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Treveria plc

("Treveria", the "Group" or the "Company")

Final results for the year ended 31 December 2012

Treveria plc (AIM: TRV), the German retail focused real estate investment company, today announces its audited results for the year ended 31 December 2012. The Company also announces that its Annual Report and Accounts for the year ended 31 December 2012 are available on the Company's website www.treveria.com.

For further information, please contact:

IOMA Fund and Investment Management Limited

Graham Smith +44 (0) 1624 681250

N+1 Singer

James Maxwell/Nick Donovan +44 (0) 20 7496 3000

Chairman's statement

Highlights

As shareholders will be aware, in the year under review and in the period since the year-end, the Company's primary focus has been one of seeking to stabilise the debt position. All our lending facilities were due to mature in 2012, and the overwhelming majority of the portfolio was in breach of loan to value covenants. In the cases of Silos D, F/K and G, we succeeded in reaching agreements with the lenders to extend the loans. In the case of Silo E, however, we did not reach agreement with the lender and, as described more fully below, insolvency proceedings were commenced. 

The Company has also undertaken a major reorganisation of its asset management function. In particular, the activities carried out by its wholly owned subsidiary in Frankfurt, Treveria Asset Management GmbH ("TAMG"), are being outsourced to external service providers with the overall objective of optimising operations. We believe that this externalisation will not only yield cost optimization, but will also result in a leaner, nimbler, more efficient business. We plan to continue working actively to cut costs at all levels of our corporate structure.

Financial results

We report a loss for the year of €135.2m (compared with a loss in the previous year of €13.0m). The key components of this result is the write down of investment property valuations by €91.6m and the €77.1m effect of the de-recognition of the Silo E companies as subsidiaries, following the commencement of insolvency proceedings. The decline in property valuations is mainly attributable to the decision to reflect to a greater extent the lenders' perspectives on valuations.

As a result of this loss, the total net assets fell from €270.9m in 2011 to €135.7m in 2012. This equals a fall from €0.447 per share to €0.224. On an adjusted basis (i.e. excluding deferred tax), the net asset value per share stands at €0.232 (compared with €0.488 in 2011).

With the loss being due to non-cash items, the net cash-flows from operating activities (before changes in working capital and finance expenses), and as reported in the Statement of Cash-Flows, were positive at €59.9m (2011: €63.2m). Group cash stood at €58.0m at the year-end, of which €25.6m was restricted, with €31.7m held at the parent company. As at 24 June 2013, after taking into account the February 2013 distribution of €19.7m, the Group cash stood at €41.5m, of which €27.3m was restricted, with €11.0m held at the parent company.

Investment Policy

The Company's largest shareholders have made clear that they wish the Company to seek an orderly realisation of assets, and to return cash to shareholders to the extent that a prudent management of the Company's liabilities allows. The Directors therefore propose to the shareholders to ratify at the forthcoming AGM the following amendment to the Company's investment policy:

"The investment objective of the Company is to carry out an orderly realisation of the portfolio of property assets over the medium term, to distribute the net proceeds to shareholders, and then undertake a voluntary winding up of the Company. No new investments will be made except where the Board considers it necessary to provide follow-on capital to enhance the value of an existing investment."

Management Arrangements

The Company took the decision in 2012 to move from an internally to an externally managed portfolio. Tax and accounting services were outsourced to a third-party provider with effect 1 February 2013, while the remaining services (including asset management) have been phased out over the first half of 2013. In conjunction with the restructuring agreement reached with Situs, as servicer of the Silo D loan, the asset management of the Silo D property portfolio has recently been awarded to CR Investments. As we continued working on the implementation of a restructuring agreement with Hypothekenbank Frankfurt (formerly Eurohypo) for Silo F and K, we have entered a transition period in which we are also preparing the handover of the asset management function to external service providers, which we expect to complete by the end of July 2013. The asset management of the properties in the remaining Silos (G and J) will also be transferred to a third-party before end of July 2013.

Several changes to the Board composition took place during 2012. Of particular significance was the appointment in May 2012 of David Malpica, who has much experience in real estate and distressed debt. Through his consultancy company, Kewbridge Capital Limited, he is providing advisory and interim management services to the Group, and leads the debt re-negotiations, the property disposals, and the internal re-organisation. As described more fully in the Directors' report and note 28, Kewbridge Capital is incentivised to maximize the return of cash to shareholders.

