Worsley Inv Ltd Regulatory News (WINV)

15 Mar 2007 12:37

AXA Property Trust Ld15 March 2007 To: Company AnnouncementsDate: 15 March 2007 AXA Property Trust LimitedInterim Report and Accountsfor the six month period ended 31 December 2006 Chairman's Statement Your Company, AXA Property Trust Limited, continues to make good progress inacquiring quality property in accordance with its objectives. As at 31 December2006 AXA Real Estate Investment Managers UK Limited (the "Real Estate Adviser")had completed the purchase of properties in 15 separate locations across Europeat a cost of £99.5 million. The sum of committed funds (completed, contractedand optioned assets) amounted to some £120 million, representing the commitmentof a substantial proportion of the total funds available to AXA Property TrustGroup ("the Group") for investment (including 45% gearing). There are furtherproperties under offer to the value of £28 million and the Group is close tocompleting the investment of its total funds. Over the half year the Real Estate Adviser has examined, through its Europeannetwork of offices, over £3 billion of potential acquisitions, continuing thehighly selective process of constructing a robust portfolio, designed to meetthe objectives of the Company in providing the target income yield and offeringvalue and potential for growth. During the six month period the Group hasacquired £32.4 million of assets and disposed of a 50% share in a single lotindustrial property in Italy. The portfolio is well diversified through differing lot sizes, spread throughcountries and regions within countries, further spread across types of sectorand sub sector, across different types of tenant and lease lengths. As at 31 December 2006, the Group had achieved a net running portfolio yield of7.2%, a gross yield of nearly 8.0%. This can be primarily attributed to the RealEstate Adviser's understanding of local markets. The rental income can beconsidered to be well secured both in terms of duration and well rated tenantcredentials. As the weight of money in the Continental property investmentmarkets has continued to build over the last six months, trading prices haverisen and yields have fallen, providing, in the view of AXA Investment ManagersUK Limited (the "Investment Manager"), strong potential for capital appreciationon the acquired portfolio. Results (See note 1) Overall, the Group has generated a net profit of £3.3 million in the six monthperiod to 31 December 2006. The valuation uplift excluding foreign exchange translation movements during thehalf year was 3.7% on the properties held over the whole six month period. Excluding one-off formation costs incurred as part of the set up and investmentphase, net profit was £3.9 million. Taking into account the valuation gains andone-off costs, Net Asset Value at 31 December 2006 was £97.17 million (97.17pence per ordinary share). The sterling Net Asset Value was affected by currency movements as the equity iscurrently not hedged. The Group has hedged its interest rate exposure on itsborrowing and its foreign currency exposure on its income stream. Dividend The Company has paid dividends relating to the six month period to31 December 2006 of £2.25 million, representing a cumulative annualised dividendyield of 4.5% of the issue price. This is slightly below the distribution targetin the Company's prospectus of around 5.0%. The lower dividend yield reflectsthe impact of one-off costs incurred as the Company moves towards fullinvestment without the benefit as yet of a fully-invested income stream. Once fully invested, I believe the outlook for future dividends is positive asthe Group benefits from the attractive income yields on the property investmentsalready completed, as well as potential future indexation and rental growth. Prospects I believe the fundamentals of Continental European property markets are strongand continue to attract flows of global capital. The powerful German economy is showing some growth and interest rates are low.In contrast, the UK commercial property market is widely viewed as having peakedin the final quarter of 2006. I believe these conditions enhance the prospects for the Group's wellconstructed portfolio. Acquisition of stock in the market is becoming morecompetitive but the Real Estate Adviser's established presence in local marketsgives the Group a clear edge. With the potential for value enhancement of theexisting portfolio through active portfolio management, coupled with a soundincome base and a good market background, I am enthusiastic about the future ofyour Company. Charles Hunter Chairman 13 March 2007 Note 1 Past performance is not a guide to future returns. Investment Manager's Report Investment Manager AXA Investment Managers UK Limited (the "Investment Manager") is the UKsubsidiary of AXA Investment Managers, a dedicated asset manager within the AXAGroup. AXA Investment Managers is an innovative and fast-growing multi-expertiseinvestment manager with €847 million of revenues, €485 billion of assets undermanagement and 2,600 employees in 18 countries as at 31 December 2006. AXA Real Estate Investment Managers UK (the "Real Estate Adviser") is part ofAXA REIM, which is a fully owned subsidiary of AXA Investment