as bank
borrowings less all cash as a percentage of the open market value
of the property portfolio as at 30 June
2015.
4 Dividends paid
during the 6 months to 30 June
2015.
5 The net income
receivable for the period expressed as a percentage of the capital
employed. Quarterly figures are compounded over the period to give
the rate over six months and twelve months.
6 Source: IPD
quarterly version of the monthly index funds (excludes cash).
7 The sum of capital
growth and net income for the period expressed as a percentage of
capital employed excluding cash.
* The European
Public Real Estate Association (EPRA) is a common interest group,
which aims to promote, develop and represent the European public
real estate sector.
Chairman’s Statement
I have pleasure reporting on another very good period for your
Company. The REIT conversion has taken place successfully; the
Company has fully utilised its capacity to raise additional equity
under both the Prospectus and dis-application of pre emption rights
authorities; further investment has been made in real estate assets
and the NAV has continued to grow.
The market capitalisation of the Company increased by 27% during
the six months period to £242m with total assets increased to
£320m. The share price rose by 7.0% and the net asset value per
share (‘NAV’) increased by 4.0%. The NAV total return to
shareholders was 6.6%.
The Property Portfolio and
Performance
The Investment Manager’s report provides detailed information on
the portfolio. At the end of June
2015, it was valued at £288m. Additionally there was
positive cash of £27.3m. Total assets were £320.4m (31 December 2014: £278.7m). The Company’s NAV at
period end was 78.5p per share (31 December
2014: 75.5p), an uplift of 4.0% over the period. The table
below sets out the components of the movement in the NAV.
|
|
|
Pence per Share |
%
of opening NAV |
|
NAV as at 31
December 2014 |
|
75.5 |
100.0 |
|
Increase in
valuation of property portfolio |
|
2.7 |
3.6 |
|
Decrease in interest rate swap liability |
|
0.3 |
0.4 |
| NAV as
at 30 June 2015 |
|
78.5 |
104.0 |
|
|
|
|
|
The Company completed two purchases totalling £20.4m in
Preston and Bristol and subsequent to the half year six
further properties have been purchased for £26.2m. There is one
purchase in the pipeline that the Managers expect to complete on
over the next month.
The Company has sold four properties in the reporting period for
£11.6m and since the period end a further two sales and one part
sale for £11.9m.
Shares and Share Price
At the half year, there were 288,387,160 shares in issue, an
increase of 18.1% over the period. The share price on 30 June 2015 was 83.8p, an uplift of 7.0% over
the six month period, and represented a premium of 6.8% over NAV at
the period end.
Earnings and Dividends
Earnings for the period increased from £11.57m to £12.92m, an
increase of 11.7%. The shares provided a dividend yield of 5.5%
based upon the current annualised dividend of 4.644p per share and
the share price at period end.
REIT Conversion
On 1 January 2015 the Company
became resident in the UK for tax purposes and will now be
compliant with the UK REIT regime. Following the conversion to a
REIT the Company can pay dividends as property income dividends
(PIDs). Indeed in order to maintain its tax status as a UK REIT the
Company must distribute 90% of its real estate profits in the form
of PIDs. The Board has resolved that the first three dividend
payments this year will be by way of a PID and will be paid net of
UK tax unless the registered owner of the shares has completed a
HMRC declaration. A number of shareholders attending the
May 2015 AGM highlighted that the
cash dividend received had been 20% less than before. This is due
to the deduction of the UK tax of 20% that the Company is required
to withhold. The Company’s Registrar has provided the necessary
HMRC declaration forms to all qualifying registered owners of the
Company’s shares. However the Board is aware that a number of
investors hold shares via execution only platforms or with ISA/
SIPP providers and may not have been advised of the requirement to
complete a declaration in order to receive dividends gross.
Investors are advised to seek independent advice and to contact
their nominee company to receive the necessary forms should they be
eligible to do so. Where a tax refund is due from HMRC our tax
advisers have confirmed that the relevant tax wrapper plan manager
or administrator would be required to complete the necessary forms
and submit them to HMRC.
Loan to Value ratio
At 30 June 2015, the LTV ratio was
19.8% which will increase once the Company’s cash balance is
invested. Our loan agreement with RBS sets out an upper limit of
65% until December 2016, reducing to
60% for the remaining two years.
The Board and Corporate Governance
It is my intention to retire from the Board at the AGM next June
having been a founder director of your Company since 2003. I am
delighted to inform you that the Board has asked Robert Peto to be your new chairman and he has
accepted. The Board has started a search for a new UK based
non-executive director.
Fund Raising
During February 2015 the Company
issued all of the remaining shares under its Prospectus authority
bringing the total issued since July
2014 to 100m shares. In addition, over the period from
20 February 2015 to 18 June 2015 the Company has fully utilised its
powers to issue shares on a non pre-emptive basis issuing a further
27.7m shares. In total during the half year period the Company
issued new shares for a gross consideration of £34.8m. In each case
the new shares were issued at a premium of at least 5% to the
prevailing NAV and the proceeds invested timeously into UK
commercial real estate properties at attractive yields.
As a result of being a larger company together with the lower
management fee instituted in July
2014 the ongoing charges ratio has fallen to 1.4% based on
an average NAV from 1.8% a year earlier.
Outlook
The UK economy is continuing to grow. There are interest rate
and geopolitical risks, with some countries experiencing slower
growth, but we expect UK growth to continue. There is now better
demand for space from prospective tenants so that rents in some
sectors are rising. In many areas space is in short supply because
of the lack of building in recent years.
The Managers are active with tenants and in the market and your
Board is optimistic that the Company can continue to show good
returns.
Richard
Barfield
Chairman
27 August
2015
Principal Risks and Uncertainties
The Company’s assets consist of direct investments in UK
commercial property. Its principal risks are therefore related to
the commercial property market in general, but also the particular
circumstances of the properties in which it is invested, and their
tenants. The Board and the Investment Manager seek to mitigate
these risks through a strong initial due diligence process,
continual review of the portfolio and active asset management
initiatives. All of the properties in the portfolio are insured,
providing protection against risks to the properties and also
protection in case of injury to third parties in relation to the
properties.
The Board has also identified a number of other specific risks
that are reviewed at each Board meeting. These are as follows:
- The Company and its objectives become unattractive to
investors. This is mitigated through regular contact with
shareholders, a regular review of share price performance and the
level of the discount or premium at which the shares trade to net
asset value and regular meetings with the Company’s broker to
discuss these points and address any issues that arise.
- Poor selection of new properties for investment. A
comprehensive and documented initial due diligence process, which
will filter out properties that do not fit required criteria, is
carried out by the Investment Manager. Where appropriate, this is
followed by detailed review and when necessary challenged by the
Board prior to a decision being made to proceed with a purchase.
This process is designed to mitigate the risk of poor property
selection.
- Tenant failure or inability to let property. Due diligence work
on potential tenants is undertaken before entering into new lease
arrangements. In addition, tenants are kept under constant review
through regular contact and various reports both from the managing
agents and the Investment Manager’s own reporting process.
