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| Name | Symbol | Market | Type |
|---|---|---|---|
| ProShares Ultra MSCI Brazil Capped New | AMEX:UBR | AMEX | Exchange Traded Fund |
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RNS Number:7857N
UK Balanced Property Trust Ltd(The)
21 July 2003
THE UK BALANCED PROPERTY TRUST LIMITED
(Registered in Guernsey - Number 39171)
Registered Office:
C/o BUTTERFIELD FUND MANAGERS (GUERNSEY) LIMITED
P.O. BOX 211, BUTTERFIELD HOUSE, THE GRANGE, ST. PETER PORT,
GUERNSEY, GY1 3NQ, CHANNEL ISLANDS.
___________________________
TELEPHONE: + 44 1481 720321
FACSIMILE: + 44 1481 716117
e-mail: Funds@bfmgl.gg
Immediate Announcement 21 July 2003
Further Re: Final Results
With reference to the announcement 'Final Results' released 16 July 2003 on
behalf of The UK Balanced Property Trust Limited, The Board of Directors wish to
announce additional detailed extracts relating to the Company's Report and
Accounts.
The UK Balanced Property Trust Limited
Annual Report
for the period from incorporation on 22 January 2002 to 31 March 2003
Page 2
THE UK BALANCED PROPERTY TRUST LIMITED
Directors and Advisers
Directors: Peter Harwood (Chairman) (appointed 22 January 2002)
Nicola Adamson (appointed 22 January 2002)
Peter Le Cheminant (appointed 22 January 2002)
Francis Malcolm (appointed 22 January 2002)
Stephen Vernon (appointed 22 January 2002)
Registered Office: Butterfield House
The Grange
St. Peter Port
Guernsey GY1 3NQ
Investment Manager: Scottish Widows Investment Partnership Limited
Edinburgh One
Morrison Street
Edinburgh EH3 8BE
Marketing Adviser: G&N Collective Funds Services Limited
14 Alva Street
Edinburgh EH2 8BE
Receiving Agent and Lloyds TSB Registrars
UK Transfer Agent: The Causeway
Worthing
West Sussex BN99 6DA
Administrator, Secretary Butterfield Fund Managers (Guernsey) Limited
and Registrar of the Company: La Tonnelle House
Les Banques
St Sampsons
Guernsey GY2 4BF
Principal Bankers: The Royal Bank of Scotland plc
135 Bishopsgate
London EC2M 3UR
Independent Property Valuers: Drivers Jonas Insignia Richard Ellis Limited
6 Grosvenor Street Berkeley Square House
London W1K 4DJ London W1J 6BU
Auditors: Ernst & Young LLP
14 New Street
St Peter Port
Guernsey GY1 4AF
Tax Advisers: Ernst & Young LLP
10 George Street
Edinburgh EH2 2DZ
Legal Advisers: As to Guernsey Law: As to UK Law:
Ozannes Dickson Minto W.S.
1 Le Marchant Street 11 Walker Street
St Peter Port Edinburgh EH3 7NE
Guernsey GY1 4HP
As to Property Law:
Dundas & Wilson C.S.
9th Floor, North West Wing
Bush House
Aldwych
London WC2 B4E
Page 3
THE UK BALANCED PROPERTY TRUST LIMITED
DIRECTORS' AND INVESTMENT MANAGERS' BIOGRAPHIES
Directors:
Peter Harwood (Chairman), aged 55, is a resident of Guernsey. He is an
Advocate of the Royal Court of Guernsey and has been a partner with Ozannes
since 1983, specialising in the establishment and operation of collective
investment schemes. He was formerly Chairman of TSB Bank Channel Islands
Limited and is a non-executive director of NM Rothschild & Sons (C.I.)
Limited and several listed investment funds including Five Arrows
International Reserves Limited and Investec European Growth & Income Trust
Limited.
Nicola Adamson, aged 44, is a resident of Jersey. She is qualified as a
Scottish and English solicitor and has 15 years experience in offshore trust
and fiduciary services. She is a non-executive director of Rathbone Trust
Company Jersey Limited, part of the Rathbone Brothers Group, and is a former
non-executive director of Bank of Scotland Offshore Limited. She is a
principal of a specialised offshore training company, Network CPD Limited.
Peter Le Cheminant, aged 48, is a resident of Guernsey. He qualified as a
chartered surveyor in 1979 and has been an executive member of Martel Maides
Limited, estate agents, valuers, auctioneers and property consultants, since
1988. He has over 20 years experience in both commercial and general property
matters. In 1992 he was elected Fellow of the Royal Institution of Chartered
Surveyors and in 1999 was admitted as a Member of the Chartered Institute of
Arbitrators.
Francis Malcolm, aged 59, is a resident of the UK. He is a stockbroker and a
director of Brewin Dolphin Securities Limited ("BDS"). He was an analyst with
Edinburgh Investment Trust plc for the three years until 1972, since when he
has held a number of senior positions in Bell Lawrie White (a division of
BDS) and its predecessor companies and partnerships, and is currently a
director in the corporate finance department. He is a non-executive director
of Close Brothers Development VCT plc, Close Brothers AiM VCT and Edinburgh
Income and Value Trust plc.
Stephen Vernon, aged 53, is a resident of the UK. He is a chartered surveyor
and is the chairman of Green Property Limited (formerly Green Property plc),
a property investment company. Prior to his appointment as managing director
of Green Property plc in 1993, he was group managing partner of St. Quintin,
a firm of chartered surveyors. Throughout his career, he has specialised in
the financing and development of commercial property, including shopping
centres, offices, industrial and business parks.
Investment Managers:
Tom Laidlaw MRICS, aged 44, began his career in 1976 and spent five years
working for Insignia Richard Ellis Limited before moving to Scottish Widows
Investment Management Limited in 1986. In 1995 he was appointed property
investment director responsible for the management of three property funds
with total assets of #1.3 billion and in 1998 he was appointed the head of
the property department within Scottish Widows Investment Management Limited,
now Scottish Widows Investment Partnership Limited. He currently has overall
responsibility for the properties comprised in the Property Portfolio.
Michael Channing MRICS, aged 37, has 16 years of property experience and
joined Scottish Widows Investment Management Limited in 1990. He is
responsible for managing a number of portfolios with total assets of
approximately #1.7 billion. Prior to joining Scottish Widows Investment
Management Limited, he worked for three years at Hillier Parker.
Page 4
THE UK BALANCED PROPERTY TRUST LIMITED
CHAIRMAN'S STATEMENT
I have pleasure in presenting the Annual Report of your Company for the
financial period ended 31st March 2003.
