PROPERTY UNIT TRUST FOR THE YEAR ENDED 30 SEPTEMBER 2012

Transcription

1 PROPERTY UNIT TRUST FOR THE YEAR ENDED 30 SEPTEMBER 2012

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3 Manager St. James's Place Unit Trust Group Limited P.O. Box 9034, Chelmsford, CM99 2XA United Kingdom Freephone: (Authorised and regulated by the Financial Services Authority) Directors of the Manager D. C. Bellamy A. M. Croft I. S. Gascoigne H. J. Gladman resigned 31/12/11 D. J. Lamb W. P. Tonks resigned 31/12/11 Secretary of the Manager St. James's Place Administration Limited Investment Adviser Orchard Street Investment Management LLP 1st Floor 16 New Burlington Place London, W1S 2HX United Kingdom (Authorised and regulated by the Financial Services Authority) Standing Independent Valuer CB Richard Ellis Limited St Martin's Court 10 Paternoster Row London, EC4M 7HP United Kingdom Trustee BNY Mellon Trust & Depositary (UK) Limited 160 Queen Victoria Street London, EC4V 4LA United Kingdom (Authorised and regulated by the Financial Services Authority) Registrar International Financial Data Services (UK) Limited IFDS House St. Nicholas Lane Basildon, SS15 5FS United Kingdom (Authorised and regulated by the Financial Services Authority) Auditor PricewaterhouseCoopers LLP Erskine House Queen Street Edinburgh, EH2 4NH United Kingdom (From 31 January 2012, PricewaterhouseCoopers LLP replaced KPMG Audit Plc as Auditor to the Trust) 1

4 Prospectus and Manager's Reports Copies of the up to date Prospectus (Scheme Particulars) and latest Manager's Report and Financial Statements for the range of St. James's Place Unit Trusts can be requested from a member of the St. James's Place Partnership or, at any time during normal business hours, from the Administration Centre at P.O. Box 9034, Chelmsford CM99 2XA. Freephone:

5 Report of the Manager During the year under review, 1 October 2011 to 30 September 2012, the St. James's Place Property Unit Trust Income unit offer price fell by 3.6% from 64.82p to 62.48p and the Accumulation unit offer price (in which revenue is reflected in the price rather than distributed) rose by 0.1% from 78.09p to 78.18p. On the 15 November 2012, the latest available date before the printing of this report, the Income unit offer price was 61.93p and the Accumulation unit offer price was 78.19p. The estimated yield was 4.10%. The Trust's Performance The performance of the Trust since its launch in January 2007, over the five year period since September 2007 and over the year under review is shown below, together with figures for the most commonly quoted indices in comparable markets where the major proportion of the Trust has been invested. St. James's Place Property Unit Trust Income units (offer to offer) Accumulation units (offer to offer) Indices - actual IPD UK All Property (Capital) IPD UK All Property (Total Return) Source: Lipper for Fund returns 08/01/07 to 30/09/07 to 30/09/11 to 30/09/12 30/09/12 30/09/12 % change % change % change REMEMBER THAT THE PRICE OF UNITS AND REVENUE FROM THEM MAY GO DOWN AS WELL AS UP. PLEASE BE AWARE THAT PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. Investment Adviser's Comments Over the review period, average commercial property values in the UK have softened by 2.8%. However, prime property values remain strong with Central London offices continuing to show capital growth but the situation elsewhere is patchy. Secondary property assets outside of Central London have seen a greater fall in value and we would expect to see a modest further decline over the coming months for this type of asset. In this environment, continued performance requires a focus on assets with good fundamentals and potential upside through asset management. We are seeing an increase in the volume of property coming to market, which we expect will continue during the remainder of This will present further opportunities to selectively acquire assets for the fund. The fund acquired assets totalling 56.3m during the twelve month period. Acquisitions in the last six months include a modern industrial estate close to Heathrow Airport acquired for 6.2m at an initial yield of 6.1%. The asset is fully let and, with good occupational demand and a limited supply of prime properties to let close to Heathrow, we expect to see strong rental growth. In addition, a newly refurbished data centre in Manchester for 7.6m at an initial yield of 6.5% was also added to the portfolio. The property is well located and is occupied on a long lease by Europe s leading data centre operator who has recently completed a 28m fit out of the property. In terms of disposals, assets totalling 8.6m have been realised during the year including a distribution warehouse in Coventry and a single-let office building in Leatherhead. Rental income from the portfolio remains strong. The portfolio retains its high level of occupancy with only a 0.5% vacancy rate at the end of the reporting period compared to the market average of 9.3%, as measured by the Investment Property Databank Index, and has an average unexpired lease term of 9.1 years compared with 10.0 years for the industry index. The acquisitions and disposals made during the period are in line with our strategy of increasing the weighting towards good quality shopping centres, retail warehouses and well located offices. There are good levels of investable cash in the portfolio, which ensures the portfolio is in a good position to capitalise on increased deal flow and we anticipate further acquisitions during the final quarter of Orchard Street Investment Management LLP 12 October

