TIDMAPT
To: Company Announcements
Date: 22 March 2017
Company: AXA Property Trust Limited
Subject: Half Year Report
AXA Property Trust Limited
AXA Property Trust Limited has today, in accordance with DTR 6.3.5, released
its Half Year Report and Condensed Consolidated Financial Statements for the
six month ended 31 December 2016. The Half Year Report and Condensed
Consolidated Financial Statements will shortly be available from the
Company's website retail.axa-im.co.uk/axa-property-trust
Key Financial Information
For the six month ended 31 December 2016
* Sterling currency Net Asset Value ("NAV") was GBP39.69 million
* Loss was 0.58 pence per share
* No dividends were paid relating to the period
* No Redemptions of shares paid during the period
As at 31 December 2016
* NAV was 68.93 pence per share (30 June 2016: 67.20 pence)
* Share price1 was 62.00 pence per share (30 June 2016: 55.13 pence)
* Gearing2 was 0% (gross and net) (30 June 2016: 32.1% and 26.6%)
Performance Summary
Six month ended Year ended % change
31 December 30 June 2016
2016
NAV (GBP000s) 39,689 38,694 2.57%
NAV per share 68.93p 67.20p 2.57%
(Loss)/Gain per share (0.58)p 2.08p n/a
Share redemptions paid - GBP16.2m n/a
Share price1 62.00p 55.13p 12.46%
Share price discount to NAV 10.1% 18.0% n/a
Gearing (gross)2 0% 32.1% n/a
Total assets less current 40,905 40,475 1.06%
liabilities (GBP000s)3
Total return Six month Six month
period period
31 December 31 December
2016 2015
NAV Total Return4 2.6% (4.5)%
Share price Total Return
- AXA Property Trust 12.5% 24.5%
- FTSE All Share Index 12.0% (2.0)%
- FTSE Real Estate Investment Trust Index 5.4% 3.9%
Past performance is not a guide to future performance.
1 Mid-market share price (source: Stifel Nicolaus Europe Limited).
2 Gearing is calculated as overall debt, either gross or net of cash held by
the Group over property portfolio at fair value.
3 Includes bank debt classified as a current liability.
4 On a pro-forma basis which includes adjustments to add back any prior NAV
reductions from share redemptions.
Source: AXA Investment Managers UK Limited and Stifel Nicolaus Europe Limited
Chairman's Statement
The Board are pleased to report that during the period transactions were
concluded to sell all but one of AXA Property Trust Limited's (the "Company")
properties.
With its joint venture partner the Company completed the sale of the asset in
Agnadello, Italy for a total sales price (at Joint Venture level) of EUR23.2
million and the disposal of the Rothenburg asset was contracted at EUR22.02
million with the sale subsequently completed in January 2017. Both prices were
slightly below the previous valuations, but following rigorous marketing and
negotiation represent good prices.
A further sale, in Dasing, Germany which had contracted for sale in the
previous period, completed as planned in August 2016.
Results
The Company and its subsidiaries (together the "Group") made a total net loss
after tax of GBP0.34 million for the period to 31 December 2016. The Net Asset
Value per share of the Company at 31 December 2016 was 68.93 pence (30 June
2016: 67.20 pence), a 2.6% increase compared to 30 June 2016.
The mid-market price of the Company's shares on the London Stock Exchange on 31
December 2016 was 62.00 pence, representing a discount of 10.1% to the
Company's NAV at 31 December 2016.
Return of Capital to Shareholders
No return of capital was declared during the period and the dividend policy
remains unchanged. Following the period end, a capital redemption of GBP18.4
million was announced with a payment date on 17 February 2017.
Bank Finance and Deleveraging
During the period, the Group fully repaid the main loan with Crédit Agricole
and Crédit Foncier, using the sales proceeds from the Agnadello sale and
leaving the Company with no outstanding external loan.
Prospects
The Manager continues to work on the sale of the last remaining property, the
Multiplex cinema complex outside Bergamo, east of Milan. A number of interested
buyers have come forward over the last year but it has not been possible to
convert such interest into an acceptable sale transaction. The holding is a
modern purpose designed building next to a busy shopping centre, and the
Company receives, contracted for nearly 8 years, rental income from a major
film distribution organisation. The Board, the Manager and their agents,
believe it is in the interests of the shareholders to persist in the marketing
campaign and not adopt a "forced sale" approach.
