28th Nov 2005 07:00
Insight Foundation Property Tst Ltd28 November 2005 Insight Foundation Property Trust LimitedInterim Report Unaudited as at 30 September 2005 Company summary Objective To provide Shareholders with an attractive level of income together with thepotential for income and capital growth from investing in UK commercialproperty. The Group holds a diversified portfolio of UK commercial properties and isinvested in three commercial property sectors: office, retail and industrial.The Group will not invest in other listed Investment Companies. In pursuing theinvestment objective, the Investment Manager intends to target assets with goodfundamental characteristics, a diverse spread of occupational tenants and, atleast initially, with above average income yields for the property sector withopportunities to enhance value through active management. Investment manager Insight Investment Management (Global) Limited Total assets less current liabilities (group)£538.97 million at 30 September 2005. Shareholders' funds£385.03 million at 30 September 2005. Capital structureAt launch, Insight Foundation Property Trust Limited had a capital structurecomprising approximately 85 per cent ordinary shares and 15 per cent bank debt.As at 30th September 2005 this was approximately 70 per cent ordinary shares and30 per cent bank debt. Ordinary shareholders are entitled to all dividends declared by the Company andto all the Company's assets after repayment of its borrowings. Borrowingsconsist of £152.5 million drawn down. The loan currently has an effectiveinterest cost of 5.31% (before annualised costs and expenses in association withits arrangement) fixed for the period of the loan by way of an interest rateswap contract matched against the full amount of the loan. On 27th July 2005100,000,000 C Shares were admitted to the Stock Exchange and commenced dealing. On 5th August 2005 Insight Foundation Property Trust Limited carried out aConversion of the C Shares of the Company. As at that date, the net asset valueper C Share was 97.85p and the net asset value per ordinary share was 104.59p.On this basis, for the purpose of the Conversion, the Conversion Ratio was0.9356 Ordinary shares for every one C Share. 93,560,000 new Ordinary Shareswere created on Conversion of the C Shares increasing the number of issuedOrdinary Shares of the Company from 260,000,000 to 353,560,000. ISA/PEP statusThe Company's shares are eligible for Individual Savings Accounts (ISA's) andPEP transfers and can continue to be held in existing PEPs. WebsiteThe Company's website is www.ifpt.co.uk Financial highlights and performance summary Net asset value per share rose by 3.8% over the periodThe fourth interim dividend of 1.6875 pence per share was paid on 12 August 2005 Key Statistics 30 September 2005 30 March 2005 % Change Net asset value1 (NAV £m's) 2 £385.0 £272.8 41.1Net asset value per ordinary share (pence)1 108.9 104.9 3.8Ordinary share price (pence) 112.0 115.5 (3.0)IFPT total shareholder return index 3 119.5 119.7 (0.2)Peer Group Comparison total shareholder 126.0 122.6 2.8 return index 4FTSE All-Share Index 2,745.79 2,457.73 11.7 Sources: Insight Investment, Datastream. 1 Net asset value (NAV) is calculated using International Financial ReportingStandards2 Between 31 March 2005 and 30 September 2005 the C Shares were issued andconverted to Ordinary Shares3 Total shareholder return including gross dividends reinvested4 Peer Group changes over time As at 30 September 2005 includes ISIS Property Trust Limited, ISIS PropertyTrust 2 Limited, The UK Balanced Property Trust Limited, Standard LifeInvestments Property Income Trust Limited, F&C Commercial Property Trust, ING UKReal Estate Income Trust and Invesco UK Property Income Trust - totalshareholder return including gross dividends reinvested Note: All based on returns during the period from 1 April 2005 to 30 September2005. Chairman's StatementResultsI am pleased to report a further positive set of results for the six monthsended 30 September 2005. During the period under review, the Company's unauditednet asset value per share (NAV) has increased by 4 pence per share, or 3.8%. OurShareholders have also received total dividends of 3.375 pence per share, makingan NAV total return of almost 7% over the six months. Since the launch of the Company in July 2004 the Company's NAV has increased by11.4 pence per share, or 11.7% to 108.9 pence per share. Over this period ourShareholders have also received total dividends of 6.75 pence per shareresulting in an NAV total return of approximately 18.5%. The NAV growth is clearly a reflection of the continued strength of the UKcommercial property market, but it is also a consequence of the Manager's activeapproach to transactional activity, intensive asset management and innovativefinancing. Each of these areas is making a real contribution to the Company'sperformance providing a solid base for sustained NAV growth. The Company's underlying property