6 Performance Record The St. James's Place Property Unit Trust was first offered on 8 January 2007 at an offer price of p per unit. Unit Price History Calendar year * Income Accumulation Highest Lowest Highest Lowest Offer Bid Offer Bid p p p p Distributions The record of net distributions paid/payable per unit is shown below: Income Accumulation Net revenue distributed Net revenue distributed per 1,000 per 1,000 Invested Invested per unit at 08/01/07 per unit at 08/01/07 Calendar year p p * Net Asset Values Units in Issue Units in Issue Market NAV per Unit NAV per Unit Year ended Income Accumulation NAV of Trust Income Accumulation September '000 p p ,511, ,460, , ,917, ,096, , ,731, ,032, , Ongoing Charges Figure The Ongoing Charges Figure for the year ended 30 September 2012 was 2.19%. The ongoing charges comprise property management charges of 0.41% and fund management charges of 1.78%. From July 2012, following the implementation of the UCITS IV Directive, the Total Expense Ratio (TER) has been replaced by an Ongoing Charges Figure (OCF). Both figures aim to provide an indication of the annual operating expenses of the unit trust, the main difference between them is that the OCF additionally includes certain portfolio transaction based fees charged by the custodian. * To 30 September 2012 The valuation of properties for unit pricing reflects the capital allowances on plant and machinery used by the fund in its tax computation but also assesses that either: reversal of such allowances on disposal would not arise; or, were they to arise that a compensating amount of sales proceeds would be received. However, because at the date of reporting financial performance there is no agreed treatment of capital allowances with an actual purchaser, UK GAAP requires the financial statements to make a provision for deferred taxation on such allowances used in the tax computation. This results in a difference between the unit dealing price and the net asset value per unit as reported in the financial statements. 4

7 Investment Assets as at 30 September 2012 Security Holdings Market Value 000 % of Net Assets Investment Properties (54.37%) 125, Industrial LEEDS, Units 1 & 2, Gelderd Point, Gelderd Road 3, LUTTERWORTH, Unit 3510, Magna Park ^ 5, MANCHESTER, Joule House, 76 Trafford Wharf Road 7, PORTSMOUTH, City Technology Building, Walton 4, Road POYLE, Riverside Cargo Centre, Mathisen Way 6, RUGBY, Unit A3, Swift Park 1, STONE, Opal Way, Stone Business Park ^ 6, Leisure BRISTOL, Novotel, Victoria Street ^ 14, Office CAMBRIDGE, St Andrews House & Radio House, St 15, Andrews Road HARROGATE, Nidderdale House & Warehouse, Otley 2, Road LONDON SE1, Units 1 & 4, The Whitehouse, 5, Belvedere Road ^ Retail ABERDEEN, Westhill Shopping Centre 10, BODMIN, Bodmin Retail Park 11, CHELTENHAM, VW, Tewkesbury Road 3, NOTTINGHAM, Long Row & Upper 6, Parliament Street PLYMOUTH, Armada Way & , Cornwall Street ^ ROCHDALE, The Point Retail Park, Molesworth Street 5, Shared Ownership Properties (4.28%) 26, Retail CARMARTHEN, St Catherine's Walk 13, STEVENAGE, B&Q Development, London Road 13, Collective Investment Schemes (9.59%) 20, Insight Liquidity Fund 20,439,000 20, Investment Trusts (4.91%) 9, Foreign & Colonial Commercial Property Trust 5,528,500 5, Invesco Property Income Trust 1,800, Picton Property Income Trust 4,585,000 1, Schroder Real Estate Investment Trust 3,735,000 1, Standard Life Investment Property Income Trust 1,400, Investment assets 182, Total other assets (net) 63, Net assets 245, Comparative figures shown in brackets relate to 30 September Holdings in Investment Trusts represent securities quoted on a Listed Securities Market, unless otherwise stated. The Trust has a high weighting in cash, this cash has been placed on deposit with three institutions (HSBC, Barclays and State Street) in line with COLL concentration rules. The manager monitors the concentration of deposits on an ongoing basis. ^Denotes Leasehold properties. All other properties are Freehold. 5

8 Material Portfolio Changes Cost Purchases 000 CAMBRIDGE, St Andrews House & Radio House, St Andrews Road 16,034 STEVENAGE, B&Q Development, London Road 14,903 CARMARTHEN, St Catherine's Walk 14,096 MANCHESTER, Joule House, 76 Trafford Wharf Road 8,045 POYLE, Riverside Cargo Centre, Mathisen Way 6,517 Insight Liquidity Fund 2,500 Proceeds Sales 000 LEATHERHEAD, Unilever, Leatherhead Business Park 7,383 COVENTRY, Austin Drive, Courthouse Green 927 6

