Investment Objectives

The Company’s stated investment objectives at launch were to: meet its banking obligations and satisfy its obligations to its loan stockholders; satisfy the final capital entitlement of the Zero Dividend Preference shareholders; and provide Ordinary shareholders with an expected annualised dividend yield of 8.8 per cent. per annum based on the issue price of 100 pence and capital growth. The Company has currently suspended dividend payments but it is the intention of the Board to reestablish dividend payments as soon as practicable, although it is anticipated that the rate of dividend will be at a considerably lower level. The capital growth objectives remain unchanged. The portfolio is principally invested in the Irish property market.

Duration

The Company has a planned life to 31 May 2011. However prior to that date the Directors intend to put proposals to shareholders to effect a scheme of reconstruction which will give both Ordinary and Zero Dividend Preference shareholders the option of a full cash exit on or before the planned date without the need for the Company to dispose of the entire Property Portfolio or crystallise any potential capital gains tax liability that may exist within the Group at that time or the option to extend their investment beyond the planned winding-up date.

Capital Structure

The Company has a capital structure comprising Ordinary and Zero Dividend Preference shares and units of 7.5% Convertible Unsecured Loan Stock 2011 (“CULS”). The Group also has structural gearing in the form of bank borrowings, which totalled £255.8 million at 31 December 2004.

Risk

The market price of the Company’s shares will vary to reflect supply and demand in the market which will, at least in part, be influenced by the net asset value of the Company. Investments in the Company will be subject to the general and specific risks connected with investment in real estate and high yielding securities. Additionally, as a large proportion of the Company’s assets, liabilities and income are denominated in Euros, returns to the Ordinary shareholders will be influenced by the exchange rate movement between the Euro and Sterling. Such movements would also affect market prices of
the CULS. The use of gearing is likely to increase volatility in the Company’s net asset value in that a relatively small movement in the value of the Company’s investments will result in a greater relative movement (upwards or downwards) in net asset value per Ordinary share. The Board of the Company notes the publication of the Investment Entities (Listing Rules and Conduct of Business) Instrument 2003 and confirms that it is the Company’s policy to invest no more than 15 per cent. of gross assets in other listed investment companies (including investment trusts).

The use of gearing is likely to increase volatility in the Company’s net asset value in that a relatively small movement in the value of the Company’s investments will result in a greater relative movement (upwards or downwards) in net asset value per Ordinary share.
The Board of the Company notes the publication of the Investment Entities (Listing Rules and Conduct of Business) Instrument 2003 and confirms that it is the Company’s policy to invest no more than 15 per cent. of gross assets in other listed investment companies (including investment trusts).

Management Arrangements

The Manager to the Company is INVESCO International Limited, a Jersey-incorporated subsidiary of AMVESCAP PLC. For the year ended 31 December 2004, INVESCO Asset Management Limited (“IAML”) was the investment adviser for the Income Portfolio and INVESCO Real Estate Limited (“IREL”) was the UK Property adviser. On 1 January 2005, IAML replaced IREL as the UK Property adviser. Treasury Holdings is the investment adviser for the Irish Property Portfolio.

Taxation of Dividends

There is a statutory requirement for the Company to deduct income tax from dividends paid to Jersey residents and to account for such income deducted to the Comptroller of Income Tax and, on request, to make a return of the names, addresses and shareholdings of Jersey residents shareholders. Non Jersey resident investors will be paid without deduction of Jersey income tax. UK resident individual shareholders will be liable to income tax on the amount of the dividends received. Unless exempted, an Irish resident or ordinary resident shareholder will be liable to Irish tax on the amount of any dividend received.

PEP and ISA Status

The Ordinary and Zero Dividend Preference shares and units of CULS are qualifying investments for the stocks and shares component of an ISA and eligible for inclusion in a general PEP if acquired in the market using funds contained within the PEP.

* Restated - the prior year' figures have been restated.

I am pleased to report that the net asset value per Ordinary share of your Company increased during the year by 10.2 per cent. to 47.4p (as restated). The share price more than reflected the increase in net asset value, rising from 48p to 64.3p, a rise of 34 per cent. The Ordinary shares ended the year trading on a premium of 35.7 per cent. to net asset value.

The Group's assets at the year end consisted primarily of Irish properties. This follows the disposal of the majority of the UK property portfolio, which comprised just four assets at the end of the year.