portfolio has performed well, particularlygiven the number of transactions completed since launch, with acquisitionstotalling £464 million and disposals totalling £27 million since July 2004. Forthe twelve months to September, the independent performance measurement company,Investment Property Databank ('IPD'), has recorded an un-geared total return forthe Company's underlying property portfolio (after deducting all property leveltransaction costs) of 17%, which is in line with the comparable IPD Index forour peer group. Since the audited report to March 2005, acquisitions anddisposals totalling £97 million and £12 million respectively were completed. Thelevel of transactions undertaken by the Company in order to invest availablefunds in line with the strategy has been running at approximately twice theaverage rate reflected in the IPD index. The Manager estimates that thisdifference would have had an impact of some 1.3% on the performance comparison.On an underlying basis, therefore, the Company's property portfolio hasoutperformed the market as a whole by a satisfactory margin. C Share IssueThe successful completion of the C Share issue in July has increased theCompany's capital base from approximately £439 million to £557 million. Thisexpansion will enable the Manager to grow and diversify the Company's portfolio,most specifically by increasing the exposure to the Central London and SouthEast office markets, which is expected to enhance returns to shareholders overthe coming years. On closing the C Share issue the Manager anticipated investingapproximately £100 million during 2005 with the balance of approximately £70million invested in the first quarter of 2006. Approaching £100 million ofacquisitions had been completed by early November with a further £12 millionunder offer. Following this expansion the Company now has net assets of £385 million and as aconsequence, in September the Company was admitted into the FTSE 250. TheCompany now has 920 shareholders and an increased free float of 70%, comparedwith 38% at launch, and I am delighted to welcome those who have joined ourshareholder register through the C share issue. Accounting PracticesThe Company has already adopted the new IFRS reporting standards, with the Juneand September reported Net Asset Values reflecting this rather than UK GAAP,which remains the standard used by many of our peers. The key impact of theCompany in reporting under IFRS relates to the marking to market of liabilities,and particularly the Company's debt. As part of the successful debtsecuritisation carried out by the Company in early 2005, the senior loan wasfully hedged against interest rate risk using an interest rate swap at 5.1%. Subsequent to the securitisation interest rates have fallen and in June this ledto the Company making a negative adjustment to the NAV of £6.69 million or 1.9pence per share, reducing slightly in September to £5.37 million or 1.52 penceper share. Shareholder CommunicationSince the last audited accounts the Manager continues to issue quarterlyInvestor factsheets and has launched the Company's web-site, www.ifpt.co.uk. ProspectsThe strategy set out for the expansion of the Company's capital base at the timeof the C share issue is on track, with almost £100 million invested between Julyand November 2005. It is clear, however, that the market remains verycompetitive, and the Manager is finding that many potential opportunities, whenwidely marketed, are achieving prices that do not meet our return requirements,when making appropriately prudent assumptions about future growth. Nonetheless,the Manager has continued to identify and secure attractive additions to theCompany's portfolio and expects to have invested the remaining equity before thesecond quarter of 2006. The Board will continue to work with the Manager toanalyse the benefits of increasing the Company's gearing by drawing down on thereserve notes under the Company's securitised debt facilities to underpin theCompany's future growth. Andrew Sykes, ChairmanInsight Foundation Property Trust Limited22 November 2005 Investment manager's summary reportThe Property PortfolioAs at 30 September 2005, the Company owned a direct property portfolio valued at£439 million comprising 73 assets, increasing to £481.645 million as at 15November 2005. The portfolio has approximately 252 tenancies (with 199 differentcorporate tenants) with an average unexpired lease term of approximately 8.3years. The portfolio is diversified both geographically and across the mainsub-sectors of the UK property market. During the period under review, the Company has made acquisitions and selectivedisposals totalling approximately £97 million and £12 million respectively.Since the issue of the Audited accounts in March 2005, the Company's propertyassets have increased to £481.645 million. This figure comprises the Septemberproperty portfolio valuation of £438.995 million together with the recentacquisition of National