TR Property Investment Trust plc – Report & Accounts for the year ended 31 March TR Property Investment Trust plc Report & Accounts for the year ended 31 March 2014 2 0 1 4 TR Property Investment Trust plc is managed by AC C O T U C N E T P A S B E I L R I T Y CLIENTS FIRST IN NOVATION This document is printed on Revive 50 White Silk; a paper containing 50% recycled fibre and 50% virgin fibre sourced from well-managed, responsible, FSC® certified forests. The pulp used in this product is bleached using an Elemental Chlorine Free (ECF) process. TR Property Investment Trust plc The Company’s investment objective is to maximise shareholders’ total returns by investing in the shares and securities of property companies and property related businesses internationally and also in investment property located in the UK. Introduction The Company was formed in 1905 and has been a dedicated property investor since 1982. The Company is an Investment Trust and its shares are premium listed on the London Stock Exchange. Benchmark The benchmark is the FTSE EPRA/NAREIT Developed Europe Capped Net Total Return Index in Sterling. Investment Policy The Company seeks to achieve its objective by investing in shares and securities of property companies and property related businesses on an international basis, although, with a Pan-European benchmark, the majority of the investments will be located in that geographical area. The Company also invests in investment property located in the UK only. Further details of the Investment Policies, the Asset Allocation Guidelines and policies regarding the use of gearing and derivatives are set out in the Strategic Report on pages 25 to 28 and the entire portfolio is shown on page 19. Investment Manager The Company is managed by Thames River Capital LLP (“the Manager”), part of the F&C Group. Marcus Phayre-Mudge has managed the portfolio since 1 April 2011 and been part of the Fund Management team since 1997. Independent Board The directors are independent of the Manager and meet regularly to consider investment strategy, to monitor adherence to the stated objective and investment policies and to review performance. Details of how the Board operates and fulfils its responsibilities are set out in the Directors’ Report on page 39. Performance For the year to 31 March 2014 the net asset value total return was 22.4% against a benchmark total return of 14.9%. The share price total return was 37.7%. Over the ten year period to 31 March 2014 the share price total return was 254.99% and the net asset value total return 195.35%. Over the same period the benchmark total return was 120.19%. The Financial Highlights for the current year are set out opposite and Historical Performance can be found on page 2. Dividend An interim dividend of 2.85p (2013: 2.65p) per share was paid on 7 January 2014 to shareholders on the register on 16 December 2013. A final dividend of 4.60p (2013: 4.35p) will be paid on 5 August 2014 to shareholders on the register on 27 June 2014. The shares will be quoted ex-dividend on 25 June 2014. Income growth: Over the past ten years the annual net dividend per share has grown by three times, equivalent to 11.5% per annum compounded. Retail Investors advised by IFAs The Company currently conducts its affairs so that its shares can be recommended by Independent Financial Advisers (“IFAs”) in the UK to ordinary retail investors in accordance with the Financial Conduct Authority (“FCA”) rules in relation to non- mainstream investment products and intends to continue to do so. The shares are excluded from the FCA’s restrictions, which apply to non-mainstream investment products, because they are shares in an authorised investment trust. Further information General Shareholder information and details of how to invest in TR Property Investment Trust plc, including an investment through an ISA or saving scheme, can be found on pages 80 to 84. This information can be found on the Trust’s website www.trproperty.com Financial Highlights and Performance At At 31 March 31 March % 2014 2013 Change Balance Sheet Net asset value per share 254.94p 215.25p +18.4% Shareholders’ funds (£’000) 809,438 684,219 +18.3% Shares in issue at the end of the period (m) 317.5 317.9 -0.1% Net debt1 14.0% 9.6% Share Price Share price 247.50p 186.30p +32.9% Market capitalisation £786m £592m +32.8% Discount to NAV -2.9% -13.4% Year ended Year ended 31 March 31 March % 2014 2013 Change Revenue Revenue earnings per share 8.09p 6.74p +20.0% Net dividend per share2 7.45p 7.00p +6.4% Total Return Assets and Benchmark Benchmark performance (total return) +14.9% +17.8% Net asset value total return +22.4% +21.5% Share price total return +37.7% +25.8% IPD Monthly index total return3 +14.0% +2.5% Total return from direct property +37.5% +7.4% Ongoing Charges4 Excluding performance fee 0.80% 0.93% Including performance fee 2.08% 1.41% Excluding performance fee and direct property costs 0.75% 0.86% 1. Net debt is the total value of loans (including notional exposure to CFDs) and debentures less cash as a proportion of net asset value. 