Interim Results

RNS Number : 9419I

TR Property Investment Trust PLC

26 November 2008

 



This announcement and the information contained herein is not for publication, distribution or release in, or into, directly or indirectly, the United States, Canada, Australia or Japan.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 2008

26 November 2008

ORDINARY SHARES Financial Highlights and Performance	Half year ended 30 September 2008 (Unaudited)	Half year ended 30 September 2007 (Unaudited)	% Change
Revenue
Revenue earnings per Ordinary share	4.13p	3.94p	+4.8
Net interim dividend per Ordinary share	2.30p	2.30p	-
	At 30 September  2008 (Unaudited)	At    31 March 2008 (Audited)
Balance Sheet
Net asset value per share	176.28p	219.61p	-19.7
Share price	143.50p	188.25p	-23.8
Gearing	-	-
Shareholders' funds (£'000)	453,039	567,899	-20.2
Shares in issue at end of period (m)	257.0	258.6	-0.6
Performance	Half year ended	Half year ended
	30 September	30 September
	2008	2007
Benchmark performance (total return)	-21.4%	-19.1%
NAV total return	-18.3%	-18.8%
Share price total return	-22.1%	-20.0%

SIGMA SHARES Financial Highlights and Performance	Half year ended 30 September 2008 (Unaudited)	Period from 24 July to 30 September 2007 (Unaudited)
Revenue
Revenue earnings per Sigma share	2.05p	0.06p
Net interim dividend per Sigma share	0.90p	0.20p
	At 30 September 2008 (Unaudited)	At  31 March  2008 (Audited)	% Change
Balance Sheet
Net asset value per share	83.29p	108.64p	-23.3
Share price	57.25p	92.00p	-37.8
Gearing	-	-
Shareholders' funds (£'000)	105,674	138,710	-23.8
Shares in issue at end of period (m)	126.9	127.7	-0.6
Performance	Half year ended 30 September 2008	Period from  24 July to   30 September 2007
Benchmark performance (total return)	-21.4%	-5.6%
NAV total return	-22.8%	-7.1%
Share price total return	-37.2%	-1.9%

Chairman's Statement

Introduction 

The events of the Trust's half year to the end of September 2008 have been overshadowed by the dislocation in markets that has occurred since the end of September. Like all long-only equity funds the Trust has been bruised by the sharp fall in equity markets, but both share classes have come through the violent day by day price moves with the portfolios holding their shape and with good relative performance. Over the summer both classes increased their levels of cash and reduced their exposure to more highly geared companies and these moves have stood us in good stead. Revenue per share has increased in both portfolios. The Board decided just to maintain the Ordinary share interim dividend given the current uncertain background. The Sigma share class interim dividend is raised significantly, but shareholders are reminded that the share class was only created in July 2007 and therefore could make only a token payment at the interim stage last year.

Over the six month period Pan European property shares fell by an average of just under 24%. Property shares in the UK fell 21% while on the Continent the decline was 25% in Sterling terms and 24% in local currency terms. This compares with a decline of 15% in the FTSE All Share Index and 18.5% in the Dow Jones Euro Stoxx Index over the same period. There was a wide divergence in share price performance, but the overriding themes were that low gearing strongly outperformed high gearing and large liquid stocks were sought and smaller less liquid shares were shunned.

NAV and Share Price Performance

The details of the absolute and relative returns are set out in more detail at the start of each share class report. In summary the Ordinary share class NAV return was ahead of the benchmark, while the Sigma share Class NAV return was slightly behind, though well ahead of the returns from smaller European property companies generally.  

Revenue Results and Dividends and Revenue Outlook

Ordinary Shares

The post tax revenue rose 1.2% to £10.64m but this translated into a 4.8% increase in net revenue per share to 4.13p, thanks to the benefit of share repurchases made last year. The Board has decided to maintain the interim dividend at 2.3p per share given the uncertain economic conditions. The managers' advice to the Board is that, subject to unforeseen circumstances, the net revenue per Ordinary share will rise by 0% to 5% for the current financial year. 

Sigma Shares

The post tax revenue per Sigma share was 2.05p per share. Sigma was created in July 2007 and had virtually no net revenue in the comparable period last year. The Board has decided to pay an interim dividend of 0.9p per share, which compares to the payment of 0.2p per share last year. The managers' advice to the Board is that, subject to unforeseen circumstances, the net revenue per Sigma share will be in the order of 2.4p per share for the current financial year. 

Net Debt, Gearing and Currencies

The cash holdings in both share classes were increased substantially over the six months and totalled over £100m at the end of September. This is gross cash, because the Trust still has some £40m of debenture debt and the cash in hand includes income accrued since March. The larger of the two outstanding debentures, the £25m 8.125% loan, will be repaid at the end of November 2008 from these cash resources. Separately we have been able to renew a loan facility with the Royal Bank of Scotland for £50m for the next twelve months. There is no present intention of drawing down this loan, but your Board felt that it was sensible to have some borrowing capacity in reserve during 2009 as, with pricing in its current very uncertain state, opportunities for profitable investments may be taken.

As in previous years the portfolios' exposure to foreign currencies was not hedged either at the asset or income level. Over the half year period the Sterling/Euro exchange rate was virtually unchanged. 

Discount and Share Repurchases

The Ordinary Share discount to net asset value averaged 16.6% over the half year with a range of 10% to 24%. Over the half year 1.6m Ordinary shares were repurchased and cancelled for £2.7m - an average total cost of 168.6p per share. Sales of assets were made to cover these repurchases which were made at an average discount of just over 18%. The surplus generated to the shareholders' funds was £o.6m, equivalent to 0.23p per share on the outstanding Ordinary share capital at the half year end. 

Sigma shares traded at an average discount of 21.1%. During the six month period 0.8m Sigma shares (o.6% of the outstanding capital) were repurchased from cash resources for £0.55m - an average price including costs of 68.9p. The surplus generated to the shareholders funds was £0.17m, equivalent to 0.13p per share. 

Outlook

Since the half year end and as a result of decisive action by our managers, NAV performance relative to the benchmark has been exceptionally strong. At the time of writing, the benchmark has fallen by 50% in the current financial year; the Ordinary shares by 41.5% and Sigma shares by 46.2% leading to outperformance of 8.5% and 3.8% respectively. 

Coming into 2009, the commercial property market faces three substantial questions - How deep and how long will the recession be? How much and how fiercely will banks call back loans made to commercial real estate? Lastly how quickly will the bank lending to commercial property get back onto a reasonably normal basis? Standing now, at the start of these problems, we cannot have a certain answer to any of these questions. Your managers have already taken the steps to ensure that the Trust is in an extremely sound financial position. As property values and share prices decline, the seeds of a substantial bargain hunt are being sown. We intend to be at the starting line when that hunt is ready for the off, but we cannot yet tell when this will be. 

