Half Yearly Report

RNS Number : 7431R

TR Property Investment Trust PLC

22 November 2012

 



This announcement and the information contained herein is not for publication, distribution or release in, or into, directly or indirectly, the United States, Canada, Australia or Japan.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 2012

22 November 2012

ORDINARY SHARES Financial Highlights and Performance	Half year ended 30 September 2012 (Unaudited)	Half year ended 30 September 2011 (Unaudited)	% Change
Revenue
Revenue earnings per share	5.54p	5.63p	-1.6
Net interim dividend per share	2.65p	2.40p	+10.4
	As at 30 September 2012 (Unaudited)	As at    31 March 2012 (Audited)	% Change
Balance Sheet
Net asset value per share	188.49p	183.62p	+2.7
Share price	159.90p	154.50p	+3.5
Net debt	7%	10%
Shareholders' funds (£'000)	482,947	470,472	+2.7
Shares in issue at end of period (m)	256.2	256.2	+0.0
Performance	Half year ended	Year ended
	30 September	31 March
	2012	2012
Benchmark performance (total return)	+3.4%	-8.9%
NAV total return	+4.7%	-8.5%
Share price total return	+5.8%	-9.5%

SIGMA SHARES Financial Highlights and Performance	Half year ended 30 September 2012 (Unaudited)	Half year ended 30 September 2011  (Unaudited)	% Change
Revenue
Revenue earnings per share	2.50p	1.89p	+32.3
Net interim dividend per share	1.05p	0.95p	+10.5
	As at 30 September 2012 (Unaudited)	As at 31 March 2012 (Audited)	% Change
Balance Sheet
Net asset value per share	98.32p	94.62p	+3.9
Share price	78.65p	70.70p	+11.2
Net debt	0%	5%
Shareholders' funds (£'000)	121,884	117,773	+3.5
Shares in issue at end of period (m)	124.0	124.5	-0.4
	Half year ended 30 September 2012	Year ended 31 March 2012
Performance
Benchmark performance (total return)	+3.5%	-12.1%
NAV total return	+5.7%	-13.6%
Share price total return	+13.3%	-12.7%

Dividends

Ordinary Shares

An interim dividend of 2.65p (2011: 2.40p) per Ordinary share has been declared payable on 8 January 2013 to shareholders on the register on 7 December 2012. The shares will be quoted ex-dividend on 5 December 2012.

Sigma Shares

An interim dividend of 1.05p (2011: 0.95p) per Sigma share has been declared payable on 8 January 2013 to shareholders on the register on 7 December 2012. The shares will be quoted ex-dividend on 5 December 2012.

Chairman's Statement

Ordinary and Sigma Share proposal announced on 26 September 2012

The most important point of my Chairman's Statement is to ask you to take the time to consider and vote on the proposal, being sent to shareholders later today, to convert the Sigma shares into Ordinary shares and merge the two portfolios.

The Board strongly recommends that shareholders vote in favour of the resolution. Our proposals have been carefully developed so as to add value for both shareholder classes and the Company as a whole.

Complete details, including the benefits to holders of each share class, are given in the Shareholder Circular, but in addition I have set out a short summary below of what the Board is proposing and why we believe it is in the interests of the holders of both share classes to support this proposal.

The Proposal

On 26 September 2012 the Board announced that, following a strategic review, they were proposing a conversion of the entire share capital of the Sigma shares into Ordinary shares and a merger of the two portfolios. The proposed conversion will result in a single, larger Ordinary share class which will retain the objective of maximising shareholders' total returns by investing in property shares and investment property on an international basis. The benchmark for the enlarged Ordinary share class will remain the FTSE EPRA/NAREIT Developed Europe Net Total Return Index in Sterling. The physical property investments will continue to be located in the UK only.

Strategic Review

The Board of TR Property Investment Trust plc, who are responsible for the interests of both the Ordinary and the Sigma Shareholders, commissioned a strategic review of the share structure over the summer. The brief was to take account of shareholder interests in the light of external trends and investor views as well as management performance.

The analysis showed that the Sigma Net Asset Value Total Return had outperformed the Ordinary share class Net Asset Value Total Return in the period since its establishment and most notably in the period since March 2009. This is consistent with the rationale for the creation of a share class focused on smaller property companies as set out in the original prospectus in 2007.

The Ordinary share class has also continued to add value to shareholders relative to its benchmark over this period.

So why merge the Ordinary and Sigma share classes?

The investment world has changed hugely since Sigma was launched in July 2007.

The consultation with major shareholders and other external experts confirmed that increasingly, large investors are demanding holdings with larger scale, greater liquidity and higher income. Their risk appetite is also lower than it has been in the past. Prospective investors are less - or not at all - interested in smaller funds focused on small companies with limited liquidity. We believe that these trends are not likely to reverse in the near future.

Despite good management performance and a sharply increased dividend, the Sigma shares have now traded at a significant discount to asset value for a prolonged period.

Through the review, the Board found that although there is recognition that smaller property companies do add to performance, investment vehicles of a limited size simply lack broad investor appeal. The Board concluded that investors would be better served by combining the two portfolios and providing access to these stocks, albeit in a less concentrated form, in a larger vehicle.

The EGM is due to take place on 14 December 2012 and I urge you to vote in favour of the proposal. Your votes can be registered  using the proxy forms and pre-paid envelopes which will be mailed with the Shareholder Circular.

Moving on to the period under review in these Financial Statements:

NAV and Share Price Performance

Property shares fared well compared with European equities (including the UK). The benchmark return in the six months was more than double that of the FTSE 100 (+2%). The Euro Stoxx 600 (in Sterling) was up just 0.1% in the period. Volatility in the sector has also continued to fall throughout the year but dispersion of performance amongst the stocks in our universe has remained close to the long-run average. Your Managers have therefore been able to use their stock picking capabilities to generate outperformance in the period.

The revenue results are in line with expectations and the interim dividend in both share classes has been increased. This is despite the reduction in the value of our Eurozone dividend receipts when converted into Sterling. More detail is included in the revenue section.

The details of the absolute and relative returns are set out at the start of each share class report and commented on by the Managers. In summary the Ordinary share class showed NAV total return of +4.7% against the benchmark total return of +3.4%. The share price total return was +5.8%. For the Sigma share class, the NAV total return was +5.7% and the benchmark total return was +3.5%. The share price total return was +13.3% due to a significant tightening in the discount to NAV at which the shares traded following the announcement on 26 September 2012.

