AXA PROPERTY TRUST
LIMITED
LEI: 213800AF85VEZMDMF931
(Classified Regulated Information, under DTR 6 Annex 1 section
1.2)
Key Financial Information
As at 31
December 2017
- Sterling currency Net Asset
Value (“NAV”) was £14.9 million (30 June
2017: £15.7 million)
- NAV was 63.69 pence per share (30
June 2017: 66.94 pence)
- Share price1 was
57.88 pence per share (30 June 2017: 61.25
pence per share)
For the six months ended 31 December 2017
- Loss was 4.24 pence per share (31
December 2016: loss was 0.58
pence per share)
- No dividends or redemptions of
shares were paid during the period (31
December 2016: none)
1 Mid market share price (source: Stifel Nicolaus
Europe Limited).
Performance Summary
|
Six months
ended
31 December 2017 |
Year ended
30 June
2017 |
% change |
NAV (£000s) |
14,906 |
15,665 |
(4.8)% |
NAV per share |
63.69p |
66.94p |
(4.8)% |
Loss per share |
(4.24)p |
(1.92)p |
(120)% |
Share redemptions paid |
- |
£24.0m |
n/a |
Share price1 |
57.88p |
61.25p |
(5.5)% |
Share price discount to NAV |
9.1% |
8.5% |
n/a |
Total assets less current
liabilities (£000s)2 |
15,171 |
16,164 |
(6.1)% |
Total
return |
Six
month period
31 December 2017 |
Six
month period
31 December 2016 |
NAV Total
Return3 |
(4.8)% |
2.6% |
Share price Total
Return |
|
|
- AXA Property
Trust |
(5.5)% |
12.5% |
- FTSE All Share
Index |
6.8% |
12.0% |
- FTSE Real Estate
Investment Trust Index |
8.6% |
5.4% |
Past performance is not a guide to
future performance.
1 Mid-market share price (source: Stifel Nicolaus
Europe Limited).
2 Includes bank debt classified as a current
liability.
3 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
Chairman’s Statement
AXA Property Trust Limited’s (the “ Company”) remaining property
holding is a multiplex cinema near Bergamo in Northern Italy. Its value, fundamentally, lies
in a contracted rent flow of €1.5 million p.a payable by UCI Italy
Ltd for a remaining 7 year term, plus the reversionary value at the
end of that term. The independent valuation as at December 2017 was €13.2 million but a thorough
marketing campaign over some years has not elicited any sustained
interest at all from buyers. As the Investment Managers report the
prospects of an open market sale are weaker and there is the
prospect of a lease renegotiation with the tenant. The
outturn may have an impact on valuation. Any liquidation of the
asset is likely, therefore, to take a considerable time and the
Board are reviewing how the costs of the running the Company can be
minimised.
Results
The Company and its subsidiaries (together the “Group”) made a
total net loss after tax of £1.0 million for the period to
31 December 2017. The Net Asset Value
per share of the Company at 31 December
2017 was 63.69 pence
(30 June 2017: 66.94 pence), a 4.8% decrease compared to
30 June 2017.
The mid-market price of the Company’s shares on the London Stock
Exchange on 31 December 2017 was
57.88 pence, representing a discount
of 9.1% to the Company’s NAV at 31 December
2017.
Return of Capital to Shareholders
No return of capital was declared during the period and the
dividend policy remains unchanged.
Charles Hunter
Chairman
21 March 2018
Investment Manager’s Report
Investment Manager
AXA Investment Managers UK Limited (the “Investment Manager”,
“AXA IM”) is the UK subsidiary of AXA Investment Managers, a
dedicated asset manager within the AXA Group. AXA Investment
Managers is an innovative and fast-growing multi-expertise
investment manager managing €645 billion in assets as at
30 September 2017.
AXA Real Estate Investment Managers UK Limited (the “Real Estate
Adviser”) is part of the real estate management arm of AXA
Investment Managers S.A. (“AXA IM Real Assets”). AXA IM Real Assets
offers a 360° view of real asset markets, investing in both equity
and debt, across different geographies and sectors, and via private
and listed instruments with more than €71 billion of assets under
management and about 650 people operating in 20 countries as at
30 June 2017.
Source: AXA Investment Managers UK Limited
Fund Manager
Ian Chappell was appointed as the
Fund Manager for AXA Property Trust in November 2015. He has very broad experience
across Europe's real estate
markets, having worked through several market cycles over the past
25 years and transacting and managing real estate assets covering
core, core plus and value added strategies.