Managers' Statement 

Ordinary share class & Sigma share class

Market Background and Outlook

The economic landscape is changing very rapidly. The recent enormous volatility in stock market pricing only mirrors the huge and rapid changes that are occurring in the outlook for the global economy. The demise of Lehmans in September, and the concerns we all then shared as to whether our banks would be open tomorrow morning, already seem an age away, thank goodness. Now we have to think through how long and deep the recession will be and what will be the implications of very low base rates combined with a very high Government borrowing requirement.  

Credit Markets

Real estate is a capital intensive business. Investors believe that the recent meltdown in credit markets, and the resolution of the problem through massive Government assistance, will lead to the industry suffering a period of serious credit starvation. Over the summer we had already seen a huge contraction in the willingness of banks to lend against property. Though the market has not altogether dried up, virtually every bank in Europe is now imposing much tighter loan to value (LTV) ratios, much wider spreads, larger up front arrangement fees and more stringent income and cash flow controls on any fresh borrowings. This change in the market has come too fast for many highly leveraged investors and companies to adjust their capital structures through sales or equity issues. For them debt dependency now leaves them effectively at the mercy of the banks and the property market. For the banks, many are now working with the actual or tacit support of their Governments, fresh lending on commercial real estate will be low on their priorities; rather they will be looking at ways to reduce the exposure to commercial real estate lending. 

It is estimated that the major UK and European banks have some €1,000 billion of on balance sheet lending to commercial real estate. This represents about 12% of their total loan book and some €200 billion is due to be refinanced over the next twelve months. Most of this is lent to unquoted companies and to private investors. With property values in decline the loan to value cushions in many of these loans have deflated much more rapidly than either the borrowers or lenders ever visualised. Most banks are anxious not to have to make substantial further write downs in the immediate future. So, provided borrowers can continue to pay the interest on their loans, immediate breaches of borrowing covenants are unlikely to result in loans being called. The problems arise when loans mature and borrowers are unable to renew their loans in full or sell assets at prices required to cover the debt. 

Economic Background

Matters are aggravated by the current economic contraction. Occupier demand is already weakening, and space returning to the market as a result of business contraction and failure. Rising vacancy rates are putting pressure on rental cash flows. Capital values suffer from both weaker rental values and from increased concern over tenants' covenants. In the UK, a recent RICS survey of surveyors indicated that tenant demand during the third quarter of 2008 fell at the fastest pace in a decade, and that the amount of available floor space increased at the fastest pace in the survey's history.  Similar surveys are not available for the Eurozone but conditions there are not expected to be very different in the coming six months. 

It is very difficult, at this moment, to judge how long and how deep this economic contraction will be. Globally co-ordinated stimulus packages involving cuts in both base rates and taxes should have a beneficial impact, though rate cuts hurt savers as well as helping borrowers. Can these actions, and further measures yet to be announced, significantly boost the confidence of businesses and consumers? In housing and other loan markets it is the availability of credit rather than the price of credit which is the present problem, and citizens may worry that sometime in the future the bill for all this largesse will have to be met by higher taxes or higher inflation or both. 

Property Investment Markets

Investment markets have been getting quieter and tougher all across Europe. Many cash buyers are holding back for big bargains and leveraged buyers are finding loans both hard to source and increasingly costly. Add to lack of credit the fall in tenant demand and there is extra pressure on both yields and rental values. Declines in capital values have been fairly uniform across the use classes so that there has been no safe place to hide. In the UK the monthly IPD Index suggests that average commercial capital values fell by 10.0% in the March to September period taking the average initial yield from 5.5% to 6.0%. However, property share investors think that the valuation inputs into this Monthly Index are falling behind events and expect further substantial capital value declines to be reported in the next six months. On the Continent, as usual, events are lagging the UK market by about six months, but all the evidence suggests that the same trend is in place, with the volume of investment sales shrinking month by month most notably in Eastern Europe. 

In the UK, pricing in the IPD Annual Index derivative market has continued to prove a more accurate guide to future value movements than the forecasts made by agents and researchers. Throughout most of the summer contract prices for the 2009 and 2010 years remained fairly stable with a forecast 17% decline in 2008 being followed by a 6% decline in 2009 and with value stability in 2010. The banking crisis in early autumn and the impending sharp contraction in the economy have sent the outlook into much more bearish territory. IPD pricing currently points to a further 7% decline in average capital values in the last three months of 2008, a 15% decline in 2009 and an 11% decline in 2010, taking the indicated absolute decline from the peak in July 2007 through to December 2010 to roughly 50%. 

Property Shares

Between April and September, Pan European property share prices fell by an average of 24%. The diversity of performance was wider than normal, the common theme being that investors sought to concentrate their portfolios on stocks with quality balance sheets, limited near-term debt maturities, and small or non-existent development pipelines, and aggressively sold stocks with high leverage and near term refinancing needs. This trend was particularly noticeable in the latter half of the six month period as concerns over the looming credit drought were more in evidence. The other feature of stock price movements was that large companies generally outperformed small companies as investors sought safety in liquid securities. Indeed the day-to-day marketability of the smallest companies, particularly those on AIM often became almost non-existent.  

The best performances came from Swiss and Belgian stocks which declined by 3.5% and 6% respectively. The Swiss performance was assisted by the strength of the local currency. France and Netherlands did well with falls of around 15% and UK stocks outperformed declining by 21% in the period. In the worst performing category there were some veritable train wrecks with Norway off 75%, Spain off 62%, Denmark down 55% and Austria down 50%. 

Since the end of September prices have been extremely volatile. The Sector fell 28% in the first 28 days of October, rose 17% in the next 8 days and fell 7% in two days thereafter. Added together these movements make over 50% in just 26 trading days. Price moves in this period have mirrored the pattern of sentiment in the interim period. 

Outlook

The deterioration in credit and property investment markets has been very rapid over the autumn. So rapid that the historic asset values, balance sheet ratios and cash flow numbers for most quoted property companies are considered by the market to be seriously out of date. As a result, on their historic numbers, many shares look outstandingly cheap as they apparently stand on very wide discounts and sometimes on ravishing dividend yields. We know, and the stock market already anticipates, that 2009 will bring a long series of depressing results with falling property valuations and weaker cash flows. Loan to value ratios will rise and dividends will come under pressure. The lowly geared companies will pat themselves on the back for their sagacity (for which sometimes read indolence), and the highly geared will moan about their property being unfairly valued at distressed sale prices. If the market will permit, 2009 will see a fair number of emergency rights issues aimed at restoring equilibrium to balance sheets. 

