TIDMIPT
RNS Number : 2580N
ISIS Property Trust Limited
31 August 2011
To: RNS
Date: 31 August 2011
From: ISIS Property Trust Limited
Interim results for the six months ended 30 June 2011
-- Dividend of 4.0 pence per share for the period
-- Dividend yield of 8.0 per cent as at 30 June 2011
-- Net asset value per share total return of 1.7 per cent for
the six months to 30 June 2011 *
-- Net asset value total return since launch of 69.6 per cent
*
-- Share price decreased by 5.9 per cent in the six month period
to 99.5 pence as at 30 June 2011
* Dividends reinvested
The Chairman, Peter Crook, stated:
'The UK commercial property market continued to deliver a
positive performance in the first half of 2011, with total returns
of 4.4 per cent versus 5.3 per cent in the preceding six months, as
measured by the Investment Property Databank UK quarterly and
monthly funds index (IPD). Capital values increased by 1.6 per cent
with growth moderating as the pace of yield adjustment slowed.
The property portfolio achieved a total return of 2.6 per cent
over the period with capital values falling by 0.9 per cent,
reflecting the lower than average weighting to Central London,
compared with IPD, and the absence of any shopping centre
investments in the Company's portfolio. The five year performance,
however, remains strong with an average total return of 1.9 per
cent per annum, ahead of IPD which was flat over the period. The
Company's net asset value of 101.2 pence per share as at 30 June
2011 represented a total return of 1.7 per cent for the first half
of the year. The net asset value was impacted by the swap contract
which was valued as a liability of GBP5.9 million at the period
end, accounting for 7.9 pence per share, although this liability
will unwind over the remaining five and a half years of the
contract. There was no material movement in the swap valuation over
the six months.
The Company's share price decreased by 5.9 per cent over the
period, to 99.5 pence per share at 30 June 2011, down from 105.8
pence per share as at 31 December 2010. The shares were trading at
a discount to net asset value of 1.6 per cent at the end of June
2011, compared to a premium of 2.3 per cent at the start of the
period.
Property Market
Performance in the first half of 2011 was supported by continued
interest from investors, attracted by property's high and
relatively stable income stream. Some investors also viewed UK
property as a perceived hedge against inflation, as the CPI rose to
double its target rate. Investment transaction levels fell back
after a strong end to 2010 but at GBP16.7bn were more than 7 per
cent ahead of the equivalent period a year earlier, with
institutions, quoted property companies and overseas buyers all
significant net investors.
The occupier market showed some signs of stability at the all
property level with rental growth edging up to 0.5 per cent in the
period. This disguises a difference in performance by segment with
rents falling for industrials, provincial offices and high street
retail but rising for Central London offices.
Across the market as a whole, yields edged in during the first
six months of 2011 by a modest 10 bps with compression most marked
at the prime end.
Portfolio
Largely as a result of purchases the value of the Company's
portfolio increased to GBP131.3 million as at 30 June 2011, from
GBP124.9 million at 31 December 2010.
Capital growth showed a mixed picture with most valuations
remaining at the December 2010 levels. There were some valuation
improvements however, mainly as a result of asset management
initiatives. 41/47 and 55, High Street, Rayleigh increased in value
by GBP260,000 or 7.8 per cent following the completion of a number
of lease renewals in the block. The value of 14 Berkeley Street,
London SW1 increased by GBP233,000 to GBP15.05 million as the
Company commenced refurbishment works to the vacant offices on the
1st and 4th floors. The capital value of 11 Church Street, Kingston
upon Thames also increased by GBP100,000, or 4.2 per cent, to
GBP2.45 million.
However, these capital gains were offset by falls in value in
some of the regional shops and office buildings, with shorter lease
terms.
The majority of rent reviews are seeing very little or no uplift
in the present climate. However, as a result of RPI linking, the
rent at 15 London Road, Redhill increased by GBP24,844 per annum or
16.5 per cent to GBP174,844 per annum. Following lease negotiations
at Foundry Lane, Horsham, tenants' breaks have been removed and
lease terms extended by approximately 4 years on two units, giving
a minimum unexpired lease length across the estate until 2018.
The Company completed the purchase of Hope Mill Retail Park,
Bury. This purchase originally exchanged in January 2011 by way of
a forward commitment which completed in June 2011. The property
comprises a newly constructed terrace of three units, extending to
35,000 square feet. The units are close to the town centre within
an established retail warehouse location and close to 'The Rock'
retail and leisure complex. The property was purchased for GBP7.05
million representing a net initial yield of 6.95 per cent. The
units are let to Pets at Home, Smyth's Toys and Dreams on new 15
year leases at a total annual rent of GBP518,000. Since purchase
the property has been re-valued at GBP7.565 million showing uplift
in value of GBP515,000.