9 Statement of the Manager's Responsibilities in relation to the Financial Statements of the Trust The rules in the Financial Services Authority's Collective Investment Schemes Sourcebook ("the Rules") require the Manager to prepare Financial Statements for each annual accounting period which give a true and fair view of the financial position of the Trust as at the end of the year and of the net revenue and the net capital losses on the property of the Trust for the year then ended. In preparing the Financial Statements the Manager is required to: select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; comply with the requirements of the Statement of Recommended Practice relating to Authorised Funds and the Trust Deed; follow applicable UK Accounting Standards (UK Generally Accepted Accounting Practice); and prepare Financial Statements on the going concern basis unless it is inappropriate to presume that the Trust will continue in operation. The Manager is responsible for keeping proper accounting records and for the management of the Trust in accordance with its Trust Deed, Prospectus and the Rules. The Manager has a general responsibility for taking such steps as are reasonably open to it to prevent and detect fraud and other irregularities. Directors' Certificate This report is certified in accordance with the requirements of the rules in the Financial Services Authority's Collective Investment Schemes Sourcebook. Directors A. M. Croft London D. J. Lamb 19 November

10 Statement of Trustee's Responsibilities The Trustee is under a duty to take into custody and to hold the property of the Scheme in trust for the holders of units. It is also the duty of the Trustee to enquire into the conduct of the Manager in the management of the Scheme and to ensure that the Scheme is managed in accordance with all applicable rules and restrictions in each annual accounting period, and to report thereon to unitholders. Report of the Trustee In our opinion, the Manager has managed the scheme, in all material aspects, during the period covered by this Report in accordance with the investment and borrowing powers and the restrictions applicable to the scheme, and otherwise in accordance with the Trust Deed and the rules in the Financial Services Authority's Collective Investment Scheme provisions of the Sourcebook. For and on behalf of: BNY Mellon Trust & Depositary (UK) Limited London 19 November

11 (the "Trust") Independent Auditors' Report to the Unitholders We have audited the financial statements of the Trust for the year ended 30 September 2012 which comprise the statement of total return, the statement of change in net assets attributable to unitholders, the balance sheet, the Cash Flow Statement, the related notes and the distribution table. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) and the Statement of Recommended Practice Financial Statements of Authorised Funds issued by the Investment Management Association (the Statement of Recommended Practice for Authorised Funds ). Respective responsibilities of Authorised Fund Manager and auditors As explained more fully in the Authorised Fund Manager s Responsibilities Statement the Authorised Fund Manager is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. This report, including the opinions, has been prepared for and only for the Trust s unitholders as a body in accordance with paragraph of the Collective Investment Schemes sourcebook and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Trust s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Authorised Fund Manager; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on the financial statements In our opinion the financial statements: give a true and fair view of the financial position of the Trust at 30 September 2012 and of the net revenue and the net capital losses of the scheme property of the Trust for the year then ended; and have been properly prepared in accordance with the Statement of Recommended Practice for Authorised Funds, the Collective Investment Schemes sourcebook and the Trust Deed. Opinion on other matters prescribed by the Collective Investment Schemes sourcebook In our opinion: we have obtained all the information and explanations we consider necessary for the purposes of the audit; and the information given in the Authorised Fund Manager's Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Collective Investment Schemes sourcebook requires us to report to you if, in our opinion: proper accounting records for the Trust have not been kept; or the financial statements are not in agreement with the accounting records and returns. PricewaterhouseCoopers LLP Chartered Accountants & Statutory Auditors Edinburgh 19 November 2012 The Financial Statements are published on www sjp.co.uk which is a website maintained by St. James s Unit Trust Group Limited. The maintenance and integrity of the website is the responsibility of the Authorised Fund Manager; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom governing the presentation and dissemination of the Financial Statements may differ from legislation in their jurisdictions. 9

12 Statement of Total Return for the year ended 30 September 2012 Income Net capital losses Revenue Expenses Finance costs: Interest Net revenue before taxation Taxation Net revenue after taxation 01/10/11 to 30/09/12 01/10/10 to 30/09/11 Notes (8,528) (3,894) 3 12,342 8,478 4 (5,056) (3,972) 6 (2) - 7,284 4,506 5 (1,341) (756) 5,943 3,750 Total return before distributions (2,585) (144) Finance costs: Distributions 6 (8,556) (5,972) Change in net assets attributable to unitholders from investment activities (11,141) (6,116) Statement of Change in Net Assets Attributable to Unitholders for the year ended 30 September /10/11 to 30/09/12 01/10/10 to 30/09/ Opening net assets attributable to unitholders 187, ,971 Movement due to creation and cancellation of units: Amounts receivable on creation of units 63,388 36,009 Stamp duty reserve tax Change in net assets attributable to unitholders from investment activities (see above) Retained distribution on accumulation units Closing net assets attributable to unitholders 63,388 36,009 (158) (192) (11,141) (6,116) 6,271 4, , ,049 The presentation of the financial statements have been changed from 's to 000's, the comparatives have been restated accordingly. The prices per unit as at 28 September 2012 (unaudited) were: Income units Accumulation units Bid Offer p p

