Annual Report and Accounts

RNS Number : 2067Y

Invista Foundation Property Tst Ltd

03 July 2008

Invista Foundation Property Trust Limited

Consolidated Annual Report for the year ended

31 March 2008

Contents Page

Financial Summary 2

Company Summary 3

Chairman's Statement 5

Investment Manager's Report 8

Board of Directors 19

Report of the Directors 20

Consolidated Income Statement 32

Consolidated Balance Sheet 33

Consolidated Statement of Changes in Equity 34

Consolidated Statement of Cash Flows 35

Company Income Statement 36

Company Balance Sheet 37

Company Statement of Changes in Equity 38

Company Statement of Cash Flows 39

Notes to the Financial Statements 40

Independent Auditors' Report 61

Glossary 63

Notice of Annual General Meeting 64

Corporate Information 66

Invista Foundation Property Trust Limited aims to provide Shareholders with an attractive level of income together with the potential for income and capital growth from investing in UK commercial property.

Financial Summary

Net Asset Value per share decreased by 24.2%
Earnings per share of (25.3) pence
The Company has declared and paid dividends amounting to 6.75 pence per share
Net Asset Value total return of (19.8%)

	31-Mar 2008	31-Mar 2007	% Change

Net Asset Value (NAV)1 (£'000)	378,359	502,652	(24.7)
NAV per Ordinary Share published1 (pence)	108.1	141.4	(23.5)
NAV per Ordinary Share per accounts1 (pence)	107.8	142.2	(24.2)
Share price (pence)	64.3	135.3	(52.5)
Share price discount to NAV	(40.3%)	(4.8%)
NAV total return2	(19.82%)	25.25%

FTSE All Share Index	2,927.05	3,283.21	(10.8)
FTSE Real Estate Index	3,670.67	5,674.77	(35.3)

Total Group assets less current liabilities (£'000)	£644, 882	£720,940	(10.5)

Borrowings as % of total assets less current liabilities	40.9%	30.7%	10.23
Borrowings (including non recourse borrowings held within associates and joint ventures) as % of total assets less current liabilities	51.8%	45.0%	6.83

Sources: Invista Real Estate Investment Management and Datastream based on returns during the period from 1 April 2007 to 31 March 2008

¹ Net Asset Value is calculated using International Financial Reporting Standards

² Net Asset Value total return calculated by Invista Real Estate Investment Management Limited

³ Percentage point change in borrowings

COMPANY SUMMARY

Invista Foundation Property Trust Limited and its subsidiaries (the 'Company'/the 'Group') hold a diversified portfolio of UK commercial properties, which is mainly invested in three commercial property sectors: office, retail and industrial. The Group will also invest in other sectors from time to time. The Group will not invest in other listed investment companies. In pursuing the investment objective, the Investment Manager concentrates on assets with good fundamental characteristics, a diverse spread of occupational tenants and with opportunities to enhance value through active management.

Performance Summary

Reconciliation of Net Asset Value per accounts to published Net Asset Value

	31 March 2008	31 March 2007
	Total £'000	Total £'000
Net Asset Value as published 29 April 2008	379,383	500,005
Increased performance fee accrual	-	(482)
Adjustment of tax provision based on results of subsidiaries	-	(586)
Revaluation of associates	(1,219)	3,528
Adjustment to investment property	155	-
Revalue hedge reserve on interest rate swap	-	(252)
Adjustment of income/(expense)	40	(439)
Net Asset Value per financial statements	378,359	502,652

Property performance

Value of Property Assets	592,284	717,388
Current annualised rental income	30,539	30,911
Estimated open market rental value	37,766	36,746
Underlying property performance* (year ending)	(9.9%)	22.7%
IPD Quarterly Version of Balanced Monthly Index Funds* (year ending)	(11.0%)	14.7%

* Source: Investment Property Databank ('IPD')

Summary consolidated income statement

	1 April 2007	1 April 2006
	to	to
	31 March 2008	31 March 2007
	£'000	£'000
Net rental and related income	30,103	31,278
Realised and unrealised (losses)/gains on investment property	(64,665)	50,342
Expenses	(9,242)	(19,055)
Net finance costs Share of (loss)/profit of associates and joint ventures	(12,288) (33,491)	(9,588) 44,421
(Loss)/profit before tax	(89,583)	97,398
Taxation	233	(690)
(Loss)/profit for the year	(89,350)	96,708

Earnings and dividends

Earnings per share (pence)	(25.3)	27.4
Dividends paid per share (pence)	6.75	6.75
Annualised dividend yield on 31 March 2008 share price	10.5%	4.99%

Bank borrowings

	31 March 2008	31 March 2007
On-balance sheet borrowings (£'000s)	263,500	221,580
On-balance sheet borrowings as % of total assets less current liabilities	40.9%	30.7%
The borrowings attributable to the pro-rated share of the Group's associates and joint ventures (£'000s)1	146,563	186,060
Borrowings (including non recourse borrowings held within associates and joint ventures) as % of total assets less current liabilities	51.8%	45.0%

1 The Group's associates and joint ventures contain borrowings which are structured without recourse to the

underlying investors (including the Group)

Estimated Annualised total expense ratio

As % of total assets less current liabilities	1.43%	1.06%
As % of equity	2.44%	1.52%

Chairman's Statement

Market Overview and Strategic Review

Since my last report to Shareholders we have witnessed further deterioration in the economy generally, and the real estate market specifically, which has continued to have a negative impact on the performance of the Invista Foundation Property Trust (the 'Company'). In light of this the Board has, over the last few months, undertaken an intensive review of the Company's strategy with input from both the Investment Manager and from the Company's financial advisers. Following this review, the Board has taken a number of steps to put the Company on a better financial footing to withstand the challenges posed by very depressed markets over the coming months, and to position it for growth once stability returns to the economy.

The Strategic Review identified key areas where positive action could be taken to reduce the Company's costs, enhance NAV performance, protect the business against ongoing depressed conditions but position it strongly for market improvements. The details of these activities are set out below.

Since 31 March 2008, the Company has sold a number of properties raising £47 million, increasing cash held by the Company to approximately £95 million after other commitments have been met. The Company will now deploy its cash resources in the following ways:

1. Repay £50 million of debt to reduce on-balance sheet debt from £263 million to £213 million and thus reduce annual

interest payments by £2.8 million to £11.9 million per annum. On the basis of the 31 March property valuation, this

would reduce the Company's loan to value ratio from 41% to approximately 35%. .

2. Repurchase up to £20 million worth of the Company's shares as soon as practicable. This will enhance net asset

value and contribute towards improved dividend cover. The Board recognises that the Company's shares now trade at

a level which makes share repurchases a compelling investment.

The Board has also examined the sustainability of the Company's dividend in the current environment, in which rental growth expectations have been reduced, and some key but capital intensive asset management initiatives have been delayed. In the light of these changed circumstances, the Board has decided to reduce the level of quarterly dividend paid by the Company from 1.6875 pence per share to 0.88 pence per share, to take effect after the payment of the dividend due to be declared in July. By taking this step, together with those described above, the Board's objective is to have the quarterly dividend fully covered by earnings by the end of the year. It is also the Board's firm intention to grow the dividend again as rental income increases with the completion of asset management projects in due course and as market conditions improve.

These steps will reduce leverage and improve liquidity. We strongly believe this will provide greater stability for the Company in an environment which continues to be extremely difficult for investors in UK real estate. Further details of these steps and the Company's results are set out below.

Results

Over the 12 month period to 31 March 2008, the Company's audited Net Asset Value ('NAV') fell by 34.4 pence per share ('pps') or 24% from 142.2 pps to 107.8 pps. Shareholders have received total dividends of 6.75 pps over this period resulting in a total NAV return of -19.8% over the year. From the Company's inception to 31 March 2008, its total NAV return has been 8.8% per annum.

In relative terms the total return of the underlying property portfolio owned by the Company and its subsidiaries ('the Group') over the year was -9.9%, which compared well with the benchmark return of -11.0% and over the last three years the total return of the Group's underlying portfolio was ranked 4th out of a peer group of 55 funds. In absolute terms, however, the total return over the year to 31 March 2008 is clearly disappointing, reflecting the impact of gearing and the condition of the market as a whole.

UK property market

The global credit crisis has forced investors and lenders to re-think their attitudes to risk and credit completely. The UK commercial property market has been a major casualty of this re-assessment, leading to sharp falls in capital values during the second half of 2007 continuing into 2008. It is clear that investors now require a higher return from property investment to compensate for higher borrowing costs and deepening concerns over a more prolonged economic slowdown.

With the US now widely acknowledged to be heading into a recession and the UK economy clearly slowing, many of the key risks affecting the Company's portfolio appear to be on the downside, at least in the short term. This will lead to less activity in occupational markets, as is already evident in the Central London office market, and particularly in those areas where financial services based occupiers dominate.

The portfolio

The Group's property portfolio continues to be well diversified with a bias towards the South East of England and in particular Central London. The Board receives regular reports on the spread of tenants in the portfolio and the Company's exposure to strong office occupiers creates a robust, long-term core income stream. The average unexpired lease length has increased over the year from 7.5 to 7.8 years - exactly in line with the IPD Benchmark average.

Steps were taken in the summer of 2007 to reduce weightings to the Central London office sector, with the profitable disposal of MidCity Place that completed in August. This disposal was well timed and, following a re-financing in 2006, generated a £30 million return for the Company on an initial investment of £9.8 million. This disposal had the additional advantage of reducing the off-balance sheet debt held by the Group.

Since 31 March 2008 the Company has executed a number of other disposals, raising a total of £47 million, of which £17.8 million is represented by the disposal of the Company's investment in Tokenhouse Yard in the City of London and £25 million by the disposal of a 50% stake in Minerva House in Southwark. The 50% disposal of Minerva House was reviewed carefully by the Board, as the purchaser was a fund which also retains Invista Real Estate as Investment Manager. Having sought independent advice from property advisers and financial advisers, the Board was satisfied that the terms of the sale were fair and that the transaction was in the best interests of our shareholders.

Financing

The Group's principal source of debt finance is a securitised facility of £263.5 million fully hedged against interest rates until 2014 at a total cost of funds of 5.58%. The two key banking covenants within this facility are monitored closely and regularly by the Board. The facility has a loan to value ratio covenant of 60%, which compares to a current ratio of 41% after the disposals noted above, and an interest cover ratio covenant requiring rental income to exceed 1.5 times interest payable, compared to current interest cover of 2 times interest payable which is expected to improve further during 2008 and beyond as rent reviews are settled.

The Group also has a small number of joint ventures, including Plantation Place, which are financed with debt which is ring-fenced and without recourse to the Group as a whole. The Group is therefore under no obligation to contribute additional equity to these joint ventures unless it deems it appropriate to do so in the interests of shareholders. Shortly after 31 March 2008, the Group, acting together with other equity investors, did contribute an additional £4 million of equity to the Plantation Place joint venture to keep it compliant with its debt covenants. The Board has reviewed the position again as at 30 June 2008 and concluded that it would not subscribe additional equity in July, allowing other investors to meet this requirement, although this will have the effect of diluting the value of the Group's holding in this joint venture.

The total value of the equity invested in these joint ventures was £29 million as at 31 March 2008.

Share buybacks

The Company's shares have continued to be affected by negative sentiment and trade at a material discount to net asset value. As at 1 July 2008 the shares are trading at 36.25 pence per share, a 66% discount to the 31 March 2008 Net Asset Value. During the year under review the Company acquired and cancelled 2.703 million shares at an average price of 81 pence per share. Following the Board's strategic review, the Company will now deploy up to £20 million in a share buyback programme to be completed as soon as practicable.,

Investment Manager Overview

The Board reviews the Investment Manager's performance at its quarterly Board meetings. At the beginning of May the Board paid its annual visit to the Investment Manager's offices to review its resources and processes and receive presentations on the wider economic environment. The Investment Manager has increased the resources dedicated to the Company which the Board believes is necessary in these challenging market conditions. Having reviewed this and the Investment Management contract, the Board believes that the continuing appointment of the Investment Manager, on the terms agreed, is in the interests of the Shareholders.

Board

During the year, the Board conducted its annual review of its own performance and skills. This review concluded that the Board was functioning satisfactorily and that, between them, the Directors had a broad range of appropriate technical and market knowledge and experience.

Outlook

In the first three months of 2008 there was some evidence that the rate of decline in capital values was slowing. However transaction volumes remain very low, with a high aversion to risk and a shortage of equity and debt finance available for commercial property investment. In the short to medium term it is clear that the healthy levels of rental growth enjoyed in recent times in many parts of the UK commercial property market will slow but this is likely to coincide with yields stabilising.

At this stage in the property investment cycle short to medium term performance will be determined by the extent to which financial market problems contaminate the wider economy. The Board and the Investment Manager have adopted a strategy which takes account of a worsening economic outlook. Further to the steps set out above, we will continue to focus on the reduction of risk through disposals to reduce gearing and to ensure that the Company's liquidity is adequate for its operating requirements. At the same time, the Investment Manager's efforts to create value from intensive asset management should help to offset the rise in yields and consequent fall in capital values, and to grow the Company's income base over time.

Andrew Sykes, Chairman

2 July 2008

Investment Manager's Report

Strategic Review

Over the course of 2008 we have supported the Board in instigating a strategic review of the Company on how to best maximise shareholder value under difficult market circumstances. The Chairman's statement has highlighted the key actions that are now proposed to ensure the continued stability of the Company, whilst also pursuing the longer term objective to maximise total returns. The review has critically analysed the best course of action for the Company's future activity through challenging economic conditions.

As part of this process we have raised significant cash resources via a disposal programme to provide a strong financial position and to create as much operational flexibility as possible. Following disposals of some £38 million during the year under review, since 31 March 2008 a further £47 million of disposals have been unconditionally exchanged or completed. With existing cash resources this increases free cash held by the Company to approximately £95 million.

The Board has approved a combination of reducing borrowings by £50 million, investing up to £20 million in share buybacks and reducing the Company's dividend distribution by approximately 50%. These actions are designed to maintain a stable platform for managing the Company through an extremely difficult economic environment. This will protect shareholder value now and ensure the business has a secure footing to position it strongly for future growth as the economy and markets recover in due course.

The key consequences of these important actions have been set out in the Chairman's Statement above.

Objective

The Company's long term objective is to provide Shareholders with an attractive level of income and capital growth. In the first three years of the Company's existence, it delivered high returns, peaking at a total NAV return of 25.25% over the year to 31 March 2007. The negative total NAV return of -19.82% over the year to 31 March 2008 has diluted this performance. As at 31 March 2008 the annualised total NAV return per annum since inception has been 8.8% per annum.