2. Net dividends per share are the dividends in respect of the financial year ended 31 March 2014. An interim dividend of 2.85p was paid in January 2014 and a final dividend of 4.60p will be paid in August 2014. 3. IPD monthly, one year cumulative. 4. Ongoing charges calculated in accordance with the AIC methodology. Contents IFC Company Summary Financial Statements 1 Financial Highlights and Performance 47 Group Consolidated Statement of Comprehensive Income 2 Historical Performance 48 Group and Company Statement of Changes in Equity Strategic Report 49 Group and Company Balance Sheets 3 Chairman’s Statement 50 Group and Company Cash Flow Statements 6 Investment Manager’s Report 51 Notes to the Financial Statements 18 Portfolio 73 Notice of Annual General Meeting 25 Overview of Strategy, performance measurement Shareholder Information and risk manangement 79 Directors and contact information Governance 80 General Shareholder Information 29 Directors 82 Investing in TR Property Investment Trust plc 30 Managers 31 Report of the Directors 42 Directors’ Remuneration Report Front Cover: The old market square Gamla Stan, Stockholm. 45 Independent Auditors’ Report TR Property Investment Trust 1 Historical Performance for the years ended 31 March 2005(D) 2004 (Restated) 2006(D) 2007(D) 2008(D) 2009(D) 2010(D) 2011(D) 2012(D) 2013(D) 2014 Gross revenue (A) (£’000) 16,247 – – – – – – – – – – Total revenue (B) (£’000) – 19,741 23,143 26,226 32,160 32,073 27,782 29,520 30,973 32,988 33,933 Total assets less current liabilities (£’m) 440.9 544.7 813.6 1,017.0 725.3 418.6 616.6 688.8 606.3 701.9 824.2 Shareholders’ funds (£’m) Total 401 505 771 973 707 400 598 670 588 684 809 Ordinary shares 401 505 771 973 568 324 476 531 470 684 809 Sigma shares (E) – – – – 139 76 123 140 118 – – Ordinary shares Net revenue (pence per share) Earnings 2.51 2.85 3.44 4.09 5.79 6.49 5.18 6.94 7.07 6.74 8.09 Dividends 2.50 2.85 3.40 4.10 5.60 5.75 5.75 6.00 6.60 7.00 7.45 NAV per share (pence) 113.10 145.70 224.10 290.80 219.60 126.10 185.20 207.10 183.60 215.25 254.94 Share price (pence) 95.00 128.50 209.50 256.50 188.25 106.00 159.40 177.10 154.50 186.30 247.50 Indices of growth Share price 100 135 221 270 198 112 168 186 163 196 261 Net Asset value 100 129 198 257 194 112 164 183 162 190 225 Dividend Net 100 114 136 160 224 230 230 240 264 280 298 RPI 100 103 106 111 115 114 120 126 130 135 138 Benchmark (C) 100 125 178 222 166 81 124 136 119 135 144 (A) Gross revenue – is as set out in the Statement of Total return prepared under UK GAAP. (B) Total revenue – is as set out in the Group Statement of Comprehensive Income prepared in accordance with IFRS. (C) Benchmark Price only Index: composite index comprising the S&P/Citigroup European Property Index up to March 2007, the FTSE EPRA/NAREIT Developed Europe Index up to March 2012, the FTSE EPRA/NAREIT Developed Europe Net Index for the year to March 2013 and thereafter the FTSE EPRA/NAREIT Developed Europe Capped Net Index. Source: Thames River Capital. (D) Figures from 2006 onwards have been prepared in accordance with IFRS. Figures for 2005 have been restated in accordance with IFRS. All previous figures were prepared under UK GAAP. (E) The Sigma share class was launched in 2007 and Sigma shares redesignated as Ordinary shares on 17 December 2012. 2 TR Property Investment Trust STRATEGIC REPORT Chairman’s Statement Caroline Burton Chairman details are contained later in the report. Notwithstanding Introduction these timing differences the Board are pleased to Property and property equities continue to attract investor announce the dividend increase which brings the Trust’s attention offering a recurring income stream greater than record of annual increases to 20 out of the last 21 years the majority of fixed income products but with the (the dividend was held level in 2010).