GWIK.L Regulatory News (GWIK)

Treveria plc

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

Treveria plc (AIM: TRV), the German retail focused real estate investment company, today announces its results for the year ended 31 December 2011.

Financial Highlights:

§ Reported loss before tax of €14.7 million (2010: profit €143.0 million), and a profit of €5.8 million (2010: €5.0 million) on an adjusted basis**

§ Adjusted* net asset value per share of 48.9c (2010: 54.0c)

§ Basic and adjusted** EPS were loss of 2.1c and profit of 1.0c respectively (2010: profit of 21.6c and profit of 0.8c)

§ Cash balance at the parent company level of €33.3 million (2010: €49.2 million)

§ Total value of portfolio €1.33 billion (2010: €1.37 billion on a like-for-like basis)

Operational Highlights:

§ Property sales of €57 million during 2011 (2010: €14.3 million), of which €23.8 million legally completed and accounted for in the financial statements giving rise to a profit before tax of €0.6 million (2010: €1.5 million) after costs

§ 233 new leases secured during 2011 generating annual rent of €15.3 million (2010: 299 leases, €14.5 million). The newly let area amounts to a surface area of 146,000 sqm, wherein 130,000 sqm are defined as retail space (2010: 125,000 sqm)

§ Void rate of 13.8% compared with 14.6% in 2010, of which around 33.0% is attributable to properties currently in redevelopment programs that are expected to be let within 18 months

§ Gross rental income ("GRI") on managed properties was €95.1 million (2010: €124.3 million***), with net rental income ("NRI") of €74.8 million (2010: €94.4 million)

§ Irrecoverable service charge expenditure on managed properties represented 6.3% of gross rents compared with 7.4% in 2010

* excludes deferred tax and derivative financial instruments

**excludes the profit from disposal of investment properties, revaluation surplus/deficit, RETT provision, change in fair value of derivative financial instruments and gain on derecognition of subsidiaries

*** in 2010 Treveria reported €124.3 million including Silo C which was derecognised during the year 2010 without Silo C the GRI was €100.5 million.

For further information:

CHAIRMAN'S STATEMENT

During 2011 and in the first part of 2012, our focus has been on setting in motion a sales programme in order to deleverage the portfolio and to create opportunities for the return of cash to shareholders. At the same time we have been actively managing short-term financial debt, seeking to extend maturities and renegotiate terms with lenders. All lending facilities are due to mature in the second half of 2012, and four out of our six silos are in breach of loan-to-value covenants. In addition, the Group continued restructuring its operations. We believe our cost-cutting measures will result in a leaner, nimbler, more efficient business, and we plan to continue working actively to cut costs at all levels of our corporate structure.

Revaluation and net asset value

We report in these Financial Statements a small decline in the portfolio value from €1.37 billion at the end of 2010 (excluding properties sold during 2011 and additional investments in existing properties) to €1.33 billion at the end of 2011. Whereas in 2010 the Group's property portfolio was valued by DTZ Debenham Tie Leung Limited, in 2011, after a careful review of its options, we decided to ask our subsidiary, Treveria Asset Management (TAM), to provide regular valuations of our property portfolio going forward. The Board believes that TAM not only represents the most cost efficient option, but that their expertise and intimate knowledge of the unique characteristics of each of our properties should also result in insightful and nuanced valuations. This represents a change to the intended approach for the year-end as described in the half-year results. However, the Board has satisfied itself that the TAM valuation exercise was carried out in a professional manner, using the same techniques and principles as an independent valuer would have applied. Where possible, the values have been validated against sales transactions either completed or in the pipeline since the year-end.

The adjusted net asset value per share of the Group was €48.9c as of 31 December 31 2011 compared with €54.0c as of 31 December 2010.

Finance and banking

As mentioned earlier, we have been diligently seeking to secure the long term lending arrangements for each silo.

Silo D (Deutsche Bank/Citigroup; loan €211.2 million; securitised)

On 19 July 2011, management reached an agreement with its lenders to extend the maturity date on the Silo D loan facility to 20 July 2012 and to waive any hard breaches of loan-to-value and debt service cover ratio covenants until the new maturity date. We have requested further extensions on terms that are acceptable to Treveria, and are selectively marketing properties for sale.

Silo E (ABN Amro; loan €418.1 million; securitised)

On 7 October 2011, an agreement was reached with Hatfield Philips Limited, the acting Servicer for Silo E's lenders, to extend the Final Maturity Date of the loan until 15 July 2012. We have requested further extensions on terms that are acceptable to Treveria, and are selectively marketing properties for sale.