Contingency plans are put in place at units that have tenants that
are believed to be in financial trouble. The Company subscribes to
the Investment Property Databank Iris Report which updates the
credit and risk ranking of the tenants and income stream, and
compares it to the rest of the UK real estate market.
- Loss on financial instruments. The Company has entered into a
number of interest rate swap arrangements. These swap instruments
are valued and monitored on a monthly basis by the counterparty
bank. The Investment Manager checks the valuation of the swap
instruments internally to ensure they are accurate. In addition,
the credit rating of the bank that the swaps are taken out with is
assessed regularly.
Other risks faced by the Company include the following:
- Strategic – incorrect strategy, including sector and property
allocation and use of gearing, could all lead to a poor return for
shareholders.
- Tax efficiency – the structure of the Company or changes to
legislation could result in the Company no longer being a tax
efficient investment vehicle for shareholders.
- Regulatory – breach of regulatory rules could lead to the
suspension of the Company’s Stock Exchange Listing, financial
penalties or a qualified audit report.
- The implementation of AIFMD during 2014 and the conversion of
the Company to a UK REIT have introduced new regulatory risks to
the Company in the form of ensuring compliance with the respective
regulations. In relation to AIFMD, the Board has put in place a
system of regular reporting from the AIFM and the depositary to
ensure both are meeting their regulatory responsibilities in
respect of the Company. In relation to UK REIT status, the Board
has put in place a system of regular reporting to ensure that the
requirements of the UK REIT regime are being adequately monitored
and fully complied with.
- Financial – inadequate controls by the Investment Manager or
third party service providers could lead to misappropriation of
assets. Inappropriate accounting policies or failure to comply with
accounting standards could lead to misreporting or breaches of
regulations.
- Operational – failure of the Investment Manager’s accounting
systems or disruption to the Investment Manager’s business, or that
of third party service providers, could lead to an inability to
provide accurate reporting and monitoring, leading to loss of
shareholder confidence.
- Economic – inflation or deflation, economic recessions and
movements in interest rates could affect property valuations and
also bank borrowings.
The Board seeks to mitigate and manage all risks through
continual review, policy setting and enforcement of contractual
obligations. It also regularly monitors the investment environment
and the management of the Company’s property portfolio, levels of
gearing and the overall structure of the Company.
Going Concern
The Directors have reviewed detailed cash flow, income and
expense projections in order to assess the Company’s ability to pay
its operational expenses, bank interest and dividends for the
foreseeable future. The Directors have examined significant areas
of possible financial risk including cash and cash requirements and
the debt covenants, in particular those relating to LTV and
interest cover. They have not identified any material uncertainties
which cast significant doubt on the ability to continue as a going
concern for a period of not less than 12 months from the date of
the approval of the financial statements. The Directors have
satisfied themselves that the Company has adequate resources to
continue in operational existence for the foreseeable future and
the Board believes it is appropriate to adopt the going concern
basis in preparing the financial statements.
Investment Manager’s Report
UK Real Estate Market
The UK economic fundamentals continue to strengthen as the
economy is now estimated to have grown by 0.7% in Q2 according to
the first estimate of the ONS, representing a solid rebound albeit
dominated by the service sector’s contribution. Business sentiment
and consumer confidence remain buoyant. Over the six months to
30 June 2015 the All Property total
return, as recorded by the Quarterly version of the IPD Monthly
Index, was 6.3% which, although attractive, lagged the 8.4% total
return for the same period in 2014. Capital values increased by
3.7% in the half year to end June (5.5% in 2014). Rental growth
however continues to improve, and grew by 1.8% in the six months to
30 June 2015, compared to 1.4% for
the same period in 2014. It is noticeable that rental growth is
spreading out across the UK and is no longer limited to
London and the South East,
although it is less evident in the retail sector on anything but
the best product. This reflects the relative performance of the
three main sectors with offices providing a total return of 8.7%
over the reporting period, industrial 7.8% and retail again lagging
the market at 3.7%.
Demand from investors has remained robust over the first half of
2015, continuing the theme of weight of money driving pricing that
was most evident in 2014. There remains a diverse source of
investors from overseas, to private equity type buyers to UK
institutions. This is driven as much by the relative pricing of
real estate (especially compared to gilts) as it is the improving
fundamentals of rental growth resulting from strong occupational
demand and limited supply.
Investment Outlook
UK Commercial Real Estate continues to make steady progress in
2015 although momentum has reduced compared to the same point last
year. We expect positive total returns for investors on a three
year holding period due to the elevated yield and improving income
growth prospects. The sector remains attractive from a fundamental
point of view, i.e., strengthening economic drivers and a limited
pipeline of future new developments. Rising interest rates are an
emerging risk although there is a reasonable buffer in pricing to
compensate if the market prices in a further acceleration of rate
rises. The retail sector continues to face a series of headwinds
that may hold back recovery in weaker locations due to oversupply
and structural issues but the prospects for retail towards the
South East and Central London are
expected to improve further as economic recovery gains more
traction. Prime, good quality secondary assets and selective poorer
quality secondary assets in stronger locations are likely to
provide the best opportunities in the robust economic environment
we anticipate over the remainder of 2015 and into 2016.
Performance
Over the first 6 months of 2015 the Company had a NAV Total
Return of 6.6% and a share price total return (assuming dividends
reinvested) of 10%.
UK listed real estate equities (as measured by the FTSE EPRA/
NAREIT UK index) provided a total return of 8% over the six months
to 30 June 2015, which compared well
to the 1.4% from the FTSE100 over the same period and 3% from the
FTSE All Share.
The portfolio level return has slightly lagged over the
reporting period, influenced heavily by the level of
transactions. The NAV total return demonstrates the benefit
of raising new equity at a premium to cover the transaction costs
and protect existing shareholder’s returns.
We have also written down some of the valuations based on
expected or actual sale prices as we sold out of our smaller assets
with poorer performance expectations. This includes one asset in
particular which has now been sold (Drakes Way, Swindon) where we had hope value in the
valuation for a proposed food store development which is no longer
going to happen. The standing portfolio (assets held over the
period), continued to perform well, with a total return of 18.7%
over the 12 months to end June, compared to the IPD return of 16.3%
for the same period.
Investment Strategy
The Investment Manager and the Board are focussed on providing
investors a sustainable and attractive level of income by investing
in good quality commercial real estate assets in the UK. We target
assets that we believe will appeal to occupiers, where we can add
value and generate rental growth through actively managing the
assets. The Company targets a covered dividend over the course of
each year.
Portfolio Valuation
The property is valued on a quarterly basis by Jones Lang Lasalle. As at 30 June 2015 the investment portfolio comprised a
total of 39 assets valued at a total of £288.39m. In addition the
Company had cash of £27.3m. This compares to £178.8m and £23.2m
respectively at end June 2014.
