Worsley Inv Ltd Regulatory News (WINV)

AXA Property Trust Ltd - Consolidated Unaudited Financial Statements

PR Newswire

London, October 31

AXA Property Trust Limited

To Company AnnouncementsDate 31 October 2018Company AXA Property Trust LimitedSubject Unaudited Consolidated Financial Statements

Following the announcement made by the Company on 19th October 2018, the Directors are pleased to present the Unaudited Financial Statements for the year ending 30 June 2018, together with abbreviated notes to the financial statements. Audited financial statements will be presented following the completion of the Company’s annual audit for the same period. This will include additional information and may require financial adjustments in order to show a true and fair view.

Key Financial Information (Unaudited)

As at 30 June 2018

For the year ended 30 June 2018

Performance Summary (Unaudited)

The 2018 NAV is presented without any deduction of redemption payments.

Past performance is not a guide to future performance.

1 Mid-market share price (source: Stifel Nicolaus Europe Limited).

2 On a pro-forma basis which includes adjustments to add back any prior NAV reductions from share redemptions.

Source: AXA Investment Managers UK Limited and Stifel Nicolaus Europe Limited

Property Portfolio at 30 June 2018

 1 Source - external independent valuers to the Company, Knight Frank LLP. 

Consolidated Income Statement

For the year ended 30 June 2018 (Unaudited)

The accompanying notes on the following pages form an integral part of these unaudited Financial Statements

Consolidated Statement of Changes in Equity

For the year ended 30 June 2018 (Unaudited)

For the year ended 30 June 2017 (Audited)

The accompanying notes on the following pages form an integral part of these unaudited Financial Statements

Consolidated Statement of Financial Position

For the year ended 30 June 2018 (Unaudited)

The accompanying notes on the following pages form an integral part of these unaudited Financial Statements

Consolidated Statement of Cash Flows

For the year ended 30 June 2018 (Unaudited)

The accompanying notes on the following pages form an integral part of these unaudited Financial Statements

Notes to the Consolidated Financial Statements

For the year ended 30 June 2018 (Unaudited)

1. Operations

AXA Property Trust Limited (the "Company") is a limited liability, closed-ended investment company incorporated in Guernsey. Under its original investment objectives the Company invested in commercial properties in Europe which were held through its subsidiaries. Following shareholder approval in 2013 the Company’s investment objectives changed to a managed wind-down, with the realisation of assets in a prudent manner and the repatriation of sales proceeds to shareholders. The Unaudited Consolidated Financial Statements (the “Financial Statements”) of the Company for the year ended 30 June 2018 comprise the Financial Statements of the Company and its subsidiaries (together referred to as the "Group").

2. Gross rental income

Gross rental income for the year ended 30 June 2018 amounted to £1.31 million (30 June 2017: £1.70 million). The Group leases out its investment property under an operating lease which is structured in accordance with local practices in Italy. The lease benefits from indexation.

Minimum Lease Payments (based on leases in place as at 30 June 2018)

3. General and administrative expenses

Each of the Directors receives a fee of £13,500 (30 June 2017: £13,500) and the Chairman receives a fee of £18,000 (30 June 2017: £18,000). The aggregate remuneration and benefits in kind of the Directors in respect of the Company's year ended 30 June 2018 amounted to £58,500 (30 June 2017: £63,012) in respect of the Company and £73,827 (30 June 2017: £74,282) in respect of the Group.

Investment management fees for the year ending 30 June 2018 include adjustments from previous years. 

4. Net finance cost

5. Basic and diluted loss per Share

The basic and diluted loss per share for the Group is based on the net loss for the year of £4.95 million (30 June 2017: net loss of £0.92 million) and the weighted average number of Ordinary Shares in issue during the year of 24,402,881 (30 June 2017: 48,025,516).

6. Dividends

The Company has suspended dividends from June 2012 in order to prudently manage its cash and debt positions. No dividends were declared or paid during 2015, 2016, 2017 and 2018.

7. Investment properties

The remaining property held by the Company has been valued on the basis of fair value.

In accordance with IFRS accounting standards, the valuation attributed to the property in Curno is before any allowance or deduction of capital gains tax due on sale. The extent of these taxes will depend upon whether the asset is sold directly, in which case full capital gains tax on the chargeable gain is due, or within the existing corporate structure, in which case the extent of the net price adjustment will depend upon commercial negotiations between the Company and the buyer. In either case it is expected the impact will be a reduction in net proceeds.

