TIDMTRY
RNS Number : 0684V
TR Property Investment Trust PLC
28 November 2019
The following amendment has been made to the "Half-year Report"
announcement released on 28/11/2019 at 7:00am under RNS No
9066U.
The original RNS stated in the Chairman's Statement that the
discount of the share price to the Net Asset Value reduced over the
period from 5.3% to 4.8%. This has now been corrected to 5.9% to
4.8%.
The following sentence has also been removed from the Chairman's
Statement: '*Share price discount to capital only NAV.'
All other details remain unchanged. The full amended
announcement is set out below.
This announcement and the information contained herein is not
for publication, distribution or release in, or into, directly or
indirectly, the United States, Canada, Australia or Japan.
TR PROPERTY INVESTMENT TRUST PLC
Financial Report for the half year ended 30 September 2019
28 November 2019
Financial Highlights and Performance
At 30 September At 31 March
2019
2019 (Audited) %
(Unaudited) Change
Balance Sheet
Net asset value per share 445.12p 418.54p +6.4
Shareholders' funds (GBP'000) 1,412,577 1,328,254 +6.4
Shares in issue at the end
of the period (m) 317.4 317.4 +0.0
Net debt(1) 11.4% 10.0%
Share Price
Share price 423.50p 394.00p +7.5
Market capitalisation GBP1,344m GBP1,250m +7.5
Half year Half year
ended ended
30 September 30 September
2019 (Unaudited) 2018 (Unaudited) %
Change
Revenue and dividends
Revenue earnings per share 9.96 p 9.25p +7.7
Interim dividend per share 5.20p 4.90p +6.1
Half year
ended
30 September Year ended
2019 (Unaudited)
31 March
2019
(Audited)
Performance: Assets and Benchmark
Net Asset Value total return(2) +8.5% +9.1%
Benchmark total return +6.7% +5.6%
Share price total return(3) +9.7% +6.2%
Ongoing Charges
Including performance fee +0.76% +1.10%
Excluding performance fee +0.61% +0.63%
Excluding performance fee
and direct property costs +0.59% +0.61%
1. Net debt is the total value of loan notes and loans
(including notional exposure to CFDs) less cash as a proportion of
net asset value.
2. The NAV Total Return for the year is calculated by
reinvesting the dividends in the assets of the Company from the
relevant ex-dividend date. Dividends are deemed to be reinvested on
the ex-dividend date as this is the protocol used by the Company's
benchmark and other indices.
3. The Share Price Total Return is calculated by reinvesting the
dividends in the shares of the Company from the relevant
ex-dividend date.
4. Ongoing Charges are calculated in accordance with the AIC
methodology. The ratio for 30 September 2019 is based on forecast
expenses and charges for the year ending 31 March 2020. The
performance fee included in the calculation above is the provision
at 30 September 2019 referred to in note 2 rather than an estimate
of the fee at the year end.
5. Considered to be an Alternative Performance Measure as
defined in the full Interim Report.
Dividend
An interim dividend of 5.20p (2018: 4.90p) will be paid on 7
January 2020 to shareholders on the register on 6 December 2019.
The shares will be quoted ex-dividend on 5 December 2019.
Chairman's Statement
Introduction
For the six months to 30th September, the Trust delivered a
robust NAV total return of 8.5% which was ahead of the benchmark
total return of 6.7%. The share price total return was larger at
9.7% as the Trust's shares traded close to, and occasionally at a
premium to, the net asset value.
This performance was achieved against a backdrop of weakening
confidence in the prospects for further growth in the current
global economic cycle. Importantly, central banks around the world
including the U.S. Federal Reserve, remain determined to offer
support through further easing in monetary policy. At the end of
October the Fed announced a further 25bp cut bringing the mid cycle
rate reduction to 75bps. In Europe, the European Central Bank cut
rates and announced a resumption of bond buying. Such activity
continues to help reduce the cost of borrowing and this in turn
supports asset values. In these circumstances real estate remains a
firm beneficiary.
Investors have had to wrestle with gauging the impact of the
political uncertainty in the UK and Europe. Capital expenditure and
investment decisions by corporates alongside spending by consumers
have all suffered from deferral. Unsurprisingly, demand for
logistics and warehousing remains very strong. Businesses continue
to stockpile and retail property continues to suffer from the
adversities of this consumption slowdown, combined with the
political uncertainty as well as the relentless move to online
shopping. The surprise has been the robust demand for office space
in London, although flexibility has become paramount. Meanwhile
Continental Europe's dominant cities are also in good health with
rental growth still evident.
Earnings from our companies have continued to show steady growth
and outside of the retail sector, management teams remain confident
of the return prospects for their businesses.
Revenue Results and Dividend
The half year earnings of 9.96p are 7.7% ahead of the earnings
at the prior year first half reflecting the growth referred to
above assisted marginally by currency and a lower tax charge.
The Board has announced an interim dividend of 5.20p just over
6% ahead of the prior year interim dividend of 4.90p.
Revenue Outlook
Although our manager is confident of the continued earnings
prospects for the companies we invest in, the uncertainties ahead
and in particular the potential impact on Sterling, make it
difficult to predict the full year outcome. The interim earnings
typically represent around 65% of our full year earnings, but it is
quite possible that significant currency fluctuations and changes
in the portfolio could still have a material impact on our revenue
for the full year.
Net Debt and Currencies
The level of gearing closed the half year at 11.4%. The gearing
increased from 10.0% reported at the March year end, to around
13.5% through July and August, and has been reduced again towards
the end of September. This reflects the sale of a directly owned
property close to the half year and also a tactical response to the
strong rally in UK names over the summer. Currency exposure in
respect of the capital account (as opposed to the income account
referred to above) is maintained in line with the benchmark.
Therefore, the valuation of a significant proportion of the
portfolio which is denominated in currencies other than Sterling,
will increase if Sterling weakens and vice versa if the currency
strengthens.
Discount and Share Repurchases
The discount of the share price to the Net Asset Value reduced
over the period from 5.9% to 4.8%. There were some fluctuations
over the period with the shares standing at a small premium at
times. There were no share repurchases in the half year period.
The website (www.trproperty.com) provides current and background
data on the Trust including an informative monthly fact sheet
prepared by the Manager alongside the Annual and Interim
Reports.
Board Changes
I am delighted to report the appointment of Kate Bolsover to the
Board with effect from 1st October. Kate brings a wealth of
experience, which has further strengthened the Board. She was
managing director of the mutual fund business at JP Morgan Cazenove
and more recently has held a range of board positions including
both chair and senior independent director of several investment
trusts.
Awards
The Trust recently won the Property category in the AJ Bell Fund
& Investment Trust Awards 2019.
Outlook
The themes of weakening global growth leading to central bank's
monetary stimulus are clear. It is somewhat less clear what the
outcomes will be to major geo-political and economic events such as
the US/China trade tensions, the recently announced UK General
Election and presumed subsequent withdrawal from the European
Union.