13 Balance Sheet as at 30 September 2012 Assets Investment assets Debtors Cash and bank balances Total other assets Total assets 30/09/12 30/09/11 Notes , , ,409 2,744 64,179 52,828 69,588 55, , ,401 Liabilities Creditors 9 (4,921) (4,391) Distribution payable on income units Total liabilities Net assets attributable to unitholders (1,349) (961) (6,270) (5,352) 245, ,049 The presentation of the financial statements have been changed from 's to 000's, the comparatives have been restated accordingly. Cash Flow Statement for the year ended 30 September /10/11 to 30/09/12 01/10/10 to 30/09/11 Notes Operating activities Net cash inflow from operating activities 11 5,518 5,056 Servicing of finance Interest paid 2 - Income distribution paid (2,221) (1,276) Net cash outflow from servicing of finance Taxation (2,219) (1,276) (1,149) (117) Capital expenditure and financial investment Purchases of investments (62,108) (53,758) Disposals of investments 8, Net cash outflow from capital expenditure and financial investment (53,793) (53,658) Financing Issue of accumulation and income units Stamp duty reserve tax Net cash inflow from financing Increase/(Decrease) in cash 63,152 35,737 (158) (192) 62,994 35, ,351 (14,450) 11

14 Notes to the Financial Statements 7 for the year ended 30 September Accounting and Distribution policies (a) Basis of accounting The Financial Statements have been prepared under the historical cost basis, as modified by the revaluation of investments, in compliance with the Financial Services Authority's Collective Investment Schemes Sourcebook. They have been prepared in accordance with applicable UK accounting standards and in accordance with the Statement of Recommended Practice (SORP) for Financial Statements of Authorised Funds issued by the IMA in October 2010 (IMA SORP 2010). (b) (c) (d) Revenue Rental revenue is accounted for on an accruals basis. Rental revenue received in advance is deferred and recognised as revenue over the period to which it relates. Where a rent free period is included in a lease, in accordance with UITF Abstract 28, the incentive is recognised on a straight line basis over the shorter of the lease term or the period up to the first market rent review date. Lease surrender premiums are recognised as revenue on the date that a lease is terminated. Buildings insurance recovered from tenants is recognised as revenue on an accruals basis. Revenue from other authorised collective investment schemes and Investment Trusts are recognised when the investments are quoted ex dividend. Other revenue is recognised as earned. Expenses Expenses are accounted for on an accruals basis. All expenses of the Trust are deducted from revenue with the exception of the stamp duty reserve tax which is deducted from capital. The manager has agreed that 100% of the annual management charge, the investment adviser's accounting and tax fee, the standing independent valuer's fee, the dealing charges and the litigation fees are to be transferred to capital for the purpose of calculating the distribution, as permitted by the Collective Investment Schemes Sourcebook. All expenses, other than those relating to the purchase and sale of property, are included in expenses in the Statement of Total Return. Lease incentive payments, and surrender premiums, which do not enhance the value of the property are amortised on a straight line basis from the date of lease commencement to the next market review date, or lease end if earlier. Service charge expenditure which is not recoverable from occupational tenants is accounted for on an accruals basis. Valuation of investments Property investments are included in the Balance Sheet at fair value, being the open market value as defined in the appraisal and valuation standards manual issued by the Royal Institution of Chartered Surveyors of the United Kingdom. These property investments were last valued on 28 September 2012 by CB Richard Ellis Limited, the Standing Independent Valuer. The standing independent valuer is entitled to receive a fee of 0.035% per annum of the average value of the immovable property within the Trust. This fee is payable quarterly. Investments other than direct property investments have been valued at bid market value at midday on 28 September 2012 (30/09/11: bid market value at midday), net of any accrued interest which is included in the Balance Sheet as an revenue related item. 12

15 7 Notes to the Financial Statements (e) (f) (continued) (g) Equalisation Equalisation applies only to units purchased during the distribution period. It is the accrued revenue element of the purchase price of all such units and is refunded to holders of these units as a return of capital. Being capital it is not liable to income tax, but must be deducted from the cost of units for capital gains tax purposes. (h) Purchases and sales Direct property purchases are accounted for on unconditional exchange of contracts. Direct sales are accounted for on completion. Purchases and sales of investments (other than direct property) are accounted for on trade date. (i) Provision for bad debts (j) (k) (l) Taxation Provision is made for corporation tax at the current rate on the excess of taxable revenue over allowable expenses. UK dividend revenue is disclosed net of any related tax credit. Overseas dividends continue to be disclosed gross of any foreign tax suffered, the tax element being separately disclosed in the tax note. Deferred tax is provided for on the liability method on all timing differences. A deferred tax asset is only recognised to the extent that a timing difference will be of future benefit. Distribution policy Distributions are made in respect of quarters ended 31 March, 30 June, 30 September and 31 December. At the end of the accounting period all remaining revenue, less revenue expenses and taxation, will be attributable to unitholders. In the case of income unitholders this will be paid as a distribution. In the case of accumulation unitholders the distribution will be reinvested. The benefit of tax relief from capital allowances on plant and equipment is taken to revenue for the purposes of calculating the distribution for the period. The deferred tax liability arising from the potential reversal of the benefit of capital allowances is treated as capital so that the distribution for the period is not impacted by future sales of properties which are capital transactions. In order to maximise distributions, the manager has decided to add to the type of expenses that can be charged to capital rather than income; any costs or fees which arise in connection with pursuing or defending litigation on behalf of the Scheme. It is our policy to provide for the potential non-recovery of tenants debts by way of a bad debts provision. Any arrears greater than one year will be written off. Depreciation In accordance with SSAP 19 "Accounting for Investment Properties", no provision for depreciation has been made in respect of freehold investment properties or leasehold investment properties which have unexpired lease terms in excess of 20 years. Buildings insurance Buildings Insurance is covered by the tenant while the property is occupied unless specified in the lease agreement. In accordance with FRS 5 "Reporting the Substance of Transactions", the Buildings Insurance recovered from tenants is shown as revenue in the financial statements and Building Insurance paid is shown in expenses. Any charges arising while the property is unoccupied will be paid by the Trust. Cash Flow Statement In accordance with the requirements of FRS 1 (Revised) and the IMA SORP (2010), a cash flow statement has been provided on page x as property investments are not deemed to satisfy criteria in FRS 1 (Revised) of being highly liquid (see note 16(b)). 13