8. Investment in joint venture

The Group holds a 50% joint venture interest in the equity of the Italian joint venture Property Trust Agnadello S.r.l. which held a logistics warehouse in Agnadello, Italy. In 2017, the property was sold. The remaining 50% equity interest is held by European Added Value Fund S.à r.l., a subsidiary of European Added Value Fund Limited.

The Group’s interest in Property Trust Agnadello S.r.l. is accounted for using the equity method in the Financial Statements, which approximates the lower of its carrying amount and its fair value less cost to sell.

The following table summarises the financial information of Property Trust Agnadello S.r.l. which also reconciles the summarised financial information to the carrying amount of the Group’s interest in the joint venture:

Summarised Consolidated Statement of Financial Position

Summarised Consolidated Income Statement

Summarised Consolidated Statement of Comprehensive Income

9. Trade and other receivables

The carrying values of trade and other receivables are considered to be approximately equal to their fair value.

Rent receivable is non-interest bearing and typically due within 30 days.

10. Trade and other payables

Trade and other payables are non-interest bearing and are normally settled on 30-day terms.

The carrying values of trade and other payables are considered to be approximately equal to their fair value.

11. Provisions

The variation of the provisions for performance fees and wind-down costs are included in the general and administrative expenses, in which wind-down costs are disclosed as “Liquidation costs” (see note 3).

12. Taxation

 The Parent Company is exempt from Guernsey taxation.

13. Share capital

Capital management

The Company’s capital is represented by the Ordinary Shares, revaluation reserves, revenue reserves, hedging reserves, distributable reserves and foreign exchange reserves. The share premium is included in the distributable reserve presented in the Consolidated Statement of Changes in Equity. The capital of the Company is managed in accordance with its investment policy in pursuit of its investment objective. It is not subject to externally imposed capital requirements. The Ordinary shares carry rights regarding dividends, voting, winding-up and redemptions which are detailed in full in the Company’s Memorandum and Articles of Incorporation.

The Company was authorised at the Annual General Meeting (“AGM”) on 8 December 2017 to make market purchases of up to 14.99% of its Ordinary Shares until the conclusion of the next AGM or 31 December 2018, whichever is earlier. Purchases would only be made at prices below the prevailing Net Asset Value of the shares where the Directors believe such purchases would enhance shareholder value. In the Prospectus (issued by the Company on 18 April 2005), the Directors stated their intention to seek annual renewal of this authority. Share buy backs are at the discretion of the Board.

Additionally, pursuant to the AGM which took place on 2 December 2016 (“2016 AGM”), the Directors shall not apply and shall be excluded in relation to the issue of up to an aggregate number of Ordinary Shares as represents less than 10 per cent. of the number of Ordinary Shares admitted to trading on the London Stock Exchange.

The following redemptions of shares have been done under the mechanism for the Redemption of Shares as approved at the EGM held on 27 February 2014:

14. Net asset value per ordinary share

The Net Asset Value per Ordinary Share at 30 June 2018 is based on the net assets attributable to the ordinary shareholders of £10,69 million (30 June 2017: £15.67 million ) and on 23,402,881 (30 June 2017: 23,402,881) ordinary shares in issue at the Consolidated Statement of Financial Position date.

15. Related party transactions

The Directors are responsible for the determination of the Company's investment objective and policy and have overall responsibility for the Group's activities including the review of investment activity and performance.

Mr Hunter, Chairman of the Company is also a Director of the Company’s subsidiaries, Property Trust Luxembourg 1 S.à r.l., Property Trust Luxembourg 2 S.à r.l. and Property Trust Luxembourg 3 S.à r.l. and was able to control the investment policy of the Luxembourg subsidiaries to ensure it conforms with the investment policy of the Company.

Mr Lawson, a Director of the Company is also Chairman of Northern Trust (Guernsey) Limited, the Company’s bankers and member of the same group as the Administrator and Secretary. The total charge to the Consolidated Income Statement during the year in respect of Northern Trust administration fees was £145,000 (30 June 2017: £145,000) of which £nil (30 June 2017: £nil) remained payable at the year end.

Under the Investment Management Agreement, fees are payable to the Investment Manager, Real Estate Adviser and other entities within the AXA Group. These entities are involved in the planning and direction of the Company and Group, as well as controlling aspects of their day to day activity, subject to the overall supervision of the Directors. During the period, fees of £0.24 million (30 June 2017: £0.25 million) were expensed to the Consolidated Income Statement. No transaction fees were expensed in 2018 (30 June 2017: £0.09 million). During the year, a provision for the performance fee was reversed/(increased) by £0.31 million (30 June 2017: £0.58 million). The amount had been provided under the terms of the Investment Management Agreement.

All the above transactions were undertaken at arm’s-length.

16. Commitments

As at 30 June 2018 the Company has no commitments.