As you will be aware, your Company was successfully launched in March 2002
when it raised #150 million in ordinary share capital. The equity raised
together with use of the loan facility provided by The Royal Bank of
Scotland, enabled your Company to complete the initial purchases of
properties having a portfolio value of over #216 million. The Company
completed its initial investment programme ahead of its original target date.
During the period under review, your Directors were able to declare and pay a
total dividend of 7p in line with the yield indicated at the time of the
original launch. The fact that the Company has been able to achieve its
investment programme ahead of target means that your Directors have felt
comfortable to indicate their intention to pay an increased dividend during
the forthcoming financial year.
The success of the initial launch meant that your Directors were able to
bring forward proposals for further equity capital fund raising, earlier this
calendar year, in order to take advantage of further investment
opportunities. Against difficult market conditions, your Directors were
pleased that the Company was able to raise a further #41.5 million of
ordinary share capital.
This further fund raising enabled your Company to complete the acquisition of
a further portfolio of 21 properties with a value of #73.7 million. Your
Company now has a property portfolio as at July 2003 of 89 properties with a
wide and diverse spread by sector, by regions and by tenant covenant. In
particular, it should be noted that your Company's exposure to the office
sector in London and the South East represents only 11.3% of the total
portfolio values and that your Company has no exposure to the office sector
in Central London.
The Accounts are presented in accordance with International Financial
Reporting Standards. The application of these standards require the Company
to recognise on its balance sheet, as a liability, the fair value of the
interest rate swap of #8.48 million, hedging its bank loan and hence reducing
net assets by #8.48 million as further described in note 13 and (along with
the effects of other differences in accounting standards) note 16 to the
Accounts. In an investment trust, prepared in accordance with United Kingdom
Accounting Standards, this item would not normally be recognised as a
liability, since the fair value would only crystallise in the event that your
Company elected to repay its bank loan before maturity. Your Directors have
no intention of repaying the bank loans before the maturity of the
corresponding interest rate swap contracts.
At the Annual General Meeting, the shareholders will be asked to pass a
resolution authorising the Company to buy back up to 14.99%. of the Company's
issued share capital. The Directors would only exercise that authority if the
market price of shares was at a discount to their Net Asset Value.
In the past 12 months, there has been adverse press comment aimed both at
investment trusts and the property sector. The fact that your Company has
enjoyed a successful launch and has been able to raise additional ordinary
share capital earlier this calendar year serves to emphasise, I believe, the
importance of the role of investment trusts and investment funds in assisting
private investors to achieve balance through participation in a wide range of
different investments. In particular, an investment fund, such as your
Company, has enabled investors to achieve an exposure to investment in
commercial property, which has shown considerable resilience and robustness
when measured against other investment assets. No doubt, there may be some
short-term corrections in particular classes of commercial property, but your
Directors remain confident that the diversity of your Company's property
portfolio will enable your Company and its Shareholders to continue to
achieve sustained dividends and modest levels of capital growth over the
medium-term.
Yours sincerely
Peter Harwood
Chairman
Page 10
THE UK BALANCED PROPERTY TRUST LIMITED
REPORT OF THE DIRECTORS
The Directors present their report and the consolidated financial statements
of the Group for the period from incorporation on 22 January 2002 to 31 March
2003. The Fund was launched on 20 March 2002.
Objective
The Company's investment objective is to provide ordinary shareholders with a
high level of income together with the prospect of income and capital growth
from investing in a diversified portfolio of UK commercial property.
Activities
A fair view of the Group's activities is contained in the Investment
Manager's Report.
Corporate Governance
As a Guernsey registered company, the Company is not required to comply with
the Code of Best Practice published by the Committee on the Financial Aspects
of Corporate Governance ("the Combined Code"). However the Directors place a
high degree of importance on ensuring that high standards of corporate
governance are maintained.
Going Concern
The accounts have been prepared on the going concern basis as the Directors
consider that the group has adequate resources to continue in operational
existence for the foreseeable future.
Results and dividends
The results for the period are set out in the attached consolidated financial
statements.
The Consolidated Income Statement includes one off costs of setting up the
Company and share issues amounting to #4.36m.
.
The Company has paid interim dividends related to the period ended 31 March
2003 as follows:
Pay date Rate
First interim 31 July 2002 1.750p per share
Second interim 30 October 2002 1.750p per share
Third interim 29 January 2003 1.750p per share
Fourth interim 30 April 2003 1.517p per share
Final interim 30 April 2003 0.233p per share
It is the policy of the Directors to declare and pay dividends as interim
dividends. The Directors do not therefore recommend a final dividend.
Directors
The Directors of the Company who served during the period are shown on page 2.
The Directors are also directors of UK Property Holdings Limited and UKPH No
1 Limited, the principal trading subsidiaries of the Group.
Directors' interests
The beneficial interests of the Directors and their immediate families in the
shares of the Company are set out in note 15 of the financial statements.
Page 11
THE UK BALANCED PROPERTY TRUST LIMITED
REPORT OF THE DIRECTORS (CONTINUED)
Substantial shareholdings
At 10 July 2003, the Company had notification that the following shareholders
had a beneficial interest of 3% or more of the Company's issued share
capital:
Scottish Widows Investment Partnership Limited 27.8%
Reliance Mutual 4.9%
The share register reflected the following holdings of 3% or more of the
issued share capital:
Bank of New York Nominees Limited 7.9%
Giltspur Nominees Limited 5.1%
Vidacos Nominees Limited 5.0%
Rathbone Nominees Limited 4.8%
Directors' responsibilities
The Directors are responsible for preparing consolidated financial statements
for each financial period which give a true and fair view of the state of
affairs of the Company and of the Group and of the profit or loss of the
Group for that period and which are in accordance with applicable laws. In
preparing those financial statements the Directors are required to:
* select suitable accounting policies and then apply them consistently;
* make judgements and estimates that are reasonable and prudent;
* prepare the financial statements on the going concern basis unless it
is appropriate to presume that the Group will not continue in business.
Page 12
THE UK BALANCED PROPERTY TRUST LIMITED
REPORT OF THE DIRECTORS (CONTINUED)
Directors' responsibilities (continued)
The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Group and which enable them to ensure that the financial statements have been
properly prepared in accordance with The Companies (Guernsey) Laws, 1994 to
1996 (as amended), The Control of Borrowing (Bailiwick of Guernsey)
Ordinances, 1959 to 1989, the Listing Rules of the UK Listing Authority and
the Listing Rules of the Channel Islands Stock Exchange. They are also
responsible for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
Directors' authority to buy back shares
The Company did not purchase any shares for cancellation during the year.
