Annual Financial Report

RNS Number : 3380B

AXA Property Trust Ld

26 October 2009

To: Company Announcements

Date: 26 October 2009

Company: AXA Property Trust Limited

Subject: Annual Report and Accounts 30 June 2009

AXA Property Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 30 June 2009

Financial Highlights and Performance Summary

Financial Highlights for the year to 30 June 2009

Total return on Net Asset Value (NAV) was -23.8%

NAV per share decreased by 27.3%

Earnings per share were -30.14 pence per share

Cumulative dividends paid relating to the year were 3.75 pence per share

Total Expense Ratio of 1.8% (2008: 1.9%)(Note 1)

as at 30 June 2009

Share price was 40.5 pence per share (30 June 2008: 71.0 pence(Note 2)

Gearing (Note 3) maintained at relatively low level of 50.8%(54% including Porto Kali investment on a "look through" basis)

Performance Summary

	Year ended 30 June 2009	Year ended 30 June 2008	% change
Net Asset Value (NAV) (£000)	83,462	114,797	(27.3%)
NAV per share	83.46p	114.80p	(27.3%)
Earnings per share	(30.14p)	3.83p	(886.9%)
Dividend relating to the year	3.75p	4.00p	(6.25%)
Share price (Note 2)	40.5p	71.00p	(43.0%)
Share price discount to NAV	51.5%	38.2%	n/a
Gearing (Note 3)	50.8%	45.0%	n/a
Total assets less current liabilities (£000)	170,353	194,183	(12.3%)

Total Return	Year ended 30 June 2009	Year ended 30 June 2008
NAV Total Return	(23.8%)	18.8%
Share Price total Return
AXA Property Trust	(37.2%)	(25.5%)
FTSE All Share Index	(20.5%)	(12.8%)
FTSE Real Estate Index	(41.5%)	(39.1%)

Past performance is not a guide to future performance

Note 1: Total Expense Ratio calculation based on guidelines of INREV (European Association for Investors in Non-Listed Real Estates Vehicles). Acquisition and formation costs are amortised over five years for the purposes of the Total Expense Ratio.

Note 2: Mid market share price (source: Datastream)

Note 3: Gearing is calculated as bank debt/property portfolio excluding Porto Kali investment

Source: AXA Investment Managers UK Limited and Datastream

All Enquiries:

Sponsor and Broker

Oriel Securities Limited

Tom Durie

Tel: 020 7710 7600

Investment Manager

AXA Investment Managers UK Limited

Neil Winward

Tel: 020 7330 6619

Company Secretary

Northern Trust International Fund Administration Services (Guernsey) Limited

Trafalgar Court

Les Banques

St Peter Port

Guernsey GY1 3QL

Tel: 01481 745529

Fax: 01481 745085

Chairman's Statement

AXA Property Trust's Investment Manager continues to focus on income flow maintenance and close asset management and I am pleased to note that its efforts are reflected in low levels of voids and rental arrears. The Investment Manager also continues to make progress on longer term asset management projects. The capital markets background continued, during the year, to undermine asset values, but especially since year end there are signs that the rate of valuation decline is easing.

Results

AXA Property Trust Limited (the "Company") and its subsidiaries (together the "Group") generated a consolidated net loss of £30.14 million for the year to 30 June 2009. Excluding unrealised movements on the revaluation of investments and derivatives and related deferred tax, impairment of the shareholder loan to the Dutch office portfolio joint venture (Porto Kali), foreign exchange gains and other capital items, the Group made a profit of £3.75 million.

The unrealised loss on the revaluation of properties for the year to June 2009 was £28.0 million (17.3% of market value at 30 June 2008) excluding foreign exchange translation effects. There was a corresponding reduction in deferred tax liabilities, resulting in £2.28 million of net income.

As reported in the Half Year Report to 31 December 2008, the forecast performance of the Group's investment in the Porto Kali joint venture has been revised to reflect the difficult market conditions. An impairment charge of £3.55 million was made in the first half of the financial year to reflect the estimated reductions in cash flows and recoverability of the investment. The impairment is driven principally by lower capital values. The portfolio continues to generate stable rental income.

The net rental yield on valuation for the portfolio excluding Porto Kali was 7.5% (6.4% at 30 June 2008). A detailed yield analysis is included in the Investment Manager's Report below. The income stream is well secured both in terms of tenant covenant and duration, with an average unexpired weighted lease length of 5.7 years.

Net Asset Value ("NAV") at 30 June 2009 was £83.46 million (83.46 pence per ordinary share), a decline of £31.34 million (27.3%) since 30 June 2008. The movement arose from the £30.14 million net loss for the period, £4.0 million dividend payments and £4.86 million unrealised net losses on derivatives (excluding net investment hedging) and £7.66 million foreign exchange translation gains.

Your Company's share price has suffered over the year from major swings in investor sentiment and appetite for the sector, but the Board is pleased to note that there now seems to be a more sanguine outlook and a clearer recognition of the defensive elements of the Company's strategy and its conservative gearing. In the first six months to December 2008 the market clearly feared a much bigger fall in Continental property valuations and the impact of gearing. The discount to NAV at year end was 51.5% and since then has narrowed.

Dividend

The fourth interim dividend of 0.75 pence per share in respect of the year ended 30 June 2009 was paid on 28 August 2009. The cumulative interim dividends of £3.75 million declared in respect of the year ended 30 June 2009 were 100% covered by revenue profits and 144% covered by the operating cash flow (excluding capital expenditure, foreign exchange and partial loan repayments). The annual dividend yield is 3.75% on the issue price and 9.26% on the mid market share price at 30 June 2009. Please note that past performance is not a guide to future returns.

Bank Finance

The ongoing negotiations with Calyon Corporate and Investment Bank ("Calyon") on the refinancing of the Company's £67.0 million (EUR78.6 million) long term bank facility have been protracted, but there has been progress and both parties are currently discussing detailed terms. The Board continues to seek to achieve finalisation of the refinancing as soon as possible. The Board is pleased to report that pending completion of the refinancing, the Investment Manager has negotiated a waiver from Calyon of further quarterly loan to value covenant testing.

Prospects

Your Company's conservative stance and strong tenant profile has served it well in the hard times. As the Investment Manager reports, there remain risks in property markets, but the Company's focus, particularly in food retail in southern Germany, continues to provide defensive qualities. Since the year end there is some evidence that the rate of decline in appraised property valuations in Continental European markets, albeit supported by relatively few open market transactions, is slackening. I believe that this could demonstrate that these markets are both as far through the cycle, and are generally less volatile, than UK and US property markets.

We cannot be immune to the risk of continuing or increased weakness, especially now in occupational markets, but the Investment Manager continues to manage rental income flows tightly and will seek to minimise any voids.

The Investment Manager provides the Company with a blend of highly experienced European capital markets expertise and a well-established on-the-ground operation in the countries and localities in which we operate. It is able to deliver risk control and create value in skilled property asset management.

Although wary of further markets weakness, I am confident of AXA Property Trust's relative prospects going forward, both in better times and less good times.

Charles Hunter

Chairman

23 October 2009

Investment Manager's report

Real Estate Market

Continental European markets underwent a significant re-pricing in the first half of 2009, although actual transaction volumes remained relatively low. A defensive retreat towards core investments has widened the pricing gap between assets considered prime and those in second-tier markets or situations. Attention is now shifting to rental values. These may well prove to be more sustainable in Continental Europe than in the UK, a view supported by the news that both France and Germany produced positive GDP growth in the quarter to June 2009. Nevertheless, high unemployment and low consumer confidence will doubtless exert downward pressure on rental vales in the coming year.

The low inflation/deflationary environment has allowed the Eurozone interest rate to remain low, at 1.00% (reduced from 1.25% in May). The rate at which it is possible to raise debt finance is, however, much higher than that, with margins of up to 3.00% being added to the five-year swap rate to produce all-in rates of around 6.00%.

Retail

A shift in shopping habits, as consumers 'trade-down' to lower-margin goods or buy in discount stores, leaves some traditional shopping centre retailers particularly exposed. Such trends in shopping habits tend to persist for a considerable time and this one is not expected to be limited to the period of the recession.

Therefore, while rental growth prospects are less negative than for the office sector, returns will be better from defensive retail subsectors such as supermarkets and retail warehousing with strong food anchors, rather than centres with high exposure to fashion retailing.

Offices

While the overspill of the development pipeline into the downturn has not been as large as in previous recessions, we are now seeing speculative schemes completing into a lacklustre market. This space is principally being absorbed by occupiers taking advantage of current pricing opportunities to upgrade. As a result there is an increasing amount of second-hand space, some of it obsolescent, which can be appraised against letting evidence and will cause rental values of existing investments to be reduced in the valuation process.

Industrial

Manufacturing has suffered more in this recession than banking - despite some perceptions. All manufacturers are having difficulty in raising debt capital, although the larger quoted ones can often raise additional equity capital. The sector's problems are compounded by shrinkage of logistics demand, where previously-thin margins have now become negative for all but the most-efficient operators. On a more positive note, there would appear to be some stabilisation after severe falls in transport volumes and reductions in inventories are now ending.

Investment Activity

Entering the new financial year, the Company's strategy continues to be to hold the acquired portfolio and concentrate efforts on the comprehensive management of tenants, leases and the physical premises in order to enhance the value of existing holdings.

The fruition of asset management projects at certain properties may allow the Company to realise the enhancement in value however, no sales are planned in the short term, and the Company is under no pressure or obligation to dispose of assets.

In a market where value must be created through diligent and proactive management rather than yield compression, the Company draws substantial benefit from AXA REIM's extensive network of European offices, providing local real estate management and expertise.

Property portfolio at 30 June 2009

Investment name	Country	Sector	Net yield on valuation (Note 1 and 3)	%of total assets(less current liabilities)
Rothenburg ob der Tauber	Germany	Retail	6.68%	11.75%
Phoenix Center, Fuerth	Germany	Retail	7.09%	11.20%
Curno, Bergamo	Italy	Leisure	6.84%	8.72%
Bergamina, Agnadello	Italy	Industrial	6.94%	7.55%
Smakterweg, Venray	Netherlands	Industrial	8.10%	5.05%
Am Birkfeld, Dasing	Germany	Industrial	8.28%	4.84%
Bahnhofstraße, Karben	Germany	Retail	6.65%	4.77%
Industriestraße, Montabaur-Heiligenroth	Germany	Retail	7.47%	4.39%
Keyser Centre, Antwerp	Germany	Retail	7.02%	3.42%
Nuernberger Straße, Treuchtlingen	Germany	Retail	7.00%	3.40%
Pankower Allee, Berlin	Germany	Retail	6.95%	3.36%
Other	Germany	Retail	6.68%	17.83%
Total property portfolio			7.50%	86.28%
Porto Kali investment (Note 3)	Netherlands	Office	6.49% (Note 4)	4.57%
Other non current assets and net current assets				9.15%
Total assets less current liabilities				100.0%

Note 1: Net yield on valuation is based on the current market valuation after deduction of property-specific estimates of acquisition costs and operating costs.