Magazine House for £45.05 million and the disposal ofthe retail property at Thames Street, Kingston. These assets produce a totalrent of £29.8 million per annum which reflects a portfolio net initial yield of6.2%. The current rental value of the portfolio is £31.09 million reflecting areversionary yield of 6.4%. The portfolio yield on property cost is higher atapproximately 7%. Our strategy has evolved further to increase our exposure to Central London.Since the C Share issue, three key acquisitions have been successfully completedthat meet the Company's core objectives of acquiring well located assets withthe ability to increase rents via active asset management initiatives, and alsobenefit from rental growth generally as the Central London office marketrecovers. In early July the Company acquired a freehold office property (Minerva House) inLondon SE1 for £42.13 million, reflecting a net income yield of 6.3%. Theproperty is in a strong location with extensive river frontage to the Thames andis close to Southwark Cathedral and London Bridge. The property is well let toestablished tenants (ANZ Banking Group Limited and Reed Smith LLP) producing arent of approximately £2.76 million per annum. This averages at a rate of £31per sq ft, providing the potential for income growth as the level of marketrents increase and asset management opportunities are realised. In August the Company invested £10 million in equity and subordinated debtacquiring a 19.7% stake in Mid City Place, High Holborn in London WC1. TheCompany owns the freehold property jointly, providing a rare opportunity toinvest in a high quality asset. The property is regarded as one of the 'MidTown's' most attractive assets. It provides a total floor area of 323,000 sq ftwith Grade A office accommodation and good quality retail units fronting HighHolborn. The property is let to 11 tenants on 15 leases and has significantasset management potential with current low rents of £37.50 per sq ft. In November the Company completed the acquisition of National Magazine House inSoho W1 for £45.05 million. The freehold property benefits from 16,000 sq ftfloors and is located in a prominent position. It is let for a further 13 yearsto The National Magazine Company Limited, the UK subsidiary of HearstCorporation. The property also benefits from residential units above the offices. The pricereflects a net income yield of 5.3%. There is a rent review in 2008 and webelieve this is well timed to benefit from rental growth with the currentshortage of good quality buildings offering large, clear accommodation in Soho. These recent acquisitions produce a blended net initial yield of 5.83%, are inline with the strategy outlined at the time of the C Share issue and reflectgood value in a market where there is considerable demand for well-let Londonoffice property. We have approximately £70 million available for further investment (before anyfurther drawing of reserve notes) and the Company's continued focus will beLondon and the South East. Remaining acquisitions will target an above averageyield so as to maintain a blended portfolio yield of over 6%. We have continuedto complete a limited number of disposals where the properties have reachedtheir full potential and a material premium over valuation could be achievedpost active management initiatives. We are using all efforts to ensure that the Company is substantially invested,whilst not compromising on our key investment principles. We have a robustquantitative and qualitative approach to stock selection and this is a strategythat is helping to secure mis-priced properties, even in today's competitivemarket. The underlying performance of the portfolio continues to be driven not just bystock selection but also by our pro-active approach to active asset management.This approach is required to ensure that the Company captures rental growth asfast as possible and consequently maximises all possible opportunities forcapital value appreciation. Any vacant units are pro-actively managed, and this is delivering strongresults. As at September 2005 approximately 2.6% of the portfolio was vacant,down from 4% in March 2005. If leases currently under offer complete asanticipated, the void rate will be further reduced to approximately 1.5% ofrental value. This compares to approximately 8% on an average portfolio (asmeasured by the IPD Index). The Company's loan facility runs until 2014 and is fully hedged against futureinterest rate movements. It is worth recording that the securitisation includedan additional £150 million facility of reserve notes which can be drawn down inthe future very efficiently (subject to Rating Agency consent). As further debtis drawn down and the gearing in the Company increases, the Net Asset Valueshould increase. OutlookWe anticipate returns to the UK commercial property market of over 15% for 2005and reducing to closer to 7% to 8% per annum over the foreseeable future. Theexpectation for 2005 has increased