At the time of writing, the Company has just completed the sale
of 3 & 5 Church Street, Kingston upon Thames for GBP2.96
million, in excess of the 30 June 2011 valuation of GBP2.9 million
and the cost paid at the launch of the Company of GBP2.1
million.
The void rate of the portfolio remains relatively low at 3.4 per
cent of ERV with a consequential low level of empty rates and other
non-recoverable expenditure. The principal voids are in 14 Berkeley
Street, London, SW1, where the two vacant floors which are
currently being refurbished have an ERV of approximately GBP200,000
per annum.
As at 30 June 2011 the Company's portfolio had an average
weighted lease term including breaks of 9.1 years which is a slight
improvement on the 31 December 2010 figure of 9.0 years.
Dividends
To date the Company has paid two interim dividends of 2.0 pence
per share for the current financial year, with a second interim
dividend of 2.0 pence per share paid on 26 August 2011. In the
absence of unforeseen circumstances, further dividends of 2.0 pence
per share are expected to be paid in November 2011 and February
2012, making a total of 8.0 pence per share for the year ending 31
December 2011.
Borrowings
At the period end the Company's level of debt was at GBP50
million, with the previously undrawn facility of GBP10 million
being used to finance the transaction at Bury. This loan is a
revolving credit facility and the Board expects the additional
GBP10 million drawn down to be reduced by sales currently under
negotiation. The net gearing, after deducting cash, was at 35.8 per
cent of the value of the portfolio as at 30 June 2011. This is well
within the loan to value covenant limit of 60 per cent of total
assets. The current rate of interest is 5.55 per cent on GBP40
million of the debt, which is fixed with an interest rate swap. The
remaining GBP10 million of the debt incurs interest at one month
LIBOR plus 45 bps.
Outlook
The economy and financial markets, both in the UK and globally
are struggling to shake off the effects of the downturn and the
outlook remains uncertain. Property has been relatively resilient
over the past two years but sentiment is becoming more cautious.
Total returns are expected to broadly reflect income in the short
term.
In this environment of market uncertainty and slow growth we
believe that the Company is well positioned with a good quality
portfolio and comfortably meeting banking covenants. The protection
and enhancement of the income stream is paramount and this remains
the priority of the Manager.'
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
I McBryde
S Macrae
F&C Asset Management plc
Tel: 0207 628 8000 ISIS Property Trust Limited
Consolidated Statement of Comprehensive Income
Six months Six months Year to
to 30 June to 30 June 31 December
2011 2010 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------ ------------ -------------
Revenue
Rental income 4,363 4,446 8,988
------------ ------------ -------------
Total revenue 4,363 4,446 8,988
(Losses) / gains on investment
properties (869) 6,999 6,562
3,494 11,445 15,550
Expenditure
Investment management fee (377) (531) (482)
Direct operating expenses of let
rental property (60) (98) (151)
Provision for bad debts (48) (11) (75)
Amortisation of lease surrender
premiums (77) (77) (154)
Administration fee (30) (30) (60)
Valuation and other professional
fees (52) (50) (106)
Directors' fees (64) (53) (106)
Other expenses (60) (53) (128)
Total expenditure (768) (903) (1,262)
------------ ------------ -------------
Net operating profit before
finance costs 2,726 10,542 14,288
------------ ------------ -------------
Net finance costs
Interest receivable 6 14 30
Finance costs (1,134) (1,136) (2,292)
------------ ------------ -------------
(1,128) (1,122) (2,262)
------------ ------------ -------------
Net profit from ordinary
activities before taxation 1,598 9,420 12,026
Taxation on profit on ordinary
activities (250) (270) (231)
------------ ------------ -------------
Profit for the period 1,348 9,150 11,795
Other comprehensive income:
Net loss on cash flow hedges, net
of tax (14) (2,706) (1,359)
------------ ------------ -------------
Net comprehensive profit for the
period, net of tax 1,334 6,444 10,436
------------ ------------ -------------
Dividends paid per share (note 3) 4.00p 4.00p 8.00p
------------ ------------ -------------
Basic and diluted earnings per 1.78p 12.09p 15.59p
share (note 4)
------------ ------------ -------------
This financial information has been prepared on the basis of the
accounting standards and policies set out in the Annual Report and
Accounts for the year ended 31 December 2010.