Disposal of investment properties

During the year, eleven properties were sold, generating proceeds of €46.5 million. In addition, after the year-end and as at the date of this report, a further eight properties have been sold, generating sales proceeds of €19.3 million, and a further five investment properties have been notarised for sale, which should generate proceeds of €7.5 million.

On 26 October 2012, the Company announced that it had received a number of unsolicited indications of interest from third parties with regard to the potential acquisition of some or all of Treveria's portfolio. This did not lead to any agreement acceptable to all parties (including the relevant lenders), but further indications of interest have been received and are being explored.

Finance and banking

As mentioned earlier, we have continued our efforts to secure the long term lending arrangements for each silo, but at present the outcome remains inconclusive.

Silo D (Deutsche Bank/Citigroup; loan €204 million; total assets €228 million; securitised)

In February 2013, Treveria reached a consensual agreement with the servicer, Situs Asset Management Limited, regarding the implementation of a business plan which will involve the orderly disposal of the Silo D property portfolio over time. In this context, CR Investments were appointed as the asset manager of the property portfolio. Under this agreement the servicer also granted an extension to the standstill agreement until 11 June 2013, with the intention to provide four-months rolling extensions moving forward. Under this arrangement, an extension of the standstill to 11 October 2013 has recently been granted.

Silo E

In October 2012, Hatfield Philips International, the servicer of Silo E loan, denied the extension of the standstill agreement and demanded immediate repayment and discharge of all secured obligations in full by the Silo E propcos and Treveria E S.a.r.l. In January 2013, the Company then received confirmation from the Frankfurt am Main court that the insolvency proceedings of the Silo E propco companies had been opened. At this stage, all the insolvency proceedings and the appointment of the preliminary insolvency administrator remain contingent to the appeal filed by the Company. The Company still considers that debtor-in-possession proceedings is the best alternative to preserve the value of the Silo E property portfolio for creditors and stakeholders as a whole.

Subsequently, in the first creditors meeting held in March 2013 some creditors contested the voting rights of the lenders under the loan agreements and the Company expects to provide a further update on this matter after the creditors meeting, to be held in September/October 2013, at which the creditor claims in respect of the Silo E portfolio companies will be reviewed.

Silo F/K (Hypothekenbank; loan €409 million; total assets €484 million; sole lender)

Negotiations with Hypothekenbank Frankfurt (formerly Eurohypo) regarding a restructuring of the Silo F and K debt facility have progressed well during the course of 2013. In April 2013, Treveria and Hypothekenbank Frankfurt (formerly Eurohypo) agreed on a further three month extension of the in-place standstill to 31 July 2013, with the intention to finalise the implementation of a consensual restructuring agreement.

Silo G (J P Morgan; loan €9.8 million; total assets €52 million; syndicated loan)

After having agreed on a reinstated facility agreement in December 2012 which extended the maturity of the original loan to 31 May 2013, Treveria agreed on a further six week extension of the loan agreement to 12 July 2013, to allow for repayment of the loan facility in line with scheduled sales completions. Following progress made in the sales program, the outstanding loan amount has been reduced from circa €9.8 million in December 2012 to less than €3.0 million on 31 May 2013.

Silo J (properties free of any mortgage or charge total assets €13.6 million)

Silo J, which contains only eight properties and is free of any mortgage or charge.

Total bank liabilities were reduced in the period from €671 million to €623 million (excluding Silo E).

Post Balance Sheet Event

In March 2013, the Company made a distribution to shareholders of 3.25 Euro cents per share, amounting to €19.7m in total.

Real Estate Transfer Tax

There has been no change with the RETT position.

Going Concern

The Group continues to adopt a going concern basis for the preparation of these financial statements. The Directors believe the Group will be able to manage its business risks for the foreseeable future despite the continued challenging economic conditions. After making enquiries and examining major areas which could give rise to significant financial exposures, the Board has a reasonable expectation that the Company and the Group have adequate resources to continue their operations. The Group has primarily mortgage debt facilities secured at the local company level and without any performance or payment guarantees from the Group. In the event of a financing default, each lender has recourse only to the local company borrower and cannot seek recourse from the Company. In a distress situation, to limit the financial damage to the Group, underperforming assets could be released back to the appropriate lender, or sold for a nominal value.

With respect to the Company's cash position, the Board has a reasonable expectation that sufficient liquidity will be available to meet current expenses from a combination of existing cash reserves, net sales proceeds arising from the disposal program, and cash flow from normal operations.