Silo G (J P Morgan; loan €43.7 million; syndicated loan)

The Silo G loan is performing in accordance with the loan agreement with the lender. The loan matures on 19 November 2012. The sales process for many properties in Silo G is well advanced, and if successful this will enable us to repay the loan and create surplus cash. Silo G is not cash trapped.

Silo J (properties free of any mortgage or charge)

Silo J, which contains eight properties valued at €3.9 million, is free of any mortgage or charge.

Silo F/K (Eurohypo; loan €423.8 million; sole lender)

The Silo F/K loan is set to mature on 25 July 2012. The Directors are trying to extend the existing loan or to seek refinancing. Should the lender, Eurohypo, foreclose on Silo F/K or fail to extend the existing loan, the value of the portfolio will be significantly impaired with significant losses to Eurohypo. We are hopeful that Eurohypo will work closely with us to find a solution that is acceptable to all stakeholders.

Other developments

The German tax authorities declined Treveria Holdings Limited request for RETT (Real Estate Transfer Tax) relief. An appeal has been filed. We understand the current estimate of the RETT claim against Treveria Holdings Limited to be in the range of €39.9 million. Since Treveria plc has advanced loans in the amount of €646.1 million to Treveria Holdings, we have received advice that any cash at Treveria Holdings would be split 94.2% and 5.8% between Treveria plc and the German tax authorities, respectively, according to the pari passu principle. We are working closely with the German tax authorities to the fullest extent possible in order arrive at a solution to the RETT claim that is acceptable to all parties.

Board and management

In February 2012, David Parnell and Christopher Lovell resigned and Graham Smith was appointed as a non-executive director. Graham Smith is an executive director of IOMA Fund and Investment Management Limited, the Company's administrator since November 2010. Philip Scales, who is also an executive director of IOMA Fund and Investment Management Limited, has been appointed as company secretary to the Company in succession to David Parnell. I would like to thank David and Christopher very much for all their past assistance and guidance. Both men were appointed to the Board when the Company was first launched in December 2005. We wish them every success for the future.

In April 2012, Rolf Elgeti and Nicholas Cournoyeur also resigned. Their contribution will be missed. We were very pleased to be able to appoint David Malpica in May 2012. He brings with him a wealth of experience in real estate, including distressed situations.

Eitan Milgram

Acting Chairman

30 May 2012

ASSET MANAGER'S REVIEW

Portfolio performance

As of 31 December 2011, Treveria Asset Management (TAM), a wholly owned subsidiary of Treveria plc, provided asset management services to over 369 properties with approximately 1.1 million square metres of total lettable space. Over the past year, we were able to secure or extend 233 leases representing annual rent of €15.3 million with both new and existing tenants.

As part of our drive to decrease expenses, we closed our office in Munich and flattened our organization. We now operate solely out of Frankfurt, Hamburg and Düsseldorf.

Some of our major achievements include new contracts with TK MAXX (Saarbrücken), MediaMarkt (Wilhelmshaven), Mayersche Buchhandlung (Bochum) and Conti-Park (Dortmund). We also finalized new leases with well-known German retail chains such as Deichmann, Takko, Reno, and Adler, as well as with international retailers such as Cotton On and Body Shop. As a result of our asset management efforts, vacancy decreased from 14.7% of total lettable space as of 31 December 2010 to 13.8% as of 31 December 2011.

We arranged for the sale of twelve properties for a gross consideration to Treveria of €57 million. We did not acquire or enter into any new contracts to acquire property for Treveria plc in 2011.

In January 2012, we decided to terminate the contract of Thomas Laemmerhirt, our former CFO. Bernhard Fuhrmann, who took over as our interim CEO in 2011, resigned in February 2012. In his succession, the Company appointed me as CEO effective February 2012. I have been given a mandate to ensure that we achieve profitability as a standalone entity.

Given our considerable infrastructure, the high quality of our employees, and our existing agreements with Treveria plc's silos, we believe that we are well positioned to win additional asset management mandates and to transform TAM into a viable asset management platform. We are currently positioning ourselves as the asset manager of choice for several large portfolios in Germany that we believe will need our services.

Christoph Maichel

Treveria Asset Management GmbH

30 May 2012

Directors' Report

The Directors submit their report with the audited financial statements for the year ended 31 December 2011. 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 on page [•].

The total comprehensive loss attributable to the equity holders of the parent company for the year was €13,056,000 (2010: income of €131,342,000). During the year, the Company did not pay any dividend (2010: €24,234,000) resulting in €13,056,000 being charged (2010: €107,108,000 being retained) and transferred to reserves.

