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TREVERIA PLC

("Treveria" or "the Company")

Interim Accounts

Treveria announces its interim results for the six month period to 30 June 2012. 

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Highlights

·; Profit before tax of €12.7 million (30 June 2011: €11.8 million) and adjusted profit after tax* of €7.3 million (30 June 2011: €1.1 million

·; Funds from operations €7.3 million (30 June 2011: €1.1 million)

·; Basic and adjusted earnings per share of 2.03c and 1.20c**, respectively (30 June 2011: 1.91c and 0.18c, respectively)

·; Adjusted net asset value per share 49.8c*** (31 December 2011: 48.9c)

·; The total cash balance held by Treveria plc and its subsidiaries was €56.5 million (31 December 2011: €65.9 million)

·; Gross rental income for the period of €47.8 million (30 June 2011: € 48.4 million)

·; Total value of property portfolio of €1.29 billion (FY 2011: €1.33 billion)

·; Administrative Expenses €3.9 million (30 June 2011: €5.5 million)

* Adjusted profit after tax excludes profit from disposal of investment properties, revaluation surplus/deficit and change in fair value of derivative financial instruments, net of related tax.

** Adjusted EPS excludes profit from disposal of investment properties, revaluation surplus/deficit, RETT, change in fair value of derivative financial instruments and gain on derecognition of subsidiaries, net of related tax.

*** Adjusted NAV per share excludes deferred tax arising on revaluation surpluses and derivative financial instruments.

Chairman's Statement

During the last six months our focus has been on setting in motion a sales programme, actively managing short-term financial debt, extending debt maturities and renegotiating terms with lenders.

Three of our lending facilities were due to mature in July 2012. We reached a standstill agreement with each of the lenders involved, and discussions are continuing with them regarding the alternatives for maximising and preserving value for all stakeholders. We will of course make announcements as and when replacement agreements are reached. A fourth is due to mature in November 2012.

Financial results

I am pleased to report a small increase in the Company's profitability in the period compared with previous periods. Profit after tax for the period was €12.3 million, compared with €11.5 million for the same period in 2011 and a loss of €13.0 million for the full year of 2011. The trend becomes clearer when considering "adjusted earnings", which strips out the effect of valuation adjustments which in turn are inherently a matter of judgement. Adjusted earnings for the period stand at €7.2 million, compared with €1.1 million for the same period in 2011 and €5.8 million for the full year, and translates into an adjusted earnings per share figure of 1.20 cents.

The adjusted earnings figure is in turn reflected in positive operating cash-flows of €33.0 million (before finance expense of €23.1 million and before loan repayments and capital expenditure). However, the cash-flows are mostly trapped, pending revised agreements with the lenders.

We do not believe there have been significant changes in the market value of the properties during the period, but have nevertheless performed an update to the December 2011 valuation exercise. We value the total portfolio at €1,355 million (including properties classified in the balance sheet as held for disposal), and we only recorded a small revaluation adjustment in the period of just under negative €1 million.

The adjusted net asset value per share of the Group was 49.8 cents as at 30 June 2012 compared with 48.9 cents as at 31 December 2011.

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 €207 million ; securitised)

On 20 July 2012, we entered into a standstill with the lenders in the context of the loan maturing on that date. We continue our discussions with the Deutsche Bank, the Servicer, as to consensual alternatives to maximise and protect value for all stakeholders. In the meantime, we continue to implement our updated business plan and pursue the sale of assets selectively. On 14 September 2012 Deutsche Bank AG, London Branch as the Servicer of the Notes (to which the Silo D Loan is part of) has appointed Situs Asset Management Limited to be sub-servicer of the Notes under the corresponding Servicing Agreement.

Silo E (ABN Amro; loan €406 million ; securitised)

On 16 July 2012, we entered into a forbearance period with the Servicer (Hatfield Philips International) and lately replaced by a standstill period. We continue our discussions with the Servicer in order to pursue joint alternatives that will protect and maximise value for all stakeholders. We continue the implementation of our updated business plan, including the sale of assets on a selective basis.

Silo G (J P Morgan; loan €40 million; syndicated loan)

We have actively marketed the properties in Silo G since the beginning of this year. To date, we have agreed or have received expression of interest for the sale of assets at prices well above the disposal release amount. .

Silo F/K (Hypotheken Bank, formerly Eurohypo ; loan €415 million ; sole lender)

On 25 July 2012, we entered into a standstill agreement with Hypotheken Bank Frankfurt (formerly Eurohypo). We are currently in discussions with Hypotheken Bank as to alternatives for a consensual way forward with the aim of protecting and maximising value for all stakeholders. We continue to work on the implementation of the updated business plan and have continued to pursue selective asset sales.

Silo J (properties free of any mortgage or charge)

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

Total bank liabilities were reduced in the period from €1,090 million to €1,068 million.

Other developments

As reported in the 2011 Annual Report and Accounts, the German tax authorities declined Treveria Holdings Limited request for RETT (Real Estate Transfer Tax) relief. We have been advised that there is a strong case for having the assessments withdrawn, so we have applied to the German fiscal court for a ruling. Accordingly, we continue to hold a provision of only €1 million, although the contingent liability remains at €39.9 million.