As this process could well continue for some time the Board, over the next few
months will review the various options available to minimize the Company's
expenses
Charles Hunter
Chairman
21 March 2017
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 managing EUR700 billion in assets as at 30
September 2016.
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 IM
Real Assets"). AXA IM Real Assets offers a 360° view of real asset markets,
investing in both equity and debt, across different geographies and sectors,
and via private and listed instruments with EUR70 billion of assets under
management and about 600 staff, operating in 24 countries as at 30 September
2016.
Source: AXA Investment Managers UK Limited
Fund Manager
Ian Chappell was appointed as the Fund Manager for AXA Property Trust in
November 2015. He has very broad experience across Europe's real estate
markets, having worked through several market cycles over the past 20 years and
transacting and managing real estate assets covering core, core plus and value
added strategies.
Ian graduated from Nottingham Trent University in 1991 and also holds a Master
of Arts from the University of Newcastle Upon Tyne (1992). He was elected as
Member of the Royal Institution of Chartered Surveyors in 1993. Ian is also a
member of AXA IM Real Assets' Executive Committee.
Market Outlook
Eurozone GDP growth remained steady at 0.3% quarter-on-quarter in Q3 2016.
Household consumption and public spending were the main drivers, whereas growth
in fixed investment slowed sharply and net external demand contributed
negatively. Among the major Eurozone economies, Spain remained the strongest
performer, with GDP growth of 0.7% in Q3, followed by Italy (0.3%) and then
Germany and France (both at 0.2%). GDP growth in the UK slowed from 0.7% in Q2
2016 to 0.6% in Q3, partly in response to uncertainty around its Brexit
referendum. More frequent data and confidence indicators suggest growth
accelerated in Q4 2016 in a number of countries. The Eurozone economy is
projected to have grown by 1.6% and the UK economy by 2.0% in the year as a
whole.
Despite stronger momentum going into 2017, Eurozone GDP growth is forecast to
be slightly lower in 2017 (1.5%) than in 2016. Political uncertainty - with
Article 50 expected to be triggered in Q1 2017 and key elections in the
Netherlands, France, Germany and, most likely, Italy during the year - is
expected to negatively affect spending by both businesses and households.
Growth in public consumption and investment are projected to decelerate,
although the contribution from net trade is forecast to be positive.
Furthermore, higher oil prices are expected to result in a significant increase
in headline inflation which, in the absence of strong employment or wage
growth, is projected to weigh on consumer spending. The divergence in growth
rates between Eurozone countries is expected to continue. While still low by
historical standards, long-term government bond yields are forecast to rise in
2017 and to be trending upwards in a continuation of the pattern seen in the
final quarter of 2016.
German economic growth decelerated to a seasonally-adjusted 0.2%
quarter-on-quarter in Q3 2016, the weakest quarter for growth since Q3 2015.
Growth was mainly driven by domestic demand, although investment stagnated and
net trade made a negative contribution. Year-on-year, GDP grew by 1.7% on a
seasonally adjusted basis in Q3 2016, on a par with the previous quarter.
Looking forward, the German economy should be able to continue to rely on solid
private consumption, whereas the weakness of investment is likely to persist.
Overall, in an environment subject to growing uncertainties, both political and
economic, German firms are likely to remain prudent, potentially impacting on
production, inventories and investment.
In 2016, German retail investment volumes amounted to EUR12.8bn, down 21.3%
compared to 2015 (similar to the decline experienced across Europe). In the
second half of 2016, prime yields in Germany's 10 major retail markets fell
further, by an average of 16 basis points. At the end of Q4 2016, the lowest
yields were in Munich (3.25%), followed by Berlin (3.40%). Berlin regained its
top position for retail occupiers with international brands such as Topshop and
Samsøe opening branches. As a consequence Berlin was the only major German
market to witness a growth in prime rental values.
