Preliminary Results

Standard Life Invs Property Inc Tst 31 March 2008 31 March 2008 Standard Life Investments Property Income Trust Limited Preliminary Results in respect of the year ended 31 December 2007 Financial Highlights â€¢Dividends per share up 1% to 6.76p â€¢Dividend yield of 8.7% based on year end share price â€¢Net Asset Value per share decreased by 15.9% to 111.6p â€¢Value of property portfolio is Â£178.2m â€¢Six properties disposed over the period for Â£41.1m Financial Summary 31 December 2007 31 December 2006 % Change IFRS Net Asset Value per share * 113.3p 127.8p -11.3% Published adjusted IFRS Net Asset Value per share ** 111.6p 132.7p -15.9% Price per share 77.8p 125.3p -37.9% Value of total assets Â£219.4m Â£253.4m -13.4% Loan to Value *** 27.9% 37.2% - Cash position Â£34.5m Â£5.2m - Dividends per share 6.760p 6.695p 1.0% * Calculated under International Financial Reporting Standards. ** Calculated under International Financial Reporting Standards, adjusted to exclude deferred taxation and to include the fourth quarter dividend. *** Including cash offset Extract of the Chairman's Statement 'In my interim statement, I mentioned that returns from UK commercial property were beginning to slow and were likely to fall in some sectors. Since that statement the real estate market has seen a major price correction which had not been forecast. This was driven in part by the natural correction of the over pricing following a three year strong bull market, and in part by the impact of the credit crunch. The listed sector suffered from falling share prices before the direct market saw capital falls, but over the course of the year both direct and indirect had respective negative total returns of -5.5% and -36.7% as measured by the IPD monthly index and FTSE All Share Real Estate Index. Income and Total Return I am pleased to report that within the context of the market generally, your Company's property portfolio held up relatively well with a total return of -4.6% over the year (IPD monthly index -5.5%). Your Company continues to provide an above average level of income with the property portfolio returning 6.1% income return for 2007 against the IPD monthly index of 4.9%. The interim dividend of 1.69p per share in respect of the quarter ended 31 December 2007 was paid on 29 February 2008. Total dividends for the year ended 31 December 2007 were 6.76p per share, an increase of 1% on the previous year. At the year end, the Company's ordinary shares provided an attractive dividend yield of 8.7% compared with a yield of 3.0% for the FTSE All-Share Index. Net Asset Value The adjusted IFRS net asset value of the Company was 111.6p at 31 December 2007, representing a decrease of 15.9% over the year. The property portfolio, as measured by IPD, produced a total return of -4.6%, comprising an income return of 6.1% and capital growth of -10.1%. Strategy Review and Activity Following a strategic review of the portfolio, the Company sold a portfolio of 6 properties in the summer for Â£41.1m. The sales were identified as part of a desire to maintain a strong income stream, and to reduce the Company's exposure to shorter leases or properties that the Investment Manager felt had specific risks for the Company. This action to reduce the gearing level proved to be propitious in light of the subsequent fall in property values and helped to reduce, to an extent, the negative impact on the asset value. The action taken by the Investment Manager was also consistent with the Board's objective of managing the future income stream from the portfolio. The Company did not acquire any properties over the reporting period, although it did exchange on one purchase of an industrial building in Rainham, East London for Â£7.5m which completed on 14 March 2008. The average unexpired lease term for the portfolio was 8.7 years which is slightly longer than the IPD (market) average. As at 31 December 2007, the Company had cash resources of Â£34.5m (excluding tenant deposits) representing 40.9% of the outstanding borrowings of Â£84.4m. Â£9.85m of debt drawn down under the revolving credit facility was repaid in the summer following the portfolio sale. In the current volatile markets the Board and Investment Manager are focussed on keeping the Company's gearing levels down. Taking account of the present outlook for the UK commercial property market and the Company's current level of gearing, the Board and the Investment Manager remain confident that the Company is well placed to maintain its dividend and meet all banking covenants. The Board and the Investment Manager will keep under review the best use for the Company's cash resources, taking account of all market factors, which are currently held in a AAA money market fund managed by Standard Life Investments. After the reporting period the Company completed on the sale of its largest asset, Wellington House, London, for