GWIK.L Regulatory News (GWIK)

Treveria plc

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

Interim Results for the six months ended 30 June 2014

Treveria plc (AIM: TRV), the German retail focused real estate investment company, today announces its Interim Results for the six months ended 30 June 2014, which will shortly be available on the Company's website www.treveria.com.

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Chairman's statement

Highlights

As described in the last Annual Report and Financial Statements, the Company reached agreements last year with the lenders which should facilitate an orderly realisation of the portfolio. The benefits of the outsourcing arrangements put into effect last year are also now being felt, and significant cost savings are being achieved. 

Portfolio

The Company is focusing efforts on disposing of the assets in Silos G&J. As of June 2014, the two Silos hold ten unsold properties with a net asset value of €19.2m. Additionally, we continue to make progress working closely with lenders in Silo D and F&K to implement the agreed business plans under the restructuring agreements, with view at maximizing sales proceeds and achieve full repayment of the debt facilities out of disposals over time. In both Silos, Treveria remains the 100% beneficial owner of any value remaining in the Silos post the repayment of the debt plus all the costs and fees incurred.

Silos G and J contain some properties under leasehold agreements with a negative operating run rate. The Company has made some progress in containing the issue, by disposing or repositioning these properties, and it will continue to be the focus of attention in the coming months.

Disposal of investment properties

In Silos G and J, two properties were sold during the period, generating gross sales proceeds of €1.8m. Another property notarised for sale is expected to generate additional gross proceeds of €1.8m.

The Company continues to explore a number of unsolicited indications of interest from third parties with regard to the potential acquisition of some or all of Treveria' s portfolio.

Financial results

We report a loss for the period of €2.5m (compared with a loss in the previous full year of €60.4m). As a result of the loss, the total net assets fell from €48.0m in 2013 to €45.5m in 2014. This equals a fall from €0.079 per share to €0.075.

The operating expenses were €1.2m in the period compared with €5.8m in the same period last year, although €2.3m of the reduction is due to the deconsolidation of Silos D and F/K.

Group cash stood at €14.9m at the period-end. Following the distribution paid on 5 September 2014, the Group's cash stood at €5.0m.

Real estate transfer tax

There are no further significant developments to report regarding the Real Estate Transfer Tax (RETT) case. The Company is still awaiting the outcome of the relief procedures and the ruling from the fiscal court in Germany, and is continuing the legal proceedings initiated against two of its former professional advisers.

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, and have 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 Board will seek to return capital to shareholders as and when sufficient liquidity is available, which is largely dependent on the success in completing sales, the implementation of the restructuring agreements, and resolving the RETT issue.

Eitan Milgram

Chairman

29 September 2014

Condensed consolidated statement of comprehensive income

for the six months ended 30 June 2014

Condensed consolidated statement of financial position

as at 30 June 2014

Condensed consolidated statement of changes in equity

for the six months ended 30 June 2014

Condensed consolidated statement of cash flows

for the six months ended 30 June 2014

Notes to the consolidated financial statements

for the six months ended 30 June 2014

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 2012, 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.

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 2012. 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 Directors are of the opinion that the Group is engaged in a single segment of business, being property investment business, in one geographical area, namely Germany. This is consistent with the internal reporting provided to the Board who act chief operating decision-makers and are responsible for allocating resources and assessing performance. Accordingly the Directors consider it no longer appropriate or necessary to report on the results of each Silo.

4. Profit from disposal of investment properties

5. Operating profit

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

Other income

As disclosed in prior year report, Treveria now receives a sales fee following restructuring agreement with Silo D (1.8%), F and K (1.0%) lenders.

6. Finance revenue and expense

7. Income tax

8. Earnings per share

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

9. Net assets per share

10. Investment at fair value through profit and loss

As of 30 June 2014, the Group held €13,000,000 (31 December 2013: €15,500,000) investment at fair value through profit and loss.

Fair values of financial instruments

The fair values of financial assets and financial liabilities that are traded in an active market are based on quoted market prices. For all other financial instruments, the Group determines fair values using other valuation techniques.

For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.

The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:

• Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical instruments;

• Level 2: Inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using; quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques in which all significant inputs are directly or indirectly observable from market data;

• Level 3: Inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation.

Various valuation techniques may be applied in determining the fair value of investments held as level 3 in the fair value hierarchy. The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date.

Valuation models that employ significant unobservable inputs require a higher degree of management judgement and estimation in the determination of fair value. Management judgement and estimation are usually required for the selection of the appropriate valuation model to be used. The Directors consider the most appropriate indication of the fair value of the investments held by Silo D to be the disposal fee due on the expected selling price as per the relevant business plan and the fair value of the investments held by Silos F&K to be the most recent sales negotiations and interests shown from third parties.

Fair value hierarchy - Financial instruments measured at fair value

The table below analyses the underlying investments held by the Group measured at fair value at the reporting date by the level in the fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values recognised in the statement of financial position. All fair value measurements below are recurring. There are no other financial assets or liabilities carried at fair value.

The following table shows a reconciliation of the opening balances to the closing balances for fair value measurements.