Italy's GDP growth accelerated from 0.1% quarter-on-quarter in Q2 2016 to 0.3%
in Q3. Growth was driven by investment, whereas growth in household spending
and government spending were very modest and net exports contributed negatively
following a strong Q2 2016. However, Italy's economy faces some severe
headwinds and underlying growth momentum remains weak; our forecast is for GDP
growth of 0.9% in 2016 as a whole, followed by 1.0% in 2017. A key uncertainty
is the impact of the recent referendum which resulted in Prime Minister Renzi
resigning following a larger than expected defeat. While a new caretaker
government and prime minister (Paolo Gentiloni, Democratic Party) were swiftly
put in place, there is a risk that the government's narrow agenda will
negatively affect Italy's growth. Parliamentary elections are expected in
mid-2017 once electoral laws for the upper and lower houses have been
re-aligned. Italian real estate investment volumes stood at EUR9bn in 2016 as a
whole, their highest level since 2007. Prime yield contraction continued in all
of the key sectors in 2016 and mostly to record lows albeit the rate of
contraction was at a slower pace than in 2015. Investor focus continues to be
on the mainstream office and retail sectors with core locations and strong
regional shopping centres being favoured.
Asset Management Update
During the period the sale of two assets were completed:
* Dasing was sold in August 2016
* Agnadello was sold in November 2016
Property Portfolio at 31 December 2016
Investment name Country Sector Net Yield on % of total
valuation1 Property
Portfolio 2
Rothenburg ob der Germany Retail 8.09% 60.30%
Tauber
Curno, Bergamo Italy Leisure 9.98% 39.70%
1 Net yield on valuation is Gross rental income over valuation.
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
Covenant Strength Analysis at 31 December 2016
(based on rental income)
Grade A 46.1% Creditreform:<199; D&B:A 1
Grade B 45.1% Creditreform:200-249; D&B:B,C,D 1,2
Grade C 7.4% Creditreform:>250; D&B: D + 3,4
Vacant 1.4%
Average unexpired lease length profile (weighted by rental income)
31 December 2016 30 June 2016
Years Years
Grade A 7.7 8.2
Grade B 15.0 8.4
Grade C 4.2 3.9
Average 10.8 8.1
The Company's tenant covenant profile is strong, with 46.1% of tenants rated
Grade A, indicating a high credit rating score. Rental income from Grade A
covenants has a weighted unexpired lease length of 7.7 years. The average
rent-weighted unexpired lease length for the investment portfolio as at 31
December 2016 was 10.8 years. Vacant space in the portfolio on 31 December
2016, measured using estimated market rent, represented 1.4% of the total gross
rental income.
With the portfolio extending to just two assets as at 31 December the large
majority of the Company's exposure is to two tenants, Kaufland and UCI Italia.
Lease expiry profile weighted by rental income
% of income % of income
31 December 2016 30 June 2016
Vacant 1.40% 3.7%
<1 3.8% 5.8%
<2 1.3% 2.7%
<3 0% 22.9%
<4 0.6% 0.3%
<5 0.7% 6.9%
5-10 47.1% 29.6%
10-15 0.0% 0%
15+ 45.1% 28.2%
Source: AXA Real Estate Investment Managers UK Limited
Financing
The bank loan from CA-CIB Crédit Agricole was fully repaid in December 2016
prior to the loan maturity, using sales proceeds from the Agnadello
transaction. As at 31 December 2016 the company had no outstanding external
loans.
Portfolio Outlook
Following the successful closing of two transactions and the agreement to sell
a third asset, the Manager continues to work closely with the Board on all
aspects of the strategy for the orderly wind-up of the Company 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
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
worked for a number of years at Simmons & Simmons in their London and Paris
offices, both in the general corporate and financial services/funds
departments. He then moved to Guernsey in 1999 where he was called as an
Advocate of the Royal Court of Guernsey. Gavin became a partner in 2003 of the
corporate department of Ozannes, then Mourant Ozannes. Gavin left Mourant
Ozannes in November 2016 to establish its own practice Ferbrache & Farrell. His
practice covers general corporate and banking work, funds and the asset
management industry. Gavin holds a number of directorships in investment and
captive insurance companies. He is a resident of Guernsey and has been ranked
as a leading individual in banking, corporate and investment funds by a number
of publications as well as having been elected for a number of years as a Top
Five Global Offshore Funds Lawyers in Who's Who Private Funds.
