TIDMAPT
To: Company Announcements
Date: 22 October 2015
Company: AXA Property Trust Limited
Subject: Annual Financial Report
AXA Property Trust Limited
Annual Report and Consolidated Financial Statements for the year ended 30 June
2015
Key Financial Information
For the year ended 30 June 2015
* Sterling currency Net Asset Value ("NAV") increased to GBP57.27 million on a
pro-forma basis before deduction of share redemptions paid (EUR49.37 million
after deduction of redemption paid).
* Profit was 8.63 pence per share
* No dividends were paid relating to the year
* Redemption of shares paid during the year were GBP3.8 million (2014: GBP4.1
million)
As at 30 June 2015
* NAV was 57.61 pence per share (30 June 2014: 54.5 pence)
* Share price1 was 44.75 pence per share (30 June 2014: 41.50 pence)
* Gearing2 was 35.7% (gross) and 31.1% (net) (30 June 2014: 39.2% and 34.6%)
Performance Summary
Year ended Year ended % change
30 June 2015 30 June 2014
NAV (GBP000s) 49,367 50,428 (2.10%)
NAV per share 57.61p 54.50p 5.71%
Gains/(Losses) per share 8.63p (2.44p) n/a
Share redemptions paid GBP3.8m GBP4.1m (7.32%)
Share price2 44.75p 41.50p 7.83%
Share price discount to NAV 22.3% 23.9% n/a
Gearing (gross) 3 35.7% 39.2% n/a
Total assets less current 66,910 82,185 (18.84%)
liabilities (GBP000s)4
The 2015 NAV is presented after deduction of GBP7.9m of redemption payments. If
these are added back, the movement compared to 2014 would be 4.15%.
Year ended Year ended
Total return 30 June 2015 30 June 2014
NAV Total Return1 5.43% (7.92%)
Share price Total Return
- AXA Property Trust 10.5% 14.3%
- FTSE All Share Index 2.6% 13.1%
- FTSE Real Estate Investment Trust Index 19.5% 23.9%
Past performance is not a guide to future performance.
1 On a pro-forma basis which includes adjustments to add back any prior NAV
reductions from share redemptions.
2 Mid-market share price (source: Stifel Nicolaus Europe Limited).
3 Gearing is calculated as overall debt, either gross or net of cash (net of GBP
5.2 million of post-quarter distribution) held by the Group over property
portfolio at fair value.
4 Includes bank debt classified as a current liability.
Source: AXA Investment Managers UK Limited and Stifel Nicolaus Europe Limited
Chairman's Statement
Over the year AXA Property Trust Limited (the "Company") has sold four assets
and returned to Shareholders proceeds of GBP3.8 million (and since the year end
returned a further GBP5.2 million). The Board and Investment Manager are pleased
with the progress being made with the liquidation of the portfolio. Meeting a
better market, some good prices have been achieved and the patient approach,
enhancing assets and timing marketing, appears to be bearing fruit.
Results
The Company and its subsidiaries (together the "Group") made a total net profit
after tax of GBP7.7 million for the year to 30 June 2015. Excluding the GBP4.4
million revaluation profit on investment properties, the Group made a profit of
GBP3.3 million. The Net Asset Value ("NAV") of the Company at 30 June 2015 was GBP
49.37 million (30 June 2014: GBP50.43 million), a decrease of GBP1.06 million
(2.10%) since 30 June 2014. This decrease was mainly explained by the return of
capital to shareholders (- GBP3.8 million), the revaluation of investment
properties (+GBP4.4 million) and Fx impact (-GBP5.3 million).
The Company's net property yield on current market valuation (after acquisition
and operating costs) as at 30 June 2015 was 9.00% (30 June 2014: 7.53%). A
detailed yield analysis is included in the Investment Manager's Report.
The mid-market price of the Company's shares on the London Stock Exchange on 30
June 2015 was 44.75 pence (30 June 2014: 41.50 pence), representing a discount
of 22.3% to the Company's NAV at 30 June 2015 (30 June 2014: 23.9%).
Return of Capital to Shareholders
No dividends were declared during the period and the dividend policy remains
unchanged.
The Company returned GBP2.0m to Shareholders by means of a capital redemption on
30 October 2014 and a further GBP1.8m on 14 May 2015. An additional post closing
capital redemption of GBP5.2 million paid to investors on 30 July 2015.
Bank Finance and Deleveraging
The Group continues to comply with the 60% loan-to-value ("LTV") covenant of
the main loan facility with Crédit Agricole and Credit Foncier. Further
repayments are made as assets are sold under the disposal programme. At 30 June
2015 the total bank debt stood at GBP24.44 million (EUR34.50 million) (before
capitalised debt issue costs) with an LTV of 41.0%. The loan is due to mature
on 1 July 2016.
Prospects
The Board believes that the prospect of achieving a complete disposal of the
remaining portfolio in the next year is good. As the Investment Managers
reports, conditions in the European property markets have been improving but
the wider economic and markets background continues to be uncertain. The
Investment Managers believes good prices can be obtained for the remaining six
properties, with no need for "forced sale".
The Fund Manager
AXA Investment Managers have informed the Board that after eight years as
Senior Fund Manager, Martin McGuire has resigned his position at AXA Investment
Managers and will leave the organisation on 27th November 2015. The Board
wishes to thank Martin for his considerable contribution to the management of
the Company over this time and wish him well in his future career. The Fund
Manager responsibility will pass to Ian Chappell who is a Senior Fund Manager
at AXA Investment Managers. Ian is a Member of the Royal Institution of
Chartered Surveyors and joined AXA Investment Managers in 2007. He has over 20
years' experience of the European real estate markets and has a detailed
knowledge and understanding of both the Company and portfolio. There is not
expected to be any material change in the conduct of the orderly wind down of
the portfolio
Charles Hunter
Chairman
22 October 2015
Investment Manager's Report
Investment Manager
AXA Investment Managers UK Limited (the "Investment Manager", "AXA IM") is the
UK subsidiary of AXA Investment Managers, a dedicated asset manager within the
AXA Group. AXA Investment Managers is an innovative and fast-growing
multi-expertise investment manager with EUR694 billion of assets under management
and over 2,500 employees, at 30 June 2015.
AXA Real Estate Investment Managers UK Limited (the "Real Estate Adviser") is
part of the real estate management arm of AXA Investment Managers S.A. ("AXA
Real Estate"). AXA Real Estate is a specialist in European real estate
investment management with over EUR60 billion of assets under management and over
500 staff, operating in 23 countries as at 30 June 2015.
Source: AXA Investment Managers UK Limited
Fund Manager
Martin McGuire has headed the AXA Property Trust Fund Management team since
December 2007. He is a Chartered Surveyor and Senior European Fund Manager at
AXA Real Estate. He has over 30 years of experience in commercial property with
a significant proportion of this in Continental European property. Mr McGuire
lived for five years in Brussels where he worked for Jones Lang Wootton. In
1985 he joined Standard Life and led their expansion into the Continental
European markets where he managed the investment and development programme over
many years taking the exposure to in excess of EUR1.5 billion and was Fund
Manager of the Standard Life Investments' EUR800 million European Property Growth
Fund. Latterly he was Investment Director at Standard Life Investments and
managed the GBP2 billion Unit Linked Life Fund. He holds a degree in Land Economy
from the University of Aberdeen and also an Investment Management Certificate.
He is resident in the United Kingdom.
Market Outlook
German Retail
The performance of monthly retail sales support the view that consumption
remains a strong pillar of the German economy as they continued to increase in
May 2015 by 0.5%. One of the main reasons behind the recent rise in retail
sales had been the positive effect of falling oil prices, leading to enhanced
spending on other items. As oil prices are likely to firm over the coming
months, this effect could weaken.
In the first half of 2015, investments in German retail soared up to EUR9.8bn.
Volumes have more than doubled in comparison to H1 2014. Portfolio sales
contributed strongly to the overall investment volume and were responsible for
65% of all sales. Also regional centres and second-tier cities have gained in
popularity which reflects the higher risk affinity of investors. High street
investment volumes were boosted by the takeover of 43 Galeria Kaufhof
department stores by Canada based Hudson's Bay Company.
Prime yields have remained flat in all markets with the exception of Munich and
Hamburg, where yields fell by 10bps and 9bps respectively. Yields in all German
markets are at their lowest level on record. Prime rents have been flat over
the last quarter in all markets.
Italian Industrial
The take-up of industrial spaces in Italy in Q2 2015 reached 204,650 sq m, an
increase of almost 250% on the previous quarter and a 1% decrease on same
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period of 2014. Quarterly take-up involved existing buildings and no pre-let
transactions have been recorded. With 27% of quarterly take-up, 3PL operators
were once again the most active occupiers, followed by retailers which are
increasingly gaining influence as a driver of demand. Milan and its clusters
continued to be the regions with the strongest letting activity. Overall, prime
rents increased in the first quarter to EUR50/sq m/year in Milan, up from EUR48/sq
m/year of the previous quarter, according to CBRE. In the second quarter of
2015, no significant investment transactions have been recorded in the
Logistics sector. Half-yearly volume remained slightly below EUR 90m.
Netherlands Logistics
In the Netherlands, the industrial market is continuing to benefit most from
the country's economic recovery, due to its central location along the European
logistics corridor. The Central and East Brabant and Limburg regions, which are
focused on European distribution and high-tech sectors, continue to benefit
from cheaper rents and good accessibility to the rest of Europe. Occupiers are
actively looking to relocate to more modern facilities with good accessibility
but overall demand growth looks set to remain weak over the next few quarters,
given the current uncertainty in the Eurozone. Following strong growth along
the European corridor (up 4.2% in Rotterdam) in the first quarter, prime rents
have remained stable in the second quarter of 2015 at EUR75/sq m/year. The
investment market has, however, been revived in the second quarter, with EUR408m
invested into industrial property, which represents a 8% year-on-year increase.
While anticipated improvement in demand had pushed prime yields down in Q1
2015, prime yields remained stable in Q2 2015. In Amsterdam and Rotterdam, they
now stand at 6%.
Asset Management Update
The sales of the following assets were completed during the year:
* Koethen
* Altenstadt-Lindheim
* Kraichtal
* Wuerzburg
Except for Rothenburg, all remaining assets held by the Group were actively
marketed for sale during the year. The sale of Fuerth was notarised on the 29
September 2015.
Property Portfolio at 30 June 2015
Investment name Country Sector Net Yield on % of total
valuation1,2 Property
Portfolio
Phoenix Center,Fürth Germany Retail 6.87% 34.80%
Rothenburg ob der Germany Retail 10.19% 19.98%
Tauber
Curno, Bergamo Italy Leisure 9.05% 16.75%
Bergamina, Agnadello Italy Industrial 9.53% 13.19%
Am Birkfeld, Dasing Germany Industrial 7.21% 8.69%
Smakterweg, Venray Netherlands Industrial 34.53% 6.59%
1 Net yield on valuation is based on the current market valuation after
deduction of property-specific acquisition costs and operating costs.
2 Source - external independent valuers to the Company, Knight Frank LLP.
Details of all properties in the portfolio are available on the Company's
website retail.axa-im.co.uk/axa-property-trust under, Portfolio - Our Presence.
Source: AXA Real Estate Investment Managers UK Limited
Geographical Analysis at 30 June 2015 by Fair Value
Germany 63%
Italy 30%
The Netherlands 7%
Source: AXA Real Estate Investment Managers UK Limited
Sector Analysis at 30 June 2015 by Fair Value
Retail 55%
Industrial 28%
Leisure 17%
Source: AXA Real Estate Investment Managers UK Limited
Covenant Strength Analysis at 30 June 2015
(based on rental income)
Grade A 22.0% Creditreform:<199; D&B:A 1
Grade B 46.6% Creditreform:200-249; D&B:B,C,D 1,2
Grade C 28.9% Creditreform:>250; D&B: D + 3,4
Vacant 2.5%
Average unexpired lease length profile (weighted by rental income)
30 June 2015 30 June 2014
Years Years
Grade A 8.0 7.9
Grade B 4.1 2.9
Grade C 4.9 4.7
Average 5.2 5.6
The Company's tenant covenant profile is strong, with 22.0% of tenants rated
Grade A, indicating a high credit rating score. Rental income from Grade A
covenants has a weighted unexpired lease length of 8.0 years. The average
rent-weighted unexpired lease length for the investment portfolio as at 30 June
2014 was 7.9 years. Vacant space in the portfolio on 30 June 2015, measured
using estimated market rent, represented 2.5% of the total gross rental income.
Lease expiry profile weighted by rental income
% of income (30 June % of income (30 June
2015) 2014)
Vacant 2.5% 4.5%
<1 5.2% 4.0%
<2 3.7% 18.6%
<3 20.7% 3.1%
<4 23.9% 17.7%
<5 3.3% 13.8%
5-10 35.2% 13.1%
10-15 5.5% 25.2%
15+ 0% 0%
Source: AXA Real Estate Investment Managers UK Limited
Fund Gearing1 30 June 2015 30 June 2014
Property portfolio (GBP million) 67.69 82.64
Borrowings (GBP million) 24.16 32.39
Total gross gearing 35.7% 39.2%
Total net gearing 31.1 % 34.6 %
1 Fund gearing is included to provide an indication of the overall indebtedness
of the Group and does not relate to any covenant terms in the Group's loan
facilities. Gross gearing is calculated as debt over property portfolio at fair
value including the JV asset at Agnadello. Net gearing is calculated as debt
less cash (net of GBP5.2m distributed post-quarter) over property portfolio at
fair value including the JV asset at Agnadello.
Gross LTV Covenants2 30 June 2015 30 June 2014 Maximum
Main loan facility 41.0% 45.1% 60.0%
2 Gross LTV is calculated as debt over property portfolio at fair value.
The Group has remained in compliance with the loan covenants on both
facilities. As assets are sold the related allocated loan amounts will be
repaid, as required under the main loan facility agreement. There are no other
scheduled repayments prior to maturity under the agreement.
Of the GBP8.29 million cash held by the Group including the cash in the Agnadello
JV at 30 June 2015, GBP1.5 million was held in bank accounts pledged to the
financing banks.
Interest Cover Ratio3 at 30 Historic Minimum Projected Minimum Net rental
June 2015 income headroom
Main loan facility covenant 300.2% 200.0% 314.8% 185.0% 41.2%
3 Interest Cover Ratio is calculated as net financing expense payable as a
percentage of gross rental income less movement in arrears. Net rental income
headroom is based on projected interest cover.
At 30 June 2015, the Group had taken on GBP24.44 million (EUR34.50 million) of debt
(before considering unamortised debt issue costs) relating to the main facility
which was 100% hedged by interest rate swaps at 2.795% plus a margin of 2.4%
Portfolio Outlook
The implementation of the orderly wind down of the portfolio agreed by
Shareholders at the EGM in April 2013 is progressing.
The preparation for sale of the remaining assets continues, with lease re-gears
and extensions being negotiated with existing tenants where possible all to
improve the level of income and marketability of individual assets. Where no
such initiatives are appropriate all the assets except Rothenburg are now being
brought to market with the sale completion of four assets during the financial
year: Koethen, Wurzburg, Altenstadt Lindheim and Kraichtal. Rothenburg is
currently undergoing preparation for sale and will be brought to market by
calendar year end 2015.