from earlier in the year due to the sustainedand increased levels of demand for commercial property. Prime yields continue to reflect strong real estate fundamentals withexpectations for good rental growth in some parts of the market. We remaincautious regarding the narrowing gap between prime and secondary properties. Ourview therefore is that secondary stock is now less attractive, although ourapproach allows the Company to identify value across all markets. We will alwaysbe prepared to act where we see opportunities to unlock value through selectivenew acquisitions and asset management solutions. The principal focus for the remainder of 2005 and into 2006 will be to acquirefurther properties in London and the South East, especially where they involvelarger lot sizes offering active management opportunities and flexibility forpotential occupiers. In summary, our focus for property activity will be to: • Be substantially fully invested and pursue new investment in high growth assets and segments of the market • Consider limited sales of lower yielding retail properties, notwithstanding the desire to be fully invested • Pursue active management initiatives set to make a significant impact on valuation • Maintain and enhance the current portfolio to ensure a continued broad diversity of properties and tenants. Duncan OwenInsight Investment Management22 November 2005 Property portfolio statistics Property Portfolio Statistics as at 14 November 2005 (includes the recentacquisition of National Magazine House, due to the significant nature of thetransaction) Sector analysis by valueRetail 26%Office 50%Industrial 24% Source: Insight Investment Geographical analysis by value Central London 24%South East excl. CL 36%Rest of South 9%Midlands and Wales 19%North and Scotland 12% Source: Insight Investment Tenure Analysis by valueFreehold 91%Leasehold 9% Source: Insight Investment Lease length by value (to earlier of tenant break / lease expiry) 0-5 Years 31%5-10 Years 33%10-15 Years 28%15+ Years 8% Source: Insight Investment Covenant Strength by rental incomeGovernment 4%Negligible 30%Low 40%Low-Medium 11%Medium-High 5%High 6%Unmatched 4% Source: Insight Investment 10 Largest Properties Value %*National Magazine House, Carnaby Street £45,050,000 8.1%Minerva House, 5&6, Montague Close, London SE1 £43,500,000 7.8%Victory House, Trafalgar Place, Brighton £17,700,000 3.2%Reynard Business Park, Brentford £17,300,000 3.1%20/22, Tudor Street, London, EC4 £17,100,000 3.1%The Albion Centre, Bath Street, Ilkeston £14,200,000 2.5%Olympic Office Centre, 8 Fulton Road, Wembley £13,650,000 2.4%Union Park, Fifers Lane, Norwich £13,450,000 2.4%The Gate Centre, Syon Gate Way, Brentford £10,800,000 1.9%Mid City Place, High Holborn £10,150,000 1.8% Total £202,900,000 * Percentage of Gross Asset Value 10 Largest Tenancies Value %National Magazine Company Limited £2,250,000 7.4%Australia & New Zealand Banking Group Ltd £1,460,000 4.8%Mott MacDonald Ltd £1,307,148 4.3%Reed Smith Services £1,295,374 4.3%Freshfields Services Company £1,279,600 4.2%The British Broadcasting Corporation £826,000 2.7%Grand Metropolitan Estates Ltd £795,975 2.6%Recticel SA £713,538 2.4%Jarvis Porter (Property Holdings) Ltd £700,000 2.3%Concept Automotive Services Ltd £515,970 1.8% Total £11,143,605 Consolidated income statement(unaudited) for the period from 1 April 2005 to 30 September 2005 01/04/2005 27/05/2004 27/05/2004 to to to 30/09/2005 31/03/2005 30/09/2004 £'000 £'000 £'000 Rent receivable 13,023 16,693 4,061Other income 318Property operating expenses (172) (293)Net rental and related income 12,854 16,718 4,061Profit on disposal of investment property 1,862 390 Valuation gains on investment property 18,493 18,425 4,250Valuation losses on investment property (1,922)Net valuation gains on investment property 18,493 16,503 4,250 ExpensesInvestment management fee (2,357) (2,418) (604)Valuers' and other professional fees (201) (473) (24)Administrative fee (127) (120) (41)Audit fee (13) (50) (17)Directors' fees (43) (72) (30)Other expenses (121) (187) (113) Total expenses (2,862) (3,320) (829) Net operating profit before net finance costs 30,347 30,291 7,482Interest receivable 1,270 430 143Interest payable (4,133) (3,477) (542)Finance expenses (472) (133) (64)Net finance costs (3,335) (3,180) (463)Profit before tax 27,012 27,111 7,019 Taxation provision (400) (1,756) (1,082)Profit for the period 26,612 25,355 5,937Basic and diluted earnings per share 9.22p 9.7p 2.28p The Company commenced operations on 16 July 2004 following incorporation on 27May 2004. All items in the above statement derive from continuing operations. Consolidated statement of changes in equity(unaudited) for the period from 1st April 2005 to 30th September 2005 Notes 01/04/2005 27/05/2004 27/05/2004 to to to 30/09/2005 31/03/2005 30/09/2004 £'000 £'000 £'000 Equity at 31 March 2005 272,822 Profit for the period 26,612 25,355 5,937Dividends paid 4 (8,775) (8,775) Issue of Ordinary Shares 