Final Results

TR Property Investment Trust PLC 06 June 2003 TR PROPERTY INVESTMENT TRUST PLC UNAUDITED PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2003 Highlights * Outperformed benchmark for fifth consecutive year * Total return of minus 4.2% compares with All Share total return of minus 29.8% * Revenue earnings rise 27.8% * Dividend increased by 24.2% * Encouraging start to current financial year Financial Highlights 31 March 31 March 2003 2002 Change Revenue Gross revenue (Â£'000) 16,676 13,751 +21.3% Revenue pre-tax (Â£'000) 11,971 9,027 +32.6% Revenue per share 2.30p 1.80p^ +27.8% Net dividend per share 2.05p 1.65p +24.2% Balance Sheet Gross assets (Â£'000) 359,145 428,553 -16.2% Shareholders' funds (Â£'000) 304,127 342,481 -11.2% Shares in issue at end of period (m) 416.5 416.6 -0.02% Gearing 15% 24% Net asset value per share 73.02p 78.08p^ -6.5% Performance 31 March 31 March Assets and Benchmark 2003 2002 Benchmark performance (price only)* -9.3% +1.6% NAV price only return -6.4% +6.7%^ Benchmark performance (total return)* -5.5% +4.1% NAV total return+ -4.2% +8.9%^ IPD Monthly Index total return** +10.6% +7.2% Total return from direct property# +8.0% +12.8% Performance 31 March 31 March Share Price 2003 2002 Change Share price at 31 March 59.00p 64.75p -8.9% Share price total return+ -6.2% +14.3% Market capitalisation at 31 March Â£246m Â£270m -8.9% Sources: +AITC/*Datastream/#WM Company/**IPD ^ fully diluted - MORE - - 2 - UNAUDITED PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2003 CHAIRMAN'S STATEMENT Introduction The last twelve months have been rather inglorious ones for equity investment. Declines in share prices have been widespread and substantial - sufficient to scare some long term institutional investors away from equity investment altogether. Against this challenging background I am very pleased to report to you that the Trust has performed remarkably well. Though the asset value per share fell, the decline was a modest one. Our NAV returns have outperformed our benchmark index again (for the fifth financial year in a row), revenue earnings are sharply higher and the Board is able to recommend another substantial dividend increase. Property shares beat the market again last year but there was a marked difference in performance between the UK and the Continent. In the UK the sector index fell 23%; on the Continent property shares fell 5% in local currency terms, but rose 8% in sterling terms due to a strengthening Euro. The move, two years ago, to increase the Trust's equity investment exposure on the Continent therefore paid off handsomely last year in absolute terms at both the capital and the revenue level, the more so as the Euro exposure was not hedged. In relative terms we were underweight continental assets throughout the year. Had we, a year ago, sold more UK assets and invested further in the Continent, the performance would have been further improved. Asset Performance In the year to the end of March 2003, the Trust's NAV per share declined by 6.5% from 78.08p to 73.02p and gave a total return (that is after adding back the value of the dividends paid) of minus 4.2%. Our benchmark index fell by 9.3% and produced a total return of minus 5.5% over the same period. This is the fifth consecutive year in which our NAV returns have beaten the returns from our benchmark. During those five years the benchmark index has fallen 14.8% while your Trust's NAV has risen by 31.7% - giving outperformance of 54.7%. Against the All Share Index the NAV outperformance over the five years is higher still at 103%. Our direct property holdings, all of which are in the UK, produced an ungeared total return of 8.0%, and so again made a positive contribution to performance, though they underperformed the IPD Monthly Index total return for the same period of 10.6% because we held no retail property directly. Over the last five years our ungeared total return from direct property has been 92% compared with the IPD Index figure of 65%. Revenue Performance Revenue earnings per share have risen by 27.8% from 1.80p to 2.30p per share. This has been the first financial year in which the revenue account had the full benefit of the returns from higher yielding Continental property shares, and their contribution to our investment income rose from Â£1.7m to Â£5.8m in the year. Despite the significant sales of UK assets made to finance the Continental investment and the reduction of total assets by the Â£19m spent due to share and warrant repurchases, our UK income from shares and property declined by only Â£1m. As a result total investment and rental income rose 23% to Â£16.5m. During the year several property companies chose to return capital to shareholders by way of special dividends. The Trust received some Â£3.85m by way of these special dividends. Your Board and the auditors consider these payments fundamentally to be capital receipts. Only where it is clear that the payments by companies have been made as a result of potentially repeatable earnings have the dividends been credited to income, and the amount so