Â£17.65m and the proceeds are being held in cash. Following the sale the loan to value ratio of the Company's portfolio (with cash offset) is 20.2%. Outlook The medium term outlook for the UK commercial property market is positive with high single digit returns forecast for 2009 - 2012. In the short term, 2008 is likely to remain challenging, with further capital falls in the first half leading to a negative total return over the year. Tenant demand has held up well so far and, assuming the economy grows at below trend as forecast, the low level of supply in most markets should provide a good environment for rental income growth. Your Company is well placed to benefit from the current market conditions. It has low void levels and a secure income stream, and following the sale of assets that did not meet the desired investment profile for the Company's portfolio, it now has cash resources to take advantage of the market conditions and acquire assets that the Board and Investment Manager believe will perform well for the Company.' David Moore Chairman 31 March 2008 All enquiries to: The Company Secretary Northern Trust International Fund Administration Services (Guernsey) Ltd Trafalgar Court Les Banques St Peter Port Guernsey Tel: 01481 745001 Richard England Gordon Humphries Jason Baggaley Standard Life Investments Tel: 0131 225 2345 Standard Life Investments Property Income Trust Limited Consolidated Income Statement For the year ended 31 December 2007 Restated 2007 2006 Â£ Â£ Rental income 14,298,488 14,811,508 Unrealised (loss)/gain arising on adjustment to fair value of investment properties (19,149,762) 12,701,088 Realised loss on disposal of investment properties (1,411,753) - Investment management fees (1,963,426) (1,915,571) Head lease payments (285,706) (283,854) Other direct property costs (396,478) (302,323) Directors' fees and subsistence (84,658) (83,022) Valuation fees (55,073) (81,500) Audit fees (50,000) (40,600) Other administration expenses (204,314) (131,564) ---------- --------- Operating (loss)/profit (9,302,682) 24,674,162 Finance costs - net Interest payable (5,828,933) (5,375,415) Interest receivable 998,718 331,532 ---------- --------- (Loss)/profit for the year (14,132,897) 19,630,279 ---------- --------- (Loss)/earnings per share for the year attributable to the equity holders of the Company Basic and diluted (13.59) 19.41 pence pence (restated) All items in the above Consolidated Income Statement derive from continuing operations. Consolidated Balance Sheet as at 31 December 2007 Restated 2007 2006 Â£ Â£ ASSETS Non-current assets Freehold investment properties 142,151,538 195,915,863 Leasehold investment properties 39,800,604 47,984,258 Interest rate swap - 501,862 ---------- ---------- 181,952,142 244,401,983 ---------- ---------- Current assets Trade and other receivables 2,230,660 2,244,201 Cash and cash equivalents 35,171,457 6,705,174 ---------- ---------- 37,402,117 8,949,375 ---------- ---------- ---------- ---------- Total assets 219,354,259 253,351,358 ========== ========== EQUITY Capital and reserves attributable to Company's equity holders Share capital 1,040,000 1,040,000 Share premium 5,217,022 5,217,022 Retained earnings 2,576,775 2,748,875 Capital reserves 14,635,767 35,961,779 Other distributable reserves 94,371,577 94,801,259 ---------- ---------- Total equity 117,841,141 139,768,935 ---------- ---------- LIABILITIES Non-current liabilities Bank borrowings 84,432,692 84,432,692 Interest rate swap 262,635 - Redeemable preference shares 7,591,047 7,161,365 Leasehold obligations 4,029,314 4,544,339 ---------- ---------- 96,315,688 96,138,396 ---------- ---------- Current liabilities Trade and other payables 4,912,163 7,310,579 Bank borrowings - 9,850,000 Leasehold obligations 285,267 283,448 ---------- ---------- 5,197,430 17,444,027 ---------- ---------- ---------- ---------- Total liabilities 101,513,118 113,582,423 ---------- ---------- ---------- ---------- Total equity and liabilities 219,354,259 253,351,358 ========== ========== Consolidated Statement of Changes in Equity For the year ended 31 December 2006 Share Share Retained Capital Other Total equity capital premium earnings reserves distributable reserves Â£ Â£ Â£ Â£ Â£ Â£ Opening balance 1 January 2006 as previously reported 1,000,000 - (2,334,373) 19,734,918 95,206,619 113,607,164 Prior period adjustment: Taxation - - 4,446,297 - - 4,446,297 -------- ------- --------- --------- --------- ---------- Opening balance 1 January 2006 as restated 1,000,000 - 2,111,924 19,734,918 95,206,619 118,053,461 ======== ======= ========= ========= ========= ========== Profit for the year as restated - - 19,630,279 - - 19,630,279 Unrealised gain arising on adjustment to fair value of investment properties - - (12,701,088) 12,701,088 - - Transfer between reserves* - - 405,360 - (405,360) - Movement on revaluation of interest rate swap - - - 3,525,773 - 3,525,773 