However, a decade of ultra low interest rates and a reluctance
of governments and corporates to drive capital investment has
resulted in strengthened balance sheets but left the world awash
with both capital (savings) seeking investment and income. We
therefore find ourselves in the peculiar situation with strong
demand for high quality commercial property even at record low
yields, but with banks remaining unwilling to finance speculative
development. The result has been steady asset values (outside of
retail) coupled with little evidence of over development.
Looking forward our managers remain ever vigilant about tenant
quality and credit risk so that we focus on secure and stable
earnings. Low (or even negative) interest rates will support asset
prices but, as we are seeing every day in the retail sector,
collapsing tenant demand, falling rents and corporate
restructurings quickly equates to dramatic valuation falls.
Businesses and consumers across Continental Europe and the UK
have endured three years of political uncertainty and referencing
that fact has been a staple part of this outlook over that period.
I offer no predictions of the political process or outcomes but I
would remind investors that TR Property is truly pan-European in
portfolio construction, currency exposure and its ability to seek
out real estate opportunities.
Hugh Seaborn
Chairman
27 November 2019
Directors' Responsibility Statement
The Directors acknowledge responsibility for the interim results
and approve this Half-Yearly Financial Report. The principal risks
facing the Company are substantially unchanged since the date of
the Annual Report for the year ended 31 March 2019 and continue to
be as set out in that report.
The Directors of TR Property Investment Trust plc confirm that
to the best of their knowledge:
(a) the Half-Yearly Financial Statements have been prepared in
accordance with IAS34 as adopted by the European Union and give a
true and fair view of the assets, liabilities, financial position
and profit for the period of the Group as required by the
Disclosure Guidance and Transparency Rules ('DTR') 4.2.4R;
(b) the Chairman's Statement together with the following
Manager's Report includes a fair review of the information required
by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the
remaining six months of the year); and
(c) the report includes a fair review of the information required by DTR 4.2.8R.
Approved by the Board on 27 November 2019 and signed on its
behalf by Hugh Seaborn, Chairman
Manager's Report
Performance
The Net Asset Value total return for the six months was 8.5%,
ahead of the benchmark total return at 6.7%. Continental property
companies returned 5.4% (in local currency terms) again
outperforming their UK counterparts (+4.3%) but, unlike the last
four half year reporting periods, this time the difference was much
more marginal. However, when viewed in GBP, the Continental returns
were once again more substantial at 8.3% due to further GBP
weakness.
Whilst the overall property indices travelled in a tight band
over the period, at the sector and country level there were large
dispersions of returns. The slow 'car crash' of retail property
values continued to be evidenced in the interim results of
companies such as Hammerson, Intu and Capital & Regional. Share
prices have disconnected from underlying asset values given how
hard it is to assess value accurately. The twin evils of too much
leverage and weakening earnings continue to keep investors away.
The Trust has very modest exposure to UK retail (less than 3.5% of
NAV) and importantly nearly half of that is through Supermarket
Income REIT. This company was the only UK retail name to have
positive performance in the period and this helped drive our
relative outperformance in this sector. Post the half year the
company successfully raised capital and now trades at a premium to
its asset value.
German residential has been a mainstay of performance in the
fund for many years. In the Annual Report, I highlighted the
concerns around the risk of the State of Berlin seeking to impose
(in contradiction of federal practice) rent freezes and aggressive
restrictions on indexation. These new rules ('Mietendeckel') look
likely to become law in November, although the devil is always in
the detail. Investors also worry that there could be contagion of
this type of legislation to other regions. We do not agree with
that premise and have maintained our non-Berlin exposure. It is
important to note that our German-wide (ex Berlin) exposure
(through Vonovia and LEG) is far greater than our investment in
that one city.
Our loosely termed 'alternatives' group which includes student
accommodation, self-storage and healthcare, all performed well and
each sub-sector contributed strongly to performance - both absolute
and relative. I have highlighted in the past our index-linked, long
income exposure which overlaps with this group, particularly in
healthcare and we saw strong returns there as these businesses
benefited from the drop in the cost of long term financing.
This theme of 'lower for longer' debt cost resonated strongly in
Sweden. Swedish property companies, with just one exception, have
greater than average gearing coupled with higher proportions of
short term debt. The combination of a falling cost of debt
environment, coupled with rental growth at the asset level has led
to very strong performances from many of these companies.
Switzerland, a market where we see little organic growth,
benefited from being a safe haven in these volatile times. Swiss
investors also sought exposure to their domestic currency and
property names yielding 3% to 4% look attractive regardless of the
medium term fundamentals.
The industrial and logistics overweight remains a key theme in
the portfolio. Not only did we experience strong organic growth
from all our companies (particularly those with development
opportunities) but we benefited from corporate activity as well. In
May, Londonmetric announced the agreed takeover of A&J Mucklow,
the specialist Midlands industrial owner and developer. The Trust
owned 5% of Mucklow. We opted for shares (rather than cash) in
Londonmetric as we are firm advocates of the management team and
the opportunities afforded in the merged vehicle.
Office markets across Europe continue to see rental growth. Our
overweight to Paris (Gecina, Covivio) and Stockholm (Fabege,
Kungsladen) added to performance but our underweight to Madrid and
Barcelona proved costly. Whilst we are very positive about the
outlook for both Spanish cities we focused our exposure through
Arima, the new vehicle of the Axiara management team. Axiara was
sold to Colonial in 2018 and was a successful investment for the
Trust. We are confident that they have invested the proceeds of the
IPO well but it will take time for the returns to materialise.
Central London's solid performance remains a conundrum and is
reviewed later in this report. Our overweight to decentralised
South East offices versus our underweight to Central London proved
a poor decision. However, I am confident that that has more to do
with illiquidity in the smaller companies which provide us with
that exposure, McKay Securities and CLS Holdings, than the health
of the underlying markets. In fact their relative undervaluation
provides an ongoing investment opportunity.
Offices
The resilience of the London office market in terms of both
rents and capital value stability continues to surprise us. Demand
remains broad based, particularly across tech and media industries.
Companies are happy to pay for quality and the premium rents
achieved on Grade A (new and refurbished) space have persisted. In
fact, the drought of new space has driven pre-lets (advance
commitments) to record levels. Investment appetite is driven by
expectations of sustainable rents with future growth prospects. As
a consequence investors remain active buyers. The difference
between 2018 and 2019 has been the resurgence of domestic interest
particularly in the City. However, the Brexit 'drag' has pulled
investment volumes lower with Savills year to date estimates of
GBP4.9bn in the City and GBP2.8bn in the West End both c50% below
the five year average.
The rise of the flexible office provider remains a key topic,
not least because of the travails of WeWork. Our view is that the
flexible space market share (currently c5% of floorspace in Central
London) will continue to grow. Tenants want the convenience and
tenure flex and are prepared to pay for it. WeWork has led the
space absorption charge, doubling its footprint each year since
2016. They are not alone and the difficulty for market observers is
getting a handle on the underlying occupancy of these types of
operators. WeWork et al will quickly cease acquiring space if they
cannot fill or make money from their current estates. We remain
cautious.