treated in the year was Â£0.55m and the remaining Â£3.30m was credited to the capital account. Revenue Outlook Our managers currently anticipate that the Trust's revenue income per share will increase again in the current year, but at a very modest pace compared with increases in the last two years. Earnings and dividend growth from the companies within our equity portfolio are slowing but are expected to remain positive in the next twelve months. Further ahead we expect to see a sharp increase in our income from our French property companies in our next but one financial year if the proposed REIT structure in France is fully implemented. These comments notwithstanding, shareholders will be well aware that the investee company dividends that make up the bulk of our income are not in our control. - MORE - - 3 - UNAUDITED PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2003 CHAIRMAN'S STATEMENT CONT'D Dividends The interim dividend was raised by an extraordinary level from 0.65p to 0.90p per share and I commented in my statement then that shareholders should not anticipate that the final dividend of 1.00p per share would necessarily be raised. In the light of the full year revenue result I am pleased to report that the Board now proposes a 15% increase in the final dividend to 1.15p per share. This, added to the interim dividend, produces a total payment for the year ended 31 March 2003 of 2.05p per share, a 24.2% increase over the total dividends of 1.65p per share paid for the year ended March 2002. This total dividend of 2.05p per share compares with a total payment of 1.12p per share made five years ago in the year ended March 1998. The percentage increase of 83.0% is equivalent to 12.8% per annum compound. Gearing Net debt declined from Â£82m to Â£47m last year and gearing fell from 24% to 15%. Given the relatively high income producing potential of our property assets, it is the Board's policy for the Trust to be between 15% and 30% geared under stable market conditions. The level of gearing may be lower or higher than these levels if justified by the manager's forecasts of future investment value movements. Currency Exposure The portfolio exposure to foreign currency assets and income was unhedged during the last financial year, during which the Euro rose by 13% against the pound. This added some 3.5p to the total return per share. Going forward it will be the Trust's normal policy to remain unhedged unless, with the manager's advice, the Board considers that there is a strong potential benefit to shareholders from hedging on a short term basis. Share and Warrant Repurchases The managers, on instructions from the Board, have continued to purchase shares for cancellation when suitable opportunities have occurred and the Board is seeking renewal of authority from shareholders to buy back shares at the Annual General Meeting. During the last financial year a total of Â£10.66m was spent buying back 17.5 million shares at an average price of 60.8p. A further Â£8.89m was spent repurchasing 38.8 million warrants before the expiry date of the warrant issue in July 2002. Combined, these repurchases served to increase the net asset value by 1.65p per share. The Trust issued 17.4 million shares to the remaining warrant holders at 47.5p during the year with the result that the number of shares outstanding at the end of the financial year is almost the same as at March 2002. Since they were instigated in late 1999, the additional value created for shareholders through buy-backs has been around 3.6p per share or almost 5% of the asset value at March 2003. FTSE 250 Index The Trust's shares entered the FTSE 250 Index in September 2002. This promotion carries no lasting benefit to shareholders, but illustrates the extent to which the Trust's capitalisation has withstood the ravages of the market declines relative to many other companies, which historically have been far larger. Perhaps we should hope, for sake of the future of equity investment in the UK, that the Trust does not remain in the Index for long! Awards Investment awards are recognition of excellent past performance. Last year your Company received the Bloomberg Money Award for the Best Specialist Investment Trust of 2002 and the Money Observer Award for the Best Large Investment Trust of 2002. In addition our management team was joint runner-up in the Property Fund Manager of the Year Award for 2002 organised by Property Week magazine. As I commented at the interim stage receiving such awards can be a bad omen for future performance but I am confident that your Company will be an exception to this rule. - MORE - - 4 - UNAUDITED PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2003 CHAIRMAN'S STATEMENT CONT'D In my last interim statement, I remarked that despite the outstanding performance record of the Trust, the Board was concerned that the share price discount to net asset value per share remained appreciable and that it would continue to pursue ways of addressing this. In pursuit of this aim the Board has approved the appointment of Mark Vickery, as an investor