AXA PROPERTY TRUST
LIMITED
LEI: 213800AF85VEZMDMF931
(Classified Regulated Information,
under DTR 6 Annex 1 section 1.2)
Explanatory Note
This Half Year Report and Consolidated Financial Statements
covers a period prior to the appointment of any of the current
directors and was approved (but not signed) at an Audit Committee
meeting consisting of Mr Farrell and Mr Lawson (“the Former
Directors”) on the evening of 28 March
2019. Such approval was subject to receiving confirmations
from the Investment Manager in relation to the brought forward
balances agreeing to the Year End Financial Statements for the year
ended 30 June 2018 and various minor
amendments. The Year End Financial Statements for the year ended
30 June 2018 had been approved by the
previous Board and signed by the Former Directors earlier that
evening on the 28 March 2019.
After review of the minutes of the Audit Committee meeting of
the Former Directors on 28 March 2019
and after due and careful enquiry of the Administrator and Manager,
with no impediment thereby identified, this Half Year Report and
Consolidated Financial Statements has been approved by the current
directors of the company.
Key Financial Information
As at 31
December 2018
· Sterling currency Net Asset
Value (“NAV”) was £10.8 million (30 June
2018: £10.6 million)
· NAV was 46.07 pence per share (30
June 2018: 45.43 pence)
· Share price1 was
36.90 pence per share (30 June 2018: 38.40
pence per share)
For the six months ended 31 December 2018
· Profit was 0.07 pence per share (31
December 2017 loss was: 4.24
pence per share)
· No redemptions of shares were
made during the period (31 December
2017: none)
· On 28
January 2018 the Company returned £1.2 million capital its
shareholders redeeming 2,644,440 shares.
1 Closing price on 1 November
2018 since the shares were suspended at this date (source:
Stifel Nicolaus Europe Limited).
Performance Summary
|
Six months
ended
31 December 2018 |
Year ended
30 June 2018 |
% change |
NAV (£000s) |
10,7821 |
10,631 |
1.4% |
NAV per share |
46.07p1 |
45.43p |
1.4% |
Profit/(Loss) per share |
0.07p |
(20.95)p |
100.3% |
Share redemptions made |
nil |
nil |
n/a |
Share price2,3 |
36.90p3 |
38.40p |
(3.9)% |
Share price discount to NAV |
19.9% |
15.5% |
n/a |
Total assets less current
liabilities (£000s) |
10,935 |
10,840 |
0.9% |
Past performance is not a guide to
future performance.
1 Refer to note 15
2 Mid-market share price (source: Stifel Nicolaus
Europe Limited).
3 Trading of shares was temporarily suspended from
1 November 2018.
Source: AXA Investment Managers UK Limited and Stifel
Nicolaus Europe Limited
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 €730 billion as at 31 December 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
After an extensive period of negotiation with UCI, the new lease
contract was signed in front of a notary on 13 December 2018. The key terms of the lease are
as follows:
Base Rent
Year 1 – EUR 800,000, subject to a
rent-free incentive equivalent to five months’ rent.
Year 2 – EUR 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 the tenant also
received a fixed contribution of approximately EUR 330,000.
Variable Rent
There will be an incremental rent of between EUR 1.50 and EUR
2.50 per ticket sold above a minimum threshold of 350,000
tickets per year.
Tenant Guarantee
There will be an increased guarantee package as security against
the tenant’s obligations throughout the term of the lease.
Following the escalation by the tenant regarding their trading
concerns, the marketing process was deferred until the lease terms
had been renegotiated. The Manager has now resumed marketing and
approached a targeted list of investor groups which are considered
likely investors for this type of lot size.
Property Portfolio at 31 December 2018
Investment
name |
Country |
Sector |
Net
Yield on valuation1 |
Curno, Bergamo |
Italy |
Leisure |
8.42% |
1 Source - external independent valuers to the Company, Knight
Frank LLP.