But if the credit markets can deteriorate with frightening speed, can they recover equally quickly? If they can, then have we seen the bottom of the property share market already? These markets have been so full of surprises that the recovery question is worth contemplating. However, all past evidence suggests that, whatever the short term level of base or interbank lending rates, banks tighten their loan availability far faster than they loosen it. Most of the banks with heavy commercial property books, both here and on the Continent, have or are seeking state aid to restore their credit-worthiness. That state aid will come with strings attached and amongst these strings is not likely to be one that encourages them to expand their commercial property credit if that will be at the expense of maintaining credit availability to home buyers and small businesses. Rather the reverse.

Property share prices are now starting to discount most, if not all, the anticipated decline in property values in 2009. We ourselves have been running spreadsheet programmes to try and estimate the 'bottom of the cycle' net asset values for our investment universe. Some stocks are already priced below these figures, others (especially where the figure is nil), are not. We are also forecasting an increase in dividend cuts and passes. 

We think that to get the commercial property market moving forward will require the injection of a lot of fresh capital, perhaps as much as £1oo billion in the UK and another £200 billion in Europe. This capital can be found by attracting investors away from other asset classes, but to attract them in sufficient quantity, and within a reasonable timeframe, pricing has to be rock bottom and needs to take account of the worsening outlook both for rental values and tenant's credit worthiness. At the moment the rival attractions of general equities and the high yields on corporate bonds do not suggest that capital is going to rush into commercial real estate in the near future. However, the asset class has defensive qualities in a cyclical earnings downturn. Businesses need premises and rent is a first charge while ordinary dividends are a last charge. As Governments print money to solve the credit mess they may be sowing the seeds of future inflation against which real estate is likely to offer better protection than bonds. 

Directors' Responsibility Statement

The Directors acknowledge responsibility for the interim results and approve this Half-Yearly Financial Report.

The Directors of TR Property Investment Trust plc confirm that to the best of their knowledge:

• 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 and financial position of the Company as required by the Disclosure and Transparency Rules ('DTR') 4.2.4R;

• the Chairman's Statement together with the following Managers' Reports 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

• the report includes a fair review of the information required by DTR 4.2.8R.

Approved by the Board on 25 November 2008 and signed on its behalf by Peter Salsbury, Chairman.

Ordinary Share Class - Manager's Report

I said in the Annual Report that we would try to be patient and disciplined so as to preserve your capital. I think we were patient and fairly disciplined over the six months but the sharp fall in both the NAV and the share price in the period means that we failed in the latter objective. It was a tough six months during which, month by month, we added to the cash holdings. Virtually every purchase was a mistake, virtually every sale a success. Looking in the rear view mirror I should have sold more earlier, but no news flow or reasonable forecast in the April to July period prepared us to expect the convulsions that have taken place in September and October. Managing a dedicated fund it is my job to place your capital in the market as efficiently and wisely as I am able. With a few minor exceptions I am reasonably proud of the portfolio we hold in terms of the quality of the underlying cash flows and the capital structure of the businesses in which we are invested. Our see-through gearing is very modest, and so far as I can judge, our dividend income is as safe as it can be. 

Avoiding stocks which have high levels of debt has been the overriding feature of my stock selection. We have entered a credit drought. Some companies have seen this coming early enough to adjust their balance sheets by sales and by curtailing their expenditure plans, but property companies have failed to make the necessary adjustments to their strategies and business plans early enough to avoid either becoming forced sellers of assets or having to go cap in hand to their shareholders for emergency rights issues during 2009. Neither of these actions will be good for their share prices.  

Performance

In total return terms the Ordinary share NAV beat the FTSE EPRA/NAREIT European Property Index in Sterling with a decline of 18.3% versus a decline of 21.4% by the Index. The bulk of the outperformance was due to our cash holdings. However we also benefited from the outperformance by our directly held property, by our underweight positions in Norway, Austria and Germany, our underexposure to residential markets both in the UK and Europe and from our general avoidance of stocks with high leverage. Currency movements had only a modest impact on overall performance but we were underweight in the Swiss property stocks whose performance benefited from the strength of the Swiss Franc. 

Distribution of Assets

The percentage figures in the distribution of investments table exclude our cash holdings which rose over the period from £37.3m to £78.3m as shown in the balance sheet. As to the invested assets, there was little change in their distribution over the half year period, with UK equities steady at around 46%, non UK equities at 40% (41% at March) and directly held property at 14% (13% at March). For reference, the UK component of the benchmark was 39% at the end of September 2008.

Outside the UK, the portfolio is dominated by holdings in companies listed in France. This is not a call on the French economy but because a number of major French companies hold a combination of decent quality stable assets combined with low leverage and what I hope will be a capacity to maintain or even grow their dividends through 2009 and 2010. This means that, on a see-through basis the portfolio continues to have nearly half its assets located in and around London and Paris. 

Largest Equity Investments

The top ten holdings had a value of £230m and accounted for 57% of the total assets compared with 48% at March. They have changed very little over the summer either in order or content. The two departures are St Modwen and Great Portland and the two arrivals are Liberty International and Klépierre. Share price performance accounts for three of the changes. St Modwen was the one top share in which we seriously reduced our holding. This business has been a long term favourite of mine and it remains an excellent one, but in the current environment there are few buyers for residential development land and the company's leverage is well above the sector average. 

The two biggest holdings - Unibail and Land Securities - both outperformed falling 15% and 19% respectively. Liberty was the top performer dropping only 6% - supported by news of the purchase of share stakes by two other global shopping centre owners. The only two shares in the top ten to underperform the benchmark were Big Yellow which was 1% behind and Klépierre which was 7% behind.  

Revenue

Revenue per Ordinary share rose by 4.8%. The Ordinary share class income statement shows that our income has dropped relative to the first half of last year. This is because the Sigma share class was only created in July 2007. At that point it took away its share of the net income as can be seen on the third line up from the bottom of the statement. 

Overall income was roughly in line with my 5% to 10% growth forecast made in the Annual Report. We have suffered very few dividend shocks so far, but equally we are seeing very few dividend increases of substance. Other operating income comprises interest from cash on deposit of £1.4m . Rental income was slightly ahead of forecast. Management fees declined in line with the fall in net assets, and interest payable was limited to the two debentures the larger of which is repayable at the end of November 2008. The provisional tax rate has been taken at 22% versus 16% in the previous half year and 19% at the year end. The main reason for the increase in rate is the change in income mix over the period. The REITs (newly formed in January 2007) have (generally) gradually increased the proportion of their distributions paid as PIDs (Property Income Distributions) which is taxed in the same way as property rental income, rather than UK dividend income which is not taxed in the Trust. As the cash balances have increased, so too has interest income, which again is subject to Corporation tax in the Trust. To date we have had sufficient excess expenses brought forward to be able to shelter this income from tax so this has not led to an increase in the quantum of tax actually paid, however, accounting convention requires that as the brought forward expenses are utilised the full tax charge is applied to the income account, reflecting the level of taxation which would be applied if the relief was not available.