The current authority of the Company to make market purchases of up to 14.99%
of the issued Ordinary Shares expires at the end of the Annual General
Meeting and Special Resolution 8, as set out in the notice of the Annual
General Meeting, seeks renewal of such authority until the earlier of 31
December 2004 and the Annual General Meeting in 2004. Any buy back of
Ordinary Shares will be made subject to Guernsey law and within guidelines
set out in the special resolution, and will be at the absolute discretion of
the Board. Purchases of Ordinary Shares will only be made through the market
for cash at prices below the prevailing net asset value of the Ordinary
Shares (as last calculated) where the Directors believe such purchases will
enhance shareholder value. The price paid will not be less than the nominal
value of 25p per share. Such purchases will also only be made in accordance
with the Listing Rules of the UK Listing Authority which provide that the
price to be paid must not be more than 5% above the average of the middle
market quotations for the Ordinary Shares for the five business days before
the purchase is made.
Under Rule 9 of The City Code on Takeovers and Mergers (the "Takeover Code"),
any person or group of persons acting in concert who holds not less than 30%
but not more than 50% of the voting rights of a company and who increase by
any amount the percentage level of such voting rights, is required, except
with the consent of the Panel on Takeovers and Mergers, to make a general
offer to all shareholders of that company. Under Rule 37.1 of the Takeover
Code, when a company purchases or redeems its own voting shares, a resulting
increase in the percentage of voting rights carried by the shareholding of
any person or group of persons acting in concert will be treated as an
acquisition for the purposes of Rule 9. A shareholder who is neither a
director nor acting in concert with a director will not normally incur an
obligation to make an offer under Rule 9 in consequence of the purchase or
redemption of a company's own shares but, due to the fact that Scottish
Widows Investment Partnership Limited ("SWIP") is the Company's investment
manager, Rule 9 will in this regard apply to SWIP and any parties considered
for the purposes of the Takeover Code to be acting in concert with it.
As a result of the proposed number of Ordinary Shares held by SWIP's clients
in the Company, an obligation could arise for SWIP or its clients to make a
general offer for the Company pursuant to Rule 9 of the Takeover Code as a
result of the exercise of the share buy back authority. The Directors will
not buy back Ordinary Shares if such purchases would trigger such an
obligation for any Shareholder. Accordingly, the ability of the Company to
buy back Ordinary Shares may be restricted.
Auditors
A resolution to re-appoint Ernst & Young LLP as Auditors to the Company will
be proposed at the Annual General Meeting.
Approved by the Board on 16 July 2003
Peter Harwood Nicola Adamson
Director Director
Page 13
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
THE UK BALANCED PROPERTY TRUST LIMITED
We have audited the Group's consolidated financial statements for the period
ended 31 March 2003 which comprise the Consolidated Income Statement,
Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of
Changes in Equity, Consolidated Cash Flow Statement, related notes 1 to 22
and the Schedule of Investment Property. These financial statements have been
prepared on the basis of the accounting policies set out therein.
This report is made solely to the Company's members, as a body, in accordance
with Section 64 of the Companies (Guernsey) Laws 1994. Our audit work has
been undertaken so that we might state to the Company's members those matters
we are required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and Company's members as a
body, for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditors
As described in the Directors' Responsibilities set out in the Report of the
Directors the Company's Directors are responsible for the preparation of the
financial statements in accordance with Guernsey Law and applicable
accounting standards.
Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements, United Kingdom Auditing Standards
and the Listing Rules of the Financial Services Authority.
We report to you our opinion as to whether the financial statements, which
have been prepared in accordance with International Financial Reporting
Standards, give a true and fair view and are properly prepared in accordance
with the Companies (Guernsey) Laws 1994. We also report to you if, in our
opinion, the Report of the Directors is not consistent with the financial
statements, if the Group has not kept proper accounting records or if we have
not received all the information and explanations we require for our audit or
if information specified by law or the Listing Rules regarding Director's
transactions with the Group is not disclosed.
We read the other information contained in the Annual Report and consider
whether it is consistent with the audited financial statements. The other
information comprises the Directors' and Investment Managers' Biographies,
Chairman's Statement, Investment Manager's Report and Report of the
Directors. We consider the implications for our report if we become aware of
any apparent misstatements or material inconsistencies within the financial
statements. Our responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom Auditing Standards
issued by the Auditing Practices Board. An audit includes examination, on a
test basis, of evidence relevant to the amounts and disclosures in the
financial statements. It also includes an assessment of the significant
estimates and judgements made by the directors in the preparation of the
financial statements, and of whether the accounting policies are appropriate
to the Group's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
other irregularity or error. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the financial
statements.
Opinion
In our opinion the financial statements give a true and fair view of the
state of affairs of the Company and of the Group as at 31 March 2003 and of
the profit of the Group for the period then ended and have been properly
prepared in accordance with the Companies (Guernsey) Law 1994.
Ernst & Young LLP
Guernsey, Channel Islands
Date: 16 July 2003
Page 14
THE UK BALANCED PROPERTY TRUST LIMITED
Consolidated Income Statement
for the period from incorporation on 22 January 2002 to 31 March 2003
Period to
31 March 2003
Notes Notes GBP
Income
Rental income from investment properties 2(c), 19 17,259,950
Expenditure
Set-up costs 3(e) (3,386,773)
Investment Manager's fee 3(a) (2,631,804)
Issue costs 3(e) (969,774)
Property management expenses (309,895)
Legal & professional fees (619,824)
Provision for bad debts (322,715)
Amortisation on leasehold properties 2(f), 8 (162,523)
Administration fee 3(b) (118,652)
Valuers' fees 3(d) (114,944)
Directors' fees 3(c) (73,500)
Registrar & Sub-Registrar fees 3(b) (45,000)
Tax exemption, compliance and stock exchange (23,809)
fees
Other expenses (60,871)
(8,840,084)
Net operating profit for the period before 8,419,866
Finance costs
Interest receivable 455,340
Interest payable (3,430,733)
Facility fee and bank loan cost amortisation (73,419)
(3,048,812)
Net profit from ordinary activities before 5,371,054
taxation
Taxation on profit on ordinary activities 2(e), 5 (126,299)
Net profit on ordinary activities after 5,244,755
taxation
Gain from investments
Realised gain on disposal of investment 1,386,057
properties
Unrealised gain on revaluation of investment 8 4,043,979
properties
5,430,036
Net profit for the period 10,674,791
Pence
Earnings per ordinary share 7 7.06
All items in the above statement derive from continuing operations.
The Company was incorporated on 22 January 2002 and commenced operations on
20 March 2002.
The accompanying notes form an integral part of these consolidated financial
statements.