The picture across the largest cities in Continental Europe has
been similar but with particular strength in Paris, Amsterdam,
Madrid and Barcelona. Paris has year to date capital growth of 15%
in core CBD and even higher figures in some peripheral markets.
Underlying this is year on year rental growth of 5% to 7% across
all the Paris sub-markets. In Spain, CBRE reported the fastest take
up in Q3 for over 12 years. Vacancy has fallen a full percent to
8.7% in a year and prime rents reached EUR35.5 per sq m/per month
(+7.6% year on year). Rents have been stable in the big six German
cities with Berlin again reporting best in class growth.
Investment volumes in Paris have been lower than last year (but
that period was buoyed by the Terreis EUR1.4bn transaction).
Germany, Spain and Scandinavia all continue to attract global
capital however the Netherlands (-34%) and Ireland (-17%) both saw
falls in investment volumes between H1 2018 and H1 2019 according
to CBRE.
Retail
Retail property of all types (with the exception of well let
supermarkets) across Europe continue to suffer value degradation to
varying degrees. Matters remain most acute in the UK. The period
saw a number of high profile CVAs (company voluntary arrangements)
including the long anticipated Debenhams and Arcadia. The CVAs
provided a 'stay of execution' for both retailers with store
closures and large rent reductions but neither retailer's future is
assured. The twin headwinds of the online challenge and high
property taxes (rates) continue to batter the profitability of all
but best in class retailers. Overall, vacancy in UK retail reached
13%, the correction towards sustainable rental levels remains work
in progress. With concerns over the quality and depth of cashflow,
investors have not returned. Shopping centre transaction volumes
will be lower in 2019 than they were in 2018 which itself was a
previous record. The largest transaction was the sale by Intu of
its Derby centre. However, the buyer receives a priority income
stream and, therefore, the vendor was left with significant capital
risk if the rental income falls. A desperate transaction from the
seller's point of view. We expect Intu will be forced to raise
capital as its balance sheet deteriorates.
Whilst we have seen a number of retailer failures across
Continental Europe, particularly in the Netherlands, compared to
the UK numbers these have been modest. European retail rents are
generally much closer to sustainable levels. Whilst we see weakness
in headline rents, it is not on the scale of the UK. The market
share of online purchases is currently far lower than the UK but
investors expect the trend to online to accelerate as next day
delivery becomes more standard. It is no surprise that retail
investment has fallen 22% between H1 2018 and H1 2019 according to
CBRE. Spain, which has seen strong employment and wage growth was
the only country where investment volumes rose.
Distribution and Industrial
Occupier demand has remained robust in the UK even in the face
of the supply chain uncertainty surrounding Brexit. The first nine
months of 2019 saw take up reach 19.7m sq ft, just 10% down on last
year. DTRE, predicts that full year lease up will match the five
year average of 28m sq ft. Whilst this may only be matching the
average, these are huge numbers and reflect the scale of growth in
this key market. The supply response has been forthcoming and we
predict little rental growth in certain regions such as the East
Midlands where new supply is more than matching demand. Much hinges
on the Brexit outcome for this type of real estate. We continue to
favour the smaller, urban and suburban markets as opposed to the
larger 'big boxes'. Yields have stopped falling for this latter
group. However, the medium term outlook remains positive with the
ONS reporting that online retail accounted for 18% of total retail
sales in 2018. Forrester's (a research and consulting group)
forecast that it will reach 25% by 2023.
Continental Europe is a different story with Western Europe
averaging 10.2% but just 5% in Spain and Italy. With a relatively
nascent big box market, yields have historically been much higher
than the UK. We are confident that yield compression will remain an
attractive feature of almost all these markets. CBRE estimate that
EUR32bn of capital flowed into this subsector in the year to June
2019, a sum only just eclipsed by the same period a year earlier.
This year will exceed the 10 year average and this figure excludes
the largest single property transaction, Logicor, which alone
accounts for EUR12.2bn of logistics assets across Europe. The money
is following the rental growth. Spain saw prime logistics rents
rise 4% in H1 2019. In Dublin, the figure was 5%. Vacancy stands at
less than 5% in Germany, Sweden, Ireland and the Czech
Republic.
Analysis by Savills assessed the attractiveness of 32 European
countries across 23 different metrics. One of the conclusions
identified was the tipping point for rapid growth in ecommerce
logistics. Once online retail sales exceeded 11% of all sales,
there was a step change in logistics demand.
Residential
The private rental sector continues to flourish with demand
continuing to outstrip supply. The risk is not economic but
political. As detailed earlier, Berlin is experiencing an extreme
form of state intervention. Our view remains that the unique
history of this city, coupled with the unusual political structure
where the city and the state of Berlin are effectively one, makes
the likelihood of contagion to other German residential markets
low.
However, the speed of market driven rental growth and the social
sensitivity of this particular sector means that we must have a
constant eye on the risk of state intervention across Europe. We
remain more attracted to markets where there are already state
restrictions as this ensures that book values remain below rebuild
cost. The key is to ensure that the rent restrictions allow for
indexation and this makes these income streams very attractive. We
continue to favour Germany (ex-Berlin), Ireland and Sweden,
although the Swedish residential names have become expensive and we
have recently reduced exposure to those.
Alternatives
As mentioned earlier this group is now a core part of the
portfolio. Unite's purchase of Liberty Living was welcomed by the
market (us included). In fact, the Trust had committed to being a
cornerstone investor when the previous owners had considered
floating the business in 2015. Given the investor demand for this
asset class, we would expect more portfolios to seek a listing.
Healthcare remains popular, particularly where investors are
comfortable with the underlying tenant risk, and we have seen
strong performance from Assura and PHP with their direct
relationships with state healthcare bodies in the UK and Ireland.
The elderly care providers have seen more modest returns due to
concerns over certain operators' financial strength but it was good
to see Target Healthcare (a stock we hold) raise GBP80m in May.
Self-storage has also been a strong performer and we see an
increase in the use of short-term storage by commercial users. The
weakening in the London housing market has also enabled both Big
Yellow and Safestore to acquire sites which might have previously
been outbid by residential operators.
Debt and Equity Capital Markets
Refinancing and securing record low costs of debt remains a
popular activity for CFOs across the listed property sector. EPRA
recorded GBP12.6bn of debt raised in the period under review and
GBP15.3bn in the calendar year to date. This is a slightly lower
run rate than previous years but that is to be expected given how
much debt has been refinanced at these very low levels over the
last few years. We do continue to see record low costs of debt
being secured. By way of example, in October,
Unibail-Rodamco-Westfield priced a EUR750m 12-year bond at a fixed
annual coupon of 0.875%.
There were no IPOs in the period, however, we saw GBP3.7bn of
follow on capital raisings. These were dominated by businesses
raising capital to make corporate acquisitions. These included
Vonovia raising EUR744m to aid its acquisition of Victoria Park in
Sweden and Unite (GBP290m) to aid the purchase of Liberty Living.