Lease Expiry Profile
The Company has an average lease length to earliest of lease end
or break option of 7.1 years. This is similar to the IPD index
(with leases over 35 years excluded). We take an active approach to
managing lease expiries, and for 2015 we have secured 73% of income
at risk thorough lease expiry or break, with another 10% in
solicitors hands for lease regears. 68% of the income at risk in
2016 has also been secured.
As the occupational market improves and supply though
development remains limited, there is increasing opportunity to add
value through lease events; either renewing existing leases, or
taking accommodation back to refurbish and then relet.
Portfolio sector/subsector
allocations
The portfolio is invested solely in UK Commercial Real Estate.
Retail has been an underperforming sector and the Company is likely
to remain underweight to retail whilst it believes the current
divergence between large prime dominant retail destinations and
smaller more secondary ones will continue. The exposure the
Company has to retail is generally by way of retail warehousing
rather than high street property as we feel more confident in this
sub sector.
Geographic distribution
The Company invests throughout the UK to provide a diversified
portfolio.
Investment Activity
Purchases
The Company completed two purchases in the first six months of
2015 for a total of £20.4m:
1. DSG Preston £15.8m, 7% yield – let for a further 16
years with fixed uplifts, units adjacent to the prime dominant
park.
2. Interplex 16 Bristol £4.6m, 8% yield – two industrial
units, one of which is vacant, the other let on a short lease.
A further four purchases were completed in July and August 2015, after the reporting period end, for
a total of £26.2m:
1. Office portfolio £13.2m, 7.25% yield – three offices,
located in York, Milton Keynes and Dartford – all good quality let to strong
tenants.
2. Halfords Bradford £5.1m, 8.5% yield – retail warehouse
and car showroom adjacent to the dominant retail park.
3. Office in Kiddlington for £4.8m, 8.25% yield – modern
single let office in an area with infrastructure improvement.
4. Industrial unit in Fareham for £3.1m, 7% yield – low
site cover, asset management potential.
One other investment is also in solicitors hands:
5. Industrial unit £2.9m, 7.2% yield – in the North-East,
well specified for parcel delivery.
As can be seen from the above, the year started with a large
investment but since then we have found more value in small lot
sizes.
Sales
The Company has undertaken the sale of a number of assets that
are unlikely to perform well in the future or where there is an
opportunity to realise a capital gain.
The following sales were completed in the first six months of
2015:
1. Weybridge £3.2m – sale of over rented office with lease
expiry in 2015.
2. Swindon £3.5m – sale
to tenant after prospective redevelopment as a foodstore fell
through.
3. Swansea £1.3m – sale of small short let office out of
town.
4. Chelmsford £3.6m –
sale of over rented office with lease expiries in 2015, needing
capex.
The following sales were completed in July and August of 2015,
after the reporting period end:
1. Mansfield £2.6m – part
sale of small industrial estate.
2. Leeds £3.8m – sale of
two industrial units with income at risk.
3. Glasgow £5.5m – sale
of office off market.
One other sale is also in solicitors hands:
4. Stockton £1.3m – sale of small single let industrial
unit.
Voids
During the reporting period key asset management transactions
included:
1. Ocean Trade Centre Aberdeen: two leases were extended with
the existing tenants, and a major refurbishment undertaken on 7
units (completed mid July). 5 of the units were let on an agreement
for lease for 10 years to CCF, and the other two put in solicitors
hands after the reporting period.
2. Explorer Crawley: Lease
break with Amey removed to give a further 5 years term certain.
3. Coal Rd Leeds: Five year lease extension agreed on one
unit.
4. St James House Cheltenham: A new 10 year lease agreed on part
of the third floor to the existing tenant reinforced current ERVs
and exceeded valuation assumptions.
Asset Management
The Company has maintained low voids during the period, and as
at the period end they stood at 2.8% of ERV. Lettings in solicitors
hands should reduce this to under 2%, with the main void (1.5% of
ERV) being the new purchase in Bristol where the Company plans a
refurbishment before reletting. Maintaining low voids remains
a key aim of the Investment Manager.
Debt
The Company has a debt facility in place with RBS that expires
in December 2018. The facility is for
£84m and is fully drawn down. There is an interest rate swap
in place meaning that the all in cost is 3.7%. As at 30 June the
Company had an LTV of 19.8% (bank covt 65%). The Company is
reviewing its debt strategy as a longer term facility might be more
appropriate.
Equity Raise
During the period the Company issued new equity on three
occasions to fund new acquisitions.
February 31.3m shares at 78.1p per share
March 1.3m shares at 80.2p per share
June 11.6m shares at 80.3p per share
Jason Baggaley
Fund Manager
Directors’ Responsibility
Statement
The Directors are responsible for preparing the Interim
Management Report in accordance with applicable law and
regulations. The Directors confirm that to the best of their
knowledge:
- The condensed set of Financial Statements have been prepared in
accordance with IAS 34; and
- The Interim Management Report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the Financial
Services Authority’s Disclosure and Transparency Rules.
- In accordance with 4.2.9R of the Financial Services Authority’s
Disclosure and Transparency Rules, it is confirmed that this
publication has not been audited, or reviewed by the Company’s
auditors.
The Interim Report, for the six months ended 30 June 2015, comprises an Interim Management
Report in the form of the Chairman’s Statement, the Investment
Manager’s Report, the Directors’ Responsibility Statement and a
condensed set of Unaudited Consolidated Financial Statements.
The Directors each confirm to the best of their knowledge
that:
a. the Unaudited Consolidated Financial Statements,
prepared in accordance with IFRSs as adopted by the European Union,
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Group; and
b. the Interim 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.
For and on behalf of the Directors of Standard Life Investments
Property Income Trust Limited
Richard Barfield
Chairman
27 August 2015
UNAUDITED FINANCIAL STATEMENTS
Unaudited Consolidated Statement of Comprehensive
Income
for the period ended 30 June 2015
|
Notes |
1
Jan 15 to |
1 Jan 14 to |
|
|
|
30
Jun 15 |
30 Jun 14 |
|
|
|
£ |
£ |
|
Rental income |
|
9,739,210 |
7,462,953 |
|
| Surrender premium
income |
|
– |
18,154 |
|
| Valuation gain from
investment properties |
5 |
7,529,522 |
9,176,100 |
|
| Loss on asset
acquisition |
|
(65,129) |
– |
|
| Loss on disposal of
investment properties |
|
(796,363) |
(2,032,950) |
|
| Investment
management fees |
3 |
(1,121,035) |
(735,457) |
|
| Other direct
property operating expenses |
|
(504,924) |
(483,017) |
|
| Directors' fees and
expenses |
|
(62,150) |
(68,052) |
|
| Valuer's fee |
|
(37,809) |
(22,787) |
|
| Auditor's fee |
|
(23,008) |
(22,900) |
|
| Other
administration expenses |
|
(163,143) |
(110,643) |
|
| Operating
profit |
|
14,495,171 |
13,181,401 |
|
Finance income |
|
26,256 |
25,420 |
|
| Finance costs |
|
(1,597,490) |
(1,636,315) |
|
| Profit for
the period |
|
12,923,937 |
11,570,506 |
|
Other comprehensive income
Valuation gain / (loss) on cash flow hedges |
|
757,123 |
(141,937) |
|
| Total
comprehensive income for the period |
|
13,681,060 |
11,428,569 |
|
Earnings per share:
Basic and diluted earnings per share |
|
pence
4.84 |
pence
7.31 |
| Adjusted (EPRA)
earnings per share |
|
2.32 |
2.80 |
|
|
|
|
|
|
|
All items in the above Unaudited Consolidated Statement of
Comprehensive Income derive from continuing operations.