The Manager continues to work closely with the Board on all aspects of the
strategy for the portfolio in order to ensure a timely return of capital to
Shareholders.
Board of Directors
Charles Hunter (Chairman) has over 30 years of experience in property
investment, principally in UK commercial property. He was Head of Property
Investment of Insight Investment (formerly Clerical Medical Investment Group)
for some nine years and before that Property Director of the investment
management subsidiaries of The National Mutual of Australasia group in the
United Kingdom. He is currently a director of Care South and he was on the
Supervisory Board of Schroder Exempt Property Unit Trust until its conversion
to a PAIF in 2012. Mr Hunter is a Fellow of the Royal Institution of Chartered
Surveyors and a member of the Investment Property Forum. He is resident in the
United Kingdom.
Stephane Monier has over 20 years of investment experience (including asset
allocation, fixed income and foreign exchange). Mr Monier is currently Chief
Investment Officer at Lombard Odier Europe SA. He is responsible for the
investment process and the performance for private clients' portfolios in
Europe. Mr Monier joined the Lombard Odier group in 2009 on the institutional
side (Lombard Odier Investment Managers or LOIM). He was initially Global Head
of Fixed Income and Currencies for LOIM and then promoted to Deputy Global
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Chief Investment Officer. Prior to joining LOIM, Mr Monier was Global Head of
Fixed Income and Currencies at Fortis Investments from 2006 to 2009 and he also
occupied the very same position at the Abu Dhabi Investment Authority from 1998
to 2006. Prior to Abu Dhabi, Mr Monier spent seven years in JP Morgan
Investment Management as a Fixed Income Manager both in London and Paris from
1991 to 1998. Mr Monier has a Masters Degree in Science from Agrotech (Paris)
and a Masters Degree in International Finance from HEC Graduate School of
Business (Jouy en Josas) (France). He is also a CFA charterholder. He is
resident in the United Kingdom.
Gavin Farrell is qualified as a Solicitor of the Supreme Court of England and
Wales, a French Avocat and an Advocate of the Royal Court of Guernsey. He is a
Partner at Mourant Ozannes, Advocates & Notaries Public in Guernsey, having
worked previously at Simmons and Simmons, both in Paris and London, and
specialises in international and structured finance and collective investment
schemes. Mr Farrell holds a number of directorships in investment and captive
insurance companies. He is resident in Guernsey.
Stuart Lawson is a Fellow of the Chartered Association of Certified
Accountants. He joined Northern Trust in 1988 working in Fund Administration
and Trust client accounting before being appointed Head of Finance for the
office in 1996 where he established a Risk Management Department. In 2005 he
was appointed Chief Administration Officer for Guernsey with local
responsibility for finance, risk, compliance, corporate services and
communication, and in 2007 he assumed responsibility for Real Estate and
Infrastructure Fund Administration services for the EMEA region. He is
currently head of Regulatory and Market Change in Guernsey, is a Director of a
number of client entities and Chairman of Northern Trust (Guernsey) Limited. He
has 30 years of experience in the Financial Services Industry and is resident
in Guernsey.
Alphons Spaninks joined AXA Real Estate in 2005 as a Senior Asset and
Transaction Manager. Since 2006, he has been responsible for managing the Dutch
office which currently has a team of five. The Assets under Management in The
Netherlands are currently circa EUR500m. Mr Spaninks was promoted to Regional
Head Benelux and Scandinavia in 2008, responsible for Assets under Management
of over EUR2bn and managing a team of professionals in Stockholm and Brussels. He
has almost 20 years of experience in commercial functions within various real
estate companies. Prior to joining AXA Real Estate, Mr Spaninks worked for AZL
Vastgoed as Director of Asset Management. Prior to that, he was Regional
Director at MOG, a Dutch Property Management company where he began his career
as a Property Manager. Mr Spaninks holds a Masters of Science Degree in
Building from the Technical University of Eindhoven and a Masters Degree in
Real Estate from ASRE (Amsterdam) and is a member of Royal Institution of
Chartered Surveyors. He is resident in the Netherlands.
Report of the Directors
The Directors of Company present their Annual Report together with the Group's
Audited Consolidated Financial Statements (the "Financial Statements") for the
year ended 30 June 2015. The Directors' Report together with the Financial
Statements give a true and fair view of the financial position of the Group.
They have been prepared properly, in conformity with International Financial
Reporting Standards ("IFRS") as issued by the International Accounting
Standards Board and are in accordance with any relevant enactment for the time
being in force; and are in agreement with the accounting records.
Principal Activity and Status
The Company is an Authorised Closed-ended investment company domiciled in
Guernsey and is registered under the provision of The Companies (Guernsey) Law,
2008 and has a premium listing on the official list and trades on the main
market of the London Stock Exchange. Trading in the Company's ordinary shares
commenced on 18 April 2005. The Company and the entities listed in note 2(f) to
the Financial Statements together comprise the "Group".
Going Concern
The discount control provisions established when the Company was launched
required a continuation vote to be proposed to Shareholders at the Company's
Annual General Meeting ("AGM") in 2015. As a result of the large discount to
Net Asset Value at which shares were trading there was little chance of raising
new capital. After extensive shareholder consultation, the Board resolved not
to seek continuation of the Company in 2015 and proposed to Shareholders that
the Company enter into a managed wind-down. This proposal was approved at an
Extraordinary General Meeting ("EGM") held on 26 April 2013.
In accordance with IFRS, the Financial Statements have been prepared on a
non-going concern basis reflecting the orderly wind-down of the Group.
Accordingly, the going concern basis of accounting is not considered
appropriate. All assets and liabilities continue to be measured in accordance
with IFRS. The Board recognises that the liquidity of certain holdings is
uncertain and the Board will review the most appropriate course of action with
regard to these assets over the coming months. The Directors estimate that the
wind-down costs will be approximately GBP194,272 (EUR 274,216) (30 June 2014: GBP
253,208 (EUR316,216)). The Board believes that the Group has sufficient funds
available to meet its wind-down costs, day-to-day running costs and amounts due
in terms of its loan facilities.
Investment Objective and Investment Policy
The investment objective and investment policy of the Company are as described
in the Financial Statements.
Results and Dividends
The results for the year are set out in the Consolidated Income Statement.
Following Shareholder approval at the EGM held on 26 April 2013, the Company
will continue the implementation of a Managed Wind-down. December 2015 remains
the target for the completion of all sales, however at present it is considered
that the completion of the sale of certain assets may not occur until early
2016. The Company has made timely returns of capital to Shareholders whilst
balancing the need to maximise the value from the Company's investments and to
provide for sufficient working capital. A resumption of dividend payments is
not anticipated.
Directors
The Directors who held office during the year and as at the date of this report
were:
C. J. Hunter (Chairman)
G. J. Farrell
S. C. Monier
S. J. Lawson
A. Spaninks
Mr Lawson is a Director of Northern Trust (Guernsey) Limited, the Company's
bankers and member of the same group as the Administrator and Secretary..
Mr Farrell is a Partner of the Company's Guernsey legal advisers, Mourant
Ozannes, Advocates and Notaries Public.
Mr Hunter is also a Director of the three direct subsidiaries of AXA Property
Trust Limited.
Mr. Spaninks is the AXA Real Estate Investment Regional Head of Benelux and
Scandinavia.
Management
The Investment Manager provides management services to the Company. A summary
of the contract between the Company and the Investment Manager in respect of
the management services provided is given in note 3 to the Financial
Statements. During the year, the Board through the Management Engagement
Committee has reviewed the appropriateness of the Investment Manager's
appointment.
Alternative Investment Fund Managers Directive
he Company does not expect to be required to comply with the AIFM Directive. In
the unlikely circumstance that the Company markets its shares in EEA member
states, the relevant regime remains the national private placement arrangement
which may trigger requisite authorisation, possible changes to the governance
structure of the Company including the appointment of a depositary, and
additional disclosure in the financial statements. The AIFM Directive is likely
to increase management costs, including regulatory and compliance costs. The
Company will seek to minimise this impact where possible.
Foreign Account Tax Compliance Act
For purposes of the US Foreign Accounts Tax Compliance Act, the Company
registered with the US Internal Revenue Service ("IRS") as a Guernsey reporting
Foreign Financial Institution ("FFI") in December 2013, received a Global
Intermediary Identification Number (G0W47U.99999.SL.831), and can be found on
the IRS FFI list under the link http://apps.irs.gov/app/fatcaFfiList/flu.jsf.
The Company is subject to Guernsey regulations and guidance based on reciprocal
information sharing inter-governmental agreements which Guernsey has entered
into with the United Kingdom and the United States of America. The Board will
take the necessary actions to ensure that the Company is compliant with
Guernsey regulations and guidance in this regard.
Directors' Authority to Buy Back Shares
Any buy back of shares will be made subject to Guernsey law and within
guidelines established from time to time by the Board (which will take into
account the income and cash flow requirements of the Company) and the making
and timing of any buy backs will be at the absolute discretion of the Board.
Purchases of shares will only be made through the market for cash at prices
below the prevailing Net Asset Value of the shares 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 sets a cap on the price that the Company can pay.
Articles of Incorporation
At an EGM held on 26 April 2013, a special resolution was passed to amend the
Articles of Incorporation. The Board considered that, in light of the Managed
Wind-down, and in order to facilitate the realisation of the Portfolio by year
end December 2015, in a manner that achieves a balance between maximising the
value from the Company's investments and making timely returns of capital to
Shareholders, it was in the best interests of Shareholders and the Company as a
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whole to remove the requirement in the current Articles for a Continuation
Resolution to be put to Shareholders in 2015, and to make certain other
administrative changes and updates to the current Articles.
At an EGM held on 27 February 2014, a special resolution was passed to amend
the Articles of Incorporation. The Board introduced a mechanism for the
Redemption of Shares at the discretion of the Board prior to the eventual
liquidation of the Company. The purpose of such Redemption Mechanism being to
facilitate the return to Shareholders of cash proceeds in a cost-efficient
manner in accordance with the Investment Policy and Objective.
On 30 October 2014 and 14 May 2015, the Company under the mechanism for the
Redemption of Shares purchased and cancelled 3,668,894 and 3,181,089 Shares at
a value of GBP1,999,547 and GBP1,799,022 respectively. A further capital redemption
of GBP5.2 million was approved by the directors on 6 July 2015, with a redemption
date of 20 July 2015 and payment date of 30 July 2015.
Independent auditor
KPMG Channel Islands Limited has expressed their willingness to continue in
office as auditor and a resolution proposing their re-appointment will be
submitted at the forthcoming AGM.
Directors' Responsibilities
The Directors are responsible for preparing the Directors' Report and the
Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under the law they have elected to prepare the Financial
Statements in accordance with IFRS and applicable law.
The Financial Statements are required by law to give a true and fair view of
the state of affairs of the Group and of the profit or loss of the Group for
that period.
In preparing these Financial Statements, the Directors are required to:
* select suitable accounting policies and apply them consistently;
* make judgements and estimates which are reasonable and prudent;
* state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the Financial
Statements; and
* prepare the Financial Statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business. As
explained in note 2, the Directors do not believe it is appropriate to
prepare these Financial Statements on a going concern basis.
The Directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the Financial Statements comply with the
Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Disclosure of information to auditors
So far as each Director is aware, all relevant information has been disclosed
to the Company's auditor.
Directors' Responsibility Statement
We confirm that to the best of our knowledge and in accordance with DTR 4.1.12R
of the Disclosure and Transparency Rules:
(a) These Financial Statements have been prepared in accordance with IFRS and
give a true and fair view of the assets, liabilities, financial position and
profit or loss of the Company and the undertakings included in the
consolidation as a whole as at and for the year ended 30 June 2015;
(b) These Financial Statements, which include information detailed in the
Chairman's Statement, Investment Manager's, Directors' Report and Corporate
Governance Report provide a fair review of the development and performance of
the Group during the year; and includes a description of the principal risks
and uncertainties that the Group faced as at and for the year ended 30 June
2015, and
(c) These Financial Statements taken as a whole are fair, balanced and
understandable and provide the information necessary for the shareholders to
assess the Company's performance, business model and strategy.
Signed on behalf of the Board by:
Charles Hunter Stuart Lawson
Chairman Director
22 October 2015 22 October
2015
Corporate Governance Report
To comply with the UK Listing Regime, the Company must comply with the
requirements of the UK Corporate Governance Code (the "UK Code") or explain any
departures therefrom. The Company also seek to comply with the Code of
Corporate Governance issued by the Guernsey Financial Services Commission (the
"GFSC Code").
The Board recognises the importance of a sound corporate governance culture
that meets the listing requirements. The Board considers that reporting against
the principles and recommendations of the UK Code provides appropriate
information to Shareholders. Companies reporting against the UK Code are deemed
to comply with the GFSC Code.
The UK Code is available in the Financial Reporting Council's website,
www.frc.org.uk. The FRC issued a revised UK Code in September 2014, for
reporting periods beginning on or after 1 October 2014. The Board have not
early adopted the revised code.
The Company has complied with the relevant provisions of the UK Code, except
for the following:
The UK Corporate Governance Code includes provisions relating to:
* the role of the Chief Executive;
* Executive Directors' remuneration;
* the need for an internal audit function; and
* the whistle blowing policy
For the reasons set out in the UK Code, the Board considers these provisions
are not relevant to the position of the Company as it is an externally managed
investment company. The Company has therefore not reported further in respect
of these provisions.
The Directors are non-executive and the Company does not have employees, hence
no Chief Executive or whistle-blowing policy is required. The Board is
satisfied that any relevant issues can be properly considered by the Board.
There have been no instances of non-compliance, other than those noted above.
However the Directors have satisfied themselves that the Company's service
providers have appropriate whistle-blowing policies and procedures and have
received confirmation from the service providers that nothing has arisen under
those policies and procedures which should be brought to the attention of the
Board.
Details of compliance are noted in the following pages. The absence of an
Internal Audit function is discussed in the Audit Committee Report.
Composition, Independence and Role of the Board
The Board currently comprises of five non-executive Directors. With the
exception of Mr Spaninks, all Directors are considered by the Board to be
independent of the Company's Investment Manager.
The Chairman is Mr Hunter. The Chairman of the Board must be independent for
the purposes of Chapter 15 of the Listing Rules. Mr Hunter is considered
independent because he:
* has no current or historical employment with the Investment Manager; and
* has no current directorships in any other investment funds managed by the
Investment Manager except for the three direct subsidiaries of AXA Property
Trust Limited.
The Board has overall responsibility for maximising the Company's success by
directing and supervising the affairs of the business and meeting the
appropriate interests of shareholders and relevant stakeholders, while
enhancing the value of the Company and also ensuring protection of investors. A
summary of the Board's responsibilities is as follows:
* statutory obligations and public disclosure;
* strategic direction and financial reporting;
* risk assessment and management including reporting compliance, governance,
monitoring and control; and
* other matters having a material effect on the Company.
The Board is responsible to Shareholders for the overall management of the
Company
Composition, Independence and Role of the Board (continued)
The Board needs to ensure that the Annual Report and Financial Statements,
taken as a whole, are fair, balanced and understandable and provide the
information necessary for shareholders to assess the Company's performance,
business model and strategy. In seeking to achieve this, the Directors have set
out the Company's investment objective and policy and have explained how the
Board and its delegated Committees operate and how the Directors review the
risk environment within which the Company operates and set appropriate risk
controls. Furthermore, throughout the Annual Report and Financial Statements
the Board has sought to provide further information to enable shareholders to
better understand the Company's business and financial performance.