The Board decided that there would be no interim dividend (2010: €nil) and the Directors now recommend no payment of a final dividend (2010: €nil) for the year ended 31 December 2011.

Directors

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

All of the directors are non-executive.

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". Josef (Yossi) Raucher is an investment professional at Weiss Asset Management LP.

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 2011 (2010: €nil).

Substantial shareholders

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

Brookdale International Partners LP and Brookdale Global Opportunity Fund are independent funds managed by Weiss Asset Management LP.

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.

By order of the Board

Philip Scales

Company Secretary30 May 2012

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.

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; 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.

Independent auditors' report

To the members of Treveria plc

We have audited the financials of Treveria plc for the year ended 31 December 2011 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).

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 set out on page [•], 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 2011 and of the Group's and the Company's loss for the year then ended;

·; have been properly prepared in accordance with IFRS; 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 2011 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

30 May 2012

Statements of comprehensive income

for the year ended 31 December 2011

Dividends of €nil (2010: €24,234,000) were paid during the year (see note 26).

Statements of financial position

As at 31 December 2011

The financial statements were approved by the Board of Directors on 30 May 2012 and were signed on its behalf by:

Eitan Milgram Graham Smith

Director Director

Statements of changes in equity

for the year ended 31 December 2011

Statements of cash flows

for the year ended 31 December 2011

Notes to the consolidated financial statements

for the year ended 31 December 2011

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 2011.

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

The financial statements have been prepared on a historical cost basis, except for investment properties and derivative financial instruments that have been measured at fair value. The financial statements are presented in euro and all values are rounded to the nearest thousand (€000) except when otherwise indicated.

The financial statements have been prepared in accordance with IFRS and also to comply with the Isle of Man Companies Acts 1931 to 2004.

These financial statements have been prepared on a going concern basis as it is the view of the Directors that this is the most appropriate basis of preparation to adopt having considered the issues identified below.

The Group's property portfolios are largely funded by external debt facilities. Under the terms of the debt agreements each debt obligation is "ring fenced" within a sub-group of companies. Treveria plc, the ultimate parent company, is not itself a party to any of the finance documents (in any capacity including as borrower, guarantor or security provider). The finance providers would therefore not have any recourse to the ultimate parent under the finance documents. Further details of the loans and financial risks are provided in note 21 to the financial statements.

In the event that the real estate market deteriorates and valuations fall, certain loan-to-value ratio levels could rise above permitted ratio levels. Various events which have an impact on certain of the loans have occurred:

·; on 19 July 2011, an agreement was reached with Deutsche Bank AG and Citigroup Global Markets Limited in relation to the second facility - Silo D (see note 19). Under this agreement the banks agreed to extend the loan maturity date to 20 July 2012 and to waive any loan-to-value and debt service cover ratio hard breaches until the new maturity date;

·; Eurohypo AG - Silo F/K (see note 19). The bank agreed to extend the waiver on the loan-to-value covenant until 30 September 2011. The Group is in continuing discussions with the bank regarding an extension of the loan-to-value covenant, although no formal agreement has yet been reached. On the basis of the values adopted for the properties in this silo in the Consolidated Statement of Financial Position as at 31 December 2011, a breach of the loan-to-value covenant exists although the bank has not taken any action to enforce its rights;

·; on 7 October 2011, an agreement was reached with Hatfield Philips Limited, acting as Servicer for the lenders in Silo E (see Note 19), to extend the Final Maturity Date of the loan. This has so far been extended until 15 July 2012;

The permitted loan-to-value ratios in the debt arrangements as at 31 December 2011 were between 76% and 85% with a weighted average that was 82.6%. The "hard breach" loan-to-value ratio covenants were between 76% and 95% with a weighted average that was 90.2%. Were the lenders to adopt the valuations carried out for the purposes of these financial statements as at 31 December 2011, the weighted average loan-to-value ratio in respect of the property as security under the total debt arrangements would have been 83.3% after adjusting for cash held in bank accounts that have been restricted by lenders (see note 16).

In the event that a breach of covenant occurs or a loan matures and no satisfactory waiver, refinancing or renegotiation of terms is achieved, in general a lender can enforce its security against the relevant sub-group (although in one instance, such action could trigger a cross-default acceleration of debt repayment in another sub-group - see above), with a consequent loss of the assets in return for the extinguishment of the debt within that sub-group only. 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 Consolidated Statement of Financial Position as at 31 December 2011 and hence on the reported results of the Group for the year then ended. The impact on the net assets of the Group of the enforcement of security on individual sub-groups by lenders would depend on the respective carrying values of the assets and the debt in the sub-groups concerned. Although the Directors consider the prospect unlikely, it is uncertain whether any of the lenders will choose to enforce their security in future and, therefore, no adjustments have been made in the financial statements to reflect the possible impact of such action.