Managers. AXA REIMis a specialist in European real estate investment management with approximately€35 billion of real estate assets under management in 15 European countries asat 31 December 2006, of which AXA REIM UK manages approximately €10.5 billion. Real Estate Market For the reporting period to 31 December 2006 most real estate markets acrossEurope have shown significantly positive performance. This was largely driven byprice growth, resulting from increased competition for stock as investor demandfor real estate escalated. Looking ahead, we expect rental growth in 2007 to further improve, as occupierdemand increases on the back of the improving European economy and supplycontinues to lag behind. The European investment market remains buoyant, withstrong inflows of debt and equity into real estate likely to drive furthercapital growth. Retail The second half of 2006 saw an upturn in consumer demand, with householdconsumption and retail sales growth improving across European markets. We expectthis growth to continue over the short to medium term in selected WesternEuropean countries, particularly Germany and France. Tenant demand isincreasingly focusing on good quality property and regional centres includingthe larger shopping centres. Office Demand for offices is expected to remain mainly positive, with supply risingonly modestly in most locations, the exceptions being Copenhagen, Central Europeand Spain. Rental growth is expected across most regions. Industrial In line with the improving European economy, the second half of 2006 sawincreased demand for industrial real estate, particularly for distributionwarehouses. We expect this to continue and this will increasingly translate intogreater demand for industrial investments within investors' property portfolios. Investment Activity During the reporting period, the Real Estate Adviser reviewed information onover £3 billion of property in the industrial, office, retail and leisuresectors in countries across Continental Europe and the UK. By 31 December 2006the Group had completed 15 real estate purchases valued at £100.1 million, witha further £17.2 million (including acquisition costs) worth of assets contractedand £3.4 million under option. The portfolio as at 31 December 2006 was acquired at a price of £104.9 millionplus acquisition costs of £4.7 million, giving a gross purchase price of £99.5million (after accounting for the disposal of 50% of Agnadello (£10.1 million)).The portfolio was independently valued at £100.1 million as at 31 December 2006. The Board approved an increase in gearing from 35% to 45% which gives a newtotal fund size of £160 million. With £120 million of investments alreadycompleted, contracted or under option, £40 million remains to invest, of which£28 million is already under offer. Property Portfolio at 31 December 2006 Property Country Sector Market Current Current % of total value gross net assets rental rental yield1 yield2 £'000s (less current liabilities)PhoenixCentre, Furth Germany Retail 18,293 7.66% 6.86% 15.3%Via LegaLombarda,Curno Italy Leisure 12,465 6.98% 6.50% 10.4% SS Bergamina,Agnadello Italy Industrial 10,140 7.67% 7.21% 8.4% Am Birkfeld,Dasing Germany Industrial 7,560 8.78% 8.12% 6.3% Smakterweg,Venray Netherlands Industrial 7,344 9.49% 8.36% 6.1% Bahnhofstrasse,Karben Germany Retail 7,034 7.61% 6.78% 5.9% RudnitzerChaussee,Bernau Germany Retail 6,805 9.81% 8.76% 5.7% Keyser Center,Antwerp Belgium Retail 5,781 7.62% 7.15% 4.8% NurnbergerStrasse,Treuchtlingen Germany Retail 5,323 7.80% 6.99% 4.4% FrankfurterStrasse,Wurzburg Germany Retail 4,110 7.75% 6.84% 3.4% Burgermeister-Hess-Strasse,Muhldorf amInn Germany Retail 3,942 7.90% 6.93% 3.3% LandshuterStrasse,Moosburg Germany Retail 3,504 8.05% 7.23% 2.9% EppingerStrasse,Kraichtal Germany Retail 3,213 7.77% 6.89% 2.7% DieWeidenbach,Altenstadt-Lindheim Germany Retail 2,863 7.80% 6.92% 2.4% BraunschweigerStrasse,Berlin Germany Retail 1,758 7.84% 6.73% 1.5% Total propertyportfolio 100,135 7.95% 7.20% 83.5% Other noncurrent assetsand netcurrent assets 19,795 16.5% Total assetsless currentliabilities 119,930 100% Note 1: Gross rental yield excludes property and acquisition costs. Note 2: Net rental yield includes acquisition costs and an estimated 5% of grossrent as property operating costs. Note 3: Note 2 to the Financial Statements lists those assets acquired after 31December 2006. Source: AXA Investment Managers UK Limited Geographic Analysis at 31 December 2006 by market value Germany 64%Italy 23%Netherlands 7%Belgium 6% Within Germany, the portfolio's regional profile was 66% of German assets inBavaria, 20% in Hessia,11% in Brandenburg and 3% in Berlin. Sector Distribution at 31 December 2006 by market value Retail 69%Industrial 21%Leisure 10% Source: AXA Investment Managers UK Limited Covenant Strength Analysis at 31 December 2006 Grade A 61.9% Nationally and internationally recognised companiesGrade B 18.5% Regionally recognised companiesGrade C 19.0% Locally recognised companiesVacant 0.6% Calculated using market rent The Group's covenant profile is strong, with the majority of tenants rated GradeA or B. The weighted average effective unexpired lease length for completedtransactions as at 31 December 2006 was 7.9 years (5.7 years at 30 June 2006).Rental income from Grade A covenants represents 61.9% of income and has aweighted average unexpired lease length of 9.2 years. Vacant space in theportfolio as at 31 December 2006, measured using market rent, represented 0.6%of the total gross rental income. Financing The Company continues to draw down its five year loan facility denominated inEuros and will increase gearing to 45% of the value of the Group's propertyportfolio to bring the total investible size to approximately £160 million(after estimated acquisition costs). The interest rate risk is hedged viainterest rate swaps for four years and interest rate caps in the fifth year. In the quarter to 31 March 2007, cross currency swaps were executed to hedge 80%of Euro cash flow over the next five years. 