All items in this statement derive from continuing
operations.
All of the profit for the period is attributable to the owners
of the Company. ISIS Property Trust Limited
Consolidated Balance Sheet
As at As at As at
30 June 30 June 31 December
2011 2010 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------- ---------- -------------
Non-current assets
Investment properties (note
2) 128,526 122,372 121,935
---------- ---------- -------------
128,526 122,372 121,935
Current assets
Trade and other receivables 3,046 3,393 3,595
Cash and cash equivalents 3,954 2,281 1,907
---------- ---------- -------------
7,000 5,674 5,502
---------- ---------- -------------
Total assets 135,526 128,046 127,437
Non-current liabilities
Interest-bearing bank loan (50,237) (40,206) (40,224)
Interest rate swap (5,949) (7,281) (5,935)
Deferred taxation - (240) -
---------- ----------
(56,186) (47,727) (46,159)
---------- ---------- -------------
Current liabilities
Trade and other payables (2,816) (3,069) (3,062)
---------- ---------- -------------
Total liabilities (59,002) (50,796) (49,221)
Net assets 76,524 77,250 78,216
---------- ---------- -------------
Represented by:
Share capital 756 756 756
Special distributable reserve 67,664 68,483 67,664
Capital reserve 14,748 16,054 15,617
Other reserve (5,835) (7,168) (5,821)
Revenue reserve (809) (875) -
Equity shareholders' funds 76,524 77,250 78,216
---------- ---------- -------------
Net asset value per share 101.16p 102.12p 103.39p
(note 5)
ISIS Property Trust Limited
Consolidated Statement of Changes in Equity
Six months
to Six months Year to
30 June to 30 June 31 December
2011 2010 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------- ------------ -------------
Opening net assets 78,216 73,832 73,832
Net profit for the period 1,348 9,150 11,795
Dividends paid (note 3) (3,026) (3,026) (6,052)
Movement on fair value
of interest rate swap (14) (2,706) (1,359)
Closing net assets 76,524 77,250 78,216
----------- ------------ -------------
ISIS Property Trust Limited
Consolidated Cash Flow Statement
Six months Six months Year to
to 30 June to 30 June 31 December
2011 2010 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------ ------------ -------------
Cash flow from operating
activities
Net operating profit for the
period before taxation 1,598 9,420 12,026
Adjustments for:
Losses / (gains) on investment
properties 869 (6,999) (6,562)
Decrease / (increase) in operating
trade and other
receivables 549 94 (107)
Decrease in operating trade and
other payables (34) (221) (559)
Net finance costs 1,128 1,122 2,262
------------ ------------ -------------
4,110 3,416 7,060
Taxation paid (446) (265) (117)
Net cash inflow from operating
activities 3,664 3,151 6,943
------------ ------------ -------------
Cash flow from investing
activities
Purchase of investment properties (7,445) (8,442) (8,442)
Capital expenditure (16) (11) (11)
Interest received 6 14 30
------------ ------------ -------------
Net cash outflow from investing
activities (7,455) (8,439) (8,423)
------------ ------------ -------------
Cash flow from financing
activities
Dividends paid (3,026) (3,026) (6,052)
Bank loan interest paid (239) (261) (419)
Payments under interest rate swap
arrangement (897) (875) (1,873)
Bank loan draw down 10,000 - -
------------ ------------ -------------
Net cash inflow / (outflow) from
financing activities 5,838 (4,162) (8,344)
------------ ------------ -------------
Net increase / (decrease) in cash
and cash equivalents 2,047 (9,450) (9,824)
Opening cash and cash equivalents 1,907 11,731 11,731
------------ ------------ -------------
Closing cash and cash equivalents 3,954 2,281 1,907
------------ ------------ -------------
ISIS Property Trust Limited
Notes to the Interim Report
for the six months to 30 June 2011
1. The condensed consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standards ('IFRS'), IAS 34 'Interim Financial Reporting' and the
accounting policies set out in the statutory accounts of the Group
for the year ended 31 December 2010. The condensed consolidated
financial statements do not include all of the information required
for full annual financial statements and should be read in
conjunction with the consolidated financial statements of the Group
for the year ended 31 December 2010, which were prepared under full
IFRS requirements.