16 7 Notes to the Financial Statements (continued) 2. Net capital losses 01/10/11 to 30/09/12 01/10/10 to 30/09/ Non-derivative securities (8,528) (3,894) 3. Revenue 01/10/11 to 30/09/12 01/10/10 to 30/09/ Distributions from Regulated Collective Investment Schemes Offshore distribution Bank interest Other income - Dilapidations 14 1 Building insurance reclaimed from tenants Rental revenue 10,950 7,282 Insurance commission 67 7 Total revenue 12,342 8, Expenses 01/10/11 to 30/09/12 01/10/10 to 30/09/ Payable to the Manager Management charge 3,221 2,588 Payable to the Trustee Trustee's fees Other expenses Audit fee Other expenses Registrar's fees* Investment adviser's accounting fee Buildings insurance Provision for bad debts 38 9 Standing independent valuer's fee Surveyor fee ,818 1,367 Total expenses 5,056 3, (a) *From 1 August 2012 the basis on which registration fees are charged to the schemes was changed by the Manager, with the agreement of the Trustee. As detailed in the Prospectuses, registration fees are now based on a combination of the total number of St. James s Place Unit Trust Group clients (unitholders) as well as the total number of investments held (unitholdings); and are allocated to the individual unit trusts based on the relative overall values of clients investments. Copies of the Prospectuses are available free of charge on request to the Manager. Taxation Analysis of charge in year: Corporation tax Adjustments in respect of prior years Total current tax (note 5b) Deferred taxation Deferred taxation prior year adjustment Total deferred tax (note 5c) Total taxation 01/10/11 to 01/10/10 to 30/09/12 30/09/ , , ,

17 7 Notes to the Financial Statements (continued) (b) Factors affecting current tax charge for the year: The tax assessed for the year is lower than the standard rate of corporation tax in the UK for an authorised unit trust of 20% (2011: 20%). The differences are explained below: Net revenue before taxation 7,284 4,506 (c) Corporation Tax at 20% (2011: 20%) Effects of: Non taxable foreign dividends Adjustments in respect of prior years Effect of Capital Allowances Current tax charge for year (note 5a) Deferred taxation: Provision at the start of the year Deferred tax charge in profit and loss account for the year (note 5a) Provision at the end of the year Provision consists of: Revenue taxable in different periods Provision at the end of the year Finance costs Distributions and interest 1, (142) (141) 47 - (242) (172) 1, , , , The distributions take account of revenue received on the creation of units and revenue deducted on the cancellation of units and comprises: 01/10/11 to 30/09/12 01/10/10 to 30/09/ First interim distribution 2,020 1,399 Second interim distribution 2,279 1,430 Third interim distribution 2,172 1,654 Final distribution 2,410 1,653 8,881 6,136 Deduct: Revenue received on creation of units (325) (164) Net distributions for the year 8,556 5,972 Interest 2 - Total finance costs 8,558 5,972 Movement between net revenue and net distributions 01/10/11 to 01/10/10 to 30/09/12 30/09/ Net revenue after taxation 5,943 3,750 Expenses paid out of capital 3,266 2,778 Tax relief on capital expenses (653) (555) Add: brought forward from previous year Less: carried forward to next year Net distributions for the year 2 1 (2) (2) 8,556 5,972 Debtors 30/09/12 30/09/ Amounts receivable for creation of units 1, Accrued revenue 3,093 1,643 VAT recoverable Rental incentive debtors Total debtors 5,409 2,744 15