Unaudited Consolidated Balance Sheet
as at 30 June
2015
|
Notes |
30
Jun 2015 |
31
Dec 2014 |
|
|
£ |
£ |
| ASSETS |
|
|
|
| Non-current
assets |
|
|
|
| Investment
properties |
5 |
272,669,703 |
261,672,121 |
| Lease
incentives |
5 |
2,471,229 |
2,436,976 |
|
|
275,140,932 |
264,109,097 |
|
|
|
|
| Current
assets |
|
|
|
| Investment
properties held for sale |
6 |
13,010,300 |
6,550,100 |
| Trade and other
receivables |
|
4,884,695 |
2,660,440 |
| Cash and cash
equivalents |
|
27,329,945 |
5,399,095 |
|
|
45,224,940 |
14,609,635 |
|
|
|
|
| Total
assets |
|
320,365,872 |
278,718,732 |
|
|
|
|
|
LIABILITIES |
|
|
|
| Current
liabilities |
|
|
|
| Trade and other
payables |
|
7,485,896 |
7,205,415 |
| Other
liabilities |
|
– |
500 |
|
|
7,485,896 |
7,205,915 |
| Non-current
liabilities |
|
|
|
| Bank
borrowings |
|
84,036,866 |
83,980,382 |
| Interest rate
swaps |
|
1,917,816 |
2,674,939 |
| Other
liabilities |
|
– |
6,094 |
| Rental deposits due
to tenants |
|
525,002 |
483,880 |
|
|
86,479,684 |
87,145,295 |
|
|
|
|
| Total
liabilities |
|
93,965,580 |
94,351,210 |
|
|
|
|
| Net
assets |
|
226,400,292 |
184,367,522 |
|
|
|
|
| EQUITY |
|
|
|
| Capital and
reserves attributable |
|
|
|
| to Company's
equity holders |
|
|
|
| Share capital |
|
130,589,115 |
96,188,648 |
| Retained
earnings |
|
7,776,524 |
7,634,503 |
| Capital
reserves |
|
(9,803,719) |
(17,294,001) |
| Other distributable
reserves |
|
97,838,372 |
97,838,372 |
| Total
equity |
|
226,400,292 |
184,367,522 |
|
|
|
|
| Net Asset Value
(NAV) per Share |
|
|
|
| NAV |
9 |
78.5p |
75.5p |
| EPRA NAV |
9 |
79.2p |
76.6p |
Approved by the Board of Directors on 27
August 2015 and signed on its behalf by:
Richard Barfield
Director
Unaudited Consolidated Statement of Changes in Equity
for the period ended 30 June 2015
|
Notes |
Share
Capital |
Retained
earnings |
Capital
reserves |
Other
distributable
reserves |
Total equity |
|
|
£ |
£ |
£ |
£ |
£ |
|
Opening balance 1 January 2015 |
|
96,188,648 |
7,634,503 |
(17,294,001) |
97,838,372 |
184,367,522 |
|
|
|
|
|
|
|
| Profit
for the period |
|
– |
12,923,937 |
– |
– |
12,923,937 |
|
Valuation gain on cash flow hedges |
|
– |
– |
757,123 |
– |
757,123 |
| Total
comprehensive |
|
|
|
|
|
|
| gain
for the period |
|
– |
12,923,937 |
757,123 |
– |
13,681,060 |
|
|
|
|
|
|
|
|
Dividends paid |
8 |
– |
(6,048,757) |
– |
– |
(6,048,757) |
|
Ordinary shares issued* |
|
34,400,467 |
– |
– |
– |
34,400,467 |
|
|
|
|
|
|
|
Valuation gain of investment properties |
5 |
– |
(7,529,522) |
7,529,522 |
– |
– |
|
|
|
|
|
|
| Loss on
disposal of investment properties |
|
– |
796,363 |
(796,363) |
– |
– |
| Balance at 30
June |
|
|
|
|
|
|
| 2015 |
|
130,589,115 |
7,776,524 |
(9,803,719) |
97,838,372 |
226,400,292 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* this value represents both the nominal and the premium raised
on issuing the ordinary shares.
Unaudited Consolidated Statement of Changes in Equity
for the period ended 30 June 2014
|
|
|
|
|
|
|
|
|
|
Notes |
Share
Capital |
Retained
earnings |
Capital
reserves |
Other
distributable
reserves |
Total equity |
|
|
£ |
£ |
£ |
£ |
£ |
|
Opening balance 1 January 2014 |
|
31,337,024 |
6,560,853 |
(34,144,454) |
97,838,372 |
101,591,795 |
|
|
|
|
|
|
|
| Profit
for the period |
|
– |
11,570,506 |
– |
– |
11,570,506 |
|
Valuation loss on cash flow hedges |
|
– |
– |
(141,937) |
– |
(141,937) |
| Total
comprehensive gain for the period |
|
– |
11,570,506 |
(141,937) |
– |
11,428,569 |
|
|
|
|
|
|
|
|
Dividends paid |
8 |
– |
(3,621,919) |
– |
– |
(3,621,919) |
|
Ordinary shares issued* |
|
4,032,940 |
– |
– |
– |
4,032,940 |
|
Valuation gain of investment properties |
|
– |
(9,176,100) |
9,176,100 |
– |
– |
| Loss on
disposal of investment properties |
|
– |
2,032,950 |
(2,032,950) |
– |
– |
| Balance at 30
June 2014 |
|
35,369,964 |
7,366,290 |
(27,143,241) |
97,838,372 |
113,431,385 |
|
|
|
|
|
|
|
|
|
* this value represents both the nominal and the premium raised
on issuing the ordinary shares.
