Final Results

ISIS Property Trust 2 Limited 18 September 2006 To: RNS Date: 18 September 2006 From: ISIS Property Trust 2 Limited Results in respect of the Year Ended 30 June 2006 Financial Highlights • Net asset value total return of 32.9 per cent compared to a return of 21.3 per cent from the Investment Property Databank All Monthly Valued Funds. • Dividends of 6.75 pence per share in respect of the year. • Increase of 2.5 per cent in future rate of dividend. Chairman's Statement The Chairman, Quentin Spicer, stated: 'The year to 30 June 2006 was another strong year for the commercial property sector. The Company's net asset value total return was 32.9 per cent which compares favourably to a return of 21.3 per cent from the Investment Property Databank ('IPD') All Monthly Valued Funds. The net asset value per share at the year end was 142.2 pence and the share price was 142.5 pence per share. Since launch on 1 June 2004, the Company's share price has increased by 42.5 per cent, and shareholders have earned a further 12.4 per cent of the issue price from dividends paid. There was a good level of demand for the Company's shares during the year with investors continuing to be attracted to the income and diversification benefits of investing in commercial property, underpinned by the quality of the portfolio. It was also pleasing that the Company was admitted to the FTSE All-Share Index in March 2006 following changes to the rules which now make Guernsey registered companies eligible for the UK FTSE Series. Property Market and Portfolio The trend of strong demand from institutions, private individuals and overseas investors continued during the year, leading to yield compression and increased capital values. Shortage of quality stock was also a contributing factor as was the announcement of proposed legislation for UK Real Estate Investment Trusts ('REITs'). Against this background it is pleasing to report that all of the Company's properties increased in value during the year under review. The overall market valuation of the portfolio increased from £201.1 million as at the end of the previous year to £228.5 million (*) as at 30 June 2006, representing an un-geared increase of 15.6 per cent and a total return of 22.2 per cent. The biggest gain came from the Company's largest property, at Echo Park, Banbury. The lease was restructured during the year and its market value, after payment of the lease premium, increased by 26.4 per cent to £20.5 million. Significant gains were also made at 48/49 St James Street, London SW1 and 99/103 Long Acre, London WC2. As previously reported to shareholders, at the beginning of December 2005 the property at Hemel Gateway, Boundary Way, Hemel Hempstead was severely damaged as a result of the fuel explosion at the neighbouring Buncefield fuel terminal. This property is fully insured and the Board does not expect there to be any material capital or income loss to the Company. One property, at Pincents Lane, Reading, was sold during the year for £5.0 million (7.2 per cent above valuation). There were no purchases during the year. Dividends Since launch, it has been the Board's intention to pay a gross annual dividend yield of 6.75 per cent on the issue price of 100p per share. In this respect, three interim dividends of 1.6875 pence per Ordinary Share each have been paid in relation to the financial year, on 16 December 2005, 31 March 2006 and 30 June 2006. The Board has declared a fourth interim dividend of 1.6875 pence per Ordinary Share which will be paid on 29 September 2006 to shareholders on the register on 15 September 2006. This brings the total dividends for the year to 6.75 pence per Ordinary Share. It remains the Board's intention to pay interim dividends quarterly in December, March, June and September each year. As a result of the strong performance of the Company since launch, the Board has declared an increase of 2.5 per cent in the first interim dividend in respect of the year ending 30 June 2007. The dividend, of 1.73 pence per share, will be paid on 22 December 2006 to shareholders on the register on 8 December 2006. The Board hopes to maintain this level of dividend for subsequent dividend payments. Gearing As a result of the continuing rise in the value of the property portfolio, the level of gearing as at 30 June 2006 was 30.9 per cent, which compares to 35.3 per cent as at 30 June 2005 and 40.0 per cent at launch on 1 June 2004. The Company's borrowings are represented by a £70.7 million ten year bank loan which is repayable on 30 May 2014. Outlook The Company has benefited from very good returns from the commercial property sector since its launch in June 2004 and, with returns approaching 10 per cent for the first half of 2006, another good year is in prospect. However, at current valuation levels there seems little scope for further rises and we would therefore expect returns to revert to more sustainable levels in the year ahead.' * The market value of the portfolio as at 30 June 2006 was £228.5 million. The fair value, as stated in the accounts, was £227.3 million. The difference of £1.2 million is represented by the lease premium paid in relation to the property at Echo Park, Banbury which, under International Financial Reporting Standards, is required to be recorded as a current asset and amortised over the period from the date of lease commencement to the earliest termination date. All enquiries to: Ian McBryde F&C Asset Management plc Tel: 0131 465 1000 The Company Secretary Northern Trust International Fund Administration Services (Guernsey) Limited Trafalgar Court Les Banques St Peter Port Guernsey GY1 3QL Tel: 01481 745338 ISIS Property Trust 2 Limited Consolidated Income Statement for the year ended 30 June 2006 Year ended 30 June Period from 10 May 2004 to 30 2006 (unaudited) June 2005 (audited) £'000 £'000 Revenue Rental income 12,547 13,410 Gains on investment properties Realised gains on disposal of properties 611 - Unrealised gains on revaluations of properties 30,547 24,237 ----------- ----------- Total income 43,705 37,647 ----------- ----------- Expenditure Investment management fee (1,883) (1,772) Other expenses (913) (805) Set up costs - (1,528) ----------- ----------- Total expenditure (2,796) (4,105) ----------- ----------- Net operating profit