The decline in economic activity now being seen in the UK and Europe may mean that our dividend and interest income comes under some pressure in 2009. With UK and Euro base rates expected to decline sharply in the next six months, our interest income from cash holdings will certainly diminish. The outlook for dividends has become more uncertain. At present I remain fairly confident that the Ordinary share class revenue per share will increase in the current year, the rate of increase is likely to be in the nil to 5% range rather than the 5% to 10% range forecast in May. 

Revenue per share in the financial year starting in April 2009 remains cloudy, and there will be dividend cuts which are hard to foresee at present. We will be working hard to try to ensure that the revenue per share shows no serious decline in the next financial year. Shareholders should bear in mind that the Trust has a total return objective and we normally avoid buying any asset purely for the sake of its high initial income. 

Gearing, Debt and Debentures

As already noted the cash holdings in the Ordinary share class portfolio more than doubled to £78m over the half year. However this is gross cash as the Trust still has borrowings in the form of the two debentures. The larger of these, the £25m 8.125% loan, is repayable at the end of November 2008 and the Ordinary share class's portion of this debenture is £20.25m. The £15m remaining debenture is not repayable until 2016 and the Ordinary share class's portion of this loan is £12.2m. So the net cash in the Ordinary class at the end of September was some £46m or 10% of net assets of £453m. This gross cash figure also includes the income accumulated since the start of the financial year and the vast majority of this will be paid out in dividends. 

As noted in the Chairman's statement the Trust has renewed its loan facility with the Royal Bank of Scotland and the Ordinary share class's portion of this facility is £40m. As expected, the new facility is more expensive and the non-utilisation fee is higher. We have no immediate intention of regearing the Trust, but this facility gives us the potential ammunition to do so if and when we feel that market pricing and the economic outlook again justify the use of fresh borrowings. 

Reducing the portfolio exposure to higher leveraged equities and increasing the cash holdings has lowered the Ordinary share class' 'see-through loan to value' (which adds the proportionate debt of all our equity investments to our on balance sheet net cash). The figure at the end of September was 33% versus the 37% figure at the end of March. The benchmark's see through leverage has risen over the half year to a current level of 46% (from 42% at the end of March). 

Direct Property Portfolio

Our directly held property portfolio fell in value by 8.4% in the half year and produced a total return of minus 5.4%, easily outperforming both our equity investments and the IPD Monthly Index which showed a total return of minus 7.5% on the six months. There were no fresh property purchases. We sold one small property in Wandsworth in May and exchanged contracts to sell Elizabeth House, Woking in September for £7.5m and this sale was completed in October. The March 2008 valuation was £9.05m. 

At the Colonnades complex in Bayswater the supermarket lease was acquired by Waitrose from Bishops Stores during the summer, and as part of the transaction the Trust was able to raise the passing rent from £260,000 per annum to £471,000 per annum. We are very pleased to welcome Waitrose to the building and their presence raises the status and the potential rental value of the surrounding retail space. The Colonnades was the Trust's fourth largest asset at the end of September and, as a result of the substantially increased rent now payable by Waitrose, the value of the property marginally increased over the six months. 

Over the past six months we have been concentrating on maintaining this occupancy level by expending and reorganising leases where possible and the portfolio is currently fully let. With the current economic outlook it will be a surprise if we do not suffer from any defaults in 2009, but we hope this will be restricted to our smallest tenants. 

Sigma Share Class - Manager's Report

Introduction

Throughout this difficult period, the Sigma share class has continued its transition from a portfolio dominated by large cap stocks (64% of the portfolio at its creation in July 2007) towards its intended portfolio of smaller Pan European property companies. At the end of September holdings with a market cap of less than £1bn accounted for 69% of the equities held (excluding the cash position). As I commented in the Annual Report this process of asset rotation has reflected market conditions and therefore has been slower than expected. Small companies have underperformed their larger brethren over the period and we therefore feel somewhat vindicated in our decision to delay the conversion process. Back at the year end, I also highlighted the fact that the fund has held net cash since launch and this has remained the case in the first half of the financial year. As the economic outlook deteriorated I continued to sell the large cap holdings and tended to hold the proceeds in cash prior to investing gingerly in a number of smaller companies. With the benefit of hindsight, virtually every purchase was a mistake and virtually every sale a success. This is just as applicable a statement in the smaller cap arena. The net cash (after deducting Sigma's share of the two debentures) at the beginning of the financial year was 5% of net assets, it peaked at 21% in July and was 16% at the half year. Post the half year, the net cash has fallen as I have continued to seek out those businesses with good underlying cash flow and capital structures appropriate to these difficult times. 

Performance

Over the half year, the Sigma share NAV total return was minus 22.8% and this figure compares with a total return from the FTSE EPRA/NAREIT benchmark of minus 21.4%. On a price only (as opposed to total return) basis Sigma's NAV declined by 23.3%, whilst the benchmark (price only) fell 23.7%, a very modest out-performance reflecting the fact that the total return measurement includes income; Sigma's small cap focused portfolio yields less income than the benchmark. Our own analysis shows that small cap stocks within the benchmark produced a price only return of minus 30.9%, significantly poorer than the benchmark. Although not a linear relationship, the observation that the smaller the company, the tougher time the share price has had, has proven to be a useful rule of thumb. The correct investment strategy over the period was to hold cash and minimise the rotation into smaller companies which, as a group, underperformed their larger peers. However, there was also a wide divergence of performance in both larger and smaller names which I will comment on further.

Investment Activity

The pace of investment activity continued to be determined by market conditions. Turnover (purchases and sales divided by 2) was 25% of net assets, down from nearly 45% in the previous six months. As previously mentioned, the deceleration of the repositioning occurred as I sold large caps and held the proceeds in cash for longer than originally anticipated. In addition, the volatility within equity markets also led to rotation within a number of the core smaller companies in the portfolio. In the early part of the half year, between April and June, sales outnumbered purchases almost 3:1 as the outlook for debt availability deteriorated and credit spreads began to reflect the wider malaise we now find ourselves in and share prices fell. The consequence of this strategy was the increase in cash. Amongst the larger stocks, the focus of sales in this early part of the half year, was in the UK. Virtually all the remaining holdings in Hammerson and Liberty were sold reflecting my concerns over both development risk and the broader retail sector. Keen to reduce the exposure to the City office market, I sold 30% of the British Land holding. The underperformance of the UK versus Continental Europe meant that by mid June a number of Continental stocks looked expensive (relative to the UK) and large cap sales during the summer were Continental Europe focused, notably Foncière des Régions (highly leveraged conglomerate) and Klépierre (leveraged retail investor). There are now only four large cap stocks in Sigma's top 20 positions; Land Securities, Unibail, British Land and Corio. 

