8th Mar 2007 11:45
ISIS Property Trust 2 Limited08 March 2007 To: RNS Date: 8 March 2007 From: ISIS Property Trust 2 Limited Interim results in respect of the period ended 31 December 2006 • Net asset value per share increased by 6.8 per cent • Dividend yield of 4.9 per cent The Chairman, Quentin Spicer, stated: 'The six months to 31 December 2006 saw further strong performance for thecommercial property sector, with total returns according to the InvestmentProperty Databank ('IPD') Monthly Index of 7.7 per cent. The Company's net assetvalue total return for the period was 9.3 per cent and the net asset value pershare as at 31 December 2006 was 151.9 pence. The shares have historically traded at a premium to net asset value. However,this trend changed during the second half of 2006, subsequent to theannouncement of two interest rate increases. The share price fell by 0.5 penceduring the period and the shares were trading at a 6.5 per cent discount as at31 December 2006. Property Market and Portfolio There was an increased level of activity within the portfolio during the period,with three properties being sold. The largest sale was 99/101 Long Acre, LondonWC2 which was sold for £17.5million, reflecting a net initial yield of 3.6 percent. The property valuation at 30 June 2006 was £16.4 million and the originalpurchase price at launch was £10.8 million. The property at Genesis House, Milton Keynes was sold for £8.1 millionreflecting a yield of 5.85 per cent. The valuation as at 30 June 2006 was £6.8million and the purchase price was £6.0 million in June 2004. The Company alsosold 114 Princes Street, Edinburgh for £985,000 reflecting a yield of 4.1 percent, compared with its valuation at 30 June 2006 of £950,000 and a purchaseprice of £710,000. Apart from the sales, further significant increases in value were recorded on anumber of properties. A significant contribution came from the property at Units1-8 Lakeside Road, Colnbrook which increased in value by 10.3 per cent to £15.5million, as a result of the refurbishment and re-letting of units. Also ofparticular note was 48/9 St James Street, London WC2 which increased in value by10.5 per cent to £18.4 million, as a result of an increase in ERV ('EstimatedRental Value')and an inward yield shift from continued occupational and investordemand for West End office property. Clifton Moor Gate, York increased in valueby 4.9 per cent to £10.7 million, as a result of yield movement from increasinginvestor demand in the motor showroom sector. Across the portfolio, void rates remain extremely low at 0.3 per cent, comparedwith the IPD average of 7.4 per cent. During the period, six rent reviews werecompleted providing an uplift of £45,875 per annum, or 6.4 per cent. The receipts from the sales of property in the first half of the financial yearare expected to be reinvested in the short to medium term, with a view torebalancing the portfolio. It is the intention of the Managers to seek furtherinvestment in the out of town retail and office sectors. Dividends A first interim dividend of 1.73 pence per share was paid on 22 December 2006. Asecond interim dividend of 1.73 pence per share will be paid on 30 March 2007 toshareholders on the register on 16 March 2007. As explained in my 2006 annualresults statement, this new rate of dividend represents an increase of 2.5 percent on the rate set at launch and it is intended that, in the absence ofunforeseen circumstances, future quarterly dividends will be maintained at thislevel. Borrowings The use of borrowings has continued to be an effective strategy in a market ofincreasing property values, providing enhanced returns to shareholders. Thegearing level as at 31 December 2006 was 29.4 per cent, which compared to 30.9per cent as at 30 June 2006 and 40.0 per cent at launch on 1 June 2004. On 10 January 2007 the Company repaid in full its existing debt facility of£70.7m with The Royal Bank of Scotland plc ('RBS') and entered into a new £75mfacility with Lloyds TSB Scotland plc ('LTSB'). The term of this facility isuntil January 2017. The margin under the new debt facility is 50 basis pointsover LIBOR for the first three years and 45 basis points over LIBOR for theremaining period. The other terms of the facility are substantially identical tothe terms of the previous facility with