Ian graduated from Nottingham Trent
University in 1991 and also holds a Master of Arts from the
University of Newcastle Upon Tyne
(1992). He was elected as Member of the Royal Institution of
Chartered Surveyors in 1993.
Market Outlook
Eurozone GDP growth remained stable at a seasonally adjusted
0.7% quarter-on-quarter (q-o-q) in Q3 2017, the fastest rate of
growth since Q1 2015. Among the major Eurozone economies,
Germany and Spain were the strongest performers, with
quarterly GDP growth of 0.8%, followed by France (0.6%) and Italy (0.4%). Having increased to 2%
year-on-year (y-o-y) in February
2017, harmonised CPI in the Eurozone had moderated to 1.4%
by December, largely because energy price rises decelerated.
While still low by historical standards, long-term government
bond yields are forecast to rise over the next few years, in a
continuation of the pattern seen since the final quarter of
2016.
Italy's GDP growth accelerated
from 0.3% q-o-q in Q2 2017 to 0.4% in Q3. Gross fixed investment
made the largest contribution to growth, followed by household
consumption and net trade. Fixed investment accelerated to 3% q-o-q
and growth in household spending accelerated to 0.3% q-o-q,
although growth in government expenditure decelerated to 0.1%.
Exports grew by 1.6% q-o-q, while imports rose by a slower 1.2%.
The annual growth rate accelerated to 1.7%, its highest level since
Q1 2011. Having risen to 2% in April
2017, HICP inflation fell back to 1% in December.
Having surprised on the upside in 2017, AXA IM Research expects
the positive momentum to last into 2018, forecasting GDP growth of
1.6%. They expect consumer spending growth to be driven by job
creation boosting purchasing power in a low inflation environment;
falling unemployment reducing precautionary savings; and the
effects of the improving housing market. Financial conditions
should continue to foster corporate investment, although the
outlook remains fragile, as lending to non-financial corporates is
still volatile. However, government consumption is likely to be
very limited, as the country aims to reduce its deficit. Lack of
external competitiveness also prevents Italy from extensively benefiting from
recovering international trade.
With the exception of the reform of the banking sector (which
contributed to an easing of credit and reduced NPLs) and labour
market reforms, progress elsewhere has been rather limited. The
fragmented political landscape is not supportive. In advance of the
general election to be held in March
2018, polls were pointing to a three-way race as at Q4 2017;
the right-wing coalition (Forza Italia, Northern League and
Brothers of Italy) ahead with
around 35% of the votes, followed by the Five Star Movement (M5S -
c.27%) and the Democratic Party (PD - c.25%). In combination with
the new electoral law adopted in Autumn 2017, there is expected to
be a hung parliament (the law is based on one-third of seats
allocated on a first-past-the post system and two-thirds on a
proportional basis). There is a very low chance that an
anti-establishment coalition (M5S, Northern League and Brothers of
Italy) will be formed and reach
absolute majority in the Lower House.
Asset Management Update
The sole remaining asset comprises the cinema investment in
Curno.
Following several months of pursuing interest with a potential
buyer, the likelihood of a sale is weaker, given that trading
prospects at the property appear to have been impacted by the
competing new cinema at Orio del Serio, also operated by UCI. The
tenant has communicated its poor trading results and would appear
to be targeting a renegotiation of the contracted rent to reflect a
lower operating base. Further information will be sought from them
to determine the extent of the operating downturn, whether this is
temporary, or a sign of a longer term correction. Once this is
received, an appropriate strategy will be implemented.
Property Portfolio at 31 December 2017
Investment |
Country |
Sector |
Net
Yield on valuation1 |
Curno, Bergamo |
Italy |
Leisure |
11.00% |
1 Net yield on valuation is Gross rental income over
valuation.
Source: External independent valuers to the Company, Knight
Frank LLP.