The Board's responsibilities for the Annual Report are set out in the
Directors' Responsibility Statement.
The Board is also responsible for issuing half yearly reports, interim
management statements and other price sensitive public reports.
The Board does not consider it appropriate to appoint a Senior Independent
Director because the Directors' are all deemed to be independent by the Company
except Mr Spaninks. The Board believes it has a good balance of skills and
experience to ensure it operates effectively. The Chairman is responsible for
leadership of the Board and ensuring its effectiveness.
The Board has engaged external companies to undertake the investment management
and administrative activities of the Company. Documented contractual
arrangements are in place with these companies which define the areas where the
Board has delegated responsibility to them.
The Company holds a minimum of four Board meetings per year to discuss general
management, structure, finance, corporate governance, marketing, risk
management, compliance, asset allocation and gearing, contracts and
performance. The quarterly Board meetings are the principal source of regular
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information for the Board enabling it to determine policy and to monitor
performance, compliance and controls which are supplemented by communication
and discussions throughout the year.
A representative of the Investment Manager and Administrator attends each Board
meeting either in person or by telephone thus enabling the Board to fully
discuss and review the Company's operation and performance. Each Director has
direct access to the Investment Manager and Company Secretary and may at the
expense of the Company seek independent professional advice on any matter.
Individual Directors may, at the expense of the Company, seek independent
professional advice on any matter that concerns them in the furtherance of
their duties. The Company maintains appropriate Directors' and Officers'
liability insurance.
Re-election
There are provisions in the Company's Articles of Incorporation which requires
Directors to seek re-election on a periodic basis. There is no limit on length
of service, nor is there any upper age restriction on Directors.
The Board considers that there is significant benefit to the Company arising
from continuity and experience among directors, and accordingly does not intend
to introduce restrictions based on age or tenure. It does however believe that
shareholders should be given the opportunity to review membership of the Board
on a regular basis.
In accordance with the Company's Articles of Association, at each AGM all
independent Directors who held office at the two previous AGM's and did not
retire shall retire from office and shall be available for re-election.
Mr. Spaninks is the AXA Real Estate Investment Regional Head of Benelux and
Scandinavia. As a non-independent Director, Mr. Spaninks is available for
re-election at each AGM. At the Company's upcoming AGM, and Mr Spaninks will
retire from office and shall be available for re-election.
The Board are of the opinion that the Board members standing for re-election
should be re-elected as they have the right skills and experience to continue
to manage the Company through the managed wind-down process.
Board diversity
The Board has also given careful consideration to the recommendation of the
Davies Report on "Women on Boards". As recommended in the Davies Report, the
Board has reviewed its composition. However, in view of the Company's managed
wind-down position it believes that the current appointments provide an
appropriate range of skills, experience and diversity.
Board evaluation and succession planning
The Directors consider how the Board functions as a whole taking balance of
skills, experience and length of service into consideration and also reviews
the individual performance of its members on an annual basis.
To enable this evaluation to take place, the Company Secretary will circulate a
detailed questionnaire plus a separate questionnaire for the evaluation of the
Chairman. The questionnaires, once completed, are returned to the Company
Secretary who collates responses, prepares a summary and discusses the Board
evaluation with the Chairman prior to circulation to the remaining Board
members. The performance of the Chairman is evaluated by the other Directors.
On occasions, the Board may seek to employ an independent third party to
conduct a review of the Board.
The Board considers it has a breadth of experience relevant to the Company, and
the Directors believe that any changes to the Board's composition can be
managed without undue disruption. An induction programme has been prepared for
any future Director appointments and all Directors receive other relevant
training as necessary.
Board and committee meetings
The table below sets out the number of Board, Audit Committee and Management
Engagement Committee meetings held during the year ended 30 June 2015 and,
where appropriate, the number of such meetings attended by each Director.
Management
Board of Directors Audit Committee Engagement
Committee
Held Attended Held Attended Held Attended
C. J. Hunter 4 4 2 2 1 1
G. J. Farrell 4 4 2 2 1 1
S. C. Monier 4 3 2 2 1 1
S. Lawson 4 4 2 2 1 1
A. Spaninks 4 4 2 1* 1 1*
* invitee
In addition to the scheduled quarterly Board meetings the Board, or committees
thereof, held 6 ad hoc meetings to deal with matters of an administrative
nature. These meetings were attended by those Directors who were available at
the time.
The Directors who held office during the year and their interest in the shares
of the Company (all of which are beneficial) were:
30 June 2015 30 June 2014
C. J. Hunter* 26,892 0.03% 29,043 0.03%
G. J. Farrell - - - -
S. C. Monier 72,830 0.08% 78,653 0.09%
S. Lawson - - - -
A. Spaninks - - - -
*Charles Hunter holds 26,892 (2014: 29,043) shares whilst his family holds
8,599 (2014: 9,287).
Committees of the Board
The Board has established Audit and Management Engagement Committees and
approved their terms of reference.
Audit Committee
The Company has established an Audit Committee with formal duties and
responsibilities. The Audit Committee meets formally at least twice a year and
each meeting is attended by the independent external auditor and Administrator.
The Company's Audit Committee is comprised of the entire Board except Mr.
Spaninks. The Audit Committee is chaired by Mr. Lawson.
A report of the Audit Committee detailing its responsibilities and its key
activities is presented.
Management Engagement Committee
The Management Engagement Committee is comprised of the entire Board except Mr.
Spaninks. Mr. Hunter is Chairman of the Management Engagement Committee. The
Management Engagement Committee meets formally at least once a year.
The Management Engagement Committee has formal duties and responsibilities. The
function of the Management Engagement Committee is to ensure that the Company's
Management Agreement is competitive and reasonable for the shareholders, along
with the Company's agreements with all other third party service providers
(other than the external auditors).
During the year the Management Engagement Committee has reviewed the services
provided by the Investment Manager as well as the other service providers and
have recommended to the Board that their continuing appointments is in the best
interest of the Shareholders.
Nomination Committee
The Board does not have a separate Nomination Committee. The Board as a whole
fulfils the function of a Nomination Committee. Any proposal for a new Director
will be discussed and approved by the Board.
Remuneration Committee
In view of its non-executive and independent nature, the Board considers that
it is not appropriate for there to be a separate Remuneration Committee as
anticipated by the UK Code because this function is carried out as part of the
regular Board business. A Remuneration Report prepared by the Board is
contained in the Financial Statements.
Terms of Reference
All Terms of Reference for Committees are available from the Administrator upon
request.
Internal Controls
The Board is ultimately responsible for establishing and maintaining the
Company's system of internal controls and for maintaining and reviewing its
effectiveness. The system of internal controls is designed to manage rather
than to eliminate the risk of failure to achieve business objectives and by
their nature can only provide reasonable and not absolute assurance against
misstatement and loss. These controls aim to ensure that assets of the Company
are safeguarded, proper accounting records are maintained and the financial
information for publication is reliable. The Board uses a formal risk
assessment matrix to identify and monitor risks.
The Board has delegated the management of the Company's investment portfolio
and the administration, registrar and corporate secretarial functions including
the independent calculation of the Company's NAV and the production of the
Annual Report and Financial Statements which are independently audited. Whilst
the Board delegates responsibility, it retains accountability for the functions
it delegates and is responsible for the systems of internal control.
Formal contractual agreements have been put in place between the Company and
providers of these services. On an ongoing basis board reports are provided at
each quarterly board meeting from the Investment Manager, Administrator,
Registrar, Sponsor and Broker and Company Secretary; and a representative from
the Investment Manager is asked to attend these meetings.
In accordance with Listing Rule 15.6.2 (2) R and having formally appraised the
performance and resources of the Investment Manager, in the opinion of the
Directors their continuing appointment of the Investment Manager on their terms
agreed is in the interests of the Company and the Shareholders.
In common with most investment companies, the Company does not have an internal
audit function. All of the Company's management functions are delegated to the
Investment Manager and Administrator which have their own internal audit and
risk assessment functions. An internal audit function specific to the Company
is therefore considered unnecessary.
Principal Risks and Uncertainties
Investment Risks
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The Company is exposed to the risk that its portfolio fails to perform in line
with its investment objective and policy if markets move adversely or if the
Investment Manager fails to comply with the investment policy. The Board
reviews reports from the Investment Manager at the quarterly Board meetings,
with a focus on the performance of the portfolio in line with its investment
policy.
Operational Risks
The Company is exposed to the risk arising from any failures of systems and
controls in the operations of the Investment Manager, Administrator and the
Sponsor. The Board and its Committees regularly review reports from the
Investment Manager and the Administrator on their internal controls.
Accounting, Legal and Regulatory Risks
The Company is exposed to the risk that it may fail to maintain accurate
accounting records or fail to comply with requirements of its Prospectus. The
accounting records prepared by the relevant service providers are reviewed by
the Investment Manager. The Administrator, Sponsor and Investment Manager
provide regular updates to the Board on compliance with the Prospectus and
changes in regulation.
Financial Risks
The financial risks, including market, credit, liquidity and interest rate risk
faced by the Company are set out in Note 21 of the Financial Statements.
These risks and the controls in place to reduce them are reviewed at the
quarterly Board meetings.
Relations with Shareholders
The Board welcomes shareholders' views and places great importance on
communication with its shareholders. The Board receives regular reports on the
views of shareholders and the Chairman and other Directors are available to
meet shareholders if required. The Investment Manager meets with major
shareholders on a regular basis and reports to the Board accordingly. Issues of
concern can be addressed by any shareholder in writing to the Company at its
registered address. The AGM of the Company provides a forum for shareholders to
meet and discuss issues with the Directors and Investment Manager of the
Company.
In addition the Company maintains a website which contains comprehensive
information, including regulatory announcements, share price information,
financial reports, investment objectives and strategy and investor contacts.
Significant Shareholdings
As at 21 September 2015, the Company has received of the following interests in
3% or more of the voting rights attaching to the Company's issued shares.
Shares held % of issued share
capital
State Street Nominees Limited 26,370,331.00 34.72
Transact Nominees Limited 12,738,599.00 16.77
Chase Nominees Limited 5,363,714.00 7.06
HSBC Global Custody Nominee (UK) 3,231,928.00 4.25
Limited
Credit Suisse Client Nominees (UK) 2,957,940.00 3.89
Limited
Signed on behalf of the Board by:
Charles Hunter Stuart Lawson
Chairman Director
22 October 2015 22 October 2015
Audit Committee Report
Dear Shareholders,
I am pleased to present the Audit Committee's Report for the year ended 30 June
2015, which covers the following topics:
* Responsibilities of the Audit Committee and its key activities during the
year,
* Financial reporting and significant areas of judgement and estimation,
* Independence and effectiveness of the external auditor, and
* Internal control and risk management systems.
As advised previously, the Company has implemented a strategy to wind down the
portfolio and return capital to investors. The Audit Committee's activities
during the year have therefore concentrated on maintaining an appropriate risk
and control environment, providing suitable disclosure of progress and residual
risks in the Financial Statements, ensuring ongoing engagement from service
providers and keeping sufficient liquid funds to meet expenditure for essential
or justified items.
Responsibilities
The Audit Committee reviews and recommends to the Board for approval or
otherwise, the Financial Statements of the Company and is the forum through
which the independent external auditor reports to the Board of Directors. The
independent external auditor and the Audit Committee will meet together without
representatives of either the Administrator or Investment Manager being present
if either considers this to be necessary.
The role of the Audit Committee includes:
* Monitoring the integrity of the Financial Statements of the Company
covering:
* formal announcements relating to the Company's financial performance,
* significant financial reporting issues and judgements,
* matters raised by the external auditors, and
* appropriateness of accounting policies and practices.
* Reviewing and considering the UK Code and FRC Guidance on Audit Committees
* Monitoring the quality and effectiveness of the independent external
auditors which includes:
* meeting regularly to discuss the audit plan and the subsequent audit
report,
* considering the level of fees for both audit and non-audit work,
* reviewing independence, objectivity, expertise, resources and
qualification, and
* making recommendations to the Board on the appointment, reappointment,
replacement and remuneration.
* Reviewing the Company's procedures for prevention, detection and reporting
of fraud, bribery and corruption, and
* Monitoring and reviewing the internal control and risk management systems
of the service providers together with the need for an Internal Audit
function
The Audit Committee's full terms of reference can be obtained by contacting the
Company's Administrator.
Financial Reporting
The Audit Committee's review of the Half Yearly Financial Report and Audited
Annual Report and Financial Statements focused on the following significant
risks:
* investment property portfolio valuation; and
* going concern given the wind-down strategy
Valuation of investment property portfolio
The Company's property investment portfolio had a fair value of GBP67.69 million
as at 30 June 2015 and represented the majority of the total assets of the
Company. The investments are all commercial real estate across Europe owned via
intermediate holding vehicles and a joint venture. The valuation of the
investments is in accordance with the requirements of IFRS as issued by the
International Accounting Standards Board. During the year the audit committee
have reviewed the independent valuations received and compared them to offers
received during the sales program, discussed them with the investment manager's
staff with specific knowledge of the relevant market, and sought explanations
of any variances. The Audit Committee considered the fair value of the
investments directly or indirectly held by the Group as at 30 June 2015 to be
reasonable based on information provided by the Investment Manager,
Administrator and the independent external property valuers. All prices are
subject to review and oversight by the Investment Manager.
Going concern
In accordance with IFRS, the Consolidated Financial Statements have been
prepared on a non-going concern basis reflecting the orderly wind-down of the
Group. Accordingly, the going concern basis of accounting is no longer
considered appropriate. Investment properties continue to be carried at fair
value. All other assets and liabilities continue to be measured in accordance
with IFRS.
Audit Findings Report
The independent external auditor reported to the Audit Committee that no
material misstatements were found in the course of their work. Furthermore, the
Manager and Administrator confirmed to the Audit Committee that they were not
aware of any material misstatements including matters relating to the Financial
Statements presentation.
Accounting Policies & Practices
The Audit Committee has assessed the appropriateness of the accounting policies
and practices adopted by the Company together with the clarity of disclosures
included in the Financial Statements. Following a review of the presentations
and reports from the Administrator and consulting where necessary with the
independent external auditor, the Audit Committee is satisfied that the
Financial Statements appropriately address the critical judgements and key
estimates (both in respect to the amounts reported and the disclosures). It is
also satisfied that the significant assumptions used for determining the value
of assets and liabilities have been appropriately scrutinised, challenged and
are sufficiently robust.
The Audit Committee advised the Board that this Annual Report and Financial
Statements, taken as a whole, is fair, balanced and understandable.
Risk Management
The Audit Committee continued to consider the process for managing the risk of
the Company and its service providers. Risk management procedures for the
Company are detailed in the Company's risk assessment matrix, and is reviewed
and approved by the Audit Committee on a regular basis. Regular reports are
received from the Investment Manager and Administrator on the Company's risk
evaluation process and reviews.
In the context of the Managed Wind-down, the key risks which the Audit
Committee has closely monitored are:
* Asset disposal program
* Ongoing liquidity
* Levels of expenditure
* Engagement from service providers
Through regular briefing sessions and formal committee meetings, the Audit
Committee has received the necessary information and confirmation that
activities have been managed and executed in accordance with plans approved by
the Board and established policies and procedures.