Revenue Results

At the half year stage the revenue results are broadly in line with expectations on the Ordinary share class and ahead of expectations on the Sigma share class. The Ordinary share class earnings at 5.54p per share are slightly lower at the half year stage than in the previous year (5.63p). Sigma earnings are significantly ahead at 2.50p (1.89p). The majority of our revenue is earned in the first six months of the year so the first half figures are not representative of the full year.

Ordinary Shares Dividend

The Board has announced an interim dividend of 2.65p per share, an increase of 10.4% on last year's interim dividend of 2.40p.

Sigma Shares Dividend

The Board has announced an interim dividend of 1.05p per share, an increase of 10.5% over last year's interim dividend of 0.95p.

The shares of both classes will go ex-dividend on 5 December ahead of the EGM on 14 December 2012. The dividend will be paid on 8 January 2013 to shareholders on the register as at 7 December 2012.

Revenue Outlook

Revenue earnings for the full year of 6.60p for the Ordinary share class and 2.80p for the Sigma share class were indicated in the year end report. At the half year stage our Manager's expectation is that the earnings of the two portfolios will be marginally ahead of these figures.

Historically, earnings and dividend ratios have been lower for the Sigma share class than for the Ordinary share class. However, Sigma earnings and dividends have increased significantly over the last year and in the Annual Report we commented that we expected that revenues would continue to grow for this share class in the medium term. This has been the case and, as a result, there would not be a notable dilution of earnings for the Ordinary share class should the two portfolios merge as proposed.

On the basis of these figures, the Board expects to be able to maintain a progressive dividend policy for the Ordinary share class for the full year.

Net Debt and Currencies

The Ordinary share class decreased its net borrowings from £45m to £36m whilst Sigma's reduced from £6m to close to zero towards the end of the period. The debt facilities continue to be a mixture of short and medium term facilities as detailed in the Annual Report. The higher gearing of 7.4% in the Ordinary share class reflects the 10.4% investment in direct property assets. The property assets also rose in value in the half year period.

As in previous years, the portfolios' exposure to foreign currencies were not hedged at the income level.

Discount and Share Repurchases

The Ordinary share price discount to net asset value was 15.6% at the half year, having been 14.3% at the start of the period. The Sigma share price discount to net asset value was 19.9% at the half year, having been 23.9% at the start of the period. The discount had widened to 25.9% at the end of August prior to the announcement of the Conversion Proposal by the Board on 26 September. A total of 500,000 Sigma shares were repurchased in the period at an average price of 67.7p. There were no repurchases after the date of the announcement of the proposal to convert the share capital of the Sigma shares into Ordinary shares.

Board Changes

We announced on 23 October that Paul Spencer CBE was resigning from the Company at the end of December. His role as Chairman of the Audit Committee will be taken by David Watson. On behalf of the Board, I thank Paul for his considerable contribution to the Company and wish him well for the future.

Outlook

Performance of European equity markets remains dominated by the issues within the Eurozone. Whilst there is no single solution it is heartening to see some recent evidence of coordinated thought between the politicians and the central banks. The markets' broad upwards trajectory, which commenced in mid June, has continued into the second half of the financial year. Pan European property share prices have risen 5.5% in October, again outperforming broader European equity markets. This rise has been fuelled by announcements of intended actions to improve the cost of sovereign debt and improve the solvency and lending capability of European banks. This is a painfully slow process compared with other regions, notably the U.S.A., and will have a limited impact on market confidence.

Our view is that the market's current optimism towards property equities is grounded in the sector's ability to offer stable earnings underpinned by quality Real Estate rather than great expectations of rental growth or capital gains. Most of our Continental companies' income is index-linked and this, coupled with steady declines in the marginal cost of debt, gives us confidence that underlying earnings will continue to grow in those businesses which can continue to attract both competitive financing and tenants. The caveat clearly surrounds the latter. A return to economic growth is not obviously imminent. The risk that austerity measures being applied in all European countries will make recession more likely than growth is an obvious danger. We expect our Managers' ability to outperform by superior stock and market selection will be demonstrated in the full in the months ahead.

Peter Salsbury

Chairman

22 November 2012

Directors' Responsibility Statement

The Directors acknowledge responsibility for the interim results and approve this Half-Yearly Financial Report. The principal risks facing the Company are substantially unchanged since the date of the Annual Report for the year ended 31 March 2012 and continue to be as set out in that report.

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

(a)       the Half-Yearly Financial Statements have been prepared in accordance with IAS34 as adopted by the European Union and give a true and fair view of the assets, liabilities, financial position and profit for the period of the Group as required by the Disclosure and Transparency Rules ('DTR') 4.2.4R;

(b)       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

(c)       the report includes a fair review of the information required by DTR 4.2.8R.

Approved by the Board on 22 November 2012 and signed on its behalf by Peter Salsbury, Chairman

Managers' Statement

Market Background and Outlook

Marcus Phayre-Mudge and James Wilkinson

Ordinary share class & Sigma share class

Introduction

In our outlook section in the 2012 report and accounts we dwelt on the continuing economic problems facing Europe and in particular the Eurozone. However, we also highlighted that significant steps had been taken over the preceding year, even if the pace of change sometimes made that fact hard to recognise. Not much has changed in the intervening period. Further steps have been taken in the Eurozone, some of which may prove to be significant. However, progress remains slow. Furthermore, we believe that it is unrealistic to expect an outright resolution to the problem. The foundations on which politicians, the IMF and central bankers are attempting to build are constantly shifting. Solutions designed today may well turn out to be irrelevant tomorrow. We believe that the current slow, iterative process that politicians are engaged in is probably the best that can be hoped for in a pluralistic region such as Europe. We expect that progress will continue to be made, leading to further reduction in risk premia and an eventual resumption of economic growth across Europe but that this is a process that is likely to take years and not months.

The background against which we manage the Trust has therefore not changed significantly. Our expectation of dispersion of returns between different countries and sectors within the region has been borne out and it has been right to concentrate on identifying management teams who are able to manufacture returns through entrepreneurialism and creativity. We continue to make portfolio decisions based on the fundamentals of real estate: supply, demand, tenant and income quality, and risk. By concentrating on these fundamentals we believe that we can generate attractive long term returns for shareholders.

Property Investment Markets

The amount of capital targeting real estate in Europe has increased marginally over the last six months, largely attributed to increases in equity capital rather than debt. Capital flows remain concentrated in a small number of target markets and on prime property let to good quality tenants on long leases. In order of attraction we see London, Paris, Hamburg, Munich, Berlin, Frankfurt and Stockholm as the key markets. We estimate that there is currently in excess of £30 billion of capital targeting in just London and Paris today, whilst there is less than £3 billion of suitable property available to buy. Consequently, prices have continued to increase and we see little prospect of this situation changing in the short term. Away from these markets demand is generally poor. The exception to this is the regional shopping centre market, which continues to be attractive to those investors with the balance sheet and expertise to support such large scale purchases of specialist assets.