260,000 260,000Issue of C Shares 100,000Issue costs (1,644) (2,376) (2,376)Hedge Reserve (3,987) (1,382)Equity at 30 September 2005 385,028 272,822 263,561 Consolidated balance sheet(unaudited) as at 30th September 2005 Notes 30/09/2005 31/03/2005 30/09/2004 £'000 £'000 £'000 Investment properties 428,845 379,450 349,680Investment in associate 6 131Loan to associate 6 9,787Non-current assets 438,763 379,450 349,680 Trade and other receivables 5,595 4,694 6,626Cash and cash equivalents 112,943 55,222 16,599Current assets 118,538 59,916 23,225Total assets 557,301 439,366 372,905 Issued capital and reserves 385,028 272,822 263,561Equity 385,028 272,822 263,561 Interest-bearing loans and borrowings 148,570 148,482 97,216Interest rate swap 5,369 1,382Provisions 2,000Non-current liabilities 153,939 151,864 97,216 Trade and other payables 14,298 12,875 12,128Provisions 2,000Taxation payable 2,036 1,805Current liabilities 18,334 14,680 12,128Total liabilities 172,273 166,544 109,344Total equity and liabilities 557,301 439,366 372,905 Net Asset Value per Ordinary Share 108.9p 104.9p 101.37p This Interim Report was approved by the Board of Directors on 22 November andsigned on its behalf by: Andrew Sykes Paul SmithChairman Director Consolidated statement of cash flows(unaudited) for the period from 1 April 2005 to 30 September 2005 01/04/2005 27/05/2004 27/05/2004 to to to 30/09/2005 31/03/2005 30/09/2004 £'000 £'000 £'000 Operating ActivitiesProfit for the period 26,612 25,355 7,482Adjustments for:Profit on disposal of investment property (1,862) (390)Net valuation gains on investment property (18,493) (16,503) (4,250)Net finance cost 3,336 3,180Taxation 400 1,756Operating profit before changesin working capital and provisions 9,993 13,398 3,232 Increase in trade and other receivables (785) (4,682) (6,626)Increase in trade and other payables 710 10,860 9,943 Cash generated from operations 9,918 19,576 6,549 Interest paid (2,632) (3,279)Interest received 1,147 417 143 Cash flows from operating activities 8,433 16,714 6,692 Investing ActivitiesProceeds from sale of investment property 21,020 3,550Acquisition of investment property (58,102) (364,107) (344,940) Cash flows from investing activities (37,082) (360,557) (344,940) Financing ActivitiesProceeds on issue of Ordinary Shares 260,000 260,000Cost of issue of conversion 100,000Issue costs paid on issuance of Ordinary Shares (1,644) (2,376) (2,352)Draw down of short term bank loan 98,100 98,100Repayment of short term bank loan (98,100)Draw down of long term loan 152,500Bank loan arrangement and valuation fees (901)Finance costs paid on arrangement of long (3,211) (2,284) term loanDividends paid (8,775) (8,775) Cash flows from financing activities 86,370 399,065 354,847Net increase in cash and cash equivalentsat 30 September 2005 57,721 55,222 16,599Cash and cash equivalents at beginning of period 55,222Cash and cash equivalents at end of period 112,943 55,222 16,599 Accounting policies(a) Basis of accountingThe consolidated unaudited financial statements have been prepared in accordancewith the International Financial Reporting Standards issued by, or adopted by,the International Accounting Standards Board (the "IASB"), interpretationsissued by the International Financial Reporting Standards Committee, applicablelegal and regulatory requirements of Guernsey Law and the Listing Rules of theUK Listing Authority. The consolidated financial statements have been preparedunder the historical cost convention, except for the measurement at fair valueof investment properties. (b) Basis of preparationThe accounting policies have been applied consistently by the company and areconsistent with those used in the previous year, except for changes resultingfrom the amendments to IFRSs. The company adopted the revised versions of IFRSsthat were effective at 1 January 2005. (c) Basis of consolidationThe consolidated financial statements comprise the financial statements of theCompany and all of its subsidiary undertakings up to 30 September 2005.Subsidiaries are consolidated from the date on which control is transferred tothe Group and cease to be consolidated from the date on which control istransferred out of the Group. (d) Income Rental incomeRental income is accounted for on a straight line basis over the lease term ofongoing leases and is shown gross of any UK income tax. Any material premiums orrent-free periods are spread evenly over the lease term. Interest receivableInterest receivable derives from cash monies held in current and depositaccounts throughout the period and is accounted for on an accruals basis. (e) ExpensesAll expenses are accounted for on an accruals basis. The Group's investmentmanagement and administration fees, finance costs (including interest on thelong term borrowings) and all other expenses are charged through theConsolidated Income Statement. (f) TaxationThe Company and its Guernsey registered subsidiaries have obtained exemptcompany status in