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 a product manager for alternative asset services across the EMEA
region, 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.
Directors' Responsibility Statement
We confirm that to the best of our knowledge:
* the Condensed Half Year Consolidated Financial Statements have been
prepared in accordance with International Accounting Standard 34 Interim
Financial Reporting; and
* this Half Year Report provides a fair review of the information required
by:
a. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial year and their impact on the Condensed Half Year Consolidated
Financial Statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
b. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the
related party transactions described in the last annual report that could
materially affect the financial position or performance of the entity.
Gavin Farrell Stuart Lawson
Director Director
21 March 2017 21 March 2017
Condensed Half Year Consolidated Income Statement
For the six months ended 31 December 2016 (unaudited)
Six month Six month
period ended period ended
31 December 31 December
2016 2015
Notes GBP000s GBP000s
Gross rental income 3 1 397 2 392
Service charge income 142 283
Property operating expenses (153) (755)
Net rental and related income 1 386 1 920
Valuation (loss)/gain on investment 6 (677) 1 318
properties
(Loss)/Gain on disposals of a subsidiary and (646) 1 058
investment properties
Impairment gain - 37
General and administrative expenses 4 (406) (2 380)
Operating (loss)/profit (343) 1 953
Net foreign exchange gain/(loss) 285 (326)
Net gain on financial instruments 12 63 403
Share in profit/(losses) of a joint 8 50 (311)
venture
Net finance cost (186) (519)
(Loss)/profit before tax (131) 1 200
Income tax (expense)/gain (204) 109
(Loss)/profit for the period (335) 1 309
Basic and diluted (loss)/profit per (0.58) 1.65
ordinary share (pence)
The accompanying notes below form an integral part of these condensed half year
financial statements
Condensed Half Year Consolidated Statement of Comprehensive Income
For the six months ended 31 December 2016 (unaudited)
Six month Six month
period ended period ended
31 December 31 December
2016 2015
GBP000s GBP000s
(Loss) / Profit for the period (335) 1 309
Other comprehensive income
Hedging reserve recycled to profit or loss - 527
Foreign exchange translation gain 1 330 1 136
Items that will not be reclassified subsequently
to profit or loss:
Total items that are or may be 1 330 1 663
reclassified to profit or loss
Total comprehensive profit for the year 995 2 972
Condensed Half Year Consolidated Statement of Changes in Equity
For the six month ended 31 December 2016 (unaudited)
Foreign
Hedging Revenue Distributable currency
reserve reserve reserve reserve Total
Notes GBP000s GBP000s GBP000s GBP000s GBP000s
Balance at 1 July 2016 - (40 68 856 10 327 38 694
489)
Loss for the period - (335) - - (335)
Other comprehensive income - - - 1 330 1 330
Total comprehensive income for - (335) - 1 330 995
the period
Balance at 31 December 2016 - (40 68 856 11 657 39 689
824)
For the six month ended 31 December 2015 (unaudited)
Foreign
Hedging Revenue Distributable currency
reserve reserve reserve reserve Total
Notes GBP000s GBP000s GBP000s GBP000s GBP000s
Balance at 1 July 2015 (762) (41 898) 85 049 6 978 49 367
Share redemptions - - (5 197) - (5 197)
Profit for the period - 1 309 - - 1 309
Other comprehensive income 527 - - 1 136 1 663
Total comprehensive income 527 1 309 - 1 136 2 972
for the period
Balance at 31 December 2015 (235) (40 589) 79 852 8 114 47 142
The accompanying notes below form an integral part of these condensed half year
financial statements
Condensed Half Year Consolidated Statement of Financial Position
As at 31 December 2016 (unaudited)
31 December 30 June 2016
2016
Notes GBP000s GBP000s
Non-current assets
Investment properties 6 12 415 30 832
Deferred tax assets 66 -
Current assets
Cash and cash equivalents 9 961 8 806
Trade and other receivables 9 3 062 1 492
Investment properties held for sale 6/7 18 853 6 191
Investment in joint venture held 8 2 001 10 274
for sale
Total assets 46 358 57 595
Current liabilities
Trade and other payables 10 5 453 2 213
Short term loans 11 - 14 907
Non-current
liabilities
Deferred tax liability 330 351
Provisions 886 1 253
Long-term loans - 111
Derivative financial instruments - 66
Total liabilities 6 669 18 901
Net assets 39 689 38 694
Share capital - -