The total value of the Irish property portfolio, including both investment and development properties, and interests in properties held in joint ventures, grew to just under e630 million as at 31 December 2004. On a like for like basis, and after adjusting for the revaluation of property acquired during the period, this represents an increase (in Euros) of 2.4 per cent. over the value as at 31 December 2003.

We have achieved pleasing increases in income through new lettings and rent reviews during the year. For example, the seventeen rent reviews completed at Stillorgan during the year produced an average of 60 per cent. growth in rents passing. Further details are set out in the Investment Advisers' Report. The Irish investment portfolio is now virtually fully let, with an average income yield on these assets of 5 per cent. In addition good progress is being made with planning applications for our development assets.

Financing

During the year total debt in Ireland (excluding loans held in joint ventures) increased by e9.5 million principally drawn down to fund new acquisitions.

In the UK your Company has repaid all outstanding borrowings following the disposal of
substantially all of the Company's bond investments and UK properties during the year.

We also completed an internal capital reorganisation, which has improved the tax efficiency of the Group. Intra-group loans previously made to and by a UK subsidiary and in respect of which interest payments were subject to taxation in the UK have been repaid. New intra-group loans involve Jersey subsidiaries, where no tax is payable on interest payments.

Adjustment to Accounts for 2002 and 2003

My Chairman's Statement to the interim accounts detailed new advice received concerning the accounting treatment of financial instruments, specifically the accounting treatment with respect to interest rate swaps that had ceased to constitute an effective hedge because the relative borrowings had been repaid. A prior year adjustment has been made and is reflected in the year ended 31 December 2003 comparative figures. Full details were shown in the interim results for the six months ended 30 June 2004.

Share Repurchase Authority

A resolution is being proposed at the Annual General Meeting to authorise the Company to repurchase up to 14.99 per cent. of its own ordinary shares for cancellation. If this resolution is approved, we make no commitment that any shares will be repurchased, however, the Board's intention would be to repurchase shares where there are no other suitable sources of demand and where the shares can be purchased at a price which would enhance value for shareholders generally.

Changes to the Board of Directors

With effect from 1 April this year the UK Listing Authority introduced new rules applicable to investment companies which provide that only one director may be connected with the investment manager/adviser. In order to comply with these rules, John Ronan and Patrick Teahon, both of whom are directors of Treasury Holdings, resigned from the Board of the Company on 31 March 2005. Messrs Ronan and Teahon have served as non-executive directors of the Company since it was launched in 2001 and I would like to thank them both for their invaluable contribution during what has often been difficult times.

Richard Barrett, also a director of Treasury Holdings, remains on the Board of the Company subject to annual re-election, again as required by the new rules introduced on 1 April 2005.

Litigation

In June 2004, the Company gave notice to Aberdeen Asset Managers and UBS of claims which were likely to be brought against those parties seeking compensation for substantial losses suffered by the Company in its income portfolio in 2001 and 2002. Details of the claims were supplied in writing in December 2004. Damages were claimed which would, if paid, have a material effect on the Company's financial position. Aberdeen indicated that any claim would be resisted and that it would seek payment of unpaid fees and amounts claimed to be due before and after the Company terminated Aberdeen's management contract in March 2003. In April 2005 the Company received responses from Aberdeen and UBS which continued to resist the Company's claims.

Post Balance Sheet Developments

On 1 March 2005, we announced that the Company had conditionally agreed to acquire or procure purchasers for just under 40 per cent. of the Company's Ordinary shares held by Dawnay, Day and others at a price of 58.5 pence per share.

Your Company subsequently agreed to acquire two additional properties, one at Barrow Street in the City of Dublin and one at Balbriggan in County Dublin, for an aggregate consideration of e73.76 million, to be satisfied as to e3 million in cash and as to the balance by the issue of new Ordinary shares at 58.5 pence per share.

These proposals, details of which were set out in a circular dated 11 April, 2005, were unanimously approved at an Extraordinary General Meeting held in Jersey on 5 May 2005.

As a result, the Company has introduced a number of new institutional investors, expanded the proportion of its Ordinary shares in public hands, enlarged the Irish property portfolio by the addition of two prime investment/development properties and significantly increased the total number of Ordinary shares in issue and the Company's net assets.

Outlook for 2005

With growth in the Irish economy expected to be over 5 per cent., the prospects for the Irish property market looks positive for the coming year and we continue to believe that this remains an attractive market for the Group, in addition we continue to seek out opportunities in other markets.