RBS. The Company has initially drawndown £60m under the new facility. At the same time, the Company terminated the interest rate swap with RBS andentered into a new interest rate swap transaction with LTSB. Under thisagreement, the interest on the amount initially drawn down under the newfacility has been fixed at an aggregate interest rate (including margin) of5.655 per cent per annum for the first three years and 5.605 per cent per annumthereafter. This compares to a fixed rate of interest of 6.265 per cent underthe previous facility. Outlook It has been another successful six months for the Company and further positivereturns are expected during the remainder of the financial year, although atmore modest levels than previously witnessed. Future returns are expected to be driven by income growth, rather than thecapital returns experienced to date. The Company has realised capital gains onsome properties and the Board believes it is well placed to take advantage ofany new investment opportunities that come to the market. Enquiries to: The Company Secretary Northern Trust International Fund Administration Services (Guernsey) Limited Trafalgar Court Les Banques St Peter Port Guernsey GY1 3QL Tel: 01481 745001 Fax: 01481 745051 I McBryde, S Macrae F&C Investment Business Limited Tel: 0131 718 1000 Fax: 0131 225 2375 ISIS Property Trust 2 Limited Consolidated Income Statement for the six months to 31 December 2006 Notes Six months to 31 Six months to 31 Year to 30 December 2006 December 2005 June 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Revenue Rental income 6,106 6,201 12,547 Gains on investmentproperties 7 11,173 16,769 31,158 ----------- ----------- -----------Total income 17,279 22,970 43,705 ----------- ----------- ----------- Expenditure Investment management fee (1,024) (898) (1,883) Direct operatingexpenses of let rentalproperty (240) (237) (466) Administrative fee (32) (31) (62) Valuation and other professionalfees (78) (70) (157) Directors' expenses (52) (33) (66) Other expenses (94) (113) (162) ----------- ----------- -----------Total expenditure (1,520) (1,382) (2,796) ----------- ----------- -----------Net operating profit beforefinance costs 15,759 21,588 40,909 ----------- ----------- ----------- Net finance costs Interest revenue receivable 187 64 201 Finance costs (2,265) (2,270) (4,508) ----------- ----------- ----------- (2,078) (2,206) (4,307) ----------- ----------- ----------- Net profit from ordinary activities beforetaxation 13,681 19,382 36,602 Taxation on profit on ordinary activities - - - ----------- ----------- -----------Net profit for the period 13,681 19,382 36,602 =========== =========== =========== Earnings per share 2 12.4p 17.5p 33.1p ISIS Property Trust 2 Limited Consolidated Balance Sheet as at 31 December 2006 31 December 31 December 30 June 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000Non-current assets Investment properties 212,471 214,065 227,293 ----------- ----------- ----------- Current assetsTrade and other receivables 3,306 1,046 2,939Cash and cash equivalents 28,822 7,578 5,051 ----------- ----------- ----------- 32,128 8,624 7,990 ----------- ----------- -----------Total assets 244,599 222,689 235,283 ----------- ----------- ----------- Non-current liabilities Interest-bearing bank loan (70,725) (71,330) (71,330)Interest rate swap liability (1,807) (5,741) (2,652) ----------- ----------- ----------- (72,532) (77,071) (73,982) Current liabilities Trade and other payables (4,181) (5,062) (4,165) ----------- ----------- -----------Total liabilities (76,713) (82,133) (78,147) ----------- ----------- ----------- ----------- ----------- -----------Net assets 167,886 140,556 157,136 =========== =========== =========== Represented by: Share capital 1,105 1,105 1,105Special distributable reserve 102,020 104,186 103,288Capital reserve 66,568 41,006 55,395Other reserve (1,807) (5,741) (2,652) ----------- ----------- -----------Equity shareholders' funds 167,886 140,556 157,136 =========== =========== =========== Net asset value per share 6 151.9p 127.2p 142.2p ISIS Property Trust 2 Limited Consolidated Statement of Changes in Equity for the six months to 31 December 2006 Notes 31 December 2006 31 December 2005 30 June 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Opening net assets 157,136 124,478 