In assessing the implications of potential covenant breaches, the Directors have also considered:

·; the various cure rights that are available in relation to any breach. The principal cure rights are a potential repayment of part of the loan or the use of cash trapped within each ring fenced sub-group of companies providing the security to that bank facility to amortise the loan balance; and

·; that the lenders to each sub-group have the ability to waive any breaches of covenant in relation to their sub-group where the lenders consider it to be in their best interests. In addition, they each retain sufficient interest cover, i.e. the ratio of net rental income to interest payable. Interest cover (or, where relevant, debt service cover) as reported to the banks in the last quarter of 2011 is between 128% and 236% against breach covenants ranging from 120% to 125%.

The Company continues to work diligently alongside lenders to procure loan extensions and renegotiate terms of existing loan facilities; however, the outcome of these efforts is uncertain.

(b) Basis of consolidation

The consolidated financial statements comprise the financial statements of Treveria plc and its subsidiaries as at 31 December 2011. 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, except that the Group has adopted the following new and amended IFRS as of 1 January 2011:

IAS 1 Presentation of Financial Statements

The amendment is effective for financial periods on or after 1 January 2011. Early application is permitted.

The amendment clarifies that disaggregation of changes in each component of equity arising from transactions recognized in other comprehensive income also is required to be presented, but is permitted to be presented either in the statement of changes in equity or in the notes.

The adoption of this amendment did not have any impact on the financial position or the performance of the Group.

IAS 24 Related Party Disclosures

This amendment is effective for financial periods on or after 1 January 2011.

The amendment is concerning the definition of a "related party". The definition was made symmetrical which means if one entity is identified as a related party in other entity´s financial statements, then the other entity also will be a related party in the first entity´s financial statements. This removed inconsistencies in the definition. Another result of the new definition is that two entities are no longer related if one of them is under significant influence of a person and the other is under significant influence of that person´s close family or managed by that person in their capacity as key management personal. Another amendment removed references to "significant voting power" and clarified that any reference to associates and joint ventures includes the subsidiaries of those associates and joint ventures.

The adoption of this amendment did not have any impact on the financial position or the performance of the group.

IFRIC 14/ IAS 19

This amendment is effective for financial periods on or after 1 January 2011.

The amendment determinates the availability of a refund or a reduction in future contributions in accordance with the terms and conditions of the plan and any statutory requirements in the jurisdiction of the plan. An economic benefit is available if the entity can realize it at some point during the life of the plan or when the plan liabilities are settled. Available to an entity is a refund in case the entity has an unconditional right to a refund.

The adoption of this amendment did not have any impact on the financial position or the performance of the Group.

(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.

(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:

(i) 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

(ii) 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

The IASB and IFRIC have issued a number of standards and interpretations with an effective date after the date of these financial statements. The Directors have set out below only those which may have a material impact on the financial statements in future periods.

IFRS 7 Amendments to Financial Instruments

This amendment clarifies the disclosure of the amount that represents an entity´s maximum exposure to credit risk. It is required only if the carrying amount of a financial asset does not reflect such exposure already. Further amendments contain the requirement to disclose the financial effect of collateral held as security and other credit enhancements in respect of a financial instrument. This disclosure is in addition to the existing requirement to describe the existence and nature of such collateral. The amendment clarifies that the disclosure in respect of collateral taken possession off by the entity is required only in respect of such collateral held at the end of the reporting period.

This amendment is effective for annual periods beginning on or after 1 July 2011. The Directors do not expect a material impact on the financial position or the performance of the Group.

IFRS 9 Financial Instruments: Classification and Measurement

IFRS 9, as issued, reflects the first phase of the IASB's work on the replacement of IAS 39 and applies to classification and measurement of financial assets as defined in IAS 39. The standard is effective for annual periods beginning on or after 1 January 2015, previously 1 January 2013. The deferral of the effective date has been driven by delays in completing the hedging and impairment phases of the IAS 39 replacement project.

The Directors will quantify the effect on the Group in conjunction with other phases, when issued, to present a comprehensive picture.

IAS 1 Presentation of items of Other Comprehensive Income

Pursuant to these amendments it isrequired that an entity presents separately the items of other comprehensive income that would be reclassified to profit or loss in the future if certain conditions are met from those that would never be reclassified to profit or loss. Consequently an entity that presents items of other comprehensive income before related tax effects would also have to allocate the aggregated tax amount between these sections.

