TIDMALPH
RNS Number : 3393H
Alpha Pyrenees Trust Limited
13 March 2015
13 March 2015
ALPHA PYRENEES TRUST LIMITED
("ALPHA PYRENEES TRUST" OR THE "TRUST" OR THE "COMPANY")
ALPHA PYRENEES TRUST POSTS RESULTS FOR THE YEAR ENDED 31
DECEMBER 2014:
DISPOSAL OF THREE PROPERTIES AT OR ABOVE BOOK VALUE AT THE DATE
OF SALE
106,165 SQUARE METRES OF LEASE EXTENSIONS AND NEW LEASES
NET ASSET VALUE 6.0p PER SHARE (ADJUSTED)
Alpha Pyrenees Trust Limited, the property company investing
primarily in commercial real estate in France, today posts its
results for the year from 1 January to 31 December 2014.
The Trust announced an adjusted loss of GBP3.8 million for the
year, representing an adjusted loss per share of 3.3p and an
adjusted net asset value of 6.0p per share. The Trust does not
currently propose to pay dividends.
Dick Kingston, Chairman of Alpha Pyrenees Trust, commented:
"Following the agreement with Barclays in February 2015, the
maturity of the Trust's existing borrowing facilities has been
extended to the 11 May 2015. This extension provides additional
time for the Trust to progress refinancing options including the
potential refinancing of assets by third party lenders and
potential asset sales. Given the current economic environment and
the maturation of the Group's bank borrowings the Board has decided
that to enable repayment of the bank borrowings and protect
shareholder value the Trust will continue to seek the support of
its lender in an orderly realisation of its investment property
while all alternative options continue to be explored. During the
year, the Investment Manager has continued to focus on active asset
management within the portfolio with particular emphasis on the
extension of lease terms and the letting of vacant units to secure
the Trust's income. The Board is pleased to note the important
progress achieved on this front and is also pleased to note the
achievement of the disposal of three of the Trust's properties at
or above book value. The Trust's adjusted earnings have been
impacted by a combination of reduced net income due to asset
disposals, tenants' lease breaks and increased finance charges. The
decrease in the adjusted net asset value during the period is
primarily due to the revaluation of investment properties combined
with the loss incurred in the period and adverse foreign exchange
effects."
Paul Cable, Fund Manager, Alpha Real Capital LLP, commented:
"The Trust owns a diversified portfolio of properties focused
primarily on the French property market which represents 92% of the
total portfolio by value with 84% by value located in the
economically important and stable Ile-de-France region. Despite the
continued low growth in the French economy and the challenging
business environment this creates, since 1 January 2014 new leases
or lease extensions were achieved on 106,165 square metres
representing around 42% of the portfolio by area. Included in this
total is the Trust's largest property, Villarceaux-Nozay,
representing around 50% of the Trust's total portfolio by value,
where a new 12 year lease with a fixed term of 9 years was agreed
with Alcatel-Lucent. Of the Trust's current rent roll, 86% is
secured by leases to Grade A tenants. The Investment Manager will
continue to concentrate on active asset management and property
management initiatives to secure the Trust's income while pursuing
asset sale opportunities."
Contact:
Dick Kingston
Chairman, Alpha Pyrenees Trust Limited
01481 231100
Paul Cable
Fund Manager, Alpha Real Capital LLP
020 7391 4700
For more information on the Trust please visit
www.alphapyreneestrust.com.
For more information on the Trust's Investment Manager please
visit www.alpharealcapital.com.
FORWARD-LOOKING STATEMENTS
These results contain forward-looking statements which are
inherently subject to risks and uncertainties because they relate
to events and depend upon circumstances that will occur in the
future. There are a number of factors that could cause actual
results to differ materially from those expressed or implied by
such forward-looking statements. Forward-looking statements are
based on the Board's current view and information known to them at
the date of this statement. The Board does not make any undertaking
to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. Nothing in
these results should be construed as a profit forecast.
About the Trust
Alpha Pyrenees Trust Limited ("the Trust" or "the Company")
primarily invests in higher-yielding properties in France,
particularly in the Ile-de-France region around Paris, focusing on
commercial property in the office, industrial, logistics and retail
sectors let to tenants with strong covenants.
The Trust seeks to diversify risk by investing in a portfolio of
properties spread across different property sectors with a variety
of tenants.
Dividends
The Trust does not currently propose to pay dividends.
Listing
The Trust is a closed-ended Guernsey registered investment
company which has been declared under the relevant legislation to
be an Authorised Closed-Ended Collective Investment Scheme. Its
shares are listed on the Official List of the UK Listing Authority
and traded on the London Stock Exchange.
Management
The Trust's Investment Manager is Alpha Real Capital LLP ("the
Investment Manager"). Control of the Trust rests with the
non-executive Guernsey-based Board of Directors.
ISA/SIPP status
The Trust's shares are eligible for Individual Savings Accounts
(ISAs) and Self Invested Personal Pensions (SIPPs).
Website
www.alphapyreneestrust.com
Financial highlights
Year ended Half year ended Year ended Half year ended
31 December 2014 30 June 2014 31 December 2013 30 June 2013
------------------------------------------ ------------------ ---------------- ------------------ ----------------
Net asset value (adjusted) (GBP'000)* 7,018 14,089 26,834 33,509
------------------------------------------ ------------------ ---------------- ------------------ ----------------
Net asset value per ordinary share
(adjusted)* 6.0p 12.0p 22.8p 28.5p
------------------------------------------ ------------------ ---------------- ------------------ ----------------
Net asset value per ordinary share 2.5p 5.3p 12.7p 14.7p
------------------------------------------ ------------------ ---------------- ------------------ ----------------
Earnings per share (adjusted - basic &
diluted)** (3.3)p (1.3)p 0.1p 0.2p
------------------------------------------ ------------------ ---------------- ------------------ ----------------
Earnings per share (basic & diluted) (9.8)p (8.5)p (4.7)p (2.3)p
*The net asset value and net asset value per ordinary share have
been adjusted for the fair value movement on revaluation of the
interest component of the currency swap (up to maturity in October
2013 at which point this element unwound), the interest rate swap
derivatives and 50% of the deferred tax provisions; full analysis
is given in note 10 to the accounts.
**The adjusted earnings per share includes adjustments for the
effect of the fair value mark-to-market revaluation of the
properties, currency swap (settled in October 2013) and interest
rate swap derivatives, deferred tax provisions, capital element of
investment managers fee, rental guarantee income and foreign
exchange gains and losses. A full analysis is given in note 9 to
the accounts.
Chairman's Statement
The Trust has continued to focus on active asset management
within the existing portfolio with particular emphasis on the
extension of lease terms and the letting of vacant units to secure
the Trust's income. The Board is pleased to note the important
progress achieved on this front, most notably at the Trust's
largest property, Villarceaux-Nozay, where a new long term lease
was negotiated with Alcatel-Lucent in return for agreed works to
accommodate their consolidation of staff on site from another Paris
region facility. Since 1 January 2014 new leases or lease
extensions were achieved on a total of 106,165 square metres within
the current portfolio representing around 42% of the portfolio by
area. Further detail on asset management progress appears in the
Property Review section. Going forward, the Trust is also focused
on asset sales that reduce the level of the Trust's bank
borrowings. Three sales were completed in the year at or above
their book values at the date of sale and the proceeds from these
sales are held within the cash pooling arrangement established with
the Trust's lenders, Barclays Bank PLC, to provide security for its
loans and working capital for the Trust's operations.
Going concern
Given the current economic environment and the maturation of the
Group's bank borrowings on 11 May 2015 the Board has decided that
to enable repayment of the bank borrowings and protect shareholder
value the Trust will continue to seek the support of its lender in
an orderly realisation of its investment property while all
alternative options continue to be explored. Hence, at this time,
the accounts are not prepared on a going concern basis as noted
within the accounting policy section in the notes to these
financial statements.
Results and dividend
Results for the year show an adjusted loss of GBP3.8 million
(2013: earnings of GBP0.1 million) and adjusted loss per share of
3.3p (2013: adjusted earnings per share of 0.1p) (note 9). Earnings
have been impacted by a combination of revenue losses due to asset
disposals (mainly Vitry and Gennevilliers) and tenants' breaks
together with increased finance charges (following the financing of
the hedge liability in November 2013).
The challenging business climate has created an environment
where generally the corporate decision making process has been
extended and hence leasing transactions take longer to complete.
The Trust currently has vacant space with an estimated annual
rental value of approximately GBP3.4 million (EUR4.4 million) and
against this backdrop it remains difficult to predict the timing
and level of re-leasing that will be achieved.
The Trust does not currently propose to pay dividends.
Revaluation and Net Asset Value
Investment properties are included in the balance sheet at an
independent valuation of GBP212.2 million (EUR271.2 million)
providing an average gross valuation yield across the portfolio of
8.3% as at 31 December 2014. The portfolio valuation has decreased
by 3.6% compared to 31 December 2013 on a like for like basis
taking into account the asset sales that have completed in the
period. The next revaluation will take place as at 30 June
2015.
The portfolio totals approximately 250,180 square metres
(approximately 2.7 million square feet) and many of the tenants are
well known companies belonging to large groups with strong
covenants such as: Alcatel-Lucent, Aviva, BNP Paribas, Dia, Etanco,
Furnotel, Klöckner Group, MediaMarkt, McDonalds, Norauto, OCP and
Vinci Group. Grade A tenants also include government or
quasi-government bodies and together the rent from such tenants
accounts for 86% of the Trust's rental income.
The weighted average lease length within the portfolio is
currently 10.3 years to expiry and 6.7 years to the next break.
As at 31 December 2014, the adjusted net asset value per
ordinary share is 6.0p (31 December 2013: 22.8p per share) (note
10). The decrease in the period is primarily due to the revaluation
of investment properties combined with the loss incurred in the
period and adverse foreign exchange effects.
Portfolio Summary
Country Property Sqm Description Valuation Valuation
GBPm EURm
--------- ------------------- -------- ---------------------- ---------- ----------
France Villarceaux-Nozay 82,320 Business park 104.9 134.0
--------- ------------------- -------- ---------------------- ---------- ----------
France Aubervilliers 8,750 Offices 15.3 19.6
--------- ------------------- -------- ---------------------- ---------- ----------
Warehouse and
France Goussainville 20,500 offices 10.6 13.6
--------- ------------------- -------- ---------------------- ---------- ----------
France Aubergenville 27,700 Logistics 9.1 11.6
--------- ------------------- -------- ---------------------- ---------- ----------
Champs sur
France Marne 5,930 Offices 8.5 10.8
--------- ------------------- -------- ---------------------- ---------- ----------
Logistics with
France Athis Mons 23,280 offices 8.2 10.5
--------- ------------------- -------- ---------------------- ---------- ----------
France Mulhouse 5,250 Offices 7.2 9.2
--------- ------------------- -------- ---------------------- ---------- ----------
France St Cyr L'Ecole 6,340 Offices 7.0 9.0
--------- ------------------- -------- ---------------------- ---------- ----------
France Roissy-en-France 7,800 Offices and warehouse 6.4 8.2
--------- ------------------- -------- ---------------------- ---------- ----------
France Nîmes 3,100 Offices and retail 5.7 7.3
--------- ------------------- -------- ---------------------- ---------- ----------
Logistics with
France Evreux 14,130 offices 4.9 6.3
--------- ------------------- -------- ---------------------- ---------- ----------
Warehouse and
France Ivry-sur-Seine 7,420 offices 4.1 5.2
--------- ------------------- -------- ---------------------- ---------- ----------
Warehouse and
France Fresnes 6,540 offices 3.9 5.0
--------- ------------------- -------- ---------------------- ---------- ----------
Spain Córdoba 16,880 Retail park 12.0 15.4
--------- ------------------- -------- ---------------------- ---------- ----------
Alcalá
Spain de Guadaíra 5,700 Shopping centre 2.0 2.5
--------- ------------------- -------- ---------------------- ---------- ----------
Spain Écija 5,950 Shopping centre 2.0 2.5
--------- ------------------- -------- ---------------------- ---------- ----------
Spain Zaragoza 2,590 Warehouse 0.4 0.5
--------- ------------------- -------- ---------------------- ---------- ----------
Total 250,180 212.2 271.2
Finance
The Trust's existing borrowing facilities with Barclays Bank PLC
("Barclays") were due to terminate on 10 February 2015 on which
date the Board announced that the maturity date of the Trust's
borrowings had been extended to 11 May 2015. The Trust was
compliant with its borrowing covenants on the test date of 10
February 2015 and no further covenant tests are scheduled before
the amended maturity date. A fee of 0.5% (c EUR1.35m) of the
borrowed amount is being charged by Barclays for this extension
period and this will be payable at 11 May 2015. The current
interest rates will continue to apply to the facilities during the
extension period.
This post balance sheet extension of the maturity date provides
additional time for the Trust to progress refinancing options
including the potential refinancing of assets with third party
lenders and potential asset sales.
As at 31 December 2014, the Trust had total borrowings of
GBP211.3 million (EUR270.0 million) under its facilities with
Barclays. As at 31 December 2014, the Trust held cash of GBP12.4
million.
The key features of the Trust's borrowings are:
-- No loan to value ("LTV") covenant test on any of the Trust's properties until maturity.
-- 89% of borrowings have interest rates that are fixed to
maturity at a weighted average rate of 5.26% per annum.
-- 10% of borrowings have interest rates charged at a margin of 10% above three month Euribor.
-- 1% of borrowings have interest rates charged at a margin of
2.65% above three month Euribor.
-- Interest cover ratio ("ICR") covenant on the senior secured
borrowings is set at a minimum of 115% - the Trust is compliant
with this covenant as the weighted average ICR over the six months
to 31 December 2014 was 137%.
The facility to finance the settlement of the net currency hedge
liability is provided in the form of a Euro denominated loan, which
including rolled up interest up to 31 December 2014, for a total of
EUR27.6 million; interest is charged quarterly at a margin of 10%
above three month Euribor and will be rolled up throughout the
term. The Trust is permitted to repay the loan at any time after
repayment of the senior secured borrowings (EUR242.4 million). The
hedge loan is secured by a charge over the Trust's Nîmes property
and there is a cash-pooling arrangement over the Trust's cash flows
from the whole property portfolio to provide further security to
the loan but still providing the Trust with working capital for its
operations.
Going forward the Trust does not currently propose to hedge its
equity for movements in foreign currency. The Trust has a
substantial natural hedge through the fact that its borrowings are
denominated in the same currency as the majority of its assets.
Market outlook
-- Overall leasing activity in the French and Spanish markets
has been subdued over the period reflecting economic conditions but
despite this backdrop the Trust has achieved lease extensions and
new leases on 106,165 square metres (42% of its portfolio) since 1
January 2014.
-- Take-up in our principal occupational markets has been
adversely affected by the difficult business climate. However, in
the Paris region (Ile-de-France), where 84% of the Trust's
portfolio is situated, investment confidence is gradually
improving.
-- Valuation yields have been broadly stable but are vulnerable
for properties that have substantial vacancy.
Summary
-- The Trust owns a diversified freehold portfolio of properties
totalling GBP212.2 million (EUR271.2 million) with an average gross
valuation yield of 8.3% at the December valuation.
-- 86% of the Trust's rental income derives from Grade A tenants
with a strong capacity to pay.
-- The weighted average lease length within the portfolio is
10.3 years to expiry and 6.7 years to the next break.
-- The Board continues to pursue alternative financing options
in the run up to the current maturity of the existing bank
borrowings in May 2015 and the Trust will continue to seek the
support of its lender in an orderly realisation of its investment
property. The Trust will provide further updates in due course.
Dick Kingston
Chairman
12 March 2015
Property review
Portfolio overview
Given the current economic environment and the potential
maturation of the Group's bank borrowings on 11 May 2015 the Board
has decided that to enable repayment of the bank borrowings and
protect shareholder value the Trust will continue to seek the
support of its lender in an orderly realisation of its investment
property while all alternative options continue to be explored.
Investors' attention is drawn to the property risk disclosure in
note 23.
The Trust owns a portfolio of thirteen properties in France and
four properties in Spain totalling approximately 250,180 square
metres (approximately 2.7 million square feet) of commercial real
estate. The properties are generally well let, well located and
offer good value accommodation to occupiers. Of the total property
portfolio, 92% is invested in France and 8% in Spain in terms of
capital value.
The valuation of the portfolio as at 31 December 2014 was
approximately GBP212.2 million (EUR271.2 million) based on an
average valuation yield of 8.3% with the French portfolio having an
average valuation yield of 8.2% and the Spanish portfolio 9.0%
respectively. The portfolio as a whole showed a valuation decrease
of 3.6% on a Euro like-for-like basis compared to 31 December 2013.
This consisted of a decrease of 3.3% in the French portfolio and a
decrease of 7.2% in the Spanish portfolio. The average capital
value of the portfolio is approximately GBP848 (EUR1,084) per
square metre (equivalent to GBP79 per square foot) and the average
rental value is approximately GBP83 (EUR106) per square metre per
annum (equivalent to GBP7.7 per square foot). Of the overall
portfolio, 84% by value is located within the Ile-de-France region
around Paris. The portfolio has 70% exposure to the French office
and business park sector of which 64% of the total portfolio is in
the Ile-de-France region. The reinstatement cost of the portfolio
buildings has been assessed at GBP237 million (EUR303 million)
representing approximately 112% of current value.
As at 31 December 2014, the Trust's portfolio is diversified
across business sectors with 70% in offices and business park
property, 22% in warehouses and 8% in retail.
The portfolio benefits from strong credit-rated tenants with 86%
of its current rent roll secured by leases to Grade A tenants
(large international/national companies or public sector). Examples
of those categorised as Grade A are given in the Chairman's
Statement.
The portfolio has an overall level of average occupancy of 82%
measured by rental income as a percentage of potential total income
with vacancy representing 18%.
The weighted average lease length within the portfolio is 10.3
years to expiry and 6.7 years to the next break.