Outlook

The future development of the Company continues to be dependent on the outcome of the re-financing negotiations, our success in completing sales, and resolving the RETT issue.

Eitan Milgram

Chairman

27 June 2013

Directors' report

The Directors submit their report with the audited financial statements for the year ended 31 December 2012. A review of the Group's business and results for the year is contained in the Chairman's statement, which should be read in conjunction with this report.

Business of the Group

Treveria plc is the Group holding company. The principal activity of its operating subsidiaries is the business of investing in and managing German commercial real estate, with a primary focus on retail assets.

Results for the year and dividends

The results are set out in the Statement of Comprehensive Income.

The total comprehensive loss attributable to the equity holders of the parent company for the year was €135,251,000 (2011: loss of €13,056,000). No dividend has been declared for the year ended 31 December 2012 (2011: nil).

As set out in note 32, Events after the reporting date, on 15 March 2013 the Company made cash distribution of 3.25 Euro cents per share.

Directors

The Directors who held office during the year and to the date of this report were:

Details of Directors' earnings are given in note 28 to the accounts.

All of the Directors are non-executive. David Malpica has a controlling interest in Kewbridge Capital Limited ("Kewbridge") which provides advisory and interim management services to the Company. Within the scope of this arrangement, he has been appointed interim managing director of Treveria Asset Management GmbH to manage the externalization of the asset management and administration functions, and spends on average two to three days a week in that role. Details of fees payable to Kewbridge are also given in note 28. Kewbridge is considered to be a related party under the AIM Rules as a result of David Malpica's controlling interest. Consequently, the services provided by Kewbridge constitute a related party transaction under the AIM Rules. The independent Directors, being those Directors other than David Malpica, having consulted with the Company's Nominated Adviser, consider the terms of the Company's engagement with Kewbridge to be fair and reasonable insofar as the Company's shareholders are concerned.

Directors' interests

Eitan Milgram is a Portfolio Manager and Executive Vice President at Weiss Asset Management LP which manages, independently, Brookdale International Partners LP and Brookdale Global Opportunity Fund, both of which hold an interest in the shares in the Company as shown under "Substantial Shareholders".

Nicholas Cournoyer, is a Partner in Montpelier Investment Management LLP, which holds an interest in the shares in the Company as shown under "Substantial Shareholders"

Jeffrey Strong is a senior investment professional at QVT Financial LP which holds an interest in the shares in the Company as shown under "Substantial Shareholders".

None of the other Directors listed above had an interest in the share capital of the Company in the year ended 31 December 2012 (2011: €nil).

Substantial shareholders

At the date of this report, the following shareholders had substantial interests in the issued share capital of the Company:

The UK Takeover Code

The Company is not currently subject to the City Code on Takeovers and Mergers ("Takeover Code") as it is not considered to have its place of central management and control in the UK, Channel Islands or Isle of Man (the "Relevant Jurisdictions"). However, as the Company is incorporated in the Isle of Man, being one of the Relevant Jurisdictions, the Takeover Code will apply to the Company from 30 September 2013, in accordance with recent changes to the Takeover Code which come into effect on that date.

Treasury operations and financial instruments

The Group's policy in relation to financial risk management and use of financial instruments is set out in note 21 to the financial statements.

Auditors and disclosure of information to auditors

So far as the Directors are aware, there is no relevant audit information of which the auditors are unaware and each Director has taken all reasonable steps to make himself aware of any relevant audit information and to establish that the auditors are aware of that information.

Our auditors, KPMG Audit LLC, being eligible, have expressed their willingness to continue in office.

On behalf of the Board

Graham Smith

Director27 June 2013

Statement of Directors' responsibilities in respect of the Directors' report and the financial statements

The Directors are responsible for preparing the Directors' report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year, which meet the requirements of Isle of Man company law. In addition, the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards, as adopted by the EU.

The financial statements are required by law to give a true and fair view of the state of affairs of the Group and the Parent Company and of the profit or loss of the Group and the Parent Company for that period.

In preparing these financial statements, the Directors are required to:

·; select suitable accounting policies and then apply them consistently;

·; make judgements and estimates that are reasonable and prudent;

·; state whether they have been prepared in accordance with International Financial Reporting Standards, as adopted by the EU; and

·; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Parent Company will continue in business.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that its financial statements comply with the Companies Acts 1931 to 2004. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation governing the preparation and dissemination of financial statements may differ from one jurisdiction to another.