Fraud, Bribery and Corruption
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The Audit Committee continues to monitor the fraud, bribery and corruption
policies of the Company. The Board receives a confirmation from all service
providers that there have been no instances of fraud or bribery.
The Independent External Auditor
KPMG Channel Islands Limited has been the independent external auditor from the
date of the initial listing on the London Stock Exchange. In the circumstances
of the Company and expected progress with the managed wind-down process, a
change of external auditor is not envisaged given the short remaining life.
The independence and objectivity of the external auditor is reviewed by the
Audit Committee which also reviews the terms under which the independent
external auditor is appointed to perform non-audit services. The Audit
Committee has established pre-approval policies and procedures for the
engagement of the auditor to provide audit, assurance and tax services. The
principles on which these are based are that the external auditors may not
provide a service which:
* places them in a position to audit their own work
* creates a mutuality of interest
* results in the external auditor developing close relationships with service
providers of the Company
* results in the external auditor functioning as a manager or employee of the
Company
* puts the external auditor in the role of advocate of the Company
As a general rule, the Company does not utilise external auditors for internal
audit work, secondments or valuation advice. Services which are in the nature
of audit, such as tax compliance, tax structuring, accounting advice, quarterly
reviews and disclosure advice are normally permitted but are subject to prior
approval by the Audit Committee.
The Audit Committee has examined the scope and results of the audit, its cost
effectiveness and the independence and objectivity with particular regard to
non-audit fees, and considers KPMG Channel Islands Limited to be independent of
the Company. The following table summarises the remuneration paid to KPMG
Channel Islands Limited and to other KPMG member firms for audit and non-audit
services provided to the Company during the years ended 30 June 2015 and 30
June 2014.
30 June 2015 30 June 2014
GBP GBP
Statutory audit 172,149 216,842
Total audit fees 172,149 216,842
Non-audit services - 49,426
Total non-audit - 49,426
fees
The non-audit services work in 2014 was an independent review of the Interim
Report. This work was not undertaken in 2015 since in the opinion of the
Directors, the cost exceeded the perceived benefit to the company.
Performance and effectiveness
During the year, when considering the effectiveness of the independent external
auditor, the Audit Committee has taken into account the following factors:
* the audit plan presented to them before the audit;
* the post audit report including variations from the original plan;
* changes in audit personnel;
* the independent external auditor's own internal procedures to identify
threats to independence; and
* Feedback received from both the Investment Manager and Administrator.
The Audit Committee reviewed and, where appropriate, challenged the audit plan
and the audit findings report of the independent external auditor and concluded
that the audit plan sufficiently identified audit risks and that the audit
findings report indicated that the audit risks were sufficiently addressed with
no significant variations from the audit plan. The Audit Committee considered
reports from the independent external auditors on their procedures to identify
threats to independence and concluded that the procedures were sufficient.
Reappointment of external auditors
Consequent to this review process, the Audit Committee has recommended to the
Board that a resolution be put to the 2015 AGM for the reappointment of KPMG
Channel Islands Limited as independent external auditor. The Board has accepted
this recommendation.
Internal control and risk management systems
The Company outsources the subsidiary company accounting and financial
statements production to the Investment Manager, and company accounting,
document execution and expense payment to the Administrator. The Audit
Committee considers the following matters in this regard:
* regular operations meetings with service providers,
* reporting to the Audit Committee and Board,
* independent opinion of the external auditor, and
* on-going evaluation of performance.
In addition, the Audit Committee reviews and examines externally prepared
assessments of the control environment in place at the Investment Manager and
the Administrator. No significant failings or weaknesses were identified in
these reports.
The Audit Committee has reviewed the need for an internal audit function and
has decided that the system and procedures employed by the Investment Manager
and the Administrator's internal audit function provide sufficient assurance
that a sound system of internal control, which safeguards the Company's assets,
is maintained. An internal audit function specific to the Company is therefore
considered unnecessary.
In finalising the Financial Statements for recommendation to the Board for
approval, the Audit Committee has satisfied itself that the Financial
Statements taken as a whole are fair, balanced and understandable, and provide
the information necessary for shareholders to assess the Company's performance,
business model and strategy.
A member of the Audit Committee will continue to be available at each AGM to
respond to any shareholder questions on the activities of the Audit Committee.
Stuart Lawson,
Chairman, Audit Committee
22 October 2015
Directors' Remuneration Report
Introduction
An ordinary resolution for the approval of the Director's Remuneration Report
will be put to the shareholders at the AGM to be held on 3 December 2015.
Remuneration policy
All Directors are non-executive and a Remuneration Committee has not been
established. The Board as a whole considers matters relating to the Directors'
remuneration. No advice or services were provided by any external person in
respect of its consideration of the Directors' remuneration.
The Company's policy is that the fees payable to the Directors should reflect
the time spent by the Directors on the Company's affairs and the
responsibilities borne by the Directors and be sufficient to attract, retain
and motivate directors of a quality required to run the Company successfully.
The Chairman of the Board is paid a higher fee in recognition of his additional
responsibilities. The policy is to review fee rates periodically, although such
a review will not necessarily result in any changes to the rates, and account
is taken of fees paid to directors of comparable companies. The Directors of
the Company are remunerated for their services at such a rate as the Directors
determine provided that the aggregate amount of such fees does not exceed GBP
120,000 per annum.
There are no long term incentive schemes provided by the Company and no
performance fees are paid to Directors.
None of the Directors has a service contract with the Company but each of the
Directors is appointed by a letter of appointment which sets out the main terms
of their appointment. Directors hold office until they retire by rotation or
cease to be a director in accordance with the Articles of Incorporation, by
operation of law or until they resign.
Remuneration
Directors are remunerated in the form of fees, payable quarterly in arrears, to
the Director personally. No Directors have been paid additional remuneration
outside their normal Directors' fees and expenses.
At a Board meeting of the Company held on 22 February 2012, the Board resolved
to reduce their Directors' fees by 10% for 12 months with effect from 1 April
2012. At a Board meeting of the Company held on 13 June 2013, the Board
resolved to continue to maintain the 10% reduction in fees.
The current annual Directors' fees comprise GBP18,000 per annum payable to the
Chairman and GBP13,500 per annum payable to the other Directors.
For the year ended 30 June 2015 and 30 June 2014 Directors' fees incurred were
as follows:
30 June 2015 30 June 2014
GBP GBP
C. J. Hunter 18,000 18,000
G. J. Farrell 13,500 13,500
S. C. Monier 13,500 13,500
S. Lawson 13,500 13,500
A. Spaninks 13,500 13,500
72,000 72,000
The Directors of the subsidiaries of the Group received emoluments amounting to
GBP19,985 (2014: GBP21,039). Total fees paid to Directors of the Group were GBP91,985
(2014: GBP93,039).
Signed on behalf of the Board by:
Charles Hunter Stuart Lawson
Chairman Director
22 October 2015 22 October 2015
Investment Objective and Investment Policy
At an EGM of the Company held on 26 April 2013, the Shareholders resolved to
amend the Company's investment policy. The amended investment objective and
policy is set out below:
Investment Objective
The Company is managed with the intention of realising all remaining assets in
the Portfolio, in a manner consistent with the principles of prudent investment
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management and spread of investment risk, with a view to returning capital
invested to the Shareholders in an orderly manner.
Investment Policy
The Managed Wind-down will be effected with a view to the Company realising its
investments by year end December 2015 in a manner that achieves a balance
between maximising the value from the Company's investments and making timely
returns of capital to Shareholders. However at present it is considered that
the completion of the sale of certain assets may not occur until early 2016.
The Company will cease to make any new investments or undertake capital
expenditure except where necessary in the reasonable opinion of the Manager and
Board to protect or enhance the value of any existing investments or to
facilitate orderly disposals.
Any cash received by the Company as part of the realisation process, following
repayment of the allocated loan amounts and any additional payments required
under the loan facilities but prior to its distribution to Shareholders, will
be held by the Company as cash on deposit and/or as cash equivalents.
The Company will not undertake new borrowing other than for short-term working
capital purposes.
Shareholders should expect that, under the terms of the Managed Wind-down, the
Board and the Manager will be committed to distributing as much of the
available cash as soon as reasonably practicable having regard to cost
efficiency and working capital requirements. Accordingly, in order to minimise
the administrative burden, Shareholders should expect that returns of cash will
be made regularly but not necessarily as soon as cash becomes available.
Independent Auditor's Report to the Members of AXA Property Trust
Limited
Opinions and conclusions arising from our audit
Opinion on financial statements
We have audited the consolidated financial statements (the "financial
statements") of AXA Property Trust Limited (the "Company") and its subsidiaries
(together, the "Group") for the year ended 30 June 2015 which comprise the
Consolidated Income Statement, the Consolidated Statement of Comprehensive
Income, the Consolidated Statement of Changes in Equity, the Consolidated
Statement of Financial Position, the Consolidated Statement of Cash Flows and
the related notes. The financial reporting framework that has been applied in
their preparation is applicable law and International Financial Reporting
Standards as issued by the International Accounting Standards Board (the
"IASB"). As described in Note 2, the financial statements have been prepared
on a non-going concern basis. In our opinion, the financial statements:
* give a true and fair view of the state of the Group's affairs as at 30 June
2015 and of its profit for the year then ended;
* have been properly prepared in accordance with International Financial
Reporting Standards as issued by the IASB; and
* comply with the Companies (Guernsey) Law, 2008.
Our assessment of risks of material misstatement
The risks of material misstatement detailed in this section of this report are
those risks that we have deemed, in our professional judgement, to have had the
greatest effect on: the overall audit strategy; the allocation of resources in
our audit; and directing the efforts of the engagement team. Our audit
procedures relating to these risks were designed in the context of our audit of
the financial statements as a whole. Our opinion on the financial statements
is not modified with respect to any of these risks, and we do not express an
opinion on these individual risks.
In arriving at our audit opinion above on the financial statements, the risks
of material misstatement that had the greatest effect on our audit were as
follows:
Going concern
Refer to the Audit Committee Report and Note 2 Significant accounting policies
* The risk - On 26 April 2013 an Extraordinary General Meeting was held at
which the shareholders approved proposals for a managed wind-down of the
Group. Accordingly, the Board of Directors have prepared the financial
statements on a non-going concern basis reflecting an orderly managed
wind-down of the Group and the continuing measurement of the investment
property portfolio at fair value. There is a risk that the Board of
Directors may not be able to achieve the wind-down in an orderly manner and
if this was the case then it would impact their ability to continue
measuring the investment property portfolio at fair value.
* Our response - Our audit procedures with respect to going concern included,
but were not limited to, holding discussions with the Board of Directors
and Investment Manager to understand the ongoing wind-down programme; and
obtaining and evaluating the Group's going concern assessment, post
year-end cash flow forecasts and loan covenant certificates.
We also considered the going concern disclosure in Note 2 for compliance with
International Financial Reporting Standards as issued by the IASB.
Valuation of investment properties (GBP23,886,000), investment properties held
for sale (GBP34,892,000) and investment property held indirectly through
investment in joint venture held for sale (GBP9,053,000)
Refer the Audit Committee Report, Note 2 Significant accounting policies, Note
9 Investment properties, Note 10 Investments properties held for sale and Note
11 Joint venture/Joint venture held for sale.
* The risk - The Group's direct investment property portfolio accounted for
76.5% of the Group's total assets as at 30 June 2015 and the investment in
joint venture held for sale accounted for a further 11.8% of total assets.
The fair value of the direct and indirect investment property portfolio
(together, the "investment property portfolio") as at 30 June 2015 was
assessed by the Board of Directors based on independent valuations prepared
by the Group's external property valuer. As highlighted in the Audit
Committee Report, the valuation of the Group's investment property
portfolio, given it represents the majority of the total assets of the
Group and requires the use of significant judgement, is a significant area
of our audit.
* Our response - Our audit procedures with respect to the Group's investment
property portfolio included, but were not limited to, testing the design
and implementation of certain relevant controls; evaluating the competence,
objectivity and independence of the external property valuer; we assessed
the appropriateness of the valuation methodologies and assumptions used
based on sales offers received as at year end and subsequent to year end,
market knowledge and market data, which included undertaking discussions on
key findings with the external property valuer and challenging the
assumptions used, with the assistance of our own real estate specialists
where deemed appropriate. We compared key inputs to the valuations such as
rental income, yields, occupancy and tenancy contracts for consistency with
other audit findings.
We also considered the Group's investment properties valuation policies and
their application as described in Note 2 for compliance with International
Financial Reporting Standards as issued by the IASB in addition to the adequacy
of disclosures in Notes 9, 10 and 11 in relation to investment properties,
investment properties held for sale and joint venture/Joint venture held for
sale.
Our application of materiality and an overview of the scope of our audit
Materiality is a term used to describe the acceptable level of precision in
financial statements. Auditing standards describe a misstatement or an
omission as "material" if it could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial statements.
The auditor has to apply judgement in identifying whether a misstatement or
omission is material and to do so the auditor identifies a monetary amount as
"materiality for the financial statements as a whole".
The materiality for the financial statements as a whole was set at GBP1,200,000.
This has been calculated using a percentage of the Group's net assets (of which
it represents approximately 2.4%), which we believe is the most appropriate
benchmark as net assets is considered as the prime indicator of potential
returns to members in a managed wind-down situation.
We agreed with the audit committee to report to it all corrected and
uncorrected misstatements we identified through our audit with a value in
excess of GBP60,000, in addition to other audit misstatements below that
threshold that we believe warranted reporting on qualitative grounds.
Whilst AXA Property Trust Limited is a Guernsey company, the Group's operations
are located in Luxembourg, Germany, Italy and The Netherlands. The Company
owns three Luxembourg holding entities through which the Group's operations are
owned.
The group audit team performed the audit of AXA Property Trust Limited as a
standalone entity. Audits for group reporting purposes were performed by the
component auditors in Luxembourg (the "sub-group audit team") on the
sub-consolidations of each the three Luxembourg holding entities with the
assistance of sub-group component auditors in Germany, Italy and The
Netherlands (the "sub-group component auditors"). The combined effect of this
approach covered 100% of group net rental and related income; 100% of group
profit before tax; and 100% of group total assets and total liabilities.
The audits undertaken for group reporting purposes were all performed to
materiality levels set by, or agreed with, the group audit team. These
materiality levels were set individually for each component/ sub-group
component and ranged from GBP300,000 to GBP600,000.
The group audit team sent detailed instructions to the sub-group audit team;
and the sub-group audit team sent detailed instructions to the sub-group
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component auditors. Both sets of instructions covered the significant areas
that should be covered by the audit (which included the relevant risks of
material misstatement detailed above) and set out the information required to
be reported back to the group audit team/ sub-group audit team. The group
audit team exercised oversight of the work of the sub-group audit team and its
oversight of the work of the sub-group component auditors through a combination
of visiting Luxembourg to review the work performed by the sub-group audit team
and holding telephone meetings with the sub-group audit team in order to
challenge the work they performed.
Our assessment of materiality has informed our identification of significant
risks of material misstatement and the associated audit procedures performed in
those areas as detailed above.
Whilst the audit process is designed to provide reasonable assurance of
identifying material misstatements or omissions it is not guaranteed to do so.