Asset management review
The Investment Manager maintains close contact with the Trust's
tenants to understand their needs and wherever possible to produce
solutions which deliver value to both the tenants and investors. We
constantly seek to maintain and, where possible, improve the income
from each of the Trust's assets and look for opportunities to
create income through value-adding refurbishment, extension and
reconfiguration.
Over the period we have continued to concentrate on active asset
management and property management initiatives to secure the
Trust's income and we are pleased to report a number of important
achievements since 1 January 2014 in the following areas:
-- extending the lease maturity profile of the property portfolio through lease extensions
-- letting of vacant units.
The Investment Manager remains vigilant to ensuring service
charges are controlled, the annual level of property costs is
closely monitored and additional sources of income are
identified.
Since 1 January 2014, new leases and lease extensions totalling
approximately 110,470 square metres have been achieved including
properties that have been sold subsequently.
Excluding properties that have been sold, these new leases and
lease extensions total approximately 106,165 square metres
representing 42% of the Trust's current portfolio by area. Of this
total, 11,615 square metres were previously detailed in the half
year report for 2014 and new leases and lease extensions covering
approximately 94,550 square metres have been completed since the
half year report was published as detailed below.
FRANCE
Villarceaux-Nozay - A new 12 year lease was signed with the
existing tenant, Alcatel-Lucent, with a minimum fixed term of 9
years with effect from 29 August 2014. The new lease represents an
increase of almost 5 years in fixed term commitment from the
previous lease which had approximately 4 years remaining. The
agreement includes a commitment from the Trust of EUR9 million of
staged capital expenditure towards creating both new lettable area
and other building improvements at Nozay. The additional lettable
space will generate an additional EUR489,000 of rental income per
annum on completion. Nozay contains campus style offices together
with business space and ancillary accommodation totalling
approximately 82,320 square metres and 3,000 car parking spaces.
The Nozay business park is housed on a campus of approximately 36
hectares and is located close to one of Paris' largest business
space centres, Courtaboeuf business park. It is also close to
Campus Paris-Saclay, a scientific hub of academic establishments
including 2 universities, 10 "grandes écoles" and 7 research
organizations.
Goussainville - A new 3/6/9 year lease from November 2014 was
signed with Design Location, an exhibition stand equipment company,
on 1,730 square metres of warehouse and office space. In addition,
existing tenants Jacquotte have extended their lease on a 1,850
square metre warehouse unit to January 2018 and Fuji Machinery have
signed a new 3/6/9 year lease from December 2014 on their 310
square metres of office accommodation.
Ivry - A new 6/9 year lease from November 2014 was signed with
Accedia, an electronics company specialising in CCTV and security,
on 520 square metres of vacant office space.
Aubergenville - Existing tenant, Etanco have extended their
lease on a 6,400 square metre warehouse unit to April 2016.
Mulhouse - Existing tenant, Alten, have extended their lease on
370 square metres of office accommodation to January 2018.
Goussainville - A new 3/6/9 year lease from January 2015 was
signed with Semi-Bah Transport, a logistics company, on 850 square
metres of vacant office and warehouse space.
At the Trust's Evreux property, MSL Quadralog's lease terminated
in August 2014 on 9,640 square metres of logistics warehouse space.
The Trust's Investment Manager is actively involved in the campaign
to re-let the property at the earliest opportunity.
SPAIN
Cordoba - VisionLab extended their lease on a 200 square metre
retail unit until December 2015.
PROPERTY SALES
The Investment Manager is also focused on asset sales to support
the settlement of the bank borrowings as they mature and we are
pleased to report the following progress in this regard:
Two property sales were detailed in the half year report, namely
the sale of a multi-let warehouse and office investment of 5,180
square metres located at Vitry-sur-Seine for EUR5.7 million which
was 7.5% above its book value and the sale of the larger of the two
vacant warehouse units located in Zaragoza, Spain for EUR1.3
million representing book value.
Following the renegotiation of the lease earlier in 2014, the
Trust has sold an office investment located at Gennevilliers for
EUR7.4 million which was in line with its 30 June 2014 valuation.
The property totals 3,410 square metres and is located on an
established business park 15km north of central Paris and let
entirely to Husqvarna France on a 9 year lease with a fixed term of
6 years from April 2014. The purchaser was FRUCTIREGIONS a SCPI
managed by NAMI AEW Europe.
Market overview
France
The French economy grew only marginally in 2014 with small
increases in the third and fourth quarters. Gross Domestic Product
('GDP') increased by 0.4% for the year. In December 2014,
manufacturing output was 0.5% lower year-on-year and the
unemployment rate for mainland France in the third quarter of 2014
rose slightly to stand at 9.9%. Linked to the wider economic
context, household spending showed signs of increasing towards the
end of the year but finished the year with a marginal decrease of
0.2% overall. Inflation has moderated further with the growth rate
of the Consumer Prices Index standing at 0.1% per annum at the end
of December 2014. The economy is expected to remain generally
subdued for the remainder of 2015.
Against this challenging economic background, the property
investment market returned to pre-crisis volumes with approximately
EUR22.6 billion invested in commercial real estate in France in
2014 representing a 40% increase compared to 2013. This volume was
boosted by a number of large, prime asset transactions being
concluded which represented 46% of the total volume. Traditional
French investors increased to approximately 60% by volume of the
market, with the next largest group being North American investors
(14%) followed by Middle Eastern investors (6%). Office investment
remained the highest volume sector and accounted for EUR14.6
billion representing 65% of the total investment in France and an
increase of 40% in volume compared to 2013. Logistics and
industrial investment totalled EUR0.9 billion and retail investment
reached EUR6.1 billion.
Of the Trust's total property portfolio, 92% is in France, 84%
is in the Ile-de-France and 64% is in Ile-de-France office and
business park space.
The Economy of Ile-de-France
Paris and the surrounding region, better known as Ile-de-France,
accounts for about a fifth of the French population but contributes
nearly one third of French GDP. It is one of the main players in
the global economy and is the largest European region by GDP. By
population the Ile-de-France metropolis ranks twentieth globally,
but ranked by GDP it is the fifth major metropolis in the world
after the metropolitan areas of Tokyo, Greater New York, Los
Angeles and Osaka.
In Europe, the only city that is comparable economically to
Paris is London: taking the wider metropolitan areas these two
regions can be considered broadly similar in GDP terms. It should
be noted that the GDP of these two metropolitan areas far exceeds
those of all other European cities, whether considering the Dutch
Randstad, the conurbation Rhine-Ruhr and Rhine-Main, Brussels or
Berlin.
With employment of over 5.3 million, Ile-de-France holds a
prominent place in the national economy and many national and
international companies have their headquarters in the region
because of its high quality as a business location. The
Ile-de-France has the world's third largest concentration of
Fortune 500 head offices.
The Ile-de-France economy remains extremely diverse compared to
other cities of its size with a large industrial base and one of
the most important agricultural areas in France as well as being a
pre-eminent global tourist destination.
Its economy is more diversified than London (with its emphasis
on financial markets) or Los Angeles (film and entertainment) and
Paris is not overly dependent on any one sector. Even categorizing
Ile-de-France as predominantly a services-based economy, its
industrial base which accounts for 16% of the region's GDP, remains
very important as the region is a major European production centre,
which has preserved its competitiveness by increasing its
proportion of investment in research and development where it ranks
as Europe's number one region for R&D expenditure and
personnel. All of these activities are supported by an integrated
freight and transport network.
The lack of economic growth at present, combined with the
unclear business outlook means that occupiers remain cautious and
negotiations with tenants tend to be long and drawn out. In this
environment some companies have been reluctant to commit to new
premises and many have postponed plans to move, instead opting to
renegotiate leases with existing landlords. Nevertheless, after a
disappointing third quarter, activity picked up in the last three
months of the year bringing annual take-up in 2014 to 2.1 million
square metres, an increase of about 13% over 2013 so there are
tentative signs of an improvement in the market and this will need
to be maintained for this effect to ripple out to more peripheral
locations. The average office rent in Ile-de-France has remained
broadly stable at EUR297 per square metre per annum and the office
vacancy rate for the Paris region increased slightly to 7.2%.
However, on the supply side there is little speculative development
due to the difficulty in finding finance and the risks associated
with the current market conditions which have made developers
cautious of undertaking new schemes without pre-lettings in
place.
National take-up in the logistics sector in 2014 reached
approximately 2.4 million square metres, which was 13% below the
level for 2013 despite the fact that 0.8 million square metres were
transacted in the Ile-de-France representing a 46% increase over
2013 and the highest volume since 2011.
Spain
There have been six consecutive quarters of growth in the
Spanish economy and this has resulted in an increase in GDP of 2%
for 2014. The increase in economic activity combined with the
government's efforts to reform the labour market have resulted in a
2% decrease in the unemployment rate from the third quarter of 2013
to the fourth quarter of 2014 when it stood at 23.7%. The near term
outlook for the Spanish economy shows continuing signs of gradual
improvement.
Rental indexation
On an annual basis, the INSEE Construction Cost Index,
applicable to the Trust's leases in France, turned negative for Q2
2014 (-0.98%) but following a small quarter-on-quarter rise the
latest published annual indexation base as at Q3 2014 turned
positive and stood at 0.93%. The Spanish Consumer Price Index,
applicable to the Trust's leases in Spain, was running at an
annualised rate of -1.4% as at the end of January 2015.
Paul Cable
For and on behalf of the Investment Manager
12 March 2015
Directors
Dick Kingston (aged 67)
Chairman
Dick Kingston qualified as a Chartered Accountant and was, until
December 2006, an executive director of Slough Estates Plc (now
SEGRO Plc) ("Slough"), one of the largest London Stock Exchange
listed property companies. He was chairman of their continental
European real estate activities for his last three years at Slough
and Group Finance Director there for nine years up to December
2005. Previously he was Group Financial Controller at Slough for
nine years and prior to that was responsible for group financial
control at Hawker Siddeley Group.
He was non-executive chairman of listed company Sirius Real
Estate Limited and was a non-executive director of Mersey Docks and
Harbour Company.
David Rowlinson (aged 52)
Director
David has 30 years' experience in the financial services
industry. The majority of David's experience has been gained from
working in the fiduciary sector in Guernsey. However, he has also
worked in Gibraltar and Switzerland and served in a key role
working for an investment management company in Guernsey.
After playing a major part in establishing a large trust company
in Guernsey in 1997 which he left in June 2006, David established
Liberation Management Limited ("LML") in 2007. David is the
Managing Director of LML.
David has been a full member of the Society of Trust and Estate
Practitioners since 1994.
David Jeffreys (aged 55)
Director
David Jeffreys qualified as a Chartered Accountant with Deloitte
Haskins and Sells in 1985. He works as an independent non-executive
director to a number of Guernsey based investment fund companies
and managers and is a Guernsey resident.
From 2007 until 2009 David was the Managing Director of EQT
Funds Management Limited, the Guernsey management office of the EQT
group of private equity funds. He was previously the Managing
Director of Abacus Fund Managers (Guernsey) Limited between 1993
and 2004, a third party administration service provider to
primarily corporate and fund clients.
In addition to the Company, David is a director of the following
listed companies: Alpha Real Trust Limited, PFB Data Centre Fund
Limited and Tetragon Financial Group Limited.
Phillip Rose (aged 55)
Director
Phillip Rose is a Fellow of the Securities Institute and holds a
Master of Law degree. He has over 30 years' experience in the real
estate, funds management and banking industries in Europe, the USA
and Australasia. He has been the Head of Real Estate for ABN AMRO
Bank, Chief Operating Officer of European shopping centre investor
and developer TrizecHahn Europe, Managing Director of retail and
commercial property developer and investor Lend Lease Global
Investment and Executive Manager of listed fund General Property
Trust.
Phillip is currently CEO of Alpha Real Capital LLP and is a
member of the Management Committee of the Hermes Property Unit
Trust and its Audit Committee.
Serena Tremlett (aged 50)
Director
Serena has over 25 years' experience in financial services,
specialising in closed-ended property and private equity funds and
fund administration over the last 17 years.
She is a non-executive director on the listed company boards of
Alpha Pyrenees Trust, Alpha Real Trust and those of Stenham
Property, in addition to various unlisted property and private
funds and general partners. Serena was previously company secretary
(and a director) of Assura Group, at that time a FTSE 250 company
listed on the London Stock Exchange, investing in primary
healthcare property and ran Assura's Guernsey head office.
Prior to working for Assura, Serena was head of Guernsey
property funds at Mourant International Finance Administration (now
State Street) for two years and worked for Guernsey International
Fund Managers (now Northern Trust) for seven years where she sat on
a number of listed and unlisted fund boards. Since 2008, Serena is
co-founder and managing director of Morgan Sharpe Administration, a
specialist closed-ended fund administrator.
Directors' and corporate governance report
The Directors present their report and financial statements of
the Company and the Group for the year ended 31 December 2014.
Principal activities and status
Since its incorporation on 16 November 2005, the Company, an
authorised closed-ended Guernsey registered investment company, has
carried on the business of a property investment company, investing
in commercial property in France and Spain.
Its shares are listed on the Official List of the UK Listing
Authority and have been traded on the London Stock Exchange since
29 November 2005.
Business review, results and dividends
The Chairman's statement above contains a review of the Group's
business for the year.
The results for the year are set out in the financial
statements.
No dividend was paid during the year under review and the Trust
does not currently propose to pay dividends.
Corporate governance
The Company is authorised by the Guernsey Financial Services
Commission ('GFSC') and for this reason is required to follow the
principles and guidance set out in the Finance Sector Code of
Corporate Governance issued by the GFSC and effective from 1
January 2012 ('Guernsey Code').
As a Guernsey registered company, the Company is not required to
comply with the UK Corporate Governance Code ('UK Code'). However,
the Directors do take into consideration the UK Code in determining
its governance procedures whilst also taking into account the size
of the Company, the nature of its business and its entirely
non-executive board.
The Board
Biographies of the Directors are set out above.
The Directors' interests in shares of the Company as at 31
December 2014 are set out below and there have been no changes in
such interests up to the current date:
Number of ordinary Number of ordinary
shares 2014 shares 2013
----------------- ------------------- -------------------
Dick Kingston 710,616 710,616
----------------- ------------------- -------------------
David Jeffreys 250,000 250,000
----------------- ------------------- -------------------
Phillip Rose 1,290,079 1,290,079
----------------- ------------------- -------------------
David Rowlinson - -
----------------- ------------------- -------------------
Serena Tremlett 121,472 121,472
Non-executive Directors are not appointed for specified terms.
However, appointments of Board members can be terminated at any
time without penalty and the Company's Articles of Association
("Articles") require each Director to retire and submit
himself/herself to re-election by the shareholders at every third
year. In addition, the Board believes that continuity and
experience adds to its strength.
The Annual General Meeting of the Company will take place on 24
April 2015. At this meeting, Phillip Rose and David Jeffreys will
retire and submit themselves for re-election. The remainder of the
Board recommend their re-appointment. Phillip Rose is a member of
the Investment Manager and, under the terms of the Company's
Prospectus dated 23 November 2005, submits himself for annual
re-election.
Individual Directors may seek independent legal advice in
relation to their duties on behalf of the Company.
Senior Independent Director
The Board has appointed David Jeffreys as its Senior Independent
Director and has agreed that he will be available for discussions
with shareholders independently of his peers, to the extent
appropriate.
Operations of the Board
The Board's primary role is to review matters which are of
strategic importance to the Company, including the following:
1) Setting, and continuing to review, the objectives and
strategy of the Company, taking into account market conditions.
2) Reviewing the capital structure of the Company including gearing.
3) Appointing the Investment Manager, administrator and other
appropriately skilled service providers; monitoring their
effectiveness and performance through regular reports and
meetings.
4) Reviewing the Company's performance including net asset
value, earnings per share and payment of dividends.
The Board considers these matters at its quarterly meetings.
The Board meets at least four times per annum and on an ad-hoc
basis to consider specific issues reserved for decision by the
Board including all potential acquisitions and disposals,
significant capital expenditure and leasing matters and decisions
relating to the Company's financial gearing.
Certain matters relating to the implementation of strategy are
delegated either to the Investment Manager or the administrator but
the performance of such delegation by these independent agents is
regularly monitored by the Board.
At the Board's quarterly meetings it considers papers circulated
in advance including reports provided by the Investment Manager and
the administrator in its capacity as Company Secretary. The
Investment Manager's report comments on:
-- The French and Spanish property markets including
recommendations for any changes in strategy that the Investment
Manager considers may be appropriate.
-- Performance of the Group's portfolio and key asset management initiatives.
-- Transactional activity undertaken over the previous quarter
and being contemplated for the future.
-- The Group's financial position including relationships with bankers and lenders.
The administrator provides a quarterly compliance, company
secretarial and regulatory report.
Together, these reports enable the Board to assess the success
with which the Group's strategy is being implemented, consider any
relevant risks (such as the general economic climate) and to
consider how they should be properly managed.
Board and Director appraisals
The Board carries out an annual review of its composition and
performance (including the performance of individual Directors) and
that of its standing committees. Such appraisal includes reviewing
the performance and composition of the Board (and whether it has an
appropriate mix of knowledge, skills and experience), the
relationships between the Board and the Investment Manager and
administrator, the processes in place and the information provided
to the Board and communication between Board members.
Board meeting attendance
The table below shows the attendance at Board meetings during
the year to 31 December 2014:
Director No of meetings No of meetings
attended eligible
to attend
----------------- --------------- ---------------
Dick Kingston 12 15
----------------- --------------- ---------------
David Jeffreys 15 15
----------------- --------------- ---------------
Phillip Rose 4 15
----------------- --------------- ---------------
David Rowlinson 11 15
----------------- --------------- ---------------
Serena Tremlett 12 15
Directors' and officers' insurance
An appropriate level of Directors' and Officers' insurance is
maintained whereby Directors are indemnified against liabilities to
third parties to the extent permitted by Guernsey company law.
Board Committees
The Board has established three standing committees, all of
which operate under detailed terms of reference, copies of which
are available on request from the Company Secretary.