relations manager for the Trust, with a mandate to widen investor awareness in the Trust and its excellent track record. Board and Management Although I am offering myself for re-election at this year's Annual General Meeting, I have informed the Board that it is my intention to retire as a director of the Trust after the AGM in 2004 when I will have served on the Board for ten years. It is my strong belief that a regular infusion of new Board members is important to the continuing vitality of all companies, and your Company currently has a strong group of more recently appointed directors to guide it in the future. I am pleased to announce that our management team has been further strengthened this year by the appointment of James Wilkinson to run the direct property portfolio. James will report to Marcus Phayre-Mudge, who has been appointed Deputy Fund Manager. Outlook As an asset class, property has performed with great credit over the past four years relative to equities. The high annuity-like returns offered are attractive to maturing pension and life assurance funds in a low interest rate environment. Property equities have shared some, but not all, of the performance glory. Given current discount levels, they must be expected now to outperform directly held property assets as world economies start to recover. The Trust has come through the downturn in good shape and your Board believes it is favourably positioned for a gradual improvement in equity markets. However, direct property has probably seen the zenith of its relative performance in the current cycle. The outlook for tenant demand and rental growth is currently much less positive, and without a revival in the general economy and the broader equity market, property and property shares cannot prosper for long. The current management team has demonstrated its ability to increase both the dividend income from, and the asset value of, your Company in an extraordinarily volatile market environment. On your behalf, I thank them most warmly for their efforts. EXTRACTS FROM THE MANAGER'S REPORT Introduction Pan European property shares had another excellent year relative to European equities in general. Property values were, on average, steady, earnings rose modestly as did dividends. On a country basis, the UK produced the best physical property total return (plus 10.6%) and almost the worst property share total return (minus 20.6%) - a huge (30%) discrepancy which I comment on later in my report. My main investment themes remained unchanged throughout the year. That is to say I have continued to add to our retail property exposure and to invest in companies in this area with good liquidity and decent sustainable dividend yields. At the same time I have continued to sell the shares of companies with high gearing and particularly those exposed to office property whatever the dividend yield. This risk-averse policy has worked reasonably well. Where I erred was in regional asset allocation. I left too much money in the UK and failed to go overweight on the Continent. In particular the Trust had far too little invested in Austrian and Swiss real estate stocks where property shares show positive total returns. Nevertheless I avoided most of the horror stories, of which there were several. Stock selection was positive enough to allow the Trust to outperform the benchmark again. - MORE - - 5 - UNAUDITED PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2003 EXTRACTS FROM THE MANAGER'S REPORT CONT'D Property Market Background A birds-eye view of all the commercial and residential property in Europe would now show that capital values are falling, but only by one or two per cent per annum. Tenant demand is weakening particularly in office markets as the Pan European economies splutter to maintain even modest GDP growth. However, the impact of falling rental values is being offset by investor demand, which broadened over the year and has been encouraged by the poverty of income yields in other asset classes and by the historically low cost of borrowed money. Meanwhile, though average values are in decline there are still areas of the property market where occupier demand exceeds supply and values continue to rise. The key in assessing the future trend of capital values in any particular market is the outlook for tenant demand relative to current and future supply. Investor demand eventually follows tenant demand not vice-versa. Offices Across the whole of Europe office occupier demand is fragile and in some locations it is almost non-existent. Weakness in rental values is most marked in the core and suburban areas of the largest cities, and least obvious, as yet, in regional towns. London, so often a leader in property value trends (in both directions), is currently winning the award for having the fastest falling rents and poorest tenant demand. In the City and Docklands rental values have already fallen over 25%. Vacancy rates are over 10% and still climbing. Empty desks are also evident in many 'fully' occupied buildings. The office market in the West End is also poor, and the