Weighted Average Lease Term
31 December 2017 |
7.0 years |
30 June 2017 |
7.5 years |
Covenant Strength Analysis at
31 December 2017
Creditreform: |
<199 |
Dun & Badstreet: |
A1 |
Source: AXA Real Estate Investment
Managers UK Limited
Board of Directors
Charles Hunter (Chairman)
has over 30 years of experience in property investment, principally
in UK commercial property. He was Head of Property Investment of
Insight Investment (formerly Clerical Medical Investment Group) for
some nine years and before that Property Director of the investment
management subsidiaries of The National Mutual of Australasia group
in the United Kingdom. He is
currently a director of Care South and he was on the Supervisory
Board of Schroder Exempt Property Unit Trust until its conversion
to a PAIF in 2012. Mr Hunter is a Fellow of the Royal Institution
of Chartered Surveyors and a member of the Investment Property
Forum. He is resident in the United
Kingdom.
Stephane Monier has over
25 years of investment experience (including asset allocation,
fixed income and foreign exchange). Mr Monier is currently Head of
Investments at Bank Lombard Odier & Cie Ltd. He is responsible
for the investment process and the performance for private clients’
portfolios. Mr Monier joined the Lombard Odier group in 2009 on the
institutional side (Lombard Odier Investment Managers or LOIM). He
was initially Global Head of Fixed Income and Currencies for LOIM
and then promoted to Deputy Global Chief Investment Officer. Prior
to joining LOIM, Mr Monier was Global Head of Fixed Income and
Currencies at Fortis Investments from 2006 to 2009 and he also
occupied the very same position at the Abu Dhabi Investment
Authority from 1998 to 2006. Prior to Abu
Dhabi, Mr Monier spent seven years in JP Morgan Investment
Management as a Fixed Income Manager both in London and Paris from 1991 to 1998. Mr Monier has a
Masters Degree in Science from Agrotech (Paris) and a Masters Degree in International
Finance from HEC Graduate School of Business (Jouy en Josas)
(France). He is also a CFA
charterholder. He is resident in Valais, Switzerland.
Gavin Farrell is qualified
as a Solicitor of the Supreme Court of England and Wales, a French Avocat and an Advocate of the
Royal Court of Guernsey. He worked
for a number of years at Simmons & Simmons in their
London and Paris offices, both in the general corporate
and financial services/funds departments. He then moved to
Guernsey in 1999 where he was
called as an Advocate of the Royal Court of Guernsey. Gavin became a partner in 2003 of
the corporate department of Ozannes, then Mourant Ozannes. Gavin
left Mourant Ozannes in November 2016
to establish his own practice Ferbrache & Farrell. His practice
covers general corporate and banking work, funds and the asset
management industry. Gavin holds a number of directorships in
investment and captive insurance companies. He is a resident of
Guernsey and has been ranked as a
leading individual in banking, corporate and investment funds by a
number of publications as well as having been elected for a number
of years as a Top Five Global Offshore Funds Lawyers in Who's Who
Private Funds.
Stuart Lawson is a Fellow
of the Chartered Association of Certified Accountants. He joined
Northern Trust in 1988 working in Fund Administration and Trust
client accounting before being appointed Head of Finance for the
office in 1996 where he established a Risk Management Department.
In 2005 he was appointed Chief Administration Officer for
Guernsey with local responsibility
for finance, risk, compliance, corporate services and
communication, and in 2007 he assumed responsibility for Real
Estate and Infrastructure Fund Administration services for the EMEA
region. He is currently a product manager for alternative asset
services across the EMEA region, is a Director of a number of
client entities and Chairman of Northern Trust (Guernsey) Limited. He has 30 years of
experience in the Financial Services Industry and is resident in
Guernsey.
Directors’ Responsibility
Statement
We confirm that to the best of our knowledge:
- the Condensed Half Year
Consolidated Financial Statements have been prepared in accordance
with International Accounting Standard 34 Interim Financial
Reporting; and
- this Half Year Report provides a
fair review of the information required by:
a) DTR 4.2.7R of the Disclosure and
Transparency Rules, being an indication of important events that
have occurred during the first six months of the financial year and
their impact on the Condensed Half Year Consolidated Financial
Statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure and
Transparency Rules, being related party transactions that have
taken place in the first six months of the current financial year
and that have materially affected the financial position or
performance of the entity during that period; and any changes in
the related party transactions described in the last annual report
that could materially affect the financial position or performance
of the entity.