20% of cash flow remains floating toprovide flexibility reflecting the potential variability of cash flow. The Board has opted not to hedge the net investment in Euros ("Euro equity") atthis stage. The status of interest rate, currency and equity hedging is regularly reviewedby the Investment Manager to adjust for variables such as property valuationsand predicted cash flows. Outlook The modest increase in the Company's gearing will allow the Company to makefurther investment across Europe and thereby benefit from anticipated capitalgrowth. Independent Review Report Independent review report of KPMG Channel Islands Limited to AXA Property TrustLimited on the Interim Financial Statements for the six month period ended 31December 2006 Introduction We have been engaged by the Company to review the financial information set outon pages 10 to 18 and we have read the other information contained in thisinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. This report is made solely to the Company in accordance with the terms of ourengagement contained within our engagement letter dated 26 January 2007. Ourreview has been undertaken so that we might state to the Company those matterswe are required to state to it in this review report and for no other purposes.To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the Company for our review work, for thisreview report, or for the conclusions wehave reached. Directors' Responsibilities This Interim Report, including the financial information contained therein, isthe responsibility of and has been approved by the Directors. The Directors areresponsible for preparing this Consolidated Interim Report ensuring that theaccounting policies and presentation applied to the interim figures areconsistent with those applied in preparing the preceding period financialstatements except where any changes, and the reasons for them, are disclosed. The accounting policies that have been adopted in preparing the financialinformation are consistent with those that the Directors currently intend to usein the next annual financial statements. There is, however, a possibility thatthe Directors may determine that some changes to these policies are necessarywhen preparing the full financial statements. Review Work Performed We have reviewed the accompanying Consolidated Statement of Assets andLiabilities of AXA Property Trust Limited at 31 December 2006, and the relatedConsolidated Statements of Income, Changes in Equity and Cash Flows for theperiod then ended. We conducted our review in accordance with the guidance contained in Bulletin1999/4 "Review of interim financial information" issued by the AuditingPractices Board. A review consists principally of making enquiries of managementand applying analytical procedures to the financial information and underlyingdata and based thereon, assessing whether the accounting policies and have beenconsistently applied unless otherwise disclosed. A review is substantially lessin scope than an audit performed in accordance with Auditing Standards andtherefore provides a lower level of assurance than an audit. Accordingly, we donot express an audit opinion on the financial information. Review Conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the period ended 31December 2006. KPMG Channel Islands Limited Guernsey 13 March 2007 Consolidated Income Statement (Unaudited) For the period from 1 July 2006 to 31 December 2006 ----------------------------- ------ ----------- ------------ 1 July 2006 to 5 April 2005 to 31 December 2006 31 December 2005 ----------------------------- ------ ----------- ------------ Note Group Group £000s £000s ----------------------------- ------ ----------- ------------ ------ ----------- ------------Gross rental income 3,435 116----------------------------- ------ ----------- ------------Service charge income 244 ------------------------------ ------ ----------- ------------Property operating expenses (458) ------------------------------ ------ ----------- ------------Net rental and related income 3,221 116----------------------------- ------ ----------- ------------Net interest income from certificatesof deposit and bank deposits 56 2,728----------------------------- ------ ----------- ------------Other (28) ------------------------------ ------ ----------- ------------Foreign exchange gains 16 ------------------------------ ------ ----------- ------------Net investment income 44 2,728----------------------------- ------ ----------- ------------Valuation gains on investmentproperties 2,766 ------------------------------ ------ ----------- ------------Valuation losses on investmentproperties (404) (330)----------------------------- ------ ----------- ------------Net valuation gains on investmentproperty 2,362 (330)----------------------------- ------ ----------- ------------Formation expenses (115) (1,061)----------------------------- ------ ----------- ------------Investment management fees (414) ------------------------------ ------ ----------- ------------Administrative expenses 3 (1,071) (246)----------------------------- ------ ----------- ------------Total expenses (1,600) (1,307)----------------------------- ------ ----------- ------------Other income 5 10----------------------------- ---- ----------- ------------Net operating profit before netfinancing income 4,032 1,217----------------------------- ----- ----------- ------------Profit before tax 4,032 1,217----------------------------- ------ ----------- ------------Income tax expense (686) (1)----------------------------- ------ ----------- ------------Profit for the period 3,346 1,216----------------------------- ------ ----------- ------------Basic and diluted profit per OrdinaryShare (pence) 3.35 1.22----------------------------- ------ ----------- ------------ Consolidated Statement of Changes in Equity (Unaudited) For the period from 1 July 2006 to 31 December 2006 Revaluation Revenue Distributable Foreign Total reserve reserve reserve exchange reserve £000s £000s £000s £000s £000sBalance at 1July 2006 287 - 98,137 446 98,870 Movements duringthe period Net unrealisedgain onrevaluation ofproperties 2,362 - - - 2,362 Net profit forthe period - 984 - - 984 Fair value ofeffectiveportion ofhedges 109 - - - 109 Other reserve - 39 - - 39 Dividends paid - (1,023) (1,677) - (2,700) Foreignexchangetranslationlosses - - - (2,492) (2,492) Balance at 31December 2006 2,758 - 96,460 (2,046) 97,172 For the period from 5 April 2005 to 31 December 2005 Share Revenue Distributable Foreign Total premium reserve reserve exchange reserve £000s £000s £000s £000s £000sBalance at 5 - - - - -April 2005 Movements duringthe period Share premiumon issue 100,000 - - - 100,000 Cancellationof sharepremium (100,000) - 100,000 - - Placing fees - - (981) - (981) Net unrealisedgain onrevaluation ofproperties - (330) - - (330) Net profit forthe period - 1,546 - - 1,546 Dividends paid - (1,216) (334) - (1,550) Foreignexchangetranslationlosses - - - 78 78 Balance at 31December 2005 - - 98,685 78 98,763 Consolidated Statement of Assets and Liabilities (Unaudited) As at 31 December 2006 -------------------- --------- ---------- ----------- ----------- Note 31 December 2006 31 December 2005 30 June 2006 Group Group Group £000s £000s £000s -------------------- --------- ---------- ----------- -----------Non-current assets-------------------- --------- ---------- ----------- -----------Investmentproperties 5 100,135 33,860 77,442-------------------- --------- ---------- ----------- -----------Non-currentreceivable 7 10,850 - --------------------- --------- ---------- ----------- -----------Derivativefinancialinstruments 109 - --------------------- --------- ---------- ----------- -----------Goodwill 1,268 - --------------------- --------- ---------- ----------- -----------Other assets 319 21 347-------------------- --------- ---------- ----------- -----------Deferred taxassets 589 - 349-------------------- --------- ---------- ----------- -----------Current assets-------------------- --------- ---------- ----------- -----------Cash and cashequivalents 5,939 5,119 22,077-------------------- --------- ---------- ----------- -----------Short terminvestments - 82,747 --------------------- --------- ---------- ----------- -----------Trade and otherreceivables 8 4,259 1,595 6,095-------------------- --------- ---------- ----------- -----------Total assets 123,468 123,342 106,310-------------------- --------- ---------- ----------- ----------- -------------------- --------- ---------- ----------- -----------Current liabilities-------------------- --------- ---------- ----------- -----------Trade and otherpayables 9 3,538 24,579 7,075-------------------- --------- ---------- ----------- -----------Non-currentliabilities --------- ---------- ----------- -------------------------------Deferred taxliability 3,893 - 365-------------------- --------- ---------- ----------- -----------Long term loan 18,865 - --------------------- --------- ---------- ----------- -----------Total liabilities 26,296 24,579 7,440-------------------- --------- ---------- ----------- -----------Net assets 97,172 98,763 98,870-------------------- --------- ---------- ----------- ----------- -------------------- --------- ---------- ----------- -----------Equity-------------------- --------- ---------- ----------- -----------Share capital - - --------------------- --------- ---------- ----------- -----------Reserves 97,172 98,763 98,870-------------------- --------- ---------- ----------- -----------Total equity 97,172 98,763 98,870-------------------- --------- ---------- ----------- ----------- -------------------- --------- ---------- ----------- -----------Number of OrdinaryShares 100,000 100,000 