Audit Committee
The Audit Committee consists of David Jeffreys (Chairman), Dick
Kingston, David Rowlinson and Serena Tremlett. The Board is
satisfied that David Jeffreys continues to have the requisite
recent and relevant financial experience to fulfil his role as
Chairman of the Audit Committee.
Role of the Committee
The role of the Audit Committee, which meets at least twice a
year, includes:
-- The engagement, review of the work carried out by and the
performance of the Company's external auditor.
-- To monitor and review the independence, objectivity and
effectiveness of the external auditor.
-- To develop and apply a policy for the engagement of the
external audit firm to provide non-audit services.
-- To assist the Board in discharging its duty to ensure that
financial statements comply with all legal requirements.
-- To review the Company's financial reporting and internal
control policies and to ensure that the procedures for the
identification, assessment and reporting of risks are adequate.
-- To review regularly the need for an internal audit function.
-- To monitor the integrity of the Company's financial
statements, including its annual and half year reports and
announcements relating to its financial performance, reviewing the
significant financial reporting issues and judgements which they
contain.
-- To review the consistency of accounting policies and practices.
-- To review and challenge where necessary the financial results
of the Company before submission to the Board.
The Audit Committee makes recommendations to the Board which are
within its terms of reference and considers any other matters as
the Board may from time to time refer to it.
Committee meeting attendance
Director No of meetings No of meetings
attended eligible
to attend
----------------- --------------- ---------------
David Jeffreys 4 4
----------------- --------------- ---------------
Dick Kingston 4 4
----------------- --------------- ---------------
David Rowlinson 4 4
----------------- --------------- ---------------
Serena Tremlett 4 4
Policy for non audit services
The Committee has adopted a policy for the provision of
non-audit services by its external auditor, BDO Limited and reviews
and approves all material non-audit related services in accordance
with the need to ensure the independence and objectivity of the
external auditor. No services, other than audit-related ones, were
carried out by BDO Limited during 2014.
Internal audit
The Board relies upon the systems and procedures employed by the
Investment Manager and the administrator which are regularly
reviewed and are considered to be sufficient to provide it with the
required degree of comfort. Resulting from this and the fact that
the Group only has one employee, the Board continues to believe
that there is no need for an internal audit function, although the
Audit Committee considers this annually, reporting its findings to
the Board.
Nomination Committee
The Nomination Committee consists of Serena Tremlett (Chairman),
David Jeffreys, Dick Kingston, Phillip Rose and David
Rowlinson.
The Committee's principal task is to review the structure, size
and composition of the Board in relation to its size and position
in the market and to make recommendations to fill Board vacancies
as they arise and it meets at least annually.
Committee meeting attendance
Director No of meetings No of meetings
attended eligible
to attend
----------------- --------------- ---------------
Serena Tremlett 1 1
----------------- --------------- ---------------
David Jeffreys 1 1
----------------- --------------- ---------------
Dick Kingston 1 1
----------------- --------------- ---------------
Phillip Rose 1 1
----------------- --------------- ---------------
David Rowlinson - 1
Remuneration Committee and attendance
The Remuneration Committee consists of the independent
non-executive Directors being David Jeffreys (Chairman), Dick
Kingston, David Rowlinson and Serena Tremlett.
The Board has approved formal terms of reference for the
Committee and a copy of these is available on request from the
Company Secretary.
As the Company comprises only non-executive directors, the
Committee's main role is to determine their remuneration within the
cap set out in the Company's Articles. The Remuneration Committee
met once during 2014.
Remuneration report
The aggregate fees payable to the Directors are limited to
GBP200,000 per annum under the Company's Articles and the annual
fees payable to each Director have not changed since the Company's
shares were listed in 2005. The fees payable to the Directors are
expected to reflect their expertise, responsibilities and time
spent on the business of the Company, taking into account market
equivalents, the activities and the size of the Company and market
conditions. Under their respective appointment letters, each
director is entitled to an annual fee together with a provision for
reimbursement for any reasonable out of pocket expenses.
During the year the Directors received the following emoluments
in the form of fees from the Company:
Year ending Year ending
31 December 2014 31 December 2013
GBP GBP
----------------- ------------------ ------------------
Dick Kingston 30,000 30,000
----------------- ------------------ ------------------
David Jeffreys 23,000 23,000
----------------- ------------------ ------------------
Phillip Rose 20,000 20,000
----------------- ------------------ ------------------
David Rowlinson 20,000 20,000
----------------- ------------------ ------------------
Serena Tremlett 20,000 20,000
----------------- ------------------ ------------------
Total 113,000 113,000
Internal control and risk management
The Board understands its responsibility for ensuring that there
are sufficient, appropriate and effective systems, procedures,
policies and processes for internal control of financial,
operational, compliance and risk management matters in place in
order to manage the risks which are an inherent part of business.
Such risks are managed rather than eliminated in order to permit
the Company to meet its financial and other objectives.
As the Company has only one employee, the Board reviews the
internal procedures of both its Investment Manager and its
administrator upon which it is reliant. The Investment Manager has
a schedule of matters which have been delegated to it by the Board
and upon which it reports to the Board on a quarterly basis. These
matters include quarterly management accounts and reporting both
against key financial performance indicators and its peer group.
Further, a compliance report is produced by the administrator for
the Board on a quarterly basis.
The Company maintains a risk management framework which
considers the non-financial as well as financial risks and this is
reviewed by the Audit Committee prior to submission to the
Board.
Investment management agreement
The Company has an agreement with the Investment Manager. This
sets out the Investment Manager's key responsibilities, which
include proposing a property investment strategy to the Board,
identifying property investments to recommend for acquisition or
sale and arranging appropriate lending facilities. The Investment
Manager is also responsible to the Board for all issues relating to
property asset management.
Substantial shareholding
Shareholders with holdings of more than three per cent of the
issued ordinary shares of the Company as at 20 February 2015 were
as follows:
Name of investor No. of % held
ordinary
shares
---------------------------- ----------- -------
Antler Investment Holdings
Limited 21,437,393 18.22
---------------------------- ----------- -------
Alpha Real Capital LLP 9,390,800 7.98
---------------------------- ----------- -------
Hargreaves Lansdown Asset
Management 7,533,965 6.41
---------------------------- ----------- -------
TD Direct Investing 6,349,305 5.40
---------------------------- ----------- -------
Mr Richard M. Peskin 6,000,000 5.10
---------------------------- ----------- -------
Mrs Rosemary J. Skelley 5,857,607 4.98
---------------------------- ----------- -------
Barclays Wealth Management
(UK) 5,825,599 4.95
---------------------------- ----------- -------
Halifax Share Dealing 3,819,196 3.25
Shareholder relations
The Board places high importance on its relationship with its
shareholders, with members of the Investment Manager's Investment
Committee making themselves available for meetings with key
shareholders and sector analysts. Reporting of these meetings and
market commentary is received by the Board on a quarterly basis to
ensure that shareholder communication fulfils the needs of being
useful, timely and effective. One or more members of the Board and
the Investment Manager will be available at the Annual General
Meeting to answer any questions that shareholders attending may
wish to raise.
Directors' Responsibilities Statement
Company law requires the Directors to prepare financial
statements for each financial year, which give a true and fair view
of the state of affairs of the Company and of the Group at the end
of the year and of the profit or loss of the Company and the Group
for that year.
In preparing those financial statements, the Directors are
required to:
(1) select suitable accounting policies and then apply them consistently;
(2) make judgements and estimates that are reasonable and prudent;
(3) state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements;
(4) prepare the financial statements on the going concern basis
unless it is appropriate to assume that the Company and Group will
not continue in business.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and of the Group and to 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 Group and hence for
taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors confirm that they have complied with the above
requirements in preparing the financial statements.
So far as each of the Directors are aware, there is no relevant
information of which the Company's auditor is unaware, and they
have taken all the steps they ought to have taken as Directors to
make themselves aware of any relevant information and to establish
that the Company's auditor is aware of that information.
Going concern
Given the current economic environment and the maturation of the
Group's bank borrowings on 11 May 2015 the Board has decided that
to enable repayment of the bank borrowings and protect shareholder
value the Trust will continue to seek the support of its lender in
an orderly realisation of its investment property while all
alternative options continue to be explored. Hence, at this time,
the accounts are not prepared on a going concern basis as noted
within the accounting policy section in the notes to these
financial statements.
Annual General Meeting
The AGM will be held in Guernsey at 9 a.m. on 24 April 2015 at
Old Bank Chambers, La Grande Rue, St Martin's, Guernsey. The
meeting will be held to receive the Annual Report and Financial
Statements, re-elect Directors and propose the reappointment of the
auditor and that the Directors be authorised to determine the
auditor's remuneration.
Auditor
BDO Limited has expressed its willingness to continue in office
as auditor of the Company.
By order of the Board,
David Jeffreys Serena Tremlett
Director Director
Directors' statement pursuant to the Disclosure and Transparency
Rules
Each of the Directors, whose names and functions are listed in
the Directors Report confirm that, to the best of each person's
knowledge and belief:
-- The financial statements, prepared in accordance with IFRSs
as adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group and
Company, and
-- The Chairman's Statement and the Property Review includes a
fair review of the development and performance of the business and
the position of the Company and Group and notes 22 and 23 to the
financial statements provide a description of the principal risks
and uncertainties that they face.
By order of the Board,
David Jeffreys Serena Tremlett
Director Director
.
Corporate responsibility - benefits, risks and controls
The Board has reviewed the Company's Corporate Responsibility
Policy and considers this to be appropriate for the Company. The
Company's policy is as follows:
Alpha Pyrenees Trust Limited is committed to delivering
sustainable investment returns in a way that delivers positive
environmental, social and economic benefits. The Company recognises
that the way in which buildings are designed, built, managed and
occupied, significantly influences their impact on the environment
and affected communities and it seeks to manage these issues.
The Company believes that, through the implementation of
socially responsible policies, the Company can manage effectively
our sustainability related risks, associated with, for example,
climate change (more severe and regular floods, increasing storm
damage costs and rising energy prices), site contamination and
remediation, use of hazardous materials, waste management (rising
landfill and disposal costs) and local community relations.
The Company's standard business process ensures that appropriate
environmental reports are obtained as part of the due diligence
process for property acquisitions and the Company assesses the
accessibility of each property acquisition to public
transportation.
The Company's managers and appointed agents are required to
comply with all relevant laws and regulations affecting the
Company's business, and managers are expected to be aware of the
environmental issues associated with property investment including
environmental health and safety legislation, energy use, pollution
and waste management.
Independent auditors' report
To the members of Alpha Pyrenees Trust Limited
We have audited the financial statements of Alpha Pyrenees Trust
Limited for the year ended 31 December 2014 which comprise the
consolidated and company statements of comprehensive income, the
consolidated and company balance sheets, the consolidated and
company cash flow statements, the consolidated and company
statements of changes in equity and the related notes 1 to 23. The
financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
This report is made solely to the company's members, as a body,
in accordance with Section 262 of the Companies (Guernsey) Law,
2008. Our audit work is undertaken so that we might state to the
parent 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 parent company and the
parent company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of the directors and auditor
As explained more fully in the Directors' Responsibilities
Statement within the Directors' Report, 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
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Financial Reporting
Council's Ethical Standards for Auditors.
Scope of the audit of the financial statements
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 and parent company's circumstances and
have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the
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 misstatements or inconsistencies we consider the
implications for our report.
Opinion on the financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the group's and of
the parent company's affairs as at 31 December 2014 and of the
group's loss and the parent company's loss for the year then
ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been properly prepared in accordance with the
requirements of the Companies (Guernsey) Law, 2008.
Emphasis of matter -- going concern and bank facilities
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosures made
in notes 2 and 17 to the financial statements which explain that
the financial statements have not been prepared on a going concern
basis. As it is the intention of the Board to effect an orderly
disposal of the Group's investment property, seeking the continued
support of its lender whilst doing so, the financial statements
have not been prepared on a going concern basis. The directors do
not consider that any adjustments would be required as a result of
this basis of preparation on the expectation of an orderly disposal
of the group's investment properties.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies (Guernsey) Law, 2008 requires us to report to
you if, in our opinion:
-- proper accounting records have not been kept by the parent company; or
-- the financial statements are not in agreement with the accounting records; or
-- we have failed to obtain all the information and
explanations, which, to the best of our knowledge and belief, are
necessary for the purposes of our audit.
.......................................................
Richard Michael Searle FCA
For and on behalf of BDO Limited
Chartered Accountants and Recognised Auditor
Place du Pré
Rue du Pré
St Peter Port
Guernsey
Date: 12 March 2015
Consolidated statement of comprehensive income
For the year ended For the year ended
31 December 2014 31 December 2013
------------------------------------- ------------------------------- -------------------------------
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Income
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Revenue 3 19,398 - 19,398 22,699 - 22,699
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Property operating
expenses (6,148) - (6,148) (6,502) - (6,502)
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Net rental income 13,250 - 13,250 16,197 - 16,197
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Loss on disposal
of investment properties - (1,400) (1,400) - - -
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Expenses
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Losses on revaluation 12,
of investment properties 13 - (12,416) (12,416) - (6,934) (6,934)
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Investment Manager's
fee (1,646) (706) (2,352) (1,933) (828) (2,761)
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Other administration
costs 5 (1,395) - (1,395) (1,229) - (1,229)
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Operating profit/(loss) 10,209 (14,522) (4,313) 13,035 (7,762) 5,273
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Finance income 4 4 7,550 7,554 23 8,778 8,801
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Finance costs 6 (14,051) (206) (14,257) (12,933) (5,444) (18,377)
---------------------------- ------- --------- --------- --------- --------- --------- ---------
(Loss)/profit before
taxation (3,838) (7,178) (11,016) 125 (4,428) (4,303)
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Taxation 7 - (547) (547) - (1,273) (1,273)
---------------------------- ------- --------- --------- --------- --------- --------- ---------
(Loss)/profit for
the year (3,838) (7,725) (11,563) 125 (5,701) (5,576)
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Other comprehensive
income/(expense)
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Items that may be
reclassified to
profit or loss in
subsequent periods:
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Foreign exchange
(losses)/gains on
translation of foreign
operations (translation
reserve) - (456) (456) - 680 680
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Other comprehensive
(expense)/income
for the year - (456) (456) - 680 680
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Total comprehensive
(expense)/income
for the year (3,838) (8,181) (12,019) 125 (5,021) (4,896)
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Loss per share
- basic & diluted 9 (9.8)p (4.7)p
---------------------------- ------- --------- --------- --------- --------- --------- ---------
Adjusted (losses)/earnings
per share
- basic & diluted 9 (3.3)p 0.1p
---------------------------- ------- --------- --------- --------- --------- --------- ---------
The total column of this statement represents the Group's
statement of comprehensive income, prepared in accordance with
IFRS. The revenue and capital columns are supplied as supplementary
information permitted under IFRS. All items in the above statement
derive from continuing operations. All income is attributable to
the equity holders of the parent company. There are no
non-controlling interests.
The accompanying notes are an integral part of the financial
statements.
Consolidated balance sheet
Notes 2014 2013
As at 31 December 2014 GBP'000 GBP'000
--------------------------------------- ------ ---------- ----------
Non-current assets
--------------------------------------- ------ ---------- ----------
Investment properties 12 89,543 236,920
--------------------------------------- ------ ---------- ----------
89,543 236,920
--------------------------------------- ------ ---------- ----------
Current assets
--------------------------------------- ------ ---------- ----------
Investment properties held for
sale 13 122,637 11,194
--------------------------------------- ------ ---------- ----------
Trade and other receivables 14 6,100 4,244
--------------------------------------- ------ ---------- ----------
Cash and cash equivalents 15 12,425 5,923
--------------------------------------- ------ ---------- ----------
141,162 21,361
--------------------------------------- ------ ---------- ----------
Total assets 230,705 258,281
--------------------------------------- ------ ---------- ----------
Current liabilities
--------------------------------------- ------ ---------- ----------
Trade and other payables 16 (6,032) (2,810)
--------------------------------------- ------ ---------- ----------
Financial liabilities at fair value
through profit or loss 23 (948) -
--------------------------------------- ------ ---------- ----------
Bank borrowings 17 (212,858) (1,707)
--------------------------------------- ------ ---------- ----------
Rent deposits (730) (1,057)
--------------------------------------- ------ ---------- ----------
(220,568) (5,574)
--------------------------------------- ------ ---------- ----------
Total assets less current liabilities 10,137 252,707
--------------------------------------- ------ ---------- ----------
Non-current liabilities
--------------------------------------- ------ ---------- ----------
Financial liabilities at fair value
through profit or loss 23 - (8,825)
--------------------------------------- ------ ---------- ----------
Bank borrowings 17 - (221,745)
--------------------------------------- ------ ---------- ----------
Rent deposits (952) (1,094)
--------------------------------------- ------ ---------- ----------
Deferred taxation 7 (6,230) (6,069)
--------------------------------------- ------ ---------- ----------
(7,182) (237,733)
--------------------------------------- ------ ---------- ----------
Total liabilities (227,750) (243,307)
--------------------------------------- ------ ---------- ----------
Net assets 2,955 14,974
--------------------------------------- ------ ---------- ----------
Equity
--------------------------------------- ------ ---------- ----------
Share capital 18 - -
--------------------------------------- ------ ---------- ----------
Special reserve 19 113,131 113,131
--------------------------------------- ------ ---------- ----------
Translation reserve 19 22,272 22,728
--------------------------------------- ------ ---------- ----------
Capital reserve 19 (129,871) (122,146)
--------------------------------------- ------ ---------- ----------
Revenue reserve 19 (2,577) 1,261
--------------------------------------- ------ ---------- ----------
Total equity 2,955 14,974
--------------------------------------- ------ ---------- ----------
Net asset value per share 10 2.5p 12.7p
--------------------------------------- ------ ---------- ----------
Net asset value per share (adjusted) 10 6.0p 22.8p
The financial statements were approved by the Board of Directors
and authorised for issue on 12 March 2015. They were signed on its
behalf by:
David Jeffreys Serena Tremlett
Director Director
The accompanying notes are an integral part of the financial
statements.
