Annual Financial Report

RNS Number : 8642U

AXA Property Trust Ld

22 October 2010

To: Company Announcements

Date: 22 October 2010

Company: AXA Property Trust Limited

Subject: Annual Report and Accounts 30 June 2010

AXA Property Trust Limited

Annual Report and Consolidated Financial Statements for the year ended 30 June 2010

Financial Highlights and Performance Summary

For the year to 30 June 2010

Total return on Net Asset Value (NAV) was -3.0%

NAV per share decreased by 6.5%

Losses were 1.07 pence per share

Cumulative dividends paid relating to the year were 3.00 pence per share

Total Expenses Ratio of 1.9% (2009: 1.8%)

As at 30 June 2010

Share price (note 1) was 46.50 pence per share (30 June 2009: 40.50 pence)

Gearing (note 2) was 53.7% (gross) and 42.1% (net) (30 June 2009: 50.8% and 39.0%)

Including Porto Kali investment, gearing was 57.1% (gross) and 46.7% (net) (30 June 2009: 54.0% and 43.9%)

	Year ended 30 June 2010	Year ended 30 June 2009	% change
Net Asset Value(NAV) (£000)	78,009	83,462	(6.5%)
NAV per share	78.01p	83.46p	(6.5%)
Losses per share	(1.07)p	(30.14p)	96.4%
Dividends relating to the year	3.00p	3.75p	n/a
Share price (note 1)	46.50p	40.50p	14.8%
Share price discount to NAV	40.4%	51.5%	n/a
Gearing (gross)(note 2)	53.7%	50.8%	n/a
Total assets less current liabilities (£000)	90,169 (note 3)	170,353	(-47.1%)

Total return	Year ended 30 June 2010	Year ended 30 June 2009
NAV Total Return	(3.0%)	(23.8%)
Share price Total Return
- AXA Property Trust	21.6%	(37.2%)
- FTSE All Share Index	21.1%	(20.5%)
-FTSE Real Estate Investment Trust Index (note 4)	18.0%	(42.4%)

Past performance is not a guide to future performance.

Note 1: Mid market share price (source: Datastream).

Note 2: Gearing is calculated as overall debt, either gross or net of cash held by the Group over property portfolio at fair value.

Note 3: Includes bank debt previously classified as long-term liability.

Note 4: FTSE Real Estate Index is not available.

Source: AXA Investment Managers UK Limited and Datastream

Chairman's Statement

Conditions in AXA Property Trust's markets seem to point to their having reached a trough, after the decline in values seen over the last two years. The Investment Manager continues to focus on maintaining and enhancing the portfolio's income stream having secured its refinancing.

Results

AXA Property Trust Limited (the "Company") and its subsidiaries (together the "Group") made a total net loss after tax of £1.07 million for the year to 30 June 2010. Before unrealised movements on the revaluation of investments and derivatives and related deferred tax, foreign exchange losses and other capital items, the Group made a profit of £3.57 million. The unrealised loss on the revaluation of properties was £9.39 million (6.4% of the market value at 30 June 2009) excluding foreign exchange translation effects.

The Net Asset Value ("NAV") at 30 June 2010 was £78.01 million (78.01 pence per share), a decline of £5.45 million (6.5%) since 30 June 2009. The decline was a result of the £1.07 million net loss for the year, £3.43 million foreign exchange translation losses offset in part by £2.05 million unrealised net gains on derivatives (excluding forward currency contracts). A £3.00 million dividend, covered by revenue profit of £3.57 million was also paid during the year.

The net rental yield on valuation of the portfolio excluding Porto Kali investment was 7.6%. A detailed yield analysis (including Porto Kali investment) is included in the Investment Manager's Report below.

As reported in the half year report, the estimated recoverable value of the Company's investment in the Porto Kali portfolio of Dutch office buildings (in the form of a loan to the Porto Kali portfolio vehicle) was £8.98 million as at 31 December 2009 (£0.86 million increase of the value at 30 June 2009). As at 30 June 2010, however, the forecast performance of the investment in Porto Kali portfolio was revised to reflect continuing weak market conditions which forms part of the revised business plan. As a result, the estimated recoverable value of the Company's investment has been reduced to £6.97 million. In accordance with the Company's accounting policy, an impairment charge of £0.55 million (excluding foreign exchange translation effects) has been made in the financial year. The portfolio continues to generate stable rental income (as at 30 June 2010, a running income of £4.97 million per annum). Further analysis of the Porto Kali investment can be found below.