Outlook

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

Eitan Milgram

Acting Chairman

27 September 2012

Condensed consolidated statement of comprehensive income

for the six months ended 30 June 2012

* Adjusted earnings per share are shown in note 8.

All results arise from continuing operations.

Condensed consolidated statement of financial position

as at 30 June 2012

Condensed consolidated statement of changes in equity

for the six months ended 30 June 2012

Condensed consolidated statement of cash flows

for the six months ended 30 June 2012

Notes to the consolidated financial statements

for the six months ended 30 June 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 Company acts as the investment holding company of the Group.

2. Significant accounting policies and basis of preparation

These condensed consolidated interim financial statements are unaudited, have not been reviewed by the auditors, and do not constitute statutory accounts. The statutory accounts for 2011, which received an unqualified report from the auditors, are available on the Company's website, www.treveria.com.

The condensed financial statements have been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting.

They 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 in note 13. Whilst the issues described in note 13 would not affect the ability of the Group to continue as a going concern, they 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 30 June 2012 and hence on the reported results of the Group for the year then ended.

The condensed financial statements have been prepared under the 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 accounting policies adopted by the Group in these condensed consolidated interim financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements as at, and for the year ended, 31 December 2011.

Amendments resulting from improvements to IFRSs and their interpretations did not have any impact on the accounting policies, financial position or performance of the Group.

The Group has not early adopted any other standard, interpretation or amendment which was issued and is not yet effective.

3. 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 profit/(loss) for the year and adjusting it for profit/(loss) from disposal of investment properties net of related tax, revaluation surplus/(deficit), RETT, change in fair value of derivative financial instruments, gain on derecognition of subsidiaries, investment income/(expense) and deferred tax.

4. Profit from disposal of investment properties

5. Operating profit

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

Direct costs

Administrative expenses

The Group has tax losses of €145 million (31 December 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 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.

8. Earnings per share

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

* The share options in issue have not been included in the calculation of the dilutive earnings per share for the six months ended 30 June 2012 as they are anti-dilutive and would decrease the loss per share.

9. Net assets per share

10. Investment properties

A reconciliation of the valuation to the carrying values shown in the Consolidated statement of financial position is as follows:

All properties have been valued on the basis of market value which was primarily derived using comparable recent market conditions and transactions on arm's length terms.

As a result of the level of judgement used arriving at the market valuations, the amounts which may ultimately be realised in respect of any given property, may differ from the valuations shown in the balance sheet.

As at 30 June 2012, €17,042,000 (31 December 2011: €13,830,000) is held in blocked accounts. This is where rents received, in the ordinary course of business, are deposited at banks pending the quarterly interest payment dates and, subject to the financial covenant tests, any net surplus is returned to the Group. Within this balance at 30 June 2012, €16,714,000 (31 December 2011: €13,468,000) is cash that has become cash trapped within property companies. This is where certain quarterly financial covenant tests, set out in the Group's bank loan agreements, have not been met. This does not represent an event of default under these agreements. This cash remains under the control of the banks to be used for the payment of interest and amounts due under these loan agreements, and cannot be used for the Group's purposes until the financial covenant tests are satisfied.

As at 31 December 2009, a provision for German RETT of €40,200,000 was made as a prior year adjustment. This was in respect of the acquisition of shares in Treveria Properties S.à r.l. by Treveria Holdings S.à r.l. The Group's legal advisers have confirmed that, in the event the RETT was deemed payable, the likelihood of the authorities having any actual recourse to the assets of Treveria plc was remote. The Group continues to challenge the assessment of the RETT on various legal grounds and has initiated relief procedures with the relevant German tax authorities. The outcome of such legal action and relief procedures is typically hard to predict.

In the year ended 31 December 2010, the Group reassessed the probability that Treveria Holdings Limited might be subject to the RETT liability. Based on legal advice received it was no longer more likely than not that Treveria Holdings Limited will be required to settle the RETT obligation. A balance of €1,000,000 was retained within this provision to settle amounts which may become payable in relation to the RETT relief procedures.

The Group has reassessed the situation as at 31 December 2011 and 30 June 2012 and has determined that the existing provision of €1,000,000 should remain due to RETT relief procedures which are not yet finalized.

The Group has determined that a reasonable estimate of the possible liability for RETT to be €39,900,000. However, it is not probable that an outflow of resources embodying economic benefits will be required to settle this liability but, due to the uncertainties relating to the outcome of the challenge to the assessments, the relief procedures and possible future legislation, this amount is shown as a contingent liability (31 December 2011: €39,900,000) - see note 19.

13. Interest-bearing loans and borrowings

The Group's property portfolios are largely funded by external debt facilities as summarised below.

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.

Various events which have an impact on certain of the loans have occurred in the period after the reporting date:

• The loan with Deutsche Bank AG and Citigroup Global Markets Limited in relation to Silo D was due on 20 July 2012. On that date, a Standstill Agreement until 31 August 2012 was reached with Deutsche Bank AG and Citigroup Global Markets Limited. On 31 August 2012 the Standstill Period was extended until 1 October 2012. During the Standstill Period it was agreed not to make any demand for payment or discharge of any amounts which have been due on the 20 July 2012 or will during the Standstill Period become due and payable.