Consolidated cash flow statement
Notes For the year For the year
ended ended
31 December 31 December
2014 2013
GBP'000 GBP'000
------------------------------------------- ------ ------------- -------------
Operating activities
------------------------------------------- ------ ------------- -------------
Loss for the year (11,563) (5,576)
------------------------------------------- ------ ------------- -------------
Adjustments for :
------------------------------------------- ------ ------------- -------------
Loss on disposal of investment 1,400 -
properties
------------------------------------------- ------ ------------- -------------
Losses on revaluation of investment
properties 12,416 6,934
------------------------------------------- ------ ------------- -------------
Deferred taxation 547 1,273
------------------------------------------- ------ ------------- -------------
Finance income (7,554) (8,801)
------------------------------------------- ------ ------------- -------------
Finance costs 14,257 18,377
------------------------------------------- ------ ------------- -------------
Operating cash flows before movements
in working capital 9,503 12,207
------------------------------------------- ------ ------------- -------------
Movements in working capital:
------------------------------------------- ------ ------------- -------------
(Increase)/decrease in operating
trade and other receivables (2,571) 176
------------------------------------------- ------ ------------- -------------
Increase /(decrease) in operating
trade and other payables 3,158 (192)
------------------------------------------- ------ ------------- -------------
Cash generated from operations 10,090 12,191
------------------------------------------- ------ ------------- -------------
Interest received 4 18
------------------------------------------- ------ ------------- -------------
Currency swap interest paid - (787)
------------------------------------------- ------ ------------- -------------
Cash flows from operating activities 10,094 11,422
------------------------------------------- ------ ------------- -------------
Investing activities
------------------------------------------- ------ ------------- -------------
Proceeds from disposal of investment 11,560 -
properties
------------------------------------------- ------ ------------- -------------
Capital expenditure (244) (945)
------------------------------------------- ------ ------------- -------------
Transfer to cash pooling account 15 (7,766) -
------------------------------------------- ------ ------------- -------------
Tenant contribution (3,719) -
------------------------------------------- ------ ------------- -------------
Cash flows used in investing activities (169) (945)
------------------------------------------- ------ ------------- -------------
Financing activities
------------------------------------------- ------ ------------- -------------
Currency swap collateral received - 8,530
------------------------------------------- ------ ------------- -------------
Loan advanced net of arrangement
costs - 20,354
------------------------------------------- ------ ------------- -------------
Currency swap settlement - (29,525)
------------------------------------------- ------ ------------- -------------
Repayment of borrowings - (250)
------------------------------------------- ------ ------------- -------------
Bank loan interest paid and costs (10,607) (11,204)
------------------------------------------- ------ ------------- -------------
Dividends paid - (706)
------------------------------------------- ------ ------------- -------------
Cash flows used in financing activities (10,607) (12,801)
------------------------------------------- ------ ------------- -------------
Net decrease in cash and cash equivalents (682) (2,324)
------------------------------------------- ------ ------------- -------------
Cash and cash equivalents at beginning
of year 5,923 8,400
------------------------------------------- ------ ------------- -------------
Exchange translation movement (582) (153)
------------------------------------------- ------ ------------- -------------
Cash and cash equivalents at end
of year (note 15) 4,659 5,923
The accompanying notes are an integral part of the financial
statements.
Consolidated statement of changes in equity
For the year ended Share Special Translation Capital Revenue Total
31 December 2013 capital reserve reserve reserve reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ---------- --------- ------------ ---------- --------- ---------
At 1 January 2013 - 113,131 22,048 (116,445) 1,842 20,576
--------------------- ---------- --------- ------------ ---------- --------- ---------
Total comprehensive
income/(expense)
for the year
--------------------- ---------- --------- ------------ ---------- --------- ---------
(Loss)/profit for
the year - - - (5,701) 125 (5,576)
--------------------- ---------- --------- ------------ ---------- --------- ---------
Other comprehensive - - 680 - - -
income
--------------------- ---------- --------- ------------ ---------- --------- ---------
Total comprehensive
income/(expense)
for the year - - 680 (5,701) 125 (4,896)
--------------------- ---------- --------- ------------ ---------- --------- ---------
Transactions with
owners
--------------------- ---------- --------- ------------ ---------- --------- ---------
Dividends - - - - (706) (706)
--------------------- ---------- --------- ------------ ---------- --------- ---------
Total transactions
with owners - - - - (706) (706)
--------------------- ---------- --------- ------------ ---------- --------- ---------
At 31 December 2013 - 113,131 22,728 (122,146) 1,261 14,974
--------------------- ---------- --------- ------------ ---------- --------- ---------
Note 18, 19
For the year ended Share Special Translation Capital Revenue Total
31 December 2014 capital reserve reserve reserve reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ---------- --------- ------------ ---------- --------- ---------
At 1 January 2014 - 113,131 22,728 (122,146) 1,261 14,974
----------------------- ---------- --------- ------------ ---------- --------- ---------
Total comprehensive
income/(expense)
for the year
----------------------- ---------- --------- ------------ ---------- --------- ---------
Loss for the year - - - (7,725) (3,838) (11,563)
----------------------- ---------- --------- ------------ ---------- --------- ---------
Other comprehensive
expense - - (456) - - (456)
----------------------- ---------- --------- ------------ ---------- --------- ---------
Total comprehensive
expense for the year - - (456) (7,725) (3,838) (12,019)
----------------------- ---------- --------- ------------ ---------- --------- ---------
Transactions with
owners
----------------------- ---------- --------- ------------ ---------- --------- ---------
Dividends - - - - - -
----------------------- ---------- --------- ------------ ---------- --------- ---------
Total transactions - - - - - -
with owners
----------------------- ---------- --------- ------------ ---------- --------- ---------
At 31 December 2014 - 113,131 22,272 (129,871) (2,577) 2,955
----------------------- ---------- --------- ------------ ---------- --------- ---------
Note 18, 19
The accompanying notes are an integral part of the financial
statements.
Company statement of comprehensive income
For the year ended For the year ended
31 December 2014 31 December 2013
------------------------------- ------- ------------------------------- -------------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Notes
------------------------------- ------- --------- --------- --------- --------- --------- ---------
Income
------------------------------- ------- --------- --------- --------- --------- --------- ---------
Revenue 3 7,466 - 7,466 8,515 - 8,515
------------------------------- ------- --------- --------- --------- --------- --------- ---------
Total income 7,466 - 7,466 8,515 - 8,515
------------------------------- ------- --------- --------- --------- --------- --------- ---------
Expenses
------------------------------- ------- --------- --------- --------- --------- --------- ---------
Investment Manager's
fee (491) (210) (701) (661) (283) (944)
------------------------------- ------- --------- --------- --------- --------- --------- ---------
Other administration
costs 5 (504) - (504) (422) - (422)
------------------------------- ------- --------- --------- --------- --------- --------- ---------
Total expenses (995) (210) (1,205) (1,083) (283) (1,366)
------------------------------- ------- --------- --------- --------- --------- --------- ---------
Operating profit/(loss) 6,471 (210) 6,261 7,432 (283) 7,149
------------------------------- ------- --------- --------- --------- --------- --------- ---------
Finance income 4 3 - 3 17 2,504 2,521
------------------------------- ------- --------- --------- --------- --------- --------- ---------
Finance costs 6 (1) (1,084) (1,085) (2) - (2)
------------------------------- ------- --------- --------- --------- --------- --------- ---------
Movement in impairment
of amounts receivable
from subsidiary undertakings 22 - (17,198) (17,198) - (14,564) (14,564)
------------------------------- ------- --------- --------- --------- --------- --------- ---------
Profit/(loss) before
taxation 6,473 (18,492) (12,019) 7,447 (12,343) (4,896)
------------------------------- ------- --------- --------- --------- --------- --------- ---------
Taxation 7 - - - - - -
------------------------------- ------- --------- --------- --------- --------- --------- ---------
Profit/(loss) for
the year 6,473 (18,492) (12,019) 7,447 (12,343) (4,896)
------------------------------- ------- --------- --------- --------- --------- --------- ---------
Total comprehensive
income/(expense)
for the year 6,473 (18,492) (12,019) 7,447 (12,343) (4,896)
The total column of this statement represents the Company's
statement of comprehensive income, prepared in accordance with
IFRS. The revenue and capital columns are supplied as supplementary
information permitted under IFRS. All items in the above statement
derive from continuing operations.
The accompanying notes are an integral part of the financial
statements.
Company balance sheet
Notes 2014 2013
As at 31 December 2014 GBP'000 GBP'000
---------------------------------------- ------ ---------- ----------
Non-current assets
---------------------------------------- ------ ---------- ----------
Investments in subsidiary undertakings 11 151 141
---------------------------------------- ------ ---------- ----------
Amounts receivable from subsidiary
undertakings 11 15 8,023
---------------------------------------- ------ ---------- ----------
166 8,164
---------------------------------------- ------ ---------- ----------
Current assets
---------------------------------------- ------ ---------- ----------
Trade and other receivables 14 5 6
---------------------------------------- ------ ---------- ----------
Amounts receivable from subsidiary
undertakings 11 1,364 3,574
---------------------------------------- ------ ---------- ----------
Cash and cash equivalents 1,801 3,565
---------------------------------------- ------ ---------- ----------
3,170 7,145
---------------------------------------- ------ ---------- ----------
Total assets 3,336 15,309
---------------------------------------- ------ ---------- ----------
Current liabilities
---------------------------------------- ------ ---------- ----------
Trade and other payables 16 (381) (335)
---------------------------------------- ------ ---------- ----------
Total liabilities (381) (335)
---------------------------------------- ------ ---------- ----------
Net assets 2,955 14,974
---------------------------------------- ------ ---------- ----------
Equity
---------------------------------------- ------ ---------- ----------
Share capital 18 - -
---------------------------------------- ------ ---------- ----------
Special reserve 19 113,131 113,131
---------------------------------------- ------ ---------- ----------
Capital reserve 19 (136,774) (118,282)
---------------------------------------- ------ ---------- ----------
Revenue reserve 19 26,598 20,125
---------------------------------------- ------ ---------- ----------
Total equity 2, 955 14,974
The financial statements were approved by the Board of Directors
and authorised for issue on 12 March 2015. They were signed on its
behalf by:
David Jeffreys Serena Tremlett
Director Director
The accompanying notes are an integral part of the financial
statements.
Company cash flow statement
For the year For the year
ended ended
31 December 31 December
2014 2013
GBP'000 GBP'000
------------------------------------------- ------------- -------------
Cash flows from operating activities
------------------------------------------- ------------- -------------
Loss for the year (12,019) (4,896)
------------------------------------------- ------------- -------------
Adjustments for :
------------------------------------------- ------------- -------------
Finance costs 1,085 2
------------------------------------------- ------------- -------------
Finance income (3) (2,521)
------------------------------------------- ------------- -------------
Interest from subsidiary undertakings (7,466) (8,515)
------------------------------------------- ------------- -------------
Movement in impairment of amounts
receivable from subsidiary undertakings 17,198 14,564
------------------------------------------- ------------- -------------
Operating cash flows before movements
in working capital (1,205) (1,366)
------------------------------------------- ------------- -------------
Decrease in operating trade and
other receivables 1 12
------------------------------------------- ------------- -------------
Increase in operating trade and
other payables 46 39
------------------------------------------- ------------- -------------
Cash flows used in operations (1,158) (1,315)
------------------------------------------- ------------- -------------
Interest paid (1) (2)
------------------------------------------- ------------- -------------
Interest received 3 17
------------------------------------------- ------------- -------------
Interest received from subsidiaries 40 352
------------------------------------------- ------------- -------------
Taxation - -
------------------------------------------- ------------- -------------
Cash flows used in operating
activities (1,116) (948)
------------------------------------------- ------------- -------------
Investing activities
------------------------------------------- ------------- -------------
Loans advanced (468) (778)
------------------------------------------- ------------- -------------
Cash flows used in investing
activities (468) (778)
------------------------------------------- ------------- -------------
Financing activities
------------------------------------------- ------------- -------------
Dividend payments - (706)
------------------------------------------- ------------- -------------
Cash flows used in financing
activities - (706)
------------------------------------------- ------------- -------------
Net decrease in cash and cash
equivalents (1,584) (2,432)
------------------------------------------- ------------- -------------
Cash and cash equivalents at
beginning of year 3,565 6,128
------------------------------------------- ------------- -------------
Exchange translation movement (180) (131)
------------------------------------------- ------------- -------------
Cash and cash equivalents at
end of year 1,801 3,565
The accompanying notes are an integral part of the financial
statements.
Company statement of changes in equity
For the year ended 31 Share Special Capital Revenue Total
December 2013 capital reserve reserve reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ---------- --------- ---------- --------- ---------
At 1 January 2013 - 113,131 (105,939) 13,384 20,576
-------------------------------------- ---------- --------- ---------- --------- ---------
Total comprehensive income/(expense)
for the year
-------------------------------------- ---------- --------- ---------- --------- ---------
(Loss)/profit for the
year - - (12,343) 7,447 (4,896)
-------------------------------------- ---------- --------- ---------- --------- ---------
Other comprehensive income - - - - -
-------------------------------------- ---------- --------- ---------- --------- ---------
Total comprehensive (expense)/income
for the year - - (12,343) 7,447 (4,896)
-------------------------------------- ---------- --------- ---------- --------- ---------
Transactions with owners
-------------------------------------- ---------- --------- ---------- --------- ---------
Dividends - - - (706) (706)
-------------------------------------- ---------- --------- ---------- --------- ---------
Total transactions with
owners - - - (706) (706)
-------------------------------------- ---------- --------- ---------- --------- ---------
At 31 December 2013 - 113,131 (118,282) 20,125 14,974
-------------------------------------- ---------- --------- ---------- --------- ---------
Note 18, 19
For the year ended 31 Share Special Capital Revenue Total
December 2014 capital reserve reserve reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ---------- --------- ---------- --------- ---------
At 1 January 2014 - 113,131 (118,282) 20,125 14,974
-------------------------------------- ---------- --------- ---------- --------- ---------
Total comprehensive income/(expense)
for the year
-------------------------------------- ---------- --------- ---------- --------- ---------
(Loss)/profit for the
year - - (18,492) 6,473 (12,019)
-------------------------------------- ---------- --------- ---------- --------- ---------
Other comprehensive income - - - - -
-------------------------------------- ---------- --------- ---------- --------- ---------
Total comprehensive (expense)/income
for the year - - (18,492) 6,473 (12,019)
-------------------------------------- ---------- --------- ---------- --------- ---------
Transactions with owners
-------------------------------------- ---------- --------- ---------- --------- ---------
Dividends - - - - -
-------------------------------------- ---------- --------- ---------- --------- ---------
Total transactions with - - - - -
owners
-------------------------------------- ---------- --------- ---------- --------- ---------
At 31 December 2014 - 113,131 (136,774) 26,598 2,955
-------------------------------------- ---------- --------- ---------- --------- ---------
Note 18, 19
The accompanying notes are an integral part of the financial
statements.
Notes to the financial statements
For the year ended 31 December 2014
1. General information
The Company is a limited liability, closed-ended investment
company incorporated in Guernsey. The address of the registered
office is given below. The nature of the Group's operations and its
principal activities are set out in the Chairman's statement above.
The financial statements were approved and authorised for issue on
12 March 2015 and signed by David Jeffreys and Serena Tremlett on
behalf of the Board.
2. Significant accounting policies
A summary of the principal accounting policies is set out below.
The policies have been consistently applied to all years
presented.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the accounting policies. The areas involving a high degree
of judgement or complexity or areas where the assumptions and
estimates are significant to the financial statements are disclosed
in this note.
Basis of preparation
These financial statements have been prepared in accordance with
IFRS, which comprise standards and interpretations approved by the
International Accounting Standards Board ("IASB"), and
International Accounting Standards and Standards Interpretations
Committee's interpretations approved by the International
Accounting Standards Committee ("IASC") that remain in effect, and
to the extent that they have been adopted by the European
Union.
Going concern
Given the current economic environment and the maturation of the
Group's bank borrowings on 11 May 2015 the Board has decided that
to enable repayment of the bank borrowings and protect shareholder
value the Trust will continue to seek the support of its lender in
an orderly realisation of its investment property while all
alternative options continue to be explored. Hence, at this time,
the accounts are not prepared on a going concern basis.
a) Adoption of new and revised Standards
A number of standards and interpretations issued by the IASB and
the International Financial Reporting Interpretations Committee are
effective for the current year. The adoption of these standards has
not led to any changes in the Group's accounting policies.
b) Standards and Interpretations in issue and not yet
effective
At the date of authorisation of these financial statements, the
following standards and interpretations, which have not been
applied in these financial statements, were in issue but not yet
effective and are relevant to the financial statements of the
Company and Group:
IFRS 9: Financial Instruments - for accounting periods commencing on or after 1 January 2018*
IFRS 15: Revenue from Contracts with Customers - for accounting
periods commencing on or after 1 January 2017*
Revised and amended Standards
IFRS 7: Financial Instruments: Disclosures- Amendments requiring
disclosures about the initial application of IFRS 9 - for
accounting periods commencing on or after1 January 2018*
IFRS 10: Consolidated Financial Statements - amended for sale or
contribution of assets between an investor and its associate or
joint venture - for accounting periods commencing on or after 1
January 2016*
IFRS 11: Joint Arrangements - amended by accounting for
acquisitions of interest in joint operations - for accounting
periods commencing on or after 1 January 2016*
IAS 27: Separate Financial Statements - amended by equity method
in separate financial statements - for accounting periods
commencing on or after 1 January 2016*
IAS 28: Investments in Associates and Joint Ventures - amended
for sale or contribution of assets between an investor and its
associate or joint venture - for accounting periods commencing on
or after 1 January 2016*
*Still to be endorsed by the EU
In December 2013, the IASB issued further improvements to IFRS,
which have become effective for accounting periods commencing on or
after 1 July 2014. These cover amendments to nine standards.