Strategy

Invista Real Estate Investment Management Limited's investment philosophy is to acquire properties with strong fundamentals offering potential long-term income and capital growth through active management. In the last annual report we highlighted the slowdown occurring in parts of the UK commercial property market. Since the announcement of the Company's interim results in November 2007 we have witnessed an unprecedented speed of decline in capital values precipitated by the structural problems in the wider banking and financial markets. Whilst certain defensive measures were put in place to protect the Group against a slowdown, the severity of the fall in values required the review highlighted above.

The Company has successfully sold assets where asset management strategies have been completed or where there are concerns over future growth potential. This has provided the Company with a number of options to improve shareholder returns in future.

The market

For the 12 month period from the end of May 2007 to the end of May 2008 capital value movement in the UK commercial property market (source IPD monthly index) was -17.4%, with limited differential between the sectors. Combined with the average income return of 5.3%, this resulted in a total return for this period of -13%. Average net initial yields are now in line with the level seen in June 2005. The fall in values has mainly been caused by a lack of liquidity in the financial system and increasing risk aversion, with fundamentals in terms of rental value growth and tenant demand remaining relatively robust.

Property portfolio

The Company's property portfolio, including joint ventures, was valued at £592.3 million as at 31 March 2008 and comprises 71 assets with an average lot size of £8.4 million. The portfolio is of high quality and benefits from strong fundamentals, a broad diversity and low vacancy rates supported by very strong tenants paying rental income to the Company.

Since the year end, the Company has sold or contracted to sell three direct properties and a share in a direct property for a total consideration of £47.3 million, details of which are below.

As at 31 March 2008 and excluding joint venture investments, the Group had 259 tenancies with an average lease length of 7.8 years, highlighting the significant diversification across the Group's portfolio. The Group currently has a void rate of only 4.6% of rental value compared to the peer group average of 7.8%.

Sector weightings - before and after the post year end sales

Sector	Year end - 31/3/08		Post-Sales
	Net weighting*	Gross weighting**	Net weighting*	Gross weighting**
Retail	21.4%	17.1%	22.9%	18.0%
Offices	52.6%	59.5%	48.8%	57.0%
Industrial	22.3%	20.4%	24.2%	21.8%
Other	3.7%	3.0%	4.1%	3.2%
Total	100%	100%	100%	100%

* Includes JV investments at Net Asset Value

** Includes share of off-balance sheet debt in joint ventures

Regional weightings - before and after the post year end sales

Region	Year end - 31/3/08		Post-Sales
	Net weighting*	Gross weighting**	Net weighting*	Gross weighting**
Central London	30.9%	42.1%	25.1%	38.3%
South East excl. Central London	35.7%	31.1%	39.1%	33.5%
Rest of South	10.7%	8.6%	11.0%	8.6%
Midlands and Wales	13.8%	11.1%	15.1%	11.9%
North and Scotland	8.9%	7.1%	9.7%	7.7%
Total	100%	100%	100%	100%

* Includes JV investments at Net Asset Value

** Includes share of off-balance sheet debt in joint ventures

Top ten properties - After the post year end sales

		March 2008 Value (£)	%
1	National Magazine House, 10/20 Carnaby Street, Soho, London W1	51,000,000	9.4%
2	Portman Square House, 43/45 Portman Square, London W1	33,660,000	6.2%
3	Minerva House, 5 & 6 Montagu Close, London SE1	27,750,000	5.1%
4	Plantation Place	23,192,000	4.3%
5	The Galaxy, Luton	22,200,000	4.1%
6	Reynard Business Park, Brentford	18,000,000	3.3%
7	Victory House, Trafalgar Place, Brighton	16,800,000	3.1%
8	Union Park, Fifers Lane, Norwich	15,000,000	2.8%
9	Land and Buildings, Churchill Way West, Salisbury, Wiltshire	14,750,000	2.7%
10	Olympic Office Centre, 8 Fulton Road, Wembley	14,170,000	2.6%
	Total as at 31 March 2008	236,522,000	43.6%

Top ten tenants excluding joint ventures - After the post year end sales

		March 2008 Rent (£)	%
1	The National Magazine Co Ltd	2,314,815	8.1%
2	Mott MacDonald Ltd	1,307,148	4.6%
3	Synovate Limited* **	950,000	3.3%
4	The British Broadcasting Corporation	850,100	3.0%
5	Recticel SA	713,538	2.50%
6	Wickes Building Supplies Limited	692,250	2.43%
7	Reed Smith Rambaud Charot LLP**	663,095	2.33%
8	Cushman & Wakefield Finance Ltd	574,128	2.01%
9	Motorhouse 2000 Ltd	570,150	2.00%
10	Tucker, Crossland Drake (Irwin Mitchell)	555,000	1.95%
	Total as at 31 March 2008	9,190,224	32.1%

* Synovate Limited will commence paying this rent in mid 2009

**The Company receives 50% of the rent from both Synovate and Reed Smith following the part sale of Minerva House and this is reflected in the table above.

An analysis of the rent and rental value based on Knight Frank's independent valuation as at 31 March 2008, but after contracted disposals following the year end, is set out below:

Portfolio	Value (million)	Rent (million)	Initial Yield	Rental value (million)	Yield
Direct investment property	£486.5	£28.4	5.84%	£34.3	7.04%
Development sites	£25.6	(note 1)	-	(note 1)	-
Joint venture investments	£29.2	(note 2)	-	(note 2)	-

Note 1 - Knight Frank are not reflecting any rental value to the three development sites (Wembley, Uxbridge & Hinckley)

Note 2 - All surplus rents in joint venture structures are used to amortise off-balance sheet loans

The table above highlights the potential for growing the portfolio income which will enhance dividend cover over the medium term. 37% of the £5.9 million increase in rents based on the Knight Frank valuation is realisable by June 2009. The chart below sets out the reversionary potential over a six year period.

Rental uplifts for the next six years - post sales

Date	Rent (£ million)
March 2008	28.4
March 2009	30.3
March 2010	30.7
March 2011	31.8
March 2012	33.9
March 2013	34.0
March 2014	34.0

Property portfolio performance

Investment Property Databank ('IPD') has analysed the performance of the Group's underlying property portfolio relative to its peer group Benchmark.

The rental value of the Company's directly held portfolio has increased by 6.0% versus the IPD Benchmark of 3.1% over the year to 31 March 2008. Following the end of existing rent free periods (and assuming no sales), actual contracted annual rental will have increased by 8.9% from 31 March 2008. The increase in rental value has been driven by an exposure to growth assets and a very active asset management approach.

The portfolio can be divided into three discrete elements for the purposes of analysis. These are: direct investments; development sites and joint ventures. Where assets are held wholly by the Company, as is the case with direct investments and developments, IPD reflect the full value ignoring debt. IPD account for joint ventures at their net asset value, which takes account of borrowings specific to the individual joint venture.

The property portfolio continues to perform relatively well compared to its IPD Benchmark. Over the twelve months to March 2008 the portfolio generated a total return of -9.9%, relative to the Benchmark of -11%, and was ranked 25th out of 63 peer group funds. Over three years the portfolio has generated a total return of 10.4% relative to the Benchmark of 6.7%, ranking it fourth out of 55 peer group funds.

The margin of outperformance was consistent across the sectors. Excluding joint ventures the total returns over the year to March 2008 are set out below:

IPD Sector	IFPT total return	IPD total return	Relative Return
All Retails	-8.3%	-12.5%	4.7%
All Offices	-6.0%	-10.1%	4.6%
All Industrials	-5.5%	-10.5%	5.5%
Other (leisure)	8.9%	-3.4%	12.7%

One of the key contributors towards the above average returns was above average rental value growth. Excluding joint ventures, the contribution towards rental value growth as a component of total return over the year to March 2008 is set out below:

IPD Sector	IFPT rental value growth	IPD rental value growth	Relative Return
All Retails	2.1%	1.6%	0.5%
All Offices	9.6%	6.3%	3.0%
All Industrials	2.3%	1.0%	1.3%
Other (leisure)	8.0%	0.8%	7.1%

Disposals

The Group has implemented a number of disposals over the year and since the accounting date. Disposals during the financial period followed the Group's long term strategy of selling assets once the business plans have been completed. Proceeds from sales will be used as outlined above as well as retaining some cash in order to retain operational flexibility. The aggregate disposals between 31 March 2007 and 30 June 2008 have raised £85.9 million versus a total acquisition cost of £62.1 million.

The disposals carried out in the year up to 31 March 2008 achieved a total sum of £38.6 million which was 21% in excess of the previous year end valuation of £31.9 million.

Address	Sale Date	Sale price (£m)	Acquisition date	Acquisition price
Penny Street, Lancaster	April 2007	1.85	July 2004	1.10
Abingdon Street, Northampton	May 2007	2.54	July 2004	1.54
Low Petergate, York	July 2007	1.935	July 2004	1.20
MidCity Place, London WC2 (19.7% stake)	August 2007	30	August 2005	9.8
Chapel Street & Cambridge Arcade, Southport	March 2008	2.3	July 2004	2.41
Total		38.625		16.05

Subsequent to 31 March, four further disposals have been undertaken for a total price of £47.3 million reflecting an 8.7% shortfall on the March 2008 valuation of £51.8 million.

Address	Sale Date	Sale price (£m)	Acquisition date	Acquisition price (£m)
Mercury Lane & Burgate, Canterbury	June 2008	2.8	July 2004	2.625
Unit A, Stirling Court, Swindon	June 2008	1.725	July 2004	1.35
Minerva House, London SE1 (50%)	June 2008	25	June 2005	21.06
Tokenhouse Yard, London EC2	June 2008	17.75	May 2006	21
Total		47.275		46.035

The direct property sale of Tokenhouse Yard, London EC2 for £17.8 million was driven by the opportunity to use the proceeds to pay down debt rather than concern over the asset's fundamental qualities. The Company also benefited from a pro-active management approach that was executed quickly in difficult market conditions to increase the building income by 65% from £655,000 million to £1.08 million over the period of ownership. The disposal reduces exposure to the City office market where there continues to be a risk of oversupply.

The sale of a 50% share in Minerva House, London SE1 was driven by a similar rationale, but a partial sale enables the Company to benefit from long term secure income combined with potential upside from further significant asset management at the property. A disposal of 50% resulted in a discount to the March 2008 valuation but reflected an 18% premium over the original purchase price in June 2005. The property is held with the new investing party in a simple joint ownership structure that provides both investors with liquidity.

Asset management

Office sector

Key facts

23 direct assets totalling £288.50 million
106 direct tenants generating £13.89 million per annum
6.1 years weighted lease length
4.76% void as at 31 March 2008 (12.62% as at 31 March 2007)

Regional weightings of the Office Sector portfolio - post sales

Geography	%
Central London	46.7%
South East	32.9%
Rest of South	5.4%
Rest of UK	15.0%

Portman Square House, London W1 - 21.6% share

The strategy at Portman Square House has been to generate beneficial rental evidence for key rent reviews in 2008 and 2009. As part of this strategy a major refurbishment of the reception area has just been completed. Upon acquisition the Company's share of the rent was £10.32 million per annum equating to £42 per sq ft with an average rental value of £6.68 million per annum or £62.50 per sq ft. In May 2008 the lease of the first floor at £829,000 per annum was surrendered and a simultaneous new 15 year lease was granted to Invesco at £1.426 million per annum or £95 per sq ft. This evidence will be used in the forthcoming rent review, dated 24 June 2008, with Cushman & Wakefield who occupy 70,000 sq ft at a rent of £2.658 million per annum or £38 per sq ft.

Minerva House, London SE1

The new lease of the lower ground to the second floor has been completed with Synovate, guaranteed by Aegis Group PLC. The annual rent is £1.9 million per annum or £33.57 per sq ft which commences in June 2009 on expiry of the rent free period. The Company has undertaken a high quality fit-out together with external improvements such as full window replacement.

Retail and leisure sector

Key facts:

26 direct assets totalling £149 million
72 direct tenants generating £8.5 million per annum
11.9 years weighted lease length
3.86% void as at 31 March 2008 (8.4% as at 31 March 2007)

Regional weightings of the Retail Sector portfolio - post sales

Geography	%
Central London	8.0%
South East	22.7%
Rest of South	28.7%
Rest of UK	40.6%

The Galaxy

The Company has recently secured planning consent for major external improvements and works are now on-site. This is a significant step in repositioning the property as Luton's dominant, town centre leisure destination. Two lettings of vacant space have been agreed during the year. The first completed at a rent of £15.00 per sq ft, in line with the acquisition assumption and the second is in solicitors' hands at a net effective rent of £29.30 per sq ft, 20% ahead of the acquisition valuation. Following the completion of this letting the property will be 90% let by rental value. The completion of the improvement works will consolidate interest in the remaining space from a variety of different leisure operators.

Victoria Plaza, Bolton

This retail development has been completed and is now 89% let to tenants with good covenants generating a rent of £655,000 per annum and a rental value of £740,000. Upon acquisition in July 2004 the rent was £565,000 and the rental value £518,000. The average lease length has been increased from 10 years to 12 years.

Industrial

Key facts:

18 direct assets totalling £126.4 million
107 direct tenants generating £8.28 million per annum
5.3 years weighted lease length
5% void as at 31 March 2008 (7.35% as at 31 March 2007)

Regional weightings of the Industrial Sector portfolio - post sales

Geography	%
Central London	31.5%
South East	6.1%
Rest of South	31.2%
Rest of UK	31.2%

Booker Cash & Carry, Acton

This secondary industrial property in an established West London mixed use location was acquired in 2005 for £5.5 million reflecting a yield of 6.0%. The passing rent on acquisition of £350,000 per annum equated to £5.42 per sq ft, a low base for rental growth in a market with diminishing supply, combined with the potential for future alternative use value. The rent review dating from June 2007 has been agreed at £550,000 per annum reflecting an increase of £200,000 or 57%. To preserve future options, representations regarding alternative uses have been made as part of the local plan process. As at 31 March 2008 the property was valued at £7.4 million reflecting a yield of 7.0% on the agreed rent.

Warwick

In 2006 the tenant went into administration and the lease was assigned to the guarantor, WH Smith in December 2007. In September 2007 the rent review dating from July 2005 was settled by arbitration at £288,300 per annum reflecting an increase of £25,070 or 9.5%.

WH Smith did not take occupation of the premises and in May 2008 a surrender and simultaneous granting of a new lease was completed with Land Rover plc taking a new 15 year lease at the passing rent in return for a significant premium paid entirely by the outgoing tenant.