before finance costs 40,909 33,542 ----------- ----------- Net finance costs Interest revenue receivable 201 270 Finance costs (4,508) (4,859) ----------- ----------- (4,307) (4,589) ----------- ----------- Net profit from ordinary activities before taxation 36,602 28,983 Taxation on profit on ordinary activities - - ----------- ----------- Net profit for the year 36,602 28,953 =========== =========== Earnings per share 33.1p 26.2p ISIS Property Trust 2 Limited Consolidated Balance Sheet as at 30 June 2006 30 June 2006 30 June 2005 (audited) (unaudited) £'000 £'000 Non-current assets Investment properties 227,293 201,050 ----------- ----------- Current assets Trade and other receivables 2,939 1,304 Cash and cash equivalents 5,051 4,100 ----------- ----------- 7,990 5,404 ----------- ----------- Total assets 235,283 206,454 ----------- ----------- Non-current liabilities Interest-bearing bank loan (71,330) (71,362) Interest rate swap (2,652) (6,167) ----------- ----------- (73,982) (77,529) ----------- ----------- Current liabilities Trade and other payables (4,165) (4,447) ----------- ----------- Total liabilities (78,147) (81,976) ----------- ----------- ----------- ----------- NET ASSETS 157,136 124,478 =========== =========== Represented by: Share capital 1,105 1,105 Special distributable reserve 103,288 105,303 Capital reserve 55,395 24,237 Other reserve (2,652) (6,167) Revenue reserve - - ----------- ----------- Equity SHAREHOLDERS' FUNDS 157,136 124,478 =========== =========== Net asset value per share 142.2p 112.6p ISIS Property Trust 2 Limited Consolidated Statement of Changes in Equity For the year ended 30 June 2006 (unaudited) Share Share Capital Other Revenue Total Capital Distributable Reserve Reserve Reserve Reserve £'000 £'000 £'000 £'000 £'000 £'000 ------ ------- ------- ------ ------- ------- At 1 July 1,105 105,303 24,237 (6,167) - 124,478 2005 Net profit for the year - - - - 36,602 36,602 Dividends paid - - - - (7,459) (7,459) Transfer in respect of gains on investment properties - - 31,158 - (31,158) - Transfer from special distributable reserve - (2,015) - - 2,015 - Gain on cash flow hedge - - - 3,515 - 3,515 ------ ------- ------- ------ ------- ------- At 30 June 1,105 103,288 55,395 (2,652) - 157,136 2006 ====== ======= ======= ====== ======= ======= For the period from 10 May 2004 to 30 June 2005 (audited) Share Share Share Capital Other Revenue Capital Premium Distributable Reserve Reserve Reserve Account Reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 ------ ------- ------- ------ ------- ------- ------- Issue of ordinary share capital, net of issue costs 1,105 106,792 - - - - 107,897 Conversion of share premium account - (106,792) 106,792 - - - - Net profit for the period - - - - - 28,953 28,953 Dividends paid - - - - - (6,205) (6,205) Transfer in respect of gains on investment properties - - - 24,237 - (24,237) - Transfer from special distributable reserve - - (1,489) - - 1,489 - Loss on cash flow hedge - - - - (6,167) - (6,167) ------- -------- --------- ------- ------- ------- ------- At 30 June 1,105 - 105,303 24,237 (6,167) - 124,478 2005 ======= ======== ========= ======= ======= ======= ======= ISIS Property Trust 2 Limited Consolidated Cash Flow Statement for the year ended 30 June 2006 Year ended 30 June Period from 10 May 2004 2006 (unaudited) to 30 June 2005 (audited) £'000 £'000 Cash flows from operating activities 40,909 33,542 Net operating profit for the year before finance costs Adjustments for: Unrealised gains on revaluation of investment properties (30,547) (24,237) Realised gains on disposal of investment properties (611) - Increase in operating trade and other receivables (1,635) (1,304) (Decrease) / increase in operating trade and other payables (326) 4,353 ----------- ----------- 7,790 12,354 ----------- ----------- Interest received 201 270 Bank loan interest paid (3,927) (3,469) Interest rate swap arrangement (569) (494) ----------- ----------- (4,295) (3,693) ----------- ----------- Net cash inflow from operating activities 3,495 8,661 ----------- ----------- Cash flows from investing activities Purchases of investment properties (85) (176,813) Sales of investment properties 5,000 - ----------- ----------- Net cash outflow from investing activities 4,915 (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 (7,459) (6,205) ----------- ----------- Net cash (outflow) /inflow from financing activities (7,459) 172,252 ----------- ----------- Net increase in cash and cash equivalents 951 4,100 Opening cash and cash equivalents 4,100 - ----------- ----------- Closing cash and cash equivalents 5,051 4,100 =========== =========== ISIS Property Trust 2 Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2006 1. The unaudited results of the Group which were approved by the Board on 18 September 2006 have been prepared on the basis of International Financial Reporting Standards and the accounting policies set out in the statutory accounts of the Group for the year ended 30 June 2006. 2. The fourth interim dividend of 1.6875p was declared on 7 September 2006 and will be paid on 29 September 2006 to shareholders on the register on 15 September 2006. The ex-dividend date will be 13 September 2006. 3. There were 110,500,000 Ordinary Shares in issue at 30 June 2006. The earnings per Ordinary Share are based on the net profit for the year of £36,602,000 and on 110,500,000 Ordinary Shares, being the weighted average number of shares in issue during the year. 4. The property at Pincents Lane, Reading was sold in December 2005 for £5.0 million. The resulting realised gain on disposal of £0.6 million is included in the Income Statement. At the beginning of December 2005 the property at Hemel Gateway, Boundary Way, Hemel Hempstead, was severely damaged as a result of a fuel explosion at the neighbouring Buncefield fuel terminal. This property is fully insured and the Board does not expect there to be any material capital or income loss to the Company. 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 year ended 30 June 2006 will be sent to shareholders in September 2006, and will be available for inspection at Trafalgar Court, Les Banques, St Peter Port, Guernsey, 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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