Unaudited Consolidated Cash Flow Statement
for the period ended 30 June 2015
|
Notes |
1
Jan 15 to |
1 Jan 14 to |
|
|
30
Jun 15 |
30 Jun 14 |
|
|
£ |
£ |
|
|
|
|
Cash generated from operating
activities
Profit for the period |
|
12,923,937 |
11,570,506 |
| Movement in
non-current lease incentives |
|
19,373 |
(67,274) |
| Movement in trade
and other receivables |
|
(2,224,255) |
(141,935) |
| Movement in trade
and other payables |
|
324,462 |
1,533,160 |
| Finance costs |
|
1,597,490 |
1,636,315 |
| Finance income |
|
(26,256) |
(25,420) |
| Valuation gain from
investment properties |
|
(7,529,522) |
(9,176,100) |
| Loss on disposal of
investment properties |
|
796,363 |
2,032,950 |
| Net cash inflow
from operating activities |
|
5,881,592 |
7,362,202 |
|
|
|
|
| Cash flows from
investing activities |
|
|
|
| Interest
received |
|
26,256 |
25,420 |
| Purchase of
investment properties |
5 |
(21,441,843) |
(19,611,648) |
|
Capital expenditure on investment properties |
5 |
(593,112) |
(2,206,823) |
Net
proceeds from disposal of investment
properties |
5 |
11,303,737 |
26,567,050 |
| Net cash used in
investing activities |
|
(10,704,962) |
4,773,999 |
|
|
|
|
| Cash flows from
financing activities |
|
|
|
| Ordinary shares
issued net of issue costs |
|
34,400,467 |
4,032,940 |
| Interest paid on
bank borrowing |
|
(988,881) |
(1,010,693) |
| Payments on
interest rate swaps |
|
(608,609) |
(625,622) |
| Dividends paid to
the Company's shareholders |
8 |
(6,048,757) |
(3,621,919) |
| Net cash used in
financing activities |
|
26,754,220 |
(1,225,294) |
|
|
|
|
| Net increase in
cash and cash equivalents in the period |
|
21,930,850 |
10,910,907 |
|
|
|
|
| Cash and cash
equivalents at beginning of period |
|
5,399,095 |
12,303,310 |
| Cash and cash
equivalents at end of period |
|
27,329,945 |
23,214,217 |
|
|
|
|
|
|
|
|
|
|
|
Standard Life Investments Property
Income Trust Limited
Notes to the Unaudited Consolidated Financial
Statements
for the period ended 30 June 2015
1 GENERAL INFORMATION
Standard Life Investments Property Income Trust Limited (“the
Company”) and its subsidiary (together the “Group”) carries on the
business of property investment through a portfolio of freehold and
leasehold investment properties located in the United Kingdom. The Company is a limited
liability company incorporated and domiciled in Guernsey, Channel
Islands. The Company has its listing on the London Stock
Exchange.
On 1 January 2015 the Company
became resident in the UK for tax purposes and will now be
compliant with the UK REIT regime.
The address of the registered office is Trafalgar Court, Les
Banques, St Peter Port, Guernsey.
These Unaudited Consolidated Financial Statements were approved
for issue by the Board of Directors on 27
August 2015.
The Audited Consolidated Financial Statements of the company for
the year ended 31 December 2014 are
available on request from the registered office or from the
Investment Manager's website
(www.standardlifeinvestments.com/its).
2 ACCOUNTING POLICIES
Basis of preparation
The Unaudited Consolidated Financial Statements of the Group
have been prepared in accordance with IAS 34 Interim Financial
Reporting, and all applicable requirements of The Companies
(Guernsey) Law, 2008. The
Unaudited Consolidated Financial Statements have been prepared
under the historical cost convention as modified by the measurement
of investment property and derivative financial instruments at fair
value. The Unaudited Consolidated Financial Statements are
presented in pound sterling and all values are not rounded except
when otherwise indicated.
These statements do not contain all of the information required
for full annual statements and should be read in conjunction with
the Audited Consolidated Financial Statements of the Company for
the year ended 31 December 2014. The
accounting policies adopted in the preparation of the Interim
Condensed Consolidated Financial Statements are consistent with
those followed in the preparation of the Group’s Annual
Consolidated Financial Statements for the year ended 31 December 2014, except for the adoption of new
standards and interpretations effective in the European Union as of
1 January 2015.
New standards and amendments apply for the first time in 2015.
However, they do not impact the Unaudited Interim Condensed
Consolidated Financial Statements of the Group and are listed
below:
- Annual Improvements to IFRSs 2011-2013 Cycle
3 RELATED PARTY DISCLOSURES
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.
Investment Manager
On 19 December 2003 Standard Life
Investments (Corporate Funds) Limited (“the Investment Manager”)
was appointed as Investment Manager to manage the property assets
of the Group. A new Investment Management Agreement (“IMA”) was
entered into on 7 July 2014,
appointing the Investment Manager as the AIFM (“Alternative
Investment Fund Manager”).
Under the terms of the IMA dated 19
December 2003, the Investment Manager was entitled to
receive a fee at the annual rate of 0.85% of the total assets,
payable quarterly in arrears except where cash balances exceed 10%
of the total assets. The fee applicable to the amount of cash
exceeding 10% of total assets was altered to be 0.20% per annum,
payable quarterly in arrears. The Investment Manager also agreed to
reduce its charge to 0.75% of the total assets of the Group until
such time as the net asset value per share returns to the launch
level of 97p. This was applicable from the quarter ending
31 December 2008 onwards and did not
affect the reduced fee of 0.20% on cash holdings above 10% of total
assets.
Under the terms of the IMA dated 7 July
2014, the above fee arrangements apply up to 31 July 2014. From 1
August 2014, the fee was changed to 0.75% of total assets up
to £200 million; 0.70% of total assets between £200 million and
£300 million; and 0.65% of total assets in excess of £300 million.
The total fees charged for the period ended 30 June 2015 amounted to £1,121,035 (period ended
30 June 2014: £735,457). The amount
due and payable at the period end amounted to £571,005, excluding
VAT (period ended 30 June 2014:
£373,266 excluding VAT).
4 TAXATION
Current income tax
A reconciliation of the product of accounting profit multiplied
by the applicable tax rate for the period ended 30 June 2015 and 2014 is, as follows:
|
30 Jun 2015 |
30 Jun 2014 |
|
£ |
£ |
| Profit
before tax |
12,923,937 |
11,570,506 |
|
|
|
|
Tax calculated at UK statutory income tax/corporation
tax
rate of 20% (30 June 2014: 20%) |
2,584,787 |
2,314,101 |
| UK REIT
exemption on net income and gains |
(1,140,949) |
- |
Valuation gain in respect of investment properties not
subject to tax |
(1,505,904) |
(1,835,220) |
Loss on disposal of investment properties not subject
to
tax |
- |
406,590 |
| Income
not subject to tax |
- |
(289,189) |
|
Expenditure not allowed for income tax purposes |
- |
74,720 |
| Tax loss
not utilised/(utilised) |
62,066 |
(671,002) |
|
Current income tax charge |
- |
- |
|
|
|
|
|
|
|
|
|
|
The Group has not recognised a deferred tax asset of £62,066
arising as a result of revenue tax losses. Tax losses that existed
prior to the Group’s election to be treated as a UK Real Estate
Investment Trust (REIT) (see below) have been written off as they
cannot be utilised against profits of the Group arising in the REIT
regime.
The Group elected to be treated as a UK Real Estate Investment
Trust (REIT) from 1 January 2015.
Under the UK REIT rules, profits of the Group’s property rental
business are exempt from the charge to corporation tax. Gains on
the disposal of property assets are also exempt from tax provided
they are not held for trading or, in the case of developed
property, sold within three years of completion of the development.