Note 2: Total value of Porto Kali investment (equity and shareholder loan) is £7.79 million.

Note 3: Source: external independent valuers to the Company, Knight Frank LLP

Note 4: Source: AXA Real Estate Investment Managers UK Limited

Details of all properties in the portfolio are available on the Company's website (www.axapropertytrust.com) under Portfolio - Our Presence.

Geographical Analysis at 30 June 2009 by Market Value

(including 12% interest in Porto Kali investment)

Germany	61.4%
Netherlands	19.5%
Italy	15.5%
Belgium	3.6%

Sector Analysis at 30 June 2009 by Market Value

(including 12% interest in Porto Kali investment)

Retail	59.2%
Industrial	17.2%
Office	15.0%
Leisure	8.6%

Source: AXA Real Estate Investment Managers UK Limited

Covenant strength analysis at 30 June 2009 (including 12% interest in Porto Kali investment)

Grade A	50.7%	Creditreform:<199; D&B:A 1
Grade B	13.8%	Creditreform:200-249; D&B:B,C,D 1,2
Grade C	21.7%	Creditreform:>250; D&B: D + 3,4
Vacant	5.7%

The Company's tenant covenant profile is strong, with the majority of tenants rated Grade A or B. Rental income from Grade A covenants represents 58.7% of income and has a weighted unexpired lease length of 6.4 years. The large retail component of the portfolio is composed of trading-parks anchored by large supermarket and discounter chains. Such tenants are viewed as defensive covenants in the context of an increasingly difficult occupier market.

The Real Estate Adviser's continued asset management programme has contributed to maintaining the portfolio's strong lease profile. The weighted effective unexpired lease length for the portfolio as at 30 June 2009 was 5.7 years, with 49.0% of income secured for a term of over five years. Vacancy within the portfolio stands at 5.6%, measured by rental income. Excluding the Porto Kali consortium investment, vacancy in the direct portfolio stands at 2.3%.

Post 30 June 2009 the lease to a retail tenant in Koethen, eastern Germany, expired, increasing vacancy in the direct portfolio by an additional 1.3% to 3.6%. The Real Estate Adviser is currently in advanced discussions with a national retail operator to lease the entire vacated premises. At a second retail property in Bernau, eastern Germany, preparations are being made to sub-divide and market a unit in September 2010 as the tenant has given advanced notice that the lease will not be renewed.

Average unexpired lease length profile weighted by rental income

	30 June 2009	30 June 2008
	Years	Years
Grade A	6.5	7.2
Grade B	4.1	6.2
Grade C	5.2	4.3
Average	5.8	6.4

Lease expiry profile weighted by rental income

	30 June 2009	30 June 2008
	Rental income (as a % of total gross rental income)	Rental income (as a % of total gross rental income)
Vacant	6%	5%
1 year	9%	2%
2 years	16%	9%
3 years	7%	16%
4 years	3%	7%
5 years	9%	4%
5-10 years	33%	37%
10-15 years	9%	12%
15+ years	8%	8%

Source: AXA Real Estate Investment Managers UK Limited

Financing

Fund gearing	30 June 2009	30 June 2008
Property portfolio (£ million)	146.99	162.21
Borrowings (£ million)	74.61	73.01
Total gross gearing excluding Porto Kali (Note 1)	50.8%	45.0%
Total net gearing excluding Porto Kali (Note 1)	39.0%	32.6%
Total gross gearing including Porto Kali (Note 1)	54.0%	47.6%

Note 1: Fund gearing is included to provide an indication of the overall indebtedness of the Company and does not relate to any covenant terms in the Company's loan facilities. Gross gearing is calculated as debt over property portfolio at fair value. Net gearing is calculated as debt less cash over property portfolio at fair value.

Gross Loan to Value Covenants (Note 2)	30 June 2009	30 June 2008	Maximum
Main loan facility	49.97%	43.1%	50.0%
Joint venture Property Trust Agnadello S.r.l.	59.6%	51.2%	65.0%
Consortium investment Porto Kali	72.0%	63.2%	65.0%

Note 2: Gross LTV is calculated as debt over property portfolio at fair value.

Interest Cover Ratio (Note 3)at 30 June 2009	Historic	Minimum	Projected	Gross rental income headroom
Main loan facility covenant	372.1%	250.0%	351.8%	28.9%
Joint venture Property Trust Agnadello S.r.l.	277.8%	125.0%	313.5%	60.1%
Consortium investment Porto Kali	177.0%	120.0%	140.0%	14.0%

Note 3: Interest Cover Ratio is calculated as net financing expense payable as a percentage of gross rental income less movement in arrears.

Main Loan Facility

As noted in the Chairman's Statement, negotiations with Calyon Corporate and Investment Bank ("Calyon") on the refinancing of the Company's £67.0 million (EUR78.6 million) long term bank facility have been protracted, but there has been progress and both parties are currently discussing detailed terms. Together with the Board, we continue to seek to achieve finalisation of the refinancing as soon as possible.

On 29 June 2009 the Company repaid £1.5 million (EUR 1.75 million) of its main Calyon facility from cash deposits, thereby ensuring compliance with the current 50% LTV covenant on the testing date of 30 June 2009. Following this repayment the Investment Manager negotiated a waiver from Calyon of further quarterly loan to value covenant testing pending the completion of refinancing.

The Company's loans with Calyon are fully hedged at an average rate of 5.21% via interest rate swaps until July 2010 and then by interest rate caps at a strike rate of 4.5% until April 2011 when the original loan facility expires. The Investment Manager will advise the Company on entering into new interest rate swaps to hedge the exposure after July 2010.

Capital Expenditure and Cash Position

The Company and its subsidiaries held total cash of £17.32 million (EUR 20.34 million) at 30 June 2009, giving a Net LTV of 37.0% (35.7% at 31 March 2009). Net LTV is calculated as debt net of cash over property portfolio at fair value. Details are included for information purposes; it does not form part of the loan covenants.

The £17.32 million cash held by the Company at 30 June 2009 has been allocated between working capital and uncommitted capital expenditure, principally to develop the Company's retail asset in Fuerth, Germany. The £4.5 million (EUR 5.3 million) Fuerth capital expenditure is subject to Board approval of the final terms of the development and securing the Company's debt position following the refinancing review. £11.9 million (EUR 14.0 million) cash has been invested in fixed term deposits which will be realised as required for the capital expenditure programme. If the cash allocated to uncommitted capital expenditure were utilised to repay part of the bank debt, property valuations could decline by 18% from 30 June 2009 levels before breaching the current Gross LTV covenant.

Porto Kali Investment and Loan Facility

On 26 August 2009 new terms were agreed in principle with Porto Kali's lender, HSH Nordbank AG ("HSH"), thereby resolving the LTV breach. Under the original loan facility, the LTV maximum of 65% was breached at 31 December 2008 and at 30 June 2009 the LTV was 72.2%. The key terms of the new agreement are as follows: the LTV covenant has been raised to 80% with the first test on 31 December 2010; an increase in the interest margin to 175 basis points (reduces to 150 basis points if the LTV falls to 60% or below); EUR 1.5 million loan amortisation per annum; and additional annual loan amortisation using any surplus cash above a EUR 2 million allowance for working capital and budgeted capital expenditure. The loan is without recourse to the company. Formal agreement with HSH is anticipated by the end of October 2009.

The portfolio adviser to the Porto Kali investment, AXA Real Estate Investment Managers UK Limited ("AXA REIM"), has adopted a tactical approach to sales and lettings as part of the business strategy of the Porto Kali portfolio. Capital expenditure is being deployed where it has an immediate impact on tenant retention and lettings. During the quarter eight new leases and 11 renewals/regearings were signed for a total rent of EUR 0.91 million (2% above Estimated Rental Value).

Outlook

The portfolio's income stream remains well protected with a vacancy rate in the direct portfolio of 3.6%. Although rental values are coming under pressure across Europe, rents paid by German supermarkets, an important sub-sector for the Company, are expected to remain stable or decline only marginally in the coming year.

While transaction volumes remain low, we believe that investment yields are now beginning to stabilise following significant rises of between 1% and 2% points across the continent. The Company's independent valuation fully reflects outward yield movement to date, with the net yield rising by 1.3% over 18 months to reach 7.5% in June 2009.

With strong property fundamentals and a conservative financing approach, we are confident that the Company will emerge from the financial crisis and the economic recession in a healthy financial state and well-positioned to take advantage of the opportunities that will arise in the new market environment of 2010.

AXA Investment Managers UK Limited (the 'Investment Manager', 'AXA IM') is the UK subsidiary of AXA Investment Managers, a dedicated asset manager within the AXA Group. AXA Investment Managers is an innovative and fast-growing multi-expertise investment manager with EUR 485 billion of assets under management and over 3,000 employees in 23 countries as at 30 June 2009.

AXA Real Estate Investment Managers UK Limited (the 'Real Estate Adviser') is part of real estate management arm of AXA Investment Managers S.A. ('AXA REIM'). AXA REIM is a specialist in European real estate investment management with approximately EUR 39.5 billion of real estate assets under management in 19 European countries as at 30 June 2009.

Source: AXA Investment Managers UK Limited

Fund Manager

Martin McGuire has headed the AXA Property Trust Fund Management team since December 2007. He is a Chartered Surveyor and Senior European Fund Manager at AXA REIM UK. He has over 30 years' experience in commercial property with a significant proportion of this in Continental European property. Mr McGuire lived for five years in Brussels where he worked for Jones Lang Wootton. In 1985 he joined Standard Life and led their expansion into the Continental European markets where he managed the investment and development programme over many years taking the exposure to in excess of EUR 1.5 billion and was Fund Manager of the Standard Life Investments' EUR 800 million European Property Growth Fund. Latterly he was Investment Director at Standard Life investments and managed the £2 billion Unit Linked Life Fund. He holds a degree in Land Economy from the University of Aberdeen and also an Investment Management Certificate. He is resident in the United Kingdom.