Net yield on valuation is Gross rental income over
valuation.
|
31 December
2018 |
30 June
2018 |
Weighted average lease term |
14.5 years |
6.5 years* |
* Based on the lease contract in place as at 30 June 2018.
|
Creditreform |
Dun &
Badstreet |
Covenant strength analysis at 31
December 2018 |
<199 |
A1 |
Source: AXA Real Estate Investment Managers UK Limited
Board of Directors
William Scott (Chairman),
a Guernsey resident, has been was
appointed to the board of the Company as an independent Director on
28 March 2019. Mr Scott also
currently serves as independent non-executive director of a number
of investment companies and funds, of which Axiom European
Financial Debt Fund Limited is listed on the Premium Segment of the
LSE. He is also a director of The Flight and Partners Recovery Fund
Limited and a number of funds sponsored by Man Group (Absolute
Alpha Fund PCC Limited, AHL Strategies PCC Limited and MAN AHL
Diversified PCC Limited) which are listed on The International
Stock Exchange. From 2003 to 2004, Mr Scott worked as senior vice
president with FRM Investment Management Limited, which is now part
of Man Group plc. Previously, Mr Scott was a director at Rea
Brothers (which became part of the Close Brothers group in 1999)
from 1989 to 2002 and assistant investment manager with the London
Residuary Body Superannuation Scheme from 1987 to 1989. Mr Scott
graduated from the University of
Edinburgh in 1982 and is a chartered accountant having
qualified with Arthur Young (now
Ernst & Young LLP) in 1987. Mr Scott also holds the Securities
Institute Diploma and is a chartered fellow of the Chartered
Institute for Securities & Investment. He is also a chartered
wealth manager.
Robert Burke, a resident
of Ireland, was appointed to the
board of the Company as an independent Director on 28 March 2019. He also serves as an independent
non-executive director of a number of investment companies and
investment management companies which are domiciled in Ireland as well as a number of companies
engaged in retail activities, aircraft leasing, pharmaceuticals,
corporate service provision and group treasury activities. He is a
graduate of University College Dublin with degrees of Bachelor of
Civil Law (1968) and Master of Laws (1970). He was called to the
Irish Bar in 1969 and later undertook training for Chartered
Accountancy with Price Waterhouse (now PricewaterhouseCoopers) in
London, passing the final
examination in 1973. He later was admitted as a Solicitor of the
Irish Courts and was a tax partner in the practice of McCann FitzGerald in Dublin from 1981 to 2005 at which point he
retired from the partnership to concentrate on directorship roles
in which he was involved. He continues to hold a practice
certificate as a solicitor and is a member of the Irish Tax
Institute.
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.
Directors’ Responsibility
Statement
We confirm that to the best of our knowledge:
· the Condensed Half Year
Consolidated Financial Statements have been prepared in accordance
with International Accounting Standard 34 Interim Financial
Reporting; and
· this Half Year Report provides a
fair review of the information required by:
a) DTR 4.2.7R of the Disclosure and
Transparency Rules, being an indication of important events that
have occurred during the first six months of the financial year and
their impact on the Condensed Half Year Consolidated Financial
Statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure and
Transparency Rules, being related party transactions that have
taken place in the first six months of the current financial year
and that have materially affected the financial position or
performance of the entity during that period; and any changes in
the related party transactions described in the last annual report
that could materially affect the financial position or performance
of the entity.