Although I maintained the rotation from large cap stocks, only 35% of sales in the half year were larger companies. I also reduced exposure to those stocks with the greatest leverage, those with significant development commitments and those with business plans tied to the weakest sectors of the market (residential, particularly in the UK, hotels and some retail submarkets). Two holdings were sold in their entirety in the period, NR Nordic & Russian Properties, which I felt would be unable to execute its business plan in the Baltic region, and Foncière des Murs which invests predominately in the hotel sector. Both companies had many positive aspects, particularly management experience, but I felt they would underperform in this economic climate. I significantly reduced our position in St Modwen, where the business model relies on selling land to residential developers and owner-occupiers. This business has a strong market niche and quality management. I would expect that it will be back as one of our 10 largest holdings in the future. In general terms, purchases, where they occurred, accelerated towards the end of the period. Acquisitions remained focused on businesses in Western European markets with stable cashflows and low development exposure such as Beni Stabili (Italy), Vastned Retail (Netherlands), Retail Estates (Belgium), Eurocommercial (Netherlands) and Hansteen. 

Distribution of Assets

At the half year, small cap stocks were 69% of the invested portfolio (excluding cash). This compares to a figure of 54% at the end of March. The geographical distribution has also adjusted with UK equities reducing from 52.8% to 48.6%. This was primarily due to selling down the larger companies. Our investment in Emerging Europe is included in Other European Securities at 8.5% (5.5% in March) and this exposure has been a disappointment. Although I sold the significant position in NR Nordic & Russian Properties in a timely manner, I was slow to recognise the speed at which these emerging economies would suffer as indebtedness and ballooning national deficits weakened financial stability. Unlike much of Western Europe, these economies were experiencing construction booms which have come to an abrupt halt but will result in the oversupply of commercial property in the short term.  

Largest Equity Investments

Investors will note that Land Securities and Unibail remain our two largest positions. Not only were they the largest positions at launch but (amongst the larger companies) I have reduced their positions the least and this reflects their (relatively) defensive characteristics. They have lower than average leverage, high quality core portfolios, lower development exposure (as a % of assets) and strong corporate governance and clarity of reporting. Amongst the 10 largest holdings (which account for 53.1% of total investments) the changes were the introduction of Eurocommercial Properties and Foncière Paris France. Both businesses are sector specialists with conservatively leveraged balance sheets and long established management who are also significant shareholders. The departures were Local Shopping REIT and St Modwen. I have commented on St Modwen earlier, and Local Shopping REIT dropped out due to share performance.

Revenue

Sigma's objective is to maximize returns from a portfolio of smaller property companies. These smaller companies are generally more focused on total return than income and as stated in the prospectus, Sigma was likely to have a lower dividend yield than the Ordinary shares going forward and that is indeed the case. A fair comparison with the first half of last year is not feasible as Sigma was launched on 24 July 2007. To remind investors, the process of revenue distribution last year was adjusted to reflect the earnings which were 'transferred in' on creation of the share class. Post the launch a special dividend of 1.1p was paid in October followed by the interim dividend of 0.2p reflecting the period from launch to the half year. The earnings for the first half of this year at 2.05p are ahead of the aggregate of the 'transferred in' earnings and the revenue for the short period from launch to 30 September last year. The increase is due to a number of factors. Not only have the dividends received increased in line with our 5-10% growth forecast but the deceleration of the rotation from larger companies has led to greater income receipts than expected as the portfolio continues to hold a number of higher yielding larger stocks. We have also invested in fewer non-income producing companies (such as developers who tend to recycle cash rather than pay dividends) due to market conditions. Finally share buybacks have also meant that the increased income is shared amongst fewer shares. As and when conditions improve it is quite possible that the increased investment, particularly in development companies, may lead to a reduction in revenue.

The tax rate of 19% in the revenue account is lower than that for the Ordinary share class due to a smaller proportion of PID income and no direct rental income. However, as with the Ordinary share class, the increasing amount of interest income is again subject to corporation tax in the Trust.

For the second half of the year, the fall in base rates will lead to interest income diminishing but we see no reason to adjust our income expectations for the current full year. However, looking forward past April 2009, the combination of slowing economic growth and the risk that financing costs rise (even if base rates fall) as banks demand wider margins on lending is likely to lead to falls in earnings and cuts in dividends in the 2009/10 financial year.

Debt, Gearing and Debentures

I highlighted in the introduction to this report the fact that Sigma has held significant amounts of cash throughout the period reflecting the worsening market conditions. At 30th September the gross cash position was £24.1m which includes £7.6m to cover Sigma's share of the two debentures. The first (and larger) debenture is due for repayment at the end of this month and Sigma's share is £4.75m. The net cash position was 16% of NAV.

As noted in the Chairman's Statement the loan facility with the Royal Bank of Scotland has been renewed. The Sigma share class' portion of this facility is £10m. Despite higher costs, with the current tightening of credit availability we are keen to keep the facility in place to have the ability to introduce gearing quickly when the outlook improves.

Relative to the benchmark, Sigma has been underweight in Continental Europe in terms of stock exposure and therefore underweight in the Euro. Although the Trust does not hedge currency exposure, the majority of the free cash was held in Euros which removed this Euro underweight.

As well as looking at the (negative) gearing figure at the balance sheet level we also calculate the 'see-through loan to value' (which adds the proportionate debt of all our equity investments to our on balance sheet net debt, or as is currently the case, net cash). This has continued to fall as I have sought to reduce exposure to more highly leveraged balance sheets and those companies with large committed capital expenditure. The figure at the end of September was 37% versus the figure in March of 39%. The benchmark's equivalent figure has risen to 46% (from 42% in March).

