IPI Invesco Pty

supply and demand for those ordinary shares, along with wider economic and 
political factors and changes in the law, including tax law. As such, the 
market value of an ordinary share can fluctuate and may not always reflect its 
underlying NAV. 
 
The Company's NAV is negative. It is not likely that sufficient appreciation in 
the value of the Company's investments will occur to allow investors to get 
back any of their investment. The listing of the Company's shares has been 
suspended and accordingly there is no market for the shares and no quoted 
price. 
 
Dividends have been suspended and no further dividends are expected to be paid. 
 
Borrowings 
 
The Company has, since its inception, used borrowings to fund, in whole or in 
part, purchases of property assets. Use of borrowings in this way will tend to 
magnify the proportional effect on the NAV of movements up or down in the value 
of the investment portfolio. Borrowings were used in the hope of enhancing 
shareholders returns but the Company has experienced the opposite effect. 
Accumulated losses in portfolio values over recent years have exceeded the net 
asset value and have resulted in a deficit in shareholders funds. It is not 
expected that this deficit will be recovered. 
 
Borrowings also expose the Company to the risk of breach of covenants and terms 
in relevant financing agreements. The Company has been since December 2013, and 
at the date of this document remains, non-compliant with the Loan to Value 
covenant in its facility agreement. 
 
Interest and Currency Risks 
 
As the Company has significant borrowings, the Company is exposed to interest 
rate fluctuations as a significant proportion of borrowings are based on 
floating interest rates. In addition, the Company invests in Continental 
European property exposing the Company to movements in the euro exchange rate. 
Any increase in interest rates or adverse changes in the euro exchange rate 
will have a negative impact on the NAV of the ordinary shares. 
 
Market Movements and Portfolio Performance 
 
Rental income and the market value for properties are affected by general 
economic conditions and/or by the political and economic climate of the 
jurisdictions in which the Group's property assets are situated as well as in 
the rest of the world. The marketability and value of investment properties 
held by the Group will, therefore, depend on many factors some of which may be 
beyond the control of the Company such as changes in gross domestic products, 
employment trends, inflation, interest rates, natural disasters, the 
environment, changes in the supply and demand for real estate in an area and 
credit risks. There is therefore no assurance that there will be either a ready 
market for any investment properties or that investment properties will be sold 
at a profit or will yield positive cash flows. 
 
Both rental income and market value of properties are also 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 lease properties on 
favourable terms, the inability to collect rents, the periodic need to 
renovate, repair and let space and the costs thereof, the costs of maintenance 
and insurance, and increased operating costs. In addition, certain significant 
expenditure, including operating expenses, must be met by the owner even when 
the property is vacant. 
 
While the Board obviously cannot influence the aforementioned factors, it is 
vigilant in monitoring and taking steps to mitigate the effects of them should 
they occur. The performance of the Investment Manager is carefully monitored by 
the Board, and the continuation of the investment mandate is reviewed each 
year. 
 
It is expected that all future cash returns will be applied in reducing debt or 
paying operating and winding up costs. 
 
For a fuller discussion of the economic and market conditions facing the 
Company and the current and future performance of the portfolio of the Company, 
please see both the Chairman's Statement and Investment Manager's Report. 
 
Regulatory 
 
The Company is regulated by the Jersey Financial Services Commission under the 
Jersey Listed Fund Guide. It is subject to various laws and regulations by 
virtue of its status as a collective investment fund holding a permit under 
applicable Jersey law, as well as its listings on the UKLA's Official List and 
Channel Islands Stock Exchange, not withstanding that these listings have been 
suspended and its admission to trading on the London Stock Exchange. A serious 
breach of regulatory rules may lead to suspension from the above Stock 
Exchanges or a qualified Audit Report. Other control failures, either by the 
Manager or any other of the Company's service providers, may result in 
operational or reputational issues, erroneous disclosures, loss of assets 
through fraud, as well as breaches of regulations. 
 
Changes in taxation, legal, regulatory, corporate governance, environmental, 
landlord and tenant and planning laws, regulations and guidelines may occur in 
the European Union that may adversely affect the Company, its investments in 
the affected jurisdiction and/or position of shareholders, and may reduce 
returns for shareholders. 
 