Offices

Rents in most office markets have been flat over the last year. Agents describe the markets in most of Europe's capital cities as functioning but few see reason to expect significant rental value growth. Markets continue to benefit from the absence of material speculative development during the last market cycle, which resulted in vacancy rates mid-crisis that were low by historic standards. Vacancy rates remain relatively low across the core markets of London, Paris, the key German cities and Stockholm. Across most of Europe the development cycle remains dormant. The exception is London, where most of Europe's speculative development is currently focused, albeit in a small number of well-designed and well-located buildings that we feel are likely to let up well. Away from the core markets listed above, vacancy rates are higher and demand is lower. Rents are still falling across the Benelux countries, Spain, Italy, Greece and in regional markets practically everywhere. Occupiers continue to defer making decisions until they feel more confident about the prospects for the European economy. Whilst this makes for tough conditions today, it may lead to a supply crunch further down the line as Europe begins to recover.

Retail

Consumer confidence remains subdued in all markets except Germany and Sweden. This is holding back retailer investment in all but the most attractive locations, which for retailers equates to those with the greatest footfall and highest spend. These tend to be prime high streets in capital cities and super-regional shopping centres where vacancy levels are already low. This has enabled owners of such property to increase rental values marginally over the past year although this only serves to highlight the disparity between prime and secondary assets, which are still seeing rental values decline. Retail formats continue to evolve at a fast pace and this is providing landlords with opportunities to enhance values through restructuring of existing units. Often this entails merging smaller units that were in demand in the 1990s and early 2000s to create larger spaces of 1,000 to 2,000 square metres that are more suited to today's retail needs. Achieving these types of value enhancements depends on a number of factors, amongst them control of the physical environment, retailer relationships, financial capacity and possession of the necessary skills. These factors tend to be concentrated in large, specialist retail landlords and it is increasingly the case that casual owners of retail property or those without the necessary concentration of resources will lose out.

Distribution and Industrial

Occupational demand for logistics space across northern Europe remained robust in the first half of the year. Demand was particularly strong in Germany. There is a continuing focus on cost control amongst both end users and third party logistic operators and rents have therefore remained broadly flat. Growth in internet retailing, home delivery and the ever-increasing importance of just in time delivery is leading to changes in the structure of distribution networks. As with retail, this is a sector where specialists dominate.

Debt and Credit Markets

Little has changed since our last report to shareholders. Overall availability of debt is below the historic average but listed property companies are continuing to enjoy favourable access to capital throughout the sector. A long list of European listed property companies from all sectors has secured debt capital in the last six months; both large and small capitalisation stocks. Capital has been secured from a wide range of sources: traditional bilateral bank loans, bank syndicates, corporate bonds, convertible bonds, preference shares, non-traditional lenders such as insurance companies, and specialist debt funds offering both mezzanine and senior debt. Margins have remained elevated but with interest and swap rates at low levels, overall debt costs are low by historic standards.

The large UK banks are continuing to dispose of loan portfolios, reducing their balance sheet exposure to real estate. We see this as encouraging for the sector. A healthy banking sector is a prerequisite for the property market to function well. As importantly, we expect liquidity in the investment market to improve as the buyers of loan portfolios begin to work through their acquisitions.

Property Shares

Property shares have had a good year so far. From the end of March until the end of September 2012 the sector has seen share prices increase by 5.1% compared to -0.5% from the wider European equity market. Volatility (daily annualised), which has plagued equity markets over the last five years, has fallen from 18.5% at the end of March 2012 to 13.1% at the Trust's half year point. This is significantly lower than the wider equity market volatility, which has increased marginally over the same time period, from 21.5% to 22.7%. The sector's equity beta has also continued to fall. This measures the way the sector moves in relation to the wider equity market and is important for investors in real estate, who have traditionally been attracted to the sector for its perceived diversification benefits. A beta of 1 implies that property shares will move absolutely in line with the wider equity market. At the half year the real estate equity sector beta was 0.6, having fallen steadily from 0.98 in September 2008.

Investment in listed property followed broadly similar themes to the direct markets with attention focused on the core markets of London, Paris, Germany and Sweden.

German residential was a particularly strong performer, benefiting from investor demand for a well-diversified and growing income return and perceived capital protection. Over the half year German listed property companies returned 14.7% in local currency, well ahead of the average listed real estate return. Sweden, the UK and France were next in line with returns of 13.3%, 9% and 8.4% respectively. At the other end of the spectrum were Austria, Italy and the Netherlands with returns of -0.9%, - 8.1% and -9.6% respectively.

Outlook

We expect continuing dispersion of returns within Europe. We anticipate that the core markets of London, Paris, Germany, Scandinavia and Pan-European regional shopping centres will continue to attract the majority of capital - both equity and debt - and this will drive returns. Only in locations enjoying rental value growth due to occupational demand are underlying returns likely to reach double digits. Our expectations are that such markets will include the West End of London, prime buildings in the City of London and select German residential markets (Berlin, Munich, Hamburg). Elsewhere returns are likely to be limited to income return plus whatever return can be manufactured via active management and improvement of existing portfolios.

We expect listed property companies to generate an average earnings yield of over 6% in the coming year and for those earnings to grow by 2% to 3% per annum over the next two years. Our overall assessment of capital values is that they will remain broadly flat over the next year but with hotspots in the aforementioned target markets. We therefore expect average underlying returns of around 7% to 8%, which is in line with the long term average for real estate and is in our view a relatively attractive return given the level of risk within the sector.

Manager's Report

Ordinary Share Class

Performance

The Ordinary share class total return at +4.7% was ahead of the benchmark total return of +3.4%. Whilst these figures are positive yet modest it is worthy of note that Pan European property shares and the broader European equity market were in a downward trend from mid March until mid June. During this period the NAV fell nearly 8%. The broad recovery in share prices from mid June onwards has been driven by macro events. Further European Central Bank measures together with slightly improving news from the US particularly around the housing market had a positive effect on asset prices. But as fundamental investors we have to wait and see whether the transmission mechanism into growth and jobs works.

The relative outperformance has been driven by our continued focus on quality - both of assets and balance sheets. The best performing stocks were exposed to those sub-markets experiencing rental growth or at the very least underlying stability whilst most also had the appropriate amount of debt exposure. As ever, the banks are happy to renew facilities and restructure loans (at competitive prices) with those who can afford to take their business elsewhere.