Signed on behalf of the Board by:
Blake
Nixon
Robert Burke
Director
Director
29 March
2019
29 March 2019
Condensed Half
Year Consolidated Income Statement
For the six months
ended 31 December 2018
(unaudited)
|
|
|
|
|
Six
month period ended |
|
Six
month period ended |
|
|
|
|
|
31
December 2018 |
|
31
December 2017 |
|
|
|
|
Notes |
£000s |
|
£000s |
|
|
|
|
|
|
|
|
|
|
Gross
rental income |
3 |
376 |
|
663 |
|
|
Property
operating expenses |
|
(70) |
|
(169) |
|
Net
rental and related income |
|
306 |
|
494 |
|
|
|
|
|
|
|
|
|
|
Valuation
gain/(loss) on investment property |
|
240 |
|
(710) |
|
|
Loss on
liquidation of subsidiary |
|
(43) |
|
- |
|
|
General
and administrative expenses |
4 |
(463) |
|
(315) |
|
Operating profit/(loss) |
|
40 |
|
(531) |
|
|
|
|
|
|
|
|
|
|
Net
foreign exchange gain/(loss) |
|
4 |
|
- |
|
|
Share in
loss of a joint venture |
8 |
(14) |
|
(1) |
|
|
Net
finance cost |
|
(2) |
|
(11) |
|
Profit/(Loss) before tax |
|
28 |
|
(543) |
|
|
|
|
|
|
|
|
|
|
Income tax
expense |
|
(12) |
|
(449) |
|
Profit/(Loss) for the period |
|
16 |
|
(992) |
|
|
|
|
|
|
|
|
|
Basic and
diluted loss per ordinary share (pence) |
|
0.07 |
|
(4.24) |
Condensed Half
Year Consolidated Statement of Comprehensive Income
For the six months
ended 31 December 2018
(unaudited)
|
|
|
|
|
Six
month period ended |
|
Six
month period ended |
|
|
|
|
|
31
December 2018 |
|
31
December 2017 |
|
|
|
|
|
£000s |
|
£000s |
|
|
|
|
|
|
|
|
|
Profit/(Loss) for the period |
|
16 |
|
(992) |
|
Other
comprehensive income |
|
|
|
|
|
Foreign
exchange translation gain |
|
135 |
|
232 |
|
|
|
|
|
|
Total
items that are or may be reclassified to profit or
loss |
|
135 |
|
232 |
|
|
|
|
|
|
|
|
|
Total
comprehensive profit/( loss)/for the period |
|
151 |
|
(760) |
Condensed Half
Year Consolidated Statement of Changes in Equity
For the six months
ended 31 December 2018
(unaudited)
|
|
|
|
Revenue reserve |
Distributable
reserve |
Foreign currency reserve |
Total |
|
|
|
|
£000s |
£000s |
£000s |
£000s |
Balance
at 1 July 2018 |
|
|
(46,315) |
44,853 |
12,093 |
10,631 |
Profit for
the period |
|
|
16 |
- |
- |
16 |
Other
comprehensive income |
|
|
- |
- |
135 |
135 |
Balance
at 31 December 2018 |
|
(46,299) |
44,853 |
12,228 |
10,782 |
For the six months
ended 31 December 2017
(unaudited)
|
|
|
|
Revenue reserve |
Distributable
reserve |
Foreign currency reserve |
Total |
|
|
|
|
£000s |
£000s |
£000s |
£000s |
Balance
at 1 July 2017 |
|
|
(41,411) |
44,853 |
12,223 |
15,665 |
Loss for
the period |
|
|
(992) |
- |
- |
(992) |
Other
comprehensive income |
|
|
- |
- |
232 |
232 |
Balance
at 31 December 2017 |
|
|
(42,403) |
44,853 |
12,455 |
14,905 |
Condensed Half
Year Consolidated Statement of Financial Position
As at 31 December 2018 (unaudited)
|
|
|
31
December 2018 |
|
30
June 2018 |
|
|
Notes |
£000s |
|
£000s |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Investment
property |
6 |
8,527 |
|
7,871 |
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
Cash and
cash equivalents |
|
2,808 |
|
3,298 |
|
Trade and
other receivables |
9 |
614 |
|
495 |
|
Investment
in joint venture held for sale |
8 |
- |
|
165 |
|
|
|
|
|
|
Total
assets |
|
11,949 |
|
11,829 |
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Trade and
other payables |
10 |
1,014 |
|
989 |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Provisions |
11 |
153 |
|
209 |
|
|
|
|
|
|
Total
liabilities |
|
1,167 |
|
1,198 |
|
|
|
|
|
|
Net
assets |
|
10,782 |
|
10,631 |
|
|
|
|
|
|
|
Reserves |
|
10,782 |
|
10,631 |
|
|
|
|
|
|
Total
equity |
|
10,782 |
|
10,631 |
|
|
|
|
|
|
Number of
ordinary shares |
|
23,402,881 |
|
23,402,881 |
|
|
|
|
|
|
Net
asset value per ordinary share (pence) |
|
46.07 |
|
45.43 |
|
|
|
|
|
|
|
By order of the Board
Blake
Nixon
Robert Burke
Director
Director
29 March
2019
29 March 2019
Condensed Half
Year Consolidated Statement of Cash Flow
For the six months
ended 31 December 2018
(unaudited)
|
|
|
|
Six
month period ended |
|
Six
month period ended |
|
|
|
|
31
December 2018 |
|
31
December 2017 |
|
|
Notes |
|
£000s |
|
£000s |