Guernsey under the terms of the Income Tax (Exempt Bodies)(Guernsey) Ordinance 1989 so that they are exempt from Guernsey taxation onincome arising outside Guernsey and on bank interest receivable in Guernsey.Each company is, therefore, only liable to a fixed fee of £600 per annum. TheDirectors intend to conduct the Group's affairs such that they continue toremain eligible for exemption. No charge to Guernsey taxation will arise oncapital gains. The Company and its subsidiaries are subject to United Kingdomincome tax on income arising on investment properties, after deduction of debtfinancing costs and allowable expenses. (g) Investment propertiesInvestment properties are initially recognised at cost, being the fair value ofthe consideration given, including transaction costs associated with theinvestment property. After initial recognition, investment properties aremeasured at fair value, with unrealised gains and losses recognised in theConsolidated Income Statement. Realised gains and losses on the disposal ofproperties are recognised in the Consolidated Income Statement. Fair value isbased on the open market valuations of the properties as provided by KnightFrank LLP a firm of independent chartered surveyors, at the balance sheet date.Market valuations are carried out on a quarterly basis. (h) Share issue and formation expensesIncremental external costs directly attributable to the equity transaction andcosts associated with the establishment of the company that would otherwise havebeen avoided are written off against the share premium account. (i) Segmental reportingThe Directors are of the opinion that the Group is engaged in a single segmentof business, being that of a property investment business and in onegeographical area, the United Kingdom. (j) Cash and cash equivalentsCash in banks and short-term deposits that are held to maturity are carried atcost. Cash and cash equivalents are defined as cash in hand, demand deposits andshort term, highly liquid investments readily convertible to known amounts ofcash and subject to insignificant risk of changes in value. For the purpose ofthe Consolidated Statement of Cash Flows, cash and cash equivalents consist ofcash in hand and short-term deposits in banks. (k) Bank loans and borrowingsAll bank loans and borrowings are initially recognised at cost, the fair valueof the consideration received net of arrangement costs associated with theborrowing. After initial recognition, all interest bearing loans and borrowingsare subsequently measured at amortised cost. Amortised cost is calculated bytaking into account any loan arrangement costs and any discount or premium onsettlement. (l) Derivative financial instrumentsThe Group uses derivative financial instruments to hedge its exposure tointerest rate fluctuations. It is not the Group's policy to trade in derivativefinancial instruments. Derivative financial instruments are recognised initiallyat cost and are subsequently re-measured and stated at fair value. Fair value ofinterest rate swaps is the estimated amount that the Group would receive or payto terminate the swap at the balance sheet date. The gain or loss onre-measurement to fair value of cash flow hedges in the form of derivativefinancial instruments are taken directly to the Statement of Changes in Equity.Such gains and losses are taken to a reserve created specifically for thatpurpose, described as the Hedge reserve. On maturity or early redemption therealised gains or losses arising from cash flow hedges in the form of derivativeinstruments are taken to the Income Statement, with an associated transfer fromthe Statement of Changes in Equity in respect of unrealised gains or lossesarising in the fair value of the same arrangement. The Group considers the termsof its interest rate swap qualify for hedge accounting. (m) Investment in AssociateAssociates are those entities in which the Group has significant influence, butnot control, over the financial and operating policies. The consolidatedfinancial statements include the Group's share of the total recognized gains andlosses of associates on an equity accounted basis, from the date thatsignificant influence commences to the date that significant influence ceases.When the Group's share of losses exceeds its interest in an associate, theGroup's carrying amount is reduced to nil and recognition of further losses isdiscontinued except to the extent that the Group has incurred legal orconstructive obligations or made payments on behalf of an associate. Loans toassociates are stated at their amortised cost less impairment losses. Notes to the Interim report1. The un-audited interim results have been prepared in accordance withInternational Financial Reporting Standards. 2. The returns per ordinary share are based on 288,630,383 shares, being theaverage number of shares in issue. The average number of shares in issue in theperiod 27/05/2004 to 30/09/2004 was 260,000,000 shares. The average number ofshares in issue in the period 27/05/2004 to 31/03/2005 was 260,000,000 shares. 