Final Results

ISIS Property Trust 2 Limited 07 September 2005 To: RNS Date: 7 September 2005 From: ISIS Property Trust 2 Limited Unaudited results in respect of the period ended 30 June 2005 • Share price increased by 24.5 per cent to 124.5 pence. • Net asset value per share increased by 17.3 per cent. • Annualised dividend yield of 5.4 per cent. The Chairman, Quentin Spicer, stated: 'The Company was launched on 1 June 2004 with an objective 'to provide ordinary shareholders with an attractive level of income together with the potential for capital and income growth from investing in a diversified UK commercial property portfolio'. I would like to thank my Board colleagues, the Investment Managers and advisers for their significant input at the time of the launch, and for their subsequent efforts, all of which have helped make the Company's first accounting period a successful one on which to report. Results In addition to providing an attractive level of income to shareholders the Company's share price increased by 24.5 per cent during the period ended 30 June 2005, to 124.5p per Ordinary Share. This compared favourably to the issue price of 100p and represented a premium of 6.2 per cent to the net asset value announced at the end of the period. The dividend yield as at 30 June 2005 was 5.4 per cent which compared to a yield of 6.75 per cent at launch. The net asset value per share benefited not only from strong growth within the property portfolio but also from the Company's geared structure. Shareholders also benefited from the continuing demand for the Company's shares. This is a reflection of demand by investors for the attractive level of income provided by the Company and the underlying quality of the property portfolio. This demand has been maintained despite the launch of four new companies with similar structures and objectives over the past year. When the Company was launched, its peer group comprised four companies with an aggregate market capitalisation of approximately £500 million. At 30 June 2005 there were eight such companies with an aggregate market capitalisation of £1.9 billion. Property Market and Portfolio The commercial property market delivered strong returns during the period. A major factor for this performance was the strength of the investment market, much of it coming from overseas. The strongest returns came from the retail sector to which the Company is most exposed. Against this background, the portfolio performed well with all 38 properties increasing in value. The overall valuation increase, from £176.8 million at launch to £201.1 million as at 30 June 2005, represents an un-geared increase of 13.8 per cent. This compares favourably to an increase of 12.1 per cent in the IPD All Property Index. The two largest increases in value came from 48/49 St James's Street, London and 30/40 The Parade, Leamington Spa, with increases of £2.5 million (24.5 per cent) and £1.9 million (20.4 per cent) respectively. Taken together these two properties account for 11.8 per cent of the portfolio. The Board believes that the portfolio continues to provide a sound base from which to deliver capital and income growth. To date, other than the initial purchase of the property portfolio, there have been no purchases or sales of properties. Dividends The Company's first interim dividend of 2.24p per Ordinary Share was paid on 24 December 2004 and the second and third interim dividends of 1.6875p per Ordinary Share each were paid on 29 March and 24 June 2005 respectively. The Board has declared a fourth interim dividend of 1.6875p per Ordinary Share, which will be paid on 30 September 2005 to shareholders on the register on 16 September 2005. These dividends, totalling 7.3025p per Ordinary Share, are as stated in the prospectus and equivalent to an annual gross dividend yield of 6.75 per cent on the issue price of 100p per share. It is the Board's intention that the Company continues to make four dividend payments each year, in March, June, September and December. Gearing At the time of its launch, the Company drew down a ten year bank facility of £70.7 million which represented 40.0 per cent of the initial portfolio valuation. At the same time the Company entered into an interest rate swap transaction under which it fixed the interest rate payable on the full amount of the loan, such that the rate of interest which the Company will pay is fixed at 6.355 per cent until 31 May 2007 and 6.265 per cent from 1 June 2007 until 1 June 2014. As a result of the strong growth in the value of the portfolio during the period, the level of gearing as at 30 June 2005 had decreased to 35.3 per cent. Corporate Governance As a Guernsey incorporated company, the Company is not required to comply with the Combined Code on Corporate Governance. However, as stated in the prospectus, the Directors intend to comply with best practice on good governance that is applicable to investment companies and, accordingly, during the period, put in place the necessary procedures to implement the relevant parts of the Combined Code. Shareholder Communication In addition to the production of an Interim and Annual Report, a factsheet is produced at the end of each of the two quarters when these reports are not produced. These factsheets and the Interim and Annual Reports are available on the Company's website (www.isispropertytrust2.co.uk). Outlook The Board does not expect returns from the property portfolio during the current year to match the strong returns produced in its first accounting period. At current valuation levels the scope for further increases in commercial property values is limited and rental growth could come under pressure if there is a prolonged slowdown in economic growth or consumer expenditure. However, the combination of lower interest rates and the continuing strong demand for property is likely to be beneficial for valuations.' All enquiries to: The Company Secretary Northern Trust International Fund Administration Services (Guernsey) Limited Trafalgar Court Les Banques St Peter Port Guernsey GY1 3QL Tel: 01481 745338 Fax: 01481 745085 M Barrie G J Humphries F&C Asset Management plc Tel: 0131 465 1000 Fax: 0131 225 2375 ISIS Property Trust 2 Limited Consolidated Income Statement (unaudited) for the period from incorporation on 10 May 2004 to 30 June 2005 Total £'000 Revenue Rental income 13,410 Gains on investment properties Unrealised gains on revaluations of properties 24,237 -------- Total income 37,647 -------- Expenditure Investment