Page 15
THE UK BALANCED PROPERTY TRUST LIMITED
Consolidated Balance Sheet
At 31 March 2003
31 March 2003 GBP
Notes
Non-current assets
Freehold properties: at market value 8 263,485,000
Leasehold properties: at amortised cost 8 25,566,588
289,051,588
Current assets
Debtors and prepayments 10 6,092,353
Cash and cash equivalents 11 7,980,692
14,073,045
Total assets 303,124,633
Non-current liabilities
Bank loan 13 (100,132,486)
Interest rate swap liability 13 (8,482,772)
Deferred income tax liability 5 (62,299)
(108,677,557)
Current liabilities
Creditors and accruals 12 (12,200,130)
Income tax payable 5 (21,702)
(12,221,832)
Total liabilities (120,899,389)
NET ASSETS 182,225,244
Equity
Share capital 14 47,780,250
Share premium 14 142,403,475
Revenue reserves 20 (4,905,745)
Capital reserves 21 (3,052,736)
TOTAL EQUITY 182,225,244
Pence
Adjusted net asset value per ordinary share 16 95.35
Approved by the directors on 16 July 2003
Peter Harwood, Director
Nicola Adamson, Director
The accompanying notes form an integral part of these consolidated financial
statements
Page 16
THE UK BALANCED PROPERTY TRUST LIMITED
Company Balance Sheet
At 31 March 2003
31 March 2003 GBP
Notes
Non-current assets
Freehold properties: at market value 8 68,585,000
Leasehold properties: at amortised cost 8 4,805,933
Loan to subsidiary 9 171,099,325
Investment in subsidiary: at cost 9 43,914,000
288,404,258
Current assets
Debtors and prepayments 10 14,644,062
Cash and cash equivalents 11 1,986,912
16,630,974
Total assets 305,035,232
Non-current liabilities
Bank loan 13 (100,132,486)
Interest rate swap liability 13 (8,482,772)
Deferred income tax liability (22,000)
(108,637,258)
Current liabilities
Creditors and accruals 12 (20,208,393)
Income tax payable -
(20,208,393)
Total liabilities (128,845,651)
NET ASSETS 176,189,581
Equity
Share capital 14 47,780,250
Share premium 14 142,403,475
Revenue reserves 20 (4,557,669)
Capital reserves 21 (9,436,475)
TOTAL EQUITY 176,189,581
Approved by the directors on 16 July 2003
Peter Harwood, Director
Nicola Adamson, Director
The accompanying notes form an integral part of these consolidated financial
statements
Page 17
THE UK BALANCED PROPERTY TRUST LIMITED
Consolidated Statement of Changes in Equity
for the period from incorporation on 22 January 2002 to 31 March 2003
Period to
31 March 2003 GBP
Notes
Net profit for the period 10,674,791
Issue of ordinary share capital 14 191,943,420
Share issue costs 14 (1,759,695)
Unrealised loss on revaluation of interest 2(g), 13 (8,482,772)
rate swap
Dividends paid and declared 6 (10,150,500)
Net assets as at 31 March 2003 182,225,244
Dividends paid and declared per ordinary 6.77 pence
share
The accompanying notes form an integral part of these consolidated financial
statements
Page 18
THE UK BALANCED PROPERTY TRUST LIMITED
Consolidated Cash Flow Statement
for the period from incorporation on 22 January 2002 to 31 March 2003
Period to
31 March 2003 GBP
OPERATING ACTIVITIES
Net operating profit for the period 8,419,866
Adjustment for:
Non cash item: amortisation of leasehold properties 162,523
Increase in operating debtors and prepayments (6,086,353)
Increase in operating creditors and accruals 8,401,211
2,477,381
Income tax paid (42,298)
Interest received 449,340
Interest paid (3,363,960)
(2,914,620)
Net cash inflow from operating activities 7,940,329
INVESTING ACTIVITIES
Purchases of investment properties (291,582,568)
Sales of investment properties 7,798,493
Net cash outflow from investing activities (283,784,075)
FINANCING ACTIVITIES
Proceeds from issue of ordinary share capital 191,943,420
Less: directly attributable set-up costs (334,724)
Draw down of bank loan 100,700,000
Bank loan arrangement fees (609,258)
Dividends paid (7,875,000)
Net cash inflow from financing activities 283,824,438
Cash and cash equivalents at end of period 7,980,692
The accompanying notes form an integral part of these consolidated financial
statements
Page 19
THE UK BALANCED PROPERTY TRUST LIMITED
Notes to the consolidated financial statements
for the period from incorporation on 22 January 2002 to 31 March 2003
1 Corporate Information
The consolidated financial statements of The UK Balanced Property Trust
Limited for the period ended 31 March 2003 were authorised for issue in
accordance with a resolution of the Directors on 16 July 2003. The UK
Balanced Property Trust Limited is a limited company incorporated in
Guernsey, Channel Islands. The Company's shares are traded on the main market
of the London Stock Exchange and the market operated by the Channel Islands
Stock Exchange. The Company is geared through bank borrowings and has an
indefinite life. The registered office of the Company is located at
Butterfield House, The Grange, St Peter Port, Guernsey GY1 3NQ.
The principal activities of the Company during the period are described
in the Investment Manager's Report.
The Group comprises The UK Balanced Property Trust Limited and its
subsidiaries. The two principal trading subsidiaries are: UK Property
Holdings Limited and UKPH No 1 Limited. These subsidiaries are 100% owned and
registered in Guernsey.
Certain property assets were initially acquired through 100% equity interests
in Small Property Fund LP and Murray Grant Property Fund LP, both established
in Delaware, USA. In addition, in March 2003 a further property portfolio was
acquired through Toronsay UK Real Estate LP. During the period these entities
were dissolved or are in the process of dissolution and their assets and
liabilities transferred to the parent company or its two principal trading
subsidiaries.
A number of other subsidiaries exist as holding or nominee companies for the
property portfolio. These subsidiaries are 100% owned and are incorporated in
either Guernsey or Jersey.
2 Accounting policies
(a) Basis of accounting
The consolidated financial statements have been prepared in accordance with
the International Financial Reporting Standards issued by, or adopted by, the
International Accounting Standards Board (the "IASB"), interpretations issued
by the International Financial Reporting Standards Committee, applicable
legal and regulatory requirements of Guernsey Law and the Listing Rules of
the UK Listing Authority.
The consolidated financial statements have been prepared under the historical
cost convention, except for the measurement at fair value of freehold
investment properties and derivative financial instruments.
(b) Basis of consolidation
The consolidated financial statements comprise the financial statements of
the Company and all of its subsidiaries up to 31 March 2003.
Subsidiaries are consolidated from the date on which control is transferred
to the Group and cease to be consolidated from the date on which control is
transferred out of the Group.
(c) Rental income
Rental income is accounted for on a straight line basis over the lease term
of ongoing leases and is shown gross of any UK income tax. Any premiums or
rent-free periods are spread evenly over the term of the lease.