As at close of business on 30 June 2010, the mid market price of the Company's shares on the London Stock Exchange was 46.50 pence (31 December 2009: 53.00 pence), representing a discount of 40.4% on the Company's Net Asset Value at 30 June 2010 (31 December 2009: 30.4%).

Dividend

The fourth interim dividend of 0.75 pence per share in respect of the year ending 30 June 2010 was declared on 5 August 2010 and paid on 27 August 2010. The cumulative interim dividends of 3.0 pence per share or £3.00 million declared in respect of the twelve months to 30 June 2010 were 119% covered by revenue profit and 134% covered by operating cash flow (excluding capital expenditure and foreign exchange). The annual dividend yield is 3.0% on the issue price and 6.5% on the mid market share price at 30 June 2010. Please note that past performance is not a guide to future returns.

Bank Finance and Hedging Strategy

On 30 September 2010 the Company agreed heads of terms for a new medium-term loan facility to refinance its existing loan of €78.64 million. This proposed facility, agreed with Credit Agricole Corporate and Investment Bank ("Credit Agricole") and Landesbank Berlin / BerlinHyp, extends for a period of five years from the date of drawdown.

The achievement of this significant step is an important part of the Company's strategy and provides a good basis for the Board and Investment Manager to deliver growth and improve the Company's prospects.

A new hedging strategy was approved by the Company's Board on 2 July 2010 which more closely offsets short-term foreign currency fluctuations, matches the Company's net assets exposed to foreign currency and allows the Company to be more proactive if exchange rates remain volatile. This new strategy will be implemented through the use of derivatives with maturities of between three and twelve months with a nominal value approximate to the Company's Net Asset Value ("NAV"). A first phase in the strategy was undertaken in August 2010 and final stages of implementation are planned as part of the refinancing, delivering protection against volatile exchange rate and interest rate fluctuations.

Prospects

In a time of continuing austerity throughout Europe the Company's exposure to Germany, the one economy where growth and unemployment have improved quite significantly, has been a strength. While the Investment Manager intends to maintain these weightings (supported as they are by well secured income flows), with investment transactions picking up in markets, they intend to look for opportunities elsewhere and to consider revising portfolio weightings marginally.

The long-term potential for the Company remains sound, and we believe there are now more reasons to be confident of its more medium-term prospects than there have been for some time:

- appraised and realisable property market values are more likely to increase than hitherto;

- with the benefit of the Investment Managers' strong on-the-ground presence they are able to enhance stock values and income flow;

- the Company's pre-let extension and rebuilding of its retail park at Fuerth in Bavaria, Germany, is under construction and it will almost certainly lead to enhanced capital and rental values at completion next year;

- with the heads of terms now agreed on the refinancing, the Board believes the capital funding of the Company will be secured, providing a strong basis for growth, and cash flow will be enhanced supporting future dividend payments.

While being alert to opportunities internally and in markets, above all the Company remains conservative in both its investment approach and its financial management.

Charles Hunter

Chairman

21 October 2010

Investment Manager's Report

Investment Manager

AXA Investment Managers UK Limited (the 'Investment Manager', 'AXA IM') is the UK subsidiary of AXA Investment Managers, a dedicated asset manager within the AXA Group. AXA Investment Managers is an innovative and fast-growing multi-expertise investment manager with €524 billion of assets under management and over 2,500 employees in 23 countries as at 30 June 2010.

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 Real Estate'). AXA Real Estate is a specialist in European real estate investment management with approximately €39.5 billion of real estate assets under management and 500 staff, operating in 22 countries as at 30 June 2010.

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 Real Estate. 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 €1.5 billion and was Fund Manager of the Standard Life Investments' €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.

Real Estate Market

The latter part of 2009 witnessed tentative signs of a property market recovery. This was supported by a weight of risk-averse equity capital seeking a home in investments that were slightly riskier than bonds but not as risky as equities. Consequently, investment activity was largely restricted to prime 'bond-equivalent' assets. These were typically long-lease, modern assets, let to reputable tenants in core locations; on these criteria, growth prospects had a lower priority. From a low base, transaction volumes increased markedly and some stabilisation of previously rising capitalisation yields was produced.