AXA Property Trust Limited

AXA Property Trust Limited is an authorised closed-ended Guernsey registered investment company listed on the London Stock Exchange.

The investment objective of the Company is to secure attractive total returns for shareholders through a combination of dividends and capital appreciation from European properties (including the United Kingdom).

The Company aims to achieve its investment objective through a policy of investing in commercial properties across Europe (including the United Kingdom) which are predominantly freehold (or its equivalent) and in the following segments of the commercial property market: offices, retail (both in and out of town), industrial and 'other' sectors, including leisure and hotels.

Residential investments are not considered except where they form a small part of a larger commercial investment. The Company will not acquire any interests in properties which are in the course of construction unless pre-letting agreements exists in respect of at least 80% of the surface area of the relevant property.

The Company may invest in properties through joint ventures if the terms of any such joint ventures effectively allow it to trigger a disposal of the underlying properties held through the joint ventures or to dispose of its interest in the joint ventures at a time of the Company's choice. The Company will not invest in other investment companies.

Investment decisions are based on analysis of, amongst other criteria, prospects for future capital and income growth, sector and geographic prospects, tenant covenant strength, lease length and initial and equivalent yields.

Board of Directors

Charles Hunter (Chairman) is currently a non executive director of Protego Real Estate Funds plc and is on the Supervisory Board of Schroder Exempt Property Unit Trust. He is also a trustee of St Monica Trust. He has around 30 years of experience in property investment, principally in UK commercial property. During this time, he was a non executive director of PIL Group Limited, the Head of Property Investment of Insight Investment (formerly Clerical Medical Investment Group) and also was the Property Director of the investment management subsidiaries of The National Mutual of Australasia group in the United Kingdom. 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.

Richard Ray is Managing Director of AXA Real Estate Investment Managers Belgium S.A. He has around 25 years of property experience, especially in the commercial real estate markets in Belgium and in other parts of Europe. Prior to joining AXA, he was the Head of Investment at ATIS REAL August Thouard S.A. From 1987 to 2000, he worked with CB Richard Ellis S.A. (formerly Richard Ellis S.A.), first as an Investment and Valuation Surveyor and then as a Manager in the Investment Department. In 1994, Mr Ray was appointed Director of Investment, Valuation and Research. He is a member of the Royal Institution of Chartered Surveyors and certified as a "Titulaire" of the Belgian Institut Professionel de l'immobilier (Real Estate Institute). He is resident in Belgium.

Stephane Monier has over 18 years of experience in fixed income, foreign exchange markets and asset allocation. Mr Monier is currently the Global Head of Fixed Income and Currencies at Lombard Odier Darier Hentsch & Cie (LODH). He is responsible for various sectors including money market, government bonds, corporate bonds, emerging market debt, currencies and absolute return. Prior to joining LODH, Mr Monier was Global Head of Fixed Income and Currencies at Fortis Investments from 2006 to 2009. Prior to joining Fortis Investments itself, he was Head of Fixed Income and Currency in the Abu Dhabi Investment Authority (ADIA) from 1998 to 2006 and he 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 INAPG (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 Switzerland.

John Marren is a Director of Northern Trust International Fund Administration Services (Guernsey) Limited where he is Head of Client Servicing. Prior to joining Northern Trust International Fund Administration Services (Guernsey) Limited in 1992, he worked for KPMG in Guernsey where he was responsible for the audit of a portfolio of entities in the finance industry. Mr Marren currently holds a number of non-executive board appointments in fund management and investment companies including several real estate funds. He has a Bachelor of Commerce Degree from University College Galway in Ireland, is a Fellow of the Institute of Chartered Accountants in Ireland and a Member of the Institute of Bankers in Ireland. He is resident in Guernsey.

Gavin Farrell is qualified as a Solicitor of the Supreme Court of England and Wales, a French Avocat and an Advocate of the Royal Court of Guernsey. He is a partner at Ozannes, Advocates & Notaries Public in Guernsey, having worked previously at Simmons and Simmons, both in Paris and London, and specialises in international and structured finance and collective investment schemes. Mr Farrell holds a number of directorships in investment and captive insurance companies. He is resident in Guernsey.

Report of the Directors

The Directors present their report and audited Consolidated Financial Statements of the Group for the year ended 30 June 2009.

Principal Activity and Status

AXA Property Trust Limited (the "Company") is an Authorised closed-ended investment scheme domiciled in Guernsey and listed on the London Stock Exchange. Trading in the Company's ordinary shares commenced on 18 April 2005. The Company and the entities listed below together comprise the "Group".

The Company is a member of the Association of Investment Companies (AIC).

Results and Dividends

The results for the year are set out in the attached Financial Statements. The Company has paid quarterly dividends related to the year ended 30 June 2009 as follows:

	Payment date	Rate per Share
First interim	28 November 2008	1.00p
Second interim	27 February 2008	1.00p
Third interim	29 May 2009	1.00p
Fourth interim	28 August 2009	0.75p

A further dividend of £750,000 (0.75 pence per share) was approved on 4 August 2009. The ex-dividend date was 12 August 2009 and the payment date was 28 August 2009.

Directors

The Directors who held office during the year as at 30 June 2009 were:

C. J. Hunter (Chairman)

G. J. Farrell

R. G. Ray

J. M. Marren

S. C. Monier

On 1 July 2008, The Companies (Guernsey) Law, 1994 was superseded by The Companies (Guernsey) Law 2008.

The Directors have adopted the provisions of The Companies (Guernsey) Law, 2008 in preparing these financial statements, and have taken the decision not to present parent company only accounts, which is allowed under the new law.

Biographical Details of each of the Directors are shown on above. An evaluation of the performance of individual Directors was carried out during the year which concluded that the Board is performing satisfactorily in the six areas reviewed: Board composition and meeting process, Board information, training, Board dynamics, Board accountability and effectiveness and an evaluation of the Chairman. During the year the Directors of the Company received the following emoluments in the form of fees:

C.J. Hunter	£20,000
G. J. Farrell	£15,000
R. G. Ray	£15,000
J. M. Marren	£15,000
S.C. Monier	£15,000
	£80,000

The Directors of the subsidiaries of the Group received emoluments amounting to £27,844 (2008: £21,040). Total fees paid to Directors of the Group were £107,844 (2008: £101,040).

Management

AXA Investment Managers UK Limited (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 has reviewed the appropriateness of the Investment Manager's appointment. In carrying out the review the Board considered the investment performance of the Company during its accounting year and the capability and resources of the Investment Manager to deliver satisfactory investment performance. It also considered the length of the notice period of the investment management contract and the fees payable to the Investment Manager, together with the standard of the other services provided. Following this review, it is the Directors' opinion that the continuing appointment of the Investment Manager on the terms agreed is in the interests of shareholders as a whole.

Significant Shareholdings

Shareholders with holdings more than 3% of the issued ordinary shares of the Company as at 7 August 2009 were as follows:

	Number of Shares	Percentage
HSBC Global Custody Nominee (UK) Limited	28,400,000	28.40%
Nutraco Nominees Limited	10,779,879	10.78%
Quilter Nominees Limited	9,539,205	9.54%
Nortrust Nominees Limited	6,745,000	6.75%

Corporate Governance

Introduction

Guernsey does not have its own corporate governance code and, as a Guernsey incorporated company, the Company is not required to comply with the Combined Code on Corporate Governance issued by the Financial Reporting Council in June 2008 (the 'Combined Code'). However, it is the Company's policy to comply with best practice on good corporate governance that is applicable to investment companies.

The Board has considered the principles and recommendations of the AIC's Code of Corporate Governance (the 'AIC Code') by reference to the AIC Corporate Governance Guide for Investment Companies (the 'AIC Guide'). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in Section 1 of the Combined Code, as well as setting out additional principles and recommendations on issues which are of specific relevance to investment companies. The Board considers that it is appropriate to report against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the Combined Code).

Except as disclosed below, the Company complied throughout the year with the recommendations of the AIC Code and the relevant provisions of the Combined Code. Since all the Directors are non-executive, and in accordance with the AIC Code and the preamble to the Combined Code, the provisions of the Combined Code on the role of the chief executive and, except in so far as they apply to non-executive Directors, on Directors' remuneration, are not relevant to the Company, and are not reported on further.

In view of its non-executive nature and the requirement of the Articles of Association that all Directors retire by rotation at least every three years, the Board considers that it is not appropriate for the Directors to be appointed for a specified term as recommended by Code provision A.7.2 and principle 3 of the AIC Code, or for a Senior Independent Director to be appointed as recommended by Code provision A.3.3 and principle 1 of the AIC Code, or for there to be a Nomination Committee as recommended by Code provision A.4.1 and principle 9 of the AIC Code, or for there to be a Remuneration Committee as recommended by Code provision B.2.1 and principle 5 of the AIC Code.

The Board consists solely of non-executive Directors of which Mr Hunter is Chairman. With the exception of Mr Ray all Directors are considered by the Board to be independent of the Company's Investment Manager.

New Directors receive an induction from the Investment Manager and Secretary on joining the Board, and all Directors receive other relevant training as necessary.

The Company has no executive directors or employees. All matters, including strategy, investment and dividend policies, gearing, and corporate governance procedures, are reserved for the approval of the Board of Directors. The Board currently meets at least quarterly and receives full information on the Company's investment performance, assets, liabilities and other relevant information in advance of Board meetings.

Throughout the year the Audit Committee and the Management Engagement Committee have been in operation.

The Audit Committee, chaired by Mr Marren, operates within clearly defined terms of reference and comprises all the Directors except Mr Ray. The duties of the Audit Committee in discharging its responsibilities include reviewing the Annual and Interim Financial Statements, the system of internal control and the terms of the appointment of the auditors together with their remuneration.

It is also the forum through which the auditors report to the Board of Directors and meets at least twice yearly. The objectivity of the auditors is reviewed by the Audit Committee which also reviews the terms under which the external auditors are appointed to perform non-audit services. The Committee reviews the scope and results of the audit, its cost effectiveness and the independence and objectivity of the auditors, with particular regard to non-audit fees. Such fees amounted to £31,422 (2008: £38,171) for the Group for the year ended 30 June 2009 and related to a review of the interim financial information which is normal practice. Notwithstanding such services the Audit Committee considers KPMG Channel Islands Limited to be independent of the Company and that the provision of such non-audit services is not a threat to the objectivity and independence of the conduct of the audit.