18 7 Notes to the Financial Statements (continued) 9. Creditors 30/09/12 30/09/ Accrued expenses Corporation tax payable Deferred taxation 1, Deferred revenue 2,908 1,984 VAT payable Total creditors 4,921 4, Reconciliation of movement in net cash to movement in net funds 30/09/11 Cash flows 30/09/ Cash at bank and in hand 52,828 11,351 64, Reconciliation of net revenue before finance costs and taxation to net cash flow from operating activities 01/10/11 to 30/09/12 01/10/10 to 30/09/ Net (decrease)/increase in unitholders' funds before finance costs and taxation (1,244) 612 Net capital gains 8,528 3,894 Increase in debtors (2,345) (1,030) Rental incentive (non cash element) Increase in creditors 338 1,422 Net cash flow from operating activities 5,518 5, Units in issue At the year end there were Income units of 126,731,549 (30/09/11: 91,917,002) and Accumulation units of 242,032,083 (30/09/11: 185,096,889) resulting in equivalent Income units of 432,442,273 (30/09/11: 316,809,723). 13. Related party transactions St. James's Place Unit Trust Group Limited and BNY Mellon Trust & Depositary (UK) Limited together with their associates are related parties and regarded as controlling parties by virtue of having the ability to act in respect of operations of the Trust. The Manager's service charge paid to St. James's Place Unit Trust Group Limited is shown in note 4 and details of the value of units created and cancelled by St. James's Place Unit Trust Group Limited are shown in the Statement of Change in Net Assets Attributable to Unitholders. The net balances due from St. James's Place Unit Trust Group Limited at the year end in respect of these transactions was 1,172,136 (30/09/11: 124,359). Trustee's fees and interest payable to the BNY Mellon Trust & Depositary (UK) Limited and their associates are shown in notes 4 and 6 respectively. The net balances due to BNY Mellon Trust & Depositary (UK) Limited and their associates at the year end in respect of these transactions was 1,913 (30/09/11: 3,306). The manager St James s Place Unit Trust Group Limited is a subsidiary of St. James s Place Wealth Management Group plc ( SJPWMG ), the ultimate parent company of the manager is Lloyds Banking Group plc, and the Trust s related parties include other companies in the Lloyds Banking Group. Included in the investment portfolio are investments of 26,950,000 (2011: 8,000,000) relating to properties held jointly between the Trust and its related parties. 16

19 7 Notes to the Financial Statements (continued) During the year the trust sold its 12.5% interest in an office let to Unilever at Leatherhead Business Park for an open market value of 7,643,750. The property was held jointly by the Trust, SJPUK plc (a fellow subsidiary of SJPWMG), and other companies within the Lloyds Banking Group, and was included in the investment portfolio at 30 September 2011 at a value of 8,000,000. During the year the Trust acquired from other companies in the Lloyds Banking Group, at open market value, a share in two properties which were jointly held by the Trust and SJPUK plc and included in the investment portfolio at the year end. These acquisitions were a 50% share in a retail development let to B&Q in Stevenage for 14,200,000, and a 25% share in a retail development in Carmarthen at a cost of 13,250,000, the two investments are included in the investment portfolio at the 30th September 2012 at values of 13,500,000 and 13,450,000 respectively. 14. Capital commitments and contingent liabilities On 30 September 2012, the Trust had no capital commitments (30/09/11: nil) and no contingent liabilities (30/09/11: nil). 15. Financial instruments In accordance with the investment objectives, as stated on page 22, the Trust holds certain financial instruments. These comprise: Immovable property; Shares in investment trusts and units in collective investment schemes; and; and Cash (including overdrafts) and short-term debtors and creditors that arise directly from its operations. The rules in the Scheme Documents set out the financial instruments in which the Trust may invest. The Trust's use of financial instruments during the year satisfies these requirements. 16. Risk management The Manager s objectives in managing investment risk are to ensure that the investment profile of the Trust is consistent with its stated investment objectives and risk profile, and to ensure appropriate liquidity. Day to day responsibility for managing investment risk is delegated to the Investment Adviser, who is required to manage the Trust in accordance with FSA regulations, the Prospectus and the terms of their Investment Management Agreement with the Manager. The Manager monitors the activities of the Investment Adviser, through a variety of mechanisms including the following: Initial and ongoing due diligence of Investment Adviser investment and risk management procedures including on site reviews; Periodic reviews of the investments held by the Trust and their compliance with investment objectives and liquidity requirements; and Ongoing review of the investment performance of the Trust against appropriate benchmarks. The main risks arising from the Trust's financial instruments are market price risk and liquidity risk. The Manager's policies for managing risks are summarised below. These policies have remained unchanged since the beginning of the year to which these financial statements relate. 17