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before tax |
|
|
28 |
|
(543) |
|
Adjustments for: |
|
|
|
|
|
|
(Gain)/Loss on valuation and disposals of a subsidiary and
investment property |
|
|
(341) |
|
710 |
|
Shares in
loss of joint-venture |
8 |
|
14 |
|
1 |
|
Gain on
financial instruments |
|
|
(4) |
|
|
|
(Increase)/decrease in trade and other receivables |
9 |
|
(415) |
|
615 |
|
Decrease
in provisions |
11 |
|
(56) |
|
(234) |
|
Increase
/(decrease) in trade and other payables |
10 |
|
25 |
|
(477) |
|
Net
finance cost |
|
|
2 |
|
11 |
Net
cash (used in)/generated from operations |
|
(747) |
|
83 |
|
|
|
|
|
|
|
|
Interest paid |
|
|
(2) |
|
(10) |
|
Tax paid |
|
|
(12) |
|
(927) |
Net
cash outflow from operating activities |
|
(761) |
|
(854) |
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
Investment in
joint-ventures |
|
|
151 |
|
- |
Net
cash inflow from investing activities |
|
151 |
|
- |
|
|
|
|
|
|
|
|
Effects of
exchange rate fluctuations |
|
120 |
|
41 |
(Decrease) in cash and cash equivalents |
|
(490) |
|
(813) |
|
|
|
|
|
|
|
|
Cash and cash
equivalents at start of the period |
|
|
3,298 |
|
3,846 |
Cash
and cash equivalents at the period end |
|
2,808 |
|
3,033 |
|
|
|
|
|
|
|
|
Notes to the Condensed Half Year
Consolidated Financial Statements
For the period ended 31 December 2018
1. Operations
AXA Property Trust Limited (the “Company”) is a limited
liability, closed-ended investment company incorporated in
Guernsey. The Company has
historically invested in commercial properties in Europe which were held through its
subsidiaries. The Condensed Half Year Consolidated Financial
Statements of the Company for six month ended 31 December 2018 comprise the financial
statements of the Company and its subsidiaries (together referred
to as the “Group”).
2. Significant accounting policies
(a) Statement of
compliance
The Condensed Half Year Consolidated Financial Statements have
been prepared in accordance with the Disclosure Transparency Rules
of the Financial Conduct Authority and with IAS 34, ‘Interim
Financial Reporting’. They do not include all the information
required for the full annual financial statements and should be
read in conjunction with the consolidated financial statements of
the Group for the year ended 30 June
2018, which were prepared under full International Financial
Reporting Standard (“IFRS”) requirements as issued by the
International Accounting Standards Board.
(b) Basis of
preparation
The same accounting policies and methods of computation have
been applied to the Condensed Half Year Consolidated Financial
Statements as in the Annual Report and Consolidated Financial
Statements for the year ended 30 June
2018.
The presentation of the Condensed Half Year consolidated
Financial Statements is consistent with the Annual Report and
Consolidated Financial Statements.
(c) Going concern
The discount control provisions established when the Company was
launched required a continuation vote to be proposed to
shareholders at the Company's Annual General Meeting (“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. 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.
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.
3. Gross rental income
Gross rental income for the six months ended 31 December 2018 amounted to £0.37 million
(31 December 2017: £0.7 million). The Group leases
out its investment property under an operating lease which is
structured in accordance with local practices in Italy. The lease benefits from indexation.
Minimum Lease Payments
|
Rental income |
Rental income |
|
31
December 2018 |
30
June 2018 |
|
£000s |
£000s |
0-1 year |
800 |
1,284 |
1-5 years |
3,320 |
6,420 |
5+ years |
7,885 |
616 |
The forecasted rental income reflects the lease terms at the end
of the reporting period. The change in forecasted rental income in
December 2018 compared to
June 2018 reflects the terms of the
lease agreed during the period.
The rental income for the period ending 31 December 2018 was reduced by the lease
discount agreed during the period as part of the new lease
negotiations.