Investor competition for assets has returned, and the early part of 2010 saw yields starting to fall, particularly in those markets leading the cycle (e.g. United Kingdom, and to an extent, France). However, the second quarter of 2010 has seen a renewed decline in investor sentiment, due to concerns over fiscal budget deficits and, in particular, the responses by debt-laden governments to reduce their sovereign debt risk. The impending implementation of significant austerity packages to control national debt, has reduced the prospects of early improved tenant demand (which would have driven rental value growth) and increased the largest perceived risk of tenants vacating or defaulting. As a result, we expect yields to stabilise in the remainder of 2010.

The announcement of austerity packages by European governments, to be mainly implemented from 2011 onward, has led to downgraded short-term GDP forecasts in many continental European countries, particularly those in Southern Europe. One notable exception is Germany where a rebound in exports led to 9% quarter on quarter Gross Domestic Product ("GDP") growth recorded in the second quarter of 2010, with an unemployment rate at 7.6% lower even than before the downturn. Transaction activity has now started to pick up across the continent, particularly in France, and focussing on prime properties and income secured against long-term leases.

Outlook for 2011

Whilst the austerity measures should provide a solid base for improved economic growth and investor confidence in the medium-term, we expect capitalisation yields to rise in 2011. Such rises will, however, be very modest, reflecting what we believe will be a scenario of central banks interest rates generally being retained at their current low levels.

Short-term outlook for retail

For many consumers, however, the economic recovery will prove more painful than the recession. Household spending, and the discretionary element in particular, will fall - much to the chagrin of embattled retailers. This is expected to lead to poorer prospects for rental growth in the retail sector, where increased personal taxation, public spending cuts, and persistent unemployment will impact households. Consumer price-sensitivity (for middle-income consumers) and luxury fashion goods (young and high-end consumers) will determine the demand profile in the medium-term, in an otherwise weak market of relatively low consumer spending.

We expect the strong segmentation in retail trade to be reinforced in this 'recovery' period. At one end, the discount and well-located convenience shops that serve the basic needs of consumers and, at the other end, high-profit brand/label retailers competing for the best locations should fare reasonably well. That will leave several 'average' retailing in the middle, which will be under-supported by the consumers. Long leased food supermarkets are likely to remain most resilient in the retail sector. Length and strength of income will drive investment demand for such transactions and location will not be as strong a differentiator as might be expected. This will be underpinned by the continued appetite for bond-type long leased income producing properties.

Short-term outlook for offices

Most commercial operations have survived the recession in reasonably good shape, in part because they targeted cost-cutting (and not increasing their debt facilities) rather than seeking to maintain market share. In property terms, many of them have surplus space, and that will need to be re-absorbed before they start to expand again. But many of the larger operations will take advantage of the availability of modern office space to consolidate and/or relocate their businesses to improve their efficiency. We expect demand for office space to increase - particularly in those cities exposed to the global financial markets. We believe the turning points in many markets, particularly the main ones, will be surprisingly sharp.

Short-term outlook for logistics

Of all of the sectors, logistics should recover the fastest after surplus capacity has been re-absorbed. Port operations should be in greater demand than hub operations, but economic obsolescence will prove a more significant risk than previously - suggesting that development may be the preferred route (while perhaps selling down standing assets).

Further ahead: medium-term outlook

In 2012 and 2013, rental value growth is expected to improve in all sectors, as stronger economic growth returns and occupier markets strengthen. We believe investor appetite, buoyed by improved prospects for further rental growth, will recover and capitalisation yields will start to fall.

In our opinion, whilst the medium-term outlook is favourable, shorter term prospects suggest that the recovery in property market capital values will not follow a smooth upward trend. We expect purchasers to restrict themselves to prime real estate assets, as uncertainty engenders risk aversion. This preference for prime may filter through to some of the best quality secondary assets, but the wider secondary market - with short unexpired leases, voids, poor locations - will suffer from a weak short-term growth outlook and a lack of demand. During the latter part of 2011, riskier assets will be relatively cheap - raising the potential for exceptionally-high returns, even on a risk-adjusted basis, for those investors willing to make a commitment. This should gain momentum in 2012 or 2013 as secondary assets witness resurgence in demand.

Investment Activity

The direct property portfolio has experienced a capital value loss of 5.91% over the twelve months to 30 June 2010 in Euro terms. The Investment Manager believes that valuations should now stabilise going into the second half of 2010.

The Investment Manager has reviewed the Company's holdings and strategy in the light of the significant market developments and upheavals since the Company's launch in 2005. The Investment Manager remains confident in the performance prospects of the acquired portfolio. Select disposals, however, have been identified within the Germany portfolio. Disposal proceeds will be invested in opportunities that are now appearing in other Continental European markets and sectors, particularly France and Spain.