Reliance on Third Party Service Providers 
 
The Company has no employees and the Directors have all been appointed on a 
non-executive basis. The Company is therefore reliant upon the performance of 
third party service providers for its executive function. In particular, the 
Investment Manager performs services which are integral to the operation of the 
Company. Failure by any service provider to carry out its obligations to the 
Company in accordance with the terms of its appointment could have a materially 
detrimental impact on the operation of the Company and could affect the ability 
of the Company to successfully pursue its Investment Policy. 
 
The Investment Manager may be exposed to the risk that litigation, misconduct, 
operational failures, negative publicity and press speculation, whether or not 
it is valid, will harm its reputation. Any damage to the reputation of the 
Investment Manager could result in potential counterparties and third parties 
being unwilling to deal with the Investment Manager and by extension the 
Company. This could have an adverse impact on the ability of the Company to 
successfully pursue its Investment Policy. 
 
Please also refer to the potential for environmental claims as outlined under 
Environmental and Social Policies below. 
 
The Risks and Risk Management Policies are detailed in note 23 to the financial 
statements. 
 
Board Diversity 
 
The Company's policy on diversity is set out on page 17. The Board comprises 
five non-executive directors all of whom are male. Summary biographical details 
of the Directors are set out on page 14. The Company has no employees. 
 
Environmental and Social Policies 
 
The Group assumes all property ownership rights and liabilities relating to its 
acquired properties and could face substantial risk of loss from environmental 
claims based on environmental problems associated with such property, as well 
as from safety issues and third party liability risks. Despite due diligence, 
environmental liabilities in relation to properties in which the Group invests 
may not be ascertainable or fully ascertained prior to acquisition and the 
Group may therefore be exposed to clean-up and other remedial costs. The cost 
of any required remedy and the owner's liability for such remediation work in 
relation to any affected property may not be limited under the applicable 
environmental laws and could exceed the value of the property and/or the 
aggregate assets of the property owning subsidiary which holds the affected 
property. Furthermore, the presence of hazardous substances or the failure 
properly to remedy contamination from such substances may adversely affect the 
Group's ability to sell the relevant property and may also affect the Group's 
ability to borrow using the affected property as collateral. The Company does 
not have a human rights policy, although the Investment Manager applies the 
United Nations Principles for Responsible Investment. 
 
This Strategic Report was approved by the Board on 26 November 2014 
 
R&H Fund Services (Jersey) Limited 
Company Secretary 
 
. 
 
PROPERTY PORTFOLIO INFORMATION 
 
INVESTMENT PROPERTIES 
 
at 31 March 2014 
 
PROPERTY                                                        VALUE      % OF 
                                                    COUNTRY GBP MILLION PORTFOLIO 
 
Le Directoire, St Cloud                              France     31.83      26.6 
 
Schickardstrasse 30, Böblingen                      Germany     16.12      13.5 
 
11 Old Jewry, London EC2                                 UK     13.70      11.4 
 
St Michel Sur Orge, Ile de France                    France     10.58       8.8 
 
Offices, Priory Business Park, Bedford*                  UK      7.60       6.3 
 
135-139 Rue Colonel Bourg, Brussels                 Belgium      5.83       4.9 
 
Walworth Industrial Estate, Andover                      UK      5.38       4.5 
 
Forum One, Station Road, Theale                          UK      5.05       4.2 
 
Combs la Ville, Ile de France*                       France      4.51       3.8 
 
Le Verdun, Gentilly*                                 France      4.05       3.4 
 
Chittening Industrial Estate, Avonmouth                  UK      3.62       3.0 
 
Can Estella Industrial Estate, Barcelona              Spain      3.47       2.9 
 
Armstrong Road, Basingstoke                              UK      3.06       2.6 
 
Grovebury Road, Leighton Buzzard*                        UK      3.00       2.5 
 
Chalfon Court, Amersham                                  UK      1.21       1.0 
 
Webner Industrial Estate, Wolverhampton                  UK      0.77       0.6 
 
                                                     119.76     100.0 
 

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