Exposure to the limited number of markets with real rental growth and the likelihood of continued occupier demand was once again a key ingredient for stock picking. Germany, London (Greater not just Central) and Scandanavia were the outperforming geographical regions. Companies focused on 'alternative' sub markets including student accommodation, self storage, healthcare and residential land banking were also strong performers. However, it is worthwhile noting that businesses which were exposed to these better performing submarkets but which were also perceived as higher risk or over leveraged still underperformed. Even as markets recovered from June onwards investors focused on quality and safety.

Distribution of Assets

We reduced Continental European equity exposure from 51.5% to 52.2% in the six month period (it was 58.2% a year ago) and UK exposure rose from 34.0% to 38.3% of total investments. UK physical property exposure remained unchanged at just over 10%. The top 10 investments which include the four largest property assets account for 51.3% of the total investments.

Investment Activity

Over the period, turnover (purchases and sales divided by two) totalled £110.7m, which equates to 22.1% of the average net assets over the period. This is slightly higher than the longer term average. As noted earlier, this period was dominated by macro news (and noise) from central bankers and politicians across the Eurozone. As we have written in previous performance reviews, business and politics rarely mixes successfully. Such a backdrop, particularly the slide in markets from mid March to mid June meant that we felt no pressure to increase gearing from the modest level we have been running for a while. Please bear in mind that whilst we do have modest gearing, the physical assets (10% of the portfolio) are themselves ungeared. The consequence is that our 'see- through' leverage is not higher than the benchmark's. However even during the post Easter weakness in markets the portfolio remained fully invested throughout the six month period. Two reasons. Firstly we had a high conviction about the sub-markets which were going to outperform and maintained large overweight positions in our chosen stocks focused on London, Germany and Scandanavia. Simultaneously we also had a substantial list of stocks and markets we wished to avoid. Even in such a short period as six months we have experienced dispersion of returns which has allowed us to generate relative outperformance through stockpicking rather than through leverage. Secondly, whilst we believe that resolution of the Eurozone crisis ultimately requires fundamental restructuring of its financial institutions, this goal was never going to be achieved swiftly. National interests and democratic processes mean that the solution will evolve through a long series of progressive steps. A number of these have already been initiated by the ECB. As we have seen since the initial Greek crisis in 2010, markets are capable of exuberance on receipt of good news, however modest. It has therefore been the right strategy to remain fully invested, focused on our chosen quality companies, ensuring that relative performance did not suffer when the market leapt forward as it did again in early September.

Investment activity within the first quarter of the year was against a backdrop of weakening prices. We increased exposure to non Euro markets principally Switzerland, the UK and Sweden. As I highlighted earlier, within these regions we were adding to quality companies. The focus was a combination of defensive businesses with strong, recurring income streams as well as those with exposure to alternative submarkets such as self storage (Big Yellow and Safestore), residential land banks (St Modwen) and healthcare (Primary Health Properties). Sales broadly matched purchases to ensure no increase in leverage. Fabege, a Swedish property company is a good example of our bottom up, defensive focus during this period. Whilst the company is primarily exposed to submarkets we like (Greater Stockholm region), the amount of leverage it carries combined with the threat of litigation from the Swedish tax authorities resulted in us avoiding it - even though it appeared cheaper than many within its peer group.

The market rally through July enabled us to take some profits in Continental Europe reducing the gearing from 9% to 6%. However, we maintained exposure in the UK switching our remaining holding in Capital Shopping Centres into Segro. Our retail exposure is through a combination of Hammerson, Land Securities and British Land. Whilst we have been heavily underweight UK industrials for some time, Segro has made good progress in achieving its new strategic goals. Too many property company managements remain reactive rather than proactive in these choppy times.

The traditional summer holiday lull saw prices weaken again but September brought a further bout of investor enthusiasm and property shares rallied alongside broader equity markets. We have maintained our policy of 'quality first' adding modestly again to gearing as we crossed the half year mark. By way of illustration, at the end of the half year, UK equity exposure had increased to 38.3% from 34.0% at March 2012 with both St Modwen and Segro returning to the Top 20 list together with Deutsche Wohnen (German residential). Our favoured Swedish company, Hufvudstaden which has by far the lowest gearing across its Scandanavian peer group, is now the 13^th largest equity position (previously 20^th).

Revenue and Revenue Outlook

In the full year results, we highlighted that we expected revenue to drop slightly this year. The revenue earnings in the first half were 5.54p compared to 5.63p in the same period last year. This was not due to a reduction in underlying earnings (in local currency terms) from the companies we invest in; they have grown modestly as we expected but the Euro was significantly weaker than in the prior year comparative period. This translated into lower earnings in Sterling terms. The tax charge was higher in the first half of the current year (11.5% versus 10.1% at the year end) as fewer European dividends were received as capital distributions, which did not attract withholding tax. Also the proportion of income attracting UK corporation tax was higher. By the end of September the Trust has received over 75% of its total annual dividend income (but only 50% of its UK rental income), and has incurred around 50% of its annual expenses. Therefore the earnings for the first half do not represent half the anticipated full year earnings. However, we now expect that earnings for the full year will be ahead of the 6.60p indicated in the year end report.

Gearing, Debt and Debentures

The overall net debt position in the portfolio fell over the year from £45m to £36m, which translates into gearing of 7.4%. The gearing levels in the two share classes are not truly comparable figures as the Ordinary share class also holds physical property. These assets have no underlying gearing, unlike the equity portfolio. This is well illustrated by the 'see through' gearing analysis where we add the property assets and debt of the companies in which we invest to the on-balance sheet direct property assets and debt of the share class. At the end of September the see-through gearing at 36.4% was slightly below the benchmark figure of 40.4%.

The Trust continues to have multi-currency facilities with both ING and RBS totalling £80m which together with the £15m 2016 debenture provides the Trust with additional balance sheet flexibility. The modest use of CFD's has also provided both competitively priced gearing flexibility as well as reducing transaction costs in some European stocks.

Direct Property Portfolio

The physical property portfolio produced a positive total return for the six months of 3.1% made up of a capital return of 0.7% and an income return of 2.4%.  This compares to a total return from the IPD Monthly Index for the same six month period of 0.9% made up of a capital return of -2.4% and an income return of 3.3%.

In June we completed the letting of the remaining ground and first floor office space at Field House, Harlow to the existing tenant Teva. They have taken the space on leases expiring in June 2023 at rents between £11.00 per sq ft and £12.75 per sq ft.  We have also agreed an extension to the Close Brothers lease of part of the 1^st floor until December 2014 at the same rent.  At that point Teva can exercise their option over this additional space; at which time they will occupy the entire property.

