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 £39.69
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
31 December 2016 |
Year ended
30 June 2016 |
% change |
NAV (£000s) |
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 |
- |
£16.2m |
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
liabilities (£000s)3 |
40,905 |
40,475 |
1.06% |
Total return |
Six
month period
31 December 2016 |
Six
month period
31 December 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 €23.2 million and
the disposal of the Rothenburg asset was contracted at €22.02
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 £0.34 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 £18.4 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 €700 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 €70 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
valuation1 |
% of total Property
Portfolio 2 |
Rothenburg ob der
Tauber |
Germany |
Retail |
8.09% |
60.30% |
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
31 December 2016 |
% of income
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:
- 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
- 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 period ended |
|
Six
month period ended |
|
|
|
|
31
December 2016 |
|
31
December 2015 |
|
|
|
Notes |
£000s |
|
£000s |
|
|
|
|
|
|
|
|
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 properties |
6 |
(677) |
|
1
318 |
|
(Loss)/Gain on disposals of a subsidiary and investment
properties |
(646) |
|
1
058 |
|
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 venture |
8 |
50 |
|
(311) |
|
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 ordinary share (pence) |
|
(0.58) |
|
1.65 |
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
period ended |
|
Six month
period ended |
|
|
|
|
31
December 2016 |
|
31
December 2015 |
|
|
|
|
£000s |
|
£000s |
|
|
|
|
|
|
|
(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 reclassified to profit or loss |
|
1
330 |
|
1
663 |
|
|
|
|
|
|
|
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)
|
|
Hedging reserve |
Revenue reserve |
Distributable reserve |
Foreign
currency reserve |
Total |
|
Notes |
£000s |
£000s |
£000s |
£000s |
£000s |
|
|
|
|
|
|
|
Balance at 1 July
2016 |
|
- |
(40
489) |
68
856 |
10
327 |
38
694 |
Loss for the
period |
|
- |
(335) |
- |
- |
(335) |
Other comprehensive
income |
|
- |
- |
- |
1
330 |
1
330 |
Total comprehensive
income for the period |
|
- |
(335) |
- |
1
330 |
995 |
Balance at 31 December
2016 |
|
- |
(40
824) |
68
856 |
11
657 |
39
689 |
For the six month ended 31 December
2015 (unaudited)
|
|
Hedging reserve |
Revenue reserve |
Distributable reserve |
Foreign
currency reserve |
Total |
|
Notes |
£000s |
£000s |
£000s |
£000s |
£000s |
|
|
|
|
|
|
|
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 for the period |
|
527 |
1
309 |
- |
1
136 |
2
972 |
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 2016 |
|
30 June
2016 |
|
|
Notes |
£000s |
|
£000s |
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 for sale |
8 |
2
001 |
|
10
274 |
|
|
|
|
|
|
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 period ended |
|
Six
month period ended |
|
|
|
|
31
December 2016 |
|
31
December 2015 |
|
|
Notes |
|
£000s |
|
£000s |
|
|
|
|
|
|
|
Operating
activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/profit before
tax |
|
|
(131) |
|
1
200 |
|
|
|
|
|
|
|
|
Adjustments for: |
|
|
|
|
|
|
Loss/(Gain) on
valuation and disposals of a subsidiary and investment
properties |
6 |
|
1
323 |
|
(2
376) |
|
Shares in
(profits)/losses of joint-venture |
8 |
|
(50) |
|
311 |
|
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 payables |
10 |
|
3
584 |
|
(432) |
|
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 and investment properties |
6 |
|
7
450 |
|
29
938 |
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 the period |
|
|
8
806 |
|
8
078 |
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 £204,247 (30 June 2016: £206,418). 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 £1.40 million
(31 December 2015: £2.39 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 2016 |
30 June
2016 |
|
£000s |
£000s |
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 2016 |
31
December 2015 |
|
£000s |
£000s |
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 £24.1 million
as at 31 December 2016. No additional
capital redemption took place during the period.
6. Investment properties
|
31
December 2016 |
30 June
2016 |
|
£000s |
£000s |
Fair value of
investment properties at beginning of the period/year |
30
832 |
58
778 |
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 the period/year |
31
268 |
37
023 |
|
|
|
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 £7.45 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 £23.2 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 Position |
31
December 2016 |
30 June
2016 |
|
£000s |
£000s |
|
|
|
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 2016 |
31
December 2015 |
|
£000s |
£000s |
|
|
|
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 Income |
Six
month |
Six
month |
|
period
ended |
period
ended |
|
31
December 2016 |
31
December 2015 |
|
£000s |
£000s |
|
|
|
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 period |
50 |
(311) |
9. Trade and other receivables
|
31
December 2016 |
30 June
2016 |
|
£000s |
£000s |
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 2016 |
30 June
2016 |
|
£000s |
£000s |
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 property |
1
885 |
- |
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: €17.96 million (£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 2016 |
31
December 2015 |
|
£000s |
£000s |
Hedging reserve
recycled to consolidated income statement |
- |
527 |
Current year fair
value movement of ineffective hedges |
63 |
(124) |
Total gain recognised
in the Consolidated Income Statement |
63 |
403 |
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 £72,500
(31 December 2015: £72,500) 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 £0.02
million (31 December 2015: £0.24 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 £0.03 million and on all sales
(31 December 2015: £0.14 million). During the period, the
provision for the performance fee was reversed by £0.21 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 £18.4 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 £42.4 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