Reserves 39 689 38 694
Total equity 39 689 38 694
Number of ordinary shares 57 577 470 57 577 470
Net asset value per ordinary share (pence) 68.93 67.20
The accompanying notes below form an integral part of these condensed half year
financial statements
By order of the Board
Gavin Farrell Stuart Lawson
Director Director
21 March 2017 2 March 2017
Condensed Half Year Consolidated Statement of Cash Flow
For the six month ended 31 December 2016 (unaudited)
Six month Six month
period ended period ended
31 December 31 December
2016 2015
Notes GBP000s GBP000s
Operating activities
(Loss)/profit before tax (131) 1 200
Adjustments for:
Loss/(Gain) on valuation and disposals 6 1 323 (2 376)
of a subsidiary and investment
properties
Shares in (profits)/losses of 8 (50) 311
joint-venture
Gain on financial instruments 12 (63) (403)
Increase in trade and other receivables 9 (273) (1 013)
(Decrease)/Increase in provisions (367) 537
Increase/(Decrease) in trade and other 10 3 584 (432)
payables
Net finance cost 186 519
Net foreign exchange (gain)/loss (285) 326
Net cash generated from operations 3 924 (1 331)
Interest income received 97 132
Interest paid (382) (696)
Tax (paid)/received (1 256) 370
Net cash inflow from operating activities 2 383 (1 525)
Investing activities
Investment in joint-ventures 8 8 383 -
Proceeds from disposals of a subsidiary 6 7 450 29 938
and investment properties
Net cash inflow from investing activities 15 833 29 938
Financing activities
Redemption of shares - (5 197)
Bank loan facility repaid 11 (14 907) (9 666)
Net cash used in financing activities (14 907) (14 863)
Effects of exchange rate fluctuations (2 154) (85)
Increase in cash and cash equivalents 1 155 13 465
Cash and cash equivalents at start of 8 806 8 078
the period
Cash and cash equivalents at the period end 9 961 21 543
The accompanying notes below form an integral part of these condensed half year
financial statements
Notes to the Condensed Half Year Consolidated Financial Statements
For the period ended 31 December 2016
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 Condensed
Half Year Consolidated Financial Statements of the Company for six month ended
31 December 2016 comprise the financial statements of the Company and its
subsidiaries (together referred to as the "Group").
2. Significant accounting policies
a. Statement of compliance
The Condensed Half Year Consolidated Financial Statements have been prepared in
accordance with the Disclosure Transparency Rules of the Financial Conduct
Authority and with IAS 34, 'Interim Financial Reporting'. They do not include
all the information required for the full annual financial statements and
should be read in conjunction with the consolidated financial statements of the
Group for the year ended 30 June 2016, which were prepared under full
International Financial Reporting Standard ("IFRS") requirements as issued by
the International Accounting Standards Board.
b. Basis of preparation
The same accounting policies and methods of computation have been applied to
the Condensed Half Year Consolidated Financial Statements as in the Annual
Report and Consolidated Financial Statements for the year ended 30 June 2016.
The presentation of the Condensed Half Year consolidated Financial Statements
is consistent with the Annual Report and Consolidated Financial Statements.
c. Determination and presentation of operating segments
The Board has considered the requirements of IFRS 8, 'Operating Segments'. The
Board is of the view that the Company 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. The
conclusion remains unchanged from the consolidated financial statements for the
year ended 30 June 2016.
d. 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 Condensed Half Year 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. As at December 2016 the completion of all sales is foreseen in
the course of 2017.
The Directors estimate that the wind-down costs will be approximately GBP204,247
(30 June 2016: GBP206,418). The Board believes that the Group has sufficient
funds available to meet its wind-down costs and day-to-day running costs.
3. Gross rental income
Gross rental income for the six months ended 31 December 2016 amounted to GBP
1.40 million (31 December 2015: GBP2.39 million). The Group leases out all of its
investment property under operating leases which are usually structured in
accordance with local practices in Germany and Italy. All leases benefit from
indexation.