At the Colonnades in Bayswater, we have let a small 800 sq ft office to Bootcamp Pilates Ltd who are an existing tenant.  Bootcamp run a successful and expanding Pilates studio and this space is adjacent to their current studio.

Absolute Taste Ltd who occupy 4 of the 16 units at Ferrier Street Industrial Estate, Wandsworth have renewed their 4 leases until September 2016 on broadly similar terms to the old leases.  14 of the 16 leases now expire in September 2016 and we are working to bring the final two in line. We continue to explore the medium term redevelopment potential of the site.

Following the lettings to Teva and Bootcamp the property portfolio is 99.7% occupied.

Marcus Phayre-Mudge

Fund Manager

Ordinary Share Class

22 November 2012

 

Manager's Report

Sigma Share Class

Performance

Over the half year period to the end of September the Sigma share class NAV total return was 5.7%.  The benchmark total return was 3.5%.  As we highlighted in the Market Background and Outlook section, volatility has been reducing over the last year and this has allowed the performance characteristics of individual companies and markets to come to the fore.  The Sigma share class has particularly benefitted from exposure to offices and business space in Central London and German office, retail and residential property. These markets, which on a see-through basis account for 25% of Sigma's net asset value, have been widely recognised as attracting the majority of investment capital for European real estate due to expectations of continuing rental growth and stable or growing capital values. 

We continue to pick stocks based on a bottom up assessment of each company in our sector, focussing on the fundamentals of income security, asset quality and management capability.  We believe this latter factor is key.  Poor management decisions, whether buying or selling the wrong property or pursuing the wrong debt strategy, destroy value.  The opposite is also true and we have consistently sought to identify what we call manufacturers of returns; those management teams who can create value through their own endeavours irrespective of what the underlying market is doing. 

Investment Activity and Distribution of Assets

Turnover (purchases and sales divided by two) totalled 29% over the first half.  This compares to 46% for the full year to March 2012.  We reduced net gearing from 5% to zero after the Summer, taking profits on outperforming stocks such as Shaftesbury and Capital & Counties in the UK, GSW and Alstria in Germany.  These stocks provide exposure to our most favoured markets in Central London and Germany.  Whilst we continue to believe in the prospects for these markets, the stocks themselves no longer offered compelling value.  Where possible we have sought alternative exposure in better value stocks.  However, in the case of German residential the entire sector moved up in price sharply and attractive alternatives have been scarce.  See-through exposure to German residential property has therefore fallen from 12% at the end of March 2012 to 7.9% at the end of September.

Outside London, UK exposure is limited to a handful of special cases.  We have just over 6% of NAV invested in St Modwen Properties, Unite Group, Safestore and Big Yellow. These stocks all offer exposure to what might loosely be described as alternative assets: land, student housing and self-storage.

We maintained exposure to the Nordics, which on a see-through basis totalled 17.8% of net assets at the half year point.  Our positive outlook on the Swedish property market is tempered, however, by a number of ongoing tax cases against Swedish property companies and leverage that we generally consider to be too high. 

We have zero exposure to Greece, Ireland or Portugal and only 0.4% see-through exposure to Spain.  Italian see-through exposure totals 7.9%, reflecting our holdings in Beni Stabili, IGD and Eurocommercial, which own high quality portfolios focussed on the wealthier areas of Northern Italy.

Debt, Gearing and Debenture

The overall debt position in the share class reduced from £7.40m to £2.85m over the first half.  Debt is now entirely made up of the 2016 debenture loan.  The share class held cash of £2.90m at the half year point, resulting in a net cash position of £0.05m. 

The share class has significant financial flexibility. Its allocation of available debt facilities is £18.85m.  Additionally it has the ability to gear through the use of CFDs.

Revenue and Revenue Outlook

Revenue earnings at 2.50p are ahead of the earnings of 1.89p per share for the same period in the prior year. In the 2012 year end report it was indicated that we expected earnings to move forward in the current year and we are pleased to report this has been the case. Earnings for the full year are expected to be slightly ahead of the 2.80p indicated in the Annual Report. As for the Ordinary share class, the earnings are skewed to the first half of the year whilst the majority of expenses are spread more evenly throughout the year, so earnings in the first half do not represent half the full year result.

The revenue tax charge of 7.7% is similar to the year end level and lower than for the first half in the previous year. The tax charge consists entirely of withholding tax on the non-UK holdings so the rate is determined by the withholding tax levels set in the various jurisdictions in which we invest.

James Wilkinson

Fund Manager

Sigma Share Class

22 November 2012

Ordinary Share Class Statement of Comprehensive Income 

for the half year ended 30 September 2012

	(Unaudited) Half year ended 30 September 2012			(Unaudited) Half year ended 30 September 2011			(Audited) Year ended 31 March 2012
	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	16,544	-	16,544	16,732	-	16,732	21,749	-	21,749
Other operating income	152	-	152	17	-	17	32	-	32
Gross rental income	1,873	-	1,873	1,650	-	1,650	3,257	-	3,257
Service charge income	967	-	967	813	-	813	1,249	-	1,249
Gains/(losses) on investments held at  fair value	-	10,022	10,022	-	(97,866)	(97,866)	-	(61,405)	(61,405)
Net returns/ (losses) on contracts for difference	60	16	76	-	(96)	(96)	52	202	254
	______	______	______	______	______	______	______	______	______
Total income/(loss)	19,596	10,038	29,634	19,212	(97,962)	(78,750)	26,339	(61,203)	(34,864)
	______	______	______	______	______	______	______	______	______
Expenses
Management fees	(1,221)	(611)	(1,832)	(1,285)	(643)	(1,928)	(2,493)	(1,246)	(3,739)
Performance fee	-	(468)	(468)	-	-	-	-	-	-
Repayment of prior years' VAT	-	-	-	117	58	175	117	58	175
Direct property expenses, rent payable and service charge costs	(1,220)	-	(1,220)	(1,156)	-	(1,156)	(1,795)	-	(1,795)
Other administrative expenses	(491)	-	(491)	(362)	-	(362)	(720)	-	(720)
	______	______	______	______	______	______	______	______	______
Total operating expenses	(2,932)	(1,079)	(4,011)	(2,686)	(585)	(3,271)	(4,891)	(1,188)	(6,079)
	______	______	______	______	______	______	______	______	______
Operating profit/(loss)	16,664	8,959	25,623	16,526	(98,547)	(82,021)	21,448	(62,391)	(40,943)
Finance costs	(633)	(633)	(1,266)	(616)	(616)	(1,232)	(1,293)	(1,293)	(2,586)
	______	______	______	______	______	______	______	______	______
Net profit/(loss) before tax	16,031	8,326	24,357	15,910	(99,163)	(83,253)	20,155	(63,684)	(43,529)
Taxation	(1,839)	715	(1,124)	(1,497)	720	(777)	(2,041)	1,070	(971)
	______	______	______	______	______	______	______	______	______
Net profit/(loss)	14,192	9,041	23,233	14,413	(98,443)	(84,030)	18,114	(62,614)	(44,500)
	______	______	______	______	______	______	______	______	______
Earnings/(loss) per Ordinary share (note 3a)	5.54p	3.53p	9.07p	5.63p	(38.43)p	(32.80)p	7.07p	(24.44)p	(17.37)p