Rather we plan the audit to determine the extent of testing needed to reduce to
an appropriately low level the probability that the aggregate of uncorrected
and undetected misstatements does not exceed materiality for the financial
statements as a whole. This testing requires us to conduct significant depth
of work on a broad range of assets, liabilities, income and expense as well as
devoting significant time of the most experienced members of the audit team, in
particular the Responsible Individual, to subjective areas of the accounting
and reporting process.
An audit involves obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are
appropriate to the Group's circumstances and have been consistently applied and
adequately disclosed; the reasonableness of significant accounting estimates
made by the Board of Directors; and the overall presentation of the financial
statements. In addition, we read all the financial and non-financial
information in the Annual Report to identify material inconsistencies with the
audited financial statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the knowledge
acquired by us in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies we consider the
implications for our report.
Matters on which we are required to report by exception
Under International Standards on Auditing (UK and Ireland) we are required to
report to you if, based on the knowledge we acquired during our audit, we have
identified other information in the Annual Report that contains a material
inconsistency with either that knowledge or the financial statements, a
material misstatement of fact, or that is otherwise misleading.
In particular, we are required to report to you if:
we have identified material inconsistencies between the knowledge we acquired
during our audit and the directors' statement that they consider that the
Annual Report and financial statements taken as a whole is fair, balanced and
understandable and provides the information necessary for members to assess the
Company's performance, business model and strategy; or
* the Audit Committee Report does not appropriately address matters
communicated by us to the audit committee.
Under the Companies (Guernsey) Law, 2008, we are required to report to you if,
in our opinion:
* the Company has not kept proper accounting records; or
* the financial statements are not in agreement with the accounting records;
or
* we have not received all the information and explanations, which to the
best of our knowledge and belief are necessary for the purpose of our
audit.
Under the Listing Rules we are required to review the part of the Corporate
Governance Statement relating to the Company's compliance with the ten
provisions of the UK Corporate Governance Code specified for our review.
We have nothing to report in respect of the above responsibilities.
Scope of report and responsibilities
The purpose of this report and restrictions on its use by persons other than
the Company's members as a body
This report is made solely to the Company's members, as a body, in accordance
with section 262 of the Companies (Guernsey) Law, 2008 and, in respect of any
further matters on which we have agreed to report, on terms we have agreed with
the Company. 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 auditor
As explained more fully in the Directors' Responsibilities Statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view. Our responsibility is
to audit, and express an opinion on, the financial statements in accordance
with applicable law and ISAs (UK and Ireland). Those standards require us to
comply with the UK Ethical Standards for Auditors.
Lee C Clark
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors
Glategny Court, Glategny Esplanade
St Peter Port
Guernsey
GY1 1WR
22 October 2015
The maintenance and integrity of the AXA Property Trust Limited website is the
responsibility of the Board of Directors; the work carried out by the auditors
does not involve consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred to the
financial statements or audit report since they were initially presented on the
website.
Legislation in Guernsey governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Consolidated Income Statement
For the year ended 30 June
Year ended Year ended
30 June 2015 30 June 2014
Notes GBP000s GBP000s
Gross rental income 4 5,738 7,714
Service charge income 504 659
Property operating expenses (1,536) (2,271)
Net rental and related income 4,706 6,102
Valuation profit/(loss) on investment properties 9 4,431 (2,242)
Gain/(loss) on disposals of a subsidiary and 1,503 (474)
investment properties
General and administrative expenses 5 (1,381) (2,738)
Operating profit 9,261 648
Net foreign exchange loss (603) (148)
Net gain/(loss) on financial instruments 21 479 (308)
Share in profit of a joint venture 11 1,455 176
Net finance cost 6 (1,807) (2,568)
Profit/(loss) before tax 8,783 (2,200)
Income tax expense 18 (1,040) (190)
Profit/(loss) for the year 7,743 (2,390)
Basic and diluted profit per ordinary share 7 8.63 (2.44)
(pence)
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2015
Year ended Year ended
30 June 2015 30 June 2014
Note GBP000s GBP000s
Profit/(loss) for the period 7,743 (2,390)
Other comprehensive income/(loss)
Items that are or may be reclassified to profit
or loss
Hedging reserve recycled to profit or loss 22 280 1,005
Foreign exchange translation loss (5,285) (3,307)
Other comprehensive loss (5,005) (2,302)
Total comprehensive profit /(loss) for the year 2,738 (4,692)
Consolidated Statement of Changes in Equity
For the year ended 30 June 2015
Revenue Hedging Distributable Foreign Total
reserve reserve reserve currency
reserve
Notes GBP000s GBP000s GBP000s GBP000s GBP000s
Balance at 1 July 2014 (46,065) (4,618) 88,848 12,263 50,428
Share redemption 19 - - (3,799) - (3,799)
Net profit for the year 7,743 - - - 7,743
Other comprehensive income/ 22 - 280 - (5,285) (5,005)
(loss)
Total comprehensive income for the 7,743 280 - (5,285) 2,738
year
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Balance at 30 June 2015 (38,322) (4,338) 85,049 6,978 49,367
For the year ended 30 June 2014
Revenue Hedging Distributable Foreign Total
reserve reserve reserve currency
reserve
GBP000s GBP000s GBP000s GBP000s GBP000s
Balance at 1 July 2013 (43,675) (5,623) 92,948 15,570 59,220
Share redemption - - (4,100) - (4,100)
Net loss for the year 19 (2,390) - - - (2,390)
Other comprehensive income/ 22 - 1,005 - (3,307) (2,302)
(loss)
Total comprehensive loss for (2,390) 1,005 (4,100) (3,307) (8,792)
the year
Balance at 30 June 2014 (46,065) (4,618) 88,848 12,263 50,428
The accompanying form an integral part of these Consolidated Financial
Statements.
Consolidated Statement of Financial Position
For the year ended 30 June 2015
30 June 2015 30 June 2014
Notes GBP000s GBP000s
Non-current assets
Investment properties 9 23,886 67,351
Investment in joint venture 11 - 9,543
Deferred tax assets 18 86 26
Current assets
Cash and cash equivalents 8,078 3,008
Trade and other receivables 13 888 1,870
Investment properties held for 9 34,892 6,326
sale
Investment in joint venture held 11 9,053 -
for sale
Total assets 76,883 88,124
Current liabilities
Trade and other payables 14 1,582 2,100
Current portion of long-term 15 7,971 3,586
loans
Non-current
liabilities
Deferred tax liability 18 596 269
Provisions 17 367 1,156
Long-term loans 16 16,189 28,802
Derivative financial instruments 21 811 1,783
Total liabilities 27,516 37,696
Net assets 49,367 50,428
Share capital - -
Reserves 49,367 50,428
Total equity 49,367 50,428
Number of ordinary shares 19 85,684,658 92,534,848
Net asset value per ordinary share (pence) 20 57.61 54.50
The accompanying notes form an integral part of these Consolidated Financial
Statements.
By order of the Board
Charles Hunter Stuart Lawson
Chairman Director
22 October 2015 22 October 2015
Consolidated Statement of Cash Flows
For the year ended 30 June 2015
Year ended Year ended
30 June 30 June
2015 2014
Notes GBP000s GBP000s
Operating activities
Profit/(loss) before tax 8,784 (2,200)
Adjustments for:
Profit/(loss) on valuation and disposals of a (5,934) 2,716
subsidiary and investment properties
Shares in profits/(losses) of joint venture 11 (1,455) (176)
(Gain)/loss on financial instruments 21 (479) 308
Increase/(decrease) in trade and other receivables 897 (260)
Increase/(decrease) in provisions (789) 436
Increase in trade and other payables (602) 54
Net finance cost 6 1,807 2,568
Net foreign exchange loss 603 148
Net cash generated from operations 2,832 3,594
Interest income received 288 349
Interest paid (1,681) (2,597)
Tax paid (792) (270)
Net cash flow from operating activities 647 1,076
Investing activities
Capital expenditure on completed investment 9 (19) (611)
properties
Proceeds from disposals of a subsidiary and 9 11,902 21,521
investment properties
Net cash flow from investing activities 11,883 20,910
Financing activities
Redemption of shares 19 (3,799) (4,100)
Finance costs (27) 54
Bank loan facility repaid 16,17 (4,956) (16,893)
Net cash outflow from financing activities (8,782) (20,939)
Effects of exchange rate fluctuations 1,322 (1,733)
Decrease in cash and cash equivalents 5,070 (687)
Cash and cash equivalents at start of the year 3,008 3,694
Cash and cash equivalents at the year end 8,078 3,008
The accompanying notes form an integral part of these Consolidated Financial
Statements.
Notes to the Consolidated Financial Statements
For the year ended 30 June 2015
1. Operations
AXA Property Trust Limited (the "Company") is a limited liability, closed-ended
investment company incorporated in Guernsey. The Company invests in commercial
properties in Europe which are held through its subsidiaries. The Consolidated
Financial Statements of the Company for the year ended 30 June 2015 comprise
the financial statements of the Company and its subsidiaries (together referred
to as the "Group").
2. Significant accounting policies
(a) Basis of preparation
The Consolidated Financial Statements which show a true and fair view have been
prepared in accordance with International Financial Reporting Standards
("IFRS") which comprise standards and interpretations approved by the
International Accounting Standards Board ("IASB") and are in compliance with
The Companies (Guernsey) Law, 2008. The Financial Statements have been prepared
on a non-going concern basis, and the accounting policies, presentation and
methods of computation are consistent with this basis, as disclosed in the
going concern paragraph below. EUR
(b) Going concern
The discount control provisions established when the Company was launched
required a continuation vote to be proposed to Shareholders at the Company's
Annual General Meeting in 2015. As a result of the large discount to Net Asset
Value at which shares were trading there was little chance of raising new
capital. After extensive shareholder consultation, the Board resolved not to
seek continuation of the Company in 2015 and proposed to Shareholders that the
Company enter into a managed wind-down. This proposal was approved at an EGM
held on 26 April 2013.
The Consolidated Financial Statements have been prepared on a non-going concern
basis reflecting the orderly wind-down of the Group. Accordingly, the going
concern basis of accounting is not considered appropriate. All assets and
liabilities continue to be measured in accordance with IFRS. The Board
recognises that the timely disposal of properties is uncertain and continues to
keep under review the most appropriate course of action with regard to these
assets over the coming months with the aim of maximising shareholder return
whilst taking account of the target exit date of December 2015. December 2015
remains the target for the completion of all sales, however at present it is
considered that the completion of the sale of certain assets may occur early
2016.
The Directors estimate that the wind-down costs will be approximately GBP194,272
(EUR274,216). The Board believes that the Group has sufficient funds available to
meet its wind-down costs, day-to-day running costs and amounts due in terms of
its loan facilities.
(c) Adoption of new standards and its consequential amendments
Standards, interpretations and amendments to published statements currently
effective
There are no new standards, interpretations and amendments to published
statements effective as of 1 July 2014 that have a significant impact on the
Group's Consolidated Financial Statements.
Standards, interpretations and amendments to published statements not yet
effective
At the reporting date of Group's Consolidated Financial Statements, the
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following standard, which was in issue but not yet effective has not been
applied in these Consolidated Financial Statements:
- IFRS 9 Financial Instruments (Effective 1 January 2018) - as the Group
will not be in existence, it does not intend to early adopt the standard.
(d) Significant estimates and judgements
The preparation of the Group's Consolidated Financial Statements requires
management to make judgements, estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities, and the
accompanying disclosures, and the disclosure of contingent liabilities.
Uncertainty about these assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of assets or liabilities
affected in future periods.
(i) Judgements:
In the process of applying the Group's accounting policies, management has made
the following judgements, which have the most significant effect on the amounts
recognised in the Consolidated Financial Statements:
Functional currency
As disclosed in note 2(e), the Group's functional currency is Sterling and the
subsidiaries' functional currency is the Euro. The Board of Directors considers
that the Parent Company's functional currency is Sterling, as the capital
raised, return on capital and dividends paid by the Parent Company are in
Sterling. The Euro most faithfully represents the economic effect of the
underlying transactions, events and conditions of the subsidiaries. The Euro is
the currency in which the subsidiaries measure their performance and reports
their results.
Going concern
The Consolidated Financial Statements have been prepared on a non-going concern
basis reflecting the orderly wind-down of the Group. Further discussions of the
Board's decision to wind-down the Group, can be found in note 2(b).
Classification of investment properties as held for sale
The Group has classified certain investment properties as held for sale. In
establishing whether an investment property maybe transferred to held for sale,
the investment property must be available for immediate sale in its present
condition subject only to terms that are usual and customary for sales of such
property and its sale must be highly probable, as discussed in note 2(o).
Lease classification
The Group has entered into commercial property leases on its investment
property portfolio. The Group has determined, based on an evaluation of the
terms and conditions of the arrangements, such as the lease term not
constituting a substantial portion of the economic life of the commercial
property, that it retains all the significant risks and rewards of ownership of
these properties and accounts for the contracts as operating leases.
(ii) Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are described below. The Group based its assumptions
and estimates on parameters available when the Consolidated Financial
Statements were prepared. Existing circumstances and assumptions about future
developments, however, may change due to market changes or circumstances
arising which are beyond the control of the Group. Such changes are reflected
in the assumptions when they occur.
Revaluation of investment properties
The Group carries its investment properties at fair value, with changes in fair
value being recognised in the Consolidated Income Statement.
Properties
are valued quarterly by external independent valuers as at the end of each
calendar quarter. Their valuations are reviewed quarterly by the Board.
Quarterly valuations of investment properties are carried out by Knight Frank
LLP, external independent valuers to the Group, in accordance with the Royal
Institution of Chartered Surveyors' ("RICS") Appraisal and Valuation Standards.
The properties have been valued in accordance with the definition of the RICS
Valuation which is defined as the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The valuation is based on the highest and
best use of the investment properties.
In view of market instability, the valuers refer to the RICS Valuation
Standards Guidance Note 1 (Valuation Uncertainty). The key assumptions used to
determine the market value of the investment properties are explained further
in note 2(l).
Taxes
Uncertainties exist with respect to the interpretation of complex tax
regulations, changes in tax laws, and the timing and amount of future taxable
income. The Group estimates its tax receivables and liabilities after taking
into account the impact of tax laws and regulation and the timing and amount of
future taxable income.
Deferred tax assets are recognised for unused tax losses to the extent that it
is probable that taxable profit will be available against which the losses can
be utilised. Significant management judgement is required to determine the
amount of the deferred tax asset that can be recognised, based upon timing and
the level of future taxable profits. Details of tax losses recognised as a
deferred tax asset and the amount of unused tax losses held by the Group, refer
to note 18.
Provisions
In determining the provision for wind-down costs, estimates of costs have been
obtained from the Broker, Administrator and other parties involved in the
managed wind-down of the Company. The carrying amount of the provision as at 30
June 2015 was GBP194,272 (EUR 274,216).
Value of financial instruments
The Group hold financial instruments that are not quoted in active markets,
such as interest rate swaps.
(e) Foreign currency translation
(i) Foreign currency transactions
Transactions in foreign currencies are translated to presentation currency at
the spot foreign exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the Consolidated
Statement of Financial Position date are translated to presentation currency at
the foreign exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in the Consolidated Income Statement.