Aedifica, the healthcare operator raised EUR600m to acquire a UK
portfolio (GBP450m) and aid expansion.
Aroundtown, the aggressively expanding German commercial and
residential investor, was the most prolific issuer of debt, raising
a total of EUR3.0bn in a mix of straight bonds, senior unsecured
and perpetual subordinated notes.
Property Shares
Property equity markets moved broadly sideways until late July
when the background (rumbling) noise of the Brexit debacle once
again rose in volume and pitch, driving investors away from UK
domestic stocks. Property companies are a disproportionately large
component of UK domestic 'baskets' due to their high level of GBP
earnings. UK property names which had been weakening over the
summer fell by 7.5% in the first two weeks of August. What was
almost more surprising was the subsequent rally which ran from 15th
August to 30th September adding 12.4% as investors changed their
views entirely with the incoming Prime Minister appearing to be
more determined than ever to drive matters to a conclusion, albeit
an unknown one. Broader markets also saw a strong style rotation
from 'growth' to 'value' and property names - seen as value plays -
were a beneficiary.
Once again the central banks have played a leading role in
investor behaviour. ECB President Draghi delivered his parting
shot, another rate cut and a renewed bond buying programme. More QE
saw the 10-year Bund yield fall to -0.6% at the end of September.
Property values with their long duration income profiles benefit
from these further falls in the cost of long-term financing.
Against this benign backdrop of positive macro policies, there
was a broad dispersion of fundamental real estate factors driving
performance at the sector and company level. The issues surrounding
retail property require no introduction. I have highlighted in
previous reports the differential in characteristics between UK
retail property and its Continental counterparts. These differences
particularly around greater affordability across Europe continue to
dominate. The essence is that the UK has a triple whammy of higher
rents, much higher property taxes (rates) and greater online
penetration. This continued to be reflected in the performance of
the respective retail landlords. The worst performing Continental
business, Vastned Retail, returned -15.6% versus -58.4% for Intu
and -19.6% for Capital & Regional. Klepierre returned +3.5%
whilst Hammerson returned -11.3%. The pattern of performance is
clear.
As mentioned in the summary, German residential has been a
stalwart sector for many years, growing in importance through
capital increases and M&A driven by excellent returns. The
Berlin political situation - which remains unresolved - rocked
investor confidence. There are three listed companies with high
exposure to the Berlin residential market, the largest Deutsche
Wohnen returned -20.6% and the smallest, Phoenix Spree -16.6%. We
are exposed to both these businesses but not ADO Properties which
returned -23.9%. These figures are all very disappointing but it is
worth reminding investors that the vast bulk of our German
residential exposure is through LEG (-0.9%) and Vonovia (+3.8%).
The weak returns from these stalwarts, who own thousands of
apartments across the whole of Germany, points to investors'
concerns. Nevertheless, their relative outperformance of the Berlin
names illustrates how investors see little chance of contagion from
the Berlin political process.
Scandinavia and Sweden in particular were strong performers in
the period. Almost all Nordic property companies operate with
higher leverage and shorter duration debt structures than the
average pan European property company. The consequence of the
dovish response by the Riksbank (mirroring the ECB) was to
supercharge earnings expectations and total returns with the
Swedish element of the benchmark returning 20.2% in the six months.
Residential names performed particularly well with Balder +25.1%
and Kojamo of Finland returning a hugely impressive 40%. Not only
have the underlying residential letting markets remained strong but
corporate activity provided reinforcing datapoints. Vovonia
acquired 61% of Hembla in a EUR1.1bn transaction adding to this
giant residential investor's expansion outside of Germany.
The industrial/logistics markets across Europe remain top of
investors shopping lists with all of our companies in this
preferred sector beating the benchmark. Standout performances came
from Catena (+28.4%) and WDP (+22.0%). In the UK, we saw strong
performances on the back of corporate activity with Londonmetric
acquiring A&J Mucklow in a part paper/part cash GBP415m deal.
The Trust owned 5% of Mucklow and enjoyed a tremendous return of
27.5% in the period with the transaction completing at the end of
June. Londonmetric has been a key holding for many years and we
welcome the increased scale together with the opportunities offered
by Mucklow's West Midlands assets.
Swiss property stocks draw investors in volatile times. The
uncertainty surrounding the global outlook as well as the ongoing
local issues in Europe resulted in the Swiss property companies
collectively returning +15% (in CHF) in the six months to
September.
Investment Activity
Turnover (purchases and sales divided by two) totalled GBP157.8m
equating to 12.0% of the average net assets over the period. This
compares to GBP122.7m in the same period last year and GBP138.8m
for the previous year. The increase compared to previous periods
reflects, in part, the block disposals following the privatisations
of Telford Homes (acquired in July by Trammel Crow part of the CBRE
group) and Green REIT (acquired in September by US private equity
Henderson Park).
Corporate activity has been a strong feature of the period as
noted earlier. Much more commercial property is owned privately
than publicly and, if public markets are going to insist on valuing
companies significantly below asset value, then private capital
will step in. Green REIT is a case in point, where the stock traded
between EUR1.30 and EUR1.60 per share for 4 years prior to the
Board announcing their intention to sell the business. The eventual
sale price was EUR1.94 per share.
In the logistics space, I reduced exposure to the UK names
particularly those with the greatest 'big box' exposure as share
prices moved to premiums to net asset values. I remain positive
about the prospects for the sector, particularly those with
development programmes in densely populated markets. I increased
our Continental European positions (Argan, Catena, VIB, Montea,
WDP) where all our positions have significant landbanks and where
we anticipate further yield tightening (capital values rising) just
as we have experienced in the UK.
As noted earlier, the vast majority of our German residential
exposure is outside of Berlin and this will remain the case as we
continue to absorb the impact of this historic state intervention
freezing rents for five years. I have, though, increased our
exposure to German commercial property through adding to VIB
Vermoegen (industrial), Sirius and CLS (offices) and Aroundtown
(all sectors). The latter has just agreed non-binding terms to
acquire a smaller competitor, TLG. The twist in this particularly
opaque saga is that TLG had already bought / committed to acquire,
for cash, up to 15% of Aroundtown owned by the founder, Yakir
Gabay. This represents 2/3 of his holding and TLG paid a hefty
premium to the share price. Minority shareholders will need to be
able to rely on a strong supervisory board going forward. Not as
easy as it sounds.
Revenue and Revenue Outlook
Earnings for the first half of the year increased by 7.7% over
the prior year first half to 9.96p per share. This reflected the
underlying earnings growth we have seen from our portfolio with a
little help from weakening sterling and a lower tax charge. Some
modest successes in reclaiming withholding tax together with
beneficial withholding tax rates on some of the dividends received
in the first half maintained the effective tax rate to around
10.5%, in line with the prior year. The prior year tax charge had
benefitted from some more significant withholding tax reclaims and
we anticipate a slightly higher effective tax rate in the second
half.