20 7 Notes to the Financial Statements (a) (b) (c) Market price risk (continued) Market price risk represents the potential loss the Trust might suffer through holding market positions in the face of price movements. The Trust's exposure to market price risk is comprised mainly of movements in the value of the Trust's investments in properties and other property related investments. Property valuation is a matter of judgement by an independent valuer. Commercial property is a less liquid asset than other asset classes such as bonds or equities and values could be affected if properties need to be sold at short notice. Values could also be affected if no replacement tenants can be found at the end of a lease agreement and as a result of market rent reviews. The Manager has delegated the investment management of the portfolio to an external Investment Adviser who determines the asset allocation and minimises the risk associated with particular countries or industry sectors, whilst continuing to follow the Trust s investment objectives. The Manager has the responsibility for monitoring the portfolio to ensure compliance with the investment objectives and that an acceptable risk reward profile is maintained. Liquidity risk Liquidity risk arises where liabilities cannot be met when they fall due or can only be met at an uneconomic price. For instance, this could arise if the Trust faced significant redemptions in a short period of time. Property investment is relatively illiquid compared with many other asset classes and, as a result, the Trust's liquidity position is managed to ensure that its financial obligations, including redemption of units, can be met. The purchase of investment property or the funding of new development can involve significant sums of money. The Trust plans for business activity and operates a detailed cash forecasting model that is regulary reviewed. In addition, the Trust also has sources of borrowing available to it should this be required. Derivative risk The Manager may use derivative instruments to hedge the value of the investment portfolio against market, currency and stock specific risk through investment in warrants, options forwards and futures. The purpose of the financial instruments is efficient portfolio management. No such derivatives were held by the Trust in the year to 30 September 2012 and accordingly no sensitivity analysis has been presented. (d) Custodian risk The Trust's investments are held on its behalf by State Street Bank and Trust Company (acting as agent), the custodian to the Trust, and its appointed sub-custodians. Bankruptcy or insolvency of the custodian or its sub-custodians may cause the Trust's rights with respect to securities to be delayed. This risk is managed through ongoing monitoring of the custodian and periodic reviews of its procedures for selecting and monitoring subcustodians, together with ad hoc reviews of custodian and sub-custodian credit ratings. (e) Other risks Credit risk is the risk that a counterparty in respect of an investment or a tenant in respect of a property will be unable or unwilling to meet a commitment that it has entered into with the Trust. In respect of property investments, in the event of a default by an occupational tenant, the Trust will suffer a rental shortfall and their additional costs including legal expenses, in maintaining, insuring and reletting the property. The Manager receives regular reports on concentrations of risk and any tenants in arrears. The Manager monitors such reports in order to anticipate, and minimise the impact of, defaults by occupational tenants. 18

21 7 Notes to the Financial Statements (continued) (f) Maturity profile of financial liabilities All financial liabilities of the Trust at the year end are due to settle in one year or less, or on demand. (g) Fair value of financial assets and liabilities Direct properties are valued at open market value. Investments other than direct property investments have been valued at bid-price (see Note 1(d)). Other financial assets and liabilities of the Trust are included in the Balance Sheet at fair value. 17. Portfolio transaction costs Analysis of total trade costs. Purchases Sales 01/10/11 to 01/10/10 to 01/10/11 to 01/10/10 to 30/09/12 30/09/11 30/09/12 30/09/ Non-derivative securities 58,787 50,779 8, Land registry/stamp duty 2,519 1, Acquisition fee Surveyor fee Solicitor fee Total costs 3,321 2, Total trades in the year after transaction costs 62,108 53,757 8,

22 Distribution Tables Distributions in pence per unit Group 1 First interim Units purchased prior to 1 October 2011 Second interim Units purchased prior to 1 January 2012 Third interim Units purchased prior to 1 April 2012 Final Units purchased prior to 1 July 2012 Group 2 First interim Units purchased on or after 1 October 2011 to 31 December 2011 Second interim Units purchased on or after 1 January 2012 to 31 March 2012 Third interim Units purchased on or after 1 April 2012 to 30 June 2012 Final Units purchased on or after 1 July 2012 to 30 September 2012 Income Net revenue Equalisation Distributions paid to/payable 31/01/13 Distributions paid to 31/01/12 Group 1 (p) (p) (p) (p) First interim Second interim Third interim Final Group 2 (p) (p) (p) (p) First interim Second interim Third interim Final Accumulation Net revenue Equalisation Distributions paid to/payable 31/01/13 Distributions paid to 31/01/12 Group 1 (p) (p) (p) (p) First interim Second interim Third interim Final Group 2 (p) (p) (p) (p) First interim Second interim Third interim Final Corporate Tax A unitholder liable to corporation tax receives this distribution, excluding equalisation, as follows: First interim % of the dividend, together with the tax credit, is received as franked investment income. First interim % of the dividend is received as an annual payment (non-foreign element) received after deduction of income tax at the lower rate and is liable to corporate tax. The tax deemed to have been deducted is treated as income tax. First interim % of the dividend is received as an annual payment (foreign element) received after deduction of income tax at the lower rate and is liable to corporate tax. It is treated as foreign income in the hands of the corporate investor and is liable to corporation tax. The associated deemed tax is treated as foreign tax in the hands of the investor, who may be able to claim double tax relief. Investors cannot reclaim any of this deemed tax on the foreign element from HM Revenue and Customs. 20