Non-monetary assets and liabilities that are measured at historical cost in a
foreign currency are translated using the exchange rate at the date of the
transaction. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated to presentation
currency at foreign exchange rates ruling at the dates the fair value was
determined.
(ii) Financial statements of foreign operations
The assets and liabilities of foreign operations, arising on consolidation, are
translated to presentation currency at the foreign exchange rates ruling at the
Consolidated Statement of Financial Position date. The income and expenses of
foreign operations are translated to presentation currency at an average rate.
Foreign exchange differences arising on retranslation are recognised in other
comprehensive income and as a separate component of equity.
(f) Basis of consolidation
(i) Subsidiaries
The consolidated financial statements comprise the financial statements of the
Company and its subsidiaries as at 30 June each year. Subsidiaries are fully
consolidated from the date of acquisition, being the date on which the Group
obtains control, and continue to be consolidated until the date when such
control ceases. The financial statements of the subsidiaries are prepared for
the same reporting period as the parent company, using consistent accounting
policies.
ii) Transactions eliminated on consolidation
All intra-group balances, transactions and unrealised gains and losses
resulting from intra-group transactions are eliminated in preparing the
consolidated financial statements.
(iii) Joint ventures
The Group's interest in jointly controlled entities are accounted for using the
equity method. The Group recognises the portion of gains or losses on the sale
of assets by the Group to the joint venture that is attributable to the other
ventures ("Downstream transaction"). The Group recognises its share of profits
or losses from the joint venture that result from the Group's purchase of
assets from the joint venture until it resells the assets to an independent
party ("Upstream transaction"). When downstream transactions provide evidence
of a reduction in the net fair value of the assets sold, or of an impairment
loss of those assets, those losses shall be recognised in full by the investor.
When upstream transactions provide evidence of a reduction in the net fair
value of the assets to be purchased or of an impairment loss of those assets,
the investor shall recognise its share in those losses.
AXA Property Trust Limited, the Company, is the parent of the Group. It was
incorporated in Guernsey on 5 April 2005. The Company owned the following
subsidiaries as at the reporting date:
Investment Country of Date of Ownership Principal
in incorporation incorporation interest activities
subsidiaries %
GBP000s
Property Trust Luxembourg 1 1,292 Luxembourg 20 July 2005 100 Holding
S.à r.l. company
Property Trust Luxembourg 2 1,251 Luxembourg 24 November 100 Holding
S.à r.l. 2005 company
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Property Trust Luxembourg 3 152 Luxembourg 2 June 2006 100 Holding
S.à r.l. company
2,695
The Manager will seek to merge or wind up redundant holding companies from
planned disposals within a short time frame to avoid ongoing administrative
expenses.
Owned directly by Property Trust Luxembourg 1 S.à r.l., Property Trust
Luxembourg 2 S.à r.l. and Property Trust Luxembourg 3 S.à.r.l. as at the
reporting date:
Country of Ownership
incorporation interest %
Property Trust Luxembourg 1 S.à r.l.
Property Trust Altenstadt S.à r.l. Luxembourg 100
Property Trust Fürth S.à r.l. Luxembourg 100
Property Trust Netherlands 1 B.V. Netherlands 100
Property Trust Luxembourg 2 S.à r.l.
Property Trust Rothenburg 1 S.à r.l. Luxembourg 100
Property Trust Kraichtal S.à r.l. Luxembourg 100
Property Trust Dasing S.à r.l. Luxembourg 100
Multiplex 1 S.r.l. Italy 100
Property Trust Luxembourg 3 S.à r.l.
Property Trust Agnadello S.r.l. Italy 50
Property Trust Kali S.à r.l. Luxembourg 100
(g) Income recognition
Interest income from banks is recognised on an effective yield basis.
Rental income from investment property leased out under operating leases is
recognised in the Consolidated Income Statement on a straight-line basis over
the term of the lease. Lease incentives are amortised over the whole lease
term.
(h) Expenses/Other Income
Expenses are accounted for on an accruals basis.
Service costs for service contracts entered into by the Group acting as the
principal are recorded when such services are rendered. The Group is entitled
to recover such costs from the tenants of the investment properties. The
recovery of costs is recognised as service charged income on an accrual basis.
(i) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits carried at
cost. Cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
(j) Dividends
Dividends are recognised as a liability in the period in which they become
obligations of the Company. All dividends are paid as interim dividends.
Interim dividends are recognised when paid. Final dividends are recognised once
they are approved by shareholders.
(k) Provisions
A provision is recognised in the Consolidated Statement of Financial Position
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.
(l) Investment properties
Investment properties are those which are held to earn rental income and
capital appreciation and are recognised as such once all material conditions in
the exchanged purchase contracts are satisfied. Investment properties are
initially recognised at cost, being the fair value of consideration given,
including associated transaction costs. Any subsequent capital expenditure
incurred in improving investment properties is capitalised in the period during
which the expenditure is incurred and included within the book cost of the
properties.
After initial recognition, investment properties are measured at fair value
using the fair value model with unrealised gains and losses recognised in the
Consolidated Income Statement. Realised gains and losses upon disposal of
properties are recognised in the Consolidated Income Statement. Quarterly
valuations are carried out by Knight Frank LLP, external independent valuers,
in accordance with the RICS Appraisal and Valuation Standards. The properties
have been valued in accordance with the definition of the RICS Valuation which
is defined as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. The valuation is based on the highest and best use of the
investment properties.
Valuations reflect, where appropriate, the types of tenants actually in
occupation or responsible for meeting lease commitments or likely to be in
occupation after letting of vacant accommodation and the market's general
perception of their creditworthiness, the allocation of maintenance and
insurance responsibilities between lessor and lessees, and the remaining
economic life of the property. It has been assumed that whenever rent reviews
or lease renewals are pending with anticipated reversionary increases, all
notices and where appropriate counter notices have been served validly and
within the appropriate time.
Subsequent expenditure is charged to the asset's carrying amount only when it
is probable that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably. All other repairs
and maintenance costs are charged to the Consolidated Income Statement during
the financial period in which they are incurred.
Investment properties are derecognised when they have been disposed. Where the
Group disposes of a property at fair value in an arm's length transaction, the
carrying value immediately prior to the sale is adjusted to the transaction
price, and the adjustment is recorded in the income statement within gain/
(loss) on disposals of subsidiaries and investment properties.
(m) Leases
The determination of whether an arrangement is, or contains, a lease is based
on the substance of the arrangement at the inception date. The arrangement is
assessed for whether fulfilment of the arrangement is dependent on the use of a
specific asset or assets or the arrangement conveys a right to use the asset or
assets, even if that right is not explicitly specified in an arrangement.
Leases in which the Group does not transfer substantially all the risks and
benefits of ownership of an asset are classified as operating leases. Initial
direct costs incurred in negotiating an operating lease are added to the
carrying amount of the leased asset and recognised over the lease term on the
same basis as rental income. Contingent rents are recognised as revenue in the
period in which they are earned.
(n) Financial instruments
(i) Investments at fair value through profit or loss
An instrument is classified as fair value through profit or loss if it is held
for trading or is designated as such upon initial recognition. Upon initial
recognition, attributable transaction costs are recognised in profit or loss
when incurred. Financial instruments at fair value through profit or loss are
measured at fair value and changes therein are recognised in profit or loss.
(ii) Loans and receivables
Loans advanced and other receivables are classified as loans and receivables.
Loans and receivables are carried at amortised cost using the effective
interest rate method, less impairment losses, if any. Gains and losses are
recognised in profit or loss when the loans and receivables are derecognised or
impaired.
(iii) Loans and borrowings
All loans and borrowings are initially recognised at fair value less directly
attributable transaction costs. After initial recognition, interest bearing
loans and borrowings are subsequently measured at amortised cost using the
effective interest method.
(iv) Derivative financial instruments
The Group uses derivative financial instruments to hedge its exposure to
interest rate risks arising from financing activities. However, as disclosed in
Note 22, hedge accounting for these derivative financial instruments ceased to
apply .
Derivative financial instruments are recognised initially at cost which is also
deemed to be fair value. Subsequent to initial recognition, derivative
financial instruments are stated at fair value. The gain or loss on
remeasurement to fair value is recognised immediately in profit or loss.
The fair value of interest rate swaps is the estimated amount that the Group
would receive or pay to terminate the swap at the Consolidated Statement of
Financial Position date, taking into account current interest rates and the
current creditworthiness of the swap counterparties.
(v) Derecognition of financial instruments
A financial asset is derecognised when:
- the rights to receive cash flows from the asset have expired;
- the Company retains the right to receive cash flows from the asset, but
has assumed an obligation to pay them in full without material delay to a third
party under a "pass through arrangement"; or
- the Company has transferred substantially all the risks and rewards of
the asset, or has neither transferred nor retained substantially all the risks
and rewards of the asset, but has transferred control of the asset.
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled.
(o) Assets held for sale
Investment property is transferred to assets held for sale when it is expected
that the carrying amount will be recovered principally through sale rather than
from continuing use. For this to be the case, the property must be available
for immediate sale in its present condition subject only to terms that are
usual and customary for sales of such property and its sale must be highly
probable.
For the sale to be highly probable:
- The Board must be committed to a plan to sell the property and an
active programme to locate a buyer and complete the plan must have been
initiated;
- The property must be actively marketed for sale at a price that is
reasonable in relation to its current fair value; and
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- The sale should be expected to qualify for recognition as a completed
sale within one year from the date of classification.
As the Company's investment properties are expected to be realised through sale
on uncertain dates in the future expected by the end of 2015, the Company has
applied judgement in classifying investment properties as held for sale. On
re-classification, an investment property that is measured at fair value
continues to be so measured.
(p) Impairment
The carrying amounts of the Group's assets, other than investment property, are
reviewed at each Consolidated Statement of Financial Position date to determine
whether there is any indication of impairment. If any such indication exists,
the asset's recoverable amount is estimated. An impairment loss is recognised
whenever the carrying amount of an asset exceeds its estimated recoverable
amount. Impairment losses are recognised in the Consolidated Income Statement.
(q) Taxation
The Company has obtained exempt company status in Guernsey under the terms of
the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and accordingly is
subject to an annual fee of GBP1,200 (2014: GBP600). The Directors intend to
conduct the Group's affairs such that it continues to remain eligible for
exemption.
The Company's subsidiaries are subject to income tax on any income arising on
investment properties, after deduction of debt financing costs and other
allowable expenses. However, when a subsidiary owns a property located in a
country other than its country of residence the taxation of the income is
defined in accordance with the double taxation treaty signed between the
country where the property is located and the residence country of the
subsidiary.
Income tax on the profit or loss for the year comprises current and deferred
tax. Current tax is the expected tax payable on the taxable income for the year
as determined under local tax law, using tax rates enacted or substantially
enacted at the Consolidated Statement of Financial Position date, and any
adjustment to tax payable in respect of previous periods.
Deferred income tax is provided using the liability method, providing for
temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amount used for taxation purposes. The
amount of deferred tax provided is based on the expected manner of realisation
or settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantially enacted at the Consolidated Statement of Financial
Position date, except in the case of investment properties, where deferred tax
is provided for the effect of the sale of the properties. Deferred tax assets
are recognised only to the extent that it is probable that future taxable
profits will be available against which the asset is utilised.
Details of current tax and deferred tax assets and liabilities are disclosed in
note 18.
(r) Hedge accounting
Prior to 1 January 2013, the Group designated certain hedging instruments,
which included derivatives and non-derivatives in respect of foreign currency
exposure and interest rate risk as cash flow hedges. Based on the requirements
of IAS 39, as the forecast transaction was no longer expected to occur, hedge
accounting was discontinued prospectively.
(s) Determination and presentation of operating segments
The Board of Directors is charged with setting the Company's investment
strategy in accordance with the Prospectus. They have delegated the day to day
implementation of this strategy to its Investment Manager but retain
responsibility to ensure that adequate resources of the Company are directed in
accordance with their decisions. The investment decisions of the Investment
Manager are reviewed on a regular basis to ensure compliance with the policies
and legal responsibilities of the Board. The Investment Manager has been
given full authority to act on behalf of the Company. Under the terms of the
Investment Management Agreement dated 18 April 2005, subject to the overall
supervision of the Board, the Investment Manager advised on the general
allocation of the assets of the Company between different investments, advised
the Company on its borrowing policy and geared investment position, managed the
investment of the Company's subscription proceeds and short-term liquidity in
fixed income instruments and advised on the use of (and management of)
derivatives and hedging by the Company.
Information presented to the Board by the Investment Manager is based on IFRS.
Whilst the Investment Manager may make the investment decisions on a day to day
basis regarding the allocation of funds to different investments, any changes
to the investment strategy or major allocation decisions have to be approved by
the Board, even though they may be proposed by the Investment Manager. The
Board therefore retains full responsibility as to the major allocations made
on an ongoing basis. The Investment Manager will always act under
the terms of the Prospectus and the Investment Management Agreement dated 18
April 2005 and to the changes to the investment objective and investment policy
approved at an EGM held on 26 April 2013, which cannot be radically changed
without the approval of the Board of Directors.
The Board has considered the requirements of IFRS 8, 'Operating Segments'. The
Board is of the view that the Group is engaged in a single segment of business,
being investment in properties in Europe. Geographic and Sector analyses of the
segment are included in the Investment Manager's Report .
3. Material agreements
(i) AXA Investment Managers UK Limited has been appointed as the Investment
Manager of the Group pursuant to an Investment Management Agreement dated 18
April 2005. The Investment Manager is responsible for advising the Group on the
overall management of the Group's investments and for managing the Group's
investments in fixed income instruments in accordance with the Group's
investment objective and policy, subject to the overall supervision of the
Directors. Under the terms of the Investment Management Agreement, the
Investment Manager is entitled to a management fee of 90 basis points per annum
of gross assets together with reasonable expenses payable quarterly in arrears.
The management fee shall be reduced by an amount equal to the fees payable to
the Real Estate Adviser by the property subsidiaries such that the total fees
payable by the Group to the Investment Real Estate Adviser and Investment
Manager will not exceed 90 basis points per annum. Either party may terminate
the Investment Management Agreement with not less than 12 months' notice in
writing.
In view of the change to the Investment Objective and Policy, the Manager
agreed to amend the Management Fee arrangements with effect from 1 January 2013
in order to provide better alignment with the objective of the Managed
Wind-down, such that the Manager and/or its Associates will receive in
aggregate (refer to note 5 Investment management fees and Performance fee):
- a management fee of 1.10 per cent. of NAV (as opposed to 0.90 per cent.
of gross assets) per annum to be paid quarterly in arrears based on the NAV at
the end of the relevant quarter,
- transaction fees of 0.35 per cent. of the gross sales price achieved on
each asset sale; and
- a performance fee of 12.5 per cent. of cash returned to Shareholders in
excess of 90 per cent. of NAV as at 31 December 2012, with threshold percentage
of NAV increasing by 5 per cent per annum with effect from 1 January 2015
(such that the threshold percentage for the 12 months from and including 1
January 2015 was 85 per cent of NAV as at 31 December 2012 and increased to 90
per cent from and including 1 January 2016 and so on for each consecutive
year).
This amendment of the management fee was approved by a resolution of the
Shareholders on 26 April 2013.
(ii) Stifel Nicolaus Limited (formerly known as Oriel Securities Limited) is
Sponsor and Broker to the Company.