Joint Ventures

Plantation Place, London EC3 - 28.19% share (28.08% as at 31 March 2008)

Plantation Place is a fully let, very high quality, flexible City office building with very high quality tenants and an average lease length of over 18 years.

However, as mentioned in the Chairman's Statement, Plantation Place has suffered a fall in value over the year. In contrast with the capital value, the rental value ignoring tenant incentives increased by 10% over the period, ranging from £57.50 per sq ft on the lower floors to £60.75 per sq ft on the upper floors. This results in a total rental value of £30.26 million compared with a passing rent of £27.08 million. With key rent reviews in 2009 and 2010 there is a risk that the rental value will fall over the short term, although there are other asset management initiatives ongoing that could potentially add value outside of rent reviews. Whilst it is disappointing that the Company was unable to capitalise on the very strong performance over a relatively short period of time, as was the case with MidCity Place, the fundamentals continue to offer medium to long term potential for rental and capital value growth.

Crendon - 50% share

In April 2007 the separate non-recourse debt facility was extended to £28.4 million to finance the first two phases of development. Phase 2 was pre-let to Terex Demag for £295,000 per annum and has recently completed.

Practical completion of Phase 1, an 80,000 sq ft speculative development comprising 11 units is expected in June 2008. Of these three units have been pre-sold for a total price of £1.875 million and a further two units are under offer on a leasehold basis. There are two further development sites totalling approximately four acres capable of accommodating 70,000 sq ft which already benefit from outline planning permission for industrial premises.

The rental income of the estate at acquisition was £1.48 million. After good initial progress on lettings, this figure rose to £1.66 million by December 2007. However, following several lease expiries in early 2008, the annual rental fell to £1.45 million as at 31 March 2008. Transactions securing a further £125,000 of rent are currently under offer in addition to the £295,000 secured to Terex Demag Limited on Phase 2 of the development.

Finance

On-balance sheet finance

On-balance sheet loan	£m	Expiry	Hedging	Margin	Total cost	Security (property / cash) £m	LTV
Original securitised loan	152.5	07/2014	5.10% to 2014	0.21%	5.31%	551.44 (538.12 / 13.3)	47.78%
Reserve Notes	111	07/2014	5.71% to 2016	0.25%	5.96%	551.44 (538.12 / 13.3)	47.78%
Total / blended	262.5				5.58%

In May 2007 the Company issued £111 million of additional securitised debt, termed Reserve Notes, at an effective margin of 0.25% over the fixed rate. These funds were used to repay existing, more expensive off-balance sheet debt and in addition provided cash for operational flexibility. The loan to value ratio of the enlarged securitised facility was 47.78% as at 31st March 2008 compared with a covenant of 60%. There is also significant cover on the Interest Cover Ratio ('ICR') covenant that as at 31 March 2008 was 2.03 times compared with a covenant of 1.5 times. The securitised loan can be repaid at any time with no prepayment fees. Any cash in the securitised pool can be reinvested or released when the loan to value is below 35%. In addition to the property in the securitised pool the Group has uncharged property assets of £25.6 million.

Non-recourse, off-balance sheet finance

At the start of the year the Group had four non-recourse off-balance sheet investments. In July the disposal of MidCity Place, London WC2 resulted in a reduction in the off-balance sheet debt of £39.5 million. The strategy is for this to reduce further over the short to medium term.

The Group now has three joint ventures that are financed using off-balance sheet debt that is non-recourse, meaning that the lender's security is limited to the assets held by the individual joint ventures. Any breach or default of an individual joint venture would have no other impact upon the Company's other assets or banking arrangements. As at 31 March 2008 the total NAV of the three indirect holdings was £29.2 million, or 7.7% of the Company's total NAV of £378 million.

The largest of the joint ventures is the Group's 28.19% stake in Plantation Place, London EC3 which as at 31 March 2008 had a Net Asset Value of £23.2 million.

Off-balance sheet loan

IFPT share / total £m

Expiry

Hedging

Margin

Total cost

IFPT share of total assets

£m

LTV

Plantation Place EC3

123.88

03/13

4.74% to 2013

0.45%

5.19%

£150.8

82.14%

The property is owned by a unit trust in which the Company invested £19.6 million to acquire this stake. On acquisition the total purchase price of £527 million was paid by the unit trust funded by equity and a highly structured securitised debt facility of £455 million.

The decline in the value of the property between December 2007 and March 2008 required a net cash injection of £14.785 million to avoid a breach of the gearing covenant in the debt facility, and all four investors contributed to a cash deposit, with the Company contributing its share, amounting to £4.3 million. It is likely that a further cash injection will be required following the June valuation, which will be known in mid-July. We have recommended that the Company does not invest in these circumstances and as a consequence the Company's holding will be diluted by other investors making the injection required.

Off-balance sheet loan

IFPT share / total £m

Expiry

Hedging

Margin

Total cost

IFPT share of total assets

£m

LTV

Crendon Industrial Estate

13.5

05/09

5.267%

Blended

1.25%

6.517%

16.62

68.77%

The total non-recourse debt facility for Crendon Industrial Partnership Ltd, in which the Company has a 50% stake, is £28.4 million, comprising two investment sub-facilities totalling £20.88 million and a development sub-facility of £7.5 million. The loan to value covenant is based on the expenditure drawn down from the loan divided by the valuer's original projection for the completed scheme as calculated in October 2006. The valuer's figure was £38.37 million and on this basis the loan to value covenant of 75% is comfortably satisfied.

Progress to date has been good with Phase 2 pre-let and 33% of Phase 1 either pre-sold or currently under offer. However falling property values have put the loan to value covenant in risk of breach when the property is revalued by the bank upon Practical Completion of the whole scheme. The Company could therefore be required to inject a further £1.5 million of equity to rectify its share of the breach. In light of this, and the otherwise good progress on asset management initiatives, we are in discussions with the Bank to establish a sustainable debt facility in advance of the expiry of the original facility in May 2009.

Off-balance sheet loan

IFPT share / total £m

Expiry

Hedging

Margin

Total cost

IFPT share of total assets

£m

LTV

Merchant Properties

5.0

12/11

5.288%

Blended

0.615%

5.903%

7.46

67.04%

The Company has a 19.49% stake in Merchant Property Unit Trust and its subsidiaries. This vehicle has total non-recourse debt of £25.7 million, comprising two sub-facilities of £20.79 million and £4.87 million. The loan to value covenant of 70% is comfortably satisfied based on the independent valuation as at 31 March 2008.

Liquidity

As a result of the Reserve Note issuance and disposals, the Group had £42.5 million of cash outside of the security pool as at 31 March 2008 with a further £13.3 million inside the security pool.

The disposals of Tokenhouse Yard and the 50% stake in Minerva House which have been set out above will generate net proceeds after fees of approximately £47 million. This gives the Company total cash resources of approximately £95 million after other commitments. After repaying £50 million of debt and £20 million of share repurchases, the Company will retain £20 million of liquidity to ensure operational flexibility.

Outlook and future strategy

We are currently experiencing very challenging market conditions. Appropriate steps have been taken to mitigate the negative impact on the Group's portfolio and significant work is still ongoing.

The negative sentiment and uncertainty in the wider economy will impact on the occupational markets and, although there is little current evidence of this at the moment in the Company's portfolio, we are preparing for these challenges should they occur. The Company's portfolio is sound and well spread, and we will continue to seek to add value to it through intensive asset management, with the objective of growing the Company's income and capital as markets and the economy recover in due course.

Duncan Owen

CEO, Invista REIM

Board of Directors

Andrew Sykes (Chairman)

Aged 50, was a director of Schroders plc from 1998 to 2004, having joined Schroders in 1978. He was responsible for the group's private banking and alternative investments businesses, including property, private equity, structured products and hedge funds. He is Chairman of Absolute Return Trust Limited and a non-executive director of Schroder Exempt Property Unit Trust, JP Morgan Asian Investment Trust plc, Smith & Williamson Holdings Limited and Record plc.

John Frederiksen

Aged 60, is chairman of the Danish Property Federation and several major Danish property companies and president of the European Property Federation. He established and was Managing Director of Bastionen A/S, one of the largest Danish property investment companies from 1986 to 2001. He was also Chairman of ASC, the largest property management company in Denmark, from 1990 to 1998.

Keith Goulborn

Aged 63, was head of Unilever's UK Property Department for 17 years. In this capacity he was responsible for the property investment activities of the Unilever Pension Fund in the UK and operational property advice to the UK group and its implementation. Prior to that, he was a partner in Debenham, Nightingale Chancellors. He is a fellow of the Royal Institution of Chartered Surveyors and a member of the Investment Property Forum.

Harry Dick-Cleland

Aged 51, is Managing Director of Cleland & Co Limited, Chartered Accountants which he founded in 2003. He was previously a partner at Ernst & Young from 1998 to 2003, having joined their Guernsey office in 1987. He is a fellow of the Institute of Chartered Accountants in England & Wales.

David Warr

Aged 54, is an executive director of Fortis Reads International Management Limited, a Guernsey based fiduciary services business wholly owned by Fortis plc. He is a fellow of the Institute of Chartered Accountants in England & Wales and specialises in Trust and Corporate work. He is also a non executive director of Marwyn Value Investors Limited, Hemisphere Defensive HF (USD) Limited and UK Select Trust Limited.

Peter Atkinson

Aged 53, was the Senior Partner of Collas Day Advocates for 14 years where he specialised in corporate and fiduciary work. He joined Collas Day in 1980 and became Senior Partner in 1992. He is now a non-executive director of a number of listed and unquoted companies. He is an Advocate of the Royal Court of Guernsey and a Solicitor of the Supreme Court of England and Wales. He is a former chairman of the Guernsey Bar.

Report of the Directors

The Directors of Invista Foundation Property Trust Limited ('the Company') and its subsidiaries (together 'the Group') present their report and the Audited Financial Statements of the Company and the Group Financial Statements of the Group for the year ended 31 March 2008.

Business review

Business of the Company

Invista Foundation Property Trust Limited is a limited liability, closed-ended, Guernsey investment company managed by Invista Real Estate Investment Management Limited (the Investment Manager). A review of the business during the year is contained in the Chairman's Statement and the Investment Manager's Report.

Investment Policy and Strategy

Investment objective

The investment objective of the Company is to provide shareholders with an attractive level of income together with the potential for income and capital growth through investing in UK commercial property. The Group will invest in three commercial property sectors: office, retail and industrial and other sectors from time to time.

Diversification

The Board believes that in order to maximise the stability of the Group's income, the optimal strategy for the Group is to be invested in a portfolio of assets which (a) is diversified by location, sector, asset size and tenant exposure and (b) has low vacancy rates and creditworthy tenants. There is a predefined limit on the value of any individual asset at the date of acquisition, set at 15% of gross assets, and a limit of 10% on the proportion of rental income deriving from a single tenant. From time to time the Board may also impose limits on sector, location and tenant types. At present, the Board has not set a limit on the proportion of the portfolio that can be invested in development property.

The Company's portfolio will be invested and managed, as is currently required by the Listing Rules, in a way which is consistent with its object of spreading investment risk and taking into account the Company's investment objective, policy and restrictions.

Asset allocation

The Group currently owns, and intends to continue to own, a diversified portfolio of UK commercial property. Its sector focus will be office, retail and industrial. The Group may acquire other types of real estate, for example residential or leisure. At present, the Board has instructed the Investment Manager to seek to maintain the Group's exposure to the office sector at below 60% of the total value of the Group's assets. This instruction will be kept under review by the Board. Asset allocation will also be determined taking into account current Listing Rule requirements (see below under "Investment Restrictions") and the Company's investment objective, policy and restrictions.

Borrowings

As at 31 March 2008, the Group had £263.5 million of on-balance sheet debt and £146.6 million of off-balance sheet debt. The Board has determined that on balance sheet debt should not exceed 40% of on- balance sheet assets, and consolidated on- and off-balance sheet debt should not exceed 50% of the Group's gross assets including off-balance sheet debt It should be noted that the Company's Articles of Association limit its borrowings to 65% of the Group's gross assets, calculated as at the time of drawdown. If either the on- balance sheet limit or the consolidated limit is breached at any time the Directors will require the Investment Manager, as a priority, to manage the Group's assets with the objective of bringing borrowings within the respective limit while taking due account of the interests of shareholders. Accordingly, corrective measures may not have to be taken immediately if this would be detrimental to shareholder interests. As at 31 March 2008, borrowing levels slightly exceed the levels of the guidance set by the Board, and the Investment manager has taken steps to reduce gearing through asset disposals.

Interest Rate Exposure

It is the Board's policy to hedge interest rate risk, either by ensuring that borrowings are on a fixed rate basis, or through the use of interest rate derivatives. Interest rate derivatives may only be employed for hedging purposes.

Investment Strategy

In pursuing the investment objective, the Investment Manager intends to target assets with good fundamental characteristics, a diverse spread of occupational tenants and with opportunities to enhance value through active management.

The Investment Manager will adjust sector and regional weightings to access higher growth markets to maximise the potential for income and capital growth, subject to restrictions imposed by the Board from time to time.

Investment Restrictions

As the Company is a closed-ended investment fund for the purposes of the Listing Rules, the Group will adhere to the Listing Rules applicable from time to time to closed-ended investment funds. The Company and, where relevant, its subsidiaries will observe the following restrictions applicable to closed-ended investment funds in compliance with the current Listing Rules:

Neither the Company nor any subsidiary will conduct a trading activity which is significant in the context of the Group as a whole and the Group will not invest in other listed investment companies.

Where amendments are made to the Listing Rules, the restrictions applying to the Company will be amended so as to reflect the new Listing Rules.

Key Performance Indicators ('KPIs')

The Board uses two principal financial KPIs to monitor and assess the performance of the Company: the absolute NAV total return of the Company and the performance of the Company's underlying property portfolio relative to a peer group Benchmark.

1. Net Asset Value total return

For the year to 31 March 2008 the Company produced a NAV total return of (19.8%). From inception in July 2004 the Company has produced an annualised NAV total return of 8.8% per annum.

2. Underlying property portfolio performance relative to peer group Benchmark

The performance of the Company's property portfolio is measured against a specific benchmark defined as the Investment Property Databank ('IPD') Quarterly Version of Balanced Monthly Index Funds (the Benchmark). As at 31 March 2008 this Index comprised 64 member funds with an aggregate value of £36.5 billion. For the 12 months to 31 March 2008 the Company's property portfolio produced a total return of (9.9%) relative to the Benchmark average of (11.0%), one of the best two funds in the Benchmark. Since inception in July 2004 the Company's property portfolio has produced a total return of 11.3% per annum relative to the Benchmark of 8.5% per annum. It should be noted that all these return calculations are undertaken on a 'like for like' basis and take account of all property related transaction costs.