IFRS 13, Fair Value Measurement requires disclosure, by class of financial instrument, if the effect of changing one or more inputs to reasonably possible alternative assumptions would result in a significant change to the fair value measurement. The information used in determination of the fair value of Level 3 investments is chosen with reference to the specific underlying circumstances and position of the investee company. On that basis, the Board believes that the impact of changing one or more of the inputs to reasonably possible alternative assumptions would not change the fair value significantly.

Financial instruments not measured at fair value

The carrying value of short-term financial assets and financial liabilities (cash, debtors and creditors) approximate their fair value.

11. Investment property held for disposal

All properties were valued as at 30 June 2014 and 31 December 2013 by the Board of Directors. As of 30 June 2014, the Group held €32,899,000 investment properties in Silo G and Silo J (including adjustment for head leases, note 14). One of these assets has been notarised for sale to third parties with expected gross exit proceeds of €1.80m. The assessed fair value of held for disposal properties as at 31 December 2013 was €36,831,000. Each of the valuations is based on the notarized sales price where applicable and on the expected disposal prices from the ongoing negotiations or planned sales programme in other instances. As a result of the level of judgement used in 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 Statement of Financial Position.

12. Cash and short-term deposits

All the cash and short-term deposits are available for Group use and are not subject to any restrictions.

Treveria Holdings Ltd. a wholly owned subsidiary of Treveria plc has received assessments from the German tax authorities for Real estate Transfer Tax ("RETT") as a result of the acquisition of shares in Treveria Properties S.à r.l. by Treveria Holdings S.à r.l. in 2009. 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 is 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, and has applied to the German fiscal court for a ruling on the matter. The outcome of such legal action and relief procedures is typically hard to predict.

The maximum possible liability for RETT (including late payment fees and interest) is estimated to be €45,392,000. 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 unfavourable outcome in the legal proceedings, this amount is shown as a contingent liability (31 December 2013: €45,392,000) - see note 16. However, the Company continues to make a provision of €1,000,000 to settle amounts which may become payable in relation to the RETT relief procedures.

14. Finance lease obligations

The Group leases certain of its investment properties under finance leases (see note 11).

15. Financial risk management objectives and policies

The Group's principal financial liabilities comprise bank loans, finance leases and trade payables. The main purpose of these financial instruments is to raise finance for the Group's operations. The Group has various financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations. It now also has investments at fair value, following the deconsolidation of Silos D and F&K.

The main risks arising from the Group's financial instruments are credit risk and liquidity risk. The risk management policies employed by the Group to manage these risks are discussed below:

Credit risk

Credit risk arises when a failure by counter parties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the reporting date. In the event of a default by an occupational tenant, the Group will suffer a rental shortfall and may incur additional costs, including legal expenses in maintaining, insuring and re-letting the property until it is re-let. The asset manager monitors the tenants in order to anticipate, and minimise the impact of, defaults by occupational tenants, as well as ensuring that the Group has a diversified tenant base.

The maximum credit risk exposure relating to financial assets is represented by the carrying values as at the reporting date. There are no significant concentrations of credit risk within the Group.

The realisability of the amounts due from subsidiaries in the Company is based on the performance of the underlying subsidiaries.

Liquidity risk

Liquidity risk is the risk an entity will encounter in meeting its obligations associated with financial liabilities. This may arise when the realisation of assets and the maturity of liabilities do not match. An unmatched position potentially enhances profitability, but can also increase the risk of losses. The Group has procedures with the object of minimising such losses such as maintaining sufficient cash and other highly liquid current assets and by having available an adequate amount of committed credit facilities. Cash and cash equivalents are placed with financial institutions on a short-term basis reflecting the Group's desire to maintain a high level of liquidity in order to enable timely completion of investment transactions.

Cash can become trapped within property companies if certain financial tests set out in the Group's bank loan agreements are not met. Cash traps do not represent events of default under the finance documents but there is a risk that cash is retained within the property companies for the payment of interest and other amounts due under the finance documents and cannot be used for other Group purposes.

The table below summarises the maturity profile of the Group's financial liabilities at 30 June 2014 and 31 December 2013 based on contractual undiscounted payments.

Currency risk

There is no significant foreign currency risk as the majority of the assets and liabilities of the Group are maintained in Euro.

Interest rate risk

The Group no longer has interest bearing loans and therefore is not subject to significant interest risk.

Capital management

Following de-consolidation of Silo D and Silo F&K as detailed in prior year reports, the Group no longer has interest bearing loans and the current capital structure of the Group consists of 100% equity. Equity comprises issued capital, reserves and retained earnings as disclosed in the Statement of changes in equity.

16. Contingent Liabilities

As disclosed in more detail in note 13, Treveria Holdings Limited is subject to a contingent liability of up to €45,392,000 (31 December 2013: €45,392,000) for German RETT.

17. Events after the date of the consolidated statement of financial position

The Company paid a distribution of 1.5 Eurocents per share on 5 September 2014, amounting to €9,075,000 in total.

There were no other significant events after the date of the consolidated statement of financial position.