Signed on behalf of the Board by:
Charles Hunter
Chairman
21 March 2018
Stuart Lawson
Director
21 March 2018
Condensed Half
Year Consolidated Income Statement
For the six months ended 31 December
2017 (unaudited)
|
|
|
|
|
Six
month period ended |
|
Six
month period ended |
|
|
|
|
|
31
December 2017 |
|
31
December 2016 |
|
|
|
|
Notes |
£000s |
|
£000s |
|
|
|
|
|
|
|
|
|
|
Gross
rental income |
3 |
663 |
|
1,397 |
|
|
Service
charge income |
|
- |
|
142 |
|
|
Property
operating expenses |
|
(169) |
|
(153) |
|
Net
rental and related income |
|
494 |
|
1,386 |
|
|
|
|
|
|
|
|
|
|
Valuation
loss on investment properties |
6 |
(710) |
|
(677) |
|
|
Loss on
disposals of a subsidiary and investment properties |
- |
|
(646) |
|
|
General
and administrative expenses |
4 |
(315) |
|
(406) |
|
Operating loss |
|
(531) |
|
(343) |
|
|
|
|
|
|
|
|
|
|
Net
foreign exchange gain |
|
- |
|
285 |
|
|
Net gain
on financial instruments |
12 |
- |
|
63 |
|
|
Share in
(loss)/profit of a joint venture |
8 |
(1) |
|
50 |
|
|
Net
finance cost |
|
(11) |
|
(186) |
|
Loss
before tax |
|
(543) |
|
(131) |
|
|
|
|
|
|
|
|
|
|
Income tax
expense |
|
(449) |
|
(204) |
|
Loss
for the period |
|
(992) |
|
(335) |
|
|
|
|
|
|
|
|
|
Basic and
diluted loss per ordinary share (pence) |
|
(4.24) |
|
(0.58) |
Condensed Half Year Consolidated Statement of Comprehensive
Income
For the six months ended 31 December
2017 (unaudited)
|
|
|
|
|
Six
month period ended |
|
Six
month period ended |
|
|
|
|
|
31
December 2017 |
|
31
December 2016 |
|
|
|
|
|
£000s |
|
£000s |
|
|
|
|
|
|
|
|
|
Loss
for the period |
|
(992) |
|
(335) |
|
Other
comprehensive income |
|
|
|
|
|
Hedging
reserve recycled to profit or loss |
|
- |
|
- |
|
Foreign
exchange translation gain |
|
232 |
|
1,330 |
|
Total
items that are or may be reclassified to profit or
loss |
|
232 |
|
1,330 |
|
|
|
|
|
|
|
|
|
Total
comprehensive (loss)/profit for the period |
|
(760) |
|
995 |
Condensed Half Year Consolidated Statement of Changes in
Equity
For the six months ended 31 December
2017 (unaudited)
|
|
|
|
Revenue reserve |
Distributable
reserve |
Foreign currency reserve |
Total |
|
|
|
|
£000s |
£000s |
£000s |
£000s |
|
|
|
|
|
|
|
|
Balance
at 1 July 2017 |
|
|
(41,411) |
44,853 |
12,223 |
15,665 |
Loss for
the period |
|
|
(992) |
- |
- |
(992) |
Other
comprehensive income |
|
|
- |
- |
232 |
232 |
Balance
at 31 December 2017 |
|
(42,403) |
44,853 |
12,455 |
14,905 |
For the six months ended 31 December
2016 (unaudited)
|
|
|
|
Revenue reserve |
Distributable
reserve |
Foreign currency reserve |
Total |
|
|
|
|
£000s |
£000s |
£000s |
£000s |
|
|
|
|
|
|
|
|
Balance
at 1 July 2016 |
|
|
(40,489) |
68,856 |
10,327 |
38,694 |
Loss for
the period |
|
|
(335) |
- |
- |
(335) |
Other
comprehensive income |
|
|
- |
- |
1,330 |
1,330 |
Balance
at 31 December 2016 |
|
|
(40,824) |
68,856 |
11,657 |
39,689 |
Condensed Half Year Consolidated Statement of Financial
Position
As at 31 December 2017
(unaudited)
|
|
|
31
December 2017 |
|
30
June
2017 |
|
|
Notes |
£000s |
|
£000s |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Investment
properties |
6 |
11,782 |
|
12,310 |
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
Cash and
cash equivalents |
|
3,033 |
|
3,846 |
|
Trade and
other receivables |
9 |
368 |
|
788 |
|
Investment
in joint venture held for sale |
8 |
649 |
|
642 |
|
|
|
|
|
|
Total
assets |
|
15,832 |
|
17,586 |
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Trade and
other payables |
10 |
662 |
|
1,422 |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Provisions |
11 |
265 |
|
499 |
|
|
|