The fortunes of sterling remain a significant unknown with the
potential for change in either direction. Although 68% of our
projected non-sterling income has already been collected, foreign
exchange movements could still have a significant impact on the
revenue account. Another material factor will be the positioning of
the portfolio through the second half as we take into account
political events. This may also lead to a change in the gearing
levels which will have an impact upon the revenue account.
Gearing and Debt
Gearing at the end of September was modestly higher than at the
year-end, although this disguises activity in-between. Corporate
transactions delivered cash just ahead of the year end and, as I
wrote the Annual Report in May, this had not been re-invested given
the uncertain political outlook. Net investment increased over the
early part of summer with gearing moving from 10.0% to around 13.5%
but then was pulled back again towards the end of the period in
response to the dramatic rally in UK names from mid-August.
Essentially, I have been taking profits in the UK larger cap names
and reduced London exposure as share prices return to
pre-Referendum levels and the gearing level has ended the period at
just over 11%.
At the time of writing, we have just entered into a new loan
agreement with ICBC for a facility of GBP20m. This addition
diversifies our borrowing relationships, which we are always keen
to do, and gives us the capacity to effect gearing towards the
upper limit of our guidelines if deemed advantageous.
Direct Physical Portfolio
The physical property portfolio produced a total return of 1.2%
for the 6 months comprising a capital return of -0.5% and an income
return of 1.7%.
At the end of the period, Field House, Harlow was sold for
GBP10.5m, 3% ahead of book cost after all fees and rental top ups.
The price reflected a net initial yield of 7.7% and a capital value
of GBP170 per sq. ft and comes at the end of an intensive period of
asset management. We successfully completed the rent review of Teva
(the principal tenant) together with the letting of the vacant 1st
floor suite at a new record rent for the building.
Over the summer at The Colonnades in Bayswater, we completed the
separation and refurbishment/extension for the old public house and
flat above. We have created a modern, fully furnished 3 bed, 3 bath
flat with its own direct access. Previously, redundant space has
been incorporated to provide a cinema room. The property is on the
market to sell with a new long lease and early interest has been
positive. These works also included the external recladding of the
pub and we hope to find a new operator shortly.
The planning application for the redevelopment of our industrial
estate in Wandsworth remains with the Council for determination but
we are informed that it will go to the planning committee before
the Christmas break. The length of time it has taken to reach this
point in the planning application process (over a year) reflects
not only the scheme's size and complexity, but also how stretched
local authority planning teams are.
Outlook
The ongoing Brexit saga continues to dominate the outlook.
However, the country does appear to be inching towards an outcome
after three years of negotiation and Parliamentary stalemate.
Clarity will result in the release of pent up investment decisions.
This will aid property values as both tenants and investors commit
to transactions. Beyond that potential short term bounce, we remain
focused on the longer-term sector-focused dynamics which are
broadly the same as they were six months or a year ago. Retail
property (particularly in the UK) remains of deep concern. The
flipside of that coin - logistics - the reverse. However, equity
markets are now up with events with deep discounts applied to
retail names and premiums for logistics businesses. The largest
city office markets across Europe are set fair with few exhibiting
over supply. The private residential sector is also robust with
wage growth ensuring affordability, although the pace of rental
growth is a growing concern and (further) direct intervention (as
seen in Berlin), whilst unlikely, cannot be ruled out. The reality
of the situation is the acute shortage of accommodation as these
key cities grow and more rural areas
depopulate.
Underpinning all this commentary at the sector level is the
response of the central banks. Inflation expectations in the
Eurozone, a metric closely watched by the ECB's governing council,
fell to an all-time low in early October. The 'five-year, five year
inflation forward' which measures how much annual inflation markets
are pricing in starting in five years' time sank below 1.1%. With
this low level of inflation expectation, interest rates will remain
lower for longer and the hunt for income and yield is set to
continue. Real assets remain a good source of that income. The key
is in the assessment of that income quality.
Marcus Phayre-Mudge
Fund Manager
27 November 2019
GROUP STATEMENT OF COMPREHENSIVE INCOME
for the half year ended 30 September 2019
(Unaudited) (Unaudited) (Audited)
Half year ended Half year ended Year ended
30 September 2019 30 September 2018 31 March 2019
Revenue Capital Revenue Capital Revenue Capital
Return Return Total Return Return Total Return Return Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income
Investment
income 31,141 - 31,141 30,130 - 30,130 44,771 - 44,771
Other operating
income 13 - 13 11 - 11 674 - 674
Gross rental
income 1,763 - 1,763 1,789 - 1,789 3,659 - 3,659
Service charge
income 1,039 - 1,039 928 - 928 1,608 - 1,608
Gains on
investments
held at fair
value - 79,313 79,313 - 66,774 66,774 - 96,594 96,594
Net movement
on foreign
exchange;
investments
and loan
notes - 6,881 6,881 - 1,491 1,491 - (1,463) (1,463)
Net movement
on foreign
exchange;
cash and
cash equivalents - (41) (41) - 1,320 1,320 - (508) (508)
Net returns
on contracts
for difference 4,365 (2,174) 2,191 3,038 (2,812) 226 6,469 (18,380) (11,911)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Total income 38,321 83,979 122,300 35,896 66,773 102,669 57,181 76,243 133,424
_____ _____ _____ _____ _____ _____ _____ _____ _____
Expenses
Management
and performance
fees (note
2) (769) (4,390) (5,159) (760) (4,650) (5,410) (1,514) (10,653) (12,167)
Direct property
expenses,
rent payable
and service
charge costs (1,168) - (1,168) (1,007) - (1, 007) (1,940) - (1,940)
Other administrative
expenses (625) (302) (927) (604) (275) (879) (1,271) (564) (1,835)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Total operating
expenses (2,562) (4,692) (7,254) (2,371) (4,925) (7,296) (4,725) (11,217) (15,942)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Operating
profit 35,759 79,287 115,046 33,525 61,848 95,373 52,456 65,026 117,482
Finance costs (412) (1,236) (1,648) (405) (1,215) (1, 620) (851) (2,554) (3,405)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Profit from
operations
before tax 35,347 78,051 113,398 33,120 60,633 93,753 51,605 62,472 114,077
Taxation (3,737) 1,954 (1,783) (3,783) 1,962 (1,821) (5,351) 3,479 (1,872)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Total comprehensive
income 31,610 80,005 111,615 29,337 62,595 91,932 46,254 65,951 112,205
_____ _____ _____ _____ _____ _____ _____ _____ _____
Earnings
per Ordinary
share
(note 3) 9.96p 25.21p 35.17p 9.25p 19.72p 28.97p 14.58p 20.78 35.36p
The total column of this statement represents the Group's
Statement of Comprehensive Income, prepared in accordance with
IFRS. The revenue return and capital return columns are
supplementary to this and are prepared under guidance published by
the Association of Investment Companies. All items in the above
statement derive from continuing operations.
The Group does not have any other income or expense that is not
included in the above statement, therefore 'Total Comprehensive
Income' is also the profit for the period.
All income is attributable to the shareholders of the parent
company.