The Management Engagement Committee, chaired by Mr Hunter, comprises the full Board, except Mr Ray and Mr Monier, and reviews the appropriateness of the Investment Manager's continuing appointment together with the terms and conditions thereof on a regular basis.

Mr Monier resigned as a member of the Management Engagement Committee in 2008 because of his UK residency during the year.

The table below sets out the number of Board meetings held during the year ended 30 June 2009 and the number of meetings attended by each Director.

	Board of Directors		Audit Committee		Management Engagement Committee
	Held	Attended	Held	Attended	Held	Attended
C. J. Hunter	4	3	2	2	1	1
G. J. Farrell	4	4	2	2	1	1
R. G. Ray	4	4	n/a	n/a	1	n/a
J. M. Marren	4	4	2	2	1	1
S. C. Monier	4	3	2	1	1	n/a

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.

Going Concern

After making enquiries, and bearing in mind the nature of the Company's business and assets, the Directors consider that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Financial Statements.

Internal Controls

The Board is responsible for the Company's system of internal control and for reviewing its effectiveness. The Board has therefore established an ongoing process designed to meet the particular needs of the Company in managing the risks to which it is exposed, consistent with the guidance provided by the Turnbull Committee.

Such review procedures have been in place throughout the financial year and up to the date of approval of the Annual Report, and the Board is satisfied with their effectiveness. By their nature these procedures can provide reasonable, but not absolute, assurance against material misstatement or loss. At each Board meeting the Board monitors the investment performance of the Company in comparison to its stated objective and against comparable companies. The Board also reviews the Company's activities since the last Board meeting to ensure that the Investment Manager adheres to the agreed investment policy and approved investment guidelines and, if necessary, approves changes to such policy and guidelines. In addition, at each quarterly Board meeting, the Board receives reports from the Secretary in respect of compliance matters and duties performed on behalf of the Company.

The Board has reviewed the need for an internal audit function. The Board has decided that the systems and procedures employed by the Investment Manager and the Secretary, including their internal audit functions, 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 Company is therefore considered unnecessary.

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 by writing to the Company at its registered address (see inside back cover for Corporate Information). The Annual General Meeting of the Company provides a forum for shareholders to meet and discuss issues with the Directors and Investment Manager of the Company.

Directors' Authority to Buy Back Shares

The authority of the Company to make market purchases of up to 14.99% of the issued ordinary share capital was renewed by way of a special resolution at the Annual General Meeting held on 2 December 2008 until the earlier of the Annual General Meeting in 2009 and 31 December 2009. 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 set a cap on the price that the Company can pay.

Independent auditors

KPMG Channel Islands Limited have expressed their willingness to continue in office as auditors and a resolution proposing their re-appointment will be submitted at the Annual General Meeting.

Charles Hunter John Marren

Chairman Director

23 October 2009 23 October 2009

Investment Policy

Diversification and Asset Allocation

The Company may invest in properties through joint ventures if the terms of any such joint ventures effectively allow it to trigger a disposal of the underlying properties held through the joint ventures or to dispose of its interests in the joint ventures at a time of the Company's choice. The Company will not invest in other investment companies.

Investment decisions based on analysis of, amongst other criteria, prospects for future capital and income growth, sector and geographic prospects, tenant covenant strength, lease length, and initial and equivalent yields.

Asset allocation will be determined by taking into account current Listing Rule requirements (see below under 'General') and the Company's investment objective, policy and restrictions.

Borrowings

The Company has the power under its Articles of Incorporation to borrow up to an amount equal to 50% of the value of the part of the Company's investment portfolio of the Group that comprises properties, valued on a market value basis of an independent valuer in accordance with the practice statement contained in the Appraisal and Valuation manual prepared by the Royal Institute of Chartered Surveyors, at the time of drawdown.

General

The Company and, where relevant, its subsidiaries will observe the investment restrictions imposed on closed-ended investment companies from time to time by the Listing Rules of the UK Listing Authority.

The Directors do not currently intend to propose any material changes to the Company's investment policy, save in the case of exceptional or unforeseen circumstances.

Any material change to the investment objective or policy described above will only be made following shareholder approval.

While there will be no pre-defined limit on exposures to these factors, the Company's portfolio will be invested and managed, as is currently required by the Listing Rules, in a way which is consistent with its object of spreading investment risk and taking into account the Company's investment objective, policy and restrictions.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Directors' 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.

The financial statements are required by law to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these Financial Statements, the Directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and estimates that are reasonable and prudent;

- state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the Financial Statements;

- and prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the Financial Statements comply with the Companies (Guernsey) Law, 2008. They 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, there is no relevant information of which the Company's auditor is unaware and has taken all the steps he ought to have taken as a Director to make himself aware of any relevant information and to establish that the Company's auditor is aware of this information.

Directors' Responsibility Statement

We confirm that to the best of our knowledge and in accordance with DTR 4.1.12R of the Disclosure and Transparency Rules:

(a) The Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and its Group as at and for the year ended 30 June 2009;

(b) The Financial Report, which includes information detailed in the Chairman's Statement, Investment Manager's and Directors Reports and Notes to the Annual Financial Statements, provides a fair review of the development and performance of the business and the positions of the Group; and includes a description of the principal risks and uncertainties that the Group faced as at and for the year ended 30 June 2009.

Charles Hunter John Marren

Chairman Director

23 October 2009 23 October 2009

Independent Auditor's Report

We have audited the Group financial statements (the "financial statements") of AXA Property Trust Limited (the "Company") for the year ended 30 June 2009 which comprise Consolidated Income Statement, the Consolidated Statement of Changes in Equity, the Consolidated Balance Sheet, the Consolidated Statement of Cash Flows and the related notes. These financial statements have been prepared under the accounting policies set out therein.

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.

Respective Responsibilities of Directors and Auditors

The directors' responsibilities for preparing the financial statements which give a true and fair view and are in accordance with International Financial Reporting Standards and are in compliance with applicable Guernsey law are set out in the Statement of Directors' Responsibilities above.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view, are in accordance with International Financial Reporting Standards and comply with the Companies (Guernsey) Law, 2008. We also report to you if, in our opinion, the company has not kept proper accounting records, or if we have not received all the information and explanations we require for our audit.

We read the other information accompanying the financial statements and consider whether it is consistent with those statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements.

Basis of Audit Opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion the Financial Statements;

- give a true and fair view of the state of the Group's affairs as at 30 June 2009 and of its loss for the year then ended;

- are in accordance with International Financial Reporting Standards; and

- comply with the Companies (Guernsey) Law, 2008.

KPMG Channel Islands Limited

Chartered Accountants

Guernsey

23 October 2009

Income Statement

Company and Consolidated Income Statement for the year ended 30 June 2009


	Notes	Year ended 30 June 2009 £000s	Year ended 30 June 2008 £000s

Gross rental income	4	12,805	10,850
Service charge income		530	930
Property operating expenses		(2,338)	(1,687)
Net rental and related income		10,997	10,093
			-
Net foreign exchange gains		129	280
Net investment income		129	280

Valuation gains on investment properties		-	2,267
Valuation losses on investment properties		(28,037)	(3,331)
Impairment losses	11	(3,708)	-
Net valuation losses on investment properties and financial assets		(31,745)	(1,064)

Unrealised losses on net investment hedging	19	(5,164)	-
Unrealised (losses)/gains on other derivatives		(236)	251
Investment management fees		(1,620	(1,728)
Sponsor's fees	3	(56)	(204)
Administrative expenses	5	(1,401)	(1,626)
Total expenses		(8,477)	(3,307)

Other income		-	138

Net operating (loss)/profit		(29,096)	6,140

Financial income/expenses
Interest income from bank deposits		565	262
Interest income from loans to joint ventures		403	683
Finance costs		(3,750)	(3,141)
Loan facility commitment fees		(84)	(83)

(Loss)/profit before tax		(31,962)	3,861

Income tax income/(expense)	16	1,821	(35)

(Loss)/profit for the year		(30,141)	3,826

Basic and diluted (loss)/earnings per ordinary share (pence)	6	(30.14)	3.83

The accompanying notes below form an integral part of these Financial Statements.

Consolidated Statement of Changes in Equity

Consolidated Statement of Changes in Equity for the year ended 30 June 2009

	Revaluation Reserve £000s	Hedging Reserve £000s	Revenue Reserve £000s	Distributable Reserve £000s	Foreign Currency Reserve £000s	Total £000s
	Note 20	Note 20		Note 20	Note 20
Balance at 1 July 2008	6,413	(839)	639	94,469	14,115	114,797
Movements during the year
Net loss for the year	(31,981)	-	1,840	-	-	(30,141)
Effective portion of changes in fair value of hedges	-	(4,857)	-	-	-	(4,857)
Foreign exchange translation gains	-	-	-	-	7,663	7,663
Dividends paid	-	-	(2,479)	(1,521)	-	(4,000)
Balance at 30 June 2009	(25,568)	(5,696)	-	92,948	21,778	83,462

Consolidated Statement of Changes in Equity for the year ended 30 June 2008

	Revaluation Reserve £000s	Hedging Reserve £000s	Revenue Reserve £000s	Distributable Reserve £000s	Foreign Currency Reserve £000s	Total £000s
	Note 20	Note 20		Note 20	Note 20
Balance at 1 July 2007	7,226	412	-	94,469	(2,128)	99,979
Movements during the year
Net profit for the year	(813)	-	4,639	-	-	3,826
Effective portion of changes in fair value of hedges	-	(1,251)	-	-	(868)	(2,119)
Foreign exchange translation gains	-	-	-	-	17,111	17,111
Dividends paid	-	-	(4,000)	-	-	(4,000)
Balance at 30 June 2008	6,413	(839)	639	94,469	14,115	114,797

The accompanying notes below form an integral part of these Financial Statements.