The focus on comprehensive management of tenants, leases and physical premises will remain a priority. Following the new lease signed by the Company on 19 November 2009 with the German supermarket retailer Edeka for a new anchor store at the Company's Phoenix Center retail park at Fuerth in Bavaria, Germany, the building permit to develop the 3,737m2 unit at the centre was granted in August 2010 and construction works have commenced on site. The development project and the new lease to Edeka will secure the long-term prospects of the wider centre and is expected to have a positive impact on rental levels across the scheme. The project shows a yield on total cost (including current valuation of land and the former Edeka unit) of 9.43%. We expect the implementation of this project will provide exciting capital and income growth potential.

Property Portfolio at 30 June 2010

Investment name	Country	Sector	Net yield on valuation (notes 1 and 3)	% of total assets
Rothenburg ob der Tauber	Germany	Retail	7.26%	11.54%
Phoenix Center, Fuerth	Germany	Retail	7.25%	10.57%
Curno, Bergamo	Italy	Leisure	6.62%	9.19%
Bergamina, Agnadello	Italy	Industrial	7.08%	7.99%
Smakterweg, Venray	Netherlands	Industrial	8.84%	5.09%
Am Birkfeld, Dasing	Germany	Industrial	8.01%	4.80%
Bahnhofstraße, Karben	Germany	Retail	7.18%	4.78%
Industriestraße, Montabaur-Heiligenroth	Germany	Retail	8.53%	4.02%
Keyser Center, Antwerp	Belgium	Retail	6.94%	3.66%
Pankower Allee, Berlin	Germany	Retail	7.16%	3.36%
Nürnberger Straße, Treuchtlingen	Germany	Retail	7.76%	3.28%
Other	Germany	Retail	-	16.51%
Total property portfolio			7.60%	84.79%
Porto Kali investment(note 2)	Netherlands	Office	6.49% (note 4)	4.45%
Other non-current and current assets				10.76%
Total assets				100.00%

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

Note 2: total value of Port Kali investment (equity and shareholder loan) is £6.97 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 2010 by Market Value

Germany	60%
Netherlands	19%
Italy	17%
Belgium	4%

Sector Analysis at 30 June 2010 by Market Value

Retail	58%
Industrial	18%
Office	15%
Leisure	9%

Source: AXA Real Estate Investment Managers UK Limited

Covenant Strenth Analysis at 30 June 2010

(including 12% interest in Porto Kali Investment)

Grade A	57.9%	Creditreform:<199; D&B:A 1
Grade B	13.8%	Creditreform:200-249; D&B:B,C,D 1,2
Grade C	22.9%	Creditreform:>250; D&B: D + 3,4
Vacant	5.4%

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 57.9% of income and has a weighted unexpired lease length of 5.9 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 competitive occupier markets.

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 2010 was 5.2 years (note 1). Vacancy within the portfolio stands at

5.4%, measured by rental income. Excluding the Porto Kali consortium investment, vacancy in the direct portfolio stands at 2.6%.

Average unexpired lease length profile weighted by rental income

	30 June 2010	30 June 2009
	Years	Years
Grade A	6.0	6.5
Grade B	3.6	4.1
Grade C	4.5	5.2
Average	5.2	5.8

Lease expiry profile weighted by rental income

	30 June 2010	30 June 2009
	Rental income (as a % of total gross rental income)	Rental income (as a % of total gross rental income)
Vacant	6%	6%
1 year	10%	9%
2 years	9%	16%
3 years	8%	7%
4 years	9%	3%
5 years	12%	9%
5-10 years	31%	33%
10-15 years	14%	9%
15+ years	1%	8%

Source: AXA Real Estate Investment Managers UK Limited

Note 1: This figure does not include the 15.5 years lease signed to Edeka at Fuerth in November 2009 which will commence once the premises have been constructed.