Issue of ordinary share capital 40,000 - - - - 40,000 Share premium on issue of ordinary share capital - 5,280,000 - - - 5,280,000 Share issue costs - (62,978) - - - (62,978) Dividends - - (6,697,600) - - (6,697,600) -------- -------- ---------- --------- --------- ---------- Balance at 31 December 2006 as restated 1,040,000 5,217,022 2,748,875 35,961,779 94,801,259 139,768,935 ======== ======== ========== ========= ========= ========== * this is a transfer to move redeemable preference share finance costs from the retained earnings reserve to the other distributable reserves. Consolidated Statement of Changes in Equity For the year ended 31 December 2007 Share Share Retained Capital Other Total equity capital premium earnings reserves distributable reserves Â£ Â£ Â£ Â£ Â£ Â£ Opening balance 1 January 2007 as restated 1,040,000 5,217,022 2,748,875 35,961,779 94,801,259 139,768,935 Loss for the year - - (14,132,897) - - (14,132,897) Unrealised loss arising on adjustment to fair value of investment properties - - 19,149,762 (19,149,762) - - Realised loss on disposal of investment properties - - 1,411,753 (1,411,753) - - Transfer between reserves* - - 429,682 - (429,682) - Movement on revaluation of interest rate swap - - - (764,497) - (764,497) Dividends - - (7,030,400) - - (7,030,400) ------- ------- --------- --------- --------- --------- Balance at 31 December 2007 1,040,000 5,217,022 2,576,775 14,635,767 94,371,577 117,841,141 ======= ======= ========= ========= ========= ========= * this is a transfer to move redeemable preference share finance costs from the retained earnings reserve to the other distributable reserves. Consolidated Cash Flow Statement For the year ended 31 December 2007 2007 2006 Â£ Â£ Cash flows from operating activities Cash generated from operations 10,221,975 12,038,350 Interest paid (6,738,057) (3,631,250) --------- --------- Net cash generated from operating activities 3,483,918 8,407,100 --------- --------- Cash flows from investing activities Purchase of investment properties - (24,091,397) Capital expenditure on investment properties (189,200) (63,116) Proceeds from disposal of investment properties 41,053,247 - Interest received 998,718 331,532 --------- ---------- Net cash generated/(used) in investing activities 41,862,765 (23,822,981) --------- ---------- Cash flows from financing activities Proceeds from issuing of new ordinary shares - 5,320,000 Share issue costs - (62,978) Proceeds from bank borrowings - 9,850,000 Repayments of bank borrowings (9,850,000) - Dividends paid to the Company's shareholders (7,030,400) (6,697,600) --------- ---------- Net cash (used)/generated from financing activities (16,880,400) 8,409,422 --------- ---------- ---------- ---------- Net increase/(decrease) in cash and cash equivalents in the year 28,466,283 (7,006,459) ========== ========== Cash and cash equivalents at beginning of year 6,705,174 13,711,633 ---------- ---------- Cash and cash equivalents at end of year 35,171,457 6,705,174 ========== ========== Standard Life Investments Property Income Trust Limited Notes to the Consolidated Financial Statements For the year ended 31 December 2007 1. The results of the Group were prepared on the basis of International Financial Reporting Standards. 2. The interim dividend in respect of the quarter ended 31 December 2007 was declared on 7 February 2008 and paid on 29 February 2008 to shareholders. 3. There were 104,000,000 Ordinary Shares in issue throughout the year to 31 December 2007. 4. The Group results consolidate those of Standard Life Investments Property Holdings Limited, a wholly owned subsidiary which invests in properties in the United Kingdom. 5. The total fair value of freehold and leasehold properties shown on the Balance Sheet is Â£181,952,142. This differs from the market valuation of the property portfolio at the year end of Â£178,200,000 due to adjustments made to reflect the discounted present value of minimum lease payments and lease incentives. 6. The accounting policy in respect of deferred tax was changed during the year so that a 'blended' approach was used when estimating the amount of deferred income tax arising from the temporary difference between the tax bases of the assets and liabilities and their carrying amounts in the financial statements. This new approach represents a change in accounting policy during 2007 and is considered to provide a better estimate of the Group's deferred tax position. This change in accounting policy has led to a prior year adjustment. The full audited Financial Statements for the year ended 31 December 2007 will be sent to shareholders in April 2008, and will be available for inspection at Trafalgar Court, Les Banques, St Peter Port, Guernsey, the registered office of the Company. This information is provided by RNS The company news service from the London Stock Exchange

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