The Group is subject to UK corporation tax on all other profits and
gains.
5 INVESTMENT PROPERTIES
| Country |
|
|
|
UK |
UK |
UK |
|
|
| Class |
|
|
|
Industrial |
Office |
Retail |
Total |
|
|
|
|
|
£ |
£ |
£ |
£ |
|
| Market
value as at 1 January 2015 |
|
|
|
108,660,000 |
114,265,100 |
47,125,000 |
270,050,100 |
|
| Purchase
of investment properties |
|
|
|
4,851,800 |
- |
16,590,043 |
21,441,843 |
|
| Capital
expenditure on investment properties |
|
|
|
452,089 |
137,696 |
3,327 |
593,112 |
|
|
Carrying value of disposed investment properties |
|
|
|
(3,750,000) |
(8,350,100) |
- |
(12,100,100) |
|
|
Valuation gain/(loss) from investment properties |
|
|
|
3,259,433 |
4,409,592 |
(139,503) |
7,529,522 |
|
|
Movement in lease incentives receivable |
|
|
|
40,395 |
329,295 |
(8,867) |
360,823 |
|
|
Investment properties recategorised as held for sale |
|
|
|
(8,393,717) |
(4,616,583) |
- |
(13,010,300) |
|
| Closing
market value |
|
|
|
105,120,000 |
106,175,000 |
63,570,000 |
274,865,000 |
|
|
|
|
|
|
|
|
|
|
|
Adjustment for lease incentives* |
|
|
|
(503,068) |
(1,130,062) |
(562,167) |
(2,195,297) |
|
|
Closing carrying value as at 30 June 2015 |
|
|
|
104,616,932 |
105,044,938 |
63,007,833 |
272,669,703 |
|
|
|
|
|
|
|
|
|
|
|
|
|
*Lease incentives are split between non current assets of
£2,471,229 and current liabilities of £275,932.
The valuations were performed by Jones
Lang Lasalle, an accredited independent valuer with a
recognised and relevant professional qualification and recent
experience of the location and category of the investment
properties being valued. The valuation model in accordance with
Royal Institute of Chartered Surveyors (‘RICS’) requirements on
disclosure for Regulated Purpose Valuations has been applied (RICS
Valuation – Professional Standards January
2014 published by the Royal Institution of Chartered
Surveyors). These valuation models are consistent with the
principles in IFRS 13.
The market value provided by Jones Lang
Lasalle at the period ended 30 June
2015 was £288,390,000 (30 June
2014: £178,795,000) however an adjustment has been made for
lease incentives of £2,195,297* (30 June
2014: £1,344,492) that are already accounted for as an
asset. The valuation at 30 June 2015
of £288,390,000 includes £3,725,000 in relation to Units 2001 &
2002 Coal Road in Leeds,
£4,950,000 in relation to 140 West George Street in Glasgow, £1,300,000 in relation to Portrack
Interchange in Stockton on Tees and £3,550,000 in relation to
Windsor Court and Crown Farm in
Mansfield, four investment
properties held for sale at the Balance Sheet date (see note
6).
Valuation gains and losses from investment properties are
recognised in profit and loss for the period and are attributable
to changes in unrealised gains or losses relating to investment
property (completed and under construction) held at the end of the
reporting period.
| Country |
|
|
|
UK |
UK |
UK |
|
| Class |
|
|
|
Industrial |
Office |
Retail |
Total |
|
|
|
|
£ |
£ |
£ |
£ |
| Market
value as at 1 January 2014 |
|
|
|
48,175,000 |
79,945,000 |
48,295,000 |
176,415,000 |
| Purchase
of investment properties |
|
|
|
72,084,707 |
15,097,439 |
10,671,653 |
97,853,799 |
| Capital
expenditure on investment properties |
|
|
|
29,971 |
2,779,559 |
(101,508) |
2,708,022 |
|
Carrying value of disposed investment properties |
|
|
|
(14,550,000) |
- |
(14,050,000) |
(28,600,000) |
|
Valuation gain from investment properties |
|
|
|
2,961,019 |
16,132,344 |
2,104,506 |
21,197,869 |
|
Movement in lease incentives receivable |
|
|
|
(40,697) |
310,758 |
205,349 |
475,410 |
|
Investment properties recategorised as held for sale |
|
|
|
- |
(6,550,100) |
- |
(6,550,100) |
| Closing
market value |
|
|
|
108,660,000 |
107,715,000 |
47,125,000 |
263,500,000 |
|
|
|
|
|
|
|
|
|
Adjustment for lease incentives* |
|
|
|
(462,673) |
(800,767) |
(571,033) |
(1,834,473) |
|
Adjustment for financial lease obligations |
|
|
|
- |
6,594 |
- |
6,594 |
|
Closing carrying value as at 31 December 2014 |
|
|
|
108,197,327 |
106,920,827 |
46,553,967 |
261,672,121 |
|
|
|
|
|
|
|
|
|
|
|
In the Consolidated Cash Flow Statement, proceeds from disposal
of investment properties comprise:
|
|
|
1
Jan 15 to |
1
Jan 14 to |
|
|
|
30
Jun 15 |
30
Jun 14 |
|
Carrying value of disposed investment properties |
|
|
12,100,100 |
28,600,000 |
| Loss on
disposal of investment properties |
|
|
(796,363) |
(2,032,950) |
|
Proceeds from disposal of investment properties |
|
|
11,303,737 |
26,567,050 |
|
|
|
|
|
|
|
Valuation Methodology
The fair value of completed investment properties are determined
using the income capitalisation method.
The income capitalisation method is based on capitalising the
net income stream at an appropriate yield. In establishing the net
income stream the valuer has reflected the current rent (the gross
rent) payable to lease expiry, at which point the valuer has
assumed that each unit will be re-let at their opinion of ERV. The
valuer has made allowances for voids and rent free periods where
appropriate, as well as deducting non recoverable costs where
applicable. The appropriate yield is selected on the basis of the
location of the building, its quality, tenant credit quality and
lease terms amongst other factors.
No properties have changed valuation technique since
31 December 2014.
The Company appoints a suitable valuer (such appointment is
reviewed on a periodic basis) to undertake a valuation of all the
direct real estate investments on a quarterly basis. The valuation
is undertaken in accordance with the then current RICS guidelines
and requirements as mentioned above.
The Investment Manager meets with the valuer on a quarterly
basis to ensure the valuer is aware of all relevant information for
the valuation and any change in the investment over the quarter.
The Investment Manager then reviews and discusses the draft
valuations with the valuer to ensure correct factual assumptions
are made. The valuer reports a final valuation that is then
reported to the Board.
The management group that determines the Company’s valuation
policies and procedures for property valuations is the Property
Valuation Committee. The Committee reviews the quarterly property
valuation report produced by the Valuer (or such other person as
may from time to time provide such property valuation services to
the Company) before its submission to the Board, focussing in
particular on:
- significant adjustments from the previous property valuation
report.
- reviewing the individual valuations of each property.