• The loan with ABN Amro N.V. in relation to Silo E was due on 15 July 2012. On 16 July 2012, a Forbearance Period with ABN Amro N.V. was reached in relation to Silo E. For the duration of 30 days from the date of this letter, it was agreed not to make any demand for payment or discharge of any amounts which have on the 15 July 2012 or will during the Forbearance Period, become due and payable. On 15 August 2012 a Standstill Agreement was reached for the period of 60 calendar days from the date of the expiry of the Forbearance Period. During the Standstill Period it was agreed not to make any demand for payment or discharge of any amounts which have on the 15 July 2012 or will during the Standstill Period, become due and payable.

·; The loan with Hypotheken Bank (formerly Eurohypo AG) in relation to Silo F/K was due on 25 July 2012. On that date, a Standstill Agreement until 25 October 2012 was reached with Hypotheken Bank. During the Standstill Period it was agreed not to make any demand for payment or discharge of any amounts which have been due on the 25 July 2012 or will during the Standstill Period become due and payable.

The permitted loan-to-value ratios in the debt arrangements as at 30 June 2012 were between 75% and 85% with a weighted average of 82.7%. The "hard breach" loan-to-value ratio covenants were between 76% and 95% with a weighted average of 90.2%. Were the lenders to adopt the valuations carried out for the purpose of these financial statements as at 30 June 2012, the weighted average loan-to-value ratio in respect of all the property as security under those debt arrangements would have been 78.8% after adjusting for cash held in bank accounts that have been restricted by lenders (see note 11).

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 30 June 2012 and hence on the reported results of the Group for the period 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 June 2012 quarter is between 130% and 276% against breach covenants ranging from 115% to 140%.

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.

Deutsche Bank AG and Citigroup Global Markets Limited

During the year amounts of €4,380,000 (2011: €7,113,000) were repaid arising from amortisations due under the loan agreement, resulting in a balance at the end of the period of €206,841,000 (2011: €211,221,000). Until the original maturity date of 20 July 2011, the effective interest rate on this loan was 4.79% per annum payable quarterly in arrears. With effect from 21 July 2011, interest on this loan is floating at a rate based on Euribor, with the margin increased by 100bps, and is payable quarterly in arrears. The loan amortises by 1.5% per annum with a final repayment due on 20 July 2012. The facility has been in cash trap since July 2009. The loan is secured over the assets and the undertakings of companies within the relevant sub-group.

ABN Amro N.V. (Silo E)

During the year amounts of €12,451,000 (2011: €9,862,000) were repaid arising from proceeds of disposal of investment property and other prepayments due under the loan agreement, resulting in a balance at the end of the year of €405,691,000 (2011: €418,142,000). Until the original maturity date of 15 July 2011, interest on 90% of the loan was fixed at a weighted average interest rate of 4.76% per annum, with interest on the remaining 10% floating at a rate based on Euribor, but capped at 5.35% per annum by means of an interest rate cap. Interest was payable quarterly in arrears. With effect from 16 July 2011, interest on this loan is floating at a rate based on Euribor, with the margin increased by 100bps, and is payable quarterly in arrears. The loan amortises by amounts up to 1.6% per annum with a final repayment due on 15 July 2012. The loan is secured over the assets and the undertakings of companies within the relevant sub-group.

Hypotheken Bank Frankfurt (formerly Eurohypo AG) - (Silo F/K)

During the period amounts of €8,669,000 (31 December 2011: €9,480,000) were repaid arising from prepayments due under the loan agreement, resulting in a balance at the end of the period of €415,155,000 (31 December 2011: €423,824,000). Interest on approximately 92% of the loan is fixed at a weighted average interest rate of 6.05% per annum by means of interest rate swaps, with interest on the remaining approximately 8% floating at a rate based on EURIBOR, but capped at 6.25% per annum by means of an interest rate cap. Interest is payable quarterly in arrears. With effect from 26 July 2012, interest on this loan is floating at a rate based on Euribor, with the margin increased by 200bps, and is payable quarterly in arrears. The loan amortises by increasing amounts up to 1.75% per annum with a final repayment due on 25 July 2012. The loan is secured over the assets and the undertakings of companies within the relevant sub-group.

J.P. Morgan plc (Silo G)

During the year amounts of €0 (2011: €3,184,000) were repaid arising from proceeds of disposal of investment property, resulting in a balance at the end of the year of €40,467,000 (2011: €40,467,000). The interest rate on this loan is fixed at a weighted average interest rate of 5.46% per annum by means of an interest rate swap and is payable quarterly in arrears. The loan is not amortising and is repayable on 19 November 2012. The loan is secured over the assets and the undertakings of companies within the relevant sub-group.

14. Financial instruments

Set out below is a comparison by category of carrying amounts and fair values of all the Group's financial instruments that are carried in the financial statements:

The fair value of derivative financial instruments has been calculated by the relevant banks based on market prices, estimated future cash flows and forward rates, as appropriate.