(d) Expenses
All expenses are accounted for on an accruals basis. The Group's investment
management and administration fees, finance costs (including interest on the
bank facility) and all other expenses are charged through the Consolidated
Income Statement.
Page 20
THE UK BALANCED PROPERTY TRUST LIMITED
Notes to the consolidated financial statements
for the period from incorporation on 22 January 2002 to 31 March 2003
(continued)
(2) Accounting policies (continued)
(e) Taxation
The Company is exempt from Guernsey taxation on income derived outside
Guernsey under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989. A
fixed annual fee of #600 is payable to the States of Guernsey in respect of
this exemption. No charge to Guernsey taxation will arise on capital gains.
The Directors intend to conduct the Group's affairs such that the management
and control is not exercised in the United Kingdom and so that neither the
Company or any of its subsidiaries carries on any trade in the United
Kingdom. Accordingly, the Company and its subsidiaries will not be liable for
United Kingdom taxation on their income or gains other than certain income
deriving from a United Kingdom source.
The Company and its subsidiaries are subject to United Kingdom income tax on
income arising on the Property Portfolio after deduction of its allowable
debt financing costs and its allowable expenses.
Deferred income tax is provided, using the liability method, on all temporary
differences at the balance sheet date between the tax basis of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are measured at the tax rates that are
expected to apply to the period when the liability is settled, based on tax
rates (and tax laws) that have been enacted or substantively enacted at the
balance sheet date.
(f) Properties
Freehold investment properties are initially recognised at cost, being the
fair value of the consideration given, including transaction costs associated
with the investment property.
After initial recognition, freehold investment properties are measured at
fair value, with unrealised gains and losses recognised in the Consolidated
Income Statement. Fair value is based on the open market valuations of the
properties as provided by Drivers Jonas and Insignia Richard Ellis Limited,
firms of chartered surveyors, at the balance sheet date.
Leasehold properties are stated at their amortised cost. Amortisation is
calculated so as to write off the cost on a straight line basis over the
remaining term of the lease.
(g) Financial instruments
The Group uses derivative financial instruments to hedge its risk associated
with interest rate fluctuations. It is not the Group's policy to trade in
derivative instruments.
Derivative instruments are initially recognised in the balance sheet at cost
and are subsequently re-measured at their fair value. Fair value is measured
as the present value of estimated future net interest cash flows based on
current and expected future interest rates at the period end. Details of the
Group's financial risk management objectives and policies are set out in note
17.
Gains or losses arising from changes in the fair value of derivative
instruments are taken directly to the Consolidated Statement of Changes in
Equity and the capital reserve in the Consolidated Balance Sheet.
The Group considers its derivative instruments qualify for hedge accounting
when certain criteria are met.
The Group's criteria for interest rate swaps are:
the instrument must be related to an asset or a liability; and
it must change the character of the interest rate by converting a variable
rate to a fixed rate or vice versa.
- it must match the principal amounts and maturity date of the hedged
item.
Page 21
THE UK BALANCED PROPERTY TRUST LIMITED
Notes to the consolidated financial statements
for the period from incorporation on 22 January 2002 to 31 March 2003
(continued)
2. Accounting policies (continued)
(h) Share issue expenses
Incremental external costs directly attributable to the equity transaction
that would otherwise have been avoided are written off against the share
premium account.
(i) Segmental reporting
The Directors are of the opinion that the Group is engaged in a single
segment of business being property investment business and in one
geographical area, the United Kingdom.
(j) Cash and cash equivalents
Cash in banks and short-term deposits that are held to maturity are carried
at cost. Cash and cash equivalents are defined as cash in hand, demand
deposits and short term, highly liquid investments readily convertible to
known amounts of cash and subject to insignificant risk of changes in value.
For the purpose of the Consolidated Cash Flow Statement, cash and cash
equivalents consist of cash in hand and short term deposits in banks.
(k) Bank loans and borrowings
All bank loans and borrowings are initially recognised at cost, being the
fair value of the consideration received net of arrangement costs associated
with the borrowing. After initial recognition, all interest bearing loans and
borrowings are subsequently measured at amortised cost. Amortised cost is
calculated by taking into account any loan arrangement costs and any discount
or premium on settlement.
3 Fees
(a) Investment Manager's fee
Scottish Widows Investment Partnership Limited ('the Investment Manager') has
been appointed with responsibility for the management of the Group's assets,
subject to the overall supervision of the Directors. During the period to 20
March 2003, the Investment Manager was entitled to an aggregate annual fee
from the Group, payable quarterly in arrears, at the rate of 1.15% per annum
of the Gross Assets. From 20 March 2003, the Investment Manager has agreed to
reduce such fee on the Gross Assets in excess of #250 million to 1.0% per
annum. The fees of any managing agents appointed by the Investment Manager
will be paid out of this fee.
The Investment Management Agreement is for a fixed initial period of three
years and, with effect from 20 March 2004, is terminable by either party on
twelve months notice.
(b) Administration, secretarial and registrar fees
Butterfield Fund Managers (Guernsey) Limited ('the Administrator') provides
administration and secretarial services to the Group and registrar services
to the Company. During the period to 6 February 2003 the Administrator was
entitled to an annual fee, payable quarterly in arrears, at an annual rate of
0.05% of the Gross Assets, subject to a minimum fee of #80,000 per annum in
respect of administration and secretarial services, and a fee of #5,000 per
annum in respect of registrar services. The Administrator is also entitled to
reimbursement of reasonable out of pocket expenses. Under an agreement dated
7 February 2003, the maximum fee was fixed at #132,500 per annum effective
from the date of the agreement.
The Administration and Secretarial Agreement is terminable by either party on
three months notice.
Lloyds TSB Registrars are the Company's UK transfer agent and their fees are
payable by the Company.
Page 22
THE UK BALANCED PROPERTY TRUST LIMITED
Notes to the consolidated financial statements
for the period from incorporation on 22 January 2002 to 31 March 2003
(continued)
3 Fees (continued)
(c) Directors' fees
The Directors of the Company are entitled to remuneration and benefits in
kind not exceeding a total of #100,000 per annum.
(d) Valuer's fees
Drivers Jonas, has agreed a fee based on 0.0375% per annum of the aggregate
value of the property portfolio that they value. The valuation agreement is
for a fixed initial period of one year; thereafter it is terminable by either
party on three months notice.
Insignia Richard Ellis Limited, has agreed a fee based on 0.025% per annum of
the aggregate value of the property portfolio that they value. The valuation
agreement is fixed for a period of one year and is terminable by either party
on three months notice.