In September 2014, the IASB issued further improvements to IFRS,
which will become effective for accounting periods commencing on or
after 1 January 2016 (still to receive endorsement by the EU).
These cover amendments to five standards.
The Directors anticipate that, with the exception of IFRS 9, the
adoption of these standards and interpretations in future periods
will not have a material impact on the financial statements of the
Company or the Group.
IFRS 9 uses a single approach to determine whether a financial
asset is measured at amortised cost or at fair value, replacing the
many different rules in IAS 39. The approach in IFRS 9 is based on
how an entity manages its financial instruments (its business
model) and the contractual cash flow characteristics of the
financial assets (payments that are solely payments of principal
and interest). The recognition and de-recognition requirements for
financial assets and financial liabilities are unchanged from those
set out in IAS 39.
The classification and measurement requirements of financial
liabilities are broadly similar to IAS 39 although the requirements
relating to financial liabilities measured at fair value have been
amended so that changes in fair value related to an entity's own
credit risk are generally recognised directly in other
comprehensive income. IFRS 9 requires one impairment method which
would replace the various different methods indicated by IAS 39
that arise from the different categories' classification. At the
time of adoption of the new standard it is expected only that the
Company and Group's financial assets will be required to be
classified in accordance with the new standard and no changes in
measurement will be required.
The principal accounting policies adopted are set out below.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and the subsidiary undertakings
controlled by the Company, made up to 31 December each year.
Control is achieved where the Company has power over the investee,
exposure or rights, to variable returns from its involvement with
the investee and the ability to use its power to affect the amount
of the investor's returns.
The results of subsidiary undertakings acquired or disposed of
during the year are included in the consolidated statement of
comprehensive income from the effective date of acquisition or up
to the effective date of disposal as appropriate.
When necessary, adjustments are made to the financial statements
of subsidiary undertakings to bring their accounting policies used
into line with those used by the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Presentation of income statement
In order to better reflect the activities of an investment
company and in accordance with guidance issued by the Association
of Investment Companies ("AIC"), supplementary information, which
analyses the income statement between items of a revenue and
capital nature, has been presented alongside the statement of
comprehensive income.
Revenue recognition
Rental income from investment property leased out under an
operating lease is recognised in the statement of comprehensive
income on a straight line basis over the term of the lease. Lease
incentives granted are recognised as an integral part of the net
consideration for the use of the property and are therefore also
recognised on the same straight line basis. Rental revenues are
accounted for on an accruals basis. Therefore, deferred revenue
generally represents advance payments from tenants. Revenue is
recognised when it is probable that the economic benefits
associated with the transaction will flow to the Group and the
amount of revenue can be measured reliably. Upon early termination
of a lease by the lessee, the receipt of a surrender premium is
immediately recognised as revenue.
The Company's interest income is accrued on a time basis, by
reference to the principal outstanding and the effective interest
rate applicable. Provisions against recoverability of interest
income are recognised as an expense within the movement in
impairment of amounts receivable from subsidiary undertakings.
Leasing
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
Foreign currencies
a) Functional and presentation currency
Items included in the financial statements of each of the Group
entities are measured in the currency of the primary economic
environment in which the entity operates (the "functional
currency"). The consolidated financial statements are presented in
Sterling, which is the Company's functional and presentation
currency.
b) Transactions and balances
Transactions in currencies other than Sterling are recorded at
the rates of exchange prevailing on the dates of the transactions.
At each balance sheet date, monetary assets and liabilities that
are denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Gains and losses arising on
retranslation are included in net profit or loss for the year.
c) Group companies
The results and financial position of all the Group entities
that have a functional currency which differs from the presentation
currency are translated into the presentation currency as
follows:
(i) assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of the balance
sheet;
(ii) income and expenses for each statement of comprehensive
income are translated at the average exchange rate prevailing in
the period; and
(iii) all resulting exchange differences are recognised as a
separate component of equity.
On consolidation, the exchange differences arising from the
translation of the Company's net investment in foreign entities are
taken to other comprehensive income. When a foreign operation is
sold, such exchange differences are recognised in the statement of
comprehensive income as part of the gain or loss on sale.
The year-end exchange rate used is GBP1:EUR1.278 (2013: GBP1:EUR
1.198) and the average rate for the year used is GBP1:EUR1.240
(2013: GBP1:EUR1.178).
Operating profit
a) Company
Operating profit includes interest income from subsidiary
entities, as reduced by administrative expenses and excludes the
movement on impairment of loans from subsidiaries, finance costs
and finance income.
b) Group
Operating profit includes net gains or losses on revaluation of
investment properties, as reduced by administrative expenses and
property operating costs and excludes finance costs and finance
income.
Expenses
All expenses are accounted for on an accruals basis and include
fees and other expenses paid to the administrator, the Investment
Manager and the Directors.
In respect of the analysis between revenue and capital items
presented within the statement of comprehensive income, all
expenses have been presented as revenue items except that:
(i) expenses which are incidental to the acquisition of an
investment property are included within the cost of that
property.
(ii) a proportion of the Investment Manager's fee is charged to
the capital column in the statement of comprehensive income in
order to reflect the Directors' estimated long-term view of the
nature of the investment return of the Group.
(iii) realised gains or losses from disposal of investment
properties and unrealised gains or losses on revaluation of
investment properties;
(iv) foreign exchange losses.
Taxation
The Company is exempt from Guernsey taxation on income derived
outside of Guernsey and bank interest earned in Guernsey. A fixed
annual fee of GBP600 is payable to the States of Guernsey in
respect of this exemption. No charge to Guernsey taxation arises on
capital gains. The Group is liable to foreign tax arising on
activities of the overseas subsidiaries. The Company has subsidiary
operations in Luxembourg, Belgium, France and Spain.
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
statement of comprehensive income because it excludes items of
income and expense that are taxable or deductible in other years
and it further excludes items that are never taxable or deductible.
The Group's liability for current tax is calculated using tax rates
that have been enacted or substantially enacted by the balance
sheet date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amount of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible timing differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered. Deferred tax is
calculated at the tax rates that are expected to apply in the year
when the liability is settled or the asset realised. Deferred tax
is charged or credited in the statement of comprehensive
income.
Dividends
Dividends are recognised as a liability in the financial
statements in the period in which they become obligations of the
Company.
Fair value measurement
The Group measures certain financial instruments such as
derivatives, and non-financial assets such as investment property,
at fair value at the end of each reporting period, using recognised
valuation techniques and following the principles of IFRS 13. In
addition, fair values of financial instruments measured at
amortised cost are disclosed in the financial statements.
Fair value 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. The fair value
measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either:
-- in the principal market for the asset or liability
or
-- in the absence of a principal market, in the most
advantageous market for the asset or liability.
The Group must be able to access the principal or the most
advantageous market at the measurement date. The fair value of an
asset or a liability is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming that market participants act in their economic best
interest.
A fair value measurement of a non-financial asset takes into
account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset
in its highest and best use.
The Group uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs significant to
the fair value measurement as a whole:
-- Level 1 - Quoted (unadjusted) market prices in active markets
for identical assets or liabilities.
-- Level 2 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is directly
or indirectly observable.
-- Level 3 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Group determines whether
transfers have occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest level input that
is significant to the fair value measurement as a whole) at the end
of each reporting period.
Investment property
Investment property, which is property held to earn rentals
and/or for capital appreciation, is initially recognised at cost
being the fair value of consideration given including related
transaction costs. After initial recognition at cost, investment
properties are carried at their fair values based on half yearly
professional valuations made by Knight Frank LLP. The valuations
are in accordance with standards complying with the Royal
Institution of Chartered Surveyors Appraisal and Valuation manual
and the International Valuation Standards Committee.
Gains or losses arising from changes in the fair value of
investment property are included in the statement of comprehensive
income in the period in which they arise. Properties are treated as
acquired when the Group assumes the significant risks and returns
of ownership and as disposed of when these are transferred to the
buyer.
Investment property held for sale
Investment properties are classified as held for sale if their
carrying amount will be recovered by sale rather than by continuing
use in the business. For this to be the case, the property must be
available for immediate sale in its present condition, management
must be committed to and have initiated a plan to sell the property
which, when initiated, was expected to result in a completed sale
within twelve months. Property assets that are classified as held
for sale are measured at fair value in accordance with IAS 40
Investment Property.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, which is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors of the
Company.
For management purposes, the Group is organised into one main
operating segment, which invests in commercial property located in
Europe. All of the Group's activities are interrelated, and each
activity is dependent on the others. Accordingly, all significant
operating decisions are based upon analysis of the Group as one
segment. The financial results from this segment are equivalent to
the financial statements of the Group as a whole.
All of the Group's revenue is from entities that are
incorporated in Europe.
All of the Group's non-current assets are located in Europe:
France and Spain. Total non-current assets located in France
amounted to GBP85.1 million (2013: GBP217.0 million) and
non-current assets located in Spain amounted to GBP4.4 million
(2013: GBP19.9 million).
With the exception of cash and cash equivalents, which are
located in Europe and Guernsey, all of the Group's current assets
are located in Europe only.
Revenue from one tenant, Alcatel-Lucent, amounted to GBP9.1
million in 2014 (2013: GBP9.6 million). Total revenue from tenants
located in France amounted to GBP17.9 million (2013: GBP21.0
million) and revenue from tenants located in Spain amounted to
GBP1.5 million (2013: GBP1.7 million). Please refer to note 22 for
further details.
Investment in subsidiaries
Investments in subsidiaries are initially recognised and
subsequently carried at cost in the Company's financial statements
less, where appropriate, provisions for impairment.
Financial instruments
Financial assets and financial liabilities are recognised on the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument. The Group shall offset
financial assets and financial liabilities if the Group has a
legally enforceable right to set off the recognised amounts and
interests and intends to settle on a net basis.
(a) Financial assets
The Group's financial assets fall into the categories discussed
below, with the allocation depending to an extent on the purpose
for which the asset was acquired. Although the Group uses
derivative financial instruments in economic hedges of interest
rate risk, it does not hedge account for these transactions. The
Group has not classified any of its financial assets as held to
maturity or as available for sale.
Unless otherwise indicated, the carrying amounts of the Group's
financial assets are a reasonable approximation of their fair
values.
(a) (i) Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
arise principally through rental leases with tenants (e.g. trade
receivables and cash and cash equivalents), but also incorporate
other types of contractual monetary assets. They are initially
recognised at fair value plus transaction costs that are directly
attributable to the acquisition or issue and subsequently carried
at amortised cost using the effective interest rate method, less
provision for impairment.
The effect of discounting on these financial instruments is not
considered to be material.
Impairment provisions are recognised when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Group will be unable to collect all of the amounts due under
the terms of the receivable, the amount of such a provision being
the difference between the net carrying amount and the present
value of the future expected cash flows associated with the
impaired receivable. For trade receivables, such impairments
directly reduce the carrying amount of the impaired asset and are
recognised against the relevant income category in the statement of
comprehensive income.
Cash and cash equivalents are carried at cost and consist
primarily of short term deposits in banks with an original maturity
of three months or less.
(a) (ii) Fair value through profit or loss
This category comprises only 'in the money' financial
derivatives. They are carried in the balance sheet at fair value
with changes in fair value recognised in the statement of
comprehensive income.
The fair value of the Group's derivatives is based on valuations
as described in note 23.
(a) (iii) Derecognition of financial assets
A financial asset (in whole or in part) is derecognised
either:
-- when the Group has transferred substantially all the risks and rewards of ownership; or
-- when it has neither transferred nor retained substantially
all the risks and rewards and when it no longer has control over
the asset or a portion of the asset; or
-- when the contractual right to receive cash flow has expired.
(b) Financial liabilities
The Group classifies its financial liabilities into one of two
categories, depending on the purpose for which the liability was
issued and its characteristics. Although the Group uses derivative
financial instruments in economic hedges of interest rate risk, it
does not hedge account for these transactions.
Unless otherwise indicated, the carrying amounts of the Group's
financial liabilities are a reasonable approximation of their fair
values.
(b) (i) Fair value through profit or loss
This category comprises only 'out-of-the-money' financial
derivatives. They are carried in the balance sheet at fair value
with changes in fair value recognised in the statement of
comprehensive income.
The fair value of the Group's derivatives is based on the
valuations as described in note 23.
(b) (ii) Financial liabilities measured at amortised cost
Other financial liabilities include the following items:
-- Trade payables and other short-term monetary liabilities,
which are initially recognised at fair value and subsequently
carried at amortised cost using the effective interest rate
method.
-- Bank borrowings are initially recognised at fair value net of
attributable transaction costs incurred. Such interest bearing
liabilities are subsequently measured at amortised cost using the
effective interest rate method.
(b) (iii) Derecognition of financial liabilities
A financial liability (in whole or in part) is derecognised when
the Group has extinguished its contractual obligations, it expires
or is cancelled. Any gain or loss on derecognition is taken to the
statement of comprehensive income.
(c) Share capital
Financial instruments issued by the Company are treated as
equity only to the extent that they do not meet the definition of a
financial liability. The Company's ordinary shares are classified
as equity instruments. For the purposes of the disclosures given in
note 22 the Company considers all its share capital, share premium
and all other reserves as equity. The Company is not subject to any
externally imposed capital requirements.
(d) Effective interest rate method
The effective interest rate method is a method of calculating
the amortised cost of a financial asset or liability and of
allocating interest income or expense over the relevant period. The
effective interest rate is the rate that exactly discounts
estimated future cash receipts or payments (including all fees or
amounts paid or received that form an integral part of the
effective interest rate, transaction costs and other premiums or
discounts) through the expected life of the financial asset or
liability, or, where appropriate, a shorter period.
Significant accounting estimates and judgements
The Directors make estimates and assumptions concerning the
future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
(a) Investment property
The gross property value is the price that would be received to
sell an asset in an orderly transaction between market participants
at the measurement date. Transaction costs normally borne by the
seller are not deducted in arriving at gross property value, in
accordance with IAS 40. The fair value is calculated by deducting
the costs normally borne by the purchaser from the gross property
value. Fair value is not intended to represent the liquidation
value of the property, which would be dependent upon the price
negotiated at the time of sale less any associated selling costs.
The fair value is largely based on estimates using property
appraisal techniques and other valuation methods. Such estimates
are inherently subjective and actual values can only be determined
in a sales transaction.
Investment properties held for sale are measured at fair value.
The Board determines that a property is available for sale where it
is intended and expected to sell within one year from the date of
classification as held for sale.
The fair value of the Group's investment properties and
investment properties held for sale as at 31 December 2014 was
GBP212.2 million (2013: GBP248.1 million). Refer to notes 12 and 13
for further details.
(b) Income and deferred taxes
The Group is subject to income and capital gains taxes in
numerous jurisdictions. Significant judgement is required in
determining the total provision for income and deferred taxes.
There are many transactions and calculations for which the ultimate
tax determination and timing of payment is uncertain during the
ordinary course of business. The Group recognises liabilities for
anticipated tax issues based on estimates of whether additional
taxes will be due. Where the final tax outcome of these matters is
different from the amounts that were initially recorded such
differences will impact the income and deferred tax provisions in
the period in which the determination is made.
The Group's deferred tax liability as at 31 December 2014 was
GBP6.2 million (2013: GBP6.1 million). See note 7 for further
details.
(c) Fair value of derivative contracts
The Directors estimate fair values of derivative contracts based
on valuation techniques. These techniques are significantly
affected by the assumptions used, including discount rates and
estimates of future cash flows. The fair value of derivative
contracts at the balance sheet date was GBP0.9 million liability
(2013: GBP8.8 million liability). See note 23 for further
details.
3. Revenue
Group Company Group Company
2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------- --------- --------- --------- ---------
Rental income 15,530 - 18,239 -
------------------------------------------------- --------- --------- --------- ---------
Service and management charges 3,868 - 4,460 -
------------------------------------------------- --------- --------- --------- ---------
Interest from subsidiary undertakings (note 22) - 7,466 - 8,515
------------------------------------------------- --------- --------- --------- ---------
Total 19,398 7,466 22,699 8,515
Interest from subsidiary undertakings arises from financial
assets classified as loans and receivables, has been calculated
using the effective interest rate method and arises on loans that
have been impaired as detailed in note 11.
At 31 December 2014, the Group recognised non recoverable
property operating expenditure as follows:
31 March 31 March
2014 2013
GBP'000 GBP'000
------------------------------------------------ --------- ---------
Service charge income 3,868 4,460
------------------------------------------------ --------- ---------
Property operating expenditure (6,148) (6,502)
------------------------------------------------ --------- ---------
Non recoverable property operating expenditure (2,280) (2,042)
Property operating expenses relating to investment properties
that did not generate any rental income were GBP0.6 million (2013:
GBP0.3 million).
The Group leases out its investment property solely under
operating leases. Leases are typically for terms of standard
institutional 3/6/9 years in France and 5 + 5 years in Spain. At
the balance sheet date, using the exchange rate prevailing at the
balance sheet date, the Group had contracted with tenants for the
following future minimum lease payments:
2014 2013
GBP'000 GBP'000
---------------------------------------- --------- ---------
Within one year 13,900 17,268
---------------------------------------- --------- ---------
In the second to fifth years inclusive 48,777 53,482
---------------------------------------- --------- ---------
After five years 36,763 4,831
---------------------------------------- --------- ---------
Total 99,440 75,581
4. Finance income
Group Company Group Company
2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- --------- --------- --------- ---------
Bank interest income 4 3 23 17
------------------------------- --------- --------- --------- ---------
Foreign exchange gains - - 447 2,504
------------------------------- --------- --------- --------- ---------
Net gains on financial assets
and liabilities held at
fair value through profit
or loss (note 22) 7,550 - 8,331 -
Total 7,554 3 8,801 2,521
5. Other administration costs
Group Company Group Company
2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- --------- --------- --------- ---------
Accounts and administrative
fees 351 144 345 128
----------------------------- --------- --------- --------- ---------
Non-executive Directors'
fees 113 113 113 113
----------------------------- --------- --------- --------- ---------
Auditors' remuneration for
audit services 120 58 115 51
----------------------------- --------- --------- --------- ---------
Other professional fees 773 189 617 130
----------------------------- --------- --------- --------- ---------
Staff costs 38 - 39 -
Total 1,395 504 1,229 422
----------------------------- --------- --------- --------- ---------
The Group has one employee. The Directors are the only key
management personnel of the Group.