vacancy rate is close to 10%, but there is still just enough tenant demand to ensure that the market has some depth to it. On the outskirts of London, M25 office rental levels are soft after a sharp increase in vacancy rates. In regional UK markets the main source of demand is the public sector. Continental city centre office markets seem inexorably to be following London's lead. In Amsterdam, Berlin, Frankfurt, Madrid, Munich and Stockholm, where significant new speculative office construction occurred in the last three years, conditions have already worsened sharply with rental values down by between 15% to 20% to date. In other locations, such as Barcelona, Paris, Milan, Vienna and Zurich, where there has been less or little new development, there has been a slower increase in vacancy rates and therefore a slower decrease in rental values - so far. Gauging the timing and extent of the nadir and then the recovery in office markets is a crucial question for all property investors. The optimists believe that rents will soon stabilise at their new lower levels and that demand will recover as soon as GDP growth accelerates. The pessimists, with whom I currently agree, believe that the severity of the downturn in business to business confidence has been so sharp that private sector occupiers will only recover their desire to hire more labour very gradually and that while vacancy rates remain at historically high levels rental values will continue to drift downwards. Retail Retail property has been a star performer over the last two years as retail sales growth has continued to rise in absolute terms, particularly in the UK. Consumer demand is now slowing across the whole of Europe and is already negative in some areas. Meanwhile cost inflation is outpacing price inflation for some retailers, and hurting their margins. In short, the overall picture for retail property demand appears to be moving from positive to negative. But retail property is different. It is much less homogenous than office and industrial property in terms of tenant demand and centres offer greater opportunities for continuous income enhancement through active management. It is also, and this is very important in a Pan European context, subject to far stricter planning controls than offices or industrial property. This means that good retail space is still scarce and when, as now, major national and international retailers are expanding or rolling out new concepts, there can still be strong competition for floorspace even if the immediate profit outlook is cloudy. - MORE - - 6 - UNAUDITED PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2003 EXTRACTS FROM THE MANAGER'S REPORT CONT'D I have tried to concentrate the equity investments in the shares of those retail property companies that own the bigger shopping centres, which have monopolies in their catchment areas, and on those that concentrate on retail warehousing. It seems to me that retail sales are likely to hold up most strongly in locations where shoppers are attracted by the widest range of goods combined with ease of access and good, preferably free, car parking. As the recent corporate activity in Safeway, Selfridges and Debenhams illustrates, retailing (and retail property) is still of enormous interest to venture capital. Property Share Background In performance terms property equities had another excellent year relative to general equities. The FT Eurotop 300 Index in sterling fell a huge 34.4% over the twelve months to end March 2003 while our benchmark in sterling fell only 9.3%. The UK property shares sector was a poor performer falling 23.3% and producing a total return of minus 20.6%. Excluding the UK, the property equities in the rest of Europe did far better. In Euro terms they fell by only 4.8% and produced a positive total return of 0.3%, but the Euro rose by 13% against the pound so that in sterling terms the returns were plus 8% price only and plus 13% total return. I remarked at the start of my statement that the poor performance of UK property shares ran contrary to the strong returns from UK direct property. There was no single outstanding cause of this discrepancy, but rather it was the sum of a number of contributory factors. The more important of these are that UK equity investors tend to view property companies as shares first and property second, while across the Channel and in other countries, property shares are normally seen as property first and equities second, and therefore as being separate from general equities. The higher level of dividend yield on the Continent has attracted buying interest to the sector from investors needing income - a source of buying interest generally absent in the UK. Indeed, looking across the global real estate equities market, the UK sector's poor performance last year stands in marked contrast to returns in other G7 markets, all of which now have or are about to get tax transparent property structures. Quoted tax transparent property companies, known generally as 'real estate investment trusts' or by the acronym 'REITs', are now a standard method