Fees incurred in 2015 totalled GBP25,000 (2014: GBP53,623)
(iii) Northern Trust International Fund Administration Services
(Guernsey) Limited is Administrator, Secretary and Registrar to the Company
pursuant to the Administration Agreement dated 13 April 2005. Fees incurred in
2015 totalled GBP145,000 (2014: GBP175,000).
4. Gross rental income
Gross rental income for the year ended 30 June 2015 amounted to GBP5.74 million
(2014: GBP7.71 million). The Group leases out all of its investment property
under operating leases and are usually structured in accordance with local
practices in Germany, Italy and The Netherlands. All leases benefit from
indexation.
Minimum Lease Payments (based on leases in place as at 30 June 2015)
30 June 2015 30 June 2014
Rental income (GBP Rental income (GBP
000s) 000s)
0-1 year 8,589 7,705
1-5 years 23,909 20,794
5+ years 15,401 15,257
5. General and administrative expenses
30 June 30 June
2015 2014
GBP000s GBP000s
Administration (292) (398)
fees
General expenses (975) (678)
Audit fees (172) (266)
Legal and professional fees (151) (314)
Directors' fees (92) (93)
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Insurance fees (38) (38)
Liquidation 59 (13)
costs
Sponsor's fees (25) (54)
Investment management fees (426) (461)
Performance fee 731 (423)
Total (1,381) (2,738)
At a Board meeting of the Company held on 22 February 2012, the Board resolved
to reduce their Directors' fees by 10% for 12 months with effect from 1 April
2012. At a Board meeting of the Company held on 13 June 2013, the Board
resolved to continue to maintain the 10% reduction in fees. As such, each of
the Directors receives a fee of GBP13,500 (2014: GBP13,500) and the Chairman
receives a fee of GBP18,000 (2014: GBP18,000).
The aggregate remuneration and benefits in kind of the Directors in respect of
the Company's year ended 30 June 2014 amounted to GBP72,000 (2014: GBP72,000) in
respect of the Company and GBP91,985 (2014: GBP93,039) in respect of the Group.
6. Net finance cost
30 June 30 June
2015 2014
GBP000s GBP000s
Interest income from bank - 3
deposits
Interest income from JV 288 345
partners
Finance (2,095) (2,916)
costs
Total (1,807) (2,568)
7. Basic and diluted loss per Share
The basic and diluted gain or loss per share for the Group is based on the net
profit for the year of GBP7.74 million (2014: net loss of GBP2.39 million) and the
weighted average number of Ordinary Shares in issue during the year of
89,682,623 (2014: 98,092,929).
8. Dividends
The Company has suspended dividends from June 2012 for the short-term in order
to prudently manage its cash and debt positions. No dividends were declared or
paid during 2014 and 2015.
9. Investment properties
30 June 30 June
2015 2014
GBP000s GBP000s
Fair value of investment properties at beginning of year 67,351 78,130
Capital expenditure during the year 19 611
Disposals during the year (10,503) -
Fair value adjustments 4,431 (2,242)
Foreign exchange translation (8,846) (2,822)
Investment properties transferred (28,566) (6,326)
from / (to) held for sale
Fair value of investment properties at the end of the year 23,886 67,351
Investment properties classified held for sale (note 34,892 6,326
10)
Total investment properties 58,778 73,677
All investment properties are carried at fair value.
Investment properties comprise a number of commercial properties that are
leased to third parties.
During the year, the following investment properties were sold:
- Frankfurter Strasse (Wuerzburg, Germany) completed in August 2014.
Sales price achieved was EUR5.35 million (GBP3.8 million).
- Elsdorfer Weg (Koethen, Germany) completed in October 2014. Sales price
achieved was EUR2.15 million (GBP1.5 million)
- Die Weidenbach (Lindheim (Altenstadt), Germany) completed in May 2015.
Sales price achieved was EUR4.25 million (GBP3.0 million)
- Eppinger Strasse (Kraichtal, Germany) completed in June 2015. Sales
price achieved was EUR5.6 million (GBP4.0 million).
The properties have been valued on the basis of fair value, which is the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date.
Quarterly valuations are carried out at 31 March, 30 June, 30 September and 31
December by Knight Frank LLP, external independent valuers.
The fair value of investment properties and investment properties held for sale
are analysed by valuation method, according to the levels of the fair value
hierarchy. The different levels have been defined as follows:
Level 1: quoted (unadjusted) prices in active markets for identical assets or
liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are
observable for asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices);
Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
All investment properties and investment properties held for sale are valued
via a level 3 valuation.
The significant assumptions made relating to valuations are set out below:
2015 Assumptions:
2015 Industrial Retail Leisure Total
Gross Estimated rental value per sqm EUR 42.0 EUR 121.60 EUR 180.00 EUR 64.79
p.a.
-range EUR EUR EUR 180.00 EUR
37.50-44.00 108.00-141.00 26.00-180.00
-weighted average EUR 41.40 EUR 121.36 EUR 180.00 EUR 109.14
Net initial yield
-range 7.21%-9.53% 6.87%-10.19% 9.05% 6.87%-10.19%
-weighted average 8.60% 8.05% 9.05% 8.35%
Reversionary yield
-range 9.20%-9.58% 6.54%-8.42% 8.03% 6.54%-9.58%
-weighted average 9.35% 7.29% 8.03% 7.96%
True equivalent yield
-range 9.41%-9.85% 6.82%-9.07% 9.03% 6.82%-9.85%
-weighted average 9.59% 7.68% 9.03% 8.41%
An increase/Joint in ERV will increase/Joint valuations, while an
increase/Joint to yield decreases/increases valuations. The table below sets
out the sensitivity of the valuation to changes of 50 basis points in yield.
2015 sensitivity:
Movement Industrial Retail Leisure
Increase of 50 basis points Decrease of Decrease of Decrease of
EUR1.0 EUR3.35 EUR1.0
million million million
Decrease of 50 basis points Increase of Increase of Increase of
EUR1.1 EUR3.85 EUR0.85
million million million
2014 Assumptions:
Industrial Retail Leisure Total
2014
Gross Estimated rental value per EUR 31 EUR 113 EUR 180 EUR 64.36
sqm p.a.
-range EUR 33-54 EUR 26-300 EUR 180 EUR 26-300
-weighted average EUR 42.75 EUR 112.72 EUR 180 EUR 72.04
Net initial yield
-range 4.87%-10.75% 7.51%-10.68% 9.05% 4.87%-10.75%
-weighted average 8.78% 8.50% 9.05% 8.66%
Reversionary yield
-range 9.19%-10.37% 7.83%-10.35% 8.03% 7.83%-10.37%
-weighted average 9.98% 8.66% 8.03% 8.91%
True equivalent yield
-range 9.24%-10.60% 8.11%-11.25% 9.07% 8.11%-11.25%
-weighted average 10.28% 9.08% 9.07% 9.40%
2014 sensitivity:
Movement Industrial Retail Leisure
Increase of 50 basis points Decrease of Decrease of Decrease of
EUR1.35 EUR3.25 EUR0.8
million million million
Decrease of 50 basis points Increase of Increase of Increase of
EUR1.6 EUR3.78 EUR1.0
million million million
Venray is excluded from 2015 calculations as it is now valued as a site value
plus the residual lease income.
10. Investment properties held for sale
As at 30 June 2015, the Group classified the Fuerth property in Germany and
Curno property in Italy as investment properties held for sale (2014: Venray
property in The Netherlands). As at 30 June 2015, the Venray asset has been
reclassified as investment property as the IFRS 5 criteria is not met.
11. Joint venture / Joint venture held for sale
The Group holds a 50% joint venture interest in the equity of the Italian joint
venture Property Trust Agnadello S.r.l. which holds a logistics warehouse in
Agnadello, Italy. The remaining 50% equity interest is held by European Added
Value Fund S.à r.l., a subsidiary of European Added Value Fund Limited.
The Group's interest in Property Trust Agnadello S.r.l. is accounted for using
the equity method in the consolidated financial statements, which approximates
the lower of its carrying amount and its fair value less cost to sell.
The following table summarises the financial information of Property Trust
Agnadello S.r.l. which also reconciles the summarised financial information to
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the carrying amount of the Group's interest in the joint venture:
Summarised Consolidated Statement of Financial Position
30 June 30 June
2015 2014
GBP000s GBP000s
Non-current assets - 17,937
Current assets 18,469 1,635
Non-current - (8,473)
liabilities
Current liabilities (14,637) (9,829)
Net assets (100%) 3,832 1,270
Group's share of net assets (50%) 50% 50%
Group's share of net assets 1,916 635
Loan balances due to joint venture partners 7,137 8,908
Carrying amount of interest in joint venture 9,053 9,543
Summarised Consolidated Income Statement
30 June 2015 30 June
2014
GBP000s GBP000s
Net rental and related income 1,512 1,839
Valuation gains /(losses) on investment property 2,117 (167)
Total administrative and other expenses (172) (239)
Other income 5 7
Financial expenses (568) (773)
Profit/(loss) before 2,896 667
tax
Income tax expense 16 (315)
Profit/(loss) for the year 2,910 352
Group's share of profit/(loss) for the year 1,455 176
Summarised Consolidated Statement of Comprehensive
Income
30 June 2015 30 June
2014
GBP000s GBP000s
Loss for the year 2,910 352
Total comprehensive income for the year 2,910 352
Group's share of comprehensive income for the year 1,455 176
12. Other investments
Financial assets designated at fair value through profit or loss includes a 12%
equity investment held in the holding company of the Dutch office portfolio
Porto Kali. The investment was acquired for GBP1.02 million on 22 June 2007. At
30 June 2015, the fair value of the investment was nil (2014: nil) as the
portfolio of underlying entities reported negative net assets. The investment
Porto Kali Holdings B.V and its subsidiaries is under administration.
13. Trade and other receivables
30 June 30 June
2015 2014
GBP000s GBP000s
Tax receivable (witholding, 505 588
corporate and income)
Investment property sold receivable 13 14
Other 92 234
receivables
VAT 67 330
receivable
Rent 45 37
receivable
Accrued 140 611
income
Prepayments 26 56
Total 888 1,870
The carrying values of trade and other receivables are considered to be
approximately equal to their fair value.
Rent receivable is non-interest bearing and typically due within 30 days.
14. Trade and other payables
30 June 30 June
2015 2014
GBP000s GBP000s
Investment manager's fee 196 215
Property 21 43
manager's fee
Tax payable (income, transfer, 581 416
capital and other)
Interest payable on loan facility 148 224
Legal and professional fees 56 108
VAT payable 35 -
Audit fee 151 156
Administration and Company 70 123
Secretarial fees
Rent prepaid 56 166
Directors' 6 10
fees
Sponsor's fees 6 6
Other 256 633
Total 1,582 2,100
Trade and other payables are non-interest bearing and are normally settled on
30-day terms.
The carrying values of trade and other payables are considered to be
approximately equal to their fair value.
15. Current portion of long-term loans
30 June 30 June
2015 2014
GBP000s GBP000s
Secured 7,971 3,586
bank loan
Two assets are classified in current assets as held for sale as at 30 June 2015
(refer to note 10), and the related bank loan totalling GBP7.97 million (EUR11.25
million) has been classified as a current liability.
16. Long-term loans
30 June 30 June
2015 2014
GBP000s GBP000s
Non-current liabilities
Secured 16,099 28,705
bank loan
Loan due to third party 90 97
Total 16,189 28,802
The main loan facility is with Crédit Agricole Corporate and Investment Bank
("Crédit Agricole") and Crédit Foncier de France ("Crédit Foncier").
The outstanding balance of the main loan (including current portion) as at 30
June 2015 was EUR34.50 million (2014: EUR41.49 million) (before capitalised debt
issue costs) as a result of the partial loan repayments following the various
asset disposals during the year.
The Group is in compliance with the loan covenants including the Loan to Value
covenant of 60%.
Other terms of the main loan facility at 30 June 2015 are:
Expiry date 1 July 2016
LTV to expiry 60%
3-month Euribor 0.20%
Margin 2.40%
All-in rate swap 5.326%
Arrangement fee 1.00%
Amortisation None
The facility is secured through both mortgages and through share pledges on the
property vehicles and their holding companies.
The carrying value of these loans approximates their fair value.
17. Provisions
30 June 30 June
2015 2014
GBP000s GBP000s
Provision for performance fees 173 903
Provision for wind-down costs 194 253
Total 367 1,156
18. Taxation
30 June 30 June
2015 2014
GBP000s GBP000s
Effect of:
Current tax
Luxembourg 12 (1)
Italy 158 178
The Netherlands 89 (65)
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Germany 314 91
Total current 573 203
tax
Deferred tax
Investment 467 (13)
property
Total deferred 467 (13)
tax
Tax charge during the year 1,040 190
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following items:
30 June 2015
Assets Liabilities Net
GBP000s GBP000s GBP000s
Investment property - (596) (596)
Tax value of loss carry forwards recognised 86 - 86
Tax assets/(liabilities) 86 (596) (510)
30 June 2014
Assets Liabilities Net
GBP000s GBP000s GBP000s
Investment property - (269) (269)
Tax value of loss carry forwards recognised 26 - 26
Tax assets/ 26 (269) (243)
(liabilities)
At 30 June 2015, the Group had unused tax losses amounting to GBP1.5 million (EUR
2.1 million) (2014: GBP12.8 million (EUR16 million)) for which no deferred tax
asset has been recognised as they are not expected to be utilised.
At 30 June 2015, taxable temporary differences associated with investments in
subsidiaries for which no deferred tax liability had been recognised totalled GBP
nil (EURnil) (2014: GBPnil (EURnil)).
Movement in temporary differences
Recognised Foreign
in
income exchange
1 July statement translation 30 June
2014 2015
GBP000s GBP000s GBP000s GBP000s
Investment (269) (467) 140 (596)
property
Tax value of loss carry forwards 26 - 60 86
recognised
Tax assets/ (243) (467) 200 (510)
(liabilities)
Recognised Foreign
in
income exchange
1 July statement translation 30 June
2013 2014
GBP000s GBP000s GBP000s GBP000s
Investment (390) (13) 134 (269)
property
Tax value of loss carry forwards 37 - (11) 26
recognised
Tax assets/ (353) (13) 123 (243)
(liabilities)
The Parent Company is exempt from Guernsey taxation.
19. Share capital
30 June 2015 30 June 2014
Number of Share Number of Share
Shares Premium Shares Premium
GBP000s GBP000s
Shares of no par value issued and 85,684,658 100,000 92,534,848 100,000
fully paid
Capital management
The Company's capital is represented by the Ordinary Shares, revaluation
reserves, revenue reserves, hedging reserves, distributable reserves and
foreign exchange reserves. The share premium is included in the distributable
reserve presented in the Consolidated Statement of Changes in Equity. The
capital of the Company is managed in accordance with its investment policy in
pursuit of its investment objective. It is not subject to externally imposed
capital requirements. The Ordinary shares do not have any special rights
attached to the shares.
The Company was authorised at the Annual General Meeting ("AGM") on 4 December
2014 to make market purchases of up to 14.99% of its Ordinary Shares until the
conclusion of the next AGM or 31 December 2015, whichever is earlier. Purchases
would only be made at prices below the prevailing Net Asset Value of the shares
where the Directors believe such purchases would enhance shareholder value. In
the Prospectus (issued by the Company on 18 April 2005), the Directors stated
their intention to seek annual renewal of this authority. Share buy backs are
at the discretion of the Board.