100,000-------------------- --------- ---------- ----------- -----------Net Asset Valueper Ordinary Share(pence) 97.17 98.76 98.87-------------------- --------- ---------- ----------- ----------- Consolidated Statement of Cash Flows (Unaudited) For the period from 1 July 2006 to 31 December 2006 ----------------------------------- ---------- ----------- 1 July 2006 to 5 April 2005 to 31 December 2006 31 December 2005 Group Group £000s £000s ----------------------------------- ---------- ----------- Operating activities----------------------------------- ---------- -----------Profit before tax 4,032 1,217----------------------------------- ---------- -----------Adjustments for:----------------------------------- ---------- -----------Unrealised (gain)/loss on revaluation ofinvestment property (2,362) 327----------------------------------- ---------- -----------(Increase)/decrease in trade and otherreceivables 1,954 (73)----------------------------------- ---------- -----------Increase in trade and other payables 3,908 1,693----------------------------------- ---------- -----------Investment income (220) (1,468)----------------------------------- ---------- -----------Bank interest 165 (55)----------------------------------- ---------- -----------Other 45 2----------------------------------- ---------- -----------Net cash inflow from operatingactivities 7,522 1,643----------------------------------- ---------- ----------- ----------------------------------- ---------- -----------Investing activities----------------------------------- ---------- -----------Interest paid (45) ------------------------------------ ---------- -----------Interest received 192 ------------------------------------ ---------- -----------Tax paid (654) ------------------------------------ ---------- -----------Acquisition of investment properties (28,293) (11,321)----------------------------------- ---------- -----------Proceeds from disposal of subsidiaries 1,585 ------------------------------------ ---------- -----------Acquisition of property, plant andequipment - (3)----------------------------------- ---------- -----------Loan receivables (10,850) ------------------------------------ ---------- -----------Goodwill (1,268) ------------------------------------ ---------- -----------Acquisition of certificates of deposits - (152,000)----------------------------------- ---------- -----------Proceeds from sale of certificates ofdeposit - 69,250----------------------------------- ---------- -----------Net cash outflow from investingactivities (39,333) (94,074)----------------------------------- ---------- ----------- ----------------------------------- ---------- -----------Financing activities----------------------------------- ---------- -----------Proceeds from the issue of shares - 100,000----------------------------------- ---------- -----------Calyon loan facility 18,865 ------------------------------------ ---------- -----------Issue costs - (981)----------------------------------- ---------- -----------Dividends paid (2,700) (1,550)----------------------------------- ---------- -----------Net cash inflow from financingactivities 16,165 97,469----------------------------------- ---------- ----------- ----------------------------------- ---------- -----------Effect of exchange rate fluctuations oncash held (492) 81----------------------------------- ---------- -----------(Decrease)/increase in cash and cashequivalents (16,138) 5,119----------------------------------- ---------- -----------Cash and cash equivalents at start ofperiod 22,077 ------------------------------------ ---------- -----------Cash and cash equivalents at 31 December2006 5,939 5,119----------------------------------- ---------- ----------- Notes to the Unaudited Financial Statements For the period 1 July 2006 to 31 December 2006 1. Operations AXA Property Trust Limited (the "Company") is a limited liability, closed-endedinvestment company incorporated in Guernsey. The Company invests in commercialproperties in Europe which are held through its subsidiaries. The interimConsolidated Financial Statements of the Company for the six month period ended31 December 2006 comprise the financial statements of the Company and itssubsidiaries (together referred to as the "Group"). 2. Principle Accounting Policies (a) Statement of compliance The Interim Consolidated Financial Statements have been prepared in accordancewith International Financial Reporting Standards ('IFRS') issued by, or adoptedby, the International Accounting Standards Board (the 'IASB'), interpretationsissued by the International Financial Reporting Standards Committee, applicablelegal and regulatory requirements of Guernsey Law and the Listing Rules of theUK Listing Authority. (b) Basis of preparation The same accounting policies and methods of computation have been applied to theInterim Consolidated Financial Statements as in the annual financial statementsat 30 June 2006, except for accounting policies developed in relation to newitems in the current period. These new policies are detailed below and areintended for use in future financial statements of the Group. (c) Basis of consolidation of Joint Ventures The Group's interests in jointly controlled entities are accounted