3. Earnings for the period from 01 April 2005 to 30 September 2005 should not betaken as a guide to the results of the period to 31 March 2006. 4. The third interim dividend of £4,387,500, equivalent to 1.6875 pence pershare was declared on 21 April 2005. The dividend payment was made on 19 May2005, to shareholders on the register on 29 April 2005. The fourth interimdividend of £4,387,500, equivalent to 1.6875 pence per share was declared on 19July 2005 with an ex-dividend date of 27 July 2005. The dividend payment wasmade on 12 August 2005, to shareholders on the register on 29 July 2005. Thefifth interim dividend of £5,966,325, equivalent to 1.6875 pence per share wasdeclared on 24 October 2005 with an ex-dividend date of 02 November 2005. Thedividend will be paid on 2 December 2005 to those shareholders on the registerat close of business on 04 November 2005. The net asset value in these accountsis expressed before the fifth interim dividend payment. 5. The Group results consolidate those of Insight Foundation Property TrustLimited and its subsidiary companies, all of which are wholly owned. 6. In August 2005, the Company invested equity and subordinated debt of£9,917,246.50 for a 19.725% shareholding in DV3 MidCity Limited, the companythat owns the Mid City Place property in London. This investment is classifiedas an investment in an associate due to the company having the ability to exertsignificant influence through its shareholding and representation on the boardof directors. The subordinated debt was advanced on similar terms to the othershareholders of DV3 Mid City Limited in proportion to their shareholdings. KPMG Independent review report to Insight Foundation Property Trust Limited We have been engaged by the company to review the financial information set outon pages 13 to 19 and we have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. This report is made solely to the company in accordance with the terms of ourengagement to assist the company in meeting the requirements of the ListingRules of the Financial Services Authority. Our review has been undertaken sothat we might state to the company those matters we are required to state inthis report and for no other purpose. To the fullest extent permitted by law, wedo not accept or assume responsibility to anyone other than the Company for ourreview work, for this report, or the conclusions we have reached. Directors' responsibilitiesThe interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the Directors. The Directors areresponsible for preparing the interim report in accordance with the ListingRules which require that the accounting policies and presentation applied to theinterim figures should be consistent with those which will be applied inpreparing the annual accounts. Review work performedWe conducted our review in accordance with guidance contained in Bulletin 1999/4"Review of interim financial information" issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof management and applying analytical procedures to the financial informationand underlying financial data and, based thereon, assessing whether theaccounting policies and presentation have been consistently applied, unlessotherwise disclosed. A review is substantially less in scope than an auditperformed in accordance with Auditing Standards and therefore provides a lowerlevel of assurance than an audit. Accordingly we do not express an audit opinionon the financial information. Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the period ended30th September 2005. KPMG Channel Islands Limited22 November 2005 Corporate informationRegistered AddressRoyal Bank Place1 Glategny EsplanadeSt Peter PortGuernsey GY1 2HS DirectorsAndrew F Sykes (Chairman)John R FrederiksenKeith M GoulbornGraham A HallPaul D Smith(all Non-Executive Directors) Investment ManagerInsight Investment Management(Global) Limited33 Old Broad StreetLondon EC2N 1HZ Fund AdministratorRBSI Fund Services(Guernsey) LimitedRoyal Bank Place1 Glategny EsplanadeSt Peter PortGuernsey GY1 2HS Solicitors to the Companyas to English LawHerbert SmithExchange House,Primrose StreetLondon EC2A 2HS as to Guernsey LawOzannes1 Le Marchant StreetSt. Peter PortGuernsey GY1 4HP AuditorsKPMG Channel Islands Limited2 Grange PlaceThe GrangeSt. Peter PortGuernsey GY1 4LD Property ValuersKnight Frank LLP20 Hanover SquareLondon W1S 1HZ Channel Islands SponsorOzannes Securities Limited1 Le Marchant StreetSt. Peter PortGuernsey GY1 4HP UK Sponsor and BrokerJP Morgan Cazenove Limited20 MoorgateLondon EC2R 6DA Tax advisersDeloitte & Touche LLP180 StrandLondon WC2R 1BL Receiving Agent and UKTransfer/Paying AgentComputershare InvestorServices PLCThe PavilionsBridgwater RoadBristol BS99 1XZ Issued by Insight Investment Management (Global) Limited.Registered office 33 Old Broad Street, London EC2N 1HZ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Schroder Real