The Board also monitors the level of the share price compared to the Net Asset Value of the Company. Where appropriate on investment grounds, the Company will from time to time repurchase its own shares, but the Board recognises that movements in the share price premium or discount are driven by numerous factors, including investment performance, gearing and market sentiment. Accordingly it focuses its efforts principally on addressing sources of risk and return as the most effective way of producing long term value for shareholders.

Dividend

During the year the Company has declared and paid the following interim dividends to its ordinary shareholders:

Dividend For Quarter	Date Declared	Rate
31 March 2007	2 May 2007	1.6875 pence per share
30 June 2007	1 August 2007	1.6875 pence per share
30 September 2007	7 November 2007	1.6875 pence per share
31 December 2007	6 February 2008	1.6875 pence per share

All dividends are declared and paid as interim dividends. The Directors do not therefore recommend a final dividend. A dividend for the quarter ended 31 March 2008 of 1.6875 pence was declared on 7 May 2008 and paid on 22 May 2008.

Accounting, Legal and Regulatory

The Company has robust processes in place to ensure that accurate accounting records are maintained and that evidence to support the accounts is available to the auditors upon request. The Investment Manager operates established property accounting systems and has procedures in place to ensure that the quarterly NAV and Gross Asset Value are calculated properly.

In addition the Company's property assets are valued quarterly by specialist property valuation firms who are provided with regular updates on portfolio activity by the Investment Manager.

The Administrator monitors legal requirements to ensure that adequate procedures and reminders are in place to meet the Company's legal requirements and obligations. The Investment Manager undertakes full legal due diligence with advisors when transacting and managing the Company's assets. All contracts entered into by the Company are reviewed by the Company's legal and other advisors.

Processes are in place to ensure that the Company complies with the conditions applicable to property investment companies set out in the Listing Rules of the London Stock Exchange and the Channel Islands Stock Exchange. The Administrator attends all Board meetings to be aware of all announcements that need to be made and the Company's advisors are aware of their obligations to advise the Administrator, and where relevant the Board, of any notifiable events. Finally, the Board is satisfied that the Investment Manager and Administrator have adequate procedures in place to ensure continued compliance with regulatory requirements of the FSA and the Guernsey Financial Services Commission.

Management

The Company has retained the services of Invista Real Estate Investment Management Limited ('Invista') as Investment Manager. Invista is the largest listed real estate fund manager in the UK with HBOS plc, holding a 55% stake. The team dealing with the Company is led by Duncan Owen, CEO of Invista who chairs their bi-monthly investment committees. The other members of that committee are Philip Gadsden, Nick Montgomery and Mark Long who have comprised the investment committee since the Company's launch in 2004. The Board continues to be satisfied that Invista has sufficient resources available to deliver the investment objective.

Management and performance fees

The Investment Manager is entitled to a base fee and a performance fee together with reasonable expenses incurred in the performance of its duties. The base fee is equal to one quarter of 0.95% of the gross assets less current liabilities of the Group per quarter.

The Investment Manager is also entitled to an annual performance fee where the total return per Ordinary Share during the relevant financial period exceeds an annual rate of 10% (the 'performance hurdle'). Where the performance hurdle is met, a performance fee will be payable in an amount equal to 15% of any aggregate total return over and above the performance hurdle. A performance fee will only be payable where both the following criteria are met. First in respect of the relevant financial period, the total return of the underlying assets must meet or exceed the Investment Property Databank Benchmark on a like for like basis. Secondly, the annualised total return over the period from admission of the Company's Ordinary Shares to the end of the relevant financial period must be equal to or greater than 10% per annum.

The Investment Management Agreement can be terminated by either party on not less than twelve months notice in writing.

Administration

The Board appointed Northern Trust International Fund Administration Services (Guernsey) Limited as the Administrator to the Company from 25 July 2007. The Administrator is entitled to an annual fee equal to £120,000.

Accounting Services

The Board appointed Invista Real Estate Investment Management Limited as the Accounting Agent to the Company from 1 April 2007. The Accounting Agent is entitled to a fee equal to five basis points of net asset value subject to a minimum annual fee of £250,000.

Going concern

The Directors have examined significant areas of possible financial risk and have satisfied themselves that the Group has adequate resources to continue in operational existence for the foreseeable future. After due consideration the Board believes it is appropriate to adopt the going concern basis in preparing the financial statements.

Creditor Payment Policy

It is the Company's policy to ensure settlement of supplier invoices in accordance with stated terms.

Directors

The Directors of the Company who, together with their beneficial interest in the Company's ordinary share capital, are given below:

Director	Number of Ordinary Shares	Percentage (%)
Andrew Sykes	60,292	Less than 0.1
Keith Goulborn	34,880	Less than 0.1
Harry Dick-Cleland	-	-
David Warr	150,000	Less than 0.1
Peter Atkinson	10,000	Less than 0.1
John Frederiksen	50,000	Less than 0.1

The remuneration of the Directors during the year was as follows:

Director	£
Andrew Sykes (Chairman)	37,500
Keith Goulborn	22,500
Harry Dick-Cleland*#	32,500
David Warr*	27,500
Peter Atkinson*	27,500
John Frederiksen	22,500
	170,000

* Member of the Transaction Committee (see page 26)

# Chairman of the Audit Committee

None of the Directors had a service contract with the Company during the year.

Directors receive a base fee of £22,500 per annum, and the Chairman receives £37,500 per annum. The Chairman of the Audit Committee receives an additional fee of £5,000 and members of the Transaction Committee each receive an additional fee of £5,000 reflecting their additional responsibilities and workload.

Disclosure of Information to Auditors

As far as each of the Directors is aware, there is no relevant audit information of which the Company's auditors are unaware, and each of the Directors has taken all of the steps that they each ought to have taken to be aware of relevant audit information.

Substantial Shareholdings

At 31 March 2008 the Directors were aware that the following shareholders each owned 3% or more of the issued Ordinary Shares of the Company.

	Number of Ordinary Shares	Percentage (%)
Cazenove Capital Management (UK)	50,575,124	14.41
Rensburg Sheppards Plc	30,987,947	8.83
Newton Investment Management Limited	24,528,741	6.99
Legal & General Investment Management Limited	15,418,128	4.39
Gerrard Limited	11,174,828	3.19

Independent Auditors

KPMG Channel Islands Limited have expressed their willingness to continue as Auditors to the Company and resolutions proposing their reappointment and authorising the Directors to determine their remuneration for the coming year will be put to Shareholders at the Annual General Meeting.

Corporate Governance

Principles Statement

The Directors are committed to high standards of corporate governance and have made it Company policy to comply with best practice in this area insofar as the Directors believe it is relevant and appropriate to the Company notwithstanding the fact that, as a Guernsey registered Company, it is not obliged to comply with the 'Combined Code', or the Code of Best Practice published by the Committee on the Financial Aspects of Corporate Governance.

It is the Board's intention to continue to comply with the Association of Investment Companies ('AIC') code for Corporate Governance best practice.

Role of the Board

The Board has determined that its role is to consider and determine the following principal matters which it considers are of strategic importance to the Company:

The overall objectives of the Company as described under Investment Objective and Policy above and the strategy for fulfilling those objectives within an appropriate risk framework in light of market conditions prevailing from time to time
The capital structure of the company including consideration of an appropriate policy for the use of borrowings both for the Company and in any joint ventures in which the Company may invest from time to time
The appointment of the Investment Manager, Administrator and other appropriately skilled service providers and to monitor their effectiveness through regular reports and meetings
The key elements of the Company's performance including NAV growth and the payment of dividends.

Board Decisions

At its Board meetings, the Board ensures matters listed under Role of the Board above are considered and resolved by the Board. While issues associated with implementing the Company's strategy are generally considered by the Board to be non-strategic in nature and are delegated either to the Investment Manager or the Administrator, the Board considers there will be implementation matters significant enough to be of strategic importance to the Company and should be reserved to the Board. Generally these are defined as:

Large property decisions affecting 10% or more of the Company's assets
Large property decisions affecting 5% or more of the Company's rental income
Decisions affecting the Company's financial borrowings.

Board performance evaluation

During the year to 31 March 2008 the Board undertook a review of its performance. This review concluded that the Board was operating effectively and that the members of the Board had the breadth of skills required to fulfill their role.

Non-Executive Directors, rotation of Directors and Directors' tenure

The Combined Code recommends that Directors should be appointed for a specified period. The Board has resolved in this instance that Directors' appointments need not comply with this requirement as all Directors are non executive and their respective appointments can be terminated at any time without penalty. However the Board has also approved a policy that Directors will stand for re-election every three years. Andrew Sykes and David Warr will stand for re-election during the year commencing 1 April 2008.

The Board has determined that all the Directors are independent of the Investment Manager.

Keith Goulborn has agreed to be the Senior Independent Director.

Board Meetings

The Board meets quarterly and as required from time to time to consider specific issues reserved to the Board.

At the Board's quarterly meetings it considers papers circulated in advance including reports provided by the Investment Manager and the Administrator. The Investment Manager's report comments on the UK commercial property market, performance, strategy, transactional and asset management activities and the Group's financial position including relationships with its bankers and lenders.

The Administrator provides a compliance report.

These reports enable the Board to assess the success with which the Group's objectives and other associated matters are being implemented and also to consider any relevant risks and how they can be properly managed. The Board also considers reports provided from time to time by its various service providers reviewing their internal controls.

The table below shows the attendance at quarterly Board or Audit Committee meetings during the year to 31 March 2008:

	Board	Audit Committee
Andrew Sykes (Chairman)	4	1
Keith Goulborn	4	1
Harry Dick-Cleland	3	2
David Warr	4	2
Peter Atkinson	3	2
John Frederiksen	4	1
No. of meetings during the year	4	2

In between its regular quarterly meetings, the Board has also met on two other occasions during the period although it was not possible for all Directors to attend both these meetings. The Company maintains liability insurance for its Directors and Officers.

Committees of the Board

The Audit Committee

The Audit Committee is chaired by Mr Dick-Cleland with Mr Sykes, Mr Goulborn, Mr Frederiksen, Mr Warr and Mr Atkinson as members. The Board considers that Mr Dick-Cleland's experience makes him suitably qualified to chair the Audit Committee. The Committee meets no less than twice a year and if required meetings can also be attended by the Investment Manager, the Administrator and the Independent Auditors.

The Committee is responsible for reviewing the half-year and annual financial statements before their submission to the Board. In addition the Committee is specifically charged under its terms of reference to advise the Board on the terms and scope of the appointment of the auditors, their remuneration, the independence and objectivity of the auditors, and reviewing with the auditors the results and effectiveness of the audit.

During the year the Company's auditors were involved in reviewing the interim financial statements. No other audit work was performed. Members of the Committee may also meet with the Company's valuer to discuss the scope and conclusions of their work.

Nomination Committee

The Nomination Committee is chaired by Mr Sykes with all other Board Directors as members. The committee did not meet in the course of the year.

As all the Directors are non-executive the Board has resolved that it is not appropriate to have a Remuneration Committee.

Transactions Committee

The members of the Transactions Committee are Peter Atkinson, Harry Dick-Cleland and David Warr, with the Chairman elected at each meeting. The Transactions Committee reviews transactions between regular scheduled Board meetings where a Board approval is required. All transaction proposals are circulated to all Directors in advance of meetings of the Committee, together with a recommendation and explanatory note from the Investment Manager. All Board members may comment in advance of the Committee, but only those attending will consider the proposal. Transactions are noted subsequently at regular quarterly Board meetings. The members of the Transaction Committee are each paid a fee of £5,000 per annum, in addition to their fees as Directors.

Shareholder Relations

Shareholder communications are a high priority for the Board. The Investment Manager produces a quarterly fact sheet which is distributed to Shareholders and released to the London and Channel Islands Stock Exchanges. Members of the Investment Manager's Investment Committee make themselves available at all reasonable times to meet with Shareholders and sector analysts. Feedback from these sessions is provided by the Investment Manager to quarterly Board meetings. The Company website is www.ifpt.co.uk.

In addition, the Board is also kept fully appraised by the Investment Manager and other professional advisers including the Company's brokers of all market commentary on the Company. Through this process the Board seeks to monitor the views of shareholders and to ensure an effective communication programme. The Chairman and Directors also hold meetings with shareholders in response to invitations to do so.

Details of the resolutions to be proposed at the Annual General Meeting on 19 August 2008 can be found in the Notice of the Meeting.

Statement of directors' responsibilities

The Directors are responsible for preparing the Directors' Report and the Annual Report and Financial Statements for each financial period which give a true and fair view of the financial state of affairs of the Group and the Company as at the end of the financial period in accordance with International Financial Reporting Standards and otherwise in accordance with applicable laws. In preparing those financial statements the Directors are required to:

Select suitable accounting policies and apply them consistently
Make judgements and estimates that are reasonable and prudent
State whether applicable that accounting standards have been followed and that any material departures are disclosed and explained in the financial statements
Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and to enable them to ensure that the financial statements comply with The Companies (Guernsey) Law, 1994. They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are also responsible for:

Ensuring that the Annual Report includes information required by the Listing Rules of the Financial Services Authority
The Group's system of internal controls, which is designed to meet the Group's particular needs and the risks to which it is exposed.

Internal Control

The Combined Code requires the Directors annually to review the effectiveness of the Group's system of internal controls and to report to shareholders on their findings. Although such a system can only provide reasonable assurance and not absolute assurance against material misstatement or loss, it is designed to manage rather than eliminate the risk of failure.

The Board considers risk management and internal control on a regular basis during the year. The key reviews conducted by the Directors are described as follows:

1.   The Board arranges to meet the Investment Manager annually at the Investment Manager's office

      in London. This allows the Board to inspect the office arrangements and to meet other members of

      the Investment Manager's team. On those occasions the Board interrogates the Investment Manager's

      processes in more detail than is possible at Board meetings and is able to gain a better understanding on the

      level of resource that is applied by the Investment Manager to the Company's business.

2.   The Board regularly reviews the Investment Manager's Business Contingency Management and is able to

      discuss this and other matters with the Investment Manager's Chief Risk Officer. The Board has also reviewed

      a  report prepared by Invista's risk team on Invista and has been satisfied that their approach is appropriate for

      the Group.