of global property investment. REIT performance has been strong and in the US, Australia and Japan REIT share prices are currently standing at or close to their all time highs. In Europe the tax transparent Benelux property companies have also performed strongly and in France, where REITs are due to be introduced in 2004, property shares have performed well in anticipation of the enhanced income which is expected to flow from the companies involved. Initial yield is a strong factor in the current pricing of global property shares, and tax freedom, or the lack of it, is the major component of the difference in initial yields. US REITs are standing on an average 10% premium to NAV and yielding 6.5%, in Australia the comparable figures are a 6% discount to NAV and a yield of 6.8% while for Benelux stocks the discounts average 9% and dividend yields are 7.5%. In the UK the discount average is a whopping 32% but the sector average net dividend yield is only 3.1% - lower than the current yield on the All Share Index. We remain overweight in UK property shares primarily because of this very large average discount to asset value. I think this discount gives UK property stock prices more potential upside than the stocks in other markets. Share buy-backs and returns of capital are adding value, takeover bids make sense, and there is a chance that a change in tax legislation will see the introduction of UK REITs and result in a hefty one-off rerating of the sector. Its an outside chance, but the property industry has recently been invited by the Treasury to submit arguments as to why REITs should be introduced in the UK. Given the general trend towards Pan European tax harmonisation and the potential willingness of the industry to find a 'quid pro quo' the chance may be a five to one bet against. - MORE - - 7 - UNAUDITED PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2003 EXTRACTS FROM THE MANAGER'S REPORT CONT'D Distribution of Assets The overall division between UK property and UK and Continental equities has altered only modestly over the financial year. The Group Cash Flow Statement shows that purchases and sales added together were only around 70% of the previous year's total. As I commented earlier, performance would have been enhanced if I had reduced the UK equity holdings further and bought more Continental equities. The current target distribution of the portfolio is 35% to 55% in UK equities, 35% to 55% in Continental equities and 10% to 30% in UK direct property. On a see-through basis the distribution of assets shows greater percentage change. At March 2002, the Trust's see-through portfolio was 56% offices, 25% retail property, 12% industrial and warehousing and 7% residential and other uses. At March 2003 the percentages were 40%, 38%, 12% and 10%. Largest Equity Investments I have commented briefly on the top twenty equity holdings. There are six new entries over the year, which I hope shareholders will not consider as evidence of lethargy. Of the departures from the top twenty, two, Rodamco North America and Haslemere, were taken over for cash. Canary Wharf aside, we maintained our investments in the other departures which slipped out of the top twenty on price movements or as a result of returning capital. Canary Wharf dropped out as a result of a reduced holding and a return of capital. There are three French companies in the new entries - Gecina, Klepierre and Silic. All were existing holdings to which we added, though Gecina's increase in value mainly results from a merger with Simco during the year. All three companies are expected to enter the new French tax-free property company structure later this year and therefore be able to pay enlarged dividends from 2004 onwards. We added to our Eurocommercial - a real European corporate hybrid - the shares are quoted in Holland with a management based in London and the majority of its assets in Italian and French shopping centres. The final two new entries were Cofinimmo, a tax-free owner of Brussels office buildings (where tenant demand is primarily from EU activity) and Grainger Trust, which, despite specialising in the ownership of housing in the UK, performed strongly last year. Movements within the list reflect my attempt to avoid portfolios overweight in offices or companies with above average gearing. With this in mind I added considerably to holdings in Rodamco Europe, Liberty International and Corio and reduced the investment in British Land and Canary Wharf. I also reduced the size of the holding in St Modwen from 9% to 6% of the company's equity - taking a substantial capital gain in the process. I intend to retain a large investment in this well run smaller company. Our shareholding in The Big Yellow Group was unchanged over the year, during which the shares fell by 35%. I believe that the energetic management of this self storage company will deliver its five year business plan and that the Trust's equity investment is a 'sleeper' from which we will secure high returns in the future. Gearing and Debenture Debt Over the year I reduced the Trust's net debt