Report of the Independent Auditors, KPMG Audit LLC, to the members of Treveria plc

We have audited the financials of Treveria plc for the year ended 31 December 2012 which comprise the Consolidated and the Company Statements of Comprehensive Income, the Consolidated and the Company Statements of Financial Position, the Consolidated and the Company Statements of Cash Flows and the Consolidated and the Company Statements of Changes in Equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRS), as adopted by the EU.

This report is made solely to the Company's members, as a body, in accordance with Section 15 of the Companies Act 1982. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and auditors

As explained more fully in the Statement of Directors' responsibilities, the Directors are responsible for the preparation of financial statements that 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 Auditing Practices Board's (APB'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 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.

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 the Company's affairs as at 31 December 2012 and of the Group's and the Company's loss for the year then ended;

·; have been properly prepared in accordance with IFRS, as adopted by the EU; and

·; have been properly prepared in accordance with the provisions of Companies Acts 1931 to 2004.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Acts 1931 to 2004 require us to report to you if, in our opinion:

·; proper books of account have not been kept by the Company and proper returns adequate for our audit have not been received from branches not visited by us;

·; the Company's Statement of Comprehensive Income and Statement of Financial Position are not in agreement with the books of account and returns;

·; certain disclosures of Directors' remuneration specified by law are not made; or

·; we have not received all the information and explanations we require for our audit.

Emphasis of matter - negotiations with lenders

In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosures made in note 2 to the financial statements concerning the possible outcome of on-going negotiations with the lenders to the Group. The outcome of such negotiations is uncertain, leading to the risk that one or more lenders could enforce their security against the Group. Whilst this would not affect the ability of the Group to continue as a going concern, it could have a significant potential impact on the classification and valuation of the relevant property assets included in the Group Statement of Financial Position at 31 December 2012 and hence on the reported loss of the Group for the year then ended. However, the ultimate outcome of this matter cannot be presently determined and therefore no adjustment has been made in the financial statements to reflect this matter.

KPMG Audit LLC

Chartered Accountants

Heritage Court

41 Athol Street

Douglas

Isle of Man IM99 1HN

27 June 2013

Statements of Comprehensive Incomefor the year ended 31 December 2012

Dividends of €nil (2011: nil) were paid during the year (see note 26).

The notes below form an integral part of the financial statements

Statements of Financial Positionas at 31 December 2012  

The financial statements were approved by the Board of Directors on 27 June 2013 and were signed on its behalf by:

Eitan Milgram Graham Smith

Director Director

The notes below form an integral part of the financial statements

Statements of Changes in Equityfor the year ended 31 December 2012

The notes below form an integral part of the financial statements

Statements of Changes in Equityfor the year ended 31 December 2012

The notes below form an integral part of the financial statements

Statements of Cash Flowsfor the year ended 31 December 2012

The notes below form an integral part of the financial statements

Notes to the Consolidated Financial Statements

for the year ended 31 December 2012

1. General information

Treveria plc (the Company) is a company incorporated and domiciled in the Isle of Man whose shares are publicly traded on AIM.

The consolidated financial statements of Treveria plc comprise the Company and its subsidiaries (together referred to as the Group). The parent company financial statements present information about the Company as a separate entity and not about its Group. The financial statements for the Group and the parent company have been prepared for the year ended 31 December 2012.

The principal activities of the Group are described in note 4.

The Company acts as the investment holding company of the Group.

2. Significant accounting policies

(a) Basis of preparation

These financial statements have been prepared in accordance with the Isle of Man Companies Acts 1931 to 2004, International Financial Reporting Standards ("IFRS"), as adopted by the EU and IFRIC interpretations. The consolidated financial statements have been prepared on a going concern basis and on a historical cost basis as amended by the revaluation of investment property, land held for resale and financial assets and financial liabilities at fair value through profit or loss. Comparative information for the Group and Company financial statements is presented for the year ended 31 December 2011. The financial statements are presented in Euro and all values are rounded to the nearest thousand (€000) except when otherwise indicated.

The preparation of financial statements in conformity with IFRS, as adopted by the EU, requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.