Ordinary Share Class Income Statement 

for the half year ended 30 September 2008

	(Unaudited) Half year ended  30 September 2008			(Unaudited) Half year ended  30 September 2007			(Audited) Year ended  31 March 2008
	Revenue Return	Capital Return	Total	Revenue Return	Capital Return	Total	Revenue Return	Capital Return	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Income
Investment income	12,610	-	12,610	16,702	-	16,702	22,941	-	22,941
Other operating income	1,347	-	1,347	260	-	260	886	-	886
Gross rental income	2,130	-	2,130	1,973	-	1,973	4,025	-	4,025
Service charge income	423	-	423	1,095	-	1,095	1,943	-	1,943
Losses on investments held at fair value	-	(113,286)	(113,286)	-	(184,337)	(184,337)	-	(222,109)	(222,109)
	______	_____	_____	______	_____	_____	______	______	______
Total income	16,510	(113,286)	(96,776)	20,030	(184,337)	(164,307)	29,795	(222,109)	(192,314)
	______	_____	_____	______	_____	_____	______	______	______
Expenses
Management and performance fees	(1,133)	(2,207)	(3,340)	(1,818)	(1,125)	(2,943)	(3,025)	(1,728)	(4,753)
Direct property expenses, rent payable and service charge costs	(570)	-	(570)	(1,457)	-	(1,457)	(2,450)	-	(2,450)
Other expenses	(282)	-	(282)	(178)	-	(178)	(593)	-	(593)
	______	_____	_____	______	_____	_____	______	______	______
Total operating expenses	(1,985)	(2,207)	(4,192)	(3,453)	(1,125)	(4,578)	(6,068)	(1,728)	(7,796)
	______	_____	_____	______	_____	_____	______	______	______
Operating profit/(loss)	14,525	(115,493)	(100,968)	16,577	(185,462)	(168,885)	23,727	(223,837)	(200,110)
Finance costs	(829)	(829)	(1,658)	(1,384)	(1,384)	(2,768)	(2,174)	(2,174)	(4,348)
	______	_____	_____	______	_____	_____	______	______	______
Profit/(loss) from operations before tax	13,696	(116,322)	(102,626)	15,193	(186,846)	(171,653)	21,553	(226,011)	(204,458)
Taxation	(3,053)	2,005	(1,048)	(2,469)	940	(1,529)	(4,066)	2,750	(1,316)
	______	_____	_____	______	_____	_____	______	______	______
Net profit/(loss) before reorganisation	10,643	(114,317)	(103,674)	12,724	(185,906)	(173,182)	17,487	(223,261)	(205,774)
Transfer to Sigma shares	-	-	-	(2,203)	26,806	24,603	(2,203)	26,806	24,603
	______	_____	_____	______	_____	_____	______	______	______
Net profit/(loss)	10,643	(114,317)	(103,674)	10,521	(159,100)	(148,579)	15,284	(196,455)	(181,171)
	______	_____	_____	______	_____	_____	______	______	______
Earnings/(loss) per Ordinary share (note 3)	4.13p	(44.40)p	(40.27)p	3.94p	(59.61)p	(55.67)p	5.79p	(74.41)p	(68.62)p

Ordinary Share Class Balance Sheet

as at 30 September 2008

	30 September  2008	30 September 2007	31 March 2008
	(Unaudited)	(Unaudited)	(Audited)
	£'000	£'000	£'000
Non-current assets
Investments held at fair value	405,359	642,063	564,798
	______	______	______
Current assets
Other receivables	10,690	4,691	5,196
Cash and cash equivalents	78,261	11,022	37,329
	______	______	______
	88,951	15,713	42,525
Other payables	(25,330)	(7,214)	(23,578)
	______	______	______
Net current assets	63,621	8,499	18,947
	______	______	______
Total assets less current liabilities	468,980	650,562	583,745
Non-current liabilities	(15,941)	(36,856)	(15,846)
	______	______	______
Net assets	453,039	613,706	567,899
	______	______	______
Net asset value per Ordinary share	176.28p	233.79p	219.61p

Sigma Share Class Income Statement 

for the half year ended 30 September 2008

	(Unaudited) Half year ended  30 September 2008			(Unaudited) Period from Inception to  30 September 2007			(Audited) Period from Inception to  31 March 2008
	Revenue Return	Capital Return	Total	Revenue Return	Capital Return	Total	Revenue Return	Capital Return	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Income
Investment income	3,459	-	3,459	324	-	324	1,894	-	1,894
Interest receivable and similar income	498	-	498	132	-	132	471	-	471
Losses on investments held at fair value	-	(34,204)	(34,204)	-	(11,337)	(11,337)	-	(18,501)	(18,501)
	______	______	______	______	______	______	______	______	______
Total income	3,957	(34,204)	(30,247)	456	(11,337)	(10,881)	2,365	(18,501)	(16,136)
	______	______	______	______	______	______	______	______	______
Expenses
Management and performance fees	(459)	(229)	(688)	(268)	(134)	(402)	(775)	(388)	(1,163)
Other expenses	(70)	-	(70)	(21)	-	(21)	(94)	-	(94)
	______	______	______	______	______	______	______	______	______
Total operating expenses	(529)	(229)	(758)	(289)	(134)	(423)	(869)	(388)	(1,257)
	______	______	______	______	______	______	______	______	______
Operating profit/(loss)	3,428	(34,433)	(31,005)	167	(11,471)	(11,304)	1,496	(18,889)	(17,393)
Finance costs	(189)	(189)	(378)	(71)	(71)	(142)	(265)	(265)	(530)
	______	______	______	______	______	______	______	______	______
Profit/(loss) from operations before tax	3,239	(34,622)	(31,383)	96	(11,542)	(11,446)	1,231	(19,154)	(17,923)
Taxation	(622)	353	(269)	(16)	14	(2)	(126)	60	(66)
	______	______	______	______	______	______	______	______	______
Net profit/ (loss)	2,617	(34,269)	(31,652)	80	(11,528)	(11,448)	1,105	(19,094)	(17,989)
	______	______	______	______	______	______	______	______	______
Earnings/(loss) per Sigma share (note 3)	2.05p	(26.89)p	(24.84)p	0.06p	(8.75)p	(8.69)p	0.85p	(14.73)p	(13.88)p

Sigma Share Class Balance Sheet

as at 30 September 2008

	30 September 2008	30 September 2007	31 March 2008
	(Unaudited)	(Unaudited)	(Audited)
	£'000	£'000	£'000
Non-current assets
Investments held at fair value	91,281	138,694	132,952
Current assets
Other receivables	528	999	1,987
Cash and cash equivalents	24,105	20,651	14,552
	______	______	______
	24,633	21,650	16,539
Other payables	(7,391)	(2,284)	(7,932)
	______	______	______
Net current assets	17,242	19,366	8,607
Total assets less current liabilities	108,523	158,060	141,559
Non-current liabilities	(2,849)	(7,594)	(2,849)
	______	______	______
Net assets	105,674	150,466	138,710
	______	______	______
Net asset value per Sigma share	83.29p	114.17p	108.64p