17. Subsequent events

These Financial Statements were approved for issuance by the Board on 31 October 2018.

In August 2018 the Board issued a Shareholder Circular (“the Circular”) with proposals and recommendations to:

1. put the Company into voluntarily liquidation in accordance with the Companies Law,

2. appoint Linda Johnson and Ashley Paxton of KPMG Channel Islands Limited as Liquidators, and

3. cancel the admission of its shares to the Official List of the UK Listing Authority and to trading on the Main Market of the London Stock Exchange (the “Proposals”).

The decision to recommend the voluntary liquidation of the Company followed the managed wind-down of the Company which was approved by Shareholders in 2013 through a change in its investment policy and objective with the intention of realising all remaining assets and returning the proceeds to the shareholders in an orderly manner. As a result, there is now only one asset remaining in the portfolio, the property in Curno, Italy. As the managed wind-down has reached an advanced stage, plans for the final winding-up and liquidation were confirmed in an announcement on 22 June 2018 and were subsequently set out in detail in the Circular.

The Circular included a review of the Company’s operating cost structure having regard to the uncertain prospects of achieving a sale of the Curno property and the reducing rental income. As a result of this analysis the Board considered there were significant cost savings that would be achieved.

It was also explained within the Circular that no financial statements of the Company or updated NAV would be prepared for the financial year ended 30 June 2018 or subsequent years once the liquidation was approved. This was re-confirmed on 30 August 2018 when the Company released unaudited financial information for the period ending 30 June 2018. In expectation of the Proposals being approved, the existing auditor to the Company, KPMG Channel Islands Limited, gave notice of their resignation, contingent upon the Proposals being passed by letter dated 5 July 2018.

An EGM was scheduled for 7 September 2018, at which shareholders were due to vote on the Proposals. The EGM took place as scheduled, but it was adjourned until 21 September 2018 following the attendance of representatives of shareholders accounting for approximately 30% of the voting rights who expressed their intention to vote against the Proposals, which required 75% approval of those voting in order to be passed.

The Adjourned EGM took place on 21 September 2018. However, the Proposals were not approved. A single shareholder came to hold a 29.8% interest in the Company prior to the Adjourned EGM. At the Adjourned EGM, the Proposals were supported by shareholders representing 38.3% of the issued shares of the Company, amounting to 56.2% of those voting at the Adjourned EGM. However, the shareholder holding shares representing 29.8% of the Company voted against the Proposals and effectively blocked them as a 75% majority was required.

The Directors have consulted with the shareholder who voted against the Proposals. As indicated in the Company’s announcement issued on 5 October 2018, the shareholder has indicated a wish to present an alternative plan for the continuation of the Company with a different investment policy and objective. The Directors note that any proposal to amend the investment policy and objective of the Company would require shareholder approval.

The Directors believe that such a potential proposal, if put forward, would be a significant change from the Company's current investment policy and objective, which was approved by more than 75% of those Shareholders voting at the EGM in October 2013 and which remains in place. The Board therefore remains committed to continue with the Company's current realisation strategy, in particular with respect to the lease negotiations at Curno and the property’s subsequent disposal. The Company will also continue to make distributions at the earliest opportunity.

At the same time and in view of the fact that plans for the significant cost savings identified in the Circular have been affected whilst the Company remains listed, the Board and its advisors will continue to review the Company’s ongoing operating cost structure to identify and implement expense reductions where possible.

Corporate Information

Directors (All non-executive)C. J. Hunter (Chairman)G. J. FarrellS. C. MonierS. J. LawsonRegistered OfficePO Box 255Trafalgar CourtLes BanquesSt Peter PortGuernsey GY1 3QLChannel IslandsInvestment ManagerAXA Investment Managers UK Limited7 Newgate StreetLondon EC1A 7NXUnited KingdomReal Estate AdviserAXA Real Estate Investment Managers UK Limited155 BishopsgateLondon EC2M 3XJUnited KingdomSponsor and BrokerStifel Nicolaus Europe Limited150 CheapsideLondon EC2V 6ETUnited KingdomAdministrator and SecretaryNorthern Trust International FundAdministration Services (Guernsey) LimitedPO Box 255Trafalgar CourtLes BanquesSt Peter PortGuernsey GY1 3QLChannel IslandsRegistrarComputershare Investor Services (Guernsey) Limited1st FloorTudor HouseLe BordageSt Peter PortGuernsey GY1 1DBChannel IslandsIndependent AuditorKPMG Channel Islands LimitedGlategny Court, Glategny EsplanadeSt Peter PortGuernsey GY1 1WRChannel Islands