|
|
|
Total
liabilities |
|
927 |
|
1,921 |
|
|
|
|
|
|
Net
assets |
|
14,905 |
|
15,665 |
|
|
|
|
|
|
|
Reserves |
|
14,905 |
|
15,665 |
|
|
|
|
|
|
Total
equity |
|
14,905 |
|
15,665 |
|
|
|
|
|
|
Number of
ordinary shares |
|
23,402,881 |
|
23,402,881 |
|
|
|
|
|
|
Net
asset value per ordinary share (pence) |
|
63.69 |
|
66.94 |
|
|
|
|
|
|
|
By order of the Board
Charles Hunter
Chairman
21 March 2018
Stuart Lawson
21 March 2018
Director
Condensed Half Year Consolidated Statement of Cash Flow
For the six months ended 31 December
2017 (unaudited)
|
|
|
|
Six
month period ended |
|
Six
month period ended |
|
|
|
|
31
December 2017 |
|
31
December 2016 |
|
|
Notes |
|
£000s |
|
£000s |
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before tax |
|
|
(543) |
|
(131) |
|
|
|
|
|
|
|
|
Adjustments for: |
|
|
|
|
|
|
Loss on valuation and
disposals of a subsidiary and investment properties |
6 |
|
710 |
|
1,323 |
|
Shares in
loss/(profit) of joint-venture |
8 |
|
1 |
|
(50) |
|
Gain on financial
instruments |
12 |
|
- |
|
(63) |
|
Decrease/(increase) in
trade and other receivables |
9 |
|
615 |
|
(273) |
|
Decrease in
provisions |
11 |
|
(234) |
|
(367) |
|
(Increase)/decrease in
trade and other payables |
10 |
|
(477) |
|
3,584 |
|
Net finance cost |
|
|
11 |
|
186 |
|
Net foreign exchange
gain |
|
|
- |
|
(285) |
Net
cash generated from operations |
|
83 |
|
3,924 |
|
|
|
|
|
|
|
|
Interest income
received |
|
|
- |
|
97 |
|
Interest paid |
|
|
(10) |
|
(382) |
|
Tax paid |
|
|
(927) |
|
(1,256) |
Net
cash (outflow)/inflow from operating activities |
|
(854) |
|
2,383 |
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
Investment in
joint-ventures |
|
|
- |
|
8,383 |
|
Proceeds from
disposals of a subsidiary and investment properties |
|
|
- |
|
7,450 |
Net
cash inflow from investing activities |
|
- |
|
15,833 |
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
Bank loan facility
repaid |
|
|
- |
|
(14,907) |
Net
cash used in financing activities |
|
- |
|
(14,907) |
|
|
|
|
|
|
|
|
Effects of
exchange rate fluctuations |
|
41 |
|
(2,154) |
(Decrease)/increase in cash and cash equivalents |
|
(813) |
|
1,155 |
|
|
|
|
|
|
|
|
Cash and cash
equivalents at start of the period |
|
|
3,846 |
|
8,806 |
Cash
and cash equivalents at the period end |
|
3,033 |
|
9,961 |
The accompanying notes form an integral part of these condensed
Half Year Financial Statements.
Notes to the Condensed Half Year Consolidated Financial
Statements
For the period ended 31 December 2017
1. Operations
AXA Property Trust Limited (the "Company") is a limited
liability, closed-ended investment company incorporated in
Guernsey. The Company invests in
commercial properties in Europe
which are held through its subsidiaries. The Condensed Half Year
Consolidated Financial Statements of the Company for six month
ended 31 December 2017 comprise the
financial statements of the Company and its subsidiaries (together
referred to as the "Group").
2. Significant accounting policies
(a) Statement of
compliance
The Condensed Half Year Consolidated Financial Statements have
been prepared in accordance with the Disclosure Transparency Rules
of the Financial Conduct Authority and with IAS 34, ‘Interim
Financial Reporting’. They do not include all the information
required for the full annual financial statements and should be
read in conjunction with the consolidated financial statements of
the Group for the year ended 30 June
2017, which were prepared under full International Financial
Reporting Standard (“IFRS”) requirements as issued by the
International Accounting Standards Board.