Confidence in the market is strong and likely to remain so with healthy demand for investment property underpinning current yields, while rental growth should slowly recover in respect of the office sector. Meanwhile the retail sector will continue to experience a healthy demand from retailers with supply of quality stock remaining very tight and no new prime retail space expected onto the Dublin market for at least the next twelve months.

Given the quality of the Company's portfolio, we are well placed to benefit from this generally positive market scenario. We can anticipate a high degree of activity in relation to our development portfolio in terms of bringing projects through the planning process and initiating development activity.

RYF Horney
Chairman

4 May 2004

The Directors present their report on the affairs of the Company, together with the audited financial statements for the year ended 31 December 2004.

Principal activities and business review

The business of the Company is that of a public closed-ended investment company investing in the Irish and UK property markets. A review of the Company’s activities is given in the Chairman’s Statement and the Investment Advisers’ Report.

Status

The Company is a collective investment fund, as defined in the Collective Investment Funds (Jersey) Law 1988, and has been granted exempt status under Article 123A of the Income Tax (Jersey) Law 1961.

Ordinary and Zero Dividend Preference shares and units of CULS are eligible for inclusion in a general PEP if acquired in the market using funds contained within the PEP. The Ordinary and Zero Dividend Preference shares and units of CULS are qualifying investments for the stocks and shares component of an ISA.

Revenue and Dividends

The Directors do not recommend the payment of a dividend on the Company’s Ordinary shares for the year (2003 : nil).

Irish Property Acquisitions and Placing/Repurchase/Cancellation of Ordinary Shares

As detailed in the Chairman’s Statement the Shareholders approved all the resolutions proposed at an Extraordinary General Meeting held on 5 May 2005 concerning:

– the acquisition of property at Balbriggan, County Dublin, from Treasury Holdings and others and of property at Barrow Street in the City of Dublin, for an initial aggregate consideration of €73.76 million to be satisfied in cash of €3 million and the balance by the issue of new Ordinary shares in the Company at 58.5 pence per share;
– a placing of 65 million Ordinary shares at 58.5 pence per share with predominantly institutional investors: this comprises 14.22 million of the new Ordinary shares being issued in respect of the Balbriggan acquisition and a further 50.78 million Ordinary shares currently held by Dawnay, Day and others;
– the repurchase and cancellation of the balance of the Ordinary shares held by Dawnay, Day and others, being 27.92 million Ordinary shares, at 58.5 pence per share;
– the enlargement of the issued ordinary share capital of the Company from 197 million Ordinary shares to 253 million Ordinary shares;
– the increase in Treasury Holdings’ stake in the Company from 35.5 per cent. of the existing Ordinary share capital to 55.2 per cent. of the enlarged Ordinary share capital; and
– the grant of a waiver by the UK Take-over Panel from the requirement which would otherwise arise under Rule 9 of the Take-over Code for Treasury Holdings and persons acting in concert with it to make a mandatory bid for the remaining Ordinary shares of the Company.

Directors

The Directors of the Company, all of whom served throughout the year, are shown with brief
biographical details on pages 13 and 14. In order to comply with Chapter 21.9 of the UKLA Listing Rules, whereby no more than one professional adviser to the investment manager may be a Director of the Company, Mr Ronan and Mr Teahon of Treasury Holdings resigned from the Board on 31 March 2005. Mr Barrett, also of Treasury Holdings, will remain a Director of the Company and will be subject to annual re-election by shareholders.

In accordance with the Articles of Association, Mr Barrett and Mr Jenkinson will retire by rotation and, being eligible, offer themselves for re-election.

No Director has a service contract with the Company.

Mr Barrett is a director of Treasury Holdings (“Treasury”). Treasury has an agreement to provide investment advisory services in respect of the Irish Property Portfolio and to provide property management services in respect of the Irish properties to Castle Market Holdings Limited. The terms of these agreements in force during the year are disclosed in note 3 to the Financial Statements.

The Directors who held office at the year end and their beneficial interests in the Ordinary 1p shares, Zero Dividend Preference 1p shares and 7.5% Convertible Unsecured Loan Stock 2011 (“CULS”) at 31 December 2004 are shown below:

Substantial Interests

The Board has been advised that in addition to the Directors’ interests shown above the following shareholders owned 3 per cent. or more of the issued Ordinary share capital of the Company as at 13 May 2005.

Panel waivers

The Panel on Takeovers and Mergers agreed in 2001 to waive the requirement for Treasury Holdings and persons acting in concert with it to make a general offer pursuant to Rule 9 of the City Code on Takeovers and Mergers in circumstances where its percentage holding of Ordinary shares increased as a result of the exercise of conversion rights attaching to any of its holding of Loan Stock. This waiver continues to apply.