23 Distribution Tables (continued) Second interim % of the dividend, together with the tax credit, is received as franked investment income. Second interim % of the dividend is received as an annual payment (non-foreign element) received after deduction of income tax at the lower rate and is liable to corporate tax. The tax deemed to have been deducted is treated as income tax. Second interim % of the dividend is received as an annual payment (foreign element) received after deduction of income tax at the lower rate and is liable to corporate tax. It is treated as foreign income in the hands of the corporate investor and is liable to corporation tax. The associated deemed tax is treated as foreign tax in the hands of the investor, who may be able to claim double tax relief. Investors cannot reclaim any of this deemed tax on the foreign element from HM Revenue and Customs. Third interim % of the dividend, together with the tax credit, is received as franked investment income. Third interim % of the dividend is received as an annual payment (non-foreign element) received after deduction of income tax at the lower rate and is liable to corporate tax. The tax deemed to have been deducted is treated as income tax. Third interim % of the dividend is received as an annual payment (foreign element) received after deduction of income tax at the lower rate and is liable to corporate tax. It is treated as foreign income in the hands of the corporate investor and is liable to corporation tax. The associated deemed tax is treated as foreign tax in the hands of the investor, who may be able to claim double tax relief. Investors cannot reclaim any of this deemed tax on the foreign element from HM Revenue and Customs. Final % of the dividend, together with the tax credit, is received as franked investment income. Final % of the dividend is received as an annual payment (non-foreign element) received after deduction of income tax at the lower rate and is liable to corporate tax. The tax deemed to have been deducted is treated as income tax. Final % of the dividend is received as an annual payment (foreign element) received after deduction of income tax at the lower rate and is liable to corporate tax. It is treated as foreign income in the hands of the corporate investor and is liable to corporation tax. The associated deemed tax is treated as foreign tax in the hands of the investor, who may be able to claim double tax relief. Investors cannot reclaim any of this deemed tax on the foreign element from HM Revenue and Customs. 21

24 General Information The Trust St. James's Place Property Unit Trust is an authorised Unit Trust scheme under section 243 of the Financial Services and Markets Act (2000) and is constituted by a Trust Deed dated 5 January The Unit Trust is subject to the rules of the Financial Services Authority's Collective Investment Scheme Sourcebook and is classified as a non UCITS retail scheme. The Trust Manager The Manager of the Trust is St. James's Place Unit Trust Group Limited which is a member of the IMA and is authorised and regulated by the Financial Services Authority. Investment Objectives The investment objective of the Scheme is to provide an attractive yield together with the potential for capital growth over the medium to long term. The Scheme will achieve its investment objective by investing primarily in a balanced portfolio of commercial, industrial and retail property located across the UK. The Scheme may also invest in commercial, industrial and retail property located outside the UK. In addition to immovable property the Scheme may invest in a range of asset classes permitted for a non-ucits retail scheme pursuant to the applicable FSA Rules including transferable securities, units in collective investment schemes, deposits, money market instruments, cash, and derivative and forward transactions (for the purpose of hedging only). It is the Manager's intention that the assets of the Unit Trust will be invested so that the Unit Trust will be eligible for inclusion in an ISA. European Savings Directive As a Non-UCITS retail scheme, the Trust is currently exempt from the reporting requirements of this Directive. Unit Dealings Dealings on the Trust take place on a daily basis. Purchase or sale instructions can be made by telephone or in writing to St. James's Place Unit Trust Group Limited, P.O. Box 9034, Chelmsford, CM99 2XA, United Kingdom, freephone: The Manager adopts a policy of forward pricing, i.e. the order will be transacted on the dealing day following receipt of the client's instructions, or if received before noon on the dealing day, on that dealing day. In the case of telephone purchases of units from the Manager, settlement must be by return of post after receipt of the contract note. In the case of telephone redemptions, the proceeds will not become payable until the receipt at the Administration Centre of a written request. Telephone instructions are not accepted for ISA wrapped investments or the Unit Trust Investment Plan (Regular Premium Unit Trust). A contract note confirming the subscription or redemption price and the number of units involved will be forwarded, together with a cancellation notice, where appropriate, on the next business day. The most recent issue and redemption prices will be published in the Daily Telegraph and on the Manager's website: Minimum Investment The minimum lump sum investment is 1,500, thereafter the minimum additional investment is 1,000. The minimum monthly investment to the Unit Trust Investment Plan is 150 and the minimum monthly increment is 50. The minimum annual investment to the Unit Trust Investment Plan is 1,500 and the minimum annual increment is 500. Management Charges The Trust Deed permits the following management charges which are receivable by the Manager: (a) A Preliminary Charge of 5 per cent which is included in the offer price of the Units. (b) An Annual Management Charge at a rate of 1.5 per cent of the value of the Trust. 22

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26 General Information (continued) Income Distributions Income distributions are made quarterly on or before 31 January, 30 April, 31 July and 31 October each year. Accumulation Distributions Revenue due to accumulation unitholders is reflected in the price of their units. Tax Vouchers Income unitholders that receive income distributions by direct credit and accumulation unitholders (where the distribution income is reinvested) receive an annual consolidated tax voucher in May with all the relevant payment and tax information required to complete a tax return. Tax vouchers will be enclosed if income unitholders receive payment by cheque. Report A report is sent semi-annually to all unitholders on or before 30 Novemeber and 31 May each year. Capital Gains Tax The Trust is not liable to tax on capital gains and an individual holding units will not be liable to capital gains tax unless the total chargeable gains for the tax year 2012/2013 exceed 10,600 (2011/ ,600). To calculate capital gains on accumulation units, the total amount of reinvested net revenue (shown on the annual tax credit vouchers) should be added to the base cost of the units purchased. Unitholders should consult their professional advisers for any advice regarding their tax position. 23