(e) Set-up costs/Issue costs
Set-up costs for the first issue were limited to 2.25% of Initial Gross
Assets, being "the aggregate value of the ordinary shares issued under the
Issue at the Issue Price (before deduction of expenses) and the amount
available to be drawn down under the bank facility", and amounted to
#5,125,500. Included in this amount are share issue expenses of #1,338,727,
which have been charged against share premium, loan arrangement costs of
#400,000, which have been netted against the Group's bank borrowings and are
amortised over the term of the loan facility. Set up costs of #3,386,773 are
taken directly to the Consolidated Income Statement.
Total expenses for the second issue were #1,600,000. Included in this amount
are share issue expenses of #420,968 which have been charged against share
premium, loan arrangement costs of #209,258 which have been netted against
the Group's bank borrowings and which are amortised over the term of the loan
facility and share issue expenses of #969,774 which have been taken directly
to the Consolidated Income Statement.
4 Employees
The Group did not have any employees during the period from
incorporation to 31 March 2003.
5 Income tax
Major components of income tax expense for the period Period to
to 31 March 2003 are: 31 March 2003 GBP
Current income tax 64,000
Deferred income tax relating to origination and 62,299
reversal of temporary differences
Income tax expense reported in the Consolidated Income 126,299
Statement
The current income tax charge arises as a combination of the Group's income
tax liabilities being determined by reference to the UK fiscal year from
launch on 20 March 2002 to 5 April 2002 when a small tax liability arose, and
also the other short period when Toronsay UK Real Estate LP properties were
owned by The UK Balanced Property Trust Limited.
Page 23
THE UK BALANCED PROPERTY TRUST LIMITED
Notes to the consolidated financial statements
for the period from incorporation on 22 January 2002 to 31 March 2003
(continued)
5 Income tax (continued)
A reconciliation of the current income tax charge to applicable results from
ordinary activities at the statutory income tax rate to income tax expense at
the Group's effective income tax rate for the period is as follows:
Period to
31 March 2003 GBP
Net profit from ordinary activities 5,371,054
At UK statutory income tax rate of 22% 1,181,632
Income not taxable, including interest receivable (100,175)
Expenditure not allowed for income tax purposes 726,543
Effect of permanent timing capital allowances compared (1,681,701)
to amortisation
Effect of temporary timing difference on capital (62,299)
allowances
Current income tax charge 64,000
Deferred income tax at 31 March 2003 relates to accelerated depreciation
for tax purposes. Under International Accounting Standard 12, the Group is
required to provide at the balance sheet date for deferred income tax on all
temporary differences between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes, regardless of whether or not
those temporary differences are expected to reverse. Following the sale of
certain properties to other group companies, temporary differences which
previously resulted in deferred tax liabilities have become permanent
differences and eliminated the associated deferred tax liability.
6 Dividends on ordinary shares
XD date Paydate Period to
31 March 2003 GBP
First interim of 17 July 2002 31 July 2002 2,625,000
1.75 pence per
share
Second interim 16 October 2002 30 October 2002 2,625,000
of 1.75 pence
per share
Third interim of 15 January 2003 29 January 2003 2,625,000
1.75 pence per
share
Fourth interim 6 March 2003 30 April 2003 2,275,500
of 1.517 pence
per share
10,150,500
A final interim dividend of 0.233 pence per share was declared on 10 April
2003. The ex dividend date was 16 April 2003 and the pay date was 30 April
2003.
7 Earnings per ordinary share
The earnings per share is based on the net profit for the period of
#10,674,791 and on 151,203,008 ordinary shares, being the weighted average
number of ordinary shares in issue throughout the period.
Page 24
THE UK BALANCED PROPERTY TRUST LIMITED
Notes to the consolidated financial statements
for the period from incorporation on 22 January 2002 to 31 March 2003
(continued)
8 Investment properties
Group Company
31 March 2003 GBP 31 March 2003 GBP
Freehold properties
Cost of freehold properties 264,635,672 68,977,500
purchased
Additions 1,217,785 561,203
Total cost 265,853,457 69,538,703
Disposals at cost during the (6,412,436) -
period
Cost of properties on hand at 259,441,021 69,538,703
period end
Surplus/ (loss) on revaluation 4,043,979 (953,703)
Market value of freehold 263,485,000 68,585,000
properties on hand at period end
Leasehold properties
Cost of leasehold properties 25,588,382 4,768,500
purchased
Additions 140,729 38,797
Total cost 25,729,111 4,807,297
Amortisation for the period (162,523) (1,364)
Amortised cost of leasehold 25,566,588 4,805,933
properties on hand at period end
Reconciliation of accounting property values to the Schedule of Investment
Property
Amortised cost of leasehold properties 25,566,588 4,807,297
on hand at period end
Unrealised profit on leasehold properties on
hand at period end 1,373,412 32,703
(not recognised for accounting purposes)
Market value of leasehold properties on 26,940,000 4,840,000
hand at period end
Market value of freehold properties on 263,485,000 68,585,000
hand at period end
Market value of all properties on hand at 290,425,000 73,425,000
period end
The loan is secured on the Property Portfolio.
Drivers Jonas completed a valuation of particular group investment properties
at 31 March 2003 on an open market basis in accordance with the requirements
of the Appraisal and Valuation Manual published by the Royal Institution of
Chartered Surveyors. The value of these investment properties amounted to
#217,000,000.
Insignia Richard Ellis Limited completed a valuation of particular group
investment properties at 31 March 2003 on an open market basis in accordance
with the requirements of the Appraisal and Valuation Manual published by the
Royal Institution of Chartered Surveyors. The value of these investment
properties amounted to #73,425,000.
Each property valuer is external to the Company. The property valuers take
account of deleterious materials included in the construction of the
investment properties in arriving at their estimate of open market valuation,
when the Investment Manager advises the presence of such materials.
The Group has entered into leases on its property portfolio as lessor. These
non-cancellable leases have remaining lease terms of between 1 month and 977
years. See note 19 for further information. No one property accounts for or
has accounted for more than 15% of the gross assets of the company. The 10
largest properties per open market value are shown on page 30. All leasehold
properties have more than 60 years remaining on the lease term.
9 Investment in subsidiary undertaking
The Company owns 100% of the issued ordinary share capital of UK Property
Holdings Limited ("UKPH Ltd") a company incorporated in Guernsey whose principal
business is that of holding investment property.
Page 25
THE UK BALANCED PROPERTY TRUST LIMITED
Notes to the consolidated financial statements
for the period from incorporation on 22 January 2002 to 31 March 2003
(continued)
9 Investment in subsidiary undertaking (continued)
The Company has also lent #171,099,325 to UKPH Ltd. The loan principal is
repayable on 31 March 2012. Interest accrues on the aggregate outstanding
loan balance at an annual rate of 350 basis points over three month Sterling
LIBOR or such other interest rate that may be agreed from time to time
between UKPH Ltd and The UK Balanced Property Trust Limited. Interest is
payable in arrears on each interest payment date, these being 31 December, 31
March, 30 June and 30 September in each year until the Termination Date. The
loan is unsecured.