3.   The Board meets regularly at the offices of the Administrator for its formal quarterly Board meetings and for ad-

      hoc Board meetings. The Board is therefore familiar with the environment in which the Administrator is

      operating and has the opportunity to meet the staff responsible for providing administrative services to the

     Company. This enables the Board to view at first hand the level of resources made available to the Company by

      the Administrator.

The Group's system of internal control therefore is substantially reliant on Invista's and Northern Trust's own internal controls and their internal audit.

The key elements designed to provide effective control are as follows:

Regular review of relevant financial data including management accounts and performance projections
Contractual documentation with appropriately regulated entities which clearly describes responsibilities for the two principal service providers concerned
The Investment Manager's system of internal controls is based on clear written processes, a formal investment committee, clear lines of responsibility and reporting all of which are monitored by Invista's internal risk team. Invista is regulated by the FSA
The Company's strategy is authorised by the Board which also monitors regularly the Investment Manager's effectiveness in its implementation.

Corporate Responsibility - benefits, risks and controls

The Board has reviewed the current Socially Responsible Policy adopted by Invista and considers this to be appropriate for the Company. Invista's policy is as follows:

"Invista is committed to delivering strong financial returns to our clients, but in a way that delivers positive and measurable environmental, social and economic benefits. We recognise that the way in which buildings are designed, built, managed and occupied significantly influences their impact on the environment and affected communities, and we seek to manage these issues through our Sustainable Investment programme.

We believe that through the implementation of this programme we can manage effectively our sustainability related risks, associated with, for example, climate change (more severe and regular floods, increasing storm damage costs and rising energy prices), site contamination and remediation, use of hazardous materials, employee and contractor health and safety, waste management (rising landfill and disposal costs), and local community relations.

The drivers for Invista to address these issues have never been stronger: greater occupier demand for sustainable/energy efficient buildings, growing regulation, increased investor interest and significant planning requirements. All these factors make it imperative that we both manage the risks and maximise the opportunities presented by these issues".

Recognising the scale of this challenge, Invista's implementation of this Policy is underpinned by two key principles - striving for continuous improvement and actively engaging with stakeholders. Implementation of the Policy is managed by Invista's Sustainability Committee which comprises senior representatives from around the firm including the Deputy Chief Executive Officer and members from the property sector teams. In addition Invista has engaged with an external sustainability consultant, Upstream Strategies (Upstream), to advise this Committee.

Invista's standard business process ensures that environmental reports are obtained as part of the due diligence process for property acquisitions and an evolving environmental checklist is used to highlight key issues arising from major development and refurbishment projects. However, the main focus for implementing the Policy is with existing standing investments.

Whilst all the Company's managers and appointed agents are required to comply with all relevant laws and regulations affecting the Company's business, the Company's managing agents are also increasingly being required to meet specified minimum standards developed by Invista and Upstream that will ensure policy objectives and targets are being achieved. Managers will also be expected to provide performance data on managed properties in relation to key environmental impacts which will enable quantitative targets to be set for improved performance in the future in the following key areas:

Energy use
Pollution
Waste Management
Water Use
Transport

For those properties where lease and other contracts limit the scope for the Company to influence sustainability issues day to day, Invista still seeks to ensure it is fully briefed on these issues through a full exchange of information so that as far as possible Invista can engage and encourage appropriate behaviour towards environmental matters. In particular this is relevant for properties which are singly let and also with joint venture partners to whom property management responsibilities have been delegated.

Through implementation of this Policy, the Company expects to make a significant contribution to managing and reducing the direct and indirect environmental impact from its property portfolio. The Company is also a participant in Upstream's Third Dimension benchmarking service which assists in the understanding of medium to longer-term sustainability of properties and the impact on rental income and investment values, set within a framework of social and economic risk.

Authority to buy back shares

The Company purchased 2,703,331 shares for cancellation during the year. The Directors currently have authority to buy back up to 14.99% of the Company's Ordinary Shares and will seek annual renewal of this authority from Shareholders. Any buyback of Ordinary Shares will be made subject to Guernsey law and within any guidelines established from time to time by the Board and the making and timing of any buybacks 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 NAV of the Ordinary Shares (as last calculated) where the Directors believe such purchases will enhance shareholder value. Such purchases will also only be made in accordance with the rules of the UK Listing Authority which provide that the price to be paid must not be more than 5 per cent above the average of the middle market quotations for the Ordinary Shares for the five business days before the shares are purchased. Any shares purchased under this authority will be cancelled.

Status for Taxation

The Income Tax Administrator in Guernsey has granted the Company exemption from Guernsey Income Tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and the income of the Company may be distributed or accumulated without deduction of Guernsey Income Tax. Exemption under the above mentioned Ordinance entails the payment by the Company of an annual fee of £600.

During the year, the Company's properties have been held in various subsidiaries and associates, the majority of which are subject to UK Income Tax. In each instance any tax due is computed after deduction of debt financing costs and other allowances as appropriate.

Andrew Sykes, Chairman

2 July 2008

Harry Dick-Cleland, Director

2 July 2008

Consolidated Income Statement

		31/03/2008	31/03/2007
	Notes	£'000	£'000

Rental income		30,924	30,701
Other income	4	1,170	1,459
Property operating expenses	5	(1,991)	(882)
Net rental and related income		30,103	31,278
Profit on disposal of investment property		551	6,075
Net valuation (loss)/gain on investment property	12	(65,216)	44,267

Expenses
Investment management fee	3	(6,600)	(6,423)
Performance fee	3	-	(11,437)
Valuers' and other professional fees		(1,233)	(525)
Administrators and accounting fee	3	(470)	(261)
Auditor's remuneration	6	(115)	(163)
Directors' fees	7	(170)	(177)
Other expenses	7	(654)	(69)
Total expenses		(9,242)	(19,055)

Net operating (loss)/profit before net finance costs		(43,804)	62,565

Interest receivable		2,479	1,767
Interest payable	19	(14,767)	(11,355)
Net finance costs		(12,288)	(9,588)
Share of (loss)/profit of associates and joint ventures	14	(32,842)	44,421
Loss on sale of associate		(649)	-
(Loss)/profit before tax		(89,583)	97,398
Taxation	9	233	(690)
(Loss)/profit for the year attributable to the equity holders of the parent		(89,350)	96,708
Basic and diluted (loss)/earnings per share	10	(25.3)p	27.4p

All items in the above statement are derived from continuing operations.

The accompanying notes 1 to 26 form an integral part of the financial statements.

Consolidated Balance Sheet

		31/03/2008	31/03/2007
	Notes	£'000	£'000

Investment property	12	563,057	629,380
Investment property under development	13	-	4,337
Investment in associates and joint ventures	14	29,227	83,671
Interest rate swap	19	-	3,163
Non-current assets		592,284	720,551

Trade and other receivables	17	8,878	7,935
Cash and cash equivalents		59,224	24,548
Current assets		68,102	32,483
Total assets		660,386	753,034

Issued capital and reserves	18	378,359	502,652
Equity		378,359	502,652

Interest-bearing loans and borrowings	19	259,579	149,270
Interest rate swap	19	6,944	-
Non-current liabilities		266,523	149,270

Interest-bearing loans and borrowings	19	-	69,018
Trade and other payables	20	15,380	31,910
Taxation payable	9	124	184
Current liabilities		15,504	101,112

Total liabilities		282,027	250,382

Total equity and liabilities		660,386	753,034

Net Asset Value per Ordinary Share	21	107.8p	142.2p

The financial statements on pages 32 to 60 were approved at a meeting of the Board of Directors held on 2 July 2008 and signed on its behalf by:

Andrew Sykes, Chairman

Harry Dick-Cleland, Director

The accompanying notes 1 to 26 form an integral part of the financial statements.

Consolidated Statement of Changes in Equity

		Share premium	Hedge reserve	Revenue reserve	Revaluation reserve	Total
		£'000	£'000	£'000	£'000	£'000

Balance as at 31 March 2006		98,356	(3,875)	328,290	-	422,771

Gain on cash flow hedge		-	7,038	-	-	7,038
Profit for the year		-	-	96,708	-	96,708
Dividends paid	11	-	-	(23,865)	-	(23,865)

Balance as at 31 March 2007		98,356	3,163	401,133	-	502,652

Share capital cancelled in the year		-	-	(2,190)	-	(2,190)
(Loss) on cash flow hedge		-	(10,107)	-	-	(10,107)
(Loss) for the year		-	-	(89,350)	-	(89,350)
Unrealised gain on investment property under development		-	-	-	1,170	1,170
Transfer unrealised gain on investment under development to revenue reserve		-	-	1,170	(1,170)	-
Dividends paid	11	-	-	(23,816)	-	(23,816)
Balance as at 31 March 2008		98,356	(6,944)	286,947	-	378,359

Share capital was issued at nil par value, see note 18 for movements in the year.

Total recognised expense for the year was £98,287,000 (2007: income £103,746,000).

The accompanying notes 1 to 26 form an integral part of the financial statements.

Consolidated Cash Flow Statement

		31/03/2008	31/03/2007
Operating activities	Notes	£'000	£'000
(Loss)/profit for the year		(89,350)	96,708
Adjustments for:
Profit on disposal of investment property		(551)	(6,075)
Net valuation loss/(gain) on investment property		65,216	(44,267)
Share loss/(profit) of associates and joint ventures		32,842	(44,109)
Loss on sale of associate		649	-
Net finance cost		12,288	9,588
Taxation		(233)	690
Operating profit before changes in working capital and provisions		20,861	12,535


Increase in trade and other receivables		(943)	(1,914)
(Decrease)/increase in trade and other payables		(12,193)	5,554
Cash generated from operations		7,725	16,175

Interest paid		(13,262)	(9,827)
Finance costs paid		(1,265)	(673)
Interest received		2,479	1,573
Tax paid		242	(276)
Cash flows from operating activities		(4,081)	6,972
Investing Activities

Proceeds from sale of investment property		21,587	30,394
Addition to investment property		(19,662)	(94,453)
Proceeds from sale of associate		21,277	-
Acquisition of associates		(359)	(7,675)
Loan to associate - repayment		-	6,549
Cash flows from investing activities		22,843	(65,185)
Financing Activities

Redemption of shares		(2,190)	-
Draw down of loan facility	19	111,000	69,018
Repayment of existing loans		(69,080)	-
Dividends paid	11	(23,816)	(23,865)
Cash flows from financing activities		15,914	45,153

Net increase/(decrease) in cash and cash equivalents for the year		34,676	(13,060)
Opening cash and cash equivalents		24,548	37,608
Closing cash and cash equivalents		59,224	24,548

The accompanying notes 1 to 26 form an integral part of the financial statements.

Company Income Statement

		31/03/2008	31/03/2007
	Notes	£'000	£'000

Dividend income	24	15,000	10,500
Other income	4	-	38
Total income		15,000	10,538

Expenses
Investment management fee	3	(3,391)	(3,209)
Performance fee	3	-	(11,437)
Valuers' and other professional fees		(31)	(130)
Administrators and fund accounting fee	3	(470)	(280)
Audit remuneration	6	(65)	(103)
Directors' fees		(170)	(177)
Other expenses	7	(220)	(12)
Total expenses		(4,347)	(15,348)
Net operating profit/(loss) before net finance income		10,653	(4,810)

Interest receivable		10,963	6,430
Interest payable	8	(2,531)	(1,150)
Net finance income		8,432	5,280
Profit for the year attributable to the equity holders		19,085	470

All items in the above statement are derived from continuing operations.

The accompanying notes 1 to 26 form an integral part of the financial statements.

Company Balance Sheet

		31/03/2008	31/03/2007
	Notes	£'000	£'000

Investment in subsidiary companies	15	387,057	370,424
Loans to subsidiary companies	16	90,870	84,245
Non-current assets		477,927	454,669

Trade and other receivables	17	24,611	13,087
Cash and cash equivalents		18,716	10,452
Current assets		43,327	23,539

Total assets		521,254	478,208

Issued capital and reserves	18	331,708	338,629
Equity		331,708	338,629

Interest -bearing loans and borrowings	24	7,532	-
Non interest -bearing loans and borrowings	24	88,008	117,610
Non-current liabilities		95,540	117,610

Trade and other payables	20	94,006	21,969
Current liabilities		94,006	21,969
Total liabilities		189,546	139,579
Total equity and liabilities		521,254	478,208

The financial statements on pages 32 to 60 were approved at a meeting of the Board of Directors held on 2 July 2008 and signed on its behalf by:

Andrew Sykes, Chairman

Harry Dick-Cleland, Director

The accompanying notes 1 to 26 form an integral part of the financial statements.

Company Statement of Changes in Equity

	Notes	Share premium	Revenue reserve	Total
		£'000	£'000	£'000

Balance as at 31 March 2006		98,356	263,668	362,024
Profit for the year		-	470	470
Dividends paid	11	-	(23,865)	(23,865)
Balance as at 31 March 2007		98,356	240,273	338,629

Share capital cancelled in the year		-	(2,190)	(2,190)
Profit for the year		-	19,085	19,085
Dividends paid	11	-	(23,816)	(23,816)
Balance as at 31 March 2008		98,356	233,352	331,708

Share capital was issued at nil par value, see note 18 for movements in the year.

The accompanying notes 1 to 26 form an integral part of the financial statements.

Company Cash Flow Statement

		31/03/2008	31/03/2007

Operating activities	Notes	£'000	£'000
Profit for the year		19,085	470
Adjustments for:
Net finance income		(8,432)	(5,280)
Operating profit before changes in working capital and provisions		10,653	(4,810)

Decrease in trade and other receivables		14	33,065
(Decrease) / increase in trade and other payables		(11,636)	5,508
Cash generated from operations		(969)	33,763

Interest received		498	277
Finance costs reimbursed/(incurred)		248	(1,150)
Cash flows from operating activities		(223)	32,890
Investing activities

Acquisition of subsidiary companies		(16,633)	(3,960)
Intra group loan received		57,751	23,033
Intra group loan provided		(6,625)	(24,323)
Cash flows from investing activities		34,493	(5,250)
Financing activities

Redemption of shares		(2,190)	-
Dividends paid	11	(23,816)	(23,865)
Cash flows from financing activities		(26,006)	(23,865)

Net increase in cash and cash equivalents for the year		8,264	3,775
Opening cash and cash equivalents		10,452	6,677
Closing cash and cash equivalents		18,716	10,452

The accompanying notes 1 to 26 form an integral part of the financial statements.

Notes to the Financial Statements

1. Significant accounting policies

Invista Foundation Property Trust Limited ("the Company") is a closed-ended investment company incorporated in Guernsey. The consolidated financial statements of the Company for the year ended 31 March 2008 comprise the Company, its subsidiaries and its interests in associates and joint ventures (together referred to as the 'Group').

Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by, or adopted by, the International Accounting Standards Board (the 'IASB'), and interpretations issued by the International Financial Reporting Interpretations Committee, applicable legal and regulatory requirements of Guernsey Law and the Listing Rules of the UK Listing Authority.

Basis of preparation

The financial statements are presented in sterling, rounded to the nearest thousand. They are prepared on the historical cost basis except that investment property, investment property under development and derivative financial instruments are stated at their fair value.

The accounting policies have been consistently applied to the results, assets, liabilities and cash flows of the entities included in the consolidated financial statements and are consistent with those of the previous year.

Use of estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

The most significant judgements made in preparing these accounts relate to the carrying value of investment properties and investment properties under development which are stated at open market value. The Group uses external professional valuers to determine the relevant amounts. Judgements made by management in the application of IFRS that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are disclosed in note 22.

Basis of consolidation

Subsidiaries

The consolidated financial statements comprise the accounts of the Company and all of its subsidiaries drawn up to 31 March each year. Subsidiaries are those entities, including special purpose entities, controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Where properties are acquired by the Group through corporate acquisitions and there are no significant assets or liabilities acquired other than the property, the acquisition has been treated as an asset acquisition.

Associates

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group's share of the total recognised gains and losses of these entities on an equity accounted basis, from the date that significant influence commences to the date that significant influence ceases. When the Group's share of losses exceeds its interest in an entity, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or is making payments on behalf of an entity.

Joint ventures

Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement. The consolidated financial statements include the Group's share of recognised gains and losses of jointly controlled entities on an equity accounted basis. When the Group's share of losses exceeds its interest in an entity, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or is making payments on behalf of an entity.

Transactions eliminated on consolidation

Intra-group balances and any unrealised gains and losses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated to the extent of the Group's interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment.

Investment property

Investment property is land and buildings held to earn rental income together with the potential for capital growth.

Acquisitions of investment properties are recognised on completion of contracts and are initially recognised at cost, being the fair value of the consideration given, including transaction costs associated with the investment property.

After initial recognition, investment properties are measured at fair value, with unrealised gains and losses recognised in the Income Statement. Realised gains and losses on the disposal of properties are recognised in the Income Statement. Fair value is based on the open market valuations of the properties as provided by a firm of independent chartered surveyors, at the balance sheet date. Open market valuations are carried out on a quarterly basis.

As disclosed in note 23, the Group leases out all owned properties on operating leases. A property held under an operating lease is classified and accounted for as an investment property where the Group holds it to earn rentals, capital appreciation, or both. Any such property leased under an operating lease is classified as an investment property and carried at fair value.

Disposals of investment properties are recognised on completion of contracts.

Investment property under development

Property that is being constructed or developed for future use as investment property is classified as "investment property under development" and is initially stated at cost. After initial recognition investment property under development is measured at fair value. Any unrealised gains are recognised directly in the equity of the Group, with any unrealised losses recognised in the income statement. Fair value is based on the open market valuations of the property under development as provided by Knight Frank LLP at various stages during the development process.

Upon completion of the development the property is reclassified and subsequently accounted for as "investment property".

Investments in subsidiaries

The Company's investments in subsidiaries are valued at cost less provision for impairment.

Financial instruments

Non-derivative financial instruments

Assets

Non-derivative financial instruments comprise trade and other receivables and cash and cash equivalents. These are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest rate method less any impairment losses.

Cash and cash equivalents

Cash at 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 purposes of the Cash Flow Statement, cash and cash equivalents consist of cash in hand and short-term deposits at banks with a term of no more than three months.

Liabilities

Non-derivative financial instruments comprise loans and borrowings and trade and other payables.

Loans and borrowings

Borrowings are recognised initially at fair value of the consideration received, less attributable transaction costs. Subsequent to initial recognition, interest bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the Consolidated Income Statement over the period of the borrowings on an effective interest basis.

Certain borrowings by the Company from subsidiaries have fixed repayment dates and are interest free. These loans are recognised by the Company initially at fair value of the future payments discounted at market interest rates. The difference between the consideration received and the initial value of the loan is treated as finance income in the Company's Income Statement on initial recognition. The discount is subsequently amortised on an effective interest rate basis and treated as a finance expense.

Trade and other payables

Trade and other payables are stated at cost.

Derivative financial instruments

The Group uses derivative financial instruments to hedge its exposure to interest rate fluctuations. It is not the Group's policy to trade in derivative financial instruments.

Cash flow hedges

Cash flow hedges are used to hedge the variability in cash flows of a recognised asset or liability or a highly probable forecast transaction.

Derivative financial instruments are recognised initially at fair value and are subsequently re-measured and stated at fair value. Fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the balance sheet date. Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in the Consolidated Income Statement.

On maturity or early redemption of the hedged item the realised gains or losses arising are taken to the Consolidated Income Statement, with an associated transfer from the Statement of Changes in Equity in respect of unrealised gains or losses arising in the fair value of the same arrangement.

Share capital

Ordinary shares are classified as equity.

Dividends

Dividends are recognised in the period in which they are declared.

Impairment

Financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.

Significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in the Income Statement.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in the Income Statement.

Non-financial assets

The carrying amounts of the Group's non-financial assets, other than investment property, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to that asset.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit").

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in the Consolidated Income Statement.

Provisions

A provision is recognised in the Balance Sheet when the Group has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation.

Rental income

Rental income from investment properties is recognised on a straight-line basis over the term of ongoing leases and is shown gross of any UK income tax. Any premiums or rent-free periods are spread evenly over the lease term.

Finance income and expenses

Finance income comprises interest income on funds invested and gains on hedging instruments that are recognised in the Income Statement. Interest income is recognised on an accruals basis.

Finance expenses comprise interest expense on borrowings, and losses on hedging instruments that are recognised in the Income Statement. Attributable transaction costs incurred in establishing the Group's credit facilities are deducted from the fair value of borrowings on initial recognition and are amortised over the lifetime of the facilities through the Income Statement. Finance expenses are accounted for on an effective interest basis.

Expenses

All expenses are accounted for on an accruals basis. The investment management and administration fees, and all other expenses are charged through the Income Statement.

Taxation

The Company and its subsidiaries are subject to United Kingdom income tax on any income arising on investment properties, after deduction of debt financing costs and other allowable expenses.

Income tax on the profit or loss for the year comprises current tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous periods.

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.

2. New standards and interpretations

A number of new standards, amendments to standards and interpretations are effective for the reporting period of the Group and have been applied in preparing these consolidated financial statements:

IAS 1 - IFRS 7, 'Financial Instruments: Disclosures', and the complimentary amendment to IAS1, 'Presentation of financial instruments - Capital disclosures' were adopted during the year. This introduces new disclosures relating to financial instruments. These do not have any impact on the classification and valuation of the Group's or Company's financial instruments, or the disclosures relating to taxation and trade and other payables.

IFRS 8 'Operating Segments' - at the date of authorisation of these financial statements IFRS 8 was in issue but not yet effective. The standard is not expected to have a significant impact on the consolidated financial statements.

3. Material agreements

Invista Real Estate Investment Management Limited (Invista) has been appointed as Investment Manager to the Company.

The Investment Manager is entitled to a base fee and a performance fee together with reasonable expenses incurred by it in the performance of its duties. The base fee is equal to one quarter of 95 basis points of the gross assets less current liabilities of the Group per quarter.

In addition, and subject to the conditions below, the Investment Manager is entitled to an annual performance fee where the total return per ordinary share during the relevant financial period exceeds an annual rate of 10 per cent (the 'performance hurdle'). Where the performance hurdle is met, a performance fee will be payable in an amount equal to 15 per cent of any aggregate total return over and above the performance hurdle. A performance fee will only be payable where: (i) in respect of the relevant financial period, the total return of the underlying assets meets or exceeds the Investment Property Databank ('IPD') Monthly Index balanced funds benchmark on a like for like basis; and (ii) the annualised total return over the period from admission of the Company's Ordinary Shares to the end of the relevant financial period is equal to or greater than 10 per cent per annum.

The total charge to the Income Statement during the period was £6,600,000 (2007: £6,423,000) for the base management fee of which, £3,391,000 (2007: £3,209,000) arises in the Company. As the conditions for receipt of a performance fee were not met during the year, there was no charge to the Income Statement for the year (2007: £11,437,000).

The Investment Management Agreement may be terminated by either the Company or the Investment Manager on not less than twelve months notice in writing.

The Board appointed Invista Real Estate Investment Management Limited as the Accounting Agent to the Company from 1 April 2007. The Accounting Agent is entitled to a fee equal to 5 basis points of net asset value subject to a minimum annual fee of £250,000. The charge to the Income Statement for the year was £250,000 (2007: nil).

RBSI Fund Services (Guernsey) Limited acted as administrator, registrar, custodian and corporate secretary of the Company, until they gave notice on 22 January 2007 to terminate the Administration agreement and this agreement was subsequently terminated on 25 July 2007. The charge to the Income Statement for the year was £102,000 (2007: £261,000).

The Board appointed Northern Trust International Fund Administration Services (Guernsey) Limited as the Administrator to the Company with effect from 25 July 2007. The Administrator is entitled to an annual fee equal to £120,000 and a set up fee of £25,000. The charge to the Income Statement for the year was £118,000 (2007: £nil).

4. Other income

	31/03/2008	31/03/2007
	£'000	£'000
Group
Insurance commissions	313	305
Surrender premia	-	1,026
Dilapidations	586	-
Miscellaneous income	271	128
	1,170	1,459

The Group is obliged to arrange insurance on the majority of its property assets for which it receives a commission which is stated net of any fees payable to insurance brokers.

Company
Miscellaneous income	-	38
	-	38

5. Property operating expenses

	31/03/2008	31/03/2007
	£'000	£'000
Surveyor's fees	-	300
Dilapidations	-	(113)
Agents' fees	155	173
Repairs and maintenance	234	113
Surrender premia	245	-
Advertising	6	11
Rates - vacant	218	64
Security	110	-
Insurance	197	-
Other expenses	826	334
	1,991	882

Property operating expenses incurred during the year were higher than in the previous year primarily due to certain non-recurring items such as non recoverable void costs. Some properties (for example a part of Minerva House and Uxbridge) had been held vacant during the year to facilitate asset management initiatives.

6. Auditor's remuneration

The total expected audit fees for the year are £100,000 (2007: £163,000) although there were additional fees of £15,000 in the year that related to audit fees for the year to 31 March 2007 that were not accrued for in the year ended 31 March 2007. No non-audit fees were paid to the auditors during the year (2007: £nil).

7. Other expenses

	31/03/2008	31/03/2007
	£'000	£'000
Group
Directors' and officers ' insurance premium	46	19
Printing costs	-	(9)
Regulatory costs	65	14
Marketing	35	(146)
Impairment of trade receivables	266	79
Other expenses	242	112
	654	69

Company
Directors' and officers ' insurance premium	46	3
Regulatory costs	65	3
Marketing	35	-
Other expenses	74	6
	220	12

Directors are the only officers of the entities and there are no other key personnel.

The Directors total remuneration for the year was £170,000 (2007: £177,000), all of which arose in the Company.

8. Interest payable

Company

In previous years the Company has received interest free loans from a subsidiary which are repayable on 30 March 2015. The difference between the fair value of these loans, £13,727,000, and the face value of £28,892,000 was recognised as finance income in the Company at the date of receipt of these loans. This amount is then amortised as finance expenses over the period of the loans. The amounts charged to the income statement as finance expenses for the year was £1,237,000 (2007: £1,147,000). Other interest of £1,294,000 (2007: £3,000) was also charged to the income statement in the year.

9. Taxation

	31/03/2008	31/03/2007
	£'000	£'000

Tax credit/(expense) in year	233	(690)


Reconciliation of effective tax rate
(Loss)/profit before tax	(89,583)	97,398
Effect of:
Income tax using UK income tax rate of 22%	(19,708)	21,428
Revaluation loss/(gain) not taxable	14,348	(9,739)
Share of loss/(profit) of associates not taxable	7,225	(9,704)
Profit/(loss) on disposal of investment property not taxable	(121)	(1,337)
Loss on disposal of associate not taxable	143	-
Other (losses)/income not taxable	(2,120)	(305)
Current tax (credit)/expense in the year	(233)	690

The Company and its Guernsey registered subsidiaries have obtained exempt company status in Guernsey under the terms of the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 so that they are exempt from Guernsey taxation on income arising outside Guernsey and on bank interest receivable in Guernsey. Each company is, therefore, only liable to a fixed fee of £600 per annum. The Directors intend to conduct the Group's affairs such that they continue to remain eligible for exemption.

10. Basic and diluted (loss)/earnings per share

The basic and diluted (loss)/earnings per share for the Group is based on the net (loss) for the year of

(£89,350,000) (2007: profit of £96,708,000) and the weighted average number of Ordinary Shares in issue during the year of 353,145,831 (2007: 353,560,000).

11. Dividends paid

	No. of
In respect of	Ordinary	Rate	31/03/2008
	Shares	(pence)	£'000

Quarter 31 March 2007 dividend paid 18 May 2007	353.56 million	1.6875	5,966
Quarter 30 June 2007 dividend paid 17 August 2007	353.56 million	1.6875	5,966
Quarter 30 September 2007 dividend paid 30 November 2007	353.36 million	1.6875	5,963
Quarter 31 December 2007 dividend paid 22 February 2008	350.85 million	1.6875	5,921
		6.7500	23,816

	No. of
In respect of	Ordinary	Rate	31/03/2007
	Shares	(pence)	£'000

Quarter 31 March 2006 dividend paid 26 May 2006	353.56 million	1.6875	5,966
Quarter 30 June 2006 dividend paid 25 August 2006	353.56 million	1.6875	5,966
Quarter 30 September 2006 dividend paid 24 November 2006	353.56 million	1.6875	5,966
Quarter 31 December 2006 dividend paid 18 February 2007	353.56 million	1.6875	5,967
		6.7500	23,865

A dividend for the quarter ended 31 March 2008 of 1.6875 pence (£5,921,000) was declared on 7 May 2008 and paid on 22 May 2008 (31 March 2007: 1.6875).