(b) Basis of
preparation
The same accounting policies and methods of computation have
been applied to the Condensed Half Year Consolidated Financial
Statements as in the Annual Report and Consolidated Financial
Statements for the year ended 30 June
2017 expect for following captions:
- Trade and other
receivables
- Trade and other
payables
for which VAT and taxes payables and receivables have been
netted off both in Balance Sheet and corresponding notes for
December 2017 figures and
comparatives figures.
The presentation of the condensed Half Year Consolidated
Financial Statements is consistent with the Annual Report and
Consolidated Financial Statements.
(c) Going concern
The discount control provisions established when the Company was
launched required a continuation vote to be proposed to
Shareholders at the Company's Annual General Meeting in 2015. As a
result of the large discount to Net Asset Value at which shares
were trading there was little chance of raising new capital. After
extensive shareholder consultation, the Board resolved not to seek
continuation of the Company in 2015 and proposed to Shareholders
that the Company enter into a managed wind-down. This proposal was
approved at an EGM held on 26 April
2013.
The Condensed Half Year Consolidated Financial Statements have
been prepared on a non-going concern basis reflecting the orderly
wind-down of the Group. Accordingly, the going concern basis of
accounting is not considered appropriate. All assets and
liabilities continue to be measured in accordance with IFRS. The
Board recognises that the timely disposal of properties is
uncertain and continues to keep under review the most appropriate
course of action with regard to these assets over the coming months
with the aim of maximising shareholder return. As at 31 December 2017, the completion of all sales is
foreseen in the course of 2018.
The Directors estimate that the wind-down costs will be
approximately £164,637 (30 June 2017:
£189,000). The Board believes that the Group has sufficient funds
available to meet its wind-down costs and day-to-day running
costs.
3. Gross rental income
Gross rental income for the six months ended 31 December 2017 amounted to £0.7 million
(31 December 2016: £1.40 million). The Group leases
out all of its investment property under operating leases and are
usually structured in accordance with local practices in
Italy. All leases benefit from
indexation.
Minimum Lease Payments (based on leases in place as at
31 December 2017)
|
Rental income |
Rental income |
|
31
December 2017 |
30
June 2017 |
|
£000s |
£000s |
0-1 year |
1,277 |
1,277 |
1-5 years |
6,383 |
6,385 |
5+ years |
1,245 |
1,892 |
4. General and administrative
expenses
|
Six
month |
Six
month |
|
period ended |
period ended |
|
31
December 2017 |
31
December 2016 |
|
£000s |
£000s |
Administration
fees |
(89) |
(99) |
General expenses |
(93) |
(146) |
Audit fees |
(82) |
(89) |
Legal and professional
fees |
(10) |
(145) |
Director's fees |
(35) |
(41) |
Insurance fees |
(30) |
(30) |
Liquidation costs |
24 |
2 |
Sponsor's fees |
(13) |
(13) |
Investment management
fees* |
(197) |
(57) |
Performance fee |
210 |
212 |
Total |
(315) |
(406) |
*Investment management fees for the period ended 31 December 2017 include £107k adjustments
related to previous years.
5. Share capital redemptions
No share redemption took place during the period.
6. Investment properties
|
31
December 2017 |
30
June 2017 |
|
£000s |
£000s |
Fair value of
investment properties at beginning of the period/year |
12,310 |
37,023 |
Opening fair value of
assets sold during the year |
- |
(24,724) |
Fair value
adjustments |
(710) |
(781) |
Foreign exchange
translation |
182 |
792 |
Fair value of
investment properties at the end of the period/year |
11,782 |
12,310 |
|
|
|
Total investment
properties |
11,782 |
12,310 |
All investment properties are carried at 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.
7. Investment properties held for
sale
As at 31 December 2017, there is no investment
property classified as held for sale (30
June 2017: none).
8. Investment in Joint ventures held
for sale
The Group holds a 50% joint venture interest in the equity of
the Italian joint venture Property Trust Agnadello S.r.l. which was
holding a logistics warehouse in Agnadello, Italy. On 15 November
2016, Property Trust Agnadello S.r.l. completed the sale of
its asset for a total sale price of £23.2 million.