Financing

Fund Gearing	30 June 2010	30 June 2009
Property portfolio (£ million)	132.95	146.99
Borrowings (£ million)	71.42	74.61
Total gross gearing excluding Porto Kali (note 1)	53.7%	50.8%
Total net gearing excluding Porto Kali (note 1)	42.1%	39.0%
Total gross gearing including Porto Kali (note 1)	57.1%	54.0%

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 2010	30 June 2009	Maximum
Main loan facility	53.5%	49.97%	55.0%
Joint venture Property Trust Agnadello S.r.l.	58.8%	59.6%	65.0%
Consortium investment Porto Kali	77.5%	72.0%	80.0%

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

Interest Cover Ratio (Note 3)at 30 June 2010	Historic	Minimum	Projected	Gross rental income headroom
Main loan facility covenant	315.0%	250.0%	655.7%	61.9%
Joint venture Property Trust Agnadello S.r.l.	371.5%	125.0%	494.1%	74.7%
Consortium investment Porto Kali	197.0%	120.0%	329.0%	52.0%

Note 3: Interest Cover Ratio (ICR) is calculated as net financing expense payable as a percentage of gross rental income (or in the case of Property Trust Agnadello, net rental income) less movement in arrears. Projected net financing expense payable assumes prevailing floating interest rates for the majority of the year. Gross rental income headroom is based on projected interest cover.

Main Loan Facility and Hedging Strategy

Documentation regarding the waiver of the existing Loan to Value ("LTV") breach of the £64.01 million (€78.64 million) loan facility with Credit Agricole (announced in the Interim Management Statement RNS dated 19 May 2010) and the increase of the LTV covenant to 55% has now been completed and the Company is no longer in breach of any covenants in the loan facility.

Having finalised the waiver, the Company has agreed head of terms for a new medium-term loan facility to refinance its existing loan of €78.64 million. The proposed new facility, agreed on 30 September 2010 with Credit Agricole Corporate and Investment Bank ("Credit Agricole") and Landesbank Berlin / BerlinHyp, extends for a period of 5 years from the date of drawdown. The aggregate interest rate cost of the new loan based on the current five year swap plus a 2.0% margin is estimated to be 4.0%. This compares favourably with the overall cost of debt over the last five years and thus increases available cash flow to ensure the maintenance and potential growth of dividend income for shareholders.

The main financial covenants applicable as part of the facility are as follows:

- 55% LTV on drawdown to maximum of €78.64 million;

- LTV test at 50% at end of year 1, thereafter 60%;

Global LTV test at 60% at end of year 1, thereafter 70%. The Global LTV is the loan value plus mark-to-market changes under hedges as a percentage of the market value of the properties;

- Interest Cover Ratio Covenant - 185% (1 year look forward and back);

- Margin of 200bps;

- Arrangement Fee of 90bps;

- Prepayment Fees of 125bps (year 1) and 100bps (year 2).

As part of the refinancing the Company will renew and extend its cross currency swaps to ensure stable sterling denominated income flows from the portfolio over the medium-term, and will enter into new interest rate swaps and caps to eliminate floating interest rate risk.

Following the advice of the Investment Manager, on 2 July 2010 the Company's Board approved a new hedging strategy which more closely offsets short-term foreign currency fluctuations, matches the Company's net assets exposed to foreign currency and allows the Company to be more proactive if exchange rates remain volatile. This new strategy will be implemented through the use of derivatives with maturities of between three and twelve months with a nominal value approximate to the Company's Net Asset Value ("NAV").

As such, on 12 August 2010, the Company closed out two of the original three long-term forward rate hedging arrangements ("FRAs") in place with Credit Agricole for a total face value of €80.0 million of the total €120.0 million. The cash impact of closing these two trades was €0.63 million in favour of the bank and this was met from the Company's cash resources. The trades are NAV neutral as the cash outflow of €0.63 million extinguishes the liability of the same value at the trading date. The third FRA is planned to be closed as part of refinancing the main loan facility and replaced with a shorter term instrument.

Capital Expenditure and Cash Position

The Company and its subsidiaries held total cash of £15.47 million (€18.90 million) at 30 June 2010.

The £15.47 million has been allocated between working capital and capital expenditure. A total of £4.01 million (€4.9 million) of capital expenditure is now committed for the development of the Company's retail asset in Fuerth, Germany, which is under construction following the approval of the building permit in August 2010. Cash of £9.95 million (€12.16 million) is held on short-term deposit to be drawn as required for the capital expenditure programme and other cash requirements.

Porto Kali Investment and Loan Facility

Following the restructuring of the loan facility with HSH Nordbank, the Loan to Value at 30 June 2010 at 77.5% is within the new covenant of 80.0% which became effective 1 November 2009, and the interest service cover ratio at 197% is above the covenant of 120%. The loan is amortised by €1.5 million per annum. The loan is without recourse to the Company.