12. Investment property

	Leasehold	Freehold	Total
	£'000	£'000	£'000
At valuation as at 31 March 2006	55,920	462,260	518,180
Additions	39,515	50,898	90,413
Provision for further purchase consideration	-	790	790
Disposals	(15,881)	(8,389)	(24,270)
Net valuation (losses)/gains on investment property	(2,584)	46,851	44,267
At valuation as at 31 March 2007	76,970	552,410	629,380
Additions	450	10,692	11,142
Transfer from investment property under development (see note 13)	-	8,650	8,650
Disposals	-	(20,899)	(20,899)
Net valuation losses on investment property	(2,505)	(61,933)	(64,438)
Lease incentives (see note 17)	(81)	(697)	(778)
Amounts recognised as investment property	74,834	488,223	563,057

Fair value as determined by the valuers excluding lease incentives totals £563,835,000 (2007: £629,380,000).

The fair value of investment property is determined by Knight Frank LLP, a firm of independent chartered surveyors, who are a registered independent appraiser. Fair values were determined having regard to recent market transactions for similar properties in the same location as the Group's investment property.

The Group had no non-income generating properties during the year (2007: none). The development site at Uxbridge generated £70,000 of income during the first three months of the year.

13. Investment property under development

	31/03/2008 £'000	31/03/2007 £'000
Opening balance	4,337	-
Additions	3,143	4,337
Valuation gain	1,170	-
Transfer to investment property	(8,650)	-
Closing balance	-	4,337

During the year the investment property under development was completed and has been transferred to investment property.

14. Investment in associates and joint ventures

MidCity Place, London WC1

In August 2005, the Group, through Invista Foundation (Mid City) Limited, invested equity and subordinated debt of £9,917,000 for a 19.725% shareholding in DV3 Mid City Limited, a company incorporated in the British Virgin Islands and which owned the MidCity Place property in London.

The subordinated debt which was invested in DV3 Mid City Limited of £9,787,000 was split into two separate loans. The first loan was for £3,900,000, this amount, along with all associated loan interest, was repaid on 11 July 2006. The second loan for £5,887,000 had a partial repayment of £2,649,692, along with all associated interest as at 11 July 2006. The remaining loan of £3,237,000 was converted into equity, along with associated interest of £336,000 on 17 January 2007.

On 9 August 2007, Invista Foundation (Mid City) Limited sold its 19.725% shareholding in DV3 Mid City Limited for £21,302,000.

This investment is classified as an investment in an associate due to the Company having the ability to exert significant influence through its unit-holding and the associated agreements.

Plantation Place, London EC3

As at 31 March 2008 the Group's 28.08% interest in One Plantation Place Unit Trust's share of net assets was valued at £23,192,000 (2007: £52,687,000).

During the year the Group did not receive any income distribution (2007: £312,000) or a capital distribution (2007: £81,000) from One Plantation Place Unit Trust.

This investment is classified as an investment in an associate.

Crendon Industrial Estate

As at 31 March 2008 the Group's 50% share of the net assets in a joint venture company established to acquire Crendon Industrial Estate near Oxford was valued at £3,430,000 (2007: £5,233,000).

As at 31 March 2008 Crendon Industrial Partnership had non current assets of £33,250,000 (2007: £31,000,000), current assets of £2,373,000 (2007: £1,552,000), non current liabilities of £31,045,000 (2007: £24,994,000) and current liabilities of £2,018,000 (2007: £3,287,000). The income for the year was £1,873,000 (2007: £1,483,000) and the expenses were £2,235,000 (2007: £1,822,000).

This investment is classified as a joint venture due to the Company sharing the control with another investor.

Merchant Properties Unit Trust

During the year the Group increased the equity in Merchant Property Unit Trust by £296,798 raising the ownership to 19.49%

As at 31 March 2008 the Group's 19.49% equity investment amounts to £2,605,000 (19.42% at 31 March 2007: £3,000,000). During the year the Group received an income distribution of £10,015 (31 March 2007: £nil)

This investment is classified as an investment in an associate.

As at 31 March 2008	Plantation Place £'000	Crendon Industrial Estate £'000	Merchant £'000	Total £'000
Equity interest	28.08%	50%	19.49%
Total assets	554,562	35,623	39,363	629,548
Total liabilities	471,969	33,063	25,997	531,029
Revenues for year	30,764	1,873	1,471	34,108
Loss for year	(105,260)	(3,606)	(3,499)	(112,365)

Net asset value attributable to Group	23,192	1,280	2,605	27,077
Loans due to Group	-	2,150	-	2,150
Total asset value attributable to Group	23,192	3,430	2,605	29,227
Loss attributable to the Group	(29,557)	(1,803)	(682)	(32,042)
Loss from MidCity				(800)
Total loss attributable to the Group				(32,842)

As at 31 March 2007	MidCity Place £'000	Plantation Place* £'000	Crendon Industrial Estate** £'000	Merchant*** £'000	Total £'000
Equity interest	19.725%	28.08%	50%	19.42%
Total assets	334,103	651,653	32,552	13,586	1,031,894
Total liabilities	218,628	464,025	28,281	85	711,019
Revenues for year	13,666	141,049	4,674	1	159,390
Profit/(loss) for year/period	165	100,712	3,271	(131)	104,017

Net asset value attributable to Group	22,751	52,687	2,160	3,000	80,598
Loans due to Group	-	-	3,073	-	3,073
Total asset value attributable to Group	22,751	52,687	5,233	3,000	83,671

* Revenues and profit relate to the period 21 November 2005 to 31 March 2007

** Revenues and profit relate to the period 13 April 2006 to 31 March 2007

*** Revenues and profit relate to the period 16 November 2006 to 31 March 2007

15. Investment in subsidiary companies

	31/03/2008 £'000	31/03/2007 £'000
Opening balance	370,424	366,595
Net additions/(disposals) in the year	16,633	3,829
Closing balance	387,057	370,424

The Group's investment properties are held by its subsidiary companies. All of the Company's subsidiaries are wholly owned.

The principal subsidiaries which hold investment property are as follows:

Subsidiary	Domicile	Ownership interest 2008	Ownership interest 2007
Invista Foundation Property Limited	Guernsey	100%	100%
Invista Foundation Property (No.2) Limited	Guernsey	100%	100%
LP (Brentford) Limited	Guernsey	100%	100%
Invista Foundation (Basingstoke) Limited	Guernsey	100%	-
Invista Foundation (Broadwick) Limited	Guernsey	100%	-
Invista Foundation (Salisbury) Limited	Guernsey	100%	-
Invista Foundation (Victory) Limited	Guernsey	100%	-
Invista Foundation (Uxbridge) Limited	Guernsey	100%	-
Invista Foundation (Wembley) Limited	Guernsey	100%	-
Invista Foundation (Tokenhouse) Limited	Guernsey	100%	-
Invista Foundation (Hinckley) Limited	Guernsey	100%	-
Invista Foundation (Portman) Limited	Guernsey	100%	-
Invista Foundation Property Bootle Limited	Isle of Man	-	100%

The principal subsidiaries which have entered into borrowing facilities on behalf of the Company and its property holding subsidiaries are:

Invista Foundation Property (No.2) Limited*	Guernsey	100%	100%
Invista Foundation Holding Company Limited	Guernsey	100%	100%
Real Estate Capital (Foundation) Limited**	Guernsey	See below	See below

* This loan was repaid in June 2007, see note 19.

** Real Estate Capital (Foundation) Limited is a special purpose vehicle and its accounts have been included within these consolidated financial statements on the basis that the Company has the power, directly or indirectly, to govern the financial and operating policies of that entity so as to obtain benefits from its activities.

16. Loans to subsidiary companies

At 31 March 2008 the Company had outstanding loans of £90,870,000 (2007: £84,245,000) to its subsidiary companies. A loan of £15,901,000 has no fixed repayment date and interest is charged on 60% of the outstanding balance at an annual rate of 3 per cent above UK LIBOR. A second loan of £59,771,000 has no fixed repayment date and interest is charged on the full loan amount at an annual rate of 3 per cent above UK LIBOR. A third loan of £1,698,000 has no fixed repayment date and no interest is charged. A fourth set of loans of £13,500,000 have fixed repayment dates and interest is charged on the full loan amounts at an annual rate of 3 per cent above UK LIBOR.

17. Trade and other receivables

	31/03/2008 £'000	31/03/2007 £'000
Group
Rent receivable	7,316	4,424
VAT recoverable	307	1,694
Other debtors and prepayments	1,255	1,817
	8,878	7,935

Company
Amounts due from subsidiary companies	24,611	13,074
Other debtors	-	13
	24,611	13,087

Rent receivable includes an amount of £1,202,000 due from a tenant where there has been a dispute regarding service charge. All outstanding amounts are anticipated to be received imminently.

Other debtors and prepayments includes £778,000 in respect of lease incentives.

18. Issued capital and reserves

Authorised share capital

The authorised share capital of the Company is represented by an unlimited number of Ordinary Shares of no par value.

Issued share capital

The number of issued Ordinary Shares of the Company at the start of the year was 353,560,000. This has reduced to 350,856,669 at the end of the year following the buy back and cancellation of 2,703,331 shares.

Dividends

On 7 May 2008 the Directors declared a dividend of 1.6875 pence per share, giving an interim dividend payable of £5,920,706 (2007: £5,966,325). The dividend has not been included as a liability.

19. Interest-bearing loans and borrowings

This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings. For more information about the Group's exposure to interest rate risk, see note 22.

	31/03/2008		31/03/2007
Group	£'000	£'000	£'000	£'000
Non-current liabilities
Class A Secured Floating Rate Notes		139,000		139,000
Class B Secured Floating Rate Notes		13,500		13,500
Sub total		152,500		152,500
Reserve Notes		111,000		-
Total		263,500		152,500
Less: Finance costs incurred	(5,367)		(4,103)
Add: Amortised finance costs	1,446	(3,921)	873	(3,230)
		259,579		149,270

Current liabilities
NMR Loan Facility		-		69,080
Less: Finance costs incurred	-		(76)
Add: Amortised finance costs	-	-	14	(62)
	-	-		69,018

In March 2005 the Group entered into a £152.5 million loan repayable in July 2014 with Real Estate Capital (Foundation) Limited, a securitisation vehicle ('the facility') which was, admitted to the Official List of the Irish Stock Exchange. Securitised notes were issued at a blended margin of 20.8 basis points over LIBOR and simultaneously the Company entered into an equivalent maturity swap agreement at 5.1%.

At the time of the original securitisation, an additional facility of £150m of 'reserve notes' was arranged, £111m of which were sold in June 2007 leaving £39m undrawn. These were issued at a margin of 25 basis points over LIBOR and simultaneously the Company entered into an equivalent maturity swap agreement at 5.71%.

The Group hedges against interest rate movements by fixing the interest it will pay quarterly over the period of the loans with interest rate swaps. These interest rate swaps are classified as cash flow hedges and are stated at fair value. The counterparty is liable to pay interest at LIBOR on the loans. As at 31 March 2008 the combined fair value of the swaps was a liability of £6,944,000 (2007: asset of £3,163,000). The deficit in the year of £10,107,000 (2007: gain of £7,038,000) is taken to the hedge reserve in equity.

In aggregate, therefore, the blended effective interest rate is 5.58% per annum. There were additional capitalised costs of £1.3 million incurred in selling the reserve notes that are being amortised over the life of the loan. This has reduced the incremental margin cost from 28 basis points to 24.5 basis points, calculated over the remaining life of the loan.

Both facilities have first charge security over all the property assets in the ring fenced Security Pool which at 31 March 2008 contained properties valued at £538.24 million (2007: £467.6 million) together with £13.32 million cash (2007: £1.85 million) (the 'Security Pool'). Assets can be sold and bought within this Security Pool without any need to revert to the Issuer or the Rating Agents up to an annual turnover rate of 20%. Various restraints apply during the term of the loan although the facilities have been designed to provide significant operational flexibility. The principal covenants however are that the loan should not comprise more than 60% of the value of the assets in the Security Pool nor should estimated rental and other income arising from assets in the Security Pool comprise less than 150% of the interest payments (interest cover at 31 March 2008 - 200%, at 31 March 2007 - 296%).

The Group (via its subsidiary, Invista Foundation Property (No. 2) Limited (IFP2L)) had previously entered into two loan agreements with NM Rothschild & Sons Limited ('NMR'); although both were repaid in June 2007 with funds raised from the reserve note issuance.

Interest payable by the Group of £14,767,000, (2007: £11,355,000) all arose on the debt set out in the above table.

20. Trade and other payables

	31/03/2008 £'000	31/03/2007 £'000
Group
Rent received in advance	6,683	7,223
Rental deposits	3,391	3,449
Other trade payables and accruals	5,306	21,238
	15,380	31,910

Company
Trading account with subsidiary companies	91,726	9,371
Trade payables and accruals	2,280	12,598
	94,006	21,969

Accounts with subsidiaries are repayable on demand, are interest free and unsecured.

21. Net asset value per Ordinary Share

The net asset value per Ordinary Share is based on the net assets of £378,359,000 (2007: £502,652,000) and 350,856,669 (2007: 353,560,000) Ordinary Shares in issue at the balance sheet date.

22. Financial instruments, properties and associated risks

Financial risk factors

The Group and the Company hold cash and liquid resources as well as having debtors and creditors that arise directly from its operations. The Group has entered into interest rate swap contracts which are used to limit exposure to interest rate risks, but does not have any other derivative instruments.

The main risks arising from the Group's and Company's financial instruments and properties are market price risk, credit risk, liquidity risk and interest rate risk. The Board regularly reviews and agrees policies for managing each of these risks and these are summarised below:

Market price risk

Rental income and the market value for properties are generally affected by overall conditions in the economy, such as changes in gross domestic product, employment trends, inflation and changes in interest rates. Changes in gross domestic product may also impact employment levels, which in turn may impact the demand for premises. Furthermore, movements in interest rates may also affect the cost of financing for real estate companies.

Both rental income and property values may also be affected by other factors specific to the real estate market, such as competition from other property owners, the perceptions of prospective tenants of the attractiveness, convenience and safety of properties, the inability to collect rents because of bankruptcy or the insolvency of tenants, the periodic need to renovate, repair and release space and the costs thereof, the costs of maintenance and insurance, and increased operating costs.

The Directors monitor the market value of investment properties by having independent valuations carried out quarterly by a firm of independent chartered surveyors as described in note 12.

Included in market price risk is interest rate risk which is discussed further below.

Credit risk

Credit risk is the risk that an issuer or counter party will be unable or unwilling to meet a commitment that it has entered into with the Group or Company. In the event of default by an occupational tenant, the Group will suffer a rental income shortfall and incur additional costs, including legal expenses, in maintaining, insuring and re-letting the property. The Investment Manager reviews reports prepared by Experian, or other sources to assess the credit quality of the Group's tenants and aims to ensure there is no excessive concentration of risk and that the impact of any default by a tenant is minimised.