10 Debtors and pre-payments
Group Company
31 March 2003 GBP 31 March 2003 GBP
Loan interest receivable from UK - 13,341,468
Property Holdings Limited
Tenant arrears (net of 5,950,701 1,246,055
provision for bad debts)
Due from Scottish Widows 21,839 39,099
Investment Partnership Limited
Due from UK Property Holdings - 11,300
Limited
Other debtors and prepayments 119,813 6,140
6,092,353 14,644,062
11 Cash and cash equivalents
All cash monies were held in current accounts at the period end. There
were no short-term deposits held.
12 Creditors
Group Company
31 March 2003 GBP 31 March 2003 GBP
Investment management fees (644,829) (644,829)
Administration fee (63,584) (63,584)
Registrar & sub-registrar fee (35,178) (35,178)
Directors fees (10,500) (10,500)
Legal & professional fees (1,590,195) (1,431,405)
Accrued interest on bank loan (98,449) (98,449)
Commissions due to Scottish (1,525,365) (1,525,365)
Widows
Rent deposits (174,333) -
VAT payable (932,152) -
Rental income received in (4,796,927) (1,255,937)
advance
Sundry payables (53,118) (10,089)
Due to UK Property Holdings - (12,857,557)
Limited
Dividend payable (2,275,500) (2,275,500)
(12,200,130) (20,208,393)
Bank loan and interest rate swap liability
Group Company
31 March 2003 GBP 31 March 2003 GBP
Bank loan
Facility 100,700,000 100,700,000
Drawn down 100,700,000 100,700,000
Issue costs (609,258) (609,258)
Amortisation of issue costs 41,744 41,744
Total due 100,132,486 100,132,486
Page 26
THE UK BALANCED PROPERTY TRUST LIMITED
Notes to the consolidated financial statements
for the period from incorporation on 22 January 2002 to 31 March 2003
(continued)
13 Bank loan and interest rate swap liability (continued)
The bank loan is secured on the property portfolio of the Group. The
Company is to ensure that at all times the loan to value percentage does not
exceed 55% (this is defined as the ratio of the loan compared to the
aggregate of the open market property valuations plus any cash deposits). The
Company will further ensure that the adjusted net rental income for any
calculation period (any 3 month period) is not less than 175% of the
projected finance costs. Further no single tenant will account for more than
20% of the total net rental income and the five largest tenants do not
account for more than 40% of the total net rental income.
Interest rate exposure has been limited by the purchase of an interest rate
swap contract. The hedge has been achieved by matching the notional amount of
the swap with the loan principal and matching the swap term to the loan term.
The Directors estimate that the fair value of the liabilities in respect of
the interest rate swap contract at 31 March 2003 is a liability of
#8,482,772, which is based on a discounted cash flow projection using
interest rates prevailing at the balance sheet date.
Interest accrued on the bank loan at a variable rate based on LIBOR plus 72
basis points subject to a cap of 6.5725% which expired on 25 March 2003. From
25 March 2003 the interest rate is effectively fixed at 6.355% through an
interest rate swap on the amount drawn down arranged with The Royal Bank of
Scotland plc. The interest rate swap expires on 25 March 2012.
Loan arrangement fee costs are being amortised over the term of the facility.
14 Share capital and share premium
31 March 2003 GBP
Authorised share capital:
300,000,000 ordinary shares of #0.25 each: 75,000,000
31 March 2003 GBP
Issued share capital:
191,121,000 ordinary shares of #0.25 each, fully 47,780,250
paid:
Share premium:
Received on the placing of ordinary shares 144,163,170
Less: directly attributable set-up costs (1,759,695)
142,403,475
The share issues that have taken place during the period are as follows:
Date of Number of shares issued Issue price
Issue pence
First issue 20 Mar 2002 150,000,000 100.00
Second issue 20 Mar 2003 41,121,000 102.00
Total 191,121,000
15 Related party transactions
No Director has any interest in any transactions which are or were unusual in
their nature or significant to the nature of the Group.
The following Directors held ordinary shares in the Company at 31 March
2003:
Peter Harwood 10,000 shares
Nicola Adamson 50,000 shares
Peter Le Cheminant 10,000 shares
Francis Malcolm 64,000 shares
Stephen Vernon 15,000 shares
Page 27
THE UK BALANCED PROPERTY TRUST LIMITED
Notes to the consolidated financial statements
for the period from incorporation on 22 January 2002 to 31 March 2003
(continued)
15 Related party transactions (continued)
All transactions with related parties including property purchases and
sales were approved by the independent board of directors.
Lloyds TSB Group plc is the ultimate parent company and controlling party of
Scottish Widows plc. Scottish Widows Investment Partnership Limited, Lloyds
TSB Life Assurance Company Limited and Lloyds TSB Registrars.
SWIP agreed to pay costs and commissions incurred in connection with the
placing and offer for subscription of the initial ordinary shares in return
for the payment of a commission of 2.25% of the value of the Initial Gross
Assets. This amounted to #5,125,500 of which #829,725 remained outstanding at
the balance sheet date.
SWIP received fees for its services as Investment Manager. The total charge
to the Consolidated Income Statement during the period was #2,631,804 of
which #644,829 remained payable at the balance sheet date.
SWIP is due marketing commission of #347,820 relating to the March 2003 share
issue which remains payable at the balance sheet date.
Scottish Widows Unit Funds Limited is due #347,820 in relation to placing
commission relating to the March 2003 share issue which remains payable at
the balance sheet date.
Lloyds TSB Registrars were due fees of #40,000 for services as Registrar
during the period. As at the balance sheet date, #35,178 was still
outstanding.
On 20 March 2002, the Small Property Fund ("SPF") and the Murray Grant
Property Fund ("MGPF") were purchased from Scottish Widows plc. The total
sale price of #151,045,000 was based on an independent valuation performed by
Drivers Jonas.
On 25 March 2003, Toronsay UK Real Estate LP ("Toronsay Portfolio") was
purchased from Lloyds TSB Life Assurance Company Limited, a wholly owned
subsidiary of Lloyds TSB Group plc. The purchase price of #73,746,000 was
based on an independent valuation performed by Insignia Richard Ellis
Limited.