for byproportionate consolidation. The Group combines its share of the Joint Ventures'individual income and expenses, assets and liabilities and cash flows on aline-by-line basis with similar items in the Group's financial statements. TheGroup recognises the portion of gains or losses on the sale of assets by theGroup to the Joint Venture. The Group does not recognise its share of profits orlosses from the Joint Venture that result from the Group's purchase of assetsfrom the Joint Venture until it resells the assets to an independent party.However, a loss on the transaction is recognised immediately if the lossprovides evidence of a reduction in the net realisable value of current assets,or an impairment loss. (d) Goodwill Goodwill arising on the acquisition of a subsidiary or a jointly controlledentity represents the excess of the cost of acquisition over the Group'sinterest in the net fair value of the identifiable assets, liabilities andcontingent liabilities of the subsidiary or jointly controlled entity recognisedat the date of acquisition. Goodwill is initially recognised as an asset at costand is subsequently measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to each of theGroup's cash-generating units expected to benefit from the synergies of thecombination. Cash-generating units to which goodwill has been allocated aretested for impairment annually, or more frequently when there is an indicationthat the unit may be impaired. If the recoverable amount of the cash-generatingunit is less than the carrying amount of the unit, the impairment loss isallocated first to reduce the carrying amount of any goodwill allocated to theunit and then to the other assets of the unit pro-rata on the basis of thecarrying amount of each asset in the unit. An impairment loss recognised forgoodwill is not reversed in a subsequent period. (e) Hedge accounting The Group designates certain hedging instruments, which include derivatives,embedded derivatives and non-derivatives in respect of foreign currency andinterest rate risk, as either fair value hedges, cash flow hedges, or hedges ofnet investments in foreign operations. Hedges of foreign exchange risk on firmcommitments are accounted for as cash flow hedges. At the inception of the hedge relationship the entity documents the relationshipbetween the hedging instrument and hedged item, along with its risk managementobjectives and its strategy for undertaking various hedge transactions.Furthermore, at the inception of the hedge and on an ongoing basis, the Groupdocuments whether the hedging instrument that is used in a hedging relationshipis highly effective in offsetting changes in fair values or cash flows of thehedged item. Movements in the hedging reserve in equity are detailed in thestatement of changes in equity. Fair value hedge Changes in the fair value of derivatives that are designated and qualify as fairvalue hedges are recorded in profit or loss immediately, together with anychanges in the fair value of the hedged item that is attributable to the hedgedrisk. Hedge accounting is discontinued when the Group revokes the hedgingrelationship, the hedging instrument expires or is sold, terminated, orexercised, or no longer qualifies for hedge accounting. The adjustment to thecarrying amount of the hedged item arising from the hedged risk is recognised inprofit or loss from that date. Cash flow hedge The effective portion of changes in the fair value of derivatives that aredesignated and qualify as cash flow hedges are deferred in equity. The gain orloss relating to the ineffective portion is recognised immediately in profit orloss as part of other expenses or other income. Amounts deferred in equity arerecycled in profit or loss in the periods when the hedged item is recognised inprofit or loss. However, when the forecast transaction that is hedged results inthe recognition of a non-financial asset or a non-financial liability, the gainsand losses previously deferred in equity are transferred from equity andincluded in the initial measurement of the cost of the asset or liability. Hedgeaccounting is discontinued when the Group revokes the hedging relationship, thehedging instrument expires or is sold, terminated, or exercised, or no longerqualifies for hedge accounting. Any cumulative gain or loss deferred in equityat that time remains in equity and is recognised when the forecast transactionis ultimately recognised in profit or loss. When a forecast transaction is nolonger expected to occur, the cumulative gain or loss that was deferred inequity is recognised immediately in profit or loss. 3. Administrative Expenses and Directors' Fees ------------------------------ ------------ ------------ 1 July 2006 to 5 April 2005 to 31 December 2006 31 December 2005 ------------------------------ ------------ ------------ Group Group ------------------------------ ------------ ------------ £000s £000s ------------------------------ ------------ ------------Directors' fees 47 48------------------------------ ------------ ------------Administration fees 92 51------------------------------ ------------ ------------Audit fees 174 34------------------------------ ------------ ------------Acquisition costs 168 ------------------------------- ------------ ------------Legal and professional fees 228 73------------------------------ ------------ ------------General Expenses 362 40------------------------------ ------------ ------------ Total 1,071 246 ------------------------------ ------------ ------------ Each of the Directors of the Company receives a fee of £15,000 per annum fromthe Company. The Chairman receives a fee of £20,000 per annum. The aggregateremuneration and benefits in kind of the Directors in respect of the periodending 31 December 2006 amounted to £40,000 in respect of the Company and£46,773 in respect of the Group. 