Minimum Lease Payments (based on leases in place as at 31 December 2016)
31 December 30 June 2016
2016
GBP000s GBP000s
0-1 year 3 209 3 706
1-5 years 12 220 11 105
5+ years 19 345 15 625
4. General and administrative expenses
Six month Six month
period ended period ended
31 December 31 December
2016 2015
GBP000s GBP000s
Administration fees (99) (136)
General expenses (146) (605)
Audit fees (89) (86)
Legal and professional fees (145) (78)
Director's fees (41) (45)
Insurance fees (30) (18)
Liquidation costs 2 (59)
Sponsor's and Brokers' fees (13) (639)
Investment management fees (57) (235)
Performance fee 212 (479)
Total (406) (2 380)
5. Share capital redemptions
Cumulated capital return to shareholders reaches GBP24.1 million as at 31
December 2016. No additional capital redemption took place during the period.
6. Investment properties
31 December 30 June 2016
2016
GBP000s GBP000s
Fair value of investment properties at beginning of 30 832 58 778
the period/year
Opening fair value of assets sold during the year - (28 020)
Fair value adjustments (677) 797
Foreign exchange translation 1 113 5 468
Fair value of investment properties at the end of 31 268 37 023
the period/year
Investment properties classified as held for sale (18 853) (6 191)
Total investment properties 12 415 30 832
All investment properties are carried at fair value.
7. Investment properties held for sale
As at 31 December 2016, the Rothenburg property is classified as held for sale
(30 June 2016: Dasing property). On 25 August 2016, the Dasing property was
sold through an asset deal for a sale price of GBP7.45 million.
8. Investment in Joint ventures 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 was holding a logistics warehouse
in Agnadello, Italy. On 15 November 2016, Property Trust Agnadello S.r.l.
completed the sale of its asset for a total sale price of GBP23.2 million.
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
the carrying amount of the Group's interest in the joint venture:
Summarised Consolidated Statement of Financial 31 December 30 June 2016
Position 2016
GBP000s GBP000s
Current assets 4 205 20 965
Current liabilities (204) (17 183)
Net assets (100%) 4 001 3 782
Group's share of net assets (in percent) 50% 50%
Group's share of net assets 2 001 1 891
Loan balances due to joint-venture partners - 8 383
Carrying amount of interest in joint-venture 2 001 10 274
Summarised Consolidated Income Statement Six month Six month
period ended period ended
31 December 31 December
2016 2015
GBP000s GBP000s
Net rental and related income 633 699
Valuation profit/(loss) on investment property (506) (864)
Total administrative and other expenses (184) (79)
Other income 234 -
Financial expenses (192) (238)
Profit/(loss) before tax (15) (482)
Income tax gain/(expense) 115 (140)
Profit/(loss) for the period 100 (622)
Group's share of profit/(loss) for the period 50 (311)
Summarised Consolidated Statement of Comprehensive Six month Six month
Income
period ended period ended
31 December 31 December
2016 2015
GBP000s GBP000s
Profit/(loss) for the period 100 (622)
Total comprehensive income/(loss) for the period 100 (622)
Group's share of comprehensive income/(loss) for the 50 (311)
period
9. Trade and other receivables
31 December 30 June 2016
2016
GBP000s GBP000s
Tax receivable (witholding, corporate and income) 1 664 367
Investment property sold receivable - 282
Other receivable 515 347
VAT receivable 484 24
Management fee receivable - 156
Rent and service charges receivables 379 116
Accrued income - 129
Prepayments 20 71
Total 3 062 1 492
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.
10. Trade and other payables
31 December 30 June 2016
2016
GBP000s GBP000s
Investment manager's fee 91 165
Property manager's fee - 37
Tax payable (income, transfer, capital and other) 643 888
Interest payable on loan facility - 99
Legal and professional fees 80 93
VAT payable 1 776 13
Audit fee 96 170
Administration and Company Secretarial fees 76 79
Rent prepaid 271 9
Advance received on the sale of the Rothenburg 1 885 -
property
Other 535 660
Total 5 453 2 213
The carrying values of trade and other payables are considered to be
approximately equal to their fair value. Trade and other payables are
non-interest bearing and are normally settled on 30-day terms.