Additionally, pursuant to the AGM which took place on 4 December 2014 ("2014
AGM"), the Directors shall not apply and shall be excluded in relation to the
issue of up to an aggregate number of Ordinary Shares as represents less than
10 per cent. of the number of Ordinary Shares admitted to trading on the London
Stock Exchange.
The following redemptions of shares have been done under the mechanism for the
Redemption of Shares as approved at the EGM held on 27 February 2014:
Redemption Capital Shares
date returned cancelled
19 March 2014 GBP 1,999,957 3,641,580
09 April 2014 GBP 2,099,903 3,823,572
30 October GBP 1,999,547 3,668,894
2014
14 May 2015 GBP 1,799,022 3,181,296
GBP 7,898,429 14,315,342
20. Net asset value per ordinary share
The Net Asset Value per Ordinary Share at 30 June 2015 is based on the net
assets attributable to the ordinary shareholders of GBP49.37 million (2014: GBP
50.43 million) and on 85,684,658 (2014: 92,534,848) ordinary shares in issue at
the Consolidated Statement of Financial Position date.
21. Financial risk management
The table below summarises the amounts recognised in the Consolidated Income
Statement in relation to derivative financial instruments.
30 June 30 June
2015 2014
GBP000s GBP000s
Hedging reserve recycled to consolidated income statement 280 1,005
Current year fair value movement of ineffective hedges (759) (697)
Total (loss)/gain recognised in the Consolidated (479) 308
Income Statement
The Group is exposed to various types of risk that are associated with
financial instruments. The Group's financial instruments comprise bank
deposits, cash, derivative financial instruments, receivables, loans and
payables that arise directly from its operations. The carrying value of
financial assets and liabilities approximate the fair value.
The main risks arising from the Group's financial instruments are market risk,
credit risk, liquidity risk, interest risk and currency risk. The Board review
and agree policies for managing its risk exposure. These policies are
summarised below.
Market Price Risk
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
uncertainty. There is no assurance that the estimates resulting from the
valuation process will reflect the actual sales price even where a sale occurs
shortly after the valuation date. Rental income and the market value for
properties are generally affected by overall conditions in the local economy,
such as growth in Gross Domestic Product ("GDP"), employment trends, inflation
and changes in interest rates. Changes in GDP may also impact employment
levels, which in turn may impact the demand for premises. Furthermore,
movements in interest rates may affect the cost of financing for real estate
companies.
Both rental income and property values may 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
the 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 Investment Manager addresses
market risk through a selective investment process, credit evaluations of
tenants, ongoing monitoring of tenants and through effective management of the
properties.
Market price sensitivity analysis
The sensitivity analysis has been determined based on the exposure to property
valuation risks at the reporting date. Any changes in market conditions will
directly affect the profit or loss reported through the Consolidated Income
Statement. A 5% increase in the value of the direct properties (after deferred
tax) at 30 June 2015 would have increased net assets and income for the year by
GBP2.35 million (2014: GBP2.95 million). A decrease of 5% would have had an equal
but opposite effect.
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Credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. The Group
has adopted a policy of only dealing with creditworthy counterparties and
obtaining sufficient collateral where appropriate as a means of mitigating the
risk of financial loss from defaults. The Group's and Company's exposure and
the credit-ratings of its counterparties are continuously monitored and the
aggregate value of transactions concluded is spread amongst approved
counterparties.
The credit risk on liquid funds and derivative financial instruments is limited
because the counterparties are banks with high credit-ratings assigned by
international credit-ratings agencies. As at 30 June 2014 and 2015, the Group
banks with Barclays Bank plc which has a Fitch rating of F1, HSBC Bank plc with
a Fitch rating of F1+ and BIL with a Fitch rating of A-.
Cash and cash equivalents and trade and other receivables presented in the
Consolidated Statement of Financial Position are subject to credit risk with
maturities within one year.
Liquidity risk
Liquidity risk is the risk that the Company will encounter in realising assets
or otherwise raising funds to meet financial commitments in a reasonable
timeframe or at a reasonable price.
The Group invests the majority of its assets in investment properties which are
relatively illiquid, however, the Group has mitigated this risk by investing in
desirable properties in strong locations. The Group prepares forecasts in
advance which enables the Group's operating cash flow requirements to be
anticipated and ensures that sufficient liquidity is available to meet
foreseeable needs and to invest any surplus cash assets safely and profitably.
The Group also monitors the cash position in all subsidiaries to ensure that
any working capital needs are addressed as early as possible.
The Company has continued to suspend the payment of dividends to prudently
manage cash during the wind-down phase.
The table below summarises the maturity profile of the Group's liabilities.
Less 3-12 1-3 years
than 3 months
months
Total
As at 30 June GBP000s GBP000s GBP000s GBP000s
2015
Interest bearing - - 16,189 16,189
loans
Current portion of long-term - 7,971 - 7,971
loans
Trade and other payables - 1,582 - 1,582
Derivative financial instruments
Interest rate - - 811 811
swaps
Total - 9,973 17,000 26,973
Less 3-12 1-3 years
than 3 months
months
Total
As at 30 June GBP000s GBP000s GBP000s GBP000s
2014
Interest bearing - - 28,802 28,802
loans
Current portion of long-term - 3,586 - 3,586
loans
Trade and other payables 1,469 631 - 2,100
Derivative financial instruments
Interest rate - - 1,783 1,783
swaps
Total 1,469 4,217 30,585 36,271
Interest rate risk
Floating rate financial assets comprise the cash balances which bear interest
at rates based on bank base rates. The Group is exposed to cash flow risk as
the Group borrows funds under the loan facility with Crédit Agricole and Crédit
Foncier at floating interest rates. The Group manages this risk by using
interest rate swaps and caps denominated in Euro. At 30 June 2014, the Group
had interest rate swaps with a notional contract amount of GBP24.44 million (EUR
34.50million) (2014: GBP32.43 million (EUR40.50 million).
Following the orderly and managed wind-down of the Group and as discussed in
Note 22b, and the consequent repayment of external loans, hedging reserves of GBP
0.28 million loss deferred in equity related to the interest rate swaps that
were cancelled and settled during the year were recycled to profit or loss for
the period ended 30 June 2015 (2014: GBP0.74 million loss). Current movement of
fair value amounting to GBP0.76 million gain due to the ineffectiveness of hedge
accounting of interest rate swaps is recognized in profit or loss for the
period ended 30 June 2015 (2014: GBP0.70 million gain).
The Group has entered into interest rate swaps and caps for the period of the
main loan facility, effective from 1 July 2011 to 1 July 2016, to eliminate
floating interest rate risk. Details of the hedging contracts are below:
Counterparty Contract Rate Notional Amount
Interest Rate Crédit Agricole 2.795% EUR34.50 million
Swaps
Company
30 June 2015 30 June 2014
Assets Liabilities Assets Liabilities
GBP000s GBP000s GBP000s GBP000s
Non-current
Interest rate swaps and caps - 811 - 1,783
Total - 811 - 1,783
The following table details the notional principal amounts, fair values and
maturity profiles of the remaining items of interest rate swap contracts
outstanding as at the reporting date.
Average contracted fixed Notional principal
interest rate amount Fair value
30 June 2015 30 June 30 June 30 June 30 June 30 June
2014 2015 2014 2015 2014
% % EUR000s EUR000s GBP000s GBP000s
Interest rate swaps and
caps
2 - 5 2.795% - 2.795% - 34.497 40,500 (811) (1,783)
years 3.50% 3.50%
The interest rate swaps settle on a quarterly basis. The basis of floating rate
is 3-month Euribor which at the year-end was
-0.014% (2014: 0.207%). The Group will settle the difference between the fixed
and floating rate on a net basis.
Interest re-pricing
As at 30 June 2015
Total as per
Effective statement of Fixed rate Floating
interest rate financial rate
position 3 months
or less
% GBP000s GBP000s GBP000s
Financial assets
Cash and cash equivalents 8,078 - 8,078
Total 8,078 - 8,078
Financial
liabilities
Current portion of long-term loans 3.14% 7,971 - 7,971
Long-term loans 3.09% - 5.0% 16,189 90 16,099
Total 24,160 90 24,070
As at 30 June 2014
Total as per
Effective statement of Fixed rate Floating
interest rate financial rate
position 3 months
or less
% GBP000s GBP000s GBP000s
Financial assets
Cash and cash equivalents 3,008 - 3,008
Total 3,008 - 3,008
Financial
liabilities
Current portion of long-term loans 3.14% 3,586 - 3,586
Long-term loans 3.09% - 5.0% 28,802 97 28,705
Total 32,388 97 32,291
Foreign currency risk
The European subsidiaries invest in properties using currencies other than
Sterling, the Company's functional and presentational currency, and the
Consolidated Statement of Financial Position may be significantly affected by
movements in the exchange rates of such currencies against Sterling.
The following table sets out the total exposure to foreign currency risk and
the net exposure to foreign currency of monetary assets and liabilities based
on notional amounts.
Monetary Monetary Net
assets liabilities exposure
GBP000s GBP000s GBP000s
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At 30 June 8,350 (25,742) (17,392)
2015
At 30 June 4,878 (34,488) (29,610)
2014
Foreign currency risk sensitivity
The following table demonstrates the sensitivity to potential fluctuations in
the Euro exchange rate (ceteris paribus) of the Group's equity.
Increase/ Effect on
decrease equity
in Euro and income
exchange rate GBP000s
At 30 June +5% 860
2015
-5% (860)
At 30 June +5% 1,481
2014
-5% (1,481)
Derivative financial instruments are recognised initially at cost which is also
deemed to be fair value. Subsequent to initial recognition, derivative
financial instruments are stated at fair value. The gain or loss on
remeasurement to fair value is recognised immediately in profit or loss.
The fair value of interest rate swaps is the estimated amount that the Group
would receive or pay to terminate the swap at the Consolidated Statement of
Financial Position date, taking into account current interest rates and the
current creditworthiness of the swap counterparties.
Derecognition of financial instruments
A financial asset is derecognised when:
- the rights to receive cash flows from the asset have expired;
- the Company retains the right to receive cash flows from the asset, but
has assumed an obligation to pay them in full without material delay to a third
party under a "pass through arrangement"; or
- the Company has transferred substantially all the risks and rewards of
the asset, or has neither transferred nor retained substantially all the risks
and rewards of the asset, but has transferred control of the asset.
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled.
The table below analyses financial instruments carried at fair value, by
valuation method. The different levels have been defined as follows:
Level 1: quoted (unadjusted) prices in active markets for identical assets or
liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are
observable for asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices);
Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
Level 1 Level 2 Level 3
30 June 2015 GBP000s GBP000s GBP000s
Liabilities measured at fair
value
Interest rate swaps and caps - 811 -
Total - 811 -
Level 1 Level 2 Level 3
30 June 2014 GBP000s GBP000s GBP000s
Liabilities measured at fair
value
Interest rate swaps and caps - 1,783 -
Total - 1,783 -
The Group had the following derivative contracts outstanding as at the
reporting dates:
30 June 2015
Fixed Notional Fair
interest amount value
Counterparty Settlement rate EUR000s GBP000s
date
Interest rate
swaps
Crédit Agricole Corporate & 01/07/2016 2.795% 39,497 (811)
Investment Bank
30 June 2014
Fixed Notional Fair
interest amount value
Counterparty Settlement Fixed EUR000s GBP000s
date interest
rate
Interest rate
swaps
Crédit Agricole Corporate & 01/07/2016 2.795% 40,500 (1,783)
Investment Bank
22. Reserves
(a) Revaluation reserves
Revaluation reserves of the Group arose from the revaluation of investment
properties, financial assets and derivatives. The amounts in these reserves
have already been recognised through the Consolidated Income Statement and
therefore are an allocation of the results for the year.
(b) Hedging reserves
Hedging reserves comprise the effective portion of the cumulative net change in
the fair value of hedging instruments.
30 June 30 June
2015 2014
GBP000s GBP000s
Balance at the beginning of financial year (4,618) (5,623)
Movement on cash flow hedges:
Interest rate 280 741
swaps
Cross currency - 264
swaps
Net change 280 1,005
in fair
value of
hedges
Balance at (4,338) (4,618)
end of
financial
year
Following the decision at the EGM on 26 April 2013, to enter into a managed
wind down of the Company, the criteria for hedge accounting of the interest
rate swaps are no longer met. The loan is expected to be fully settled
following the last asset disposal (likely to be during the first quarter of
calendar year 2016), whereas the interest rate swaps mature 1 July 2016. The
critical terms of the hedge and the hedged item are no longer deemed to match
and hedge accounting ceased to apply from 1 January 2013 onwards.
(c) Distributable reserves
Distributable reserves arose from the cancellation of the share premium account
pursuant to the special resolution passed at the EGM on 13 April 2005 and
approved by the Royal Court of Guernsey on 24 June 2005.
(d) Foreign currency reserves
Foreign currency reserves arose as a result of the translation of the financial
statements of foreign operations, the functional and presentation currency of
which is not Sterling.
23. NAV Reconciliation
The following is a reconciliation of the NAV per share attributable to ordinary
shareholders as presented in these financial statements, using IFRS to the NAV
per share reported to the LSE:
NAV per
Ordinary
NAV Share
GBP000s GBP
Net Asset Value reported to London Stock Exchange 49,463 57.73
Adjustment on Property Trust Netherlands 1 B.V. (96) (0.12)
Net Assets Attributable to Shareholders per Financial 49,367 57.61
Statements
24. Related party transactions
The Directors are responsible for the determination of the Company's investment
objective and policy and have overall responsibility for the Group's activities
including the review of investment activity and performance.
Mr Hunter, Chairman of the Company and Mr Spaninks, a Director of the Company,
formed the majority of the Directors of its subsidiaries, Property Trust
Luxembourg 1 S.à r.l., Property Trust Luxembourg 2 S.à r.l. and Property Trust
Luxembourg 3 S.à r.l. and were able to control the investment policy of the
Luxembourg subsidiaries to ensure it conforms with the investment policy of the
Company until Mr Spaninks resignation from the Boards of Property Trust
Luxembourg 1 S.à r.l., Property Trust Luxembourg 2 S.à r.l. and Property Trust
Luxembourg 3 S.à r.l. on 11 October 2013.
Mr Farrell, a Director of the Company, is also a Partner in Mourant Ozannes,
the Guernsey legal advisers to the Company. The total charge to the
Consolidated Income Statement during the period in respect of Mourant Ozannes
legal fees was nil (2014: GBP2,145), of which GBPnil (2014: GBPnil) remained payable
at the year end.
Mr Lawson, a Director of the Company, was a Director of the Administrator and
Secretary, Northern Trust International Fund Administration Services (Guernsey)
Limited until 13 December 2013, when he became a Director of Northern Trust
(Guernsey) Limited, the Company's bankers and member of the same group as the
Administrator and Secretary. The total charge to the Consolidated Income
Statement during the year in respect of Northern Trust administration fees was
GBP145,000 (2014: GBP175,000) of which GBPnil (2014: GBP36,250) remained payable at the
year end.
Under the Investment Management Agreement, fees are payable to the Investment
Manager, Real Estate Adviser and other entities within the AXA Group. These
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