The Group’s interest in Property Trust Agnadello S.r.l. is
accounted for using the equity method in the consolidated 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 |
31
December 2017 |
30
June 2017 |
|
£000s |
£000s |
Current assets |
1,343 |
1,322 |
Current
liabilities |
(45) |
(38) |
Net assets
(100%) |
1,298 |
1,284 |
Group's share of net
assets (in percent) |
50% |
50% |
Group's share of
net assets |
649 |
642 |
Loan balances due to
joint-venture partners |
- |
- |
Carrying amount of
interest in joint-venture |
649 |
642 |
|
|
|
Summarised
Consolidated Income Statement |
Six
month |
Six
month |
|
period ended |
period ended |
|
31
December 2017 |
31
December 2016 |
|
£000s |
£000s |
Net rental and related
income |
- |
633 |
Valuation loss on
investment property |
- |
(506) |
Total administrative
and other expenses |
(2) |
(184) |
Other income |
- |
234 |
Financial
expenses |
- |
(192) |
Loss before tax |
(2) |
(15) |
Income tax gain |
- |
115 |
(Loss)/profit for the
period |
(2) |
100 |
Group's share of
(loss)/profit for the period |
(1) |
50 |
|
|
|
Summarised
Consolidated Statement of Comprehensive Income |
Six month |
Six month |
|
period ended |
period ended |
|
31
December 2017 |
31
December 2016 |
|
£000s |
£000s |
(Loss)/profit for the
period |
(2) |
100 |
Total comprehensive
(loss)/income for the period |
(2) |
100 |
Group's share of
comprehensive (loss)/income for the period |
(1) |
50 |
9. Trade and other receivables
|
31
December 2017 |
30
June 2017 |
|
£000s |
£000s |
Other receivables |
2 |
681 |
Management fee
receivable |
84 |
- |
VAT receivable |
104 |
59 |
Rent receivable |
11 |
14 |
Prepayments |
167 |
34 |
Total |
368 |
788 |
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.
The comparative trade and other receivables have been amended as
the tax has been netted with note 10 trade and other payables.
10. Trade and other payables
|
31
December 2017 |
|
30
June 2017 |
|
£000s |
|
£000s |
Investment manager's
fee accrued |
66 |
|
111 |
Tax payable (income,
transfer, capital and other) |
198 |
|
632 |
Interest payable on
loan facility |
- |
|
13 |
Legal and professional
fees accrued |
19 |
|
29 |
Audit fee accrued |
96 |
|
221 |
Rent prepaid |
1 |
|
3 |
Other payables |
282 |
|
413 |
Total |
662 |
|
1,422 |
The carrying values of trade and other payables are considered
to be approximately equal to their fair value. Trade and other
payables are non-interest bearing and are normally settled on
30-day terms.
The comparative trade and other payables have been amended as
the tax has been netted with note 9 trade and other
receivables.
.
11. Provisions
|
31
December 2017 |
30
June 2017 |
|
£000s |
£000s |
Provision for
performance fees |
100 |
310 |
Provision for
wind-down costs |
165 |
189 |
Total |
265 |
499 |
12. Financial risk management
The table below summarises the amounts recognised in the
Consolidated Income Statement in relation to derivative financial
instruments.
|
Six
month |
|
Six
month |
|
period ended |
|
period ended |
|
31
December 2017 |
|
31
December 2016 |
|
£000s |
|
£000s |
Current year fair
value movement of ineffective hedges |
- |
|
63 |
Total gain
recognised in the Consolidated Income Statement |
- |
|
63 |
The Group is exposed to various types of risk that are
associated with financial instruments. The Group's financial
instruments comprise cash, receivables and payables that arise
directly from its operations. The carrying value of financial
assets and liabilities approximate the fair value.
The main risks arising from the Group's financial instruments
are market risk, credit risk, liquidity risk and currency
risk. The Board review and agree policies for managing its
risk exposure. These policies are summarised below.
Market Price Risk
Property and property related assets are inherently difficult to
value due to the individual nature of each property. As a result,
valuations are subject to uncertainty. There is no assurance that
the estimates resulting from the valuation process will reflect the
actual sales price even where a sale occurs shortly after the
valuation date. Rental income and the market value for properties
are generally affected by overall conditions in the local economy,
such as growth in Gross Domestic Product (“GDP”), employment
trends, inflation and changes in interest rates. Changes in GDP may
also impact employment levels, which in turn may impact the demand
for premises. Furthermore, movements in interest rates may affect
the cost of financing for real estate companies.