Balance Sheet

Company and Consolidated Balance Sheet as at 30 June 2009

	Notes	30 June 2009 £000s	30 June 2008 £000s
Non-current assets
Investment properties	8	146,988	162,211
Property, plant and equipment		-	1
Loan receivable	11	7,789	10,490
Derivative financial instruments	19	40	1,857
Other assets		65	271
Deferred tax assets	16	118	613

Current assets
Cash and cash equivalents	12	17,324	20,111
Trade and other receivables	13	1,670	4,298

Total assets		173,994	199,852

Current liabilities
Trade and other payables	14	3,641	5,669

Non-current liabilities
Deferred tax liability	16	629	3,210
Long term loan	15	74,606	73,009
Derivative financial instruments	19	11,656	3,167

Total liabilities		90,532	85,055

Net assets		83,462	114,797

Share capital		-	-
Reserves	20	83,462	114,797

Total equity		83,462	114,797

Number of ordinary shares		100,000,000	100,000,000
Net asset value per ordinary share	18	83.46	114.80

The accompanying notes below form an integral part of these Financial Statements.

Charles Hunter John Marren

Chairman Chairman

23 October 2009 23 October 2009

Statement of Cash Flows

Company and Consolidated Statement of Cash Flows for the year ended 30 June 2009

	Year ended 30 June 2009 £000s	Year ended 30 June 2008 £000s
Operating Activities
(Loss)/Profit before tax	(31,962)	3,861
Adjustments for:
Unrealised loss on revaluation of investment properties and financial assets	31,745	1,064
Unrealised loss on net investment hedging	5,164	-
Unrealised loss/(gain) on revaluation of other derivatives	236	(251)
Decrease in trade and other receivables	1,290	838
(Decrease)/Increase in trade and other payables	(738)	69
Investment income	(403)	(683)
Bank interest	(565)	(262
Interest expense	3,750	3,129
Foreign exchange gain	(129)	(280)
Decrease in fair value of financial assets/liabilities	-	1,835
Amortisation of loan facility fees	84	83
Net cash generated from operations	8,472	9,403
Interest income received	658	160
Interest paid	(3,988)	(2,833)
Investment income received	403	683
Tax paid	(163)	(139)
Net cash inflow from operating activities	5,382	7,274

Investing activities
Acquisition of investment properties	(563)	(7,683)
Acquisition of other investments	-	264
Loan to third party	-	223
Other	-	(36)
Net cash outflow from investing activities	(563)	(7,232)

Financing activities
Finance costs	-	63
Calyon loan facility (repaid)/drawn	(4,061)	16,834
Dividends paid	(4,000)	(4,000)
Net cash (outflow)/inflow from financing activities	(8,061)	12,897

Effect of exchange rate fluctuations	455	1,014

(Decrease)/increase in cash and cash equivalents	(2,787)	13,953

Cash and cash equivalents at start of year	20,111	6,158

Cash and cash equivalents at year end	17,324	20,111

The accompanying notes below form an integral part of these Financial Statements.

Notes to the Financial Statements

1. Operations

AXA Property Trust Limited (the "Company") is a limited liability, closed-ended investment company incorporated in Guernsey. The Company invests in commercial properties in Europe which are held through its subsidiaries. The Consolidated Financial Statements of the Company for the year ended 30 June 2009 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 Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards, they give a true and fair view and are in compliance with the Companies (Guernsey) Law, 2008 as amended.

The Consolidated Financial Statements were approved by the Board of Directors on 23 October 2009.

Standards, interpretations and amendments to published statements not yet effective.

At the date of authorisation of these Financial Statements, the following standards and interpretations, which have not been applied in these Financial Statements, were in issue but not yet effective:

- IAS 1 - Presentation of Financial Statements - Comprehensive revision including requiring a statement of comprehensive income (Effective date - 1 January 2009)

- IAS 23 - Borrowing costs - Comprehensive revision to prohibit immediate expensing (Effective date - 1 January 2009)

- IAS 27 - IAS 28 and IAS 31 - Consequential amendments arising from amendments to IFRS 3 (Effective date - 1 January 2009)

- IAS 32 - Financial instruments presentation - Amendments relating to puttable instruments and obligations arising on liquidation (Effective date - 1 January 2009)

- IFRIC 10 - Interim Financial Reporting and Impairment (Effective date - 1 January 2009)

- IFRS 8 - Operating Segments - disclosure on the financial performance of the Group's operating segments (Effective for periods commencing on or after 1 January 2009).

- IFRS 1 (Amendment) First time adoption of IFRS, and IAS 27 Consolidated and separate financial statements (effective from 1 January 2009);

- IAS 23 (Amendment) Borrowing costs (effective from 1 January 2009);

- IAS 36 (Amendment) Impairment of assets (effective from 1 January 2009);

- IAS 39 (Amendment) Financial instruments: Recognition and measurement (effective from 1 January 2009);

- IAS 28 (Amendment) Investments in associates (and consequential amendments to IAS 32 Financial Instruments: Presentation and IFRS 7 Financial instruments: Disclosures) (effective from 1 January 2009);

- IAS 31 (Amendment) Interests in joint ventures (and consequential amendments to IAS 32 and IFRS 7) (effective from 1 January 2009);

- IAS 40 (Amendment) Investment property (and consequential amendments to IAS 16) (effective from 1 January 2009)

- IFRS 3 (Revised) - Business Combinations - Comprehensive revision on applying the acquisition method (Effective date - 1st July 2009)

- IFRIC 13 - Customer Loyalty Programmes (Effective date - 1st July 2009)

- IFRIC 16 - Hedges of a Net Investment in a Foreign Operation (Effective date - 1st October 2009)

- IFRIC 17 - Distributions of Non-Cash Assets to Owners (Effective date - 1st July 2009)

- IFRIC 18 - Transfers of Assets from Customers (Effective date - 1st July 2009)

- IAS 27 (Revised) - Consolidated and Separate Financial Statements (Effective date - 1st July 2009)

- IAS 39 and IFRS 7 (Amended) - Reclassification of Financial Assets (Effective date - 1st July 2009)

- IFRS 7 (Amended) - Improving disclosures about Financial Instruments (Effective date - 1st October 2009)

- IAS 39 - Eligible hedged items (Effective date - 1st July 2009)

- IFRS 7 - Financial Instruments: Disclosures - Improving Disclosures about Financial Instruments (Effective date - 1st January 2009).

Amendments to IFRS 7 were issued by the IASB in March 2009 and become effective for annual periods beginning on or after 1 January 2009 with early application permitted. The amendment to IFRS 7 requires fair value measurements to be disclosed by the source of inputs, using a three-level hierarchy:

- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)

- Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2)

- Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

The Directors anticipate that the adoption of these Standards in future periods will have no material financial impact on the Financial Statements of the Group.

(b) Basis of preparation

The Financial Statements are presented in Sterling which is also the functional currency of the Company. All amounts are rounded to the nearest thousand. The Financial Statements have been prepared on a historical cost basis except for the measurement of the investment properties, derivative financial instruments, and financial assets designated at fair value through profit or loss.

The preparation of Financial Statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

(i) Functional and presentation currencies

The Company's functional currency is Sterling and the subsidiaries' functional currency is Euro. The presentation currency of the Company and the Group is Sterling.

(ii) Foreign currency transactions

Transactions in foreign currencies are translated to Sterling at the spot foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Sterling at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the 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 Sterling at foreign exchange rates ruling at the dates the fair value was determined.

(iii) Financial statements of foreign operations

The assets and liabilities of foreign operations, arising on consolidation, are translated to Sterling at the foreign exchange rates ruling at the balance sheet date. The income and expenses of foreign operations are translated to Sterling at an average rate. Foreign exchange differences arising on retranslation are recognised as a separate component of equity.

(d) Basis of consolidation

(i) Subsidiaries

Subsidiaries are those entities, including special purpose entities, controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of the subsidiaries are included in the consolidated Financial Statements from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Where properties are acquired by the Group through corporate acquisitions and there are no significant assets or liabilities other than the property, the acquisition has been treated as an asset acquisition.

(ii) Transactions eliminated on consolidation.

Intra-group balances and any unrealised gains and losses arising from intra-group transactions are eliminated in preparing the consolidated Financial Statements.

(iii) Joint ventures

The Group's interests in jointly controlled entities are accounted for by proportionate consolidation. The Group combines its share of the joint ventures' individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar items in the Group's Financial Statements. 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 venturers. The Group does not recognise 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. However, a loss on the transaction is recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets, or an impairment loss.

(e) Income recognition

Income from certificates of deposit and interest income from banks and subsidiaries are recognised on an effective yield basis.

Rental income from investment property leased out under operating leases is recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives are amortised over the whole lease term.

Tracking interest income based on rental yields earned on profit participating loans is accrued as earned.

(f) Expenses

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 properties. The recovery of costs is recognised as service income on an accrual basis.

(g) Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with original maturity of less than 3 months. 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.

(h) Dividends

Dividends are recognised as a liability in the period in which they become obligations of the Company. All dividends are paid as interim dividends. Interim dividends are recognised when paid.

(i) Provisions

A provision is recognised in the balance sheet 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.

(j) Investment properties

Investment properties are those which are held to earn rental income and capital appreciation and are recognised as such once all material conditions in the exchanged purchase contracts are satisfied. They are initially recognised at cost, being the fair value of consideration given, including transaction costs and any acquisition costs directly attributable to the acquisition of the property. Acquisition costs incurred on exchanged but not completed contracts are recognised as other assets in the balance sheet.

After initial recognition, investment properties are measured at fair value using the fair value model with unrealised gains and losses recognised in the income statement. Realised gains and losses upon disposal of properties are recognised in the income statement. Quarterly valuations are carried out by Knight Frank LLP, external independent valuers in accordance with the RICS Appraisal and Valuation Standards. The properties have been valued on the basis of open market value, which is the estimated amount for which a property should exchange on the date of valuation, in an arm's-length transaction.

Valuations reflect, where appropriate, the types 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 income statement during the financial period in which they are incurred.

(k) Investments at fair value through profit or loss

An instrument is classified as fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Upon initial recognition, attributable transaction costs are recognised in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value and changes therein are recognised in profit or loss.

The investment held in the Porto Kali portfolio has been designated by the Directors as fair value through profit or loss in order to achieve an accounting treatment consistent with the Group's other property investments.

(l) Loans and receivables

Loan 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, as well as through the amortisation process.

(m) 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

(n) Short term investments

Certificates of deposits are measured at fair value which is market value, all having a maturity of less than one year. Certificates of deposits are recognised on acquisition and shown in current assets on the balance sheet, they are derecognised on disposal with any realised gains or losses being included on the income statement.

(o) Impairment

The carrying amounts of the Group's assets, other than investment property, are reviewed at each balance sheet date to determine whether 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 income statement.