Ordinary Share Class Balance Sheet

as at 30 September 2012

	30 September 2012	30 September 2011	31 March 2012
	(Unaudited)	(Unaudited)	(Audited)
	£'000	£'000	£'000
Non-current assets
Investments held at fair value	520,834	491,354	516,241
	___    ___	___  ___	___  ___
Current assets
Other receivables	4,946	5,400	6,414
Cash and cash equivalents	4,818	531	2,944
	______	______	______
	9,764	5,931	9,358
Current liabilities	(32,602)	(45,024)	(39,937)
	______	______	______
Net current liabilities	(22,838)	(39,093)	(30,579)
	______	______	______
Total assets less current liabilities	497,996	452,261	485,662
Non-current liabilities	(15,049)	(15,169)	(15,190)
	______	______	______
Net assets	482,947	437,092	470,472
	______	______	______
Net asset value per Ordinary share	188.49p	170.59p	183.62p

Sigma Share Class Statement of Comprehensive Income

for the half  year ended 30 September 2012

	(Unaudited) Half year ended 30 September 2012			(Unaudited) Half year ended 30 September 2011			(Audited) Year ended 31 March 2012
	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	3,917	-	3,917	3,132	-	3,132	4,615	-	4,615
Other operating income	13	-	13	16	-	16	19	-	19
Gains/(losses) on investments held at fair value	-	3,690	3,690	-	(27,617)	(27,617)	-	(21,624)	(21,624)
Net returns on contracts for difference	1	19	20	-	4	4	-	28	28
	______	______	______	______	______	______	______	______	______
Total income/(loss)	3,931	3,709	7,640	3,148	(27,613)	(24,465)	4,634	(21,596)	(16,962)
	______	______	______	______	______	______	______	______	______
Expenses
Management fees	(338)	(169)	(507)	(369)	(184)	(553)	(704)	(352)	(1,056)
Repayment of prior years' VAT	-	-	-	27	14	41	27	14	41
Other administrative expenses	(98)	-	(98)	(74)	-	(74)	(155)	-	(155)
	______	______	______	______	______	______	______	______	______
Total operating expenses	(436)	(169)	(605)	(416)	(170)	(586)	(832)	(338)	(1,170)
	______	______	______	______	______	______	______	______	______
Operating profit/(loss)	3,495	3,540	7,035	2,732	(27,783)	(25,051)	3,802	(21,934)	(18,132)
Finance costs	(136)	(136)	(272)	(151)	(151)	(302)	(299)	(299)	(598)
	______	______	______	______	______	______	______	______	______
Net profit/(loss) before tax	3,359	3,404	6,763	2,581	(27,934)	(25,353)	3,503	(22,233)	(18,730)
Taxation	(258)	-	(258)	(227)	-	(227)	(261)	-	(261)
	______	______	______	______	______	______	______	______	______
Net profit/(loss)	3,101	3,404	6,505	2,354	(27,934)	(25,580)	3,242	(22,233)	(18,991)
	______	______	______	______	______	______	______	______	______
Earnings/(loss) per Sigma share (note 3b)	2.50p	2.74p	5.24p	1.89p	(22.39)p	(20.50)p	2.60p	(17.83)p	(15.23)p

Sigma Share Class Balance Sheet

as at 30 September 2012

	30 September 2012	30 September 2011	31 March 2012
	(Unaudited)	(Unaudited)	(Audited)
	£'000	£'000	£'000
Non-current assets
Investments held at fair value	121,236	120,048	123,501
	______	______	______
Current assets
Other receivables	5,937	1,100	5,105
Cash and cash equivalents	2,917	843	1,445
	______	______	______
	8,854	1,943	6,550
Current liabilities	(5,357)	(6,620)	(9,429)
	______	______	______
Net current assets/(liabilities)	3,497	(4,677)	(2,879)
	______	______	______
Total assets less current liabilities	124,733	115,371	120,622
Non-current liabilities	(2,849)	(2,849)	(2,849)
	______	______	______
Net assets	121,884	112,522	117,773
	______	______	______
Net asset value per Sigma share	98.32p	90.22p	94.62p

GROUP STATEMENT OF COMPREHENSIVE INCOME

for the half year ended 30 September 2012

	(Unaudited) Half year ended 30 September 2012			(Unaudited) Half year ended 30 September 2011			(Audited) Year ended 31 March 2012
	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	20,461	-	20,461	19,864	-	19,864	26,364	-	26,364
Other operating income	165	-	165	33	-	33	51	-	51
Gross rental income	1,873	-	1,873	1,650	-	1,650	3,257	-	3,257
Service charge income	967	-	967	813	-	813	1,249	-	1,249
Gains/(losses) on investments held at fair value	-	13,712	13,712	-	(125,483)	(125,483)	-	(83,029)	(83,029)
Net returns/ (losses) on contracts for difference	61	35	96	-	(92)	(92)	52	230	282
	_____	_____	_____	_____	_____	_____	_____	_____	_____
Total income/(loss)	23,527	13,747	37,274	22,360	(125,575)	(103,215)	30,973	(82,799)	(51,826)
	_____	_____	_____	_____	_____	_____	_____	_____	_____
Expenses
Management fees (note 2)	(1,559)	(780)	(2,339)	(1,654)	(827)	(2,481)	(3,197)	(1,598)	(4,795)
Performance fee (note 2)	-	(468)	(468)	-	-	-	-	-	-
Repayment of prior years' VAT (note 2)	-	-	-	144	72	216	144	72	216
Direct property expenses, rent payable  and service charge costs	(1,220)	-	(1,220)	(1,156)	-	(1,156)	(1,795)	-	(1,795)
Other administrative expenses	(589)	-	(589)	(436)	-	(436)	(875)	-	(875)
	_____	_____	_____	_____	_____	_____	_____	_____	_____
Total operating expenses	(3,368)	(1,248)	(4,616)	(3,102)	(755)	(3,857)	(5,723)	(1,526)	(7,249)
	_____	_____	_____	_____	_____	_____	_____	_____	_____
Operating profit/(loss)	20,159	12,499	32,658	19,258	(126,330)	(107,072)	25,250	(84,325)	(59,075)
Finance costs	(769)	(769)	(1,538)	(767)	(767)	(1,534)	(1,592)	(1,592)	(3,184)
Profit/(loss) from operations before tax	19,390	11,730	31,120	18,491	(127,097)	(108,606)	23,658	(85,917)	(62,259)
Taxation	(2,097)	715	(1,382)	(1,724)	720	(1,004)	(2,302)	1,070	(1,232)
	_____	_____	_____	_____	_____	_____	_____	_____	_____
Net profit/(loss)	17,293	12,445	29,738	16,767	(126,377)	(109,610)	21,356	(84,847)	(63,491)
	_____	_____	_____	_____	_____	_____	_____	_____	_____
Earnings/(loss) per Ordinary share (note 3a)	5.54p	3.53p	9.07p	5.63p	(38.43)p	(32.80)p	7.07p	(24.44)p	(17.37)p
Earnings/(loss) per Sigma share (note 3b)	2.50p	2.74p	5.24p	1.89p	(22.39)p	(20.50)p	2.60p	(17.83)p	(15.23)p