The final Ordinary dividend of 8.60p (2018: 7.55p) in respect of
the year ended 31 March 2019 was declared on 30 May 2019 (2018: 31
May 2018) and was paid on 30 July 2019 (2018: 31 July 2018). This
can be found in the Group Statement of Changes in Equity for the
half year ended 30 September 2019.
The interim Ordinary dividend of 5.20p (2019: 4.90p) in respect
of the year ended 31 March 2020 was declared on 28 November 2019
(2019: 22 November 2018) and will be paid on 7 January 2020 (2019:
2 January 2019).
GROUP AND COMPANY STATEMENT OF CHANGES IN EQUITY
Share Share Capital Retained
Capital Premium Redemption Earnings
For the half year ended Ordinary Account Reserve Ordinary Total
30 September 2019 (Unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 March 2019 79,338 43,162 43,971 1,161,783 1,328,254
Net profit for the half
year - - - 111,615 111,615
Dividends paid - - - (27,292) (27,292)
_ _ __ _ _ __ _ _ __ _ _ __ _ _ __
At 30 September 2019 79,338 43,162 43,971 1,246,106 1,412,577
_ _ __ _ _ __ _ _ __ _ _ __ _ _ __
Share Share Capital Retained
Capital Premium Redemption Earnings
For the half year ended Ordinary Account Reserve Ordinary Total
30 September 2018 (Unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 March 2018 79,338 43,162 43,971 1,089,088 1,255,559
Net profit for the half
year - - - 91,932 91,932
Dividends paid - - - (23,960) (23,960)
_ _ __ _ _ __ _ _ __ _ _ __ _ _ __
At 30 September 2018 79,338 43,162 43,971 1,157,060 1,323,531
_ _ __ _ _ __ _ _ __ _ _ __ _ _ __
Share Share Capital Retained
Capital Premium Redemption Earnings
For the year ended 31 March Ordinary Account Reserve Ordinary Total
2019 (Audited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 March 2018 79,338 43,162 43,971 1,089,088 1,255,559
Net profit for the year - - - 112,205 112,205
Dividends paid - - - (39,510) (39,510)
_ _ __ _ _ __ _ _ __ _ _ __ _ _ __
At 31 March 2019 79,338 43,162 43,971 1,161,783 1,328,254
_ _ __ _ _ __ _ _ __ _ _ __ _ _ __
GROUP BALANCE SHEET
as at 30 September 2019
30 September 30 September 31 March
2019 2018 2019
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Non-current assets
Investments held
at fair value 1,423,356 1,339,652 1,291,442
Deferred taxation
asset 74 243 243
_________ _________ _________
1,423,430 1,339,895 1,291,685
Current assets
Debtors 70,503 41,874 54,892
Cash and cash equivalents 40,503 9,637 52,282
_________ _________ _________
111,006 51,511 107,174
Current liabilities (62,625) (8,340) (12,520)
_________ _________ _________
Net current assets 48,381 43,171 94,654
Total assets less
current liabilities 1,471,811 1,383,066 1,386,339
Non-current liabilities (59,234) (59,535) (58,085)
_________ _________ _________
Net assets 1,412,577 1,323,531 1,328,254
_________ _________ _________
Capital and reserves
Called up share
capital 79,338 79,338 79,338
Share premium account 43,162 43,162 43,162
Capital redemption
reserve 43,971 43,971 43,971
Retained earnings
(note 7) 1,246,106 1,157,060 1,161,783
_________ _________ _________
Equity shareholders'
funds 1,412,577 1,323,531 1,328,254
_________ _________ _________
Net asset value
per:
Ordinary share 445.12p 417.06p 418.54p
GROUP CASH FLOW STATEMENT
For the half year ended 30 September 2019
Half year ended Half year ended Year ended
30 September 30 September 31 March
2019 2018 2019
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Reconciliation of profit
from operations before
tax to net cash inflow
from operating activities
Profit from operations
before tax 113,398 93,753 114,077
Finance costs 1,648 1,620 3,405
Gains on investments
and derivatives held
at fair value through
profit or loss (77,139) (63,962) (78,214)
Net movement on foreign
exchange; cash and cash
equivalents and loan
notes 1,191 (659) (292)
Decrease/(increase) in
accrued income 1,745 1,079 (1,129)
Increase in other debtors (16,618) (10,419) (18,350)
Decrease in other creditors (2,628) (5,116) (3,711)
Net (purchases)/sales
of investments (58,374) 51,124 115,685
Decrease/(increase) in
sales settlement debtor 3,583 (500) (3,334)
(Decrease)/ increase
in purchase settlement
creditor (1,474) 148 1,474
Scrip dividends included
in investment income (3,310) (7,748) (8,226)
Scrip dividends included
in net returns on contracts
for difference (439) (779) (936)
_________ _________ _________
Net cash (outflow)/inflow
from operating activities
before interest and taxation (38,417) 58,541 120,449
Interest paid (1,777) (1,600) (3,391)
Taxation paid (1,252) (1,778) (1,872)
_________ _________ _________
Net cash (outflow)/inflow
from operating activities (41,446) 55,163 115,186
Financing activities
Equity dividends paid (27,292) (23,960) (39,510)
Drawdown/(repayment)
of loans 57,000 (41,000) (41,000)
_________ _________ _________
Net cash from/(used in)
financing activities 29,708 (64,960) (80,510)
_________ _________ _________
(Decrease) /increase
in cash (11,738) (9,797) 34,676
Cash and cash equivalents
at start of the period 52,282 18,114 18,114
Net movement on foreign
exchange; cash and cash
equivalents (41) 1,320 (508)
_________ _________ _________
Cash and cash equivalents
at end of the period 40,503 9,637 52,282
_________ _________ _________
Note
Dividends received 38,185 34,176 46,249
Interest received 14 8 669
NOTES TO THE FINANCIAL STATEMENTS
1 Basis of accounting
The accounting policies applied in these interim financial statements
are consistent with those applied in the Company's most recent annual
financial statements. The financial statements have been prepared on
a going concern basis and in accordance with International Accounting
Standard (IAS) 34 'Interim Financial Reporting'.
The financial statements have also been prepared in accordance with
the Statement of Recommended Practice (SORP), "Financial Statements
of Investment Trust Companies and Venture Capital Trusts," issued in
October 2019, to the extent that it is consistent with IFRS.
The financial statements are presented in Sterling and all values are
rounded to the nearest thousand pounds (GBP'000) except where otherwise
indicated.
In accordance with IFRS 10 the Company has been designated as an investment
entity on the basis that:
* It obtains funds from investors and provides those
investors with investment management services;
* It commits to its investors that its business purpose
is to invest solely for returns from capital
appreciation and investment income; and
* It measures and evaluates performance of
substantially all of its investments on a fair value
basis.
Each of the subsidiaries of the Company was established for the sole
purpose of operating or supporting the investment operations of the
Company (including raising additional financing), and is not itself
an investment entity. IFRS 10 sets out that in the case of controlled
entities that support the investment activity of the investment entity,
those entities should be consolidated rather than presented as investments
at fair value. Accordingly, the Company has consolidated the results
and financial positions of those subsidiaries.