(p) Segmental reporting

The Directors are of the opinion that the Group is engaged in a single segment of business being the property investment business. It operates in a single geographical segment (Europe) and the properties are let mainly to commercial entities.

(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 £600. 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 properties, 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 balance sheet 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 balance sheet date. 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 16.

(r) Significant estimates and judgements

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equate to the related actual results. The estimates and assumptions that have significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are related to the Group's property valuation policy and the Group's derivatives valuation policy. Properties are valued quarterly by external independent valuers as at the end of each calendar quarter, and derivatives are also valued quarterly by Chatham Financial Europe Limited and/or Calyon. Their valuations are reviewed quarterly by the Board.

(s) Derivative financial instruments

The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financing and investment activities. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments.

Derivative financial instruments are recognised initially at fair value which is generally cost. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged, as explained in section (t).

The fair value of the interest rate swaps and cross currency swaps is the estimated amount that the Group would receive or pay to terminate the swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of the swap counterparties.

(t) Hedge accounting

The Group designates certain hedging instruments, which include derivatives and non-derivatives in respect of foreign currency risk, as either fair value hedges, cash flow hedges, or hedges of net investments in foreign operations. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.

The fair value of derivatives that are not exchange-traded is estimated at the amount that the Company would receive or pay to terminate the contract at the balance sheet date taking into account current market conditions (volatility, appropriate yield curve) and the current creditworthiness of the counterparties. The fair value of a forward contract is determined as a net present value of estimated future cash flows, discounted at appropriate market rates on the valuation date.

Hedges which meet the strict criteria for hedge accounting are accounted for as follows:

Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss as part of other expenses or other income. Amounts deferred in equity are recycled in profit or loss in the periods when the hedged item is recognised in profit or loss.

Hedges of a net investment

Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is accounted for as part of the net investment, are accounted for in a way similar to cash flow hedges. Gains or losses on the hedging instrument relating to the effective portion of the hedge are recognised directly in equity in the foreign currency reserve. Any gains or losses relating to the ineffective portion are recognised in profit and loss. On disposal of the foreign operation, the cumulative value of any such gains or losses recognised directly in equity is transferred to profit or loss.

Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When hedge accounting for net investment hedges is discontinued, the previously recognised effective portion is deferred in equity until the subsidiaries are disposed of.

Note 19 contains details of the fair values of the derivative instruments used for hedging purposes. Movements in the hedging reserve in equity are also detailed in the statement of changes in equity.

3. Material agreements

(i) AXA Investment Managers UK Limited has been 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 is 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 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.

(ii) Oriel Securities Limited is sponsor and broker to the Company. The Company pays a retainer of £50,000 per annum payable in four equal tranches quarterly in arrears.

(iii) Northern Trust International Fund Administration Services (Guernsey) Limited is Administrator, Secretary and Registrar to the Company pursuant to the Administration Agreement dated 13 April 2005. The Administrator is entitled to receive a fixed fee of £65,000 per annum plus a variable fee which is dependant on additional work carried out by the Administrator for the Company from time to time. In addition, the Administrator shall be entitled to be reimbursed for all reasonable out of pocket expenses incurred in the performance of its duties.

4. Gross rental income

Gross rental income for the year ended 30 June 2009 amounted to £12.81 million (2008: £10.85 million). The Group leases out all of its investment property under operating leases and are structured in accordance with local practices in Belgium, Germany, Italy and the Netherlands. Belgium leases follow the 3/6/9 structure, whereas our leases in Germany, Italy and the Netherlands have fixed terms of typically between 5 and 10 years. All leases benefit from indexation. No leases currently include tenant incentives.

Minimum lease payments

	30 June 2009	30 June 2008
	Rental income p.a. £000s	Rental income p.a. £000s
0-1 year	12,957	10,044
1-5 years	36,391	32,649
5+ years	32,054	34,233

5. Administrative expenses

	30 June 2009 £000s	30 June 2008 £000s
Legal and professional fees	(562)	(493)
Administration fees	(363)	(369)
Audit fees	(224)	(228)
Directors' fees	(108)	(101)
General expenses	(102)	(320)
Insurance fees	(42)	(14)
Formation costs	-	(20)
Acquisition costs	-	(81)
Total	(1,401)	(1,626)

Each of the Directors receives a fee of £15,000 per annum from the Company. The Chairman receives a fee of £20,000 per annum. The aggregate remuneration and benefits in kind of the Directors in respect of the Company's financial year ending on 30 June 2009 amounted to £80,000 (2008: £80,000) in respect of the Company and £107,844 (2008: £101,040) in respect of the Group.

6. Basic and diluted loss per Share

The basic and diluted loss per share for the Group is based on the net loss for the year of £30.14 million (2008: profit of £3.83 million) and the weighted average number of Ordinary Shares in issue during the year of 100,000,000 (2008: 100,000,000).

7. Dividends

Dividend payment date	No. of ordinary shares	Rate pence	30 June 2009 £000s	30 June 2008 £000s
29 August 2007	100,000,000	1.00	-	1,000
1 November 2007	100,000,000	1.00	-	1,000
28 February 2008	100,000,000	1.00	-	1,000
28 May 2008	100,000,000	1.00	-	1,000
29 August 2008	100,000,000	1.00	1,000	-
28 November 2008	100,000,000	1.00	1,000	-
27 February 2009	100,000,000	1.00	1,000	-
29 May 2009	100,000,000	1.00	1,000	-
Total			4,000	4,000

A further dividend of £750,000 (0.75 pence per share) was approved on 6 August 2009. The ex-dividend date was 12 August 2009 and the payment date was 28 August 2009.

8. Investment properties

	30 June 2009 £000s	30 June 2008 £000s
Cost at the beginning of year	133,809	128,169
New acquisitions	-	5,219
Capital expenditure	468	421
Cost of investment properties	134,277	133,809

Fair value adjustments	(21,201)	6,837
Foreign exchange translation	33,912	21,565
Market Value	146,988	162,211

Investment properties comprise a number of commercial properties that are leased to third parties. The portfolio above shows the properties acquired by the Group.

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, on going monitoring of tenants and through effective management of the properties.

Market price sensitivity analysis

The sensitivity analysis below 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 Income Statement. A 5% increase in the value of the direct properties (after deferred tax) at 30 June 2009 would have increased net assets and income for the year by £5.88 million (2008: £6.49 million). A decrease of 5% would have had an equal but opposite effect.

A 5% increase in the underlying property portfolio (after deferred tax) of the indirect property fund (Porto Kali) at 30 June 2009 would have increased net assets and income for the year by £0.97 million (2008: £0.80 million). A decrease of 5% would have had nil impact (2008: nil).

9. Joint ventures

Group owns 50% of the equity in Property Trust Agnadello S.r.l. which holds a logistics warehouse in Agnadello, Italy.

The Group is entitled to a proportionate share (50%) of the rental income received and bears a proportionate share of the outgoings. The following amounts are included in the Group Financial Statements as a result of the proportionate consolidation of Property Trust Agnadello Srl:

	30 June 2009 £000s	30 June 2008 £000s
Current assets	358	3,002
Non-current assets	12,959	14,273
Current liabilities	448	308
Non-current liabilities	11,539	14,021
	30 June 2009 £000s	30 June 2008 £000s
Income	1,043	1,825
Expenses and valuation losses on investment properties and derivatives	2,580	1,186

10. Other investments

Financial assets designated at fair value through profit or loss includes the 12% equity investment held in the holding company of the Dutch office portfolio Porto Kali. The investment was acquired for £1.02 million on 22 June 2007. At 30 June 2009 the fair value of the investment was nil (2008: nil).

11. Loans receivable

The Porto Kali investment was funded by equity of £1.02 million (EUR 1.50 million) (see Note 10) and a Euro-denominated shareholder loan (non-Group loan receivable) of £9.11 million (EUR 13.53 million).

For accounting purposes the equity component has been reported at a fair value of nil since 30 June 2008 as the portfolio of underlying entities reported negative net assets, largely as a result of capitalised acquisition costs which have since been included in unrealised losses on the fair valuation of the property portfolio.

The loan is unsecured, bears interest at Euribor plus 2.25% per annum and is repayable on 18 June 2017. After two asset disposals in December 2007, £0.22 million (EUR 0.28 million) of the shareholder loan was repaid, reducing the outstanding amount to £10.49 million (EUR 13.25 million) as at 30 June 2008.

Based on updated investment and letting assumptions in the Dutch office market, the current investment model projects that the shareholder loan is not fully recoverable. The estimated recoverable value of the loan using discounted cash flow model in the Group accounts as at 30 June 2009 has been reduced to £7.79 million (EUR 9.15 million). The related impairment expense was £3.70 million (EUR 4.35 million), resulting in a total impairment allowance of £3.70 million (EUR 4.35 million) (2008:£nil; EUR nil). The impairment expense includes £0.20 million (EUR 0.24 million) accrued interest (2008: £nil;EUR nil).

As a result of the impairment and in accordance with the Group's accounting policy, the accrual of interest from the shareholder loan has been discontinued as it is not expected to be recoverable.

12. Cash and cash equivalents

	30 June 2009 £000s	30 June 2008 £000s
Bank balances	5,400	9,028
Fixed deposits	11,924	11,083
Total	17,324	20,111

13. Trade and other receivables

	30 June 2009 £000s	30 June 2008 £000s
VAT receivable	852	303
Withholding tax receivable	270	254
Accrued income	256	600
Rent receivable	218	532
Prepayments	56	2,242
Other receivable	18	367
Total	1,670	4,298

14. Trade and other payables

	30 June 2009 £000s	30 June 2008 £000s
Investment Manager fee	1,061	1,170
Other	778	649
Tax	403	150
Interest payable on Calyon facility	376	614
Legal and professional fees	349	204
VAT payable	325	2,142
Audit fee	194	171
Administration and Company Secretarial fees	107	119
Property acquisition costs	31	176
Rent prepaid	10	230
Directors' fees	7	6
Sponsor fees	-	38
Total	3,641	5,669

15. Long term loan

	30 June 2009 £000s	30 June 2008 £000s
Non-current liabilities
Secured bank loans	74,526	72,938
Loan due to third party	80	71
Total	74,606	73,009

As at 30 June 2009, the Group's main loan facility with Calyon was fully drawn to £66.86 million (EUR 78.64 million) (2008: £63.64 million, EUR 80.39 million). The loan matures on 3 April 2011. Loans drawn down from the main facility are secured over the shares in the Company's subsidiaries Property Trust Luxembourg 1 Sarl, Property Trust Luxembourg 2 Sarl and Property Trust Luxembourg 3 Sarl. In addition to the main loan facility, the Group has a 50% interest in the joint venture Property Trust Agnadello S.r.l. which holds long term bank debts of £7.67 million (EUR 9.0 million) as at 30 June 2009 secured over the property and assets of the joint venture.