4. Dividends ---------------- ----------- ------- ------------ ------------ No. of Ordinary Rate 1 July 2006 to 1 April 2005 to shares pence 31 December 31 December 2006 2005 Group Group £000s £000s ---------------- ----------- ------- ------------ ------------Dividend paid25 August 2005 100,000 0.45 - 450---------------- ----------- ------- ------------ ------------Dividend paid30 November2005 100,000 1.10 - 1,100---------------- ----------- ------- ------------ ------------Dividend paid4 September2006 100,000 1.45 1,450 ----------------- ----------- ------- ------------ ------------Dividend paid15 December2006 100,000 1.25 1,250 ----------------- ----------- ------- ------------ ------------ Total 2,700 1,550 ---------------- ----------- ------- ------------ ------------ A further dividend of £1,000,000 (1.00 pence per share) was approved by theBoard of Directors on 8 February 2007. The ex-dividend date was 14 February 2007and the payment date was 28 February 2007. 5. Investment Properties ------------------------- ----------- ----------- -------- 31 December 2006 31 December 2005 30 June 2006 Group Group Group £000s £000s £000s ------------------------- ----------- ----------- --------Cost of investmentproperties at beginningof period 77,152 - -------------------------- ----------- ----------- --------Additions during theperiod at cost 32,447 34,190 77,152------------------------- ----------- ----------- --------Disposal proceeds duringthe period (10,140) - -------------------------- ----------- ----------- --------Cost of investmentproperties at end ofperiod 99,459 34,190 77,152------------------------- ----------- ----------- --------Unrealised profit 2,645 (330) 287------------------------- ----------- ----------- --------Foreign exchangetranslation (1,969) - 3------------------------- ----------- ----------- --------Total market value ofinvestment properties atend of period 100,135 33,860 77,442------------------------- ----------- ----------- -------- 6. Joint Ventures On 16 October 2006 the Group disposed of 50% of the equity in the Italiansubsidiary Property Trust Agnadello s.r.l. which holds a logistics warehouse inAgnadello, Italy. The equity was acquired by European Added Value Fund Sarl, asubsidiary of European Added Value Fund Limited ("EAVF"). The Manager of EAVF isPartnership Incorporations Limited, which has appointed AXA Real EstateInvestment Managers UK Limited to act as Real Estate Adviser to the EAVF. Thetransaction was at arms length, at no gain or loss and the sale pricerepresented market value. The underlying property value was confirmed by KnightFrank LLP, independent valuers to the Company. The Group continues to hold a 50% share of the Joint Venture, with equivalentvoting power in the entity at 31 December 2006. The Group is entitled to aproportionate share of the rental income received and bears a proportionateshare of the outgoings. 7. Non-Current Receivables ------------------------- ----------- ----------- ---------- 31 December 31 December 30 June 2006 2005 2006 Group Group Group £000s £000s £000s ------------------------- ----------- ----------- ----------Loans receivable from Joint Ventureparty ----------- ----------- -----------------------------------Back to back loan 8,700 - -------------------------- ----------- ----------- ----------VAT loan 2,150 - -------------------------- ----------- ----------- ---------- Total 10,850 - - ------------------------- ----------- ----------- ---------- 8. Trade and Other Receivables -------------------------- ----------- ----------- -------- 31 December 2006 31 December 2005 30 June 2006 -------------------------- ----------- ----------- -------- Group Group Group -------------------------- ----------- ----------- -------- £000s £000s £000s -------------------------- ----------- ----------- --------VAT receivable 2,610 41 4,291-------------------------- ----------- ----------- --------Rent receivable 457 21 617-------------------------- ----------- ----------- --------Prepayments 279 11 203-------------------------- ----------- ----------- --------Other receivables 856 - 938-------------------------- ----------- ----------- --------Accrued income 57 1,522 46-------------------------- ----------- ----------- -------- Total 4,259 1,595 6,095 -------------------------- ----------- ----------- -------- 9. Trade and Other Payables -------------------------- ----------- ----------- -------- 31 December 2006 31 December 2005 30 June 2006 Group Group Group £000s £000s £000s -------------------------- ----------- ----------- --------Property acquisitioncosts 1,037 760 2,413-------------------------- ----------- ----------- --------Investment