Subsidiaries are consolidated from the date of their acquisition, being
the date on which the Company obtains control, and continue to be consolidated
until the date that such control ceases. The financial statements of
subsidiaries used in the preparation of the consolidated financial
statements are based on consistent accounting policies. All intra-group
balances and transactions, including unrealised profits arising therefrom,
are eliminated. This is consistent with the presentation in previous
periods.
All the subsidiaries of the Company have been consolidated in these
financial statements.
IFRS 16 - Leases, which was effective from 1 January 2019, has been
applied in the preparation of the interim financial statements. The
application of the standard has not had any material impact on the
interim financial statements and the Group's leases continue to be
classified as operating leases with the leased assets recognised in
the Balance Sheet.
2 Management fees
(Unaudited) (Unaudited) (Audited)
Half year ended Half year ended Year ended
30 September 2019 30 September 2018 31 March 2019
Revenue Capital Revenue Capital Revenue Capital
Return Return Total Return Return Total Return Return Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Management
fee 769 2,306 3,075 760 2,281 3,041 1,514 4,543 6,057
Performance
fee - 2,084 2,084 - 2,369 2,369 - 6,110 6,110
_____ _____ _____ _____ _____ _____ _____ _____ _____
769 4,390 5,159 760 4,650 5,410 1,514 10,653 12,167
_____ _____ _____ _____ _____ _____ _____ _____ _____
A provision has been made for a performance fee based on the net assets
at 30 September 2019. No payment is due until the full year performance
fee is calculated at 31 March 2020.
3 Earnings per share
The earnings per Ordinary share can be analysed between revenue and
capital, as below.
Half year ended Half year Year ended
ended
30 September 30 September 31 March
2019
(Unaudited) 2018 2019
GBP'000 (Unaudited) (Audited)
GBP'000 GBP'000
Net revenue profit 31,610 29,337 46,254
Net capital profit 80,005 62,595 65,951
_______ _______ _________
Net total profit 111,615 91,932 112,205
_______ _______ _________
Weighted average number of Ordinary
shares in issue during the period 317,350,980 317,350,980 317,350,980
pence pence pence
Revenue earnings per Ordinary
share 9.96 9.25 14.58
Capital earnings per Ordinary
share 25.21 19.72 20.78
_______ _______ _________
Earnings per Ordinary share 35.17 28.97 35.36
_______ _______ _________
4 Changes in share capital
During the half year and since 30 September 2019, no Ordinary shares
have been purchased and cancelled.
As at 30 September 2019 there were 317,350,980 Ordinary shares (30
September 2018: 317,350,980; 31 March 2019: 317,350,980 Ordinary shares)
of 25p in issue.
5 Going concern
The directors believe that it is appropriate to adopt the going concern
basis in preparing the financial statements. The assets of the Company
consist mainly of securities that are readily realisable and, accordingly,
the Company has adequate financial resources to meet its liabilities
as and when they fall due and continue in operational existence for
the foreseeable future.
6 Fair value of financial assets and financial liabilities
Financial assets and financial liabilities are carried in the Balance
Sheet either at their fair value (investments) or the balance sheet
amount is a reasonable approximation of fair value (due from brokers,
dividends and interest receivable, due to brokers, accruals and cash
at bank).
Fair value hierarchy disclosures
The table below sets out fair value measurements using IFRS 13 fair
value hierarchy.
Financial assets/(liabilities) at fair value through profit and loss
Level 1 Level 2 Level 3 Total
At 30 September 2019 GBP'000 GBP'000 GBP'000 GBP'000
Equity investments 1,332,042 - 377 1,332,419
Investment properties - - 90,937 90,937
Contracts for difference - 4,139 - 4,139
_______ _______ _______ _______
1,332,042 4,139 91,314 1,427,495
_______ _______ _______ _______
Level 1 Level 2 Level 3 Total
At 30 September 2018 GBP'000 GBP'000 GBP'000 GBP'000
Equity investments 1,241,068 - 258 1,241,326
Investment properties - - 98,326 98,326
Contracts for difference - (1,743) - (1,743)
Foreign exchange forward
contracts - (781) - (781)
_______ _______ _______ _______
1,241,068 (2,524) 98,584 1,337,128
_______ _______ _______ _______
Level 1 Level 2 Level 3 Total
At 31 March 2019 GBP'000 GBP'000 GBP'000 GBP'000
Equity investments 1,189,136 - 377 1,189,513
Investment properties - - 101,929 101,929
Contracts for difference - (3,210) - (3,210)
Foreign exchange forward
contracts - 1,969 - 1,969
_______ _______ _______ _______
1,189,136 (1,241) 102,306 1,290,201
_______ _______ _______ _______
Categorisation within the hierarchy has been determined on the basis
of the lowest level input that is significant to the fair value measurement
of the relevant asset as follows:
Level 1 - valued using quoted prices in an active market for identical
assets.
Level 2 - valued by reference to valuation techniques using observable
inputs other than quoted prices within level 1.
Level 3 - valued by reference to valuation techniques using inputs
that are not based on observable market data.
Contracts for Difference are synthetic equities and are valued by reference
to the investments' underlying market values.
Valuations of Investment Properties - Level 3
The Group carries its investment properties at fair value in accordance
with IFRS 13, revalued twice a year, with changes in fair values being
recognised in the Group Statement of Comprehensive Income. The Group
engaged Knight Frank LLP as independent valuation specialists to determine
fair value as at 30 September 2019.
Determination of the fair value of investment properties has been prepared
on the basis defined by the RICS Valuation Professional Standards,
Global & UK Edition, January 2014 (The Red Book) as follows:
"The estimated amount for which an asset or liability should exchange
on the valuation date between a willing buyer and a willing seller
in an arm's length transaction after proper marketing wherein the parties
had each acted knowledgeably, prudently and without compulsion."
The valuation takes into account future cash flow from assets (such
as lettings, tenants' profiles, future revenue streams, capital values
of fixtures and fittings, plant and machinery, any environmental matters
and the overall repair and condition of the property) and discount
rates applicable to those assets. These assumptions are based on local
market conditions existing at the balance sheet date.
In arriving at their estimates of fair values as at 30 September 2019,
the valuers have used their market knowledge and professional judgement
and have not only relied solely on historical transactional comparables.
Reconciliation of movements in Financial assets categorised as level
3
31 March Appreciation/ 30 September
At 30 September 2019 Purchases Sales (Depreciation) 2019
2019 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ---------- ------------------ ------------------- ---------------------
Unlisted equity
investments 377 - - - 377
_______ _______ _______ _______ _______
Investment properties
* Mixed use 54,962 334 (749) (867) 53,680
* Office & Industrial 46,967 232 (10,284) 342 37,257
_______ _______ _______ _______ _______
101,929 566 (11,033) (525) 90,937
_______ _______ _______ _______ _______
102,306 566 (11,033) (525) 91,314
================== ========== ================== =================== =====================
Transfers between hierarchy levels
There were no transfers between any levels during the period.