4. General and administrative
expenses
|
Six
month |
Six
month |
|
period ended |
period ended |
|
31
December 2018 |
31
December 2017 |
|
£000s |
£000s |
Administration
fees |
(84) |
(89) |
General expenses |
(16) |
(40) |
Corporate and
accounting fees |
(48) |
(43) |
Valuation and
technical advise |
(30) |
(10) |
Audit fees |
(91) |
(82) |
Legal and professional
fees |
(66) |
(10) |
Director's fees |
(29) |
(35) |
Insurance fees |
(31) |
(30) |
Liquidation costs |
- |
24 |
Corporate Broker’s
fees |
(13) |
(13) |
Investment management
fees |
(55) |
(197) |
Performance fee |
- |
210 |
Total |
(463) |
(315) |
5. Share capital redemptions
No share redemptions took place during the period.
6. Investment property
|
31
December 2018 |
30
June 2018 |
|
£000s |
£000s |
Fair value of
investment property at beginning of the period/year |
7,871 |
12,310 |
Lease incentives |
296 |
- |
Fair value
adjustments |
240 |
(4,527) |
Foreign exchange
translation |
120 |
88 |
Fair value of
investment property at the end of the period/year |
8,527 |
7,871 |
|
|
|
Total investment
property |
8,527 |
7,871 |
Investment property is carried at fair value.
7. Investment property held for
sale
As at 31 December 2018, there is no investment
property classified as held for sale (30
June 2018: none).
8. Divestment from 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.
Property Trust Agnadello S.r.l was fully liquidated in
November 2018.
The Group’s interest in Property Trust Agnadello S.r.l. was
accounted for using the equity method in the consolidated financial
statements, which approximates the lower of its carrying amount and
its fair value less cost to sell.
The following table summarises the financial information of
Property Trust Agnadello S.r.l. which also reconciles the
summarised financial information to the carrying amount of the
Group’s interest in the joint venture:
Summarised
Consolidated Statement of Financial Position |
31
December 2018 |
30
June 2018 |
|
£000s |
£000s |
Current assets |
- |
431 |
Current
liabilities |
- |
(102) |
Net assets
(100%) |
- |
329 |
Group's share of net
assets (in percent) |
50% |
50% |
Group's share of
net assets |
- |
165 |
Carrying amount of
interest in joint-venture |
- |
165 |
|
|
|
Summarised
Consolidated Income Statement |
Period |
Six
month |
|
Until
liquidation |
period ended |
|
9
November 2018 |
31
December 2017 |
|
£000s |
£000s |
Total administrative
and other expenses |
(28) |
(2) |
Loss before tax |
(28) |
(2) |
Loss for the
period |
(28) |
(2) |
Group's share of
loss for the period |
(14) |
(1) |
|
|
|
Summarised
Consolidated Statement of Comprehensive Income |
Period |
Six
month |
|
Until
liquidation |
period ended |
|
9
November 2018 |
31
December 2017 |
|
£000s |
£000s |
Loss for the
period |
(28) |
(2) |
Total comprehensive
loss for the period |
(28) |
(2) |
Group's share of
comprehensive loss for the period |
(14) |
(1) |
9. Trade and other receivables
|
31
December 2018 |
30
June 2018 |
|
£000s |
£000s |
Other receivables |
131 |
303 |
VAT receivable |
191 |
137 |
Tax receivable |
132 |
19 |
Rent receivables |
- |
11 |
Prepayments |
160 |
25 |
Total |
614 |
495 |
The carrying values of trade and other receivables are
considered to be approximately equal to their fair value. Rent
receivable is non-interest bearing and typically due within 30
days.
The Group signed a new lease agreement for its remaining assets,
applicable as from 1st January
2019, and granted lease incentive for an amount of £0.3
million. These lease incentive are amortised over the new lease
agreement period of 15 years.
10. Trade and other payables
|
31
December 2018 |
30
June 2018 |
|
£000s |
£000s |
VAT payable |
(3) |
94 |
Tax payable (income,
transfer, capital and other) |
122 |
507 |
Legal and professional
fees |
109 |
10 |
Audit fee |
186 |
114 |
Rent prepaid |
427 |
5 |
Other payables |
93 |
259 |
Administration fees
payables |
73 |
- |
Director fees |
7 |
- |
Total |
1,014 |
989 |
The carrying values of trade and other payables are considered
to be approximately equal to their fair value. Trade and other
payables are non-interest bearing and are normally settled on
30-day terms.