Share buy-backs

No shares were bought back during the year.

The Company’s authority to make market purchases of up to 14.99% of its issued Ordinary shares expired on 29 July 2003. On the same date the authority to make market purchases of all its outstanding Zero Dividend Preference (ZDP) shares was renewed. The Company will be seeking to renew both the Ordinary and ZDP authorities at this year’s AGM, notice of which is set out on pages 57 to 58 of the Annual Report and Accounts 2004. These authorities will only be exercised on terms that are in the interests of shareholders.

Directors’ Fees
An ordinary resolution to be proposed at the Annual General Meeting will enable the Company to pay additional fees to Directors reflecting the additional work undertaken by them as members of the Litigation Committee during the year. Details of the Directors concerned and the amount proposed to be paid are given in note 4 on page 37 of the Annual Report and Accounts 2004.

Ordinary Shares

During the year 17,400 CULS were converted into Ordinary shares on a 1:1 basis.

Financial Statements

The Directors’ responsibilities regarding the financial statements and safeguarding of assets are set out on page 27 of the Annual Report and Accounts 2004.

International Accounting Standards (IAS)

The financial statements are currently prepared in accordance with UK GAAP. The Company is considering the voluntary adoption of IFRS and is close to completing a project to identify the accounting and disclosure issues arising for the Company. The main areas of impact are the accounting treatment for deferred tax, development properties, Zero Dividend Preference (“ZDP”) shares and accounting for the joint venture.
Addressing each point in turn:

– IFRS requires deferred tax to be provided on revaluation gains; this will reduce the group’s net asset value (“NAV”). Details of unprovided deferred tax surpluses as at the year end are shown in note 16.
– Development properties can either continue to be held at valuation, albeit with gains and losses taken directly through equity, or at cost under IAS 16.
– Under IFRS ZDP shares are classified as debt. This has no impact on the NAV as this is based on equity shareholders’ funds, but increases the liabilities within the top half of the balance sheet.
– Havenview, the joint venture, can continue to be accounted for in the balance sheet as a single line, or by using proportional consolidation on a line-by-line basis.

It is not expected that IAS 39, Financial Instruments, will have a material impact to the Group.

Report of the Audit Committee

The Audit Committee is responsible to the Board for reviewing each aspect of the financial reporting process; the systems of internal control and management of financial risks, the audit process, relationships with external auditors, the Company’s processes for monitoring compliance with laws and regulations, its code of business conduct and for making recommendations to the Board.

The Company’s internal financial controls and risk management systems have been reviewed with the investment managers against risk parameters approved by the Board. The Committee has also received a satisfactory report on the Manager’s internal operations from the Manager’s Compliance and Internal Audit Officer.

The audit plan and timetable is drawn-up and agreed with the Company’s Auditors in advance of the financial year-end. At this stage, matters for audit focus are discussed and agreed. These matters are given particular attention during the audit process and among other matters are reported on by the Auditors in their report to the Committee. This report is considered by the Committee and discussed with the Auditors and the Investment Managers prior to approving and signing the Financial
Statements.

The Committee has reviewed the Financial Statements for the year ended 31 December 2004 with the Investment Managers and Auditors at the conclusion of the audit process.

Details of the Audit fee are shown in note 4 to the Financial Statements of the Annual Report and Accounts 2004

Assessment of the Investment Manager

The Company’s investment management agreements are considered annually by the Management Engagement Committee. The results of this formal review are advised to the Board. The Management Engagement Committee carried out the most recent review following the Company’s financial year end on 31 December 2004 and, on the basis of the Committee’s report, the Board is pleased to confirm that it is satisfied with the performance and current terms of appointment of INVESCO Asset Management Limited, INVESCO Real Estate Limited and Treasury Holdings.

Going Concern

After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Financial Statements.

Relations with Shareholders

The Board maintains a regular dialogue with institutional shareholders. In addition, Board members and representatives of the Investment Advisers are available to answer shareholders’ questions at the Annual General Meeting of the Company.

Creditor Payment Policy

The Company’s policy is to pay Stock Exchange trade creditors on dates of settlement and all other creditors are normally paid within 30 days or in accordance with contracted terms.

Auditors

A resolution is to be proposed at the Annual General Meeting for the re-appointment of KPMG Channel Islands Limited as auditors of the company.