6. Finance costs
Group Company Group Company
2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- --------- --------- --------- ---------
Interest on bank borrowings 12,592 - 11,431 -
----------------------------- --------- --------- --------- ---------
Loan fee amortisation 1,426 - 678 -
----------------------------- --------- --------- --------- ---------
Foreign exchange loss 206 1,084 - -
----------------------------- --------- --------- --------- ---------
Net losses on financial - - 6,231 -
liabilities held at fair
value through profit or
loss (note 22)
----------------------------- --------- --------- --------- ---------
Other charges 33 1 37 2
----------------------------- --------- --------- --------- ---------
Total 14,257 1,085 18,377 2
Other than net losses on financial liabilities held at fair
value through profit or loss, finance costs arise on financial
liabilities measured at amortised cost using the effective interest
rate method. No other losses have been recognised in respect of
financial liabilities at amortised cost other than those disclosed
above.
7. Taxation
(a) Taxation on profit on ordinary activities
Company
The Company is exempt from Guernsey taxation on income derived
outside of Guernsey and bank interest earned in Guernsey. A fixed
annual fee of GBP600 is payable to the States of Guernsey in
respect of this exemption. No charge to Guernsey taxation arises on
capital gains. The Group is liable to foreign tax arising on
activities in the overseas subsidiaries. The Company has subsidiary
operations in Luxembourg, Belgium, France and Spain.
Group
The Group's tax expense for the year comprises:
Group Group
2014 2013
GBP'000 GBP'000
---------------------------------------------- --------- ---------
Deferred taxation
---------------------------------------------- --------- ---------
France 547 1,273
---------------------------------------------- --------- ---------
Spain - -
---------------------------------------------- --------- ---------
Total 547 1,273
---------------------------------------------- --------- ---------
Tax expense reconciliation
---------------------------------------------- --------- ---------
Loss for the year (11,016) (4,303)
---------------------------------------------- --------- ---------
Loss for the year at the tax rate of 33.33% (3,672) (1,434)
---------------------------------------------- --------- ---------
Less: income not taxable (2,228) (5,576)
---------------------------------------------- --------- ---------
Add: expenditure not taxable 1,496 2,471
---------------------------------------------- --------- ---------
Add: un-provided deferred tax asset movement 4,951 5,812
---------------------------------------------- --------- ---------
Tax charge 547 1,273
Tax at domestic rates applicable to profits in the country
concerned
Group Group
2014 2013
GBP'000 GBP'000
--------------------------- --------- ---------
French taxation at 33.33% 547 1,273
--------------------------- --------- ---------
Spanish taxation at 30% - -
(b) Deferred taxation
The following are the major deferred tax liabilities and assets
recognised by the Group and movements thereon.
Revaluation of Accelerated tax Tax losses Interest rate swap Total
investment properties depreciation GBP'000 GBP'000 GBP'000
GBP'000
GBP'000
----------------------- ----------------------- ----------------------- ----------- ------------------- ---------
At 31 December 2012 (6,636) 19,373 (6,126) (1,897) 4,714
----------------------- ----------------------- ----------------------- ----------- ------------------- ---------
(Credited)/charged to
profit or loss (8,604) 11,271 (2,121) 727 1,273
----------------------- ----------------------- ----------------------- ----------- ------------------- ---------
Charged/(credited) to
other comprehensive
income 19 200 (87) (50) 82
----------------------- ----------------------- ----------------------- ----------- ------------------- ---------
At 31 December 2013 (15,221) 30,844 (8,334) (1,220) 6,069
----------------------- ----------------------- ----------------------- ----------- ------------------- ---------
(Credited)/charged to
profit or loss (2,550) 2,173 (119) 1,043 547
----------------------- ----------------------- ----------------------- ----------- ------------------- ---------
Charged/(credited) to
other comprehensive
income 1,038 (1,995) 525 46 (386)
----------------------- ----------------------- ----------------------- ----------- ------------------- ---------
At 31 December 2014 (16,733) 31,022 (7,928) (131) 6,230
At the balance sheet date the Company has unused tax losses of
GBP130.6 million (2013: GBP124.9 million). A deferred tax asset has
been recognised in respect of GBP9.0 million of such losses (2013:
GBP8.3 million). Due to the unpredictability of future taxable
profits, the Directors believe it is not prudent to recognise
deferred tax assets in respect of the revaluation of investment
properties and the interest rate swap.
The French unused tax losses can be carried forward
indefinitely. The Spanish unused tax losses can be carried forward
for 18 years.
8. Dividends
The Company did not pay any dividend during the year (2013:
GBP0.7 million) and does not currently propose to pay
dividends.
9. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
1 January 1 January 1 January 1 January
2014 to 2014 to 2013 to 2013 to
31 December 30 June 2014 31 December 30 June 2013
2014 2013
--------------------------------- ------------- -------------- ------------- --------------
Losses after tax per
income statement (GBP'000) (11,563) (10,009) (5,576) (2,672)
--------------------------------- ------------- -------------- ------------- --------------
Basic and diluted earnings
per share (9.8)p (8.5)p (4.7p) (2.3)p
--------------------------------- ------------- -------------- ------------- --------------
Losses after tax per
income statement (GBP'000) (11, 563) (10,009) (5,576) (2,672)
--------------------------------- ------------- -------------- ------------- --------------
Losses/(gains) on disposal
of investment properties 1,400 (300) - -
--------------------------------- ------------- -------------- ------------- --------------
Revaluation losses on
investment properties
(notes 12 and 13) 12,416 10,298 6,934 1,025
--------------------------------- ------------- -------------- ------------- --------------
Mark to market of currency
swaps (note 22) - - 5,444 6,987
--------------------------------- ------------- -------------- ------------- --------------
Mark to market of interest
rate swaps (note 22) (7,550) (3,715) (8,331) (4,623)
--------------------------------- ------------- -------------- ------------- --------------
Investment Manager's
fee (capital) 706 369 828 425
--------------------------------- ------------- -------------- ------------- --------------
Deferred taxation 547 194 1,273 730
--------------------------------- ------------- -------------- ------------- --------------
Foreign exchange losses/(gains)
(notes 4 and 6) 206 1,612 (447) (1,622)
--------------------------------- ------------- -------------- ------------- --------------
Adjusted (losses)/earnings (3,838) (1,551) 125 250
--------------------------------- ------------- -------------- ------------- --------------
Adjusted (losses)/earnings
per share (3.3)p (1.3)p 0.1p 0.2p
--------------------------------- ------------- -------------- ------------- --------------
Weighted average number
of ordinary shares (000's) 117,627 117,627 117,627 117,627
The adjusted earnings are presented to provide what the
Directors believe is a more appropriate assessment of the
operational income accruing to the Group's activities. Hence, the
Group adjusts basic earnings for income and costs which are not of
a recurrent nature or which may be more of a capital nature.
10. Net asset value per share
31 December 30 June 2014 31 December 30 June 2013
2014 2013
--------------------------- ------------ ------------- ------------ -------------
Net asset value (GBP'000) 2,955 6,232 14,974 17,347
--------------------------- ------------ ------------- ------------ -------------
Net asset value per
share 2.5p 5.3p 12.7p 14.7p
--------------------------- ------------ ------------- ------------ -------------
Net asset value (GBP'000) 2, 955 6,232 14,974 17,347
--------------------------- ------------ ------------- ------------ -------------
Currency hedges* - - - 541
--------------------------- ------------ ------------- ------------ -------------
Interest rate swaps 948 4,849 8,825 12,789
--------------------------- ------------ ------------- ------------ -------------
Deferred taxation** 3,115 3,008 3,035 2,832
--------------------------- ------------ ------------- ------------ -------------
Adjusted net asset
value 7,018 14,089 26,834 33,509
--------------------------- ------------ ------------- ------------ -------------
Net asset value per
share (adjusted) 6.0p 12.0p 22.8p 28.5p
--------------------------- ------------ ------------- ------------ -------------
Number of ordinary
shares (000's) 117,627 117,627 117,627 117,627
* The currency hedges necessarily included both a movement in
relation to currency fluctuation and a movement due to relative
future interest rates. For the purpose of providing an adjusted net
asset value the element of valuation in relation to the interest
rates was included as an adjustment; the instruments were held to
maturity at which point this element unwound. The currency hedges'
contracts terminated in October 2013.
**The net asset value and net asset value per ordinary share
have been adjusted by 50% of the deferred tax provision. An asset
realisation could potentially include the sale of an SPV with
latent deferred tax liabilities for which a potential purchaser
would expect some form of discount from the purchase price of the
related property.
The adjusted net assets are presented to provide what the
Directors believe is a more relevant assessment of the Group's net
asset position. The Directors have determined that certain fair
value and accounting adjustments may not be realisable in the
longer term.
11. Investment in subsidiary undertakings
A list of the significant investments in subsidiaries, including
the name, country of incorporation and the proportion of ownership
interest is given below.
Name of subsidiary undertaking Class of % of class Country of Principal
share held with incorporation activity
voting rights
------------------------------- --------- --------------- --------------- ----------------
Alpha Pyrenees Luxembourg Ordinary 100% Luxembourg Holding company
SARL
------------------------------- --------- --------------- --------------- ----------------
Alpha Pyrenees Luxembourg Ordinary 100% Luxembourg Holding company
No 2 SARL
------------------------------- --------- --------------- --------------- ----------------
Alpha Pyrenees Belgium Ordinary 100% Belgium Holding company
SA
------------------------------- --------- --------------- --------------- ----------------
Alpha Pyrenees Evreux Ordinary 100% France Holding company
SARL
------------------------------- --------- --------------- --------------- ----------------
Alpha Pyrenees Evreux Ordinary 100% France Property
SCI investment
------------------------------- --------- --------------- --------------- ----------------
Alpha Pyrenees Athis Mons Ordinary 100% France Holding company
SARL
------------------------------- --------- --------------- --------------- ----------------
Alpha Pyrenees Athis Mons Ordinary 100% France Property
SCI investment
------------------------------- --------- --------------- --------------- ----------------
Alpha Pyrenees Offices Ordinary 100% France Holding company
SARL
------------------------------- --------- --------------- --------------- ----------------
Alpha Pyrenees Offices Ordinary 100% France Property
SCI investment
------------------------------- --------- --------------- --------------- ----------------
Alpha Pyrenees Nozay SARL Ordinary 100% France Holding company
------------------------------- --------- --------------- --------------- ----------------
Alpha Pyrenees Nozay SCI Ordinary 100% France Property
investment
------------------------------- --------- --------------- --------------- ----------------
Alpha Pyrenees Nîmes Ordinary 100% France Property
SARL investment
------------------------------- --------- --------------- --------------- ----------------
Alpha Pyrenees Spain SLU Ordinary 100% Spain Property
investment
------------------------------- --------- --------------- --------------- ----------------
Alpha Pyrenees Alcalá Ordinary 100% Spain Property
SLU investment
------------------------------- --------- --------------- --------------- ----------------
Alpha Pyrenees Ècija Ordinary 100% Spain Property
SLU investment
------------------------------- --------- --------------- --------------- ----------------
The Group's investment properties are held by its subsidiary
undertakings.
The Company has made the following loans to its subsidiary
undertakings as at 31 December 2014:
2014 2014 2014 2013 2013 2013
Interest Non-interest Total Interest Non-interest Total
bearing bearing bearing bearing
GBP'000 GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
------------
Loans 101,639 53,163 154,802 102,149 45,673 147,822
------------ ---------- -------------- ---------- ---------- -------------- ----------
Impairment (100,735) (52,688) (153,423) (94,126) (42,099) (136,225)
------------ ---------- -------------- ---------- ---------- -------------- ----------
Total 904 475 1,379 8,023 3,574 11,597
2014 2014 2014 2013 2013 2013
Interest Non-interest Total Interest Non-interest Total
bearing bearing bearing bearing
GBP'000 GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
---------------------
Current 889 475 1,364 - 3,574 3,574
-------------------- ---------- -------------- --------- ---------- ------------ -------------
Non-current 15 - 15 8,023 - 8,023
-------------------- ---------- -------------- --------- ---------- ------------ -------------
Total 904 475 1,379 8,023 3,574 11,597
The loans are denominated in Euros, unsecured and are subject to
a range of interest rates, fixed for the term of the relevant loan.
At 31 December 2014 the weighted average interest rate was 5.47%
(2013: 5.50%).
An impairment of GBP153.4 million (2013: GBP136.2 million) has
been made against amounts receivable from subsidiary undertakings
to reflect the current mark to market impact of the interest rate
derivatives and property valuations which have arisen within the
Group subsidiaries.
12. Investment properties
2014 2013
GBP'000 GBP'000
------------------------------------- ---------- ---------
Fair value of investment properties
at 1 January 236,920 249,043
------------------------------------- ---------- ---------
Subsequent capital expenditure
after acquisition 244 945
------------------------------------- ---------- ---------
Disposals (8,484) -
------------------------------------- ---------- ---------
Movement in rent incentives/initial
costs 3,927 (30)
------------------------------------- ---------- ---------
Fair value adjustment in the year (11,771) (6,934)
------------------------------------- ---------- ---------
Effect of foreign exchange (14,352) 5,090
------------------------------------- ---------- ---------
Transfer to investment properties
held for sale (116,941) (11,194)
------------------------------------- ---------- ---------
Fair value of investment properties
at 31 December 89,543 236,920
The fair value of the Group's investment properties at 31
December 2014 and 31 December 2013 has been arrived at on the basis
of valuations carried out at that date by Knight Frank LLP,
independent valuers not connected to the Group. The portfolio has
been valued on a fair value basis as defined by the Royal
Institution of Chartered Surveyors Appraisal and Valuation
Standards ("RICS").
The approved RICS definition of fair value 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."
During the year, the Group disposed of its Gennevilliers
property in France for GBP6.0 million (EUR7.4 million) and of its
main warehouse at Zaragoza in Spain for GBP1.0 million (EUR1.3
million). A further disposal is described in note 13.
The Group has pledged investment properties valued at GBP89.5
million (EUR114.5 million) (2013: GBP236.9 million (EUR283.8
million)) to secure borrowings (note 17).
At 31 December 2014, the Group had un-provided contractual
obligations for future repairs and maintenance of GBPnil (2013:
GBPnil) and GBP5.3 million (2013: GBPnil) of future capital
requirements.
13. Investment properties held for sale
2014 2013
GBP'000 GBP'000
------------------------------------- --------- ---------
Investment properties held for 11,194 -
sale at 1 January
------------------------------------- --------- ---------
Disposals (4,269) -
------------------------------------- --------- ---------
Movement in rent incentives/initial (29) -
costs
------------------------------------- --------- ---------
Fair value adjustment in the year (645) -
------------------------------------- --------- ---------
Effect of foreign exchange (555) -
------------------------------------- --------- ---------
Transfer from investment properties 116,941 11,194
------------------------------------- --------- ---------
Investment properties held for
sale at 31 December 122,637 11,194
Investment properties held for sale represent the fair value of
properties that have been actively marketed for disposal at the
balance sheet date.
During the year, the Group disposed of its Vitry-sur-Seine
property in France for GBP4.6 million (EUR5.7 million), which was
disclosed as an investment property held for sale at the year ended
31 December 2013.
The Group has pledged investment properties held for sale valued
at GBP122.6 million (EUR156.7 million) (2013: GBP11.2 million
(EUR13.4 million)) to secure borrowings (note 17).
14. Trade and other receivables
Group Company Group Company
2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- --------- --------- ---------
Trade receivables 3,911 - 1,311 -
---------------------------------- --------- --------- --------- ---------
Amounts receivable from Property
Managing Agents 1,359 - 1,442 -
---------------------------------- --------- --------- --------- ---------
Prepayments 377 5 1,032 6
---------------------------------- --------- --------- --------- ---------
Other receivables 453 - 459 -
---------------------------------- --------- --------- --------- ---------
Total 6,100 5 4,244 6
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value. Note 22
provides an ageing of trade receivables along with details of the
provision against loans during the year.
15. Cash and cash equivalents
Cash and cash equivalents included in the cash flow statement
comprise the following balance sheet amounts:
2014 2013
GBP'000 GBP'000
----------------------------------- --------- ---------
Cash at bank in the balance sheet 12,425 5,923
----------------------------------- --------- ---------
Cash balance held on the cash (7,766) -
pooling account
----------------------------------- --------- ---------
Cash and cash equivalents 4,659 5,923
The cash balance held on the cash pooling account is subject to
certain restrictions; accordingly this balance has not been
classified as cash and cash equivalents for the purposes of the
cash flow statement.
In November 2013, the Group entered into a cash pooling
arrangement with Barclays Bank PLC over the Group's cash-flows from
the whole property portfolio in order to provide further security
to Barclays Bank PLC but which provides the Group and the Company
with working capital for its operations. The resulting cash pooling
account is controlled by Barclays Bank PLC and a cash release
mechanism is in place whereby cash is released by Barclays Bank PLC
following review of the Group's working capital budget, which is
updated quarterly.
16. Trade and other payables
Group Company Group Company
2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- --------- --------- ---------
Trade payables 351 150 310 42
---------------------------------- --------- --------- --------- ---------
Deferred income 3,704 - 695 -
---------------------------------- --------- --------- --------- ---------
Investment Manager's fee payable 585 216 680 217
---------------------------------- --------- --------- --------- ---------
VAT payable 698 - 332 -
---------------------------------- --------- --------- --------- ---------
Accruals 694 15 793 76
---------------------------------- --------- --------- --------- ---------
Total 6,032 381 2,810 335
Trade payables and accruals primarily comprise amounts
outstanding for trade purchases and ongoing costs. The Group has
financial risk management policies in place to ensure that all
payables are paid within the credit time frame.