11. Provisions
|
31
December 2018 |
30
June 2018 |
|
£000s |
£000s |
Provision for
performance fees |
- |
- |
Provision for
wind-down costs |
153 |
153 |
Other provisions |
- |
56 |
Total |
153 |
209 |
12. 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.
Credit risk
Credit risk refers to the risk that counterparty will default on
its contractual obligations resulting in financial loss to the
Group. The Group has adopted a policy of only dealing with
creditworthy counterparties and obtaining sufficient collateral
where appropriate as a means of mitigating the risk of financial
loss from defaults. The Group’s and Company’s exposure and the
credit-ratings of its counterparties are continuously monitored and
the aggregate value of transactions concluded is spread amongst
approved counterparties.
The credit risk on liquid funds is limited because the
counterparties are banks with high credit-ratings assigned by
international credit-ratings agencies. 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.
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 suspended dividends from June
2012 in order to prudently manage cash position during the
wind-down phase.
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.
13. Related party transactions
The Directors are responsible for the determination of the
Company's investment objective and policy and have overall
responsibility for the Group's activities including the review of
investment activity and performance.
Mr Hunter, (Chairman, 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
conformed 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 period
in respect of Northern Trust administration fees was £72,500
(31 December 2017: £72,500).
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 £0.05
million (31 December 2017: £0.20
million) were expensed to the Consolidated Income Statement.
All the above transactions were undertaken at arm’s-length.
14. Commitments and contingent
liability
As at 31 December 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 31 December
2018 and up to the date of approval, the Board are not able
to determine the likelihood or amount of such tax. As a result, no
provision has been included in these financial statements.
15. NAV Reconciliation
The following is a reconciliation of the NAV per share
attributable to ordinary shareholders as presented in these Interim
Financial Statements to the unaudited NAV per share reported to the
LSE:
|
|
|
|
|
|
|
|
NAV
per |
|
|
|
|
|
|
|
|
Ordinary |
|
|
|
|
|
|
NAV |
|
Share |
31 December
2018 |
|
|
|
|
|
£000s |
|
£ |
|
|
|
|
|
|
|
|
|
Net Asset
Value reported to London Stock Exchange (unaudited) |
|
10,836 |
|
46.30p |
NAV
adjustment following the auditors review on June 2018 accounts |
|
(54) |
|
(0.23)p |
Net
Assets Attributable to Shareholders per Financial Statements
(unaudited) |
|
10,782 |
|
46.07p |
16. Subsequent events
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.
On 28 January 2018 the Company
returned £1.2 million capital its shareholders redeeming 2,644,440
shares.
Gavin Farrell has tendered his
resignation from the Board which will take effect from close of
business in Guernsey on
28 March 2019.
Stuart Lawson has tendered his
resignation from the Board which will take effect from close of
business in Guernsey on
28 March 2019.
William Scott has been appointed
to the Board which will take effect from close of business in
Guernsey on 28 March 2019.
Robert Burke has been appointed
to the Board which will take effect from close of business in
Guernsey on 28 March 2019.
AXA Investment Managers UK Limited has indicated its intention
to resign as Investment Manager of the Company should the Board
take definitive steps towards convening an Extraordinary General
Meeting of the Company to consider a change to the Company’s
investment policy. The resignation would take effect immediately or
at a later date by mutual agreement. AXA REIM Luxembourg S.A. has
separately tendered its resignation as administrator of each of the
Company’s two Luxembourg
subsidiaries, which will take effect following the expiration of
the 3-month notice period or earlier if by mutual agreement.
Northern Trust International Fund Administration Services
(Guernsey) Limited has tendered
its resignation as Administrator and Secretary which will take
effect following the expiration of the 90 day notice period or
earlier if by mutual agreement..
Corporate Information
Directors (All non-executive)
W. Scott (Chairman) (appointed 28 March
2019)
R. Burke (appointed 28 March
2019)
B.A. Nixon (appointed on 23 January
2019)
G. J. Farrell (resigned 28 March
2019)
S. J. Lawson (resigned 28 March
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