In respect of credit risk arising from other financial assets, which comprise cash and cash equivalents, exposure to credit risk arises from default of the counterparty with a maximum exposure equal to the carrying amounts of these instruments. In order to mitigate such risks, cash is maintained with major international financial institutions. During the year and at the balance sheet date the Group and the Company maintained relationships with branches and subsidiaries of HSBC, The Royal Bank of Scotland and ING Barings.

Company credit risk is mitigated as trade and other receivables are inter-company.

The maximum exposure to credit risk for rent receivables at the reporting date by type of sector was:

	31 March 2008 Carrying amount £'000	31 March 2007 Carrying amount £'000
Office	4,000	1,948
Industrial	2,300	1,423
Retail	1,016	731
Other	-	322
	7,316	4,424

Rent receivables which are passed their due date, but which were not impaired at the reporting date were:

	31 March 2008 Carrying amount £'000	31 March 2007 Carrying amount £'000
0-30 days	5,754	3,347
31-60 days	7	199
61-90 days	7	25
91 days plus	1,548	853
	7,316	4,424

Since 31 March 2008 £680,000 of the 91 days plus arrears has been received.

Liquidity risk

Liquidity risk is the risk that the Group and the Company 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. Investments in property are relatively illiquid, however the Group has tried to mitigate this risk by investing in properties that it considers to be good quality.

In certain circumstances, the terms of the Group's debt facilities 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. The Investment Manager prepares cash flows on a rolling basis to ensure the Group can meet future liabilities as and when they fall due.

The following table indicates the maturity analysis of the financial liabilities.

As at 31 March 2008	Carrying amount £'000	Expected Cash flows £'000	6 mths or less £'000	6 mths-2 years £'000	2-5 years £'000	More than 5 years £'000
Group - Financial liabilities

Interest bearing loans and borrowings and interest	266,511	378,514	6,624	21,678	43,356	306,856
Trade and other payables	5,686	5,686	5,686	-	-	-
Total financial liabilities	272,197	384,200	12,310	21,678	43,356	306,856

Company - Financial liabilities

Interest and non interest bearing loans and interest	95,540	103,813	84,619	608	3,870	14,716
Trade and other payables	94,006	94,006	94,006	-	-	-
Total financial liabilities	189,546	197,819	178,625	608	3,870	14,716

As at 31 March 2007	Carrying amount £'000	Expected Cash flows £'000	6 mths or less £'000	6 mths-2 years £'000	2-5 years £'000	More than 5 years £'000
Group - Financial liabilities

Interest bearing loans and borrowings and interest	219,973	287,803	3,680	11,970	23,940	248,213
Trade and other payables	23,002	23,002	23,002	-	-	-
Total financial liabilities	242,975	310,805	26,682	11,970	23,940	248,213

Company - Financial liabilities

Non interest bearing loans	117,610	117,610	117,610	-	-	-
Trade and other payables	21,969	21,969	21,969	-	-	-
Total financial liabilities	139,579	139,579	139,579	-	-	-

Interest rate risk

Exposure to market risk for changes in interest rates relates primarily to the Group's long-term debt obligations and to interest earned on cash balances.

A 1% increase in interest rates would improve the annual income by £592,000 based on the cash balance as at 31 March 2008. A 1% decrease would cause income to fall by the same amount.

As described in note 19 the Group has entered into an interest rate swap contract whereby the rate of the Group's long term debt facilities have an effective fixed interest rate of 5.58% per annum until maturity of the debt.

The following table indicates the periods in which the cash flows associated with the swap are expected to occur.

	Carrying amount £'000	Expected cash flows to maturity £'000	6 months or less £'000	6-12 months £'000	1-2 years £'000	2-5 years £'000	More than 5 years £'000
Interest rate swap	(6,944)	(10,375)	509	(554)	(2,046)	(3,970)	(4,314)

Fair values

The fair values of financial assets and liabilities are not materially different from their carrying value in the financial statements.

The following summarises the main methods and assumptions used in estimating the fair values of financial instruments and investment property.

Investment property

Fair value is based on valuations provided by an independent firm of chartered surveyors and registered appraisers. These values were determined after having taken into consideration recent market transactions for similar properties in similar locations to the investment properties held by the Group.

Investment property under development

As at balance sheet date there was no investment property under development.

Derivatives

Fair value for the interest rate swap uses the broker quote. This is then tested using pricing models or discounted cash flow techniques.

Interest bearing loans and borrowings

Fair values are based on the amounts which are to be repaid, less any costs incurred in obtaining the borrowings. These costs are then amortised over the period of the borrowings.

Trade and other receivables/payables

All receivables and payables are deemed to be due within one year and as such the notional amount is considered to reflect the fair value.

Non interest bearing loans and borrowings

Where non interest bearing loans and borrowings have no fixed repayment date fair value is deemed to be the face value of the borrowings. Where the repayment date of the borrowings is fixed, the carrying value of such loans are discounted to net present value using a commercial interest rate as at the date of the drawdown of the loan, as disclosed in note 8. The current carrying value of such loans is £17,049,730. The fair value of these loans is calculated using the commercial interest rate in place as at the balance sheet date. The current fair value of these loans is £15,796,000.

Capital management

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.

There were no changes in the Group's approach to capital management during the year.

23. Operating leases

The Group leases out its investment property under operating leases. At 31 March 2008 the future minimum lease receipts under non-cancellable leases are as follows:

	31/03/2008 £'000	31/03/2007 £'000
Less than one year	28,885	30,735
Between one and five years	105,998	98,042
More than five years	122,204	147,508
	257,087	276,285

The total above comprises the total contracted rent receivable as at 31 March 2008.

24. Related party transactions

All material transactions between the Group and its associates are disclosed in note 14.

Material agreements are disclosed in note 3.

As disclosed in note 16, the Company has a series of loans to subsidiary companies.

The Company has loans from subsidiaries which are both interest bearing at LIBOR plus 3% and non interest bearing. As at 31 March 2008 the Company had interest bearing loans of £7,532,000 (2007: £nil) and non interest bearing of £88,008,000 outstanding to its subsidiaries (2007: £117,610,000).

During the year, the Company received dividend income from one of its subsidiaries, Invista Foundation Holding Company Limited, of £15,000,000 (2007: £10,500,000).

Finance expense relating to a subsidiary, Invista Foundation Holding Company Limited, is disclosed in note 8.

As disclosed in note 20 the Company also operates an inter-group trading account facility with its subsidiaries whereby it may receive income on behalf of its subsidiaries or pay expenses on their behalf. These balances are non-interest bearing and are settled on demand.

25. Capital commitments

At 31 March 2008 the Company had no capital commitments.

26. Post balance sheet events

Plantation Place, London EC3

As at 31 March 2008 the net asset value of the Group's 28.08% investment in the unit trust that owns Plantation Place was £23.2 million. The net asset value was calculated using the independent valuation for the property as at 31 March 2008 of £535 million. The valuation was at a level that breached the loan to value ratio covenant for the separate, off-balance sheet, non-recourse securitised debt facility resulting in a total net cash injection of £14.785 million to ensure compliance with the loan to value ratio covenant. This led to the Group, acting together with other equity investors, to contribute an additional £4.3 million of equity. A small shortfall on behalf of one of the other investors resulted in the Group's shareholding increasing from 28.08% to 28.19%. The Group's total current exposure to the asset therefore is the net asset value of £23.2 million plus the additional contribution of £4.3 million, a total of £27.5 million.

A further deterioration in market conditions is likely to result in a lower valuation for the underlying Plantation Place property as at 30 June 2008. Whilst the valuation is under discussion, it is likely to require a further cash injection to ensure compliance with the loan to value ratio covenant. The Board is continuing to review the position and as at the date of the accounts has concluded that it would not invest further equity by the relevant date in July if the unit trust was to breach its debt covenants. The effect of this decision could dilute the value of the Group's investment and possibly result in a loss of the entire investment.

Independent auditor's report to the members of Invista Foundation Property Trust Limited

We have audited the group and parent company financial statements (the 'financial statements') of Invista Foundation Property Trust Limited for the year ended 31 March 2008 which comprise Consolidated and Company Income Statements, the Consolidated and Company Balance Sheets, the Consolidated and Company Statements of Changes in Equity, the Consolidated and Company Cash Flow Statements and the related notes. These financial statements have been prepared under 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) Law, 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 the 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

The directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable Guernsey law and International Financial Reporting Standards (IFRS) as set out in the Statement of Directors' Responsibilities on page 28.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with The Companies (Guernsey) Law, 1994. We also report to you if, in our opinion, the Company has not kept proper accounting records, or if we have not received all the information and explanations we require for our audit.

We read the Directors' Report and consider the implications for our report if we become aware of any apparent misstatements within it.

We read the other information accompanying the financial statements and consider whether it is consistent with those statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) 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 Company'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, in accordance with International Financial Reporting Standards, of the state of the Group's and the parent company's affairs as at 31 March 2008 and of the Group's loss and Company's profit for the year then ended; and
have been properly prepared in accordance with The Companies (Guernsey) Law, 1994.

KPMG Channel islands Limited

Chartered Accountants

Date: 2 July 2008

Glossary

Earnings per share (EPS) is the profit after taxation divided by the weighted average number of shares in issue during the period. Diluted and Adjusted EPS per share are derived as set out under NAV.

Estimated rental value (ERV) is the Group's external valuers' reasonable opinion as to the open market rent which, on the date of valuation, could reasonably be expected to be obtained on a new letting or rent review of a property.

Gearing is the Group's net debt as a percentage of adjusted net assets.

Group is Invista Foundation Property Trust Limited and its subsidiaries.

Initial yield is the annualised net rents generated by the portfolio expressed as a percentage of the portfolio valuation.

Interest cover is the number of times Group net interest payable is covered by Group net rental income.

IPD is the Investment Property Databank Ltd, a Company that produces an independent benchmark of property returns.

Net asset value (NAV) are shareholders' funds divided by the number of shares in issue at the period end.

Net rental income is the rental income receivable in the period after payment of ground rents and net property outgoings.

Reversionary yield is the anticipated yield, which the initial yield will rise to once the rent reaches the estimated rental value.

Notice of Annual General Meeting

Notice is hereby given that the fourth Annual General Meeting of Invista Foundation Property Trust Limited will be held at the offices of Northern Trust, Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 3QL at 10.15 am on 19 August 2008 for the following purposes:

To consider and if thought fit, pass the following Ordinary Resolutions:

1. That the accounts and the report of the Directors and of the Auditors for the year ended 31 March 2008 be received

and approved.

2. That KPMG Channel Islands Limited be re-appointed as Auditors and the Directors be authorised to determine their

remuneration.

3. That Mr Andrew Sykes, who has retired in accordance with Article 74, be re-elected as a Director.

4. That Mr David Warr, who has retired in accordance with Article 74, be re-elected as a Director.

To consider and, if thought fit, pass the following as Special Resolutions:

5. That the Company be authorised, in accordance with section 315 of The Companies (Guernsey) Law 2008 together (the

'Law'), to make market purchases (within the meaning of section 316 of the Law) of Ordinary Shares of 1p each

('Ordinary Shares'), provided that:

the maximum number of Ordinary Shares hereby authorised to be acquired shall be 14.99% of the issued Ordinary Shares on the date on which this resolution is passed;

the minimum price which may be paid for an Ordinary Share shall be 1p;

the maximum price (exclusive of expenses) which may be paid for an Ordinary Share shall be 105% of the average of the middle market quotations (as derived from the Daily Official List) for the Ordinary Shares for the five business days immediately preceding the date of purchase; and

unless previously varied, revoked or renewed, the authority hereby conferred shall expire on 19 August 2009 or, if earlier, at the conclusion of the Annual General Meeting of the Company to be held in 2009 save that the Company may, prior to such expiry, enter into a contract to acquire Ordinary Shares under such authority and may make an acquisition of Ordinary Shares pursuant to any such contract.

By order of the Board

Notes:

1. A member who is entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and , on

a poll, vote instead of him or her. A proxy need to be a member of the Company.

2. A form of proxy is enclosed for use at the meeting. The form of proxy should be completed and sent, together with the

power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or

authority, so as to reach Computershare Investor Services (Cl) Limited, Ordnance House, 31 Pier Road, St Helier, Jersey

JE4 8PW not later than 10.15am on 8 August 2008.

3. Completing and returning a form of proxy will not prevent a member from attending in person at the meeting and voting

should he or she so wish.

4. To have the right to attend and vote at the meeting (and also for the purpose of calculating how many votes a member

may cast on a poll) a member must have his or her name entered on the register of members not later than 10.15am

on 8 August 2008. Changes to entries in the register after that time shall be disregarded in determining the rights of any

member to attend and vote at such Meeting.

Corporate information

Registered Address

Trafalgar Court

Les Banques

St. Peter Port

Guernsey GY1 3QL

Directors

Andrew Sykes (Chairman)

Keith Goulborn

John Frederiksen

Harry Dick-Cleland

David Warr

Peter Atkinson

(All Non-Executive Directors)

Investment Manager and Accounting Agent

Invista Real Estate Investment Management Limited

Exchequer Court

Auditor

KPMG Channel Islands Limited

20 New Street

St. Peter Port

Guernsey GY1 4AN

Property Valuers

Knight Frank LLP

20 Hanover Square

London W1S 1HZ

Channel Islands Sponsor

Ozannes Securities Limited

1 Le Marchant Street

St. Peter Port

Guernsey GY1 4HP

33 St Mary Axe

London

EC3A 8AA

The Manager's Investment Committee

Duncan Owen (Chairman)

Philip Gadsden

Nick Montgomery

Mark Long

Administrator

Northern Trust International Fund Administration Services (Guernsey) Limited

Trafalgar Court

Les Banques

St Peter Port

Guernsey GY1 3QL

UK Sponsor and Broker

JPMorgan Cazenove Limited

20 Moorgate

London EC2R 6DA

Tax Advisers

Deloitte & Touche LLP

180 Strand

London WC2R 1BL

Receiving Agent and UK Transfer/Paying Agent

Computershare Investor

Services PLC

The Pavilions

Bridgewater Road

Bristol BS99 1XZ

Solicitors to the Company

as to English Law;

Herbert Smith

Exchange House

Primrose Street

London EC2A 2HS

as to Guernsey Law;

Ozannes

1 Le Marchant Street

St. Peter Port

Guernsey GY1 4HP

ISA/PEP status

The Company's shares are eligible for individual Savings Accounts (ISA's) and PEP transfers and can continue to be held in existing PEP's

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR ILFEADTIFIIT

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