GROUP INCOME STATEMENT 

for the half year ended 30 September 2008

	(Unaudited) Half year ended  30 September 2008			(Unaudited) Half year ended  30 September 2007			(Audited) Year ended  31 March 2008
	Revenue Return	Capital Return	Total	Revenue Return	Capital  Return	Total	Revenue Return	Capital  Return	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Income
Investment income	16,069	-	16,069	17,026	-	17,026	24,835	-	24,835
Other operating income	1,845	-	1,845	392	-	392	1,357	-	1,357
Gross rental income	2,130	-	2,130	1,973	-	1,973	4,025	-	4,025
Service charge income	423	-	423	1,095	-	1,095	1,943	-	1,943
Losses on investments held at fair value	-	(147,490)	(147,490)	-	(195,674)	(195,674)	-	(240,610)	(240,610)
	_____	_____	_____	_____	_____	_____	_____	_____	_____
Total income	20,467	(147,490)	(127,023)	20,486	(195,674)	(175,188)	32,160	(240,610)	(208,450)
	_____	_____	_____	_____	_____	_____	_____	_____	_____
Expenses
Management and performance fees	(1,592)	(2,436)	(4,028)	(2,086)	(1,259)	(3,345)	(3,800)	(2,116)	(5,916)
Direct property expenses, rent payable and service charge costs	(570)	-	(570)	(1,457)	-	(1,457)	(2,450)	-	(2,450)
Other expenses	(352)	-	(352)	(199)	-	(199)	(687)	-	(687)
	_____	_____	_____	_____	_____	_____	_____	_____	_____
Total operating expenses	(2,514)	(2,436)	(4,950)	(3,742)	(1,259)	(5,001)	(6,937)	(2,116)	(9,053)
	_____	_____	_____	_____	_____	_____	_____	_____	_____
Operating profit/(loss)	17,953	(149,926)	(131,973)	16,744	(196,933)	(180,189)	25,223	(242,726)	(217,503)
Finance costs	(1,018)	(1,018)	(2,036)	(1,455)	(1,455)	(2,910)	(2,439)	(2,439)	(4,878)
Profit/(loss) from operations before tax	16,935	(150,944)	(134,009)	15,289	(198,388)	(183,099)	22,784	(245,165)	(222,381)
Taxation	(3,675)	2,358	(1,317)	(2,485)	954	(1,531)	(4,192)	2,810	(1,382)
	_____	_____	_____	_____	_____	_____	_____	_____	_____
Net profit/(loss)	13,260	(148,586)	(135,326)	12,804	(197,434)	(184,630)	18,592	(242,355)	(223,763)
	_____	_____	_____	_____	_____	_____	_____	_____	_____
Earnings/ (loss) per Ordinary share  (note 3)	4.13p	(44.40)p	(40.27)p	3.94p	(59.61)p	(55.67)p	5.79p	(74.41)p	(68.62)p
Earnings/ (loss) per Sigma share (note 3)	2.05p	(26.89)p	(24.84)p	0.06p	(8.75)p	(8.69)p	0.85p	(14.73)p	(13.88)p

The total column of this statement represents the Group's Income Statement, 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. 

All income is attributable to the shareholders of the parent company. There are no minority interests. 

The final ordinary dividend of 3.30p in respect of the year ended 31 March 2008 was declared on 27 May 2008 and paid on 5 August 2008. The final Sigma dividend of 0.65p in respect of the year ended 31 March 2008 was declared on 27 May 2008 and paid on 5 August 2008. This can be found in the Group Statement of Changes in Equity for the half year ended 30 September 2008.

GROUP STATEMENT OF CHANGES IN EQUITY

	Share Capital		Share Premium Account £'000	Capital Redemption Reserve £'000	Retained Earnings		Total £'000
for the half year ended 30 September 2008 (Unaudited)	Ordinary £'000	Sigma £'000			Ordinary £'000	Sigma £'000
At 31 March 2008	64,650	15,960	43,162	42,699	431,040	109,098	706,609
Net loss for the period	-	-	-	-	(103,674)	(31,652)	(135,326)
Ordinary shares repurchased	(400)	-	-	400	(2,697)	-	(2,697)
Sigma shares repurchased	-	(101)	-	101	-	(555)	(555)
Ordinary dividends paid	-	-	-	-	(8,489)	-	(8,489)
Sigma dividends paid	-	-	-	-	-	(829)	(829)
At 30 September 2008	64,250	15,859	43,162	43,200	316,180	76,062	558,713
	Share Capital		Share Premium Account £'000	Capital Redemption Reserve £'000	Retained Earnings		Total £'000
for the half year ended 30 September 2007 (Unaudited)	Ordinary £'000	Sigma £'000			Ordinary £'000	Sigma £'000
At 31 March 2007	83,650	-	37,063	38,655	813,576	-	972,944
Net loss for the period	-	-	-	-	(173,182)	(11,448)	(184,630)
Ordinary shares repurchased	(2,554)	-	-	2,554	(23,360)	-	(23,360)
Ordinary shares converted to Sigma shares	(15,470)	15,470	-	-	(132,302)	132,302	-
Sigma shares issued (net of costs)	-	1,004	6,101	-	-	-	7,105
Ordinary dividends paid	-	-	-	-	(7,887)	-	(7,887)
At 30 September 2007	65,626	16,474	43,164	41,209	476,845	120,854	764,172
	Share Capital		Share Premium Account £'000	Capital Redemption Reserve £'000	Retained Earnings		Total £'000
for the year ended 31 March 2008 (Audited)	Ordinary £'000	Sigma £'000			Ordinary £'000	Sigma £'000
At 31 March 2007	83,650	-	37,063	38,655	813,576	-	972,944
Net loss for the period	-	-	-	-	(205,774)	(17,989)	(223,763)
Ordinary shares repurchased	(3,530)	-	-	3,530	(30,583)	-	(30,583)
Sigma shares repurchased	-	(514)	-	514	-	(3,507)	(3,507)
Ordinary shares converted to Sigma shares	(15,470)	15,470	-	-	(132,302)	132,302	-
Sigma shares issued (net of costs)	-	1,004	6,099	-	-	-	7,103
Ordinary and special dividends paid	-	-	-	-	(13,877)	(1,708)	(15,585)
At 31 March 2008	64,650	15,960	43,162	42,699	431,040	109,098	706,609