16. Taxation

	30 June 2009 £000s	30 June 2008 £000s
Reconciliation of effective tax rate Effect of:
Current tax
Luxembourg	-	1
Italy	129	-
Netherlands	(72)	-
Germany	407	-
Total current tax	464	1

Deferred tax
Investment property	(2,733)	563
Investment property - change in tax rate	-	(852)
Loss on fair value of financial assets	(1)	353
Gain on derivatives	(25)	(1)
Tax value of loss carried forwards recognised - change in tax rate	-	207
Tax value of loss carried forwards recognised	474	(236)
Total deferred tax	(2,285)	34

Tax (credit)/charge during the year	(1,821)	35

Payment on account	(163)	(139)

Taxation paid in advance	(1,984)	(104)

Recognised deferred tax and liabilities

Deferred tax assets and liabilities are attributable to the following items:

30 June 2008

	Assets £000s	30 June 2009 Liabilities £000s	Net £000s
Investment property	33	(629)	(596)
Tax value of loss carry forwards recognised	85	-	85
Tax assets/(liabilities)	118	(629)	(511)

	Assets £000s	30 June 2008 Liabilities £000s	Net £000s
Investment property	94	(3,185)	(3,091)
Loss on fair value of financial assets	-	(1)	(1)
Gain on derivatives	-	(24)	(24)
Tax value of loss carry forwards recognised	519	-	519
Tax assets/(liabilities)	613	(3,210)	(2,597)

Movement in temporary differences

	1 July 2008 £000s	Recognised in income statement £000s	Foreign exchange translation £000s	30 June 2009 £000s
Investment property	(3,943)	2,733	(304)	(1,514)
Investment property - change in tax rate	852	-	66	918
Losses on fair value of financial assets	(1)	1	-	-
Gain on derivatives	(24)	25	(1)	-
Tax value of loss carry forwards recognised - change in tax rate	(133)	-	(16)	(149)
Tax value of loss carry forwards recognised	652	(474)	56	234
Tax assets/(liabilities)	(2,597)	2,285	(199)	(511)

	1 July 2007 £000s	Recognised in income statement £000s	Foreign exchange translation £000s	30 June 2008 £000s
Investment property	(2,935)	(563)	(445)	(3,943)
Investment property - change in tax rate	-	852	-	852
Losses on fair value of financial assets	299	(353)	53	(1)
Gain on derivatives	(20)	-	(4)	(24
Tax value of loss carry forwards recognised - change in tax rate	-	(207)	74	(133)
Tax value of loss carry forwards recognised	416	236	-	652
Tax assets/(liabilities)	(2,240)	(35)	(322)	(2,597)

The Company is exempt from Guernsey taxation. The general income tax rate in Guernsey is 0%.

17. Share capital

30 June 2009

30 June 2008

£000s

Share premium

£000s

Number of shares

£000s

Share premium

£000s

Shares of no par value issued and fully paid

100,000,000

100,000

100,000,000

100,000

On 24 June 2005 the Royal Court of Guernsey confirmed the reduction of capital by way of cancellation of the Company's share premium account. The amount cancelled, being £100 million, was credited in the financial period to 30 June 2006 as a distributable reserve established in the Company's books of account and shall be available as distributable profits to be used for all purposes permitted under Guernsey law, including the payment of dividends.

Capital risk management

The Company's capital is represented by the Ordinary Shares, revaluation reserves, revenue reserves, hedging reserves distributable reserves and foreign exchange reserves. 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 above. It is not subject to externally imposed capital requirements.

The Company was authorised at the Annual General Meeting (AGM) on 2 December 2008 to make market purchases of up to 14.99% of its Ordinary Shares until the earlier of the next AGM or 31 December 2009. Purchases will only be made at prices below the prevailing Net Asset Value of the shares where the Directors believe such purchases will enhance shareholder value. In the Prospectus (issued by the Company on 18 April 2005), the Directors stated their intention to seek annual renewal of this authority. Share buy backs are at the discretion of the Board.

18. Net Asset Value per ordinary share

The Net Asset Value per Ordinary Share at 30 June 2009 is based on the net assets attributable to the ordinary shareholders of £83.46 million (2008: £114.80 million) and on 100,000,000 (2008: 100,000,000) ordinary shares in issue at the balance sheet date.

19. Financial instruments

The Group is exposed to various types of risk that are associated with financial instruments. The Group's financial instruments comprise bank deposits, cash, derivative financial instruments receivables and payables that arise directly from its operations. The carrying value of financial asset 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 currency risk. The Board review and agrees policies for managing its risk exposure. These policies are summarised below and have remained unchanged for the year under review.

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 to 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 and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-ratings agencies.

At the reporting date, the carrying amounts of the financial assets exposed to credit risk were as follows:

At 30 June 2009	Within one year £000s	1-2 years £000s	2-5 years £000s	More than 5 years £000s	Total £000s
Cash and cash equivalents	17,324	-	-	-	17,324
Rents receivable	218	-	-	-	218
Trade and other receivables	1,452	-	-	-	1,452
Derivative financial instruments	-	-	-	40	40
Non-group loans receivables	-	-	-	7,789	7,789
Total	18,994	-	-	7,829	26,823

At 30 June 2008	Within one year £000s	1-2 years £000s	2-5 years £000s	More than 5 years £000s	Total £000s
Cash and cash equivalents	20,111	-	-	-	20,111
Rents receivable	532	-	-	-	532
Trade and other receivables	3,766	-	-	-	3,766
Derivative financial instruments	-	-	-	1,857	1,857
Non-group loans receivables	-	-	-	10,490	10,490
Total	24,409	-	-	12,347	36,756

Liquidity Risk

The Group may encounter liquidity risk when realising assets or otherwise raising funds to meet financial commitments. Investments in property are relatively illiquid, however, the Group has mitigated this risk by investing in desirable properties in strong locations.

The Group prepares forecasts annually 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 table below summarises the maturity profile of the Group's financial liabilities.

At 30 June 2009	Less than 3 months £000s	3-12 months £000s	1-5 years £000s	Total £000s
Interest bearing loans	-	-	74,606	74,606
Trade and other payables	2,690	951	-	3,641
Derivative financial instruments
Interest rate swaps	-	-	2,922	2,922
Cross currency swaps	-	-	2,754	2,754
Forwards	-	-	5,980	5,980
Total	2,690	951	86,262	89,903

At 30 June 2008	Less than 3 months £000s	3-12 months £000s	1-5 years £000s	Total £000s
Interest bearing loans	-	-	73,009	73,009
Trade and other payables	5,027	642	-	5,669
Derivative financial instruments
Interest rate swaps	-	-	184	184
Cross currency swaps	-	-	2,167	2,167
Forwards	-	-	816	816
Total	5,027	642	76,176	81,845

Interest Rate Risk

Floating rate financial assets comprise the cash balances which bear interest at rates based on bank base rates. The Group is exposed to cash flow risk as the Group borrows funds under the loan facility with Calyon Bank at floating interest rates. The Group manages this risk by using interest rate swaps and caps denominated in Euro. The swaps mature over the next three years following the maturity of the related loans and have swap rates ranging from 3.815%. to 4.722%. At 30 June 2009, the Group had interest rate swaps with a notional contract amount of £74.64 million (EUR 87.64 million) (2008: £70.76 million (EUR 89.39 million)). This exposes the Group to interest rate risk as fluctuations in interest rates will affect the fair value of hedges. The following table demonstrates the sensitivity to potential fluctuations in the interest rate (ceteris paribus) of the Group's equity (due to changes in the fair value of hedges).

Increase/ decrease in Euribor

Effect on equity

£000s

At 30 June 2009

+1%

-1%

683

(478)

At 30 June 2008

+1%

-1%

1,885

(1,245)

All interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest amounts are designated as cash flow hedges in order to reduce the Group's cash flow exposure resulting from variable interest rates on borrowings. The interest rate swaps and the interest payments on the loan occur simultaneously and the amount deferred in equity is recognised in profit or loss over the loan period.

Interest rate and cross currency swaps

	30 June 2009		30 June 2008
	Assets £000s	Liabilities £000s	Assets £000s	Liabilities £000s
Non-current
Interest rate swaps	40	2,922	1,833	184
Cross currency swaps	-	2,754	24	2,167
	40	5,676	1,857	2,351

The following table details the notional principal amounts and remaining terms of interest rate swap and foreign exchange swap contracts outstanding as at reporting date.

Cash flow hedge

	Average contracted fixed interest rate		Notional principal amount		Fair value
	30 June 2009 %	30 June 2008 %	30 June 2009 EUR000s	30 June 2008 EUR000s		30 June 2009 £000s	30 June 2008 £000s
Interest rate swaps
2 to 5 years	3.82%- 4.72%	3.82% - 4.72%	87,636	89,386		(2,882)	1,650
Cross currency swaps
2 to 5 years	4.18%- 4.63%	4.18% - 4.63%	148,568	148,568		(2,754)	(2,144)

The interest rate swaps settle on a quarterly basis. The basis of floating rate is 3-month Euribor which at the year end was 1.099% (2008: 4.96%). The Group will settle the difference between the fixed and floating rate on a net basis.

Interest re-pricing

	As at 30 June 2009
	Effective interest rate %	Total as per balance sheet £000s	Fixed rate £000s	Floating rate 3 months or less £000s
Financial assets
Non-group loans receivable		7,789	7,789	-
Cash and cash equivalents		17,324	-	17,324
Total		25,113	7,789	17,324
Financial liabilities
Long term loans	2.2 - 2.3%	74,606	-	74,606
Total		74,606	-	74,606

	As at 30 June 2008
	Effective interest rate %	Total as per balance sheet £000s	Fixed rate £000s	Floating rate 3 months or less £000s
Company
Non-group loans receivable		10,490	10,490	-
Cash and cash equivalents		20,111	-	20,111
Total		30,601	10,490	20,111
Financial liabilities
Long term loans	5.6 - 5.7%	73,009	-	73,009
Total		73,009	-	73,009

Foreign currency risk

The European subsidiaries will invest in properties using currencies other than Sterling, the Company's functional and presentational currency, and the balance sheet may be significantly affected by movements in the exchange rates of such currencies against Sterling. The Group will review and manage currency exposure on an appropriate basis.