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
17. Bank borrowings
Group Company Group Company
2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- --------- --------- --------- ---------
Current liabilities: interest
payable and bank borrowing 212,858 - 1,707 -
------------------------------- --------- --------- --------- ---------
Non-current liabilities: bank - - 221,745 -
borrowing
------------------------------- --------- --------- --------- ---------
Total liabilities 212,858 - 223,452 -
------------------------------- --------- --------- --------- ---------
The borrowings are repayable
as follows:
------------------------------- --------- --------- --------- ---------
Interest payable 1,723 - 1,707 -
------------------------------- --------- --------- --------- ---------
On demand or within one year 211,135 - - -
------------------------------- --------- --------- --------- ---------
In the second to fifth years - - 221,745 -
inclusive
------------------------------- --------- --------- --------- ---------
After five years - - - -
------------------------------- --------- --------- --------- ---------
212,858 - 223,452 -
Movements in the Group's non-current bank borrowings are
analysed as follows:
2014 2013
GBP'000 GBP'000
------------------------------------- ---------- ---------
Opening balance 221,745 197,393
------------------------------------- ---------- ---------
Loan advanced 2,064 20,829
------------------------------------- ---------- ---------
Deferred finance costs (173) (898)
------------------------------------- ---------- ---------
Amortisation of finance costs 1,426 678
------------------------------------- ---------- ---------
Repayment of loan - (208)
------------------------------------- ---------- ---------
Loan repayable within one year (211,135) -
------------------------------------- ---------- ---------
Exchange differences on translation
of foreign currencies (13,927) 3,951
------------------------------------- ---------- ---------
Total - 221,745
At 31 December 2014, EUR221.1 million (2013: EUR221.1 million)
was outstanding on the French borrowings. Borrowings are secured
over the shares in the Company's operating subsidiaries and
mortgages over properties with a total value of EUR250.2
million.
At 31 December 2014, EUR21.3 million (2013: EUR21.3 million) was
outstanding on the Spanish borrowings, which comprises a balance of
EUR1.3 million on a floating rate basis (at three month Euribor
plus margin) and EUR20.0 million on a fixed rate. Borrowings are
secured over the shares in the Company's operating subsidiaries and
mortgages over properties with a total value of EUR21.0
million.
The lender, Barclays Bank PLC, has undertaken a variable to
fixed rate swap with a third party to fix the interest rate paid by
the Group (note 22) through to the borrowings' maturity date of 10
February 2015. The weighted average rate of interest on all fixed
rate loans is 5.26% (2013: 5.26%).
On 19 November 2013, following settlement of the currency swaps,
the Group entered into a new loan contract with Barclays Bank PLC
for GBP20.8 million (EUR25.0 million). The Group is permitted to
repay this loan at any time after repayment of the existing secured
borrowings. Interest is charged at a margin of 10% above three
month Euribor and will be rolled up throughout the term. Barclays
Bank PLC has been provided with a charge over the Group's Nîmes
property. A cash pooling arrangement over the Group's cash-flows
from the whole property portfolio has been established to provide
further security to the loan but which provides the Group with
working capital for its operations. No arrangement fees have been
incurred. As part of the arrangements, the loan-to-value covenants
on all the Group's existing secured facilities of EUR242.4m have
been waived. At 31 December 2014, the outstanding principal balance
of this loan was EUR27.6 million (2013: EUR25.0 million).
The repayment date of all borrowings, originally due on 10
February 2015, has been reset to 11 May 2015, following agreement
with Barclays Bank PLC. A fee of 0.5% of the borrowed amount is
being charged by Barclays Bank PLC for this extension period and
this will be payable on 11 May 2015. The current interest rates
will continue to apply to the facilities during the extension
period.
18. Share capital
Authorised share capital
The Company's authorised share capital is unlimited.
Issued and fully paid
Number of shares
----------------------------------------- -----------------
At 1 January 2013 117,627,056
----------------------------------------- -----------------
Shares cancelled/issued during the year -
----------------------------------------- -----------------
At 31 December 2013 117,627,056
----------------------------------------- -----------------
Shares cancelled/issued during the year -
----------------------------------------- -----------------
At 31 December 2014 117,627,056
----------------------------------------- -----------------
The Company has one class of shares which carry no right to
fixed income. All ordinary shares have nil par value.
19. Reserves
The movements in the reserves for the Group and the Company are
shown above.
Special reserve
On 9 December 2005, the Royal Court of Guernsey confirmed the
reduction of the Company's capital by way of cancellation of the
amount standing to the credit of its share premium account on that
date. The amount was transferred to the special reserve. The
special reserve is a distributable reserve to be used for all
purposes permitted under Guernsey company law, including the
buyback of shares and payment of dividends.
Translation reserve
The translation reserve contains exchange differences arising on
consolidation of the Group's overseas operations. These amounts may
subsequently be reclassified to profit or loss.
Capital reserve
The capital reserve contains gains and losses on the disposal of
investment properties, and increases and decreases in the fair
value of the Group's investment properties and currency swap
derivative financial instruments, together with expenses allocated
to capital.
Revenue reserve
Any surplus arising from net profit after tax is taken to this
reserve, which may be utilised for the buyback of shares and
payment of dividends.
20. Events after the balance sheet date
On 10 February 2015, the Group agreed a three month extension
with Barclays Bank PLC of all borrowing facilities, which are
therefore due to mature on 11 May 2015 (see note 17).
21. Related party transactions
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the other party in making financial or operational
decisions. Alpha Real Capital LLP is the Investment Manager to the
Company under the terms of the Investment Manager Agreement and is
thus considered a related party of the Company.
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
The Investment Manager is entitled to receive a fee from the
Group at an annual rate of 1 per cent of the gross assets of the
Group, payable quarterly in arrears. The Investment Manager is also
entitled to receive an annual performance fee calculated with
reference to total shareholder return ("TSR"), whereby the fee is
20 per cent of any excess over an annualised TSR of 12 per cent and
then a further 15 per cent of any excess over 20 per cent; the
performance fee is subject to a three year high watermark with a
minimum threshold of 100 pence. Details of the investment
management fees for the current accounting period are shown on the
face of the statement of comprehensive income and any balances
outstanding are disclosed separately in note 16.
The Directors of the Company received fees for their services as
detailed below.
Directors fees 2014 2013
GBP'000 GBP'000
------------------ --------- ---------
Dick Kingston
(Chairman) 30 30
------------------ --------- ---------
David Jeffreys 23 23
------------------ --------- ---------
Phillip Rose 20 20
------------------ --------- ---------
David Rowlinson* 20 20
------------------ --------- ---------
Serena Tremlett 20 20
------------------ --------- ---------
Total 113 113
*David Rowlinson is a director of Antler Investment Holdings
Limited ("Antler") and the managing director of Liberation
Management Limited, which is a trustee of the Rockmount Purpose
Trust that indirectly is a partner of Alpha Real Capital LLP. As
such he is considered to be in a position in which he is able to
exercise significant influence over the Investment Manager.
Serena Tremlett is also the Managing Director and a major
shareholder of Morgan Sharpe Administration Limited, the Company's
administrator and secretary. During the year the Company paid
Morgan Sharpe Administration Limited fees of GBP81,000 (2013:
GBP81,000).
Directors' shareholdings in the Company are detailed in the
Directors' and corporate governance report.
The following, being partners of the Investment Manager, hold or
have an interest in the following shares in the Company at 31
December 2014:
2014 2013
Number of shares Number of shares
held held
-------------------- ------------------ ------------------
Rockmount Ventures
Limited and ARRCO
Limited*** 21,437,393 21,437,393
-------------------- ------------------ ------------------
P. Rose**** 1,290,079 1,290,079
-------------------- ------------------ ------------------
B. Bauman 544,809 544,809
-------------------- ------------------ ------------------
B. Frith 229,078 229,078
-------------------- ------------------ ------------------
K. Devon-Lowe 108,650 24,650
-------------------- ------------------ ------------------
R. Armist 7,450 7,450
***Rockmount Ventures Limited is the parent company of ARRCO
Limited. The interest attributed to the two corporate partners
represents 21,437,393 shares held by a related party, Antler. As
such these companies are considered to be in a position in which
they are able to exercise significant influence over the Investment
Manager.
****Phillip Rose is the CEO and a partner of the Investment
Manager.
At 31 December 2014, Alpha Real Capital LLP, the Investment
Manager of the Company, held 9,390,800 shares in the Company (2013:
9,400,000).
Paul Cable, being the Investment Manager's Fund Manager
responsible for the Company's investments, holds 84,918 (2013:
84,918) shares in the Company.
22. Financial instruments risk exposure and management
In common with all other businesses, the Group is exposed to
risks that arise from its use of financial instruments. This note
describes the Group's objectives, policies and processes for
managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented
throughout these financial statements.
There have been no substantive changes in the Group's exposure
to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure
them from previous periods unless otherwise stated in this
note.
Principal financial instruments
The principal financial instruments used by the Group and
Company, from which financial instrument risk arises, are as
follows:
Financial assets and liabilities carrying
value
----------------------------------- ------------------------------------------------
Group Company Group Company
2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ----------- ----------- ---------- ----------
Current financial assets
----------------------------------- ----------- ----------- ---------- ----------
Trade and other receivables
(excluding prepayments) 5,723 - 3,212 -
----------------------------------- ----------- ----------- ---------- ----------
Cash and cash equivalents 12,425 1,801 5,923 3,565
----------------------------------- ----------- ----------- ---------- ----------
Amounts receivable from
subsidiary undertakings - 1,364 - 3,574
----------------------------------- ----------- ----------- ---------- ----------
Total current financial
assets 18,148 3,165 9,135 7,139
----------------------------------- ----------- ----------- ---------- ----------
Non-current financial assets
----------------------------------- ----------- ----------- ---------- ----------
Amounts receivable from
subsidiary undertakings - 15 - 8,023
----------------------------------- ----------- ----------- ---------- ----------
Total non-current financial
assets - 15 - 8,023
----------------------------------- ----------- ----------- ---------- ----------
Total financial assets 18,148 3,180 9,135 15,162
----------------------------------- ----------- ----------- ---------- ----------
Current financial liabilities
----------------------------------- ----------- ----------- ---------- ----------
Trade and other payables
(excluding deferred income) 2,328 381 2,115 335
----------------------------------- ----------- ----------- ---------- ----------
Interest rate swap 948 - - -
----------------------------------- ----------- ----------- ---------- ----------
Bank borrowings 212,858 - 1,707 -
----------------------------------- ----------- ----------- ---------- ----------
Rent deposits 730 - 1,057 -
----------------------------------- ----------- ----------- ---------- ----------
Total current financial
liabilities 216,864 381 4,879 335
----------------------------------- ----------- ----------- ---------- ----------
Non-current financial liabilities
----------------------------------- ----------- ----------- ---------- ----------
Interest rate swap - - 8,825 -
----------------------------------- ----------- ----------- ---------- ----------
Bank borrowings - - 221,745 -
----------------------------------- ----------- ----------- ---------- ----------
Rent deposits 952 - 1,094 -
----------------------------------- ----------- ----------- ---------- ----------
Total non-current financial
liabilities 952 - 231,664 -
----------------------------------- ----------- ----------- ---------- ----------
Total financial liabilities 217,816 381 236,543 335
----------------------------------- ----------- ----------- ---------- ----------
Net changes in realised and unrealised gains or losses on
financial instruments can be summarised as follows:
Group Company Group Company
2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- --------- --------- --------- ---------
Net change in realised gains
or losses on loans and receivables
------------------------------------- --------- --------- --------- ---------
Interest from subsidiary
companies (note 3) - 7,466 - 8,515
------------------------------------- --------- --------- --------- ---------
Bank interest income 4 3 23 17
------------------------------------- --------- --------- --------- ---------
Impairment of trade and
other receivables (278) - (238) -
------------------------------------- --------- --------- --------- ---------
Movement in impairment of
amounts receivable from
subsidiary undertakings
(note 11) - (17,198) - (14,564)
------------------------------------- --------- --------- --------- ---------
Total (274) (9,729) (215) (6,032)
------------------------------------- --------- --------- --------- ---------
Net change in unrealised
gains and losses on financial
assets and liabilities held
at fair value though profit
or loss
------------------------------------- --------- --------- --------- ---------
Interest rate swaps 7,550 - 8,331 -
------------------------------------- --------- --------- --------- ---------
Net realised gains and losses
on financial assets and
liabilities held at fair
value through profit or
loss
------------------------------------- --------- --------- --------- ---------
Currency swaps - - (5,444) -
------------------------------------- --------- --------- --------- ---------
Currency swaps - interest - - 7,401 -
received
------------------------------------- --------- --------- --------- ---------
Currency swaps - interest - - (8,188) -
paid
------------------------------------- --------- --------- --------- ---------
Net expense of currency - - (6,231) -
swaps
------------------------------------- --------- --------- --------- ---------
Net gain on financial assets
and liabilities held at
fair value through profit
or loss 7,550 - 2,100 -
------------------------------------- --------- --------- --------- ---------
Disclosed as:
------------------------------------- --------- --------- --------- ---------
Finance costs (note 6) - - (6,231) -
------------------------------------- --------- --------- --------- ---------
Finance income (note 4) 7,550 - 8,331 -
------------------------------------- --------- --------- --------- ---------
Net gain on financial assets
and liabilities held at
fair value through profit
or loss 7,550 - 2,100 -
------------------------------------- --------- --------- --------- ---------
Group Company Group Company
2014 2014 2013 2013
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- --------- --------- ---------
Interest from subsidiary
companies - 7,466 - 8,515
--------------------------------- --------- --------- --------- ---------
Bank interest income 4 3 23 17
--------------------------------- --------- --------- --------- ---------
Interest on bank borrowings (12,592) - (11,431) -
--------------------------------- --------- --------- --------- ---------
Loan fee amortisation (1,426) - (678) -
--------------------------------- --------- --------- --------- ---------
Total interest (expense)/income (14,014) 7,469 (12,086) 8,532
--------------------------------- --------- --------- --------- ---------
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Group's finance function.
The overall objective of the Board is to set polices that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility. The above financial risk
management policies apply equally to the Group and the Company.
Further details regarding these policies are set out below.
Credit risk
Credit risk arises when a failure by counterparties to discharge
their obligations could reduce the amount of future cash inflows
from financial assets on hand at the balance sheet date.
a) Group
The Group's credit risk principally arises from cash and cash
equivalents as well as credit exposures with respect to tenants
including other receivables. In the event of a default by an
occupational tenant, the Group will suffer a rental shortfall and
incur additional costs in maintaining, insuring and re-letting the
property until it is re-let. General economic conditions may affect
the financial stability of tenants and prospective tenants and/or
demand for and value of real estate assets. A property advisor
monitors the tenants in order to anticipate and minimise the impact
of default by occupational tenants. Where possible, tenants' risk
is mitigated through rental guarantees.
Alcatel-Lucent is the largest tenant within the portfolio
representing 59.4% (2013: 52.1%) of the annual contracted rent as
at 31 December 2014. The tenant's next break option is in August
2023. The Group meets with the tenant frequently and monitors its
financial performance closely.
The ageing of trade receivables is as follows:
2014 2013
GBP'000 GBP'000
--------------- --------- ---------
0 to 6 months 3,911 1,311
--------------- --------- ---------
Over 6 months - -
--------------- --------- ---------
3,911 1,311
The movement in impairments to trade receivables of GBP0.3m
(2013: GBP0.2m) is shown on the table above.
There are no other impairment losses on any other financial
assets other than loans and receivables as mentioned above.
The carrying amount of financial assets recorded in the
financial statements, which is net of impairment losses, represents
the Group's maximum exposure to credit risk without taking into
account the value of rent deposits obtained. Details of the Group's
receivables are summarised in note 14 of the financial
statements.
The Group policy is to maintain its cash and cash equivalent
balances with a reasonable diversity of banks. The Board monitors
the placement of cash balances on an ongoing basis and has policies
to limit the amount of credit exposure to any financial
institution. As at 31 December 2014, the Group had spread its cash
across seven financial institutions and had not placed more than
66% in any one bank.
b) Company
The Company's credit risk principally arises from cash and cash
equivalents and amounts receivable from subsidiaries. The Company
follows the same Group policy with regards to diversification of
banking arrangements. Amounts receivable from subsidiaries are of
mainly a long term nature and the loans are monitored on a regular
basis.
An impairment of GBP153.4 million (2013: GBP136.2 million) has
been made against amounts receivable from subsidiary undertakings
to reflect the current mark to market impact of the interest rate
derivatives and property valuations which have arisen within the
Group's subsidiaries (note 11).
The carrying amount of financial assets recorded in the
financial statements, which is net of impairment losses, represents
the Company's maximum exposure to credit risk. Details of the
Company's loans and receivables are summarised in notes 11 and 14
of the financial statements.
Liquidity risk
Liquidity risk is the risk that arises when the maturity of
assets and liabilities does not match. An unmatched position
potentially enhances profitability, but can also increase the risk
of losses. The Group and Company have developed procedures with the
object of minimising such losses such as maintaining sufficient
cash and other highly liquid current assets and by having in place
an adequate amount of committed credit facilities. Cash and cash
equivalents are placed with financial institutions on a short term
basis reflecting the Group's and Company's desire to maintain a
high level of liquidity in order to enable timely completion of
investment transactions.
The cash balance held on the cash pooling account is subject to
certain restrictions; accordingly this balance has not been
classified as cash and cash equivalents for the purposes of the
cash flow statement (note 15).
The cash pooling account is controlled by Barclays Bank PLC and
a cash release mechanism is in place whereby cash is released by
Barclays Bank PLC following review of the Group's working capital
budget, which is updated quarterly. This allows the Group to settle
its liabilities for working capital requirements in a timely
manner.
a) Group
The following table illustrates the contractual maturity
analysis of the Group's financial liabilities based, where
relevant, on balance sheet interest rates and exchange rates
prevailing at the balance sheet date.