124,478 Net profit for the period 13,681 19,382 36,602 Dividends paid 4 (3,776) (3,730) (7,459)Unrealised gain onrevaluation of interestrate swap 845 426 3,515 ------------ ----------- -----------Closing net assets 167,886 140,556 157,136 ============ =========== =========== ISIS Property Trust 2 Limited Consolidated Statement of Cash Flows for the six months to 31 December 2006 Six months to 31 Six months to 31 Year to 30 December 2006 December 2005 June 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Cash flows fromoperating activities Net operating profit for theperiod beforefinance costs 15,759 21,588 40,909 Adjustments for: Gains on investmentproperties (11,173) (16,769) (31,158) (Increase) /decrease inoperating trade andother receivables (367) 258 (1,635) --------- --------- ---------Increase / (decrease) inoperating trade andother payables 87 565 (326) --------- --------- --------- 4,306 5,642 7,790 --------- --------- --------- Interest received 187 64 201 Bank loaninterest paid (2,611) (1,959) (3,927)Interest rate swaparrangement (330) (293) (569) --------- --------- --------- (2,754) (2,188) (4,295) --------- --------- ---------Net cash inflow fromoperating activities 1,552 3,454 3,495 --------- --------- --------- Cash flows from investing activities Capital expenditure (615) (1,246) (85)Sale of investmentproperties 26,610 5,000 5,000 --------- --------- ---------Net cash inflow frominvesting activities 25,995 3,754 4,915 --------- --------- --------- Cash flows from financing activitiesDividends paid (3,776) (3,730) (7,459) --------- --------- ---------Net cash outflow fromfinancing activities (3,776) (3,730) (7,459) --------- --------- ---------Net increase in cash andcash equivalents 23,771 3,478 951Opening cash and cashequivalents 5,051 4,100 4,100 --------- --------- ---------Closing cash and cashequivalents 28,822 7,578 5,051 ========= ========= ========= ISIS Property Trust 2 Limited Notes to the Consolidated Financial Statements for the six months to 31 December 2006 1. The unaudited interim results have been prepared in accordance with the accounting policies that the directors anticipate will be complied with in the annual financial statements for the year to 30 June 2007. 2. Earnings per Ordinary Share are based on 110,500,000 shares, being the weighted average number of shares in issue during the period (31 December 2005 - 110,500,000 and 30 June 2006 - 110,500,000). 3. Earnings for the six months to 31 December 2006 should not be taken as a guide to the results for the year to 30 June 2007. 4. Dividends paid during the period comprise a fourth interim dividend for the year ended 30 June 2006 of 1.6875p per share paid on 29 September 2006, and a first interim dividend for the year ended 30 June 2007 of 1.73p per share paid on 22 December 2006. A second interim dividend for the year ended 30 June 2007, of 1.73p per share,will be paid on 30 March 2007 to shareholders on the register at close ofbusiness on 16 March 2007. 5. No Director has any interest in any transactions which are or were unusual in their nature or significant to the Group. F&C Asset Management plc received fees for its services as Investment Managers. The total charge to the Income Statement during the period was £1,024,000 of which £520,000 remained payable at the period end. The Directors of the Company received fees for their services totalling £52,500,of which £26,000 remained payable at the period end. 6. The net asset value per ordinary share is based on net assets of £167,886,000 (31 December 2005 - £140,556,000 and 30 June 2006 - £157,136,000) and 110,500,000 ordinary shares (31 December 2005 - 110,500,000 and 30 June 2006 - 110,500,000), being the number of shares in issue at the period end. 7. Gains on investments disposed in period Six month period to 31 December 2006 £ million Original cost of investment properties sold 17.8Market value of investment properties sold as at 30 June 2006 24.2Sale proceeds 26.6Gain on disposal calculated with reference to - original cost 8.8 - 30 June 2006 valuation 2.4 8. The Group results consolidate those of IPT2 Property Holdings Limited, a wholly owned subsidiary which invests in properties. 9. The Interim Report will be posted to shareholders during March 2007. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BREI.L