11. Short-term loans
The main loan facility was with Crédit Agricole Corporate and Investment Bank
("Crédit Agricole") and Crédit Foncier de France ("Crédit Foncier"). The main
loan facility maturity was on 31 December 2016.
As at 31 December 2016, this loan has been fully repaid using the proceeds from
the asset sales performed during the period (30 June 2016: EUR17.96 million (GBP
14.9 million) before capitalised debt issue costs).
12. Financial risk management
The table below summarises the amounts recognised in the Consolidated Income
Statement in relation to derivative financial instruments.
Six month Six month
period ended period ended
31 December 31 December
2016 2015
GBP000s GBP000s
Hedging reserve recycled to consolidated income - 527
statement
Current year fair value movement of ineffective 63 (124)
hedges
Total gain recognised in the Consolidated Income 63 403
Statement
The Group is exposed to various types of risk that are associated with
financial instruments. The Group's financial instruments comprise cash,
receivables 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.
Credit risk
Credit risk refers to the risk that 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 is limited because the counterparties are banks
with high credit-ratings assigned by international credit-ratings agencies.
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.
Interest rate risk
Floating rate financial assets comprise the cash balances which bear interest
at rates based on bank base rates. The Group was exposed to cash flow risk as
the Group borrowed funds under the loan facility with Crédit Agricole and
Crédit Foncier at floating interest rates.
As at 31 December 2016, as the loan facility has been fully repaid, the Group
is no longer subject to this risk.
Foreign currency risk
The European subsidiaries will 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 Group
reviews and manage currency exposure in accordance with its hedging strategy.
13. 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 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, was 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 (2015: nil).
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 Mr Lawson 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
GBP72,500 (31 December 2015: GBP72,500) of which nil (31 December 2015: nil)
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
entities are involved in the planning and direction of the Company and Group,
as well as controlling aspects of their day to day activity, subject to the
overall supervision of the Directors. During the period, fees of GBP0.02 million
(31 December 2015: GBP0.24 million) were expensed to the Consolidated Income
Statement. Following the asset disposal, transaction fees of 35 bps on the
gross sales price were expensed; totalling GBP0.03 million and on all sales
(31 December 2015: GBP0.14 million). During the period, the provision for the
performance fee was reversed by GBP0.21 million. The amount had been provided
under the terms of the Investment Management Agreement.
All the above transactions were undertaken at arm's-length.
14. Commitments
As at 31 December 2016, the Company has no commitment.
15. Subsequent events
In January 2017, the disposal of the Rothenburg property was completed and the
remaining funds were received.
On 3 February 2017 the company announced a distribution of GBP18.4 million to its
shareholder by way of capital redemption. The Redemption date is 17 February
2017 so that the total capital returned to shareholders on the 17 February 2017
will be GBP42.4 million.
Corporate Information
Directors (All non-executive)
C. J. Hunter (Chairman)
G. J. Farrell
S. C. Monier
S. J. Lawson
A. Spaninks (resigned 31/10/2016)
Registered Office
PO Box 255
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3QL
Channel Islands
Investment Manager
AXA Investment Managers UK Limited
7 Newgate Street
London EC1A 7NX
United Kingdom
Real Estate Adviser
AXA Real Estate Investment Managers UK Limited
155 Bishopsgate
London EC2M 3XJ
United Kingdom
Sponsor and Broker
Stifel Nicolaus Europe Limited
150 Cheapside
London EC2V 6ET
United Kingdom
Administrator and Secretary
Northern Trust International Fund
Administration Services (Guernsey) Limited
PO Box 255
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3QL
Channel Islands
Registrar
Computershare Investor Services (Guernsey) Limited
1st Floor
Tudor House
Le Bordage
St Peter Port
Guernsey GY1 1DB
Channel Islands
Independent Auditor
KPMG Channel Islands Limited
Glategny Court, Glategny Esplanade
St Peter Port
Guernsey GY1 1WR
Channel Islands
END
(END) Dow Jones Newswires
March 22, 2017 03:00 ET (07:00 GMT)
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