Both rental income and property values may be affected by other
factors specific to the real estate market, such as competition
from other property owners, the perceptions of prospective tenants
of the attractiveness, convenience and safety of properties, the
inability to collect rents because of the bankruptcy or the
insolvency of tenants, the periodic need to renovate, repair and
release space and the costs thereof, the costs of maintenance and
insurance, and increased operating costs. The Investment Manager
addresses market risk through a selective investment process,
credit evaluations of tenants, ongoing monitoring of tenants and
through effective management of the properties.
Credit risk
Credit risk refers to the risk that counterparty will default on
its contractual obligations resulting in financial loss to the
Group. The Group has adopted a policy of only dealing with
creditworthy counterparties and obtaining sufficient collateral
where appropriate as a means of mitigating the risk of financial
loss from defaults. The Group’s and Company’s exposure and the
credit-ratings of its counterparties are continuously monitored and
the aggregate value of transactions concluded is spread amongst
approved counterparties.
The credit risk on liquid funds is limited because the
counterparties are banks with high credit-ratings assigned by
international credit-ratings agencies.
Cash and cash equivalents and trade and other receivables
presented in the Consolidated Statement of Financial Position are
subject to credit risk with maturities within one year.
Liquidity risk
Liquidity risk is the risk that the Company will encounter in
realising assets or otherwise raising funds to meet financial
commitments in a reasonable timeframe or at a reasonable price.
The Group invests the majority of its assets in investment
properties which are relatively illiquid, however, the Group has
mitigated this risk by investing in desirable properties in strong
locations. The Group prepares forecasts in advance which enables
the Group's operating cash flow requirements to be anticipated and
ensures that sufficient liquidity is available to meet foreseeable
needs and to invest any surplus cash assets safely and profitably.
The Group also monitors the cash position in all subsidiaries to
ensure that any working capital needs are addressed as early as
possible.
The Company has continued to suspend the payment of dividends to
prudently manage cash during the wind-down phase.
Foreign currency risk
The European subsidiaries will invest in properties using
currencies other than Sterling, the Company's functional and
presentational currency, and the Consolidated Statement of
Financial Position may be significantly affected by movements in
the exchange rates of such currencies against Sterling. The Group
reviews and manage currency exposure in accordance with its hedging
strategy.
13. 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 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 is 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 a product
manager for alternative asset service across EMEA region and
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 from June to
December 2017 in respect of Northern
Trust administration fees was £72,500 (31 December 2016:
£72,500) of which nil (31 December 2016: 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 £0.2
million (31 December 2016: £0.02 million) were expensed
to the Consolidated Income Statement. During the six months period,
the provision for performance fees was reversed by£ 0.2 million.
The amount had been provided under the terms of the Investment
Management Agreement.
All the above transactions were undertaken at arm’s-length.
14. Commitments
As at 31 December 2017, the
Company has no commitment.
15. Subsequent events
No material subsequent events to report.
Corporate Information
Directors (All non-executive)
C. J. Hunter (Chairman)
G. J. Farrell
S. C. Monier
S. J. Lawson
Registered Office
PO Box 255
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3QL
Channel Islands
Investment Manager
AXA Investment Managers UK Limited
7 Newgate Street
London EC1A 7NX
United Kingdom
Real Estate Adviser
AXA Real Estate Investment Managers UK Limited
155 Bishopsgate
London EC2M 3XJ
United Kingdom
Sponsor and Broker
Stifel Nicolaus Europe Limited
150 Cheapside
London EC2V 6ET
United Kingdom
Administrator and Secretary
Northern Trust International Fund
Administration Services (Guernsey)
Limited
PO Box 255
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3QL
Channel Islands
Registrar
Computershare Investor Services (Guernsey) Limited
1st Floor
Tudor House
Le Bordage
St Peter Port
Guernsey GY1 1DB
Channel Islands
Independent Auditor
KPMG Channel Islands Limited
Glategny Court, Glategny Esplanade
St Peter Port
Guernsey GY1 1WR
Channel Islands