Manager fee 588 10 225-------------------------- ----------- ----------- --------Other 563 57 195-------------------------- ----------- ----------- --------VAT payable 502 - 154-------------------------- ----------- ----------- --------Audit fee 252 34 168-------------------------- ----------- ----------- --------Legal and professionalfees 209 - 207-------------------------- ----------- ----------- --------Tax 120 917 25-------------------------- ----------- ----------- --------Interest payable onCalyon loan 120 - --------------------------- ----------- ----------- --------Administration andcompany secretarial fees 102 34 9-------------------------- ----------- ----------- --------Amounts due on completionof property purchasecontracts 41 22,128 3,116-------------------------- ----------- ----------- --------Directors' fees 4 20 8-------------------------- ----------- ----------- --------Initial expenses - 467 370-------------------------- ----------- ----------- --------Rent prepaid - 152 185-------------------------- ----------- ----------- -------- Total 3,538 24,579 7,075 -------------------------- ----------- ----------- -------- 10. Related Party Transactions Mr Farrell, a director of the Company, is also a partner of Ozannes, theGuernsey legal advisers to the Company. The total charge to the Income Statementduring the period in respect of Ozannes legal fees was £2,230 which was settledin full during the period. Mr Marren, a director of the Company, is also a director of Northern TrustInternational Fund Administration Services (Guernsey) Limited ("NorthernTrust"), the Administrator, Secretary and Registrar for the Company. The totaladministration fees charged to the Income Statement in respect of Northern Trustadministration fees was £82,179 for the period, of which £51,504 remainedpayable at the period end. 11. Post Balance Sheet Events (a) Between 14 February and 5 March 2007 the Company entered into three crosscurrency swaps with National Australia Bank Limited to hedge quarterly Euro toSterling cash flows of £12.2 million (€18.0 million) in total over the next fiveyears. (b) Following the disposal of 50% of the Group's shareholding in Property TrustAgnadello s.r.l. on 16 October 2006, the refinancing of the company wascompleted on 3 January 2007. Property Trust Agnadello s.r.l. drew down £15.8million (€23.5 million) in long term loans from Calyon which was used inconjunction with surplus cash to repay £16.3 million (€24.3 million) of internalloans. The £15.8 million loan comprised a five year facility of €18.0 millionplus a three year VAT loan of €5.5 million. Of the remaining £5.3 million (€7.9million) internal loan, half was assigned to the Joint Venture partner, EuropeanAdded Value Fund Limited Partnership. (c) The Group acquired the following real estate assets after the balance sheetdate, financed through internal loansof cash held by the Company: Location Sector Acquiring entity Acquisition Consideration date £000sKraichtal,Germany Vacant site Property Trust Kraichtal 31 January 79 for Sarl 2007 construction of retail outletDresden,Germany Retail - Car Property Trust Investment 4 28 February 1,927 showroom Sarl (renamed Property Trust 2007 Dresden Sarl on 27 February 2007) Kothen, Retail - DIY Property Trust Investment 5 28 February 2,637Germany Sarl (renamed Property Trust 2007 Kothen Sarl on 27 February 2007) 12. Contingent Liabilities (a) Acquisitions of a further two real estate assets were contracted prior tothe year end. The transactions are expected to be completed on payment of thepurchase prices as follows: £7,304,000 (€10,800,000) for a retail property in Montabaur-Heiligenroth,Germany (completion estimated 30 March 2007); and £3,840,000 (€5,678,000) for a retail property in Berlin (completion estimated 31May 2007). On successful completion of these contracts, the Group will be liable to payfees to property agents amounting to approximately £232,000 (€344,000). (b) The retail outlet at Kraichtal in Germany referred to in Note 11 is to beconstructed by the tenant. On completion (estimated 31 May 2007), the Group willbe liable to acquire the new building for an estimated consideration of £338,000(€500,000). Corporate Information: Directors (All non-executive) C. J. Hunter (Chairman)G. J. FarrellR. G. RayJ. M. MarrenS. C. Monier Registered OfficeTrafalgar CourtLes BanquesSt Peter PortGuernsey GY1 3QLChannel Islands Investment ManagerAXA Investment Managers UK Limited7 Newgate StreetLondon EC1A 7NXUnited Kingdom Real Estate AdviserAXA Real Estate Investment Managers UK Limited7 Newgate StreetLondon EC1A 7NXUnited Kingdom Sponsor and BrokerUBS Limited1 Finsbury AvenueLondon EC2M 2PPUnited Kingdom Administrator, Secretary and RegistrarNorthern Trust International FundAdministration Services (Guernsey) LimitedP.O. Box 255Trafalgar CourtLes BanquesSt Peter PortGuernsey GY1 3QLChannel Islands Auditor KPMG Channel Islands Limited20 New StreetGuernsey GY1 4AN All Enquiries:The Company SecretaryNorthern Trust International Fund Administration Services (Guernsey) LimitedTrafalgar CourtLes BanquesSt Peter PortGuernseyGY1 3QL Tel: 01481 745529Fax: 01481 745085 This information is provided by RNS The company news service from the London Stock Exchange