GROUP BALANCE SHEET

as at 30 September 2008

	30 September 2008 (Unaudited) £'000	30 September 2007 (Unaudited) £'000	31 March 2008 (Audited) £'000
Non-current assets
Investments held at fair value	496,640	780,757	697,750
Current assets
Other receivables	11,218	5,690	7,183
Cash and cash equivalents	102,366	31,673	51,881
	_________	_________	_________
	113,584	37,363	59,064
Other payables	(32,721)	(9,498)	(31,510)
	_________	_________	_________
Net current assets	80,863	27,865	27,554
	_________	_________	_________
Total assets less current liabilities	577,503	808,622	725,304
Non-current liabilities	(18,790)	(44,450)	(18,695)
	_________	_________	_________
Net assets	558,713	764,172	706,609
	_________	_________	_________
Capital and reserves
Called up share capital	80,109	82,100	80,610
Share premium account	43,162	43,164	43,162
Capital redemption reserve	43,200	41,209	42,699
Retained earnings	392,242	597,699	540,138
	_________	_________	_________
Equity shareholders' funds	558,713	764,172	706,609
	_________	_________	_________
Net asset value per :
Ordinary share	176.28p	233.79p	219.61p
Sigma share	83.29p	114.17p	108.64p

  GROUP CASH FLOW STATEMENT

For the half  year ended 30 September 2008

	Half year ended 30 September 2008 (Unaudited)	Half year ended 30 September 2007 (Unaudited)	Year  ended 31 March 2008 (Audited)
	£'000	£'000	£'000
Reconciliation of operating revenue to net cash inflow from operating activities
Net loss before tax	(134,009)	(183,099)	(222,381)
Financing activities	2,036	2,910	4,878
Losses on investments held at fair value through profit or loss	147,490	195,674	240,610
Decrease/(increase) in accrued income	2,598	359	(1,576)
Increase in other receivables	(491)	(1,731)	(363)
Increase/(decrease) in other payables	2,041	(5,988)	(7,246)
Net sales of investments	54,615	104,236	141,653
Increase in sales for settlement	(5,897)	(353)	(1,548)
(Decrease)/increase in purchases for settlement	(1,159)	729	(5,072)
	_________	_________	_________
Net cash inflow from operating activities before interest and taxation	67,224	112,737	148,955
Interest paid	(2,036)	(2,910)	(4,881)
Taxation on investment income	(1,223)	(1,110)	(1,571)
	_________	_________	_________
Net cash inflow from operating activities	63,965	108,717	142,503
Financing activities
Equity dividends paid	(9,318)	(7,887)	(15,585)
Issue of Sigma shares	-	7,105	7,196
Purchase of Ordinary shares	(2,697)	(26,212)	(30,582)
Purchase of Sigma shares	(555)	-	(3,508)
Repayment of loans	-	(50,860)	(50,860)
	_________	_________	_________
Net cash used in financing	(12,570)	(77,854)	(93,339)
	_________	_________	_________
Increase in cash	51,395	30,863	49,164
Cash and cash equivalents at start of the period	51,881	535	535
Exchange movements	(910)	275	2,182
	_________	_________	_________
Cash and cash equivalents at end of the period	102,366	31,673	51,881
	_________	_________	_________

Notes to the Financial Statements 

1	Basis of accounting
	The financial statements have been prepared on the basis of the accounting policies shown in the annual financial statements for the year ended 31 March 2008 and in accordance with International Accounting Standard (IAS) 34 'Interim Financial Reporting'.
	The financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£'000) except where otherwise indicated.
2	Management and performance Fees
			(Unaudited) Half year ended  30 September 2008			(Unaudited) Half year ended  30 September 2007						(Audited) Year ended  31 March 2008
			Revenue Return £'000	Capital Return £'000	Total £'000	Revenue Return £'000		Capital Return £'000		Total £'000		Revenue Return £'000		Capital Return £'000	Total £'000
	Management fee		1,592	796	2,388	1,856		928		2,784		3,503		1,751	5,254
	Performance fee		-	1,640	1,640	-		184		184		-		184	184
	Irrecoverable VAT thereon		-	-	-	230		147		377		297		181	478
			_____	____	____	____		____		___		____		____	___
			1,592	2,436	4,028	2,086		1,259		3,345		3,800		2,116	5,916
			_____	_____	_____	_____		_____		____		_____		_____	____
3	Loss per share
a	Loss per Ordinary share
	The loss per Ordinary share can be analysed between revenue and capital, as below.
						Half year ended  30 September 2008 (Unaudited) £'000			Half year ended  30 September  2007  (Unaudited) £'000				Year ended  31 March  2008 (Audited)  £'000
	Net revenue profit					10,643			10,521				15,284
	Net capital loss					(114,317)			(159,100)				(196,455)
						_______			_________				_________
	Net total loss					(103,674)			(148,579)				(181,171)
						_______			_________				_________
	Weighted average number of Ordinary shares in issue during the period					257,466,940			266,902,670				264,026,681
						pence			pence				pence
	Revenue earnings per Ordinary share					4.13			3.94				5.79
	Capital loss per Ordinary share					(44.40)			(59.61)				(74.41)
						_______			_________				_________
	Loss per Ordinary share					(40.27)			(55.67)				(68.62)
						_______			_________				_________
b		Loss per Sigma Share
		The loss per Sigma share can be analysed between revenue and capital, as below.
							Half year  ended 30 September 2008 (Unaudited) £'000				Period from inception to 30 September 2007 (Unaudited) £'000			Period from  inception to 31 March 2008 (Audited) £'000
		Net revenue profit					2,617				80			1,105
		Net capital loss					(34,269)				(11,528)			(19,094)
							_______				_______			_________
		Net total loss					(31,652)				(11,448)			(17,989)
							_______				_______			_________
		Weighted average number of Sigma shares in issue during the period					127,417,568				131,795,747			129,568,877
							pence				pence			pence
		Revenue earnings per Sigma share					2.05				0.06			0.85
		Capital loss per Sigma share					(26.89)				(8.75)			(14.73)
							_______				_______			_________
		Loss per Sigma share					(24.84)				(8.69)			(13.88)
							_______				_______			________
4		Changes in share capital
		During the half year, the Company made market purchases for cancellation of 1,600,000 Ordinary shares of 25p each and 805,000 Sigma shares of 12.5p each. At 30 September 2008 there were 257,000,000 Ordinary shares of 25p and 126,875,000 Sigma shares of 12.5p in issue.
5		Comparative information
		The financial information contained in this Half-Yearly Financial Report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the half year ended 30 September 2007 and 30 September 2008 has not been audited. The figures and financial information for the year ended 31 March 2008 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 included the report of the auditors, which was unqualified and did not contain a statement under either section 237(2) or 237(3) of the Companies Act 1985.

For further information please contact:

Chris Turner         

Fund Manager - Ordinary share class      

TR Property Investment Trust plc     

Telephone: [phone]     

Marcus Phayre-Mudge

Fund Manager - Sigma share class

TR Property Investment Trust plc

Telephone: [phone]    

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END

 

 

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