Specifically, the Directors have prepared the consolidated financial statements on a going concern basis. This is a key judgement of the Board, and is discussed further below:

Going concern

The Group continues to adopt a going concern basis for the preparation of these financial statements. The Directors believe the Group will be able to manage its business risks for the foreseeable future despite the continued challenging economic conditions. After making enquiries and examining major areas which could give rise to significant financial exposures, the Board has a reasonable expectation that the Company and the Group have adequate resources to continue their operations. The Group has primarily mortgage debt facilities secured at the local company level and without any performance or payment guarantees from the Group. In the event of a financing default, each lender has recourse only to the local company borrower and cannot seek recourse from the Company. In a distress situation, to limit the financial damage to the Group, underperforming assets could be released back to the appropriate lender, or sold for a nominal value. Whilst the outcome of on-going negotiations with the lenders to the Group negotiations is uncertain, leading to the risk that one or more lenders could enforce their security against the Group, this would not affect the ability of the Group to continue as a going concern.

With respect to the Company's cash position, the Board has a reasonable expectation that sufficient liquidity will be available to meet current expenses from a combination of existing cash reserves, net sales proceeds arising from the disposal program, and cash flow from normal operations.

Accordingly the Directors continue to adopt the going concern basis in preparing the consolidated financial statements for the year ended 31 December 2012.

(b) Basis of consolidation

The consolidated financial statements comprise the financial statements of Treveria plc and its subsidiaries as at 31 December 2012. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions that are recognised in assets and liabilities are eliminated in full.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Non-controlling interests represent the portion of profit or loss and net assets not held by the Group and are presented separately in the Statement of Comprehensive Income and within equity in the Consolidated Statement of Financial Position, separately from parent shareholders' equity.

(c) Changes in accounting policy and disclosure

The accounting policies adopted are consistent with those of the previous year.

(d) Acquisitions

Acquisitions of corporate interests in property are accounted for on consolidation as if the Group had acquired the underlying property asset directly. Accordingly no goodwill arises on such acquisitions as any difference between the fair values of the assets acquired and the acquisition consideration are allocated to the investment property asset, which is subject to subsequent revaluation under IAS 40, to its market value.

(e) Foreign currency translation

The consolidated financial statements are presented in Euro, which is the Company's functional and presentation currency and is the functional currency for the majority of subsidiaries within the Group.

Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the reporting date. All differences are taken to the Statement of Comprehensive Income.

The assets and liabilities of foreign operations are translated into Euro at the rate of exchange ruling at the reporting date and their Statements of Comprehensive Income are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are taken directly to a separate component of equity. On disposal of a foreign operation, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the Statement of Comprehensive Income.

 (f) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. In particular:

Rental income

Rental income from operating leases is recognised on a straight-line basis over the term of the lease.

Fixed or determinable rental increases are recognised on a straight-line basis over the term of the lease or over the period until the next market review date.

Contingent rents, such as turnover rent and market rent adjustments, are recognised as income in the financial period in which they are earned.

Lease incentives granted are recognised in the Statement of Comprehensive Income as an integral part of rental income.

Interest income

Interest income is recognised as interest accrues, using the effective interest method that is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset.

Service charges

In relation to amounts receivable in respect of service charges, such income is not treated as revenue, rather it is set off against the costs to which such income relates.

(g) Disposals

Investment property disposals are recognised in the financial statements on the date of completion. Profits or losses arising on disposal of investment properties are calculated by reference to the carrying value of the asset at the beginning of the year, adjusted for subsequent capital expenditure and the proceeds received from the disposal.

(h) Leases

Group as lessor

Leases where the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases.

Group as lessee

The Group's investment properties held under a lease are accounted for as finance leases and are recognised as an asset and an obligation to pay future minimum lease payments. The investment property asset is included in the Statement of Financial Position at fair value, gross of the recognised finance lease liability. Lease payments, where material, are allocated between the liability and finance charges so as to achieve a constant financing rate.

(i) Income tax

Current income tax

Current income tax assets and liabilities are measured at the reporting date at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

A 0% rate of corporate income tax applies to the Company and certain of its subsidiaries which are resident in the Isle of Man.

Certain subsidiaries may be subject to foreign taxes in respect of sources of income arising in those foreign countries.

Deferred income tax

Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions:

·; where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;

·; in respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and

·; deferred tax assets are disclosed net of deferred tax liabilities and are only recognised to the extent that:

·; it is probable that taxable profits will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised; and

·; there are deferred tax liabilities within a property-owning subsidiary in which the deferred tax asset may be offset against the deferred tax liability in the same company.

Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply to the year when the related asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the date of the Statement of Financial Position.

(j) Investment properties

Investment properties are properties owned or leased under finance leases by the Group which are held either for long-term rental income or for capital appreciation or both.

Investment properties are initially recognised at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met, and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. Surpluses or deficits arising from changes in the fair values of investment properties are included in the Statement of Comprehensive Income in the period in which they arise. Investment property held under a finance lease is stated gross of the recognised finance lease liability.

(k) Fixed assets

Fixed assets are stated at cost less depreciation and any additional provision for impairment which may be required.

Depreciation is provided on the fixed assets at rates calculated to write off the cost of each asset on a straight-line basis over its expected useful life.

(l) Investments in subsidiaries

Investments in subsidiaries are stated at cost less any provision for impairment in value.

Investments in subsidiaries are reviewed for impairment whenever there is any indication that these assets may be impaired. If any such indication exists, the recoverable amount (i.e. the higher of the fair value less cost to sell and value in use) of the asset is estimated to determine the amount of impairment loss.

If the recoverable amount is estimated to be less than its carrying amount, the carrying amount is reduced to its recoverable amount. The impairment loss is recognised in the Statement of Comprehensive Income.

(m) Investment property held for disposal

Investment property is transferred to non-current assets held for disposal when it is expected that the carrying amount will be recovered principally through sale rather than from continuing use. For this to be the case, the property must be available for immediate disposal in its present condition subject only to terms that are usual and customary for disposals of such property and its disposal must be highly probable.

For a sale to be highly probable:

·; the Board of Directors must be committed to a plan to sell the property and an active programme to locate a buyer and complete the plan must have been initiated;

·; the property must be actively marketed for sale at a price that is reasonable in relation to its current fair value; and

·; the disposal should be expected to qualify for recognition as a completed sale within one year from the date of classification.

On re-classification, investment property that is measured at fair value continues to be so measured. Therefore properties held for disposal are valued according to the relevant sale and purchase contracts.

(n) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less an allowance for impairment. An allowance for impairment is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.

(o) Amounts due from subsidiaries

Amounts due to the Company from subsidiaries are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for impairment. An allowance for impairment is made when there is objective evidence that the Company will not be able to recover the amounts in full.

(p) Cash and short-term deposits

Cash and short-term deposits comprise cash at bank and on hand, demand deposits and other short-term highly liquid investments with original maturities of three months or less, that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

(q) Bank borrowings

Interest-bearing bank loans are initially recorded at fair value, net of direct issue costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

(r) Trade payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

(s) Derivative financial instruments and hedging

The Group uses derivative financial instruments such as interest rate swaps and caps to hedge its risks associated with interest rate fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

The Group does not apply hedge accounting to its interest rate swaps. Any change in the fair value of such derivatives is recognised immediately in the Statement of Comprehensive Income as a finance cost or finance revenue as appropriate.

(t) Equity-settled share-based payments

The Company established the Treveria Employee Benefit Trust (the "Trust") for the benefit of certain employees. Ordinary shares are issued and allotted to the Trust at par and shown in Equity in Own Shares Held. At the time any such shares are transferred to the employees:

·; the fair value of these awards, being the market price of the shares on the day of commitment, is credited to retained earnings;

·; Own shares held is reduced by the par value of these shares; and

·; the fair value of these awards is expensed in administrative expenses in the Consolidated Statement of Comprehensive Income.

(u) Standards issued but not yet effective

IASB (International Accounting Standards Board) and IFRIC (International Financial Reporting Interpretations Committee) have issued the following standards and interpretations with an effective date after the date of these financial statements:

The Directors do not expect the adoption of the standards and interpretations to have a material impact on the Group's financial statements in the period of initial application.

3. Significant accounting judgements, estimates and assumptions

Judgements

In the process of applying the Group's accounting policies, which are described in note 2, the Directors have made the following judgements that have the most significant effect on the amounts recognised in the financial statements:

Operating lease commitments - Group as lessor

The Group has entered into commercial property leases on its investment property portfolio. The Group has determined that it retains all the significant risks and rewards of ownership of these properties and so accounts for them as operating leases.

Provisions

A provision is only recognised when:

·; an entity has a present obligation (legal or constructive) as a result of a past event;

·; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

·; a reliable estimate can be made of the amount of the obligation.