management fee (1,772) Set-up costs (1,528) Other expenses (805) -------- Total expenditure (4,105) -------- Net operating profit before finance costs 33,542 -------- Net finance costs Interest revenue receivable 270 Finance costs (4,859) -------- (4,589) -------- Net profit from ordinary activities before taxation 28,953 Taxation on profit on ordinary activities - -------- Net profit for the period 28,953 ======== Earnings per share 26.2p ISIS Property Trust 2 Limited Consolidated Balance Sheet at 30 June 2005 (unaudited) 30 June 2005 £'000 Non-current assets Investment properties 201,050 ----------- Current assets Trade and other receivables 1,304 Cash and cash equivalents 4,100 ----------- 5,404 ----------- Total assets 206,454 ----------- Non-current liabilities Interest-bearing bank loan (71,362) Interest rate swap (6,167) ----------- (77,529) Current liabilities Trade and other payables (4,447) ----------- Total liabilities (81,976) ----------- ----------- NET ASSETS 124,478 =========== Represented by: Share capital 1,105 Share premium account - Special distributable reserve 105,303 Capital reserve 24,237 Other reserve (6,167) Revenue reserve - ----------- Equity SHAREHOLDERS' FUNDS 124,478 =========== Net asset value per share 112.6p ISIS Property Trust 2 Limited Consolidated Statement of Changes in Equity (unaudited) for the period from incorporation on 10 May 2004 to 30 June 2005 ------- -------- -------- ------- ------ ------- ------ Share Share Special Capital Other Revenue Total Capital Premium Reserve Account £'000 £'000 Distributable £'000 Reserve Reserve £'000 Reserve £'000 £'000 £'000 ------- -------- ---------- ------- ------- -------- ------ Issue of ordinary share capital, net 1,105 106,792 - - - - 107,897 of issue costs Conversion of share premium account - (106,792) 106,792 - - - - Net profit for - - - - - 28,953 28,953 the period Dividends - - - - - (6,205) (6,205) paid Transfer in respect of gains on investment properties - - - 24,237 - (24,237) - Transfer from Special - - (1,489) - - 1,489 - Distributable Reserve Cash flow hedge - - - - (6,167) - (6,167) ------- ------- ---------- ------- ------- -------- ------- At 30 June 2005 1,105 - 105,303 24,237 (6,167) - 124,478 ======= ======= ========== ======= ======= ======= ======= ISIS Property Trust 2 Limited Consolidated Cash Flow Statement (unaudited) for the period from incorporation on 10 May 2004 to 30 June 2005 £'000 Cash flows from operating activities Net operating profit for the period before finance costs 33,542 Adjustments for: Unrealised gains on revaluations of properties (24,237) Increase in operating trade and other receivables (1,304) Increase in operating trade and other payables 4,353 ----------- 12,354 ----------- Interest received 270 Bank loan interest paid (3,469) Interest rate swap arrangement (494) ----------- (3,693) ----------- Net cash inflow from operating activities 8,661 ----------- Cash flows from investing activities Purchases of investment properties (176,813) ----------- Net cash outflow from investing activities (176,813) ----------- Cash flows from financing activities Proceeds from issue of ordinary share capital 110,500 Issue costs of ordinary share capital (2,603) Draw down of bank loan 70,662 Issue costs of bank loan (102) Dividends paid (6,205) ----------- Net cash inflow from financing activities 172,252 ----------- Net increase in cash and cash equivalents 4,100 Opening cash and cash equivalents - ----------- Closing cash and cash equivalents 4,100 =========== ISIS Property Trust 2 Limited Notes to the Consolidated Financial Statements for the period from incorporation on 10 May 2004 to 30 June 2005 1. The Board has declared a fourth interim dividend of 1.6875p which will be paid on 30 September 2005 to shareholders on the Register on 16 September 2005. The ex-dividend date will be 14 September 2005. 2. There were 110,500,000 Ordinary Shares in issue at 30 June 2005. The earnings per Ordinary Share are based on the net profit for the period of £28,953,000 and on 110,500,000 Ordinary Shares, being the weighted average number of shares in issue during the period. 3. Reconciliation of consolidated net asset value to published net asset value: 30 June 30 June 2005 2005 £'000 (p) Consolidated net asset value per financial statements 124,478 112.6 Adjustments: Net profit for the period (excluding gains on (4,716) (4.3) properties) Dividends paid 6,205 5.6 Unrealised deficit on interest rate swap 6,167 5.6 Costs allocated to capital as permitted by the SORP (2,648) (2.3) ----------- ----------- Published net asset value 129,486 117.2 =========== =========== The published net asset value was calculated on a capital only basis and otherwise in accordance with UK accounting standards applicable to accounting periods commencing prior to 1 January 2005. In order to reconcile this to the published accounts it is necessary to add back all current period revenue reserves and account for the effect of International Financial Reporting Standards ('IFRS') versus UK GAAP differences. Costs allocated to capital comprise Management fees and Bank loan interest payable, charged 60 per cent to revenue and 40 per cent to capital in recognition of the long term expected returns of the Group, as permitted by the UK Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' published in January 2003. It is the Board's intention that future net asset values, which are published at the end of each calendar quarter, are prepared on a capital only basis and in accordance with IFRS. 4. On 10 December 2004 the Royal Court of Guernsey confirmed the reduction of capital by way of a cancellation of the Company's share premium account. The amount cancelled, being £106,792,000, has been credited as a distributable reserve established in the Company's books of account and shall be available as distributable profits to be used for all purposes permitted under Guernsey law, including the buyback of shares and the payment of dividends. 5. The Group results consolidate those of IPT2 Property Holdings Limited, a wholly owned subsidiary which invests in properties. 6. These are not full statutory accounts. The full audited accounts for the period to 30 June 2005 will be sent to shareholders in September 2005, and will be available for inspection at Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 3QL the registered office of the Company. This information is provided by RNS The company news service from the London Stock Exchange

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