16 Reconciliation of consolidated net asset value per financial statements to
published net asset value
Total Per share
31 March 2003 GBP 31 March 2003 Pence
Consolidated net asset value 182,225,244 95.35
per financial statements
Adjustments:
Revenue Reserves*
Net operating profit for the (5,244,755) (2.74)
period
Unrealised loss on 8,482,772 4.44
revaluation of interest rate
swap
Dividends paid or declared 10,150,500 5.31
Set up costs (4,965,805) (2.60)
International Financial
Reporting Standards adjustments*
Unrealised surplus on leasehold 1,373,412 0.72
properties
Year end accounting adjustments:
Additions to book cost 6,520 0.00
Revaluation of Toronsay 921,000 0.48
Portfolio
Published net asset value 192,948,888 100.96
* The published NAV is calculated on a capital only basis and otherwise
in accordance with UK accounting standards. In order to reconcile to the
published accounts it is necessary to add back all revenue reserves and
account for the effect of International Financial Reporting Standards versus
UK GAAP differences. All set up costs are deducted from the published NAV.
Page 28
THE UK BALANCED PROPERTY TRUST LIMITED
Notes to the consolidated financial statements
for the period from incorporation on 22 January 2002 to 31 March 2003
(continued)
17 Financial Instruments
The Group's investment objective is to provide ordinary shareholders with a
high level of income together with the prospect of income and capital growth
from investing in UK commercial property.
Consistent with that objective, the Group's financial instruments comprise UK
commercial property investments. In addition, the Group holds cash as well as
having debtors and creditors that arise directly from its operations. The
Group has not entered into any derivative transactions during the period
under review other than the cap and interest rate swap contracts as hedges of
interest rate exposure on the bank borrowings and it is the Group's policy
that no trading in derivative instruments shall be undertaken.
The main risks arising from the Group's financial instruments are credit
risk, market price risk, liquidity risk and interest rate risk.
The Board reviews and agrees policies for managing its risk exposure. These
policies are summarised below and have remained unchanged for the period
under review.
Credit Risk
Credit risk is the risk that an issuer or counterparty will be unable or
unwilling to meet a commitment that it has entered into with the Group. In
the event of default by an occupational tenant, the Group will suffer a
rental shortfall and incur additional costs including legal expenses, in
maintaining, insuring and re-letting the property until it is re-let. The
Board receives regular reports on the concentration of risk and any tenants
in arrears.
Market price risk
The Group's exposure to market price risk is comprised mainly of movements in
the value of the Group's investments in property. The Group's investment
portfolio is managed within the investment parameters disclosed in its
prospectus.
Liquidity risk
Liquidity risk is the risk that the Group will encounter in realising assets
or otherwise raising funds to meet financial commitments.
The Group's investments comprise UK commercial property. Property and
property related assets are inherently difficult to value due to the
individual nature of each property. As a result, valuations are subject to
substantial uncertainty. There is no assurance that the estimates resulting
from the valuation process will reflect the actual sales price even where
such sales occur shortly after the valuation date.
In certain circumstances, the terms of the Group's bank loan entitle the
lender to require early repayment and in such circumstances the Group's
ability to maintain dividend levels and the net asset value attributable to
the ordinary shares, could be adversely affected.
Interest rate risk
The Group's exposure to interest rate risk relates primarily to the Group's
long-term debt obligations. The Group's policy is to manage its interest cost
using an interest rate cap and an interest rate swap, in which the Group has
agreed to exchange the difference between fixed and variable interest amounts
calculated by reference to an agreed-upon notional principle amount. The swap
is designed to fix the interest payable on the loan.
The interest rate swap contract covers the exact amount of the loan and has
the same duration. Interest fixing periods are identical and on this basis
the swap contract complies with International Accounting Standard 39's
criteria for hedge accounting.
Until 25 March 2003 the interest rate on the bank loan was capped at 6.5725%.
From 25 March 2003 until 25 March 2012 the interest rate on the bank loan is
fixed at 6.355%.
The interest rate profile of the Group at 31 March 2003 was as follows:
Page 29
THE UK BALANCED PROPERTY TRUST LIMITED
Notes to the consolidated financial statements
for the period from incorporation on 22 January 2002 to 31 March 2003
(continued)
17 Financial Instruments (continued)
Financial Total as per Weighted
assets consolidated average Weighted
balance sheet Fixed Variable interest period
rate rate rate until
Type GBP GBP GBP % Years
Cash & cash 7,980,692 - 7,980,692 - -
equivalents
7,980,692 - 7,980,692 - -
Financial Total as Weighted
liabilities per average Weighted
consolidated Fixed rate Variable interest period
balance rate rate until
sheet
Type GBP GBP GBP % Years
Bank loan 100,132,486 - 100,132,486 6.355 9
Interest 8,482,772 8,482,772 - 6.355 9
rate swap
liability
108,615,258 8,482,772 100,132,486 - -
Foreign currency risk
There is no foreign currency risk as assets and liabilities of the Group are
maintained in pounds sterling.
18 Capital commitments
Under an agreement dated 1 April 2003, The UK Balanced Property Trust Limited
had agreed to sell the Toronsay Portfolio to UKPH No1 Limited. The sale price
was #73,746,000.
19 Lease Length
The income based on the unexpired lessor lease length at the period end was
as follows (based on annual rentals):
Group
31 March 2003 GBP
Less than one year 674,648
Between one and five years 3,081,145
Over five years 19,060,531
Total 22,816,324
The largest single tenant at the period end accounted for 2.79% of the
current rental income.
The unoccupied property expressed as a percentage of estimated total rental
value was 3.18% at the period end.
20 Revenue reserves
Group Company
31 March 2003 GBP 31 March 2003 GBP
Net profit for the period 5,244,755 5,592,831
Dividends paid or declared (10,150,500) (10,150,500)
(4,905,745) (4,557,669)
Page 30
THE UK BALANCED PROPERTY TRUST LIMITED
Notes to the consolidated financial statements
for the period from incorporation on 22 January 2002 to 31 March 2003
(continued)
21 Capital reserves
Group Company
31 March 2003 GBP 31 March 2003 GBP
Realised gain on disposal of 1,386,057 -
investment properties
Unrealised gain on revaluation 4,043,979 (953,703)
of investment properties
Unrealised loss on revaluation (8,482,772) (8,482,772)
of interest rate swap
(3,052,736) (9,436,475)
22 Auditor's remuneration
Group Company
31 March 2003 GBP 31 March 2003 GBP
Auditor's remuneration for 30,000 10,000
statutory audit
Auditor's remuneration for 466,658 246,193
other services
496,658 256,193
Auditor's remuneration for other work includes tax advice on Group structure
and associated compliance services.
All Enquiries:
The Company Secretary
Butterfield Fund Managers (Guernsey) Limited
PO Box 211
Butterfield House
The Grange
St Peter Port
Guernsey
GY1 3NQ
Tel: 01481 720321
Fax: 01481 716117
This information is provided by RNS
The company news service from the London Stock Exchange
END
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