2. Investment properties
Six month period to
30 June 2011
GBP'000
--------------------
Opening valuation 121,935
Purchases and capital expenditure 7,460
Losses on investment properties (869)
--------------------
Closing valuation 128,526
--------------------
3. Dividends
Six months ended Six months ended Year ended 31
30 June 2011 30 June 2010 December 2010
Rate Rate Rate
GBP'000 (pence) GBP'000 (pence) GBP'000 (pence)
----------- -------- ----------- -------- ----------- -------- ---------
Fourth
interim
dividend 1,513 2.00 1,513 2.00 1,513 2.00
First
interim
dividend 1,513 2.00 1,513 2.00 1,513 2.00
Second
interim
dividend - - - - 1,513 2.00
Third
interim
dividend - - - - 1,513 2.00
----------- -------- ----------- -------- ----------- -------- ---------
3,026 4.00 3,026 4.00 6,052 8.00
----------- -------- ----------- -------- ----------- -------- ---------
A second interim dividend for the year to 31 December 2011, of
2.00p per share, was paid on 26 August 2011 to shareholders on the
register at close of business on 5 August 2011.
4. Earnings per share are based on 75,650,000 shares, being the
weighted average number of shares in issue during the period (30
June 2010 and 31 December 2010 - 75,650,000). Earnings for the six
months to 30 June 2011 should not be taken as a guide to the
results for the year to 31 December 2011.
5. The net asset value per ordinary share is based on net assets
of GBP76,524,000 (30 June 2010 - GBP77,250,000 and 31 December 2010
- GBP78,216,000) and 75,650,000 ordinary shares (30 June 2010 -
75,650,000 and 31 December 2010 - 75,650,000) being the number of
ordinary shares in issue at the period end.
6. 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, and that
therefore the Group has only a single operating segment. The Board
of Directors, as a whole, has been identified as constituting the
chief operating decision maker of the Group. The key measure of
performance used by the Board to assess the Group's performance is
the total return of the Group's net asset value, as calculated
under IFRS, and therefore no reconciliation is required between the
measure of profit or loss used by the Board and that contained in
the condensed consolidated financial statements.
7. No Director has an interest in any transactions which are or
were unusual in their nature or significant to the Group. F&C
Asset Management received fees for its services as Investment
Managers. The total charge to the Consolidated Statement of
Comprehensive Income during the period was GBP377,000 of which
GBP194,000 remained payable at the period end. The Manager also
received an administration fee of GBP30,000 of which GBP15,000
remained payable at the period end.
The Directors of the Company received fees for their services
totalling GBP64,000, of which GBPnil remained payable at the period
end.
8. The accounts have not been audited nor reviewed under the
requirements of ISRE 2410 'Review of interim financial information
performed by the independent auditor of the Company'.
9. The Group results consolidate those of IPT Property Holdings
Limited ('IPTPH'), a wholly-owned subsidiary which invests in
properties. IPTPH is incorporated in Guernsey and its principal
business is that of an investment and property company.
10. The Interim Report, together with this statement will be
available at the Company's website address,
www.isispropertytrust.com during August 2011.
ISIS Property Trust Limited
Statement of Principal Risks and Uncertainties
The Company's assets consist of direct investments in UK
commercial property. Its principal risks are therefore related to
the UK commercial property market in general but also the
particular circumstances of the properties in which it is invested
and their tenants. Other risks faced by the Company include
economic, strategic, regulatory, management and control, financial
and operational. These risks, and the way in which they are
mitigated and managed, are described in more detail under the
heading Principal Risks and Uncertainties within the Report of the
Directors in the Company's Annual Report for the year ended 31
December 2010. The Company's principal risks and uncertainties have
not changed materially since the date of that report and are not
expected to change materially for the remaining six months of the
Company's financial year.
Statement of Directors' Responsibilities in
Respect of the Interim Results
We confirm that to the best of our knowledge:
-- the condensed set of consolidated financial statements have
been prepared in accordance with IAS34 'Interim Financial
Reporting';
-- the Chairman's Statement constituting the Interim Management
Report together with the Statement of Principal Risks and
Uncertainties include a fair review of the information required by
the Disclosure and Transparency Rules ('DTR') 4.2.7R, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of consolidated financial statements; and
-- the Chairman's Statement together with the financial
statements include a fair review of the information required by DTR
4.2.8R, being related party transactions that have taken place in
the first six months of the current financial year and that have
materially affected the financial position or performance of the
Company during that period, and any changes in the related party
transactions described in the last Annual Report that could do
so.
On behalf of the Board
Peter Crook
Chairman
30 August 2011
This information is provided by RNS
The company news service from the London Stock Exchange
END
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