The total column of this statement represents the Group's Statement of Comprehensive Income, prepared in accordance with IFRS.  The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations.

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

The final Ordinary dividend of 4.20pin respect of the year ended 31 March 2012 was declared on 23 May 2012 and paid on 1 August 2012. The final Sigma dividend of 1.65p in respect of the year ended 31 March 2012 was declared on 23 May 2012 and paid on  1 August 2012. These can be found in the Group Statement of Changes in Equity for the half year ended 30 September 2012.

GROUP AND COMPANY 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 2012 (Unaudited)	Ordinary £'000	Sigma £'000			Ordinary £'000	Sigma £'000
At 31 March 2012	64,056	15,559	43,162	43,694	333,613	88,161	588,245
Total comprehensive income:
Net profit for the half year	-	-	-	-	23,233	6,505	29,738
Transactions with owners, recorded directly to equity:
Shares repurchased	-	(62)	-	62	-	(341)	(341)
Dividends paid	-	-	-	-	(10,761)	(2,050)	(12,811)
	_  _   __	_  _   _	_  _   __	_  _   __	_  _   __	_  _   __	_  _   __
At 30 September 2012	64,056	15,497	43,162	43,756	346,085	92,275	604,831
	_  _   __	_  _   _	_  _   __	_  _   __	_  _   __	_  _   __	_  _   __
	Share Capital		Share Premium Account £'000	Capital Redemption Reserve £'000	Retained Earnings		Total £'000
for the half year ended 30 September 2011 (Unaudited)	Ordinary £'000	Sigma £'000			Ordinary £'000	Sigma £'000
At 31 March 2011	64,056	15,615	43,162	43,638	393,743	110,229	670,443
Total comprehensive income:
Net loss for the half year	-	-	-	-	(84,030)	(25,580)	(109,610)
Transactions with owners, recorded directly to equity:
Shares repurchased	-	(25)	-	25	-	(180)	(180)
Dividends paid	-	-	-	-	(9,480)	(1,559)	(11,039)
	_  _   __	_  _   _	_  _   __	_  _   __	_  _   __	_  _   __	_  _   __
At 30 September 2011	64,056	15,590	43,162	43,663	300,233	82,910	549,614
	_  _   __	_  _   _	_  _   __	_  _   __	_  _   __	_  _   __	_  _   __
	Share Capital		Share Premium Account £'000	Capital Redemption Reserve £'000	Retained Earnings		Total £'000
for the year ended 31 March 2012 (Audited)	Ordinary £'000	Sigma £'000			Ordinary £'000	Sigma £'000
At 31 March 2011	64,056	15,615	43,162	43,638	393,743	110,229	670,443
Net loss for the year	-	-	-	-	(44,500)	(18,991)	(63,491)
Transactions with owners, recorded directly to equity:
Shares repurchased	-	(56)	-	56	-	(333)	(333)
Dividends paid	-	-	-	-	(15,630)	(2,744)	(18,374)
	_  _   __	_  _   _	_  _   __	_  _   __	_  _   __	_  _   __	_  _   __
At 31 March 2012	64,056	15,559	43,162	43,694	333,613	88,161	588,245
	_  _   __	_  _   _	_  _   __	_  _   __	_  _   __	_  _   __	_  _   __

GROUP BALANCE SHEET

as at 30 September 2012

	30 September 2012 (Unaudited) £'000	30 September 2011 (Unaudited) £'000	31 March 2012 (Audited) £'000
Non-current assets
Investments held at fair value	642,070	611,402	639,742
	_________	_________	_________
Current assets
Other receivables	6,416	6,500	7,158
Cash and cash equivalents	7,735	1,374	4,389
	_________	_________	_________
	14,151	7,874	11,547
Current liabilities	(33,492)	(51,644)	(45,005)
	_________	_________	_________
Net current liabilities	(19,341)	(43,770)	(33,458)
	_________	_________	_________
Total assets less current liabilities	622,729	567,632	606,284
Non-current liabilities	(17,898)	(18,018)	(18,039)
	_________	_________	_________
Net assets	604,831	549,614	588,245
	_________	_________	_________
Capital and reserves
Called up share capital	79,553	79,646	79,615
Share premium account	43,162	43,162	43,162
Capital redemption reserve	43,756	43,663	43,694
Retained earnings	438,360	383,143	421,774
	_________	_________	_________
Shareholders' funds	604,831	549,614	588,245
	_________	_________	_________
Net asset value per :
Ordinary share	188.49p	170.59p	183.62p
Sigma share	98.32p	90.22p	94.62p