level from Â£82m to Â£47m and the gearing ratio fell from 24% to 15%. Shareholders should note that some Â£40m of our present debt is in the form of two debentures with coupons of 8.125% and 11.5% repayable in 2008 and 2016 respectively. The market value of this debenture debt was Â£49.8m at the year end. This additional Â£9.8m represents a negative value equivalent to 2.4p per share. - MORE - - 8 - UNAUDITED PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2003 EXTRACTS FROM THE MANAGER'S REPORT CONT'D Indicating to shareholders the likely trend in gearing over the current year is unusually difficult. As I comment below the outlook for earnings and capital values remains cloudy. We have the capacity to increase gearing and it is tempting from a revenue angle to do so as we are able to borrow money today at a lower rate than the yield on many of our property and equity investments. Gearing would therefore boost earnings in the short term, particularly as the Trust's accounting policies provide for half the cost of debt to be charged to the capital account. Nevertheless my instinct is to bide my time in this uncertain economic environment. The portfolio's see-through gearing, which takes account of our own debt and adds in the proportionate debt of all our equity investments, has dropped from around 90% at March 2002 to a current level of 84%. Direct Property Portfolio The Trust's direct property portfolio produced a total return of 8.0% over the year, reflecting an income return of 6.6% and capital gains from investment sales completed during the year. The 8.0% figure also includes a reduction of 0.3% in the value of those properties retained at the end of the year but within this average figure the range of valuation changes was wide. Excluding sales, the best performance (plus 28%) came from our Southampton office building where we regeared the tenant's lease, while the worst performing asset (minus 21%) was the warehouse at Wootton Bassett, near Swindon, where the tenant went into receivership. The properties at Tolworth and Staines were sold over the winter for some Â£10m, almost 11% more than their September 2002 valuations (Â£8.95m) and 6.7% more than their combined book value (Â£9.28m) which included additional capital expenditure at Staines. A little 0.2 acre site at Tavern Quay, where we obtained residential development permission in 2002, was sold for Â£1.5m. The land was formally the over-spill car park, and the sale price compared with a March 2002 valuation of Â£750,000. The major achievement during the year was obtaining planning consents for our redevelopment proposals at Piccadilly and Battersea. The planning process in London has become a vastly time consuming and often politicised business. Although we achieved the consents we were seeking - 90,000 ft of mixed office and retail at Piccadilly and a mixed residential (57 flats) and commercial (27,000 ft) scheme at Battersea - the process took longer and was more costly than expected. This pre-development expenditure together with the cost of part refurbishment of Tavern Quay contributed to capital costs of Â£1m during the year. Our intention is that both Piccadilly and Battersea will be sold on to developers. However, the consents have arrived at a moment when demand from developers for sites is greatly reduced. It may be that the greatest potential gain to shareholders will come from retaining the properties for a limited time until London's residential and office values are more stable. In the meanwhile we will maintain the income stream from short term lettings in both properties. We have continued to keep voids to an absolute minimum during the year. Notwithstanding the poor state of the occupational market, particularly in the office sector, our only significant void is the 36,000 ft warehouse at Wootton Bassett, which we have referred to above. This represents less than 3% of the portfolio by capital value. At this stage of the property cycle it is likely that property shares offer better value and stronger recovery potential than much of the direct property market and therefore it continues to be attractive for the Trust to switch further capital from buildings into equities. Since the year end we have sold our distribution unit in Swanley ahead of the valuation and further disposals are being considered. - MORE - - 9 - UNAUDITED PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2003 EXTRACTS FROM THE MANAGER'S REPORT CONT'D Unquoted Investments We have made no investments in unquoted companies during the year. Controlrun, a joint venture that owns petrol filling stations, remains our only investment in this area of any significance. Sales of all the assets owned by the business are planned. Two properties were under offer at the interim stage, one of these, in Southall, was sold for Â£1.5m that compared with a most recent valuation of Â£1m. The sale of another at Milton Keynes has fallen through. The property is to be remarketed and the disposal of the other three properties is under consideration. Outlook We enter the new financial year still