The Group has hedged foreign currency exposure in respect of £1.14 million (EUR 1.60 million) quarterly interest receipts in Euro over the next four years through the use of cross currency swaps.

Net investment hedging

During the financial year ended 30 June 2008, the Group designated certain forward contracts as a hedge of its net investment in subsidiaries, whose functional currency is the Euro. The Group has hedged the Sterling equivalent of EUR 120 million, representing 83% of foreign currency risk arising on the translation of foreign operations. During the current period, the Company's net investment hedges were tested for ongoing effectiveness for accounting purposes and were found to have become ineffective, due primarily to the effect of falling interest rates and the fair value of the hedging instruments. As a result, in accordance with the Company's accounting policy, the net investment hedging accounting has been discontinued and the cumulative unrealised loss of £5.164 million was deferred in equity and has been recognised in the Income Statement.

The following table sets out the total exposure to foreign currency risk and the net exposure to foreign currency of the monetary assets and liabilities based on notional amounts.

Monetary assets

£000s

Monetary

liabilities

£000s

Forward foreign exchange

contracts

£000s

Net

Exposure

£000s

At 30 June 2009

26,534

(78,247)

(5,980)

(57,693)

At 30 June 2008

33,112

(78,678)

(816)

(46,382)

Foreign currency risk sensitivity

The following table demonstrates the sensitivity to potential fluctuations in the Euro exchange rate (ceteris paribus) of the Group's profit before tax (due to changes in the fair value of monetary assets and liabilities) and the Group's equity (due to changes in the fair value of forward exchange contracts and net investment hedges).

Increase/decrease in Euro rate

Effect on equity

£000s

At 30 June 2009

+5%

-5%

(10,112)

10,112)

At 30 June 2008

+5%

-5%

(10,370)

10,370

The Group had the following derivative contracts outstanding at the reporting date:

	30 June 2009
Counterparty	Settlement date	Average exchange rate	Foreign currency EUR000s	Fair value £000s
Forward currency contracts
Calyon	30/6/15	1.19 -1.25	120,000	(5,980)

	30 June 2008
Counterparty	Settlement date	Average exchange rate	Foreign currency EUR000s	Fair value £000s
Forward currency contracts
Calyon	30/6/15	1.19 - 1.25	120,000	(816)

	30 June 2009
Counterparty	Settlement date	Average exchange rate	Notional amount EUR000s	Fair value £000s
Cross currency swap
National Australia Bank Ltd.	30/4/12	1.42 - 1.44	101,861	(2,081)
Calyon	30/4/12	1.23 -1.44	46,707	(673)

	30 June 2008
Counterparty	Settlement date	Average exchange rate	Notional amount EUR000s	Fair value £000s
Cross currency swap
National Australia Bank Ltd.	30/4/12	1.42 - 1.44	101,861	(1,695)
Calyon	30/4/12	1.23 -1.44	46,707	(449)

	30 June 2009
Counterparty	Settlement date	Fixed interest rate	Notional amount EUR000s	Fair value £000s
Interest rate swaps
Calyon	30/7/10	3.82% - 4.72%	87,636	(2,605)
Interest rate caps
Calyon	16/1/12	4.5%	90,386	(277)

	30 June 2008
Counterparty	Settlement date	Fixed interest rate	Notional amount EUR000s	Fair value £000s
Interest rate swaps
Calyon	30/7/10	3.82% - 4.72%	89,386	1,143
Interest rate caps
Calyon	16/1/12	4.5%	92,136	505

20. Reserves

(a) Revaluation reserves

Revaluation reserves of the Group arose from the revaluation of investment properties and derivatives. The amounts in these reserves have already been recognised through the income statement and therefore are an allocation of the results for the year.

(b) Hedging reserves

Hedging reserves comprise the effective portion of the cumulative net change in the fair value of qualifying hedging instruments.

	30 June 2009 £000s	30 June 2008 £000s
Balance at beginning of financial year	(839)	412
Gains/(loss) recognised on cash flow hedges:
Interest rate swaps	(4,319)	947
Currency swaps	(538)	(2,198)
Balance at end of financial year	(5,696)	(839)

Distributable reserve arose from the cancellation of the share premium account pursuant to the special resolution passed at the Extraordinary General Meeting on 13 April 2005 and approved by the Royal Court of Guernsey on 24 June 2005.

(d) Foreign exchange reserves

Foreign exchange reserve arose as a result of the translation of the financial statements of foreign operations, the functional and presentation currency of which is not Sterling.

21. Related party transactions

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

Mr Hunter, Chairman of the Company and Mr. Ray, a Director of the Company, form the majority of the Directors of its subsidiaries, Property Trust Luxembourg 1 Sarl, Property Trust Luxembourg 2 Sarl and Property Trust Luxembourg 3 Sarl and are able to control the investment policy of the Luxembourg subsidiaries to ensure it conforms with the investment policy of the Company. Mr Ray is also a Managing Director of AXA Real Estate Investment Managers Belgium S.A.

Mr Farrell, a Director of the Company, is also a partner in Ozannes, the Guernsey legal advisers to the Company. The total charge to the income statement during the period in respect of Ozannes legal fees were £nil (2008: £713).

Mr Marren, a Director of the Company, is also a Director of Northern Trust International Fund Administration Services (Guernsey) Limited ("Northern Trust"), the Administrator, Secretary and Registrar for the Company. The total administration fees charged to the income statement in respect of Northern Trust administration fees is £165,915 (2008: £151,541) for the year of which £28,590 (2008: £31,927) 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 year, fees of £1.62 million (2008: £1.73 million) were expensed to the income statement of which £1.06 million (2008: £1.17 million) remained payable at the year end.

All the above transactions were undertaken on an arm's length basis.

22. Group entities

AXA Property Trust Limited, the Company, is the parent of the Group. It was incorporated in Guernsey on 5 April 2005. The Company owns the following subsidiaries:

Directly owned by the Company at 30 June 2009

Subsidiaries	Investment in Subsidiaries £000s	Country of Incorporation	Date of Incorporation	Ownership Interest %	Principal Activities
Property Trust Luxembourg 1 Sarl	1,292	Luxembourg	20 July 2005	100	Holding Company
Property Trust Luxembourg 2 Sarl	1,251	Luxembourg	24 November 2005	100	Holding Company
Property Trust Luxembourg 3 Sarl	152	Luxembourg	2 June 2006	100	Holding Company
Total	2,695

Owned by Property Trust Luxembourg 1 Sarl, Property Trust Luxembourg 2 Sarl and Property Trust Luxembourg 3 Sarl

	Country of Incorporation	Ownership Interest %
Property Trust Luxembourg 1 Sarl
Property Trust Karben Sarl	Luxembourg	100
Property Trust Treuchtlingen Sarl	Luxembourg	100
Property Trust Altenstadt Sarl	Luxembourg	100
Property Trust Wuerzburg Sarl	Luxembourg	100
Property Trust Moosburg Sarl	Luxembourg	100
Property Trust Muehldorf Sarl	Luxembourg	100
Property Trust Berlin 1 Sarl	Luxembourg	100
Property Trust Fuerth Sarl	Luxembourg	100
Property Trust Berlin 4 Sarl	Luxembourg	100
Property Trust Netherlands 1 B.V.	Netherlands	100
Keyser Center N.V.	Belgium	0.05
Property Trust Luxembourg 2 Sarl
Property Trust Bernau Sarl	Luxembourg	100
Property Trust Rothenburg 1 Sarl	Luxembourg	100
Property Trust Rothenburg 2 Sarl	Luxembourg	100
Property Trust Kraichtal Sarl	Luxembourg	100
Property Trust Montabauer Sarl	Luxembourg	100
Property Trust Dasing Sarl	Luxembourg	100
Property Trust Dresden Sarl	Luxembourg	100
Keyser Center N.V.	Belgium	99.95
Property Trust Agnadello S.r.l.	Italy	50
Multiplex 1 S.r.l	Italy	100
Property Trust Luxembourg 3 Sarl
Property Trust Koethen Sarl	Luxembourg	100
Property Trust Kali Sarl	Luxembourg	100

23. Commitments

Guarantees

In addition to the main loan facility, the Group has a 50% interest in the joint venture Property Trust Agnadello S.r.l. which holds long term bank debt of £15.33 million (EUR 18.0 million) secured over the property and shares of the joint venture. The Company has provided a guarantee to the lender, Calyon, for £7.66 million (EUR 9.0 million) on a several basis. The joint venture partner, European Added Value Fund Limited, has guaranteed the remaining 50% of the loan.

Commitments

The Group had no commitments at 30 June 2009.

24. Post balance sheet events

The Company holds a 12% interest in the Dutch office portfolio investment Porto Kali. Under the original terms of the Porto Kali consortium's loan facility with HSH Nordbank AG, the maximum permitted Gross Loan to Value "LTV" was 65.0%. The LTV maximum of 65% was breached at 31 December 2008 and at 30 June 2009 the LTV was 72.2%.

On 26 August 2009 new terms were agreed in principle with Porto Kali's lender, HSH Nordbank AG ("HSH"), thereby resolving the LTV breach. The key terms of the new agreement are as follows: the LTV covenant has been raised to 80% with the first test on 31 December 2010, an increase in the interest margin to 175 basis points (reduces to 150 basis points if the LTV falls to 60% or below), EUR 1.5 million loan amortisation per annum and additional annual loan amortisation using any surplus cash above a EUR 2 million allowance for working capital and budgeted capital expenditure. The loan is without recourse to the company. Formal agreement with HSH is anticipated by the end of October 2009.

Corporate Information

Directors (all non-executive)

C.J. Hunter (Chairman)

G.J. Farrell

R.G. Ray

J.M. Marren

S.C. Monier

Registered Office

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

7 Newgate Street

London EC1A 7NX

United Kingdom

Sponsor and Broker

Oriel Securities Limited

125 Wood Street

London EC2V 7AN

United Kingdom

Administrator, Secretary and Registrar

Northern Trust International Fund

Administration Services (Guernsey) Limited

P.O. Box 255

Trafalgar Court

Les Banques

St Peter Port

Guernsey GY1 3QL

Channel Islands

www.axa-im.com

www.axapropertytrust.com

This information is provided by RNS

The company news service from the London Stock Exchange

END

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