Contingent liability

A contingent liability is recorded by way of note to the consolidated financial statements when there is:

·; a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or

·; a present obligation that arises from past events but is not recognised because:

·; it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

·; the amount of the obligation cannot be measured with sufficient reliability.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:

Valuation of investment properties

The fair value of the Group's investment properties of €693,713,000 (2011: €1,324,691,000) as at 31 December 2012 was determined by the Directors. Each of the valuations is based upon assumptions including future rental income, anticipated refurbishment costs and the appropriate capitalisation rate. Reference is also made to market evidence of transaction prices for similar properties.

4. Segmental reporting

The Group's portfolio consists predominantly of retail investment properties in Germany. Discrete financial information is provided to the Board of Directors, which is the Chief Operating Decision Maker, on a silo-by-silo basis.

* Funds from operations is calculated by taking the (loss)/profit for the year and adjusting it for profit/(loss) from disposal of investment properties net of related tax, revaluation (deficit)/surplus, change in fair value of derivative financial instruments and deferred tax

5. (Loss)/profit from disposal of investment properties

6. Operating profit

The following items have been charged or (credited) in arriving at operating profit:

Included in administrative expenses is €294,000 (2011: €975,000) of fees receivable by the auditors and their associates in respect of other non-audit services.

Details of Directors' emoluments are set out in note 28 related parties.

Staff costs and numbers

The average number of persons employed by the Group during the year was 49 (2011: 57).

7. Loss on derecognition of subsidiaries

In October 2012, the Company received notice from Hatfield Philips International Limited ("HPI"), that the Silo E lender, facility agent and security agent ("the Finance Parties") have decided not to extend the standstill period which expired on 14 October 2012. Given the above, HPI, on behalf of the Finance Parties, have demanded immediate payment and discharge of all secured obligations in full by the Silo E propcos and Treveria E S.a.r.l.

In January 2013, the Company then received confirmation from the Frankfurt am Main court that the insolvency proceedings of the Silo E propco companies had been opened. At this stage, all the insolvency proceedings and the appointment of the preliminary insolvency administrator remain contingent to the appeal filed by the Company. The Company still considers that debtor-in-possession proceedings is the best alternative to preserve the value of the Silo E property portfolio for creditors and stakeholders as a whole.

The contribution of Silo E to the consolidated comprehensive loss in the period up to the date of derecognition is €2.6 million comprehensive profit.

8. Finance revenue and expense

Interest is charged by the Company on loans to subsidiaries principally based on a rate that relates to the underlying performance of these subsidiaries and amounts to €43,633,000 (2011: €40,120,000). However, this interest has not been recognised in the Statement of Comprehensive Income as it is not considered to be collectable at the present time (see note 28).

9. Income tax

As the Company does not receive income from land/property situated on the Isle of Man and is not in receipt of income from an Isle of Man banking business, it is subject to tax at the standard Isle of Man rate of 0%. The current income tax charge of €2,831,000 (2011: €2,537,000) represents tax charges on profits arising in Germany, that is subject to corporate income tax of 15.825% (2011: 15.825%).

The Group has tax losses of €141 million (2011: €130 million) that are available indefinitely for offset against future taxable profits of the companies in which the losses arose. Deferred tax assets have been recognised in respect of €7 million of these losses as they occur within certain subsidiaries where they may be used to offset the potential tax payable in the event the investment properties were to be disposed of at the values they are carried in the Consolidated Statement of Financial Position. The remainder of the deferred tax assets have not been recognised in respect of these losses as they may not be used to offset taxable profits elsewhere in the Group and they have arisen in subsidiaries that have been loss-making for some time.

10. Loss per share

The calculation of the basic, diluted and adjusted loss per share is based on the following data:

The Directors have chosen to disclose adjusted earnings per share in order to provide a better indication of the Group's underlying business performance; accordingly it excludes the effect of profit from disposal of investment properties, revaluation surplus/deficit, RETT, change in fair value of derivative financial instruments and loss on derecognition of subsidiaries, net of related tax.

11. Net assets per share

The effect of share options has no material impact on the net assets per share of the Group.

The Directors have chosen to disclose adjusted net assets per share in order to provide a better indication of the Group's underlying net asset value; accordingly it excludes the fair value of derivative financial instruments and deferred taxation on revaluation surpluses, as the Directors do not consider that these items will crystallise as actual liabilities of the Group in the foreseeable future.

12. Investment properties

A reconciliation of the valuation carried out to the carrying values shown in the Statement of Financial Position is as follows: