AXA PROPERTY TRUST
LIMITED
To:
Company Announcements
Date:
28 March 2019
Company:
AXA Property Trust Limited
Subject:
Annual Financial Report
AXA Property Trust Limited
Annual Report and Consolidated Financial Statements for the year
ended 30 June 2018
LEI: 213800AF85VEZMDMF931
(Classified Regulated Information, under DTR 6 Annex 1 section
1.1)
The Company has today, in accordance with DTR 6.3.5, released
its Annual Report and Audited Financial Statements for the year
ended 30 June 2018.
Key Financial Information
As at 30 June
2018
· Sterling currency Net Asset
Value (“NAV”) was £10.6 million (30 June
2017: £15.7 million)
· NAV was 45.43 pence per share (30
June 2017: 66.94 pence)
· Share price1 was
38.40 pence per share (30 June 2017: 61.25
pence)
For the year ended 30 June 2018
· Loss was 20.95 pence per share (year ended 30 June 2017: loss was 1.92 pence per share)
· No dividends were paid relating
to the year
· No redemption of shares was made
during the year (year ended 30 June
2017: £24.0 million )
1 Mid market share price (source: Stifel Nicolaus
Europe Limited).
Performance Summary
|
Year
ended
30 June 2018 |
Year
ended
30 June 2017 |
%
change |
NAV (£000s) |
10,631 |
15,665 |
(32.1)% |
NAV per share |
45.43p |
66.94p |
(32.1)% |
Loss per share |
(20.95)p |
(1.92)p |
(991)% |
Share redemptions
made |
nil |
£24.0m |
(100)% |
Share
price1 |
38.40p |
61.25p |
(37.3)% |
Share price discount
to NAV |
15.5% |
8.5% |
82.4% |
Total assets less
current liabilities (£000s) |
10,840 |
16,164 |
(32.9)% |
The 2018 NAV is presented without any deduction of redemption
payments.
Total annual
return |
Year
ended
30 June 2018 |
Year
ended
30 June 2017 |
NAV Total
Return2 |
(32.1)% |
2.5% |
Share price Total
Return |
|
|
- AXA Property
Trust |
(37.3)% |
23.0% |
- FTSE All Share
Index |
9.0% |
18.1% |
- FTSE Real Estate
Investment Trust Index |
9.8% |
9.2% |
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
Chairman’s Statement
This financial year has been one of significant development for
the Company. After an active disposal programme during the previous
financial year with the completion of three asset sales, the period
to June 2018 has proven to be
challenging with respect to the Company’s managed wind-down. The
Board continued to review the long-term viability of the Company in
light of the extended wind-down period and just prior to year-end
announced the intention to seek shareholder approval by Special
Resolution to place the company into voluntary liquidation.
At the adjourned EGM held on 21 September
2018 the Special Resolution to place the Company into
voluntary liquidation was not passed by the requisite majority, due
to the acquisition of an interest in 29.8% of the Company by a new
shareholder who voted against the Special Resolution and indicated
he would be tabling a proposal to change the strategy of the
Company to acquire new investments and not proceed any further with
the managed winding down of its affairs.
A consequence of not placing the Company into voluntary
liquidation as expected was the delayed filing of the Company’s
annual audited accounts for the 12 months to 30 June 2018. Commencing an audit process
thereafter meant that the Company did not meet the deadline for
filing audited accounts in accordance with the Listing Rules and
the trading of shares was suspended with effect from 1 November 2018.
In view of these significant developments I would draw your
attention to the notes accompanying the financial statements, in
particular Note 22: Subsequent Events. The Company is now entering
a critical phase with respect to its future and the Directors
intend to continue to review the Company’s direction and strategy
in a transparent and objective manner and to continue to listen to
shareholders.
Finally, I would like to recognise and give thanks for the
outstanding contribution of Charles
Hunter who as Chairman from the outset of the Company until
December 2018 steered the Company
through its many phases, always in a calm, respectful and
professional manner. His deep-rooted property experience was of
enormous value to the Board, and on behalf of current and past
Directors I wish Charles a happy and well-deserved retirement. I
would similarly like to extend my thanks to Stephane Monier whose particular experience in
foreign currency exposure was of great assistance to the Board in
managing the Company’s Euro-denominated portfolio.
Results
The Company and its subsidiaries (together the “Group”) made a
total net loss after tax of £4.9 million for the year ended
30 June 2018. The Net Asset Value per
share of the Company at 30 June 2018
was 45.43 pence (30 June 2017: 66.94
pence), a 32% decrease compared to 30
June 2017. The major contribution to this loss was the
reduction in value of the Curno asset over the course of the
year.
The mid-market price of the Company’s shares on the London Stock
Exchange on 30 June 2018 was
38.40 pence per share (30 June 2017: 61.25
pence) representing a discount of 15.5% to the Company’s NAV
at 30 June 2018 (30 June 2017: 8.5%)
Return of Capital to shareholders
No share redemptions were declared during the period and the
dividend policy remains unchanged.
Prospects
Following an intensive period of asset management, the Manager
and the Company’s agents have re-launched the Curno property for
sale with the benefit of the new 15-year lease and a re-stabilised
rent. Whilst it is anticipated that the overall lease package will
enhance liquidity, the Board are aware of the potential
difficulties attached to the sale of a specialised asset in a
location such as Curno and will continue to seek best price on a
Market Value basis rather than pursuing a Forced Sale approach.
Please refer to Note 21 in the financial statements: Commitments
and contingent liabilities which explains the possible tax
liability which may arise on disposal. In the meantime, given the
reduction in the contracted rent, the Directors are extremely
mindful of the reduced income generation for the Company and will
look at means to control and minimise operating expenses.
Gavin
Farrell
Interim Chairman
28 March 2019
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 active, long term, global multi asset investor with
Asset Under Management (“AUM”) of €759 billion as at 30 June 2018.
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. AXA IM Real Assets comprises about 600
people in 14 offices around the world, operating in over 20
countries.
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. Ian is also a member of AXA IM Real
Assets' Global Leadership Group.
Market Outlook
Having slowed to its lowest pace in four years in Q3 2018, first
estimates suggest Eurozone GDP growth remained stable at 0.2%
quarter-on-quarter (q-o-q) in Q4. This took growth for the year as
a whole to an estimated 1.8%, down from 2.3% in 2017. Economic
sentiment indicators suggest the deceleration continued into 2019.
AXA IM forecasts that Eurozone GDP
growth will slow to 1.4% in 2019.
According to Eurostat's flash estimate, the Eurozone HICP index
fell to 1.6% in December 2018 and
stood at an average of 2% in Q4. In the coming months, a
deceleration appears plausible as the base effects from past energy
price increases start fading. At their January 2019 meeting, the ECB decided to keep
their policy interest rates unchanged; it expects them to remain
unchanged until Autumn 2019 at the earliest. The ECB ended net
purchases under the asset purchase programme (APP) in December 2018.
We expect political risks to remain elevated as Europe heads into an eventful year; European
elections will take place in May and national elections are
scheduled in seven Member States. We expect European populist
parties to continue to exert pressure on political mainstream
parties, at both the national and European level. As a result,
populists are increasingly able to influence the policy agenda in
and around Europe, constraining
national reform efforts and making deeper European integration
unlikely in 2019, and possibly for some time to come. Thus,
uncertainties related to political factors (for example, Brexit),
trade wars, vulnerabilities in emerging markets and financial
market volatility could threaten economic and financial prospects
for 2019. Moreover, the impact of the US’s monetary policy
normalisation on the World economy is difficult to assess.
The Italian economy shrank by 0.2% q-o-q in Q4 2018, following a
0.1% contraction in the previous period. Year-on-year, the economy
grew by 0.1% in Q4 2018, slowing from a 0.6% expansion in the
previous period. AXA IM forecast
Italian GDP to grow at 0.5% in 2019 and at 0.5% in 2020.
After a few weeks of intense negotiations, the European
Commission (EC) and the Italian government reached a deal on the
2019 budget. The Italian government agreed on corrective measures
worth approximately €10 billion (0.6% of GDP). In addition, the EC
agreed to grant an allowance for exceptional circumstances (of
around 0.2% of GDP) to finance both the improvement of road safety
and actions to fight hydrogeological instability following last
October's floods. Finally, the Italian government accepted a
safeguard clause worth €2 billion for planned expenditures, which
will only be implemented if the deficit is on track. Thus, the EC
decided to not recommend an Excessive Deficit Procedure (EDP).
This is, however, unlikely to be the end of the budget problem
as the EC can still recommend an EDP until February - and it may if
the measures agreed upon are not adopted. Furthermore, the EC is
expected to reconsider (most likely a few days after the European
elections) recommending an EDP against Italy next spring. Overall, there is still a
significant lack of clarity on the true intentions of the Italian
government, as trimming the target deficit to 2% effectively means
halving the originally promised flagship measures, including the
already approved (January 2019) law
decree that introduced both a minimum universal income/pension
scheme and reforms of the pension system in a direction that allows
citizens to retire at a younger age. In 2020-2021, the cost of
these measures are planned to be covered by increases in VAT rates.
Additionally, if the measures are more expensive than projected,
ministry spending cuts are planned.
Asset Management Update
The primary asset management focus during the financial year was
the disposal of the last remaining property, in Curno, Italy. During the second half of the
year the sales process was stalled by the trading difficulties
expressed by the tenant, and as a consequence the Investment
Manager was instructed to start negotiations with the tenant to
regear the existing lease in order to re-instate liquidity. The
negotiations were subsequently agreed post year-end and in return
for a lower rent the fixed term of the lease has been extended,
whilst other amendments have in the Manager’s view improved the
institutional nature of the lease. The marketing of the asset
re-commenced following the completion of the new lease.
A consequence of this disruption was a mark-down in the
valuation of the property over the year, reflecting the significant
impact to the asset’s liquidity and sales prospects whilst the
situation remained unresolved.
Property Portfolio at 30 June 2018
Investment
name |
Country |
Sector |
Net
Yield on valuation1 |
Curno, Bergamo |
Italy |
Leisure |
16.31% |
1 Source - external independent valuers to the
Company, Knight Frank LLP.
Source: AXA Real Estate Investment Managers UK Limited
Covenant Strength Analysis at
30 June 2018
(based on rental income)
Average unexpired lease length profile
(weighted by rental income)
|
30 June 2018 |
30 June 2017 |
|
Years |
Years |
Grade A |
6.5* |
7.5 |
* Based on the lease contract in place as at 30 June 2018.
AXA Investment Managers UK Limited
28 March 2019
Board of Directors
Charles Hunter 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. Mr Hunter retired from the board on 28 December 2018.
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 and a member of the
bank’s executive committee. 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. Mr Monier retired from the board
on 28 December 2018.
Gavin Farrell
(Interim Chairman) 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. Mr Farrell was appointed Interim Chairman of the
board on 28 December 2018.
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.
Blake Nixon was one of the
pioneers of activism in the UK and has wide corporate experience in
the UK and overseas.
Following three years at Jordan Sandman Smythe (now part of
Goldman Sachs), a New Zealand
stockbroker, Blake emigrated to Australia, where he spent three years as an
investment analyst at Industrial Equity Limited (‘IEL’), then
Australia’s fourth largest listed company. In 1989 he transferred
to IEL’s UK operation and early in 1990 led the takeover of failing
LSE listed financial conglomerate, Guinness Peat Group plc (‘GPG’).
The group was then relaunched as an investment company, applying an
owner orientated approach to listed investee companies. Blake was
UK Executive Director, responsible for GPG’s UK operations and
corporate function, for the following 20 years, finally retiring as
a non-executive director in December
2015. He is a founding partner of Worsley Associates LLP, an
activist fund manager, and has served as a non-executive director
of a number of other UK listed companies, as well as numerous
unlisted companies. He is a British resident and was appointed to
the Board on 23 January 2019.
Report of Directors
The Directors of the Company present their Annual Report
together with the Group’s Audited Consolidated Financial Statements
(the “Financial Statements”) for the year ended 30 June 2018. The Directors’ Report together with
the Financial Statements give a true and fair view of the financial
position of the Group. They have been prepared properly, in
conformity with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board
and are in accordance with any relevant enactment for the time
being in force; and are in agreement with the accounting
records.
Principal Activity and Status
The Company is an Authorised closed-ended investment company
domiciled in Guernsey and is
registered under the provision of The Companies (Guernsey) Law, 2008 and has a premium listing
on the Official List and trades on the Main Market of the London
Stock Exchange. Trading in the Company's ordinary shares commenced
on 18 April 2005. The Company and the
entities listed in note 2(f) to the Financial Statements together
comprise the “Group”.
On 1 November 2018 the Company’s
listing and public trading of shares were temporarily suspended
from the London Stock Exchange as a result of the late submission
of these audited financial statements. The suspension is expected
to be re-instated once these financial statements are filed with
the listing authority.
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 (“AGM”) 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 Extraordinary General Meeting (“EGM”)
held on 26 April 2013.
In accordance with IFRS, the 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 the remaining property
is uncertain and continues to keep under review the most
appropriate course of action with regard to this asset over the
coming months with the aim of maximising shareholder return. The
Directors estimate that the remaining wind-down costs to be
incurred will be approximately £153,000 (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. There are no amounts due in terms of any
third party loan facilities.
Post financial year-end, an Extraordinary General Meeting
(“EGM”) was held on 7 September 2018
to approve the Board’s recommendation to place the Company into
voluntary liquidation. The EGM was adjourned to 21 September 2018 at the request of a shareholder
holding close to 30% of the Company’s shares. At the adjourned EGM
the recommendation did not receive the required 75% majority due to
this shareholder transferring their shares to a new shareholder,
Mr. Blake Nixon, who voted against
the Board’s recommendation. At the Company General Meeting held on
28 December 2018 Mr Hunter and Mr
Monier were not re-elected to the Board, and subsequently tendered
retirement and resignation notice respectively. Mr Nixon was
elected to the Board at the Extraordinary General Meeting held on
23 January 2019. In the event, the
Board will continue to pursue the wind down strategy unless
shareholders agree to an alternative investment policy.
Viability Statement
In accordance with provisions C2.2 of the UK Corporate
Governance Code, published by the Financial Reporting Council,
Directors are required to assess the prospects of the Company over
a period longer than the 12 months minimum required by the “Going
Concern” provision. On the 10 August
2018 the Company issued proposals to place the Company into
liquidation which was supported by consideration of the operating
cost structure together with the uncertain prospects of achieving a
sale of the Curno property and the requisite re-gearing of the
lease. The analysis indicated that savings in the region of
£275,000 would be achieved in the first year followed by £360,000
in future years if the liquidation proceeded. In the event, the
proposals were not accepted by shareholders which prompted the
Board to reconsider ongoing liquidity requirements of the Company
retaining the current operating cost structure.
Two scenarios were considered. The first assumed a disposal of
Curno at current valuation in December
2019 and the second assumed a later disposal in December 2021. Based on the assumptions made,
both indicated that the Company would remain viable and able to
meet its liabilities as they fall due and retaining a cash reserve
over £300,000 for the duration of each scenario. This provides the
Board with a clear basis to evaluate future options whilst ensuring
the Company is able to operate during the current period of
uncertainty.
Investment Objective and Investment
Policy
The investment objective and investment policy of the Company
are as described Investment Objective and Investment Policy
section.
Results and Dividends
The results for the year are set out in the Consolidated Income
Statement. Following shareholder approval at the EGM held on
26 April 2013, the Company will
continue the implementation of a managed wind-down unless and until
there is sufficient shareholder support for a change in
strategy.
Although 2018 had been the target for the completion of all
disposals, it is now considered that this will take place during
calendar year 2019 at the earliest, to reflect the potential delays
attached to the Curno asset. However, the Investment Manager
continues to work closely with the Board on all aspects of the
strategy for the Company.
The Company has made timely returns of capital to shareholders
whilst balancing the need to maximise the value from the Company’s
investments and to provide for sufficient working capital. The
Company returned £1.2 million to shareholders on 28 January 2019.
A resumption of dividend payments is not anticipated whilst the
current managed wind-down remains in place.
Directors
The Directors who held office during the year and up to the date
of this report were:
C. J. Hunter (Chairman, retired on 28
December 2018)
G. J. Farrell (appointed Interim Chairman with effect as of
28 December 2018)
S. C. Monier (retired on 28 December
2018)
S. J. Lawson
B. A. Nixon (appointed on 23 January
2019)
Mr Hunter was also a Director of the two direct
subsidiaries of AXA Property Trust Limited throughout the year
ended 30 June 2018.
Mr Lawson is a Director of Northern Trust (Guernsey) Limited, the Company’s bankers and
member of the same group as the Administrator and Secretary.
Management
The Investment Manager provides management services to the
Company. A summary of the contract between the Company and the
Investment Manager in respect of the management services provided
is given in note 3 to the Financial Statements. During the year,
the Board through the Management Engagement Committee has reviewed
the appropriateness of the Investment Manager's appointment.
Alternative Investment Fund Managers
Directive
The Company does not expect to be required to comply with the
AIFM Directive except to the extent required to permit the
marketing of the Company’s shares in EEA Member States. As the
Company is in a managed wind-down this is unlikely to occur. If
this were to occur the relevant regime remains the national private
placement arrangements in the relevant EEA Member State which might
trigger requisite authorisation, possible changes to the governance
structure of the Company including the appointment of a depositary,
and additional disclosure in the financial statements. Compliance
with the AIFM Directive would be expected to increase management
costs, including regulatory and compliance costs, of impacted
investment managers and investment funds.
International Tax Reporting
For purposes of the US Foreign Accounts Tax Compliance Act, the
Company registered with the US Internal Revenue Service (“IRS”) as
a Guernsey reporting Foreign
Financial Institution (“FFI”), received a Global Intermediary
Identification Number (G0W47U.99999.SL.831), and can be found on
the IRS FFI list.
The Common Reporting Standard (“CRS”) is a global standard for
the automatic exchange of financial account information developed
by the Organisation for Economic Co-operation and Development
(“OECD”), which has been adopted by Guernsey and which came into effect on
1 January 2016. The Board has taken
the necessary action to ensure that the Company is compliant with
Guernsey regulations and guidance
in this regard.
Directors' Authority to Buy Back
Shares
Any buy back of shares will be made subject to Guernsey law and within guidelines established
from time to time by the Board (which will take into account the
income and cash flow requirements of the Company) and the making
and timing of any buy backs will be at the absolute discretion of
the Board. Purchases of shares will only be made through the
market for cash at prices below the prevailing Net Asset Value of
the shares where the Directors believe such purchases will enhance
shareholder value.
Such purchases will also only be made in accordance with the
rules of the UK Listing Authority which sets a cap on the price the
Company can pay.
Articles of Incorporation
At an EGM held on 26 April 2013, a
special resolution was passed to amend the Articles of
Incorporation. The Board considered that, in light of the managed
wind-down, and in order to facilitate the realisation of the
portfolio, in a manner that achieved a balance between maximising
the value from the Company's investments and making timely returns
of capital to shareholders, it was in the best interests of
shareholders and the Company as a whole to remove the requirement
in the then current Articles for a Continuation Resolution to be
put to shareholders in 2016, and to make certain other
administrative changes and updates to the current Articles.
At an EGM held on 27 February
2014, a special resolution was passed to amend the Articles
of Incorporation. The Board introduced a mechanism for the
Redemption of Shares at the discretion of the Board prior to the
eventual liquidation of the Company. The purpose of such Redemption
Mechanism being to facilitate the return to shareholders of cash
proceeds in a cost-efficient manner in accordance with the
Investment Policy and Objective.
On 28 January 2019, the Company
under the mechanism for the Redemption of Shares purchased and
cancelled 2,644,440 Shares at a value of £1.2 million.
Guernsey Financial Services Commission
Code of Corporate Governance
The Board of Directors confirms that, throughout the period
covered by the Financial Statements, the Company complied with the
Code of Corporate Governance issued by the Guernsey Financial
Services Commission, to the extent it was applicable based upon its
legal and operating structure and its nature, scale and
complexity.
Independent Auditor
The Board of Directors intend to recommend that KPMG Channel
Islands Limited be re-appointed at the next AGM.
Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law they have
elected to prepare the Financial Statements in accordance with
International Financial Reporting Standards and applicable law.
Under company law the Directors must not approve the Financial
Statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and of its profit or loss
for that period.
In preparing these Financial Statements, the Directors are
required to:
§ select suitable accounting policies and apply them
consistently;
§ make judgements and estimates that are reasonable, relevant
and reliable;
§ state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements;
§ use the going concern basis of accounting unless they either
intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so. These financial statements have
been prepared on a basis other than going concern as described in
Note 2 (b).
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
its financial statements comply with the Companies (Guernsey) Law, 2008. They are responsible for
such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and have general
responsibility for taking such steps as are reasonably open to them
to safeguard the assets of the Company and to prevent and detect
fraud and other irregularities.
Disclosure of information to
auditors
So far as each Director is aware, all relevant information has
been disclosed to the Company’s auditor; and each Director has
taken all the steps that he ought to have taken as a director to
make himself aware of any relevant audit information and to
establish that the Company’s auditor is aware of that
information.
Directors’ Responsibility
Statement
We confirm that to the best of our knowledge and in accordance
with DTR 4.1.12R of the Disclosure Guidance and Transparency
Rules:
(a) These financial statements have been prepared in
accordance with IFRS and give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group and
the undertakings included in the consolidation as a whole as at and
for the year ended 30 June 2018;
(b) These financial statements, which include information
detailed in the Chairman's Statement, Investment Manager's Report,
Report of the Directors and Corporate Governance Report, provide a
fair review of the development and performance of the Group during
the year; and include a description of the principal risks and
uncertainties that the Group faced as at and for the year ended
30 June 2018, and
(c) These financial statements taken as a whole are fair,
balanced and understandable and provide the information necessary
for the shareholders to assess the Company’s performance, business
model and strategy.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website, and for the preparation and dissemination of
financial statements. Legislation in Guernsey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Signed on behalf of the Board by:
Gavin
Farrell
Interim
Chairman
Stuart
Lawson
Director
28 March 2019
Corporate Governance Report
To comply with the UK Listing Regime, the Company must comply
with the requirements of the UK Corporate Governance Code
(June 2016) (the “UK Code”) issued by
the Financial Reporting Council (“FRC”) or explain any departures
therefrom. The Company is also required to comply with the Code of
Corporate Governance issued by the Guernsey Financial Services
Commission (the “GFSC Code”).
The Board considers that reporting against the principles and
recommendations of the UK Code provides appropriate information to
shareholders. Companies reporting against the UK Code are deemed to
comply with the GFSC Code. The UK Code is available in the
Financial Reporting Council’s website, www.frc.org.uk.
The Company has complied with the relevant provisions of the UK
Code, except for the following provisions relating to:
· the role of the Chief
Executive;
· Executive Directors’
remuneration;
· Senior Independent Director;
· the need for an internal audit
function;
· the whistle blowing policy;
· Remuneration Committee; and
· Nomination Committee
The Board considers these provisions are not relevant to the
position of the Company as it is an externally managed investment
company. The Company has therefore not reported further in respect
of these provisions.
The Directors are non-executive and the Company does not have
employees, hence no Chief Executive or whistle-blowing policy is
required. The Board is satisfied that any relevant issues can be
properly considered by the Board. There have been no instances of
non-compliance, other than those noted above. However, the
Directors have satisfied themselves that the Company’s service
providers have appropriate whistle-blowing policies and procedures
and have received confirmation from the service providers that
nothing has arisen under those policies and procedures which should
be brought to the attention of the Board.
Details of compliance are noted in the following sections. The
absence of an Internal Audit function is discussed in the Audit
Committee Report.
Composition, Independence and Role of
the Board
The Board currently comprises of three non-executive Directors.
All the Directors are considered by the Board to be independent of
the Company’s Investment Manager.
Until 28 December 2018, Mr Hunter
was Chairman and with effect from 28
December 2018 the Chairman is Mr Farrell. The Chairman of
the Board must be independent for the purposes of Chapter 15 of the
Listing Rules. Mr Hunter was and Mr Farrell are considered
independent because they:
· have no current or historical
employment with the Investment Manager; and
· have no current directorships in any other
investment funds managed by the Investment Manager, other than Mr.
Hunter’s directorships of the two direct subsidiaries of AXA
Property Trust Limited.
From April 2014, Gavin Farrell has served on the Board for over
nine years and under the UK Code should be subject to annual
re-election. The Board however, take the view that there is
significant benefit to the Company arising from continuity and
experience among directors and accordingly does not intend to
introduce restrictions based on tenure. The Board believes that
shareholders should be given the opportunity to review membership
of the Board on a regular basis.
The Board has overall responsibility for maximising the
Company’s success by directing and supervising the affairs of the
business and meeting the appropriate interests of shareholders and
relevant stakeholders, while enhancing the value of the Company and
also ensuring protection of investors. A summary of the Board’s
responsibilities is as follows:
· statutory obligations and public
disclosure;
· strategic direction and
financial reporting;
· risk assessment and management
including reporting compliance, governance, monitoring and control;
and
· other matters having a material
effect on the Company.
The Board is responsible to shareholders for the overall
management of the Company.
The Board needs to ensure that the Annual Report and Financial
Statements, taken as a whole, are fair, balanced and understandable
and provide the information necessary for shareholders to assess
the Company’s performance, business model and strategy. In seeking
to achieve this, the Directors have set out the Company’s
investment objective and policy and have explained how the Board
and its delegated Committees operate and how the Directors review
the risk environment within which the Company operates and set
appropriate risk controls. Furthermore, throughout the Annual
Report and Financial Statements the Board has sought to provide
further information to enable shareholders to better understand the
Company’s business and financial performance.
The Board’s responsibilities for the Annual Report are set out
in the Directors’ Responsibility Statement.
The Board is also responsible for issuing half yearly reports,
interim management statements and other price sensitive public
reports.
The Board does not consider it appropriate to appoint a Senior
Independent Director. The Board believes it has a good balance of
skills and experience to ensure it operates effectively. The
Chairman is responsible for leadership of the Board and ensuring
its effectiveness.
Mr Nixon is not an independent director but the presence of two
other directors that are independent and non-executive are
mitigating the risk of Mr Nixon acting in his own interest.
The Board has engaged external companies to undertake the
investment management and administrative activities of the Company.
Documented contractual arrangements are in place with these
companies which define the areas where the Board has delegated
responsibility to them.
The Company holds regular board meetings to discuss general
management, structure, finance, corporate governance, marketing,
risk management, compliance, asset allocation and gearing,
contracts and performance. The quarterly Board meetings are the
principal source of regular information for the Board enabling it
to determine policy and to monitor performance, compliance and
controls which are supplemented by communication and discussions
throughout the year.
A representative of the Investment Manager and Administrator
attends each Board meeting either in person or by telephone, thus
enabling the Board fully to discuss and review the Company’s
operation and performance. Each Director has direct access to the
Investment Manager and Company Secretary and may at the expense of
the Company seek independent professional advice on any matter.
Individual Directors may, at the expense of the Company, seek
independent professional advice on any matter that concerns them in
the furtherance of their duties. The Company maintains appropriate
Directors’ and Officers’ liability insurance.
Re-election
There are provisions in the Company’s Articles of Incorporation
which require Directors to seek re-election on a periodic basis.
There is no limit on length of service, nor is there any upper age
restriction on Directors.
The Board considers that there is significant benefit to the
Company arising from continuity and experience among directors, and
accordingly does not intend to introduce restrictions based on age
or tenure. It does however believe that shareholders should be
given the opportunity to review membership of the Board on a
regular basis.
In accordance with the Company’s Articles of Association, at
each AGM all independent Directors who held office at the two
previous AGM’s and did not retire shall retire from office and
shall be available for re-election.
Board Diversity
The Board has also given careful consideration to the
recommendation of the Davies Report on “Women on Boards”. As
recommended in the Davies Report, the Board has reviewed its
composition. However, in view of the Company’s managed wind-down
position it believes that the current appointments provide an
appropriate range of skills, experience and diversity.
Board Evaluation and Succession
Planning
The Directors consider how the Board functions as a whole taking
balance of skills, experience and length of service into
consideration and also reviews the individual performance of its
members on an annual basis.
To enable this evaluation to take place, the Company Secretary
will circulate a detailed questionnaire plus a separate
questionnaire for the evaluation of the Chairman. The
questionnaires, once completed, are returned to the Company
Secretary who collates responses, prepares a summary and discusses
the Board evaluation with the Chairman prior to circulation to the
remaining Board members. The performance of the Chairman is
evaluated by the other Directors. On occasions, the Board may seek
to employ an independent third party to conduct a review of the
Board.
The Board considers it has a breadth of experience relevant to
the Company, and the Directors believe that any changes to the
Board’s composition can be managed without undue disruption. An
induction programme has been prepared for any future Director
appointments and all Directors receive other relevant training as
necessary.
Board and Committee Meetings
The table below sets out the number of scheduled Board, Audit
Committee and Management Engagement Committee meetings held during
the year ended 30 June 2018 and,
where appropriate, the number of such meetings attended by each
Director who held office during the same period.
|
Board of Directors |
Audit Committee |
Management Engagement Committee |
|
Held |
Attended |
Held |
Attended |
Held |
Attended |
C. J. Hunter |
3 |
3 |
3 |
3 |
- |
- |
G. J. Farrell |
3 |
3 |
3 |
3 |
- |
- |
S. C. Monier |
3 |
2 |
3 |
1 |
- |
- |
S. Lawson |
3 |
3 |
3 |
3 |
- |
- |
In addition to the scheduled quarterly Board meetings, the
Board, or committees thereof, held 5 ad hoc meetings to deal with
matters of an administrative nature. These meetings were attended
by those Directors who were available at the time.
The Directors who held office during the year and their interest
in the shares of the Company (all of which are beneficial)
were:
|
|
|
30
June 2018 |
30
June 2017 |
C. J.
Hunter* |
9,694 |
0.04% |
9,694 |
0.04% |
G. J.
Farrell |
- |
- |
- |
- |
S. C.
Monier |
19,892 |
0.08% |
19,892 |
0.08% |
S.
Lawson |
- |
- |
- |
- |
*Charles Hunter holds
7,345 (2017: 7,345) shares whilst his family holds 2,349 (2017:
2,349).
At the date of this report, Mr Blake
Nixon who was appointed on 23
January, 2019 holds 6,188,380 shares being an interest of
29.81% in the shares of the Company.
Committees of the Board
The Board has established Audit and Management Engagement
Committees and approved their terms of reference.
Audit Committee
The Company has established an Audit Committee with formal
duties and responsibilities. The Audit Committee meets formally at
least twice a year and each meeting is attended by the independent
external auditor and Administrator. The Company’s Audit Committee
is comprised of the entire Board. The Audit Committee is chaired by
Mr. Lawson.
A report of the Audit Committee detailing its responsibilities
and its key activities is presented in the Audit Committee
Report.
Management Engagement Committee
The Management Engagement Committee meets formally at least once
a year and is comprised of the entire Board. At the date of the
report, Mr. Farrell is Chairman of the Management Engagement
Committee.
The Management Engagement Committee has formal duties and
responsibilities. The function of the Management Engagement
Committee is to ensure that the Company’s Management Agreement is
competitive and reasonable for the shareholders, along with the
Company’s agreements with all other third party service providers
(other than the external auditor).
During the December 2017 quarterly
board meeting the directors reviewed the services provided by the
Investment Manager as well as the other service providers and have
recommended to the Board that their continuing appointments were in
the best interest of the shareholders. As such there was no formal
Management Engagements Committee held during the year.
Nomination Committee
The Board does not have a separate Nomination Committee. The
Board as a whole fulfils the function of a Nomination Committee.
Any proposal for a new Director will be discussed and approved by
the Board.
Remuneration Committee
In view of its non-executive nature, the Board considers that it
is not appropriate for there to be a separate Remuneration
Committee, as anticipated by the UK Code, because this function is
carried out as part of the regular Board business. A Remuneration
Report prepared by the Board is contained in the Financial
Statements.
Terms of Reference
All Terms of Reference for Committees are available from the
Administrator upon request.
Internal Controls
The Board is ultimately responsible for establishing and
maintaining the Company’s system of internal controls and for
maintaining and reviewing its effectiveness. The system of internal
controls is designed to manage rather than to eliminate the risk of
failure to achieve business objectives and by their nature can only
provide reasonable and not absolute assurance against misstatement
and loss. These controls aim to ensure that assets of the Company
are safeguarded, proper accounting records are maintained and the
financial information for publication is reliable. The Board uses a
formal risk assessment matrix to identify and monitor risks.
The Board has delegated the management of the Company’s
investment portfolio and the administration, registrar and
corporate secretarial functions including the independent
calculation of the Company’s NAV and the production of the Annual
Report and Financial Statements, which are independently audited.
Whilst the Board delegates responsibility, it retains
accountability for the functions it delegates and is responsible
for the systems of internal control.
Formal contractual agreements have been put in place between the
Company and providers of these services. On an ongoing basis board
reports are provided at each quarterly board meeting from the
Investment Manager, Administrator, Registrar and Company Secretary;
and a representative from the Investment Manager is asked to attend
these meetings.
In accordance with Listing Rule 15.6.2 (2) R and having formally
appraised the performance and resources of the Investment Manager,
in the opinion of the Directors their continuing appointment of the
Investment Manager on their terms agreed is in the interests of the
Company and the shareholders.
In common with most investment companies, the Company does not
have an internal audit function. All of the Company’s management
functions are delegated to the Investment Manager and Administrator
which have their own internal audit and risk assessment functions.
As such, an internal audit function specific to the Company is
therefore considered unnecessary.
Principal Risks and Uncertainties
The Board is satisfied that by using the Company’s risk matrix
in establishing the Company’s system of internal controls while
monitoring the Company’s investment objective and policy that the
Board has carried out a robust assessment of the principal risks
and uncertainties facing the Company during its managed wind-down.
The principal risks and uncertainties which have been identified
and the steps which are taken by the Board to mitigate them are as
follows:
Investment Risks
The Company is exposed to the risk that its remaining investment
property fails to perform in line with the Company’s objective, if
markets move adversely or if the remaining asset is inappropriately
disposed. The Board reviews reports from the Investment Manager at
least once a quarter, paying a particular attention to the disposal
programme and its underlying assumptions and considerations.
Operational Risks
The Company is exposed to the risk arising from any failures of
systems and controls in the operations of the Investment Manager,
Administrator and the Corporate Broker. The Board and its
Committees regularly review reports from the Investment Manager and
the Administrator on their internal controls.
Accounting, Legal and Regulatory
Risks
The Company is exposed to the risk that it may fail to maintain
accurate accounting records or fail to comply with requirements of
its Prospectus. The accounting records prepared by the relevant
service providers are reviewed by the Investment Manager. The
Administrator, Corporate Broker and Investment Manager provide
regular updates to the Board on compliance with the Prospectus and
changes in regulation.
Financial Risks
The financial risks, including market, credit, liquidity and
interest rate risk faced by the Company are set out in note 17 of
the Financial Statements. These risks and the controls in place to
reduce the risks are reviewed at the quarterly Board meetings.
Foreign Exchange Risk
The Company is exposed to currency risk given that its
subsidiaries are denominated in Euro but the presentation currency
of the Company is Pound Sterling. As a result of the UK’s Brexit
Referendum there has been an increase in the volatility of the
EUR/GBP exchange rate. The Investment Manager reports at least
quarterly to the Board on its strategy for managing this risk.
The Board seeks to mitigate and manage these risks through
continual review, policy-setting and enforcement of contractual
obligations and will update the risk assessment matrix to reflect
any changes to the control environment.
Relations with Shareholders
The Board welcomes shareholders’ views and places great
importance on communication with its shareholders. The Board
receives regular reports on the views of shareholders and the
Chairman and other Directors are available to meet shareholders if
required. The Investment Manager meets with major shareholders on a
regular basis and reports to the Board on these meetings. Issues of
concern can be addressed by any shareholder in writing to the
Company at its registered address. The AGM of the Company provides
a forum for shareholders to meet and discuss issues with the
Directors and Investment Manager of the Company.
In addition, the Company maintains a website which contains
comprehensive information, including regulatory announcements,
share price information, financial reports, investment objectives
and strategy and investor contacts.
Significant Shareholdings
As at 10 January 2019,
shareholders with 3% or more of the voting rights are as
follows:
|
Shares
held |
% of issued
share capital |
Mr Blake A Nixon |
6,976,753 |
29.81 |
Integrated Financial
Arrangements |
2,668,776 |
11.40 |
IntegraLife UK |
2,030,204 |
8.68 |
FIL Investment International |
1,421,882 |
6.08 |
M&G Investment Mgt |
1,170,126 |
5.00 |
Close Asset Mgt |
766,451 |
3.28 |
Canaccord Genuity Securities |
740,860 |
3.17 |
Signed on behalf of the Board by:
Gavin
Farrell
Chairman
Stuart
Lawson
Director
28 March 2019
Audit Committee Report
Dear Shareholders,
I am pleased to present the Audit Committee’s Report for the
year ended 30 June 2018, which covers
the following topics:
· Responsibilities of the Audit
Committee and its key activities during the year,
· Financial reporting and
significant areas of judgement and estimation,
· Independence and effectiveness
of the external auditor, and
· Internal control and risk
management systems.
As advised previously, the Company has implemented a strategy to
wind-down the portfolio and return capital to investors. The Audit
Committee’s activities during the year have therefore concentrated
on maintaining an appropriate risk and control environment,
providing suitable disclosure of progress and residual risks in the
Financial Statements, ensuring ongoing engagement from service
providers and keeping sufficient liquid funds to meet expenditure
for essential or justified items.
Responsibilities
The Audit Committee reviews and recommends to the Board for
approval or otherwise, the Financial Statements of the Company and
is the forum through which the independent external auditor reports
to the Board of Directors. The independent external auditor and the
Audit Committee will meet together without representatives of
either the Administrator or Investment Manager being present if
either considers this to be necessary.
The role of the Audit Committee includes:
1. Monitoring the integrity of the
Financial Statements of the Company covering:
o formal announcements relating to the Company’s financial
performance,
o significant financial reporting issues and
judgements,
o matters raised by the external auditors, and
o appropriateness of accounting policies and
practices.
2. Reviewing and considering the UK Code
and FRC Guidance on Audit Committees
3. Monitoring the quality and
effectiveness of the independent external auditor which
includes:
o meeting regularly to discuss the audit plan and the
subsequent findings,
o considering the level of fees for both audit and
non-audit work,
o reviewing independence, objectivity, expertise,
resources and qualification, and
o making recommendations to the Board on the appointment,
reappointment, replacement and remuneration.
4. Reviewing the Company’s procedures
for prevention, detection and reporting of fraud, bribery and
corruption, and
5. Monitoring and reviewing the internal
control and risk management systems of the service providers
together with the need for an Internal Audit function.
The Audit Committee’s full terms of reference can be obtained by
contacting the Company’s Administrator.
Financial Reporting
The Audit Committee’s review of the Half Yearly Financial Report
and Audited Annual Report and Financial Statements focused on the
following significant risks;
· investment property valuation;
and
· going concern given the
wind-down strategy.
Valuation of Investment Property
The Company’s sole remaining
investment property was independently valued at £7.87 million
(€8.90 million) as at 30 June 2018
and represented the majority of the total assets of the Group. The
remaining investment property comprises the cinema complex in
Curno, Italy, owned via an
intermediate holding company. The valuation of this investment is
in accordance with the requirements of IFRS as issued by the
International Accounting Standards Board. The valuation estimate is
provided by Knight Frank LLP, an external independent valuer. The
Audit Committee considered the fair value of the sole remaining
investment property held by the Group as at 30 June 2018 to be reasonable based on
information provided by the Investment Manager and Administrator.
All valuations are subject to review and oversight by the
Investment Manager.
Going Concern
In accordance with IFRS, the Financial Statements have been
prepared on a basis other than that of a going concern reflecting
the orderly wind-down of the Group. Accordingly, the going concern
basis of accounting is no longer considered appropriate. The sole
remaining investment property continues to be carried at fair
value. All other assets and liabilities continue to be measured in
accordance with IFRS.
Audit Findings Report
The independent external auditor reported to the Audit Committee
that no material unadjusted misstatements were found in the course
of their work. Furthermore, the Investment Manager and
Administrator confirmed to the Audit Committee that they were not
aware of any material unadjusted misstatements including matters
relating to the Financial Statements presentation.
Accounting Policies &
Practices
The Audit Committee has assessed the appropriateness of the
accounting policies and practices adopted by the Group together
with the clarity of disclosures included in the Financial
Statements. Following a review of the presentations and reports
from the Administrator and consulting where necessary with the
independent external auditor, the Audit Committee is satisfied that
the Financial Statements appropriately address the critical
judgements and key estimates (both in respect to the amounts
reported and the disclosures). It is also satisfied that the
significant assumptions used for determining the value of assets
and liabilities have been appropriately scrutinised, challenged and
are sufficiently robust.
The Audit Committee advised the Board that this Annual Report
and Financial Statements, taken as a whole, is fair, balanced and
understandable.
Risk Management
The Audit Committee continued to consider the process for
managing the risk of the Group and its service providers. Risk
management procedures for the Group are detailed in the Company’s
risk assessment matrix, and that is reviewed and approved by the
Audit Committee on a regular basis. Regular reports are received
from the Investment Manager and Administrator on the Company’s risk
evaluation process and reviews.
In the context of the managed wind-down, the key risks which the
Audit Committee has closely monitored are:
· Asset disposal program
· Ongoing liquidity
· Levels of expenditure
· Engagement from service
providers
The Audit Committee recognises that the timely disposal of the
remaining property is uncertain and continues to keep under review
the most appropriate course of action with regard to this asset
with the aim of maximising shareholder return.
Through regular briefing sessions and formal bi-annual committee
meetings, the Audit Committee has received the necessary
information and confirmation that activities have been managed and
executed in accordance with plans approved by the Board and
established policies and procedures.
Fraud, Bribery and Corruption
The Audit Committee continues to monitor the fraud, bribery and
corruption policies of the Group. The Board receives a confirmation
from all service providers that there have been no instances of
fraud or bribery.
The Independent External Auditor
KPMG Channel Islands Limited has been the independent external
auditor from the date of the initial listing on the London Stock
Exchange. In the circumstances of the Company and expected progress
with the managed wind-down process, a change of external auditor is
not currently envisaged given the short remaining life of the
Company.
The independence and objectivity of the external auditor is
reviewed by the Audit Committee, which also reviews the terms under
which the independent external auditor is appointed to perform
non-audit services. The Audit Committee has established
pre-approval policies and procedures for the engagement of the
auditor to provide audit, assurance and tax services. The
principles on which these are based are that the external auditor
may not provide a service which:
· places them in a position to
audit their own work
· creates a mutuality of
interest
· results in the external auditor
developing close relationships with service providers of the
Company
· results in the external auditor
functioning as a manager or employee of the Company
· puts the external auditor in the
role of advocate of the Company
As a general rule, the Company does not utilise external
auditors for internal audit work, secondments or valuation advice.
Services which are in the nature of audit, such as tax compliance,
tax structuring, accounting advice, quarterly reviews and
disclosure advice are normally permitted but are subject to prior
approval by the Audit Committee.
The Audit Committee has examined the scope and results of the
audit, its cost effectiveness and the independence and objectivity
with particular regard to non-audit fees, and considers KPMG
Channel Islands Limited to be independent of the Company. The
following table summarises the remuneration paid to KPMG Channel
Islands Limited and to other KPMG member firms for audit and
non-audit services provided to the Company during the years ended
30 June 2018 and 30 June 2017.
|
|
30 June
2018 |
30 June
2017 |
|
|
£ |
£ |
Statutory audit |
|
116,178 |
144,680 |
Total audit fees |
|
116,178 |
144,680 |
|
|
|
|
The Board recommended KPMG Channel Islands Limited be appointed
as liquidator at the adjourned EGM on 21
September 2018. As the special resolution to place the
Company into voluntary liquidation did not secure the requisite
majority to pass, the ordinary resolution to appoint the liquidator
also did not pass. As such, the Audit Committee invited KPMG
Channel Islands Limited to accept re-appointment as external
auditor as they concluded the failed appointment as liquidator did
not impair KPMG Channel Island Limited independence or
objectivity.
Performance and Effectiveness
During the year, when considering the effectiveness of the
independent external auditor, the Audit Committee has taken into
account the following factors:
· the audit plan presented to them
before the audit;
· changes in audit personnel;
· the post audit findings
report;
· the independent external
auditor’s own internal procedures to identify threats to
independence; and
· feedback received from both the
Investment Manager and Administrator.
The Audit Committee reviewed and, where appropriate, challenged
the audit plan and the audit findings report of the independent
external auditor and concluded that the audit plan sufficiently
identified audit risks and that the audit findings report indicated
that the audit risks were sufficiently addressed with no
significant variations from the audit plan. The Audit Committee
considered reports from the independent external auditor on their
procedures to identify threats to independence and concluded that
the procedures were sufficient.
Given that the managed wind down is reasonably expected to be
substantially complete within the next 12 months, the Audit
Committee will work with the independent external auditor to keep
future costs to a minimum.
Reappointment of External Auditor
Consequent to this review process, the Audit Committee
recommended to the Board that a resolution be put to the next AGM
for the reappointment of KPMG Channel Islands Limited as
independent external auditor.
Internal Control and Risk Management
Systems
The Company outsources the subsidiary company accounting and
financial statements production to the Investment Manager, and
company accounting, document execution and expense payment to the
Administrator. The Audit Committee considers the following matters
in this regard:
· regular operations meetings with
service providers,
· reporting to the Audit Committee
and Board,
· independent opinion of the
external auditor, and
· on-going evaluation of
performance.
In addition, the Audit Committee reviews and examines externally
prepared assessments of the control environment in place at the
Investment Manager and the Administrator. No significant failings
or weaknesses were identified in these reports.
The Audit Committee has reviewed the need for an internal audit
function and has decided that the system and procedures employed by
the Investment Manager and the Administrator’s internal audit
function provide sufficient assurance that a sound system of
internal control, which safeguards the Company’s assets, is
maintained. An internal audit function specific to the Group is
therefore considered unnecessary.
In finalising the Financial Statements for recommendation to the
Board for approval, the Audit Committee has satisfied itself that
the Financial Statements taken as a whole are fair, balanced and
understandable, and provide the information necessary for
shareholders to assess the Company’s performance, business model
and strategy.
A member of the Audit Committee will continue to be available at
each AGM to respond to any shareholder questions on the activities
of the Audit Committee.
Stuart
Lawson,
Chairman, Audit Committee
28 March 2019
Directors’ Remuneration Report
Introduction
An ordinary resolution for the approval of the Director’s
Remuneration Report was put to the shareholders at the AGM held on
28 December 2018.
Remuneration Policy
All Directors are non-executive and a Remuneration Committee has
not been established. The Board as a whole considers matters
relating to the Directors’ remuneration. No advice or services were
provided by any external person in respect of its consideration of
the Directors’ remuneration.
The Company’s policy is that the fees payable to the Directors
should reflect the time spent by the Directors on the Company’s
affairs and the responsibilities borne by the Directors and be
sufficient to attract, retain and motivate directors of a quality
required to run the Company successfully. The Chairman of the Board
is paid a higher fee in recognition of his additional
responsibilities. The policy is to review fee rates periodically,
although such a review will not necessarily result in any changes
to the rates, and account is taken of fees paid to directors of
comparable companies. The Directors of the Company are remunerated
for their services at such a rate as the Directors determine
provided that the aggregate amount of such fees does not exceed
£120,000 per annum.
There are no long term incentive schemes provided by the Company
and no performance fees are paid to Directors.
None of the Directors has a service contract with the Company
but each of the Directors is appointed by a letter of appointment
which sets out the main terms of their appointment. Directors hold
office until they retire by rotation or cease to be a director in
accordance with the Articles of Incorporation, by operation of law
or until they resign.
Remuneration
Directors are remunerated in the form of fees, payable quarterly
in arrears, to the Director personally. No Directors have been paid
additional remuneration outside their normal Directors’ fees and
expenses.
The current annual Directors’ fees comprise £18,000 per annum
payable to the Chairman and £13,500 per annum payable to the other
Directors.
For the years ended 30 June 2018
and 30 June 2017 Directors’ fees
incurred were as follows:
|
|
30 June
2018 |
30 June
2017 |
|
|
£ |
£ |
C. J. Hunter |
|
18,000 |
18,000 |
G. J. Farrell |
|
13,500 |
13,500 |
S. C. Monier |
|
13,500 |
13,500 |
S. Lawson |
|
13,500 |
13,500 |
A. Spaninks * |
|
- |
4,512 |
|
|
58,500 |
63,012 |
*A Spaninks resigned from the Board on 31
October 2016.
B. Nixon was appointed to the Board on 23
January 2019.
The directors of the subsidiaries of the Group received
emoluments amounting to £12.8k (30 June
2017: £11.3k). Total fees paid to Directors of the Group
were £58,500 (30 June 2017:
£74,282).
Signed on behalf of the Board by:
Gavin
Farrell
Interim Chairman
Stuart
Lawson
Director
28 March 2019
Investment Objective and Investment
Policy
At an EGM of the Company held on 26 April
2013, the shareholders resolved to amend the Company’s
investment policy. The amended investment objective and policy is
set out below:
Investment Objective
The Company is managed with the intention of realising the
remaining asset in the Portfolio, in a manner consistent with the
principles of prudent investment management and spread of
investment risk, with a view to returning capital invested to the
shareholders in an orderly manner.
Investment Policy
The managed wind-down will be effected with a view to the
Company realising its sole remaining investment property in the
course of calendar year 2019 in a manner that achieves a balance
between maximising the value from the Company’s investments and
making timely returns of capital to shareholders.
The Company will cease to make any new investments or undertake
capital expenditure except where necessary in the reasonable
opinion of the Investment Manager and Board to protect or enhance
the value of the existing investment or to facilitate its orderly
disposal.
The Company will not undertake new borrowing other than for
short-term working capital purposes.
Any cash received by the Company as part of the realisation
process will be held as cash on deposit and/or cash
equivalents.
Shareholders should expect that, under the terms of the Managed
Wind-down, the Board and the Investment Manager will be committed
to distributing as much of the available cash as soon as reasonably
practicable having regard to cost efficiency, debt repayment and
working capital requirements. Accordingly, in order to minimise the
administrative burden, shareholders should expect that returns of
cash will be made regularly but not necessarily as soon as cash
becomes available.
Independent Auditor’s Report to the
Members of AXA Property Trust Limited
Our opinion is
unmodified
We have audited the consolidated financial statements (the
“financial statements”) of AXA Property Trust Limited (the
“Company”) and its subsidiaries (together, the “Group”), which
comprise the consolidated statement of financial position as at
30 June 2018, the consolidated income
statement, the consolidated statements of comprehensive income,
changes in equity and cash flows for the year then ended, and
notes, comprising significant accounting policies and other
explanatory information. As described in note 2, the financial
statements have not been prepared on a going concern basis.
In our opinion, the accompanying financial statements:
· give a true and fair view of the
financial position of the Group as at 30
June 2018, and of the Group’s financial performance and the
Group’s cash flows for the year then ended;
· are prepared in accordance with
International Financial Reporting Standards (IFRS); and
· comply with the Companies
(Guernsey) Law, 2008.
Basis for
Opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities are described below. We have fulfilled our ethical
responsibilities under, and are independent of the Company and
Group in accordance with, UK ethical requirements including FRC
Ethical Standards as applied to listed entities. We believe that
the audit evidence we have obtained is a sufficient and appropriate
basis for our opinion.
Key Audit Matters:
our assessment of the risks of material misstatement
Key audit matters are those matters that, in our professional
judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In arriving at our
audit opinion above, the key audit matters were as follows
(unchanged from 2017):
|
The risk |
Our response |
Going Concern
Refer to the Audit Committee Report and accounting policy notes
2b and 2d |
Basis:
On 26 April 2013 an Extraordinary General Meeting was held at which
the shareholders approved proposals for a managed wind-down of the
Group. Accordingly the Board of Directors have prepared the
financial statements on a basis other than going concern reflecting
an orderly managed wind-down of the Group and the continuing
measurement of the investment property at fair value.
Risk:
There is a risk that the Board of Directors may not be able to
achieve the wind-down in an orderly manner and if this was the case
then it would impact their ability to continue measuring the
investment property at fair value. |
Our audit procedures included:
Evaluating managements’ wind-down strategy:
We held discussions with the Board of Directors and the Investment
Manager to understand the ongoing wind-down programme.
We obtained and evaluated the Group’s going concern assessment and
post year end cash flow forecasts and reviewed key assumptions and
significant inputs therein.
Assessing disclosures:
We considered the Group’s going concern accounting policies and
disclosures in notes 2b and 2d for compliance with IFRS. |
Valuation of Investment Property
Investment Properties
£7.9m (2017 £12.3m)
Refer to the Audit Committee Report, accounting policy notes 2d
and 2l and disclosure note 9 |
Basis:
The Group’s investment property accounted for 74.04% of the Group’s
net assets as at 30 June 2018.
The fair value of the investment property as at 30 June 2018 was
assessed by the Investment Manager and the Board of Directors based
on an independent valuation prepared by Knight Frank LLP (the
“Group’s Valuer”).
Risk:
As highlighted in the Audit Committee Report, the valuation of the
Group’s investment property is a significant area of judgment and
requires subjective assumptions to be made.
Determination of the fair value of the investment property is
considered a significant audit risk due to the magnitude of the
balance and the subjective nature of the valuation.
|
Our procedures included:
Controls Evaluation:
We evaluated the design and implementation of the control in
relation to the Investment Manager’s review of the valuation
prepared by the Group’s Valuer.
Evaluating experts engaged by management:
We assessed the competence, capabilities and objectivity of the
Group’s Valuer. We also assessed their independence by considering
the scope of their work and the terms of their engagement.
Evaluating assumptions and inputs used in the
valuation:
With the assistance of our own real estate valuation specialist we
assessed the valuation prepared by the Group’s Valuer by evaluating
the appropriateness of the valuation methodology and assumptions
used, including undertaking discussions on key findings with the
Group’s Valuer and challenging the valuation based on market
information and knowledge.
We agreed significant inputs into the valuation such as yields and
the tenancy lease agreement for consistency with other audit
findings and observable market evidence.
Assessing disclosures:
We considered the Group’s investment property valuation policies
and their application as described in the notes to the financial
statements for compliance with IFRS in addition to the adequacy of
disclosures in note 9 in relation to the fair value of the
investment property. |
Our application of
materiality and an overview of the scope of our audit
Materiality for the financial statements as a whole was set at
£320,000, determined with reference to a benchmark of Group net
assets of £10,631,000, of which it represents approximately 3%
(2017: 3%).
We reported to the Audit Committee any corrected or uncorrected
identified misstatements exceeding £16,000, in addition to other
identified misstatements that warranted reporting on qualitative
grounds.
Our audit of the Group was undertaken to the materiality level
specified above, which has informed our identification of
significant risks of material misstatement and the associated audit
procedures performed in those areas as detailed above.
Audits for group reporting purposes were performed by a
component auditor based in Luxembourg and by the group audit team in
Guernsey. These group procedures
covered 100% of total group revenue, total group loss before
taxation, and total group assets and liabilities.
The audits undertaken for group reporting purposes by the
component auditor in Luxembourg
were performed to a materiality level set by, or agreed with, the
group audit team. The materiality level set for the component
auditor in Luxembourg was
£240,000.
Detailed audit instructions were sent to the component auditor
in Luxembourg. These instructions
covered the significant audit areas that should be covered by these
audits (which included the relevant risks of material misstatement
detailed above) and set out the information required to be reported
back to the group audit team. The group audit team visited the
component auditor in Luxembourg.
Telephone meetings were also held with the component auditor in
Luxembourg.
We have nothing to report on the other
information in the Annual Report
The directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does not cover
the other information and we do not express an audit opinion or any
form of assurance conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether, based on our financial statements audit
work, the information therein is materially misstated or
inconsistent with the financial statements or our audit knowledge.
Based solely on that work we have not identified material
misstatements in the other information.
Disclosures of
principal risks and longer-term viability
Based on the knowledge we acquired during our financial
statements audit, we have nothing material to add or draw attention
to in relation to:
- the directors’
confirmation within Principal Risks and Uncertainties (page 15)
that they have carried out a robust assessment of the principal
risks facing the Group during the managed wind-down;
- the Principal Risks
disclosures describing these risks and explaining how they are
being managed or mitigated;
- the directors’ explanation
in the Viability Statement (page 8) as to how they have assessed
the prospects of the Group, over what period they have done so and
why they consider that period to be appropriate, and their
statement as to whether they have a reasonable expectation that the
Group will be able to continue in operation and meet its
liabilities as they fall due over the period of their assessment,
including any related disclosures drawing attention to any
necessary qualifications or assumptions.
Corporate
governance disclosures
We are required to report to you if:
- we have identified
material inconsistencies between the knowledge we acquired during
our financial statements audit and the directors’ statement that
they consider that the Annual Report and financial statements taken
as a whole is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s
position and performance, business model and strategy; or
- the section of the Annual
Report describing the work of the Audit Committee does not
appropriately address matters communicated by us to the Audit
Committee.
We are required to report to you if the Corporate Governance
Statement does not properly disclose a departure from the eleven
provisions of the 2016 UK Corporate Governance Code specified by
the Listing Rules for our review.
We have nothing to report to you in these respects.
We have nothing to
report on other matters on which we are required to report by
exception
We have nothing to report in respect of the following matters
where the Companies (Guernsey)
Law, 2008 requires us to report to you if, in our opinion:
- the Company has not kept
proper accounting records; or
- the financial statements
are not in agreement with the accounting records; or
- we have not received all
the information and explanations, which to the best of our
knowledge and belief are necessary for the purpose of our
audit.
Respective
responsibilities
Directors’
responsibilities
As explained more fully in the Report of Directors, the
Directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; assessing the
Group’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the going
concern basis of accounting unless they either intend to liquidate
the Group or to cease operations, or have no realistic alternative
but to do so.
Auditor’s
responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our
opinion in an auditor’s report. Reasonable assurance is a high
level of assurance, but does not guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The purpose of
this report and restrictions on its use by persons other than the
Company’s members as a body
This report is made solely to the Company’s members, as a body,
in accordance with section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been
undertaken so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
Company and the Company’s members, as a body, for our audit work,
for this report, or for the opinions we have formed.
Lee
Clark
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors, Guernsey
28 March 2019
Consolidated Income Statement
For the year ended 30 June 2018
|
|
|
|
For
the year ended |
|
For the
year ended |
|
|
|
|
30
June 2018 |
|
30 June
2017 |
|
|
|
Notes |
£000s |
|
£000s |
|
|
|
|
|
|
|
|
Gross
rental income |
4 |
1,380 |
|
1,704 |
|
Service
charge income |
|
- |
|
127 |
|
Property
operating expenses |
|
(143) |
|
(251) |
|
|
|
|
|
|
|
Net
rental and related income |
|
1,237 |
|
1,580 |
|
|
|
|
|
|
|
|
Valuation
loss on investment property |
9 |
(4,527) |
|
(781) |
|
Loss on
disposals of a subsidiary and investment property |
|
(35) |
|
(589) |
|
General
and administrative expenses |
5 |
(791) |
|
(929) |
Operating loss |
|
(4,116) |
|
(719) |
|
|
|
|
|
|
|
|
Net
foreign exchange gain on liquidation |
|
141 |
|
- |
|
Net gain
on financial instruments |
|
- |
|
55 |
|
Share in
loss of a joint venture |
10 |
(127) |
|
(40) |
|
Net
finance cost |
6 |
(14) |
|
(151) |
Loss
before tax |
|
(4,116) |
|
(855) |
Income
tax expense |
14 |
(788) |
|
(67) |
Loss
for the year |
|
(4,904) |
|
(922) |
|
|
|
|
|
|
|
Basic and
diluted loss per ordinary share (pence) |
7 |
(20.95) |
|
(1.92) |
Consolidated Statement of
Comprehensive Income
For the year ended 30 June 2018
|
|
|
|
Year
ended |
|
Year
ended |
|
|
|
|
30
June 2018 |
|
30 June
2017 |
|
|
|
Notes |
£000s |
|
£000s |
|
|
|
|
|
|
|
Loss
for the year |
|
(4,904) |
|
(922) |
Other
comprehensive income |
|
|
|
|
|
|
|
|
|
Foreign
exchange translation (loss)/gain |
|
(130) |
|
1,896 |
Total
items that are or may be reclassified to profit or
loss |
|
(130) |
|
1,896 |
|
|
|
|
|
|
|
Total
comprehensive (loss)/profit for the year |
|
(5,034) |
|
974 |
The accompanying notes form an integral part of these Financial
Statements
Consolidated Statement of Changes in
Equity
For the year ended 30 June 2018
|
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 year |
(4,904) |
- |
- |
(4,904) |
Other comprehensive
loss |
- |
- |
(130) |
(130) |
Balance at 30 June
2018 |
(46,315) |
44,853 |
12,093 |
10,631 |
For the year ended 30 June 2017
|
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 |
Share redemptions |
- |
(24,003) |
- |
(24,003) |
Loss for the year |
(922) |
- |
- |
(922) |
Other comprehensive
income |
- |
- |
1,896 |
1,896 |
Balance at 30 June
2017 |
(41,411) |
44,853 |
12,223 |
15,665 |
The accompanying notes form an integral part of these Financial
Statements
Consolidated Statement of Financial
Position
For the year ended 30 June 2018
|
|
|
30
June 2018 |
|
30 June
2017 |
|
|
Notes |
£000s |
|
£000s |
Non-current assets |
|
|
|
|
|
Investment
property |
9 |
7,871 |
|
12,310 |
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
Cash and cash
equivalents |
|
3,298 |
|
3,846 |
|
Trade and other
receivables |
11 |
495 |
|
939 |
|
Investment in joint
venture |
10 |
165 |
|
642 |
|
|
|
|
|
|
Total
assets |
|
11,829 |
|
17,737 |
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Trade and other
payables |
12 |
989 |
|
1,573 |
|
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
|
|
Provisions |
13 |
209 |
|
499 |
|
|
|
|
|
|
Total
liabilities |
|
1,198 |
|
2,072 |
|
|
|
|
|
|
Net
assets |
|
10,631 |
|
15,665 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
10,631 |
|
15,665 |
|
|
|
|
|
|
Total
equity |
|
10,631 |
|
15,665 |
|
|
|
|
|
|
|
|
|
|
|
|
Number of
ordinary shares |
15 |
23,402,881 |
|
23,402,881 |
|
|
|
|
|
|
Net
asset value per ordinary share (pence) |
16 |
45.43 |
|
66.94 |
By order of the Board
Gavin
Farrell
Interim
Chairman
Stuart
Lawson
Director
28 March 2019
The accompanying notes form an integral part of these Financial
Statements
Consolidated Statement of Cash
Flows
For the year ended 30 June 2018
|
|
|
Year
ended |
|
Year
ended |
|
|
|
30
June 2018 |
|
30 June
2017 |
|
|
Notes |
£000s |
|
£000s |
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
Loss before tax |
|
(4,116) |
|
(855) |
|
Adjustments for: |
|
|
|
|
|
Loss on valuation and
disposals of a subsidiary and investment properties |
|
4,562 |
|
1,370 |
|
Share of loss in joint
venture |
10 |
127 |
|
40 |
|
Gain on financial
instruments |
|
- |
|
(55) |
|
Decrease in trade and
other receivables |
|
444 |
|
305 |
|
Decrease in
provisions |
|
(290) |
|
(754) |
|
Decrease in trade and
other payables |
|
(584) |
|
(417) |
|
Net finance cost |
6 |
14 |
|
151 |
|
Net foreign exchange
gain on liquidation |
|
(141) |
|
- |
|
|
|
|
|
|
Net
cash generated from/(used in) operations |
16 |
|
(215) |
|
|
|
|
|
|
|
Interest income
received |
|
- |
|
97 |
|
Interest paid |
|
(27) |
|
(334) |
|
Tax
(paid)/received |
|
(916) |
|
44 |
|
|
|
|
|
|
Net
cash outflow from operating activities |
(927) |
|
(408) |
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Return of capital from
joint ventures |
|
354 |
|
- |
|
Repayments of Joint
Ventures loan |
|
- |
|
8,383 |
|
Proceeds from
disposals of a subsidiary and investment properties |
|
- |
|
25,362 |
Net
cash inflow from investing activities |
354 |
|
33,745 |
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Redemption of
shares |
|
- |
|
(24,003) |
|
Bank loan facility
repaid |
|
- |
|
(15,018) |
|
Decrease in derivative
financial liabilities |
|
- |
|
(11) |
|
|
|
|
|
|
Net
cash used in financing activities |
- |
|
(39,032) |
|
|
|
|
|
|
|
Effects of
exchange rate fluctuations |
25 |
|
735 |
Decrease in cash and cash equivalents |
(548) |
|
(4,960) |
|
|
|
|
|
|
|
Cash and cash
equivalents at start of the year |
|
3,846 |
|
8,806 |
Cash
and cash equivalents at the year end |
3,298 |
|
3,846 |
The accompanying notes form an integral part of these Financial
Statements.
Notes to the Consolidated Financial
Statements
For the year ended 30 June 2018
1. Operations
AXA Property Trust Limited (the "Company") is a limited
liability, closed-ended investment company incorporated in
Guernsey. The Company invests in
commercial property in Europe
which is held through a subsidiary. The 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. Significant accounting policies
(a) Basis of
preparation
The Financial Statements, which show a true and fair view, have
been prepared in accordance with International Financial Reporting
Standards (“IFRS”) which comprise standards and interpretations
issued by the International Accounting Standards Board (“IASB”) and
are in compliance with The Companies (Guernsey) Law, 2008. The Financial Statements
have been prepared on a basis other than that of a going concern,
and the accounting policies, presentation and methods of
computation are consistent with this basis, as disclosed in the
going concern paragraph below. The financial statements have been
prepared on a historical cost basis with the exception of
investment property which is measured at fair value.
(b) 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 Financial Statements have been prepared on a basis other
than that of a going concern 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 the sole remaining property is uncertain and
continues to keep under review the most appropriate course of
action with regard to this asset over the coming months with the
aim of maximising shareholder return. As at 30 June 2018, the completion of the sale of the
sole remaining investment property is foreseen in the course of
calendar year 2019.
The Directors estimate that the wind-down costs will be
approximately £153,000 (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.
(c) Adoption of new
standards and its consequential amendments
Standard, interpretation and
amendments to published statements currently effective
There are no new standards nor amendments effective as of
1 July 2017 which have had a
significant impact on the Group’s Financial Statements.
Standards, interpretations and
amendments to published statements not yet effective
There are no accounting standards that have been issued and are
not yet effective that are likely to have an impact on the
Financial Statements as the wind up of the Group is estimated to
take place in 2019.
(d) Significant estimates
and judgements
The preparation of the Group’s Financial Statements requires
management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities, and the accompanying disclosures, and the disclosure
of contingent liabilities. Uncertainty about these assumptions and
estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities affected
in future periods.
In the process of applying the Group’s accounting policies,
management has made the following judgements, which have the most
significant effect on the amounts recognised in the Financial
Statements:
Functional currency
As disclosed in note 2(e), the Group’s functional currency is
Sterling and the subsidiaries’ functional currency is the Euro. The
Board of Directors considers that the Parent Company’s functional
currency is Sterling, as the capital raised, return on capital and
dividends paid by the Parent Company are in Sterling. The Euro most
faithfully represents the economic effect of the underlying
transactions, events and conditions of the subsidiaries. The Euro
is the currency in which the subsidiaries measure their performance
and report their results.
Going concern
The Financial Statements have been prepared on a non-going
concern basis reflecting the orderly wind-down of the Group.
Further discussion of the Board’s decision to wind-down the Group,
can be found in note 2(b).
Classification of investment
properties as held for sale
The Group has no investment property classified as held for
sale. In establishing if an investment property may be transferred
to held for sale, the investment property must be available for
immediate sale in its present condition subject only to terms that
are usual and customary for sales of such property and its sale
must be highly probable, as discussed in note 2(o).
Lease classification
The Group has entered into a commercial property lease on its
investment property. The Group has determined, based on an
evaluation of the terms and conditions of the arrangement, such as
the lease term not constituting a substantial portion of the
economic life of the commercial property, that it retains all the
significant risks and rewards of ownership of the property and
accounts for the contract as an operating lease.
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are described below. The Group based its assumptions and estimates
on parameters available when the Financial Statements were
prepared. Existing circumstances and assumptions about future
developments, however, may change due to market changes or
circumstances arising which are beyond the control of the Group.
Such changes are reflected in the assumptions when they occur.
Revaluation of investment
property
The Group carries its investment property at fair value, with
changes in fair value being recognised in the Consolidated Income
Statement.
The property is valued quarterly by an external independent
valuer as at the end of each calendar quarter. Their valuations are
reviewed quarterly by the Board.
Quarterly valuations of the investment property are carried out
by Knight Frank LLP, external independent valuers to the Group, in
accordance with the Royal Institution of Chartered Surveyors’
(“RICS”) Appraisal and Valuation Standards. The property has been
valued in accordance with the definition of the RICS Valuation
which is defined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The valuation
is based on the highest and best use of the investment
property.
In view of market instability, the valuers refer to the RICS
Valuation Standards Guidance Note 1 (Valuation Uncertainty). The
key assumptions used to determine the market value of the
investment property are explained further in note 2(l).
Taxes
Uncertainties exist with respect to the interpretation of
complex tax regulations, changes in tax laws, and the timing and
amount of future taxable income. The Group estimates its tax
receivables and liabilities after taking into account the impact of
tax laws and regulation and the timing and amount of future taxable
income.
Deferred tax assets are recognised for unused tax losses to the
extent that it is probable that taxable profit will be available
against which the losses can be utilised. Significant management
judgement is required to determine the amount of the deferred tax
asset that can be recognised, based upon timing and the level of
future taxable profits. Details of tax losses recognised as a
deferred tax asset and the amount of unused tax losses held by the
Group, refer to note 14.
Provisions
In determining the provision for wind-down costs, estimates of
costs have been obtained from the corporate Broker, Administrator
and other parties involved in the managed wind-down of the Company.
The carrying amount of the provision as at 30 June 2018 was £153,000 (30 June 2017: £189,000).
(e) Foreign currency
translation
(i) Foreign currency transactions
Transactions in foreign currencies are translated to
presentation currency at the spot foreign exchange rate ruling at
the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the Consolidated Statement of
Financial Position date are translated to presentation currency at
the foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in the
Consolidated Income Statement. Non-monetary assets and liabilities
that are measured at historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction.
Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated to
presentation currency at foreign exchange rates ruling at the dates
the fair value was determined.
(ii) Exchange differences on foreign
operations
The assets and liabilities of foreign operations, arising on
consolidation, are translated to presentation currency at the
foreign exchange rates ruling at the Consolidated Statement of
Financial Position date. The income and expenses of foreign
operations are translated to presentation currency at an average
rate. Foreign exchange differences arising on retranslation are
recognised in other comprehensive income and as a separate
component of equity.
(f) Basis of
consolidation
(i) Subsidiaries
The Financial Statements comprise the Financial Statements of
the Company and its subsidiaries as at 30 June each year.
Subsidiaries are fully consolidated from the date of acquisition,
being the date on which the Group obtains control, and continue to
be consolidated until the date when such control ceases. The
Financial Statements of the subsidiaries are prepared for the same
reporting period as the parent company, using consistent accounting
policies.
(ii) Transactions eliminated on
consolidation
All intra-group balances, transactions and unrealised gains and
losses resulting from intra-group transactions are eliminated in
preparing the Financial Statements.
AXA Property Trust Limited, the Company, is the parent of the
Group. It was incorporated in Guernsey on 5 April
2005. The Company owned the following subsidiaries as at the
reporting date:
Subsidiaries |
Country of incorporation |
Date
of incorporation |
Ownership interest % |
Principal activities |
Property Trust
Luxembourg 2 S.à r.l. |
Luxembourg |
24 November 2005 |
100.00% |
Holding
Company |
Property Trust
Luxembourg 3 S.à r.l. |
Luxembourg |
2 June 2006 |
100.00% |
Holding
Company |
Property Trust Luxembourg 1 S.à r.l. was liquidated on
30 October 2017.
The Investment Manager will seek to merge or wind up redundant
holding companies from planned disposals within a short time frame
to avoid ongoing administrative expenses.
The companies shown in the table below were directly owned by
Property Trust Luxembourg 2 S.à r.l. and Property Trust Luxembourg
3 S.à.r.l. as at the reporting date:
Indirect subsidiaries and joint
ventures |
Country of incorporation |
Ownership interest
% |
Property Trust Luxembourg 2 S.à
r.l. |
|
|
Property Trust Rothenburg 1 S.à
r.l. |
Luxembourg |
100.00% |
Multiplex 1 S.r.l. |
Italy |
100.00% |
Property Trust Luxembourg 3 S.à
r.l. |
|
|
Property Trust Agnadello S.r.l. |
Italy |
50.00% |
Property Trust Rothenburg 1 S.a.r.l merged with Property Trust
Luxembourg 2 S.a.r.l in January
2019.
(iii) Joint ventures
The Group’s interest in jointly controlled entities are
accounted for using the equity method. The Group recognises the
portion of gains or losses on the sale of assets by the Group to
the joint venture that is attributable to the other ventures
(“Downstream transaction”). The Group recognises its share of
profits or losses from the joint venture that result from the
Group’s purchase of assets from the joint venture until it resells
the assets to an independent party (“Upstream transaction”). When
Downstream transactions provide evidence of a reduction in the net
fair value of the assets sold, or of an impairment loss of those
assets, those losses are be recognised in full. When Upstream
transactions provide evidence of a reduction in the net fair value
of the assets to be purchased or of an impairment loss of those
assets, the Group recognises its share in those losses.
(g) Income recognition
Interest income from banks is recognised on an effective yield
basis.
Rental income from the investment property leased out under
operating leases is recognised in the Consolidated Income Statement
on a straight-line basis over the term of the lease. Lease
incentives are amortised over the whole lease term.
(h) Expenses/Other
Income
Expenses are accounted for on an accruals basis.
Service costs for service contracts entered into by the Group
acting as the principal are recorded when such services are
rendered. The Group is entitled to recover such costs from the
tenants of the investment property. The recovery of costs is
recognised as service charge income on an accrual basis.
(i) Cash and cash
equivalents
Cash and cash equivalents comprise cash balances and call
deposits carried at cost. Cash equivalents are short-term, highly
liquid investments that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of changes in
value.
(j) Dividends
Dividends are recognised as a liability in the period in which
they become obligations of the Company. Interim dividends are
recognised when paid. Final dividends are recognised once they are
approved by shareholders. All dividends are paid as interim
dividends.
(k) Provisions
A provision is recognised in the Consolidated Statement of
Financial Position when the Group has a legal or constructive
obligation as a result of a past event, and it is probable that an
outflow of economic benefits will be required to settle the
obligation.
(l) Investment
property
Investment property is held to earn rental income and capital
appreciation and is recognised as such. Investment property is
initially recognised at cost, being the fair value of consideration
given, including associated transaction costs. Any subsequent
capital expenditure incurred in improving the investment property
is capitalised in the period during which the expenditure is
incurred and included within the book cost of the properties.
After initial recognition, investment property is measured at
fair value using the fair value model with unrealised gains and
losses recognised in the Consolidated Income Statement. Realised
gains and losses upon disposal of the property is recognised in the
Consolidated Income Statement. Quarterly valuations are carried out
by Knight Frank LLP, external independent valuers, in accordance
with the RICS Appraisal and Valuation Standards. The property has
been valued in accordance with the definition of the RICS Valuation
which is defined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The valuation
is based on the highest and best use of the investment
property.
Valuations reflect, where appropriate, the type of tenants
actually in occupation or responsible for meeting lease commitments
or likely to be in occupation after letting of vacant accommodation
and the market’s general perception of their creditworthiness, the
allocation of maintenance and insurance responsibilities between
lessor and lessees, and the remaining economic life of the
property. It has been assumed that whenever rent reviews or lease
renewals are pending with anticipated reversionary increases, all
notices and where appropriate counter notices have been served
validly and within the appropriate time.
Subsequent expenditure is charged to the asset’s carrying amount
only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can
be measured reliably. All other repairs and maintenance costs are
charged to the Consolidated Income Statement during the financial
period in which they are incurred.
Investment property is derecognised when it has been disposed.
Where the Group disposes of a property at fair value in an arm’s
length transaction, the carrying value immediately prior to the
sale is adjusted to the transaction price, and the adjustment is
recorded in the income statement within gain/(loss) on disposals of
subsidiaries and investment property.
(m) Leases
The determination of if an arrangement is, or contains, a lease
is based on the substance of the arrangement at the inception date.
The arrangement is assessed for whether or not fulfilment of the
arrangement is dependent on the use of a specific asset or assets
or the arrangement conveys a right to use the asset or assets, even
if that right is not explicitly specified in an arrangement.
Leases in which the Group does not transfer substantially all
the risks and benefits of ownership of an asset are classified as
operating leases. Initial direct costs incurred in negotiating an
operating lease are added to the carrying amount of the leased
asset and recognised over the lease term on the same basis as
rental income. Contingent rents are recognised as revenue in the
period in which they are earned.
(n) Financial
instruments
(i) Loans and
receivables
Loans advanced and other receivables are classified as loans and
receivables. Loans and receivables are carried at amortised cost
using the effective interest rate method, less impairment losses,
if any. Gains and losses are recognised in profit or loss when the
loans and receivables are derecognised or impaired.
(ii) Derecognition of financial
instruments
A financial asset is derecognised when:
- the rights to receive cash flows from
the asset have expired;
- the Company retains the right to
receive cash flows from the asset, but has assumed an obligation to
pay them in full without material delay to a third party under a
“pass through arrangement”; or
- the Company has transferred
substantially all the risks and rewards of the asset, or has
neither transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the asset.
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled.
(o) Assets held for sale
Investment property is transferred to assets held for sale when
it is expected that the carrying amount will be recovered
principally through sale rather than from continuing use. For this
to be the case, the property must be available for immediate sale
in its present condition subject only to terms that are usual and
customary for sales of such property and its sale must be highly
probable.
For the sale to be highly probable:
- The Board must be
committed to a plan to sell the property and an active programme to
locate a buyer and complete the plan must have been initiated;
- The property must be
actively marketed for sale at a price that is reasonable in
relation to its current fair value; and
- The sale should be
expected to qualify for recognition as a completed sale within one
year from the date of classification.
On re-classification, an investment property that is measured at
fair value continues to be so measured.
(p) Impairment
The carrying amounts of the Group's assets, other than
investment property, are reviewed at each Consolidated Statement of
Financial Position date to determine if there is any indication of
impairment. If any such indication exists, the asset's recoverable
amount is estimated. An impairment loss is recognised whenever the
carrying amount of an asset exceeds its estimated recoverable
amount. Impairment losses are recognised in the Consolidated Income
Statement.
(q) Taxation
The Company has obtained exempt company status in Guernsey under the terms of the Income Tax
(Exempt Bodies) (Guernsey)
Ordinance, 1989 and accordingly is subject to an annual fee of
£1,200. The Directors intend to conduct the Group’s affairs such
that it continues to remain eligible for exemption.
The Company’s subsidiaries are subject to income tax on any
income arising on investment property, after deduction of debt
financing costs and other allowable expenses. However, when a
subsidiary owns a property located in a country other than its
country of residence the taxation of the income is defined in
accordance with the double taxation treaty signed between the
country where the property is located and the residence country of
the subsidiary.
Income tax on the profit or loss for the year comprises current
and deferred tax. Current tax is the expected tax payable on the
taxable income for the year as determined under local tax law,
using tax rates enacted or substantially enacted at the
Consolidated Statement of Financial Position date, and any
adjustment to tax payable in respect of previous periods.
Deferred income tax is provided using the liability method,
providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the
amount used for taxation purposes. The amount of deferred tax
provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using
tax rates enacted or substantially enacted at the Consolidated
Statement of Financial Position date, except in the case of
investment property, where deferred tax is provided for the effect
of the sale of the property. Deferred tax assets are
recognised only to the extent that it is probable that future
taxable profits will be available against which the asset is
utilised.
Details of current tax and deferred tax assets and liabilities
are disclosed in note 14.
(r) Determination and presentation of
operating segments
The Board of Directors are charged with setting the Company’s
investment strategy in accordance with the Prospectus. They have
delegated the day to day implementation of this strategy to its
Investment Manager but retain responsibility to ensure that
adequate resources of the Company are directed in accordance with
their decisions. The investment decisions of the Investment Manager
are reviewed on a regular basis to ensure compliance with the
policies and legal
responsibilities of the Board. The Investment Manager has been
given full authority to act on behalf of the Company. Under the
terms of the Investment Management Agreement dated 18 April 2005, subject to the overall supervision
of the Board, the Investment Manager advised on the general
allocation of the assets of the Company between different
investments, advised the Company on its borrowing policy and geared
investment position, managed the investment of the Company’s
subscription proceeds and short-term liquidity in fixed income
instruments and advised on the use of (and management of)
derivatives and hedging by the Company.
Information presented to the Board by the Investment Manager is
based on IFRS.
Whilst the Investment Manager may make the investment decisions
on a day to day basis regarding the allocation of funds to
different investments, any changes to the investment strategy or
major allocation decisions have to be approved by the Board, even
though they may be proposed by the Investment Manager. The Board
therefore retains full responsibility as to the major allocations
made on an
ongoing basis. The Investment Manager will always act under the
terms of the Prospectus and the Investment Management Agreement
dated 18 April 2005 and to the
changes to the investment objective and investment policy approved
at an EGM held on 26 April 2013,
which cannot be materially changed without the approval of the
Board of Directors.
The Board has considered the requirements of IFRS 8, ‘Operating
Segments’. The Board is of the view that the Group is engaged in a
single segment of business, being investment in property in
Europe. Geographic and Sector
analyses of the segment are included in the Investment Manager’s
Report.
3. Material agreements
AXA Investment Managers UK Limited was appointed as the
Investment Manager of the Group pursuant to an Investment
Management Agreement dated 18 April
2005. The Investment Manager is responsible for advising the
Group on the overall management of the Group's investments and for
managing the Group's investments in fixed income instruments in
accordance with the Group's investment objective and policy,
subject to the overall supervision of the Directors. Under the
terms of the Investment Management Agreement, the Investment
Manager was entitled to a management fee of 90 basis points per
annum of gross assets together with reasonable expenses payable
quarterly in arrears. The management fee shall be reduced by an
amount equal to the fees payable to the Real Estate Adviser by the
property subsidiaries such that the total fees payable by the Group
to the Investment Real Estate Adviser and Investment Manager will
not exceed 90 basis points per annum. Either party may terminate
the Investment Management Agreement with not less than 12 months’
notice in writing.
In view of the change to the Investment Objective and Policy,
the Manager agreed to amend the Management Fee arrangements with
effect from 1 January 2013 in order
to provide better alignment with the objective of the Managed
Wind-down, such that the Manager and/or its Associates will receive
in aggregate (refer to note 5 Investment management fees and
Performance fee):
- a management fee of 1.10
per cent. of NAV (as opposed to 0.90 per cent. of gross assets) per
annum to be paid quarterly in arrears based on the NAV at the end
of the relevant quarter;
- transaction fees of 0.35
per cent. of the gross sales price achieved on each asset sale;
and
- a performance fee of 12.5
per cent. of cash returned to shareholders in excess of 80 per
cent. of NAV as at 31 December 2012,
with threshold percentage of NAV increasing by 5 per cent. per
annum with effect from 1 January 2015
(such that, by way of example, the threshold percent for the 12
month from and including 1 January
2015 (such that the threshold percentage for the 12 months
from and including 1 January 2015 was
85 per cent of NAV as of 31 December
2012 and increased to 90 per cent from and including
January 2016 and so on for each
consecutive year).
This amendment of the management fee was approved by a
resolution of the shareholders on 26 April
2013.
(ii) Stifel Nicolaus Limited is Corporate Broker to the Company.
Fees incurred for the year ended 30 June
2018 totalled £25,000 (30 June
2017: £25,000)
(iii) Northern Trust International Fund Administration Services
(Guernsey) Limited is
Administrator and Secretary to the Company pursuant to the
Administration Agreement dated 13 April
2005. Fees incurred in the year ended 30 June 2018 totalled £145,000 (30 June
2017: £145,000).
4. Gross rental income
Gross rental income for the year ended 30
June 2018 amounted to £1.38 million (30 June 2017: £1.70 million). The Group leases
out its investment property under operating leases which are
structured in accordance with local practices in Italy. All leases benefit from indexation.
Minimum Lease Payments (based on leases in place as at
30 June 2018)
|
|
|
30
June 2018 |
|
30 June
2017 |
|
|
|
£000s |
|
£000s |
0-1 year |
|
|
1,284 |
|
1,277 |
1-5 years |
|
|
6,420 |
|
6,385 |
5 + years |
|
|
616 |
|
1,892 |
The leasing arrangements are negotiated by the local asset
managers, who send recommendations to the Investment Managers and a
request for approval.
5. General and administrative
expenses
|
|
|
30
June 2018 |
|
30 June
2017 |
|
|
|
£000s |
|
£000s |
Administration fees |
|
(173) |
|
(188) |
General
expenses |
|
|
(299) |
|
(621) |
Audit
fees |
|
|
(196) |
|
(142) |
Legal and
professional fees |
(41) |
|
(160) |
Directors' fees |
|
|
(59) |
|
(74) |
Insurance fees |
|
|
(62) |
|
(64) |
Liquidation costs |
|
|
36 |
|
17 |
Corporate
Broker fees |
|
(25) |
|
(25) |
Investment
management fees |
(282) |
|
(255) |
Performance fee |
|
|
310 |
|
583 |
Total |
|
|
(791) |
|
(929) |
|
|
|
|
|
|
|
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 £58,500
(30 June 2017: £74,282) in respect of
the Group.
6. Net finance cost
|
|
|
30
June 2018 |
|
30 June
2017 |
|
|
|
£000s |
|
£000s |
Interest
charge from bank deposits |
(14) |
|
(49) |
Interest
income from JV partners |
- |
|
97 |
Finance costs |
|
|
- |
|
(199) |
Total |
|
|
(14) |
|
(151) |
7. Basic and diluted loss per
Share
The basic and diluted gain or loss per share for the Group is
based on the net loss for the year of £4.90 million (30 June 2017: net loss of £0.92 million) and the
weighted average number of Ordinary Shares in issue during the year
of 23,402,881 (30 June 2017:
48,025,516).
8. Dividends
The Company suspended dividends from June
2012 in order prudently to manage its cash and debt
positions. No dividends were declared or paid during 2015, 2016,
2017 and 2018.
9. Investment property
|
|
|
30
June 2018 |
|
30 June
2017 |
|
|
|
£000s |
|
£000s |
Fair
value of investment property at beginning of year |
12,310 |
|
37,023 |
Opening
fair value of assets sold during the year |
- |
|
(24,724) |
Fair value
adjustments |
|
(4,527) |
|
(781) |
Foreign
exchange translation |
88 |
|
792 |
Fair
value of investment property at the end of the year |
7,871 |
|
12,310 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment property |
7,871 |
|
12,310 |
Investment property is carried at fair value.
During the year ended 30 June
2017, the following investment properties were sold:
- Dasing (Dasing,
Germany) completed on 25 August 2016. Sales price achieved was €7.45
million (£6.41 millions); and
- Rothenburg (Rothenburg,
Germany) competed in January 2017. Sales price achieved was €22.02
million (£18.95 million).
No property was sold during the year ended 30 June 2018.
The property has been valued on the basis of fair value, which
is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date. Quarterly valuations are
carried out at 31 March, 30 June, 30
September and 31 December by Knight Frank LLP, external independent
valuers.
The fair value of investment property is analysed by valuation
method, according to the levels of the fair value hierarchy. The
different levels have been defined as follows:
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities;
Level 2: inputs other than quoted prices included within
Level 1 that are observable for asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices);
Level 3: inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
The investment property (Curno) is valued via level 3.
The significant assumptions made relating to its valuation are
set out below:
2018 significant assumptions
Significant assumptions |
2018 |
2017 |
Gross estimated rental value per
sqm p.a. |
|
|
- range |
125.00€ |
179.95€ |
- weighted average |
125.00€ |
179.95€ |
Net initial yield |
|
|
- range |
16.31% |
8.74% |
- weighted average |
16.31% |
8.74% |
Revisionary yield |
|
|
- range |
9.22% |
7.62% |
- weighted average |
9.22% |
7.62% |
True equivalent yield |
|
|
- range |
8.74% |
8.57% |
- weighted average |
8.74% |
8.57% |
An increase/decrease in ERV (Estimated Rental Value) will
increase/decrease valuations, while an increase/decrease to yield
decreases/increases valuations. The table below sets out the
sensitivity of the valuation to changes of 50 basis points in
yield.
The external valuer has carried out its valuation using the
comparative and investment methods. The external valuer has made
the assessment on the basis of a collation and analysis of
appropriate comparable investment and rental transactions. The
market analysis has been undertaken using market knowledge,
enquiries of other agents, searches of property databases, as
appropriate and any information provided to them. The external
valuer is adhering to the RICS Valuation – Professional
Standards.
2018 sensitivity
Movement |
|
Increase of 50 basis points |
Decrease of €0.3 million |
Decrease of 50 basis points |
Increase of €0.3 million |
2017 sensitivity
Movement |
|
Increase of 50 basis points |
Decrease of €0.7 million |
Decrease of 50 basis points |
Increase of €0.8 million |
10. 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, Property Trust Agnadello
S.r.l. sold its logistic warehouse. 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 in the Financial Statements using the equity method,
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. and 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
|
|
|
|
|
|
|
|
|
30
June 2018 |
|
30 June
2017 |
|
|
|
£000s |
|
£000s |
Current assets |
|
|
431 |
|
1,322 |
Current
liabilities |
|
|
(102) |
|
(38) |
Net
assets (100%) |
|
329 |
|
1,284 |
Group's
share of net assets (50%) |
50% |
|
50% |
Group's
share of net assets |
165 |
|
642 |
Summarised Consolidated Income
Statement
|
|
|
30
June 2018 |
|
30 June
2017 |
|
|
|
£000s |
|
£000s |
Net rental
and related (expense)/income |
(2) |
|
568 |
Loss on
disposals of investment properties |
- |
|
(387) |
Total
administrative and other expenses |
(251) |
|
(180) |
Financial
expenses |
|
- |
|
(202) |
Loss before tax |
|
|
(253) |
|
(201) |
Income tax
gain |
- |
|
121 |
Loss for the year |
|
|
(253) |
|
(80) |
Group's
share of loss for the year |
(127) |
|
(40) |
Summarised Consolidated Statement of
Comprehensive Income
|
|
|
30
June 2018 |
|
30 June
2017 |
|
|
|
£000s |
|
£000s |
Loss for the year |
|
|
(253) |
|
(80) |
Total
comprehensive loss for the year |
(253) |
|
(80) |
Group's
share of loss for the year |
(127) |
|
(40) |
11. Trade and other receivables
|
|
|
30
June 2018 |
|
30 June
2017 |
|
|
|
£000s |
|
£000s |
Other receivables |
|
|
303 |
|
681 |
VAT receivable |
|
|
137 |
|
91 |
Tax receivable |
|
|
19 |
|
119 |
Rent receivable |
|
|
11 |
|
14 |
Prepayments |
|
|
25 |
|
34 |
Total |
|
|
495 |
|
939 |
Other receivables as at 30 June
2018 are mainly composed by Insurance deferred charges
(£159,000) and Management fees receivables (£70,000).
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.
12. Trade and other payables
|
|
|
|
|
30 June
2017 |
|
|
|
£000s |
|
£000s |
Investment
manager's fee |
- |
|
111 |
VAT
payable |
94 |
|
32 |
Tax
payable (income, transfer, capital and other) |
507 |
|
751 |
Interest
payable on loan facility |
- |
|
13 |
Legal and
professional fees |
10 |
|
29 |
Audit fee |
|
|
114 |
|
221 |
Rent prepaid |
|
|
5 |
|
3 |
Other |
|
|
259 |
|
413 |
Total |
|
|
989 |
|
1,573 |
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.
13. Provisions
|
|
|
30
June 2018 |
|
30 June
2017 |
|
|
|
£000s |
|
£000s |
Non-current |
|
|
|
|
|
Provision
for performance fees |
- |
|
310 |
Provision
for wind-down costs |
153 |
|
189 |
Other provisions |
|
|
56 |
|
- |
Total |
|
|
209 |
|
499 |
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 5).