- compliance with applicable standards and guidelines including
those issued by RICS and the UKLA Listing Rules.
- reviewing the findings and any recommendations or statements
made by the valuer.
- considering any further matters relating to the valuation of
the properties.
The Chairman of the Committee makes a brief report of the
findings and recommendations of the Committee to the Board after
each Committee meeting. The minutes of the Committee meetings are
circulated to the Board. The Chairman submits an annual report to
the Board summarising the Committee’s activities during the year
and the related significant results and findings.
All investment properties are classified as Level 3 in the fair
value hierarchy. There were no movements between levels since
31 December 2014.
There are currently no restrictions on the realisability of
investment properties or the remittance of income and proceeds of
disposal.
The table below outlines the valuation techniques used to derive
Level 3 fair values for each class of investment properties:
- The fair value measurements at the end of the reporting
period.
- The level of the fair value hierarchy (e.g. Level 3) within
which the fair value measurements are categorised in their
entirety.
- A description of the valuation techniques applied.
- Fair value measurements, quantitative information about the
significant unobservable inputs used in the fair value
measurement.
- The inputs used in the fair value measurement, including the
ranges of rent charged to different units within the same
building.
| Country &
Class |
Fair value |
Valuation
Technique |
Key
Unobservable |
Range
(weighted average) |
|
£ |
|
input |
|
|
|
|
|
|
UK
Industrial
Level 3 |
113,010,649 |
· Income
Capitalisation |
·
Initial Yield
· Reversionary Yield
· Equivalent Yield
· Estimated rental value per Sq.m |
· 0%
to 9.01% (4.97%)
· 5.67% to 10.42% (7.25%)
· 5.67% to 8.70% (6.98%)
· £23.68 to £86.10 (£53.14) |
UK Office
Level 3 |
109,661,521 |
· Income
Capitalisation |
·
Initial Yield
· Reversionary Yield
· Equivalent Yield
· Estimated rental value per Sq.m |
· 0% to
11.05% (6.14%)
· 5.72% to 9.89% (6.83%)
· 5.34% to 9.60% (6.65%)
· £137.47 to £588.94 (£271.50) |
UK Retail
Level 3 |
63,007,833 |
· Income
Capitalisation |
·
Initial Yield
· Reversionary Yield
· Equivalent Yield
· Estimated rental value per Sq.m |
·
6.13% to 7.46% (6.59%)
· 3.97% to 7.41% (5.78%)
· 6.27% to 7.45% (6.74%)
· £76.56 to £179.90 (£141.32) |
|
285,680,003** |
|
|
|
**includes the market values of the four properties held for
sale as detailed in note 6.
Descriptions and definitions
The table above includes the following descriptions and
definitions relating to valuation techniques and key unobservable
inputs made in determining the fair values:
Estimated rental value (ERV)
The rent at which space could be let in the market conditions
prevailing at the date of valuation.
Equivalent yield
The equivalent yield is defined as the internal rate of return
of the cash flow from the property, assuming a rise to ERV at the
next review, but with no further rental growth.
Initial yield
Initial yield is the annualised rents of a property expressed as
a percentage of the property value.
Reversionary yield
Reversionary yield is the anticipated yield to which the initial
yield will rise (or fall) once the rent reaches the ERV.
The table below shows the ERV per annum, area per square foot,
average ERV per square foot, initial yield and reversionary yield
as at the Balance Sheet date.
|
30 Jun 2015 |
31
Dec 2014 |
|
£ |
£ |
| ERV
p.a. |
20,882,883 |
20,460,185 |
| Area sq.
ft. |
2,651,764 |
2,736,927 |
| Average
ERV per sq. ft. |
£7.88 |
£7.48 |
| Initial
Yield |
5.78% |
6.59% |
|
Reversionary Yield |
5.02% |
5.13% |
|
|
|
|
|
The initial yield moved inwards due to a combination of factors
which included a shift in market yield, the sale of some higher
yielding assets with short leases (income reinvested after the
period end was at yields of over 7%) and an increase in voids from
0.6% in June 2014 to 2.8%
June 2015.
Sensitivity analysis
The table below presents the sensitivity of the valuation to
changes in the most significant assumptions underlying the
valuation of completed investment property.
|
30 Jun 2015 |
31
Dec 2014 |
|
£ |
£ |
| Increase
in equivalent yield of 25 bps |
(11,000,000) |
(10,100,000) |
| Decrease
in rental rates of 5% (ERV) |
(10,300,000) |
(10,100,000) |
|
|
|
|
|
Below is a list of how the interrelationships in the sensitivity
analysis above can be explained. In both cases outlined in the
sensitivity table the estimated Fair Value would increase
(decrease) if:
- The ERV is higher (lower)
- Void periods were shorter (longer)
- The occupancy rate was higher (lower)
- Rent free periods were shorter (longer)
- The capitalisation rates were lower (higher)
6 INVESTMENT PROPERTIES HELD FOR
SALE
As at 30 June 2015 the Group had
exchanged contracts with third parties for the sale of Portrack
Interchange, Stockton for £1,300,000 excluding a rent free
reduction on the sale price and excluding related sale costs. The
part sale of Windsor Court and
Crown Farm completed on 15 July 2015
for £2,610,877 excluding costs. Units 2001 & 2002 Coal Road,
Leeds completed on 31 July 2015 for £3,830,664 excluding costs and
140 West George Street, Glasgow
completed on 10 August 2015 for
£5,525,287 excluding costs. All of these properties were being
actively marketed for sale at 30 June
2015 and meet the criteria of non current assets held for
sale at the Balance Sheet date. The independently assessed market
value of each property held for sale at 30
June 2015 is detailed below:
|
30
Jun 2015 |
31
Dec 2014 |
|
£ |
£ |
| De Ville Court |
– |
3,150,000 |
| Chancellors
Place |
– |
3,575,000 |
| Portrack
Interchange |
1,300,000 |
– |
| Windsor Court and
Crown Farm |
3,550,000 |
– |
| Units 2001 &
2002 Coal Road |
3,725,000 |
– |
| 140 West George
Street |
4,950,000 |
– |
| Less: transaction
costs |
(514,700) |
(174,900) |
| Closing Adjusted
Market Value |
13,010,300 |
6,550,100 |
|
|
|
|
|
7 INVESTMENT IS SUBSIDIARY
UNDERTAKINGS
The Company owns 100 per cent of the issued ordinary share
capital of Standard Life Investments Property Holdings Limited, a
company with limited liability incorporated and domiciled in
Guernsey, Channel Islands, whose principal business is
property investment.
The Group, through its subsidiary, owns 100 per cent of the
issued ordinary share capital of Huris (Farnborough) Limited, a
company incorporated in the Cayman
Islands whose principal business is property investment.
The Group, through its subsidiary, owns 100 per cent of the
issued ordinary share capital of HEREF Eden Main Limited, a company
incorporated in Jersey whose principal business is property
investment.