GROUP CASH FLOW STATEMENT

For the half  year ended 30 September 2012

	Half  year ended 30 September 2012 (Unaudited)	Half year ended 30 September 2011 (Unaudited)	Year ended 31 March 2011 (Audited)
	£'000	£'000	£'000
Reconciliation of operating revenue to net cash flow from operating activities
Profit/(loss) from operations before tax	31,120	(108,606)	(62,259)
Financing activities	1,538	1,534	3,184
(Gains)/losses on investments held at fair value through profit or loss	(13,712)	125,575	83,029
Decrease in accrued income	724	3,805	453
Increase in other debtors	(79)	(2,332)	(426)
Increase/(decrease) in creditors	44	25	(66)
Net sales/(purchases) of investments	14,751	(16,141)	(2,106)
Decrease in sales settlement debtor	97	1,247	1,905
Decrease in purchase settlement creditor	(235)	(3,404)	(4,142)
Scrip dividends included in investment income	(2,036)	-	-
	_________	_________	_________
Net cash inflow from operating activities before interest and taxation	32,212	1,703	19,572
Interest paid	(1,538)	(1,534)	(3,184)
Taxation paid	(1,995)	(1,677)	(1,679)
	_________	_________	_________
Net cash inflow/(outflow) from operating activities	28,679	(1,508)	14,709
Financing activities
Equity dividends paid	(12,811)	(11,039)	(18,374)
Repurchase of shares	(341)	(180)	(333)
(Repayment)/drawdown of loans	(11,084)	9,125	3,372
	_________	_________	_________
Net cash used in financing	(24,236)	(2,094)	(15,335)
	_________	_________	_________
Increase/(decrease) in cash	4,443	(3,602)	(626)
Cash and cash equivalents at start of the period	4,389	4,188	4,188
Exchange movements	(1,097)	788	827
	_________	_________	_________
Cash and cash equivalents at end of the period	7,735	1,374	4,389
	_________	_________	_________

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 2012 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 fees
			(Unaudited) Half year ended 30 September 2012			(Unaudited) Half year ended 30 September 2011					(Audited) Year ended 31 March 2012
			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		1,559	780	2,339	1,654		827	2,481		3,197			1,598	4,795
	Performance fee		-	468	468	-		-	-		-			-	-
	Repayment of prior years' VAT		-	-	-	(144)		(72)	(216)		(144)			(72)	(216)
			_____	____	_   ___	_____		____	____		____			____	___
			1,559	1,248	2,807	1,510		755	2,265		3,053			1,526	4,579
			_____	_____	_____	_____		_____	____		_____			_____	____
	A provision has been made for a performance fee based on the net assets at 30 September 2012.
3	Earnings/(loss) per share
a	Earnings/(loss) per Ordinary share
	The earnings/(loss) per Ordinary share can be analysed between revenue and capital, as below.
						Half year ended 30 September 2012 (Unaudited) £'000			Half year ended 30 September 2011 (Unaudited) £'000			Year ended 31 March 2012 (Audited) £'000
	Net revenue profit					14,192			14,413			18,114
	Net capital profit/(loss)					9,041			(98,443)			(62,614)
						_______			_________			_________
	Net total profit/(loss)					23,233			(84,030)			(44,500)
						_______			_________			_________
	Weighted average number of Ordinary shares in issue during the period					256,225,000			256,225,000			256,225,000
						pence			pence			pence
	Revenue earnings per Ordinary share					5.54			5.63			7.07
	Capital earnings/(loss) per Ordinary share					3.53			(38.43)			(24.44)
						_______			_________			_________
	Earnings/(loss) per Ordinary share					9.07			(32.80)			(17.37)
						_______			_________			_________
b		Earnings/(loss) per Sigma share
		The earnings/loss per Sigma share can be analysed between revenue and capital, as below.
							Half year ended 30 September 2012 (Unaudited) £'000			Half year ended 30 September 2011 (Unaudited) £'000			Year ended 31 March 2012 (Audited) £'000
		Net revenue profit					3,101			2,354			3,242
		Net capital profit/(loss)					3,404			(27,934)			(22,233)
							_______			_______			_________
		Net total profit/(loss)					6,505			(25,580)			(18,991)
							_______			_______			_________
		Weighted average number of Sigma shares in issue during the period					124,168,994			124,789,760			124,697,820
							pence			pence			pence
		Revenue earnings per Sigma share					2.50			1.89			2.60
		Capital earnings/(loss) per Sigma share					2.74			(22.39)			(17.83)
							_______			_______			_________
		Earnings/(loss) per Sigma share					5.24			(20.50)			(15.23)
							_______			_______			________
4		Changes in share capital
		During the half year the Company made market purchases for cancellation 0f 500,000 Sigma shares of 12.5p each, representing 0.40% of the number of Sigma shares in issue at 31 March 2012. The aggregate consideration paid by the Company for the shares was £341,000. Shares are repurchased in order to enhance shareholder value. As at 30 September 2012 there were 256,225,000 Ordinary shares of 25p and 123,972,000 Sigma shares of 12.5p in issue. As noted in the Chairman's Statement, the Board announced on 26 September 2012 their intention to propose a conversion of the entire share capital of the Sigma shares into Ordinary shares and a merger of the underlying portfolios. The proposals are set out in a Shareholder Circular to be posted to shareholders later today. The proposals will be put to shareholders at an Extraordinary General Meeting due to take place on 14 December 2012.
5		Going concern
		The directors believe that it is appropriate to adopt the going concern basis in preparing the financial statements. The assets of the Company consist mainly of securities that are readily realisable and, accordingly, the Company has adequate financial resources to continue in operational existence for the foreseeable future.
6		Related Party Transactions
		There are no material related party transactions during the half year.
7		Comparative information
		The financial information contained in this Half-Yearly Financial Report does not constitute statutory accounts as defined in section 435(1) of the Companies Act 2006. The financial information for the half year periods ended 30 September 2011 and 30 September 2012 has not been audited. The figures and financial information for the year ended 31 March 2012 are an extract from the latest published accounts and do not constitute statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and include the report of the auditors, which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

This announcement and the information contained herein is not for publication, distribution or release in, or into, directly or indirectly, the United States, Canada, Australia or Japan and does not constitute, or form part of, an offer of securities for sale in or into the United States, Canada, Australia or Japan.

The securities referred to in this announcement have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") and may not be offered or sold in the United States unless they are registered under the Securities Act or pursuant to an available exemption therefrom.  The Company does not intend to register any portion of securities in the United States or to conduct a public offering of the securities in the United States.  The Company will not be registered under the U.S. Investment Companies Act of 1940, as amended, and investors will not be entitled to the benefits of that Act.

This announcement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities referred to herein in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, exemption from registration or qualification under the securities law of any such jurisdiction. 

The contents of this announcement include statements that are, or may be deemed to be "forward looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should".  They include the statements regarding the target aggregate dividend.  By their nature, forward looking statements involve risks and uncertainties and readers are cautioned that any such forward-looking statements are not guarantees of future performance.  The Company's actual results and performance may differ materially from the impression created by the forward-looking statements. The Company undertakes no obligation to publicly update or revise forward-looking statements, except as may be required by applicable law and regulation (including the Listing Rules).  No statement in this announcement is intended to be a profit forecast.

For further information please contact:

Marcus Phayre-Mudge

Fund Manager - Ordinary share class

TR Property Investment Trust plc

Telephone: [phone]

Jo Elliott

Finance Manager and Investor Relations

TR Property Investment Trust plc

Telephone: [phone]

 

END

 

 

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