14. Taxation
|
|
|
30
June 2018 |
|
30 June
2017 |
|
|
|
£000s |
|
£000s |
Effect of: |
|
|
|
|
|
Current tax |
|
|
|
|
|
Luxembourg |
|
|
(36) |
|
(1) |
Italy |
|
|
(215) |
|
(188) |
Germany |
|
|
(537) |
|
(152) |
Total current
tax |
|
|
(788) |
|
(341) |
|
|
|
|
|
|
Deferred
tax |
|
|
|
|
|
Investment
property |
|
|
- |
|
274 |
Total deferred
tax |
|
|
- |
|
274 |
|
|
|
|
|
|
Tax
charge during the year |
(788) |
|
(67) |
Movement in temporary differences
|
|
|
|
|
Recognised |
|
Foreign |
|
|
|
|
|
|
|
in
income |
|
exchange |
|
|
|
|
|
1 July
2016 |
|
statement |
|
translation |
|
30
June 2017 |
|
|
|
£000s |
|
£000s |
|
£000s |
|
£000s |
Investment
property |
(351) |
|
274 |
|
77 |
|
- |
Tax value
of loss carry forwards recognised |
- |
|
- |
|
- |
|
- |
Tax
assets/(liabilities) |
|
(351) |
|
274 |
|
77 |
|
- |
There are no temporary differences as at 30 June 2018.
The Parent Company is exempt from Guernsey taxation.
15. Share capital
|
30 June
2018 |
30 June
2017 |
|
Number of
shares |
Number of
shares |
Shares of no par values issued and
fully paid |
23,402,881 |
23,402,881 |
Capital management
The Company’s capital is represented by the Ordinary Shares,
revenue reserve, distributable reserve and foreign exchange
reserve. 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, both of which are
set out in the Investment Objective and Policy section. 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 following redemptions of shares have been made under the
mechanism for the Redemption of Shares as approved at the EGM held
on 27 February 2014:
Redemption |
Capital |
Shares |
date |
Returned |
cancelled |
19-Mar-14 |
1,999,957 |
3,641,580 |
09-Apr-14 |
2,099,903 |
3,823,572 |
30-Oct-14 |
1,999,547 |
3,668,894 |
14-May-15 |
1,733,022 |
3,181,296 |
20-Jul-15 |
5,197,083 |
9,725,084 |
06-Jan-16 |
10,996,174 |
18,382,104 |
17-Feb-17 |
18,400,902 |
25,771,573 |
23-Jun-17 |
5,602,290 |
8,403,016 |
|
48,028,878 |
76,597,119 |
16. 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 £10.63 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.
17. Financial risk management
The Group is exposed to various types of risk that are
associated with financial instruments. The Group's financial
instruments comprise bank deposits, 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, interest risk and
foreign currency risk. The Board reviews and agrees 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 property.
Market price sensitivity analysis
The sensitivity analysis has been determined based on the
exposure to property valuation risks at the reporting date. Any
changes in market conditions will directly affect the profit or
loss reported through the Consolidated Income Statement. A 5%
increase in the value of the property at 30
June 2018 would have increased net assets and income for the
year by £0.4 million (30 June 2017:
£0.6 million). A decrease of 5% would have had an equal but
opposite effect. The ratio of cash, cash equivalents and trade and
other receivables to the NAV is 35.68% (30
June 2017: 30.51%).
Credit risk
Credit risk refers to the risk that counterparty will default on
its contractual obligations resulting in financial loss to the
Group. As at June 2018, 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. The Group banks with
Barclays Bank plc which has a Fitch rating of A, HSBC Bank plc with
a Fitch rating of AA- and BIL with a Fitch rating of BBB+.
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. The
Company’s maximum credit exposure is limited to the carrying amount
of financial assets recognised as at the Consolidated Statement of
Financial Position date.
At the reporting date, the carrying amount of the financial
assets exposed to risk were as follows:
|
|
Within |
|
|
|
|
|
one year |
1-3
years |
|
Total |
As at 30 June
2018 |
|
£000s |
£000s |
|
£000s |
|
|
|
|
|
|
|
Cash and
cash equivalents |
3,298 |
- |
|
3,298 |
Rent receivable |
|
11 |
- |
|
11 |
Trade and
other receivables |
484 |
- |
|
484 |
Total |
|
3,793 |
- |
|
3,793 |
|
|
|
|
|
|
|
|
|
Within |
|
|
|
|
|
one year |
1-3
years |
|
Total |
As at 30 June
2017 |
|
£000s |
£000s |
|
£000s |
|
|
|
|
|
|
|
Cash and
cash equivalents |
3,846 |
- |
|
3,846 |
Rent receivable |
|
14 |
- |
|
14 |
Trade and
other receivables |
925 |
- |
|
925 |
Total |
|
4,785 |
- |
|
4,785 |
|
|
|
|
|
|
|
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
property which is relatively illiquid. 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
prudently to manage cash during the wind-down phase.
The table below summarises the maturity profile of the Group’s
liabilities.
|
|
Less
than 3 months |
|
3-12
months |
|
1-3
years |
|
|
|
|
|
|
|
|
|
|
Total |
As at 30 June
2018 |
|
£000s |
|
£000s |
|
£000s |
|
£000s |
Trade and other
payables |
|
989 |
|
- |
|
- |
|
989 |
Total |
|
989 |
|
- |
|
- |
|
989 |
|
|
Less than 3 months |
|
3-12 months |
|
1-5 years |
|
|
|
|
|
|
|
Total |
As at 30 June
2017 |
|
£000s |
|
£000s |
|
£000s |
|
£000s |
Trade and other
payables |
|
1,573 |
|
- |
|
- |
|
1,573 |
Total |
|
1,573 |
|
- |
|
- |
|
1,573 |
Interest re-pricing risk
|
|
|
|
|
|
|
Total
as per |
|
|
|
|
|
|
|
|
statement of financial position |
|
Fixed
rate |
|
Floating rate
3 months or less |
As at 30 June
2018 |
|
|
|
£000s |
|
£000s |
|
£000s |
Financial
assets |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
3,298 |
|
- |
|
3,298 |
Total |
|
|
|
3,298 |
|
- |
|
3,298 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
as per |
|
|
|
|
|
|
|
|
statement of financial position |
|
Fixed
rate |
|
Floating rate
3 months or less |
As at 30 June
2017 |
|
|
|
£000s |
|
£000s |
|
£000s |
Financial
assets |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
3,846 |
|
- |
|
3,846 |
Total |
|
|
|
3,846 |
|
- |
|
3,846 |
|
|
|
|
|
|
|
|
|
Foreign currency risk
The European subsidiaries invested in properties using
currencies other than Sterling (that is Euros), 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 following table sets out the total exposure to foreign
currency risk and the net exposure to foreign currency of monetary
assets and liabilities based on notional amounts.
|
|
|
|
Monetary |
|
Monetary |
|
Net |
|
|
|
|
assets |
|
liabilities |
|
exposure |
|
|
|
|
£000s |
|
£000s |
|
£000s |
|
|
|
|
|
|
|
|
|
At 30 June 2018 |
|
|
|
3,793 |
|
(989) |
|
2,804 |
At 30 June 2017 |
|
|
|
4,785 |
|
(1,573) |
|
3,212 |
Foreign currency risk sensitivity
The following table demonstrates the sensitivity to potential
fluctuations in the Euro exchange rate (ceteris paribus) of the
Group’s equity.
|
|
|
|
|
|
Increase/decrease |
|
Effect
on equity |
|
|
|
|
|
|
in
Euro |
|
and
income |
|
|
|
|
|
|
exchange rate |
|
£000s |
|
|
|
|
|
|
|
|
|
At 30 June 2018 |
|
|
|
|
|
+5% |
|
140 |
|
|
|
|
|
|
-5% |
|
(140) |
|
|
|
|
|
|
|
|
|
At 30 June 2017 |
|
|
|
|
|
+5% |
|
(161) |
|
|
|
|
|
|
-5% |
|
161 |
18. Reserves
(a) Distributable reserves
Distributable reserves arose from the cancellation of the share
premium account pursuant to the special resolution passed at the
EGM on 13 April 2005 and approved by
the Royal Court of Guernsey on
24 June 2005.
(b) Foreign currency reserves
Foreign currency reserves arose as a result of the translation
of the Financial Statements of foreign operations, the functional
and presentation currency of which is not Sterling.
19. NAV Reconciliation
The following is a reconciliation of the NAV per share
attributable to ordinary shareholders as presented in these
Financial Statements to the unaudited NAV per share reported to the
LSE:
|
|
|
|
|
|
|
|
NAV
per |
|
|
|
|
|
|
|
|
Ordinary |
|
|
|
|
|
|
NAV |
|
Share |
30 June
2018 |
|
|
|
|
|
£000s |
|
£ |
|
|
|
|
|
|
|
|
|
Net Asset
Value reported to London Stock Exchange (unaudited) |
|
10,690 |
|
45.68p |
Adjustment
of tax on Multiplex S.r.l. |
|
(54) |
|
(0.23)p |
Others |
|
(5) |
|
(0.02)p |
Net
Assets Attributable to Shareholders per Financial Statements
(audited) |
|
10,631 |
|
45.43p |
|
|
|
|
|
|
|
|
NAV
per |
|
|
|
|
|
|
|
|
Ordinary |
|
|
|
|
|
|
NAV |
|
Share |
30 June
2017 |
|
|
|
|
|
£000s |
|
£ |
|
|
|
|
|
|
|
|
|
Net Asset
Value reported to London Stock Exchange (unaudited) |
|
15,832 |
|
67.65p |
Adjustment
on the income tax of Property Luxembourg |
|
(329) |
|
(1.40)p |
Other adjustments |
|
|
|
|
|
162 |
|
0.69p |
Net
Assets Attributable to Shareholders per Financial Statements
(audited) |
|
15,665 |
|
66.94p |
20. 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, retired on 28 December 2018) was also Director of the
Company’s subsidiaries, Property Trust Luxembourg 2 S.à r.l. and
Property Trust Luxembourg 3 S.à r.l. and was able to control
the investment policies of the Luxembourg subsidiaries to ensure they conform
with the investment policy of the Company.
Mr Lawson, a Director of the Company is also a product
manager for alternative asset services 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 during the year
in respect of Northern Trust administration fees was £145,000
(30 June 2017: £145,000) of which
£72,500 (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 £0.28
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.
21. Commitments and contingent
liability
As at 30 June 2018 the Company has
no commitments.
Disposal of the Curno property may incur Italian taxes which may
be material in the context of shareholders’ funds depending the
terms of the disposal. As at the 30 June
2018 and up to the date of approval, the Board are not able
to determine the likelihood of the terms of a disposal at this
time. As a result, no provision has been included in these
financial statements.
22. Subsequent events
These Financial Statements were approved for issuance by the
Board on 28 March 2019. Subsequent
events have been evaluated until this date.
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 Circular included a review of the Group’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 which would be achieved.
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 and voted against the Proposals,
effectively blocking them as a 75% majority was required.
The Directors subsequently consulted with the shareholder who
voted against the Proposals, Mr Blake
Nixon. Mr Nixon has proposed a continuation of the Company
with a different investment policy and objective, specifically
that:
1. the Company's investment policy be modified so as
to provide shareholders with an attractive level of absolute
long-term return, principally through the capital appreciation and
exit of undervalued securities, through active investment in
undervalued smaller capitalisation British equities;
2. the Curno property be taken off the market for
the time being;
3. the policy of returning capital to shareholders
be discontinued;
4. Worsley Associates LLP to be appointed as
Investment Advisor to the Company, to be responsible for the
implementation of investment decisions made by the Board and to
assume executive management of the corporate structure and affairs,
as replacement for AXA Investment Managers UK Limited (“AXA IM”),
to the extent this role is not to be fulfilled by Blake Nixon personally;
5. the Company's Board structure be reviewed in
light of this new focus (and in particular the potential to reduce
the number of directors on the board to three);
6. an expense reduction exercise be undertaken to
reduce the administration and general costs of the Company as an
ongoing listed vehicle; and
7. the best option for the asset management of the
Curno property to be identified as replacement for AXA IM;
On 9 November 2018 Property Trust
Agnadello Srl the joint venture held by the Group was
liquidated.
On 12 December 2018 the Board of
Directors confirmed receipt of a Member’s Requisition of an
Extraordinary General Meeting (“the Requisition”) requiring
that a general meeting of the Company be convened at the earliest
opportunity, for the purpose of considering and voting on a
resolution to appoint Blake Nixon as
a Director of the Company.
At the Annual General Meeting of the Company held on
28 December 2018 the Resolutions to
re-appoint both Charles Hunter and
Stephane Monier were not passed and
both Directors submitted their resignations with immediate effect.
Gavin Farrell was appointed as
Chairman on an interim basis.
As a result of the ongoing discussions with the tenant at the
Curno property, the Manager entered into negotiations in early 2018
with the aim of negotiating overall terms that would improve
liquidity and maximise potential pricing. As a result a new lease
was signed in December 2018
summarised as follows:
- Term
15 years fixed, from 1 January
2019 with an automatic nine-year extension unless cancelled
by the tenant with a minimum 12-month notice period.
- Base Rent
Year 1 – €800,000
Year 2 (i.e. from January 2019) –
€830,000, and thereafter to be indexed to 100% of the ISTAT
Consumer Index on an upwards-only basis.
As part of the overall negotiation package an amount of €330,000
lease incentive has been paid in December
2018 to the tenant and €330,000 has been granted to the
tenant as a discount on rent equivalent to 6 months’ rent free.
- Variable Rent
There will be an incremental rent of between €1.50 and €2.50 per
ticket sold above a minimum threshold of 350,000 tickets per
year.
On 15 January 2019 the Company
announced a shareholder redemption of £1.2 million arising from
available cash reserves.
At the Extraordinary General Meeting held on 23 January 2019, the proposal to appoint Mr Nixon
to the Board of Directors was passed and he was appointed with
immediate effect.
Corporate Information
Directors (All non-executive)
G. J. Farrell (Interim Chairman)
S. J. Lawson
B.A. Nixon (appointed on 23 January
2019)
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
Corporate 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