Huris (Farnborough) Limited and HEREF Eden Main Limited
generated a loss of £65,129 in the period ended 30 June 2015 as detailed in the Unaudited
Consolidated Statement of Comprehensive Income. Both companies are
shell companies which have immaterial other net assets as a result
of the transfer of investment properties owned by both companies to
Standard Life Investments Property Holdings Limited following their
acquisition in 2014. The Group intends to liquidate both companies
by the financial year ending 31 December
2015. The remaining assets of both companies total £24,810
(31 December 2014: £44,273 liability)
at the Balance Sheet date and have been included in trade and other
receivables.
8 DIVIDENDS AND PROPERTY INCOME
DISTRIBUTION GROSS OF INCOME TAX
|
30 Jun 2015 |
30
Jun 2014 |
|
£ |
£ |
| Non
Property Income Distributions |
|
|
| 1.161p
per ordinary share paid in February relating to the quarter ending
31 December 2014 (30 June 2014: 1.133p) |
2,835,350 |
1,756,085 |
| 1.161p per ordinary share paid in May relating to the
quarter ending 31 March 2014 |
– |
1,865,834 |
|
|
|
|
Property Income Distribution |
|
|
| 1.161p per ordinary share paid in May relating to the
quarter ending 31 March 2015 |
3,213,407 |
– |
|
6,048,757 |
3,621,919 |
|
|
|
|
|
On 1 January 2015 the Company
converted to a UK REIT from a Guernsey Investment Company (GIC).
The payment in February 2015 is the
dividend relating to the period prior to REIT conversion for the
quarter ending 31 December 2014 and
relates to when the Company was a GIC. The payment in May 2015 is the first property income
distribution (gross of income tax) following REIT conversion for
the quarter ending 31 March 2015.
On 21 August 2015 a property
income dividend of £3,348,175, 1.161p per ordinary share in respect
of the quarter to 30 June 2015 was
paid.
9 RECONCILIATION OF CONSOLIDATED NET
ASSET VALUE TO PUBLISHED ASSET VALUE
The net asset value attributable to ordinary shares is published
quarterly and is based on the most recent valuation of the
investment properties and calculated on a basis which adjusts the
underlying reported IFRS numbers. The adjustment made is to
include a provision for payment of a dividend in respect of the
quarter then ended.
|
30 Jun 2015 |
31
Dec 2014 |
|
Number of Shares |
Number of Shares |
| Number
of ordinary shares at the reporting date |
288,387,160 |
244,216,165 |
|
|
|
|
|
30 Jun 2015 |
31
Dec 2014 |
|
£ |
£ |
| Total
equity per consolidated financial statements |
226,400,292 |
184,367,522 |
|
|
|
|
|
Net asset value per share
78.5p 75.5p
The EPRA publishes guidelines for calculating adjusted NAV. EPRA
NAV represents the fair value of an entity’s equity on a long-term
basis. Items that EPRA considers will have no impact on the long
term, such as fair value of derivatives, are therefore
excluded.
|
|
|
|
30 Jun 2015 |
31
Dec 2014 |
|
£ |
£ |
| Total equity per
consolidated financial statements |
226,400,292 |
184,367,522 |
| Adjustments: |
|
|
| Add: fair value of
derivatives |
1,917,816 |
2,674,939 |
| Published
adjusted EPRA net asset value |
228,318,108 |
187,042,461 |
|
|
|
|
Published adjusted EPRA net asset value per share |
79.2p |
76.6p |
|
|
|
|
10 SEGMENTAL INFORMATION
The board has considered the requirements of IFRS 8 ‘operating
segments’. The board is of the view that the Group is engaged in a
single segment of business, being property investment and in one
geographical area, the United
Kingdom.
11 EVENTS AFTER THE BALANCE SHEET
DATE
Property Sales
On 15 July 2015 the Company
completed the part sale of Windsor
Court & Crown Farm, an industrial investment in Mansfield for £2.6m excluding costs.
On 31 July 2015 the Company
completed the sale of Units 2001 and 2002 Coal Road, an industrial
investment in Leeds for £3.8m
excluding costs.
On 10 August 2015 the Company
completed the sale of 140 West George Street, an office investment
in Glasgow for £5.5m excluding
costs.
Property Purchases
On 23 July 2015 the Company
completed the purchase of a retail investment in Bradford for £5.1m excluding costs.
On 24 July 2015 the Company
completed the purchase of an office portfolio of 3 properties for
£13.25m excluding costs.
On 5 August 2015 the Company
completed the purchase of an office investment in Kiddlington for
£4.8m excluding costs.
On 7 August 2015 the Company
completed the purchase of an industrial investment in Fareham for
£3.1m excluding costs.
Shares and Dividends
On 21 August 2015 a property
income dividend gross of income tax of £3,348,175 in respect of the
quarter to 30 June 2015 was paid.
End of Notes to the Unaudited
Consolidated Financial Statements for the period ended 30 June 2015.
DIRECTORS AND COMPANY INFORMATION
Directors
Richard Arthur Barfield (Chairman)
1
Sally-Ann Farnon 2
Huw Griffith Evans 3
Robert Peto 4
Registered Office
PO Box 255
Trafalgar Court
Les Banques
St. Peter Port
Guernsey GY1 3QL
Registered Number
41352
Administrator & Secretary
Northern Trust International Fund Administration
Services (Guernsey) Limited
PO Box 255
Trafalgar Court
Les Banques
St. Peter Port
Guernsey GY1 3QL
Registrar
Computershare Investor Services (Guernsey) Limited
Le Truchot
St. Peter Port
Guernsey GY1 1WD
Computershare Investor helpline: 0870 707 4040
Investment Manager
Standard Life Investments (Corporate Funds) Limited
1 George Street
Edinburgh EH2 2LL
Telephone: 0845 60 60 062
Independent Auditors
Ernst & Young LLP
Royal Chambers
St Julian’s Avenue
St Peter Port
Guernsey GY1 4AF
Solicitors
Dickson Minto W.S.
16 Charlotte Square
Edinburgh EH2 4DF
Mourant Ozannes
PO Box 186
1 Le Marchant Street
St Peter Port
Guernsey GY1 4HP
Broker
Winterflood Securities Limited
The Atrium Building
Cannon Bridge
25 Dowgate Hill
London EC4R 2GA
Principal Bankers
The Royal Bank of Scotland plc
135 Bishopsgate
London EC2M 3UR
Property Valuers
Jones Lang LaSalle Limited
22 Hanover Square
London W1A 2BN
Depositary
Citibank International plc
Canada Square
London E14 5LB
1 Chairman of the Nomination Committee
2 Chairman of the Audit Committee and Senior Independent
Director
3 Chairman of the Remuneration Committee and Management Engagement
Committee
4 Chairman of the Property Valuation Committee
Additional Notes to the Interim Financial Report
The Interim Report and Condensed Financial Statements for the
period from 1 January 2015 to
30 June 2015 will shortly be
available for download 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.
All enquiries 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 Baggaley
Standard Life Investments Limited
Tel: 0131 245 2833
END