However, the amendments do not change the existing option to present profit or loss and other comprehensive income in two statements.

The effective date is 1 July 2012 and the amendments may be early applied. The Directors do not expect a material impact on the financial position or the performance of the Group.

IAS 27 Separate Financial Statements

In the context of the introduction of IFRS 10 the rules with regard to the control model as well as the requirements concerning consolidation are relocated from IAS 27 to IFRS 10. As a result IAS 27 will only relate to the accounting of subsidiaries, joint ventures and associated companies in the separate financial statements of a company.

This amendment is effective for annual periods beginning on or after 1 January 2013. The Directors do not expect a material impact on the financial position or the performance of the Group.

IAS 12 Deferred Tax on Investment Property

The amendments to IAS 12 clarify the measurement of deferred tax assets and liabilities in respect of investment property using the fair value model in accordance with IAS 40 Investment Property. Under the amendments, the measurement of deferred tax assets and liabilities is based on a rebuttable presumption that the carrying amount of the investment property will be recovered entirely through sale. The presumption can be rebutted only if the investment property is depreciable and held within a business model whose objective is to consume substantially all of the asset´s economic benefits over the life of the asset.

The amendment is effective for annual periods beginning on or after 1 January 2012. The Directors do not expect a material impact on the financial position or the performance of the Group.

IAS 28 Investments in Associates and Joint Ventures

On transition to IFRS 11 all joint arrangements will need to be re-assessed. Under the key changes from IAS 28 the equity method will apply to all joint ventures. Thus, the proportionate consolidation method ceases to be applicable.

IAS 28 is effective for annual periods beginning on or after 1 January 2013. The Directors do not expect a material impact on the financial position or the performance of the Group.

IAS 32 Offsetting Financial Assets and Financial Liabilities

In addition to the new requirements pursuant to IFRS 7 the IASB has published amendments which clarify the offsetting criteria in IAS 32 to address inconsistencies in their application. The amendments become effective on 1 January 2014. The Directors do not expect a material impact on the financial position or the performance of the Group.

IFRS 10 Consolidated Financial Statements

This standard introduces a new approach to determining which investees should be consolidated and therefore defines a new term of "control".

An investor controls an investee when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Thus, the scope of consolidation may change due to these amendments. IFRS 10 is effective for annual periods beginning on or after 1 January 2013. The Directors do not expect a material impact on the financial position or the performance of the Group.

IFRS 11 Joint Arrangements

Pursuant to the key requirements of IFRS 11 joint arrangements are divided into two types, i.e. joint operations and joint ventures. Each type has its own accounting model. The key to determining the type of arrangement, and therefore the subsequent accounting, is the rights and obligations of the parties to the arrangement. IFRS 11 is effective for annual periods beginning on or after 1 January 2013. The Directors do not expect a material impact on the financial position or the performance of the Group.

IFRS 12 Disclosure of Interests in Other Entities

IFRS 12 contains new and expanded disclosure requirements for entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. This new standard is effective for annual periods beginning on or after 1 January 2013. The Directors do not expect a material impact on the financial position or the performance of the Group.

IFRS 13 Fair Value Measurement

The standard replaces existing guidance on fair value measurement in different IFRS with a single definition of fair value, a framework for measuring fair values and disclosures about fair value measurements. IFRS 13 is mandatory effective for annual periods beginning on or after 1 January 2013. The Directors do not expect a material impact on the financial position or the performance of the Group.

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:

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

(ii) 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 €1,334,003,000 as at 31 December 2011 was determined by the Directors. The fair value of the Group's investment properties of €1,386,382,000 as at 31 December 2010 was determined by independent valuers. Each of the valuations is based upon assumptions including future rental income, anticipated maintenance costs and the appropriate capitalisation rate. Reference is also made to market evidence of transaction prices for similar properties.

Fair value of derivatives and other financial instruments

The Group's interest rate swaps and caps are shown in these financial statements (note 22) at fair value as a liability of €10,777,000 (2010: €25,231,000) based on valuations prepared by the relevant banks. Such valuations are based on market prices, estimated future cash flows and forward rates as appropriate.

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. Revenue and profit from disposal of investment properties

6. Operating profit

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

Direct costs

Administrative expenses

Included in administrative expenses is €975,000 (2010: €1,820,000) of fees receivable by the auditors and their associates in respect of other non-audit services. €41,000 (2010: €498,000) relates to services provided in prior periods.

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

7. Staff costs and numbers

The average number of persons employed by the Group during the year was 57 (2010: 46).

8. Finance revenue and expense