overweight in the UK, and this is now proving positive for performance. Our currency position remains unhedged. The stronger the Euro relative to Sterling, the weaker will be the outlook for Continental tenant demand relative to the UK market. In the UK I expect the overall total return from physical property to be modestly positive (around 4%). I expect that office markets will face another very tough year and that retail property will again be the best performing sector. Despite their recent sharp rally, UK property shares are still standing at high average discounts to spot asset values, and corporate activity has re-emerged with three bid approaches in the sector since the year end. - MORE - - 10 - UNAUDITED PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2003 GROUP STATEMENT OF TOTAL RETURN (Incorporating the Revenue Account) for the year ended 31 March 2003 Year ended 31 March 2003 Year ended 31 March 2002 Revenue Capital Total Revenue Capital Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Total capital (losses)/gains from - (25,633) (25,633) - 20,129 20,129 investments Repurchase of warrants - (8,885) (8,885) - (3,986) (3,986) Investment income 11,529 - 11,529 7,502 - 7,502 Net rental income 4,938 - 4,938 5,869 - 5,869 ------- ------- ------- ------- ------- ------- 16,467 (34,518) (18,051) 13,371 16,143 29,514 Interest receivable and similar income 209 - 209 380 - 380 ------- ------- ------- ------- ------- ------- Gross revenue and capital (losses)/gains 16,676 (34,518) (17,842) 13,751 16,143 29,894 Management and performance fees (1,702) (851) (2,553) (1,687) (2,155) (3,842) Other administrative expenses (570) - (570) (558) - (558) ------- ------- ------- ------- ------- ------- Net return on ordinary activities 14,404 (35,369) (20,965) 11,506 13,988 25,494 before interest payable and taxation Interest payable and similar charges (2,433) (2,433) (4,866) (2,479) (2,479) (4,958) ------- ------- ------- ------- ------- ------- Net return on ordinary activities 11,971 (37,802) (25,831) 9,027 11,509 20,536 before taxation Taxation on net return on ordinary (2,237) 696 (1,541) (1,080) 1,059 (21) activities ------- ------- ------- ------- ------- ------- Net return on ordinary activities 9,734 (37,106) (27,372) 7,947 12,568 20,515 after taxation Ordinary dividends Interim of 0.90p (2002: 0.65p) (3,823) - (3,823) (2,766) - (2,766) Final of 1.15p (2002: 1.00p) (4,774) - (4,774) (4,166) - (4,166) ------- ------- ------- ------- ------- ------- (8,597) - (8,597) (6,932) - (6,932) ------- ------- ------- ------- ------- ------- Transfer to/(from) reserves 1,137 (37,106) (35,969) 1,015 12,568 13,583 ==== ==== ==== ==== ==== ==== Return per ordinary share Basic 2.30p (8.78)p (6.48)p 1.86p 2.94p 4.80p Fully diluted n/a n/a n/a 1.80p 2.84p 4.64p The revenue columns of this statement represent the revenue account of the Group. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year. - MORE - - 11 - UNAUDITED PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2003 GROUP AND COMPANY BALANCE SHEETS Group Group Company Company 2002 2003 2002 2003 Â£'000 Â£'000 Â£'000 Â£'000 Fixed asset investments 358,178 427,679 357,646 418,876 ---------- ---------- ---------- --------- Current assets Debtors 4,267 7,049 3,452 5,136 Cash at bank 1,790 901 1,641 51 ---------- ---------- ---------- --------- 6,057 7,950 5,093 5,187 Creditors - amounts falling due within one year Bank loans and overdrafts 8,697 42,932 8,697 42,911 Other creditors 11,217 10,028 49,665 38,421 ---------- ---------- ---------- --------- 19,914 52,960 58,362 81,332 ---------- ---------- ---------- --------- Net current liabilities (13,857) (45,010) (53,269) (76,145) ---------- ---------- ---------- --------- Total assets less current liabilities 344,321 382,669 304,377 342,731 Creditors - amounts falling due after more than one 40,194 40,188 250 250 year ---------- ---------- ---------- --------- Total net assets 304,127 342,481 304,127 342,481 _________ _________ _________ _________ Capital and reserves Called up share capital 104,124 104,150 104,124 104,150 Share premium 37,063 30,111 37,063 30,111 Warrant reserve - 3,031 - 3,031 Other reserves 145,997 189,383 153,355 196,793 Revenue reserve 16,943 15,806 9,585 8,396 ---------- ---------- ---------- --------- Equity shareholders' funds 304,127 342,481 304,127 342,481 _________ _________ _________ _________ Net asset value per share Basic 73.02p 82.21p 73.02p 82.21p Fully diluted n/a 78.08p n/a 78.08p - MORE - - 12 - UNAUDITED PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2003 GROUP CASH FLOW STATEMENT for the year ended 31 March 2003 2003 2003 2002 2002 Â£'000 Â£'000 Â£'000 Â£'000 Net cash inflow from operating activities 12,483 6,811 Returns on investments and servicing of finance Interest paid (4,806) (5,050) ---------- ---------- Net cash outflow from servicing of finance (4,806) (5,050) Taxation recovered 442 461 Capital expenditure and financial investment Purchase of investments (82,130) (146,766) Sale of investments 128,490 152,024 ---------- ---------- Net cash inflow from financial investment 46,360 5,258 Equity dividends paid (7,989) (6,419) ---------- ---------- Net cash inflow before financing 46,490 1,061 Financing Issue of shares 8,277 287 Purchase of own shares (10,662) (13,945) Purchase of own warrants (8,885) (3,986) ---------- ---------- Net cash outflow from financing (11,270) (17,644) ---------- ---------- Increase/(decrease) in cash 35,220 (16,583) ======= ======= Reconciliation of net cash flow to movement in net debt 2003 2002 Â£'000 Â£'000 Increase in cash 985 201 Cash outflow/(inflow) from decrease/(increase) in 34,235 (16,784) loans ---------- ---------- Change in net debt resulting from cash flows 35,220 (16,583) Exchange differences (96) (672) Other (6) (7) ---------- ---------- Movement in net debt 35,118 (17,262) Net debt at 1 April (82,219) (64,957) ---------- ---------- Net debt at 31 March (47,101) (82,219) ======= ======= - MORE - - 13 - UNAUDITED PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2003 NOTES: 1. Return per ordinary share Basic revenue return per ordinary share is based on the net revenue return on ordinary activities after taxation of Â£9,734,000 (2002: Â£7,947,000) and on the weighted average number of ordinary shares in issue during the year, being 422,633,986 (2002: 427,073,371). Basic capital return per ordinary share is based on net capital losses of Â£37,106,000 (2002: Â£12,568,000 gains) and on the same weighted average number of ordinary shares in issue. The calculations of the fully diluted revenue and capital returns per ordinary share are carried out in accordance with Financial Reporting Standard 14, 'Earnings per Share'. For the purposes of calculating diluted revenue and capital returns per share, the number of shares is the weighted average used in the basic calculation plus the number of shares deemed to be issued for no consideration on exercise of all warrants, by reference to the average price of the ordinary shares during the year. 2. Net asset value per ordinary share Basic net asset value per ordinary share is based on net assets attributable to ordinary shares of Â£304,176,000 (2002: Â£342,481,000) and on 416,494,500 (2002: 416,599,673) ordinary shares in issue at the year-end. The fully diluted net asset value per ordinary share at 31 March 2002 was calculated on the assumption that the 56,228,441 warrants in issue at that time were fully converted into ordinary shares at 47.5p per share. 3. Share Capital Changes During the year the Company made market purchases for cancellation of 17,530,872 ordinary shares of 25p and 38,802,742 warrants, for an aggregate consideration of Â£10,662,000 for the shares and Â£8,885,000 for the warrants. The warrants lapsed during August 2002 so that, at 31 March 2003, there were no warrants outstanding (2002: 56,228,441). 4. Reconciliation of Group operating revenue to net cash inflow from operating activities 2003 2002 Â£'000 Â£'000 Net revenue before interest payable and taxation 14,404 11,506 Decrease/(increase) in operating debtors 1,244 (781) Increase in operating creditors 3 121 UK income tax deducted at source - (11) Overseas withholding tax suffered (1,007) (322) Performance fees paid (1,310) (2,934) Management fee charged to capital (851) (768) --------- --------- Net cash inflow from operating activities 12,483 6,811 ====== ====== 5. Accounts for the year ended 31 March 2002 The figures and financial information for the year ended 31 March 2002 are extracted from the latest published accounts of the Company and do not constitute the 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 Section 237(3) of the Companies Act 1985. - MORE - - 14 - UNAUDITED PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2003 6. Accounts for the year ended 31 March 2003 The preliminary figures for the year ended 31 March 2003 have been extracted from the latest Group accounts. These accounts have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. 7. Dividend The final dividend, subject to shareholders' approval at the AGM, will be paid on 28 July 2003 to shareholders on the register at 27 June 2003. The shares will be quoted ex-dividend from 25 June 2003. 8. Annual Report and AGM The Annual Report will be posted to shareholders in June 2003 and will be available thereafter from the Secretary at the Registered Office, 4 Broadgate, London EC2M 2DA. The Annual General Meeting of the Company will be held at 4 Broadgate, London EC2M 2DA on Friday 25 July 2003 at 12 noon. Enquiries TR PROPERTY INVESTMENT TRUST PLC Chris Turner, Manager (Tel: 020 7818 4348) HENDERSON GLOBAL INVESTORS Stephen Westwood, Head of Investment Trusts (Tel: 020 7818 5517) Vicki Staveacre, Corporate Affairs (Tel: 020 7818 4222) - ENDS - This information is provided by RNS The company news service from the London Stock Exchange

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Keywords Studios surges as another London-listed tech firm looks set to be bought out by private equity, Kainos posts 14th consecutive year of growth and British Land sells down its remaining stake in Sheffield’s Meadowhall mall.

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