AXA Real Estate, as portfolio adviser to the Porto Kali investment, has continued its tactical approach to sales and lettings as part of the business strategy of the Porto Kali portfolio. The occupational market remains weak as Estimated Rental Values ("ERVs") are under pressure and incentives required to secure a letting have been increasing further. On the positive side, negotiations with tenants have resulted in 24 lease renewals in the financial year for an aggregated rent of €4.97 million, which is 4.5% above ERV on a cumulative basis. In addition, 13 new leases have been agreed, however for smaller unit sizes, reflecting current market tenant demand. The annual rent of €0.36 million represents a 2.0% uplift on ERV.

Capital markets remain challenging with demand focused on the prime side. As a secondary portfolio, progress on the disposal programme is slower than planned. During the last quarter to 30 June 2010, a disposal was agreed and subsequently completed on 9 August 2010. Negotiations are progressing on another four potential disposals. However, these are still in the early stages as purchasers face difficulties in raising funds and meeting the required pricing.

Portfolio Outlook

The portfolio's income stream remains well protected with a low vacancy rate of 2.6% in respect to the directly held portfolio. AXA Real Estate in-territory asset management teams are currently in the process of renewing lease contracts with several tenants where leases are due to expire in 2011. Although rental values face continuing pressure across Europe, rents paid in particular by German supermarkets, an important sub-sector for the Company, are expected to remain stable or decline only marginally in the coming year. In addition to the development project at Fuerth, limited and highly targeted landlord investment is budgeted to facilitate letting and renewal projects where improved value can be captured. Expenditure is only undertaken once a new lease has been signed. We believe that investment yields are now stabilising following significant re-pricing across the continent. With strong property fundamentals and a conservative financing approach, we are confident that the Company remains well positioned as European economies emerge from recession. In the new market environment which is emerging the Investment Manager, supported by AXA Real Estate local teams across Europe, plan to dispose of selected properties from its German portfolio. Proceeds will be reinvested in territories where the Investment Manager sees value growth potential.

Source: AXA Real Estate Investment Managers UK Limited

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) has over 30 years of experience in property investment, principally in UK commercial property. He was Head of Property Investment of Insight Investment (formerly Clerical Medical Investment Group) for some nine years and before that Property Director of the investment management subsidiaries of The National Mutual of Australasia group in the United Kingdom. He is on the Supervisory Board of Schroder Exempt Property Unit Trust and a Council member of St Monica Trust, Bristol. 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 over 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 19 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 Mourant 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 2010.

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 in note 23 to the financial statements 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 2010 as follows:

	Payment date	Rate per Share
First interim	27 November 2009	0.75p
Second interim	26 February 2010	0.75p
Third interim	28 May 2010	0.75p
Fourth interim	27 August 2010	0.75p

Directors

The Directors who held office during the year as at 30 June 2010 were:

C. J. Hunter (Chairman)

G. J. Farrell

R. G. Ray

J. M. Marren

S. C. Monier

Mr Marren is a Director of the Administrator, Northern Trust International Fund Administration Services (Guernsey) Limited.

Mr Farrell is a Partner of the Company's Guernsey legal advisers, Mourant Ozannes, Advocates and Notaries Public.

Mr Ray is Managing Director of AXA Real Estate Investment Manager Belgium S.A.

Mr Hunter and Mr Ray are also Directors of the three direct subsidiaries of AXA Property Trust Limited.

The Directors who held office during the year and their interest in the shares of the Company at 30 June 2010 (all of which were beneficial) were:

C. J. Hunter 6,200

G. J. Farrell -

R. G. Ray -

J. M. Marren -

S. C. Monier 85,000

Biographical details of each of the Directors are shown 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

C. Monier £15,000

£80,000

The Directors of the subsidiaries of the Group received emoluments amounting to £26,792 (2009: £27,844). Total fees paid to Directors of the Group were £106,813 (2009: £107,844).

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 29 September 2010 were as follows:

	Number of shares	Percentage
State Street Nominee Limited	28,400,000	28.40%
Nutraco Nominees Limited	8,784,879	8.78%
Quilter Nominees Limited	6,501,805	6.50%
Nortrust Nominees Limited	4,000,000	4.00%
BNY Gil Client Account (Nominees) Limited	3,491,871	3.49%

Corporate Governance

Introduction

The Listing Rules now require that the Company include a statement in its annual report and accounts of how it has applied the main principles set out in Section 1 of The UK Code on Corporate Governance (