Sensitivity information
The significant unobservable inputs used in the fair value measurement
categorised within Level 3 of the fair value hierarchy of investment
properties are:
* Estimated rental value: GBP5 - GBP50 per sq ft
* Capitalisation rates: 3.20% - 6.50%
Significant increases (decreases) in estimated rental value and rent
growth in isolation would result in a significantly higher (lower)
fair value measurement. A significant increase (decrease) in capitalisation
rates in isolation would result in a significantly lower (higher) fair
value measurement.
Gains on investments held at fair value
Half year ended Half year ended Year ended
30 September 30 September 31 March
2019
(Unaudited) 2018 2019
GBP'000 (Unaudited) (Audited)
GBP'000 GBP'000
Gains on sale of investments 6,300 37,253 79,858
Movement in investment
holding gains 73,013 29,521 16,736
_______ _______ _______
Gains on investments held
at fair value 79,313 66,774 96,594
_______ _______ _______
The Group received GBP92,995,000 (30 September 2018: GBP118,318,000)
and (31 March 2019: GBP246,467,000) from investments sold in the period.
The book cost of these investments when they were purchased was GBP86,695,000
(30 September 2018: GBP81,065,000) and (31 March 2019: GBP166,609,000).
These investments have been revalued over time and until they were
sold, any unrealised gains/losses were included in the fair value of
the investments.
Loan Notes
On 10 February 2016, the Company issued 1.92% Unsecured Euro 50,000,000
Loan Notes and 3.59% Unsecured GBP 15,000,000 Loan Notes which are
due to be redeemed at par on 10 February 2026 and 10 February 2031
respectively.
The fair value of the 1.92% Euro Loan Notes at 30 September 2019 was
GBP44,429,000 (30 September 2018: GBP44,663,000) and (31 March 2019:
GBP43,255,000).
The fair value of the 3.59% GBP Loan Notes at 30 September 2019 was
GBP15,566,000 (30 September 2018: GBP15,154,000) and (31 March 2019:
GBP15,373,000).
Using the IFRS 13 fair value hierarchy the Loan Notes are deemed to
be categorised within Level 2.
The loan notes agreement requires compliance with a set of financial
covenants, including:
* Total Borrowings shall not exceed 33% of Adjusted Net
Asset Value;
* the Adjusted Total Assets shall at all times be
equivalent to a minimum of 300% of Total Borrowings;
and
* the Adjusted NAV shall not be less than
GBP260,000,000.
The Company and Group complied with the terms of the loan notes agreement
throughout the year.
Multi-currency revolving loan facilities
The Group also has unsecured, multi-currency, revolving short-term
loan facilities totalling GBP65,000,000 (30 September 2018: GBP65,000,000)
and (31 March 2019: GBP65,000,000). At 30 September 2019, GBP57,000,000
was drawn on these facilities (30 September 2018: GBPnil) and (31 March
2019: GBPnil). The fair value is considered to approximate the carrying
value and the interest is paid at a margin over LIBOR.
Subsequent to 30 September 2019 the Group has entered into a new loan
agreement for a facility of GBP20,000,000.
7 Retained Earnings
Half year ended Half year ended Year ended
30 September 30 September 31 March
2019
(Unaudited) 2018 2019
GBP'000 (Unaudited) (Audited)
GBP'000 GBP'000
Investment holding gains 479,787 432,057 402,635
Realised capital reserves 691,839 656,208 688,986
_______ _______ _______
1,171,626 1,088,265 1,091,621
Revenue reserve 74,480 68,795 70,162
_______ _______ _______
1,246,106 1,157,060 1,161,783
_______ _______ _______
8 Related Party Transactions
There have been no material related party transactions during the period
and no changes to related parties.
During the period Thames River Capital charged management fees as detailed
in Note 2.
The remuneration of the directors has been determined in accordance
with rates outlined in the Directors' Remuneration Report in the Annual
Financial Statements.
9 Comparative information
The financial information contained in this Half-Yearly Financial Report
does not constitute statutory accounts as defined in section 435(1)
of the Companies Act 2006. The financial information for the half year
periods ended 30 September 2019 and 30 September 2018 has not been
audited or reviewed by the Group auditors. The figures and financial
information for the year ended 31 March 2019 are an extract from the
latest published accounts and do not constitute statutory accounts
for that year. Those accounts have been delivered to the Registrar
of Companies and include the report of the auditors, which was unqualified
and did not contain a statement under either section 498(2) or 498(3)
of the Companies Act 2006.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014). Upon the
publication of this announcement via Regulatory Information Service
this inside information is now considered to be in the public
domain.
Disclaimer
The loan notes have not been and will not be registered under
the U.S. Securities Act of 1933, as amended (the "Act") and may not
be offered or sold in the United States absent registration or an
applicable exemption from the registration requirements of the Act.
This notice is for information only, does not constitute an offer
to sell or the solicitation of an offer to buy any security and
shall not constitute an offer, solicitation or sale of any
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful.
This announcement and the information contained herein is not
for publication, distribution or release in, or into, directly or
indirectly, the United States, Canada, Australia or Japan and does
not constitute, or form part of, an offer of securities for sale in
or into the United States, Canada, Australia or Japan.
The securities referred to in this announcement have not been
and will not be registered under the U.S. Securities Act of 1933,
as amended (the "Securities Act") and may not be offered or sold in
the United States unless they are registered under the Securities
Act or pursuant to an available exemption therefrom. The Company
does not intend to register any portion of securities in the United
States or to conduct a public offering of the securities in the
United States. The Company will not be registered under the U.S.
Investment Companies Act of 1940, as amended, and investors will
not be entitled to the benefits of that Act.
This announcement does not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of the
securities referred to herein in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to
registration, exemption from registration or qualification under
the securities law of any such jurisdiction.
The contents of this announcement include statements that are,
or may be deemed to be "forward-looking statements". These
forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes",
"estimates", "anticipates", "expects", "intends", "may", "will" or
"should". They include the statements regarding the target
aggregate dividend. By their nature, forward-looking statements
involve risks and uncertainties and readers are cautioned that any
such forward-looking statements are not guarantees of future
performance. The Company's actual results and performance may
differ materially from the impression created by the
forward-looking statements. The Company undertakes no obligation to
publicly update or revise forward-looking statements, except as may
be required by applicable law and regulation (including the Listing
Rules). No statement in this announcement is intended to be a
profit forecast.
For further information please contact:
Marcus Phayre-Mudge
Fund Manager
TR Property Investment Trust plc
Telephone: 020 7011 4711
Jo Elliott
Finance Manager and Investor Relations
TR Property Investment Trust plc
Telephone: 020 7011 4710
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LLFEDLALTFIA
(END) Dow Jones Newswires
November 28, 2019 13:10 ET (18:10 GMT)
Grafico Azioni Tr Property Investment (LSE:TRY)
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Da Mar 2024 a Apr 2024
Grafico Azioni Tr Property Investment (LSE:TRY)
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