2014 Within 1 year 1-2 years 2-5 years Over 5 years Total Total carrying amount
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------------- ---------- ---------- ------------- --------- ----------------------
Trade and other payables
(excluding deferred
income) 2,328 - - - 2,328 2,328
---------------------------- -------------- ---------- ---------- ------------- --------- ----------------------
Rent deposits 730 36 489 427 1,682 1,682
---------------------------- -------------- ---------- ---------- ------------- --------- ----------------------
Bank borrowings 212,858 - - - 212,858 212,858
---------------------------- -------------- ---------- ---------- ------------- --------- ----------------------
215,916 36 489 427 216,868 216,868
---------------------------- -------------- ---------- ---------- ------------- --------- ----------------------
2013 Within 1 year 1-2 years 2-5 years Over 5 years Total Total carrying amount
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------------- ---------- ---------- ------------- --------- ----------------------
Trade and other payables
(excluding deferred
income) 2,115 - - - 2,115 2,115
---------------------------- -------------- ---------- ---------- ------------- --------- ----------------------
Rent deposits 1,057 271 373 450 2,151 2,151
---------------------------- -------------- ---------- ---------- ------------- --------- ----------------------
Bank borrowings 1,707 221,745 - - 223,452 223,452
---------------------------- -------------- ---------- ---------- ------------- --------- ----------------------
4,879 222,016 373 450 227,718 227,718
---------------------------- -------------- ---------- ---------- ------------- --------- ----------------------
Given the current economic environment and the maturation of the
Group's bank borrowings on 11 May 2015 the Board has decided that
to enable repayment of the bank borrowings and protect shareholder
value the Trust will continue to seek the support of its lender in
an orderly realisation of its investment property while all
alternative options continue to be explored.
b) Company
The Company only has trade payables and other payables which are
payable within one year.
Market risk
a) Foreign exchange risk
The Group operates in Europe and is exposed to foreign exchange
risk arising from various currency exposures, primarily with
respect to Euros. Foreign exchange risk arises from future
commercial transactions, recognised monetary assets and liabilities
and net investments in foreign operations.
The Group had entered into currency swaps to hedge foreign
currency transactions and cash flows to safeguard the equity
investments of shareholders against significant adverse movements
between Sterling and Euros.
The currency swaps' contracts, due to terminate on 16 October
2013, were closed earlier, on 11 October 2013, following agreement
with Barclays Bank PLC. As a result of this agreement, the net
settlement liability for the Group with Barclays Bank PLC was
GBP21.0 million (EUR24.7 million).
In October 2013, the Group reached agreement with Barclays Bank
PLC to finance the outstanding hedge liability through to 10
February 2015, subsequently extended to 11 May 2015, a date
coterminous with the current borrowings, also provided by Barclays
Bank PLC, which are secured against the Group's property portfolio.
The finance is provided in the form of a Euro denominated loan,
which was signed and drawndown on 19 November 2013, of GBP20.8
million (EUR25.0 million), including interest accruing on the
deferral of the settlement from 11 October 2013. Further
information on this loan has been given in Note 17 above.
The Group's policy is, where possible, to allow Group entities
to settle liabilities denominated in their functional currency
(primarily Euros or Sterling) with the cash generated from their
own operations in that currency.
As the property portfolio is acquired and mortgaged in Euros the
Board considers it appropriate from a risk perspective to review
currency exposure on a net assets basis. For illustrative purposes,
therefore, the effect of a strengthening of the Euro by 5 cents
would increase Group net assets by GBP0.1 million (2013: increase
by GBP0.7 million). A weakening of the Euro by 5 cents would
decrease net assets by GBP0.1 million (2013: decrease by GBP0.6
million).
As the Company impairs its large intercompany loan book to
reflect the underlying net asset value of its Group companies, the
overall net asset sensitivity of the Company to foreign currency
movements is the same as the Group's above.
b) Cash flow and fair value interest rate risk
The Group's principal interest rate risk arises from long-term
borrowings; the Group has interest rate swaps as disclosed
below.
The Group was required under the financing agreements with
Barclays Bank PLC to fix the rate at which it borrowed over the
duration of each loan.
Barclays Bank PLC has undertaken a variable to fixed rate swap
with a third party. The Company is not party to the swap agreement
but via the financing agreement the Company has all the risks and
rewards of the swap as, should the loan be repaid early, the
Company would be required to pay the swap break costs or,
alternatively accrue a swap benefit as a capital reduction
depending on the value of the underlying swap at that point in
time.
On 16 December 2009, the Spanish bank loan with Barclays Bank
PLC was amended and restated. As a result of the amendments, the
interest rate swap was broken and a new interest swap agreed for
the longer term of the revised loan. Of the loan principal of
EUR22.7m, interest on EUR20.0m has been fixed using the new
swap.
Note 23 details how the interest rate swaps are valued.
The Group's cash flow is regularly monitored by the Group's
management.
For the Group, an increase of 100 basis points in interest rates
would result in an increased post-tax loss of GBP0.1 million (2013:
GBP0.1 million). A decrease in 100 basis points in interest rates
would result in a reduced post-tax loss for the period of GBP0.1
million (2013: GBP0.1 million).
For the Company, an increase of 100 basis points in interest
rates would result in a decreased post-tax loss of GBP0.1 million
(2013: GBP0.1 million). A decrease in 100 basis points in interest
rates would result in an increased post-tax loss for the period of
GBP0.1 million (2013: GBP0.1 million).
The sensitivity analyses above are based on a change in an
assumption while holding all other assumptions constant. In
practice, this is unlikely to occur, and changes in some of the
assumptions may be correlated - for example, change in interest
rate and change in market values.
c) Growth in rental income and defaults
Income growth may not continue at a consistent rate. Future
income is dependent on, amongst other things, the Group negotiating
suitable rent levels when compared to associated financing
costs.
d) Capital risk management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce
debt.
Consistent with others in the industry, the Board monitors
capital on the basis of the gearing ratio in the currency in which
properties and associated borrowings are held and takes action
where appropriate. The key focus is the net leverage ratio which is
shown below.
The net leverage ratios at 31 December 2014 and at 31 December
2013 were as follows:
Group Group
2014 2013
EUR'000 EUR'000
--------------------- --------- ---------
Total borrowings 270,038 267,400
--------------------- --------- ---------
Less: cash and cash
equivalents (15,879) (7,096)
--------------------- --------- ---------
Net debt 254,159 260,304
--------------------- --------- ---------
Property valuation 271,166 297,240
--------------------- --------- ---------
Net leverage ratio 93.7% 87.6%
The Company has no borrowings; all borrowings are by
subsidiaries within the Group.
e) Fair values
The following methods and assumptions are used to estimate fair
values:
-- Cash and short-term deposits, trade receivables, trade
payables and other current liabilities approximate their carrying
amounts due to the short-term maturities of these instruments.
-- The fair value of floating rate borrowings is estimated by
discounting future cash flows using rates currently available for
debt of similar terms and remaining maturities.
-- The fair value of fixed rate borrowings is calculated based
on the present value of future principal and interest cash flows,
discounted at the market rate of interest at the reporting date.
The fair value approximates their carrying values gross of
unamortised transaction costs.
As a result the carrying values less impairment provision of
loans and receivables and financial liabilities measured at
amortised cost are approximate to their fair values.
Note 23 contain details regarding the fair value measurement of
the interest rate swaps.
23. Fair value measurement
IFRS 13 requires disclosure of the fair value measurement of the
Group's assets and liabilities, the related valuation techniques,
the valuations' recurrence and the inputs used to assess and
develop those measurements.
The Group discloses fair value measurements by level of the
following fair value measurement hierarchy:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (level
2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
The level in the fair value hierarchy within which the asset or
liability is categorised is determined on the basis of the lowest
input that is significant to the fair value measurement. Assets and
liabilities are classified in their entirety into one of the three
levels.
Investment properties and interest rate swaps are valued on a
recurring basis: investment properties are valued half yearly and
interest rate swaps are valued quarterly.
The fair value of the derivative interest rate swap contracts is
determined by reference to the mid-point of the yield curves
prevailing on the reporting date and represents the net present
value of the differences between the contracted rate and the
valuation rate when applied to the projected balances to the period
from the reporting date to the contracted expiry date.
The Group's valuers derive the fair value by applying the
methodology and valuation guidelines as set out by the Royal
Institution of Chartered Surveyors in the United Kingdom in
accordance with IAS 40. This approach is based on discounting the
future net income receivable from properties to arrive at the net
present value of that future income stream. Future net income
comprises the rent secured under existing leases, less any known or
expected non-recoverable costs and the current market rent
attributable to vacant units. The consideration basis for this
calculation excludes the effects of any taxes on the net income.
The discount factors used to calculate fair value are consistent
with those used to value similar properties with comparable leases
in each of the respective markets. A decrease in the net rental
income or an increase in the discount rate will decrease the fair
value of the investment property.
The following table shows an analysis of the fair values of
assets and liabilities recognised in the balance sheet by level of
the fair value hierarchy described above:
Assets and liabilities measured at fair
value
------------------------------------------------------------------------------
Level 1 Level 2 Level 3 Total
---------- ------------ -------- -----------
31 December 2014 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ---------- ------------ -------- -----------
Assets measured at fair
value
------------------------------ ---------- ------------ -------- -----------
Investment properties - - 212,180 212,180
------------------------------ ---------- ------------ -------- -----------
Assets for which fair values
are disclosed
------------------------------ ---------- ------------ -------- -----------
Trade and other receivables - 6,100 - 6,100
------------------------------ ---------- ------------ -------- -----------
Liabilities measured at
fair value
------------------------------ ---------- ------------ -------- -----------
Interest rate swap - (948) - (948)
------------------------------ ---------- ------------ -------- -----------
Liabilities for which fair
values are disclosed
------------------------------ ---------- ------------ -------- -----------
Current
------------------------------ ---------- ------------ -------- -----------
Trade and other payables - (6,032) - (6,032)
------------------------------ ---------- ------------ -------- -----------
Bank borrowings - (212,858) - (212,858)
------------------------------ ---------- ------------ -------- -----------
Rent deposits - (730) - (730)
------------------------------ ---------- ------------ -------- -----------
Non-current
------------------------------ ---------- ------------ -------- -----------
Bank borrowings - - - -
------------------------------ ---------- ------------ -------- -----------
Rent deposits - (952) - (952)
------------------------------ ---------- ------------ -------- -----------
Total - (215,420) 212,180 (3,240)
------------------------------ ---------- ------------ -------- -----------
Assets and liabilities measured at fair
value
------------------------------------------------------------------------------
Level 1 Level 2 Level 3 Total
---------- ------------ -------- -----------
31 December 2013 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ---------- ------------ -------- -----------
Assets measured at fair
value
------------------------------ ---------- ------------ -------- -----------
Investment properties - - 248,114 248,114
------------------------------ ---------- ------------ -------- -----------
Assets for which fair values
are disclosed
------------------------------ ---------- ------------ -------- -----------
Trade and other receivables - 4,244 - 4,244
------------------------------ ---------- ------------ -------- -----------
Liabilities measured at
fair value
------------------------------ ---------- ------------ -------- -----------
Interest rate swap - (8,825) - (8,825)
------------------------------ ---------- ------------ -------- -----------
Liabilities for which fair
values are disclosed
------------------------------ ---------- ------------ -------- -----------
Current
------------------------------ ---------- ------------ -------- -----------
Trade and other payables - (2,810) - (2,810)
------------------------------ ---------- ------------ -------- -----------
Bank borrowings - (1,707) - (1,707)
------------------------------ ---------- ------------ -------- -----------
Rent deposits - (1,057) - (1,057)
------------------------------ ---------- ------------ -------- -----------
Non-current
------------------------------ ---------- ------------ -------- -----------
Bank borrowings - (221,745) - (221,745)
------------------------------ ---------- ------------ -------- -----------
Rent deposits - (1,094) - (1,094)
------------------------------ ---------- ------------ -------- -----------
Total - (232,994) 248,114 15,120
------------------------------ ---------- ------------ -------- -----------
The Group determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorisation (based on
the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.
There were no transfers between level 1 and level 2 fair value
measurements.
Movements in level 3 of the fair value measurements, during the
year ended 31 December 2014, can be summarised as follows:
2014
--------------------------------------------------
GBP'000
-------------------------------------------------- ---------
At 1 January 248,114
-------------------------------------------------- ---------
Acquisitions during the year at cost 0
-------------------------------------------------- ---------
Subsequent capital expenditure after acquisition 244
-------------------------------------------------- ---------
Disposals (11,353)
-------------------------------------------------- ---------
Loss recognised in profit or loss (1,400)
-------------------------------------------------- ---------
Rent incentives movement 3,898
-------------------------------------------------- ---------
Fair value adjustment (12,416)
-------------------------------------------------- ---------
Effect of foreign exchange (14,907)
-------------------------------------------------- ---------
At 31 December 212,180
-------------------------------------------------- ---------
The fair value of investment properties is based on unobservable
inputs and it is therefore disclosed as level 3. The following
methods, assumptions and inputs were used to estimate fair values
of investment properties:
31 December 2014
----------------------------------------------------------------------------------------------------------------------
Class of Carrying amount Area Valuation Significant Range Weighted
investment / (square meters) technique unobservable average
properties fair value inputs
'000
--------------- ---------------- ---------------- --------------- -------------- --------------- ---------------
GBP212,180 Income Gross ERV per
Europe (EUR271,166) 250,180 capitalisation sqm p.a. EUR24 / EUR180 EUR91.1
--------------- ---------------- ---------------- --------------- -------------- --------------- ---------------
Net initial
yield (2.1%) / 9.4% 6.4%
-------------------------------- ---------------- --------------- -------------- --------------- ---------------
Reversionary
yield 5.6% / 12.4% 7.6%
-------------------------------- ---------------- --------------- -------------- --------------- ---------------
Gross
equivalent
yield 7.0% / 10.8% 8.3%
31 December 2013
----------------------------------------------------------------------------------------------------------------------
Class of Carrying amount Area Valuation Significant Range Weighted
investment / (square meters) technique unobservable average
properties fair value inputs
'000
--------------- ---------------- ---------------- --------------- -------------- --------------- ---------------
GBP248,114 Income Gross ERV per
Europe (EUR297,240) 262,100 capitalisation sqm p.a. EUR21 / EUR219 EUR93.7
--------------- ---------------- ---------------- --------------- -------------- --------------- ---------------
Net initial
yield (2.1%) / 8.9% 6.5%
-------------------------------- ---------------- --------------- -------------- --------------- ---------------
Reversionary
yield 5.2% / 11.3% 7.7%
-------------------------------- ---------------- --------------- -------------- --------------- ---------------
Gross
equivalent
yield 6.6% / 10.0% 8.2%
The Directors assessed at the balance sheet date whether the
Group's investment properties are being exploited according to
their highest and best use and they are satisfied that this is the
case.
Property risk
The properties have been valued by an independent third party
(see note 12) and the fair value has been arrived at on the basis
of a sale between a willing buyer and willing seller. Should the
Group be required to dispose of its investment properties not as a
willing seller the sale proceeds could vary.
Company
The Company did not have any financial assets or financial
liabilities at fair value through profit or loss.
Directors and Trust information
Directors
Dick Kingston (Chairman)
David Jeffreys
Phillip Rose
David Rowlinson
Serena Tremlett
Registered office
Old Bank Chambers
La Grande Rue
St Martin's
Guernsey GY4 6RT
Investment Manager
Alpha Real Capital LLP
Level 6, 338 Euston Road
London NW1 3BG
Administrator and secretary
Morgan Sharpe
Administration Limited
Old Bank Chambers
La Grande Rue
St Martin's
Guernsey GY4 6RT
Broker
Peel Hunt LLP
Moor House
120 London Wall
London EC2Y 5ET
Independent valuers
Knight Frank LLP
55 Baker Street
London W1U 8AN
Independent auditor
BDO Limited
Place du Pré, Rue du Pré
St Peter Port
Guernsey GY1 3LL
Tax advisors
BDO LLP
55 Baker Street
London W1U 7EU
Deloitte LLP
Hill House
1 Little New Street
London EC4A 3TR
Legal advisors in Guernsey
Carey Olsen
PO Box 98
Carey House
Les Banques
St Peter Port
Guernsey GY1 4BZ
Legal advisors in the UK
Norton Rose
3 More London Riverside
London SE1 2AQ
Registrar
Computershare Investor Services (Jersey) Limited
Queensway House
Hilgrove Street
St Helier
Jersey JE1 1ES
Shareholder information
Dividends
Ordinary dividends, if declared, are paid quarterly.
Shareholders who wish to have dividends paid directly into a bank
account rather than by cheque to their registered address can
complete a mandate form for this purpose. Mandates may be obtained
from the Group's Registrar. Where dividends are paid directly to
shareholders' bank accounts, dividend vouchers are sent directly to
shareholders' registered addresses.
Share price
The Company's Ordinary Shares are listed on the London Stock
Exchange.
Change of address
Communications with shareholders are mailed to the addresses
held on the share register. In the event of a change of address or
other amendment, please notify the Company's Registrar under the
signature of the registered holder.
Investment Manager
The Company is advised by Alpha Real Capital LLP which is
authorised and regulated by the Financial Conduct Authority in the
United Kingdom.
Financial Calendar
Financial reporting Reporting/Meeting dates
---------------------------------------- ------------------------
Annual results announcement 13 March 2015
---------------------------------------- ------------------------
Annual report published 2 April 2015
---------------------------------------- ------------------------
Annual General Meeting 24 April 2015
---------------------------------------- ------------------------
First trading update statement (Qtr 1) 5 June 2015
---------------------------------------- ------------------------
Half year report 18 August 2015
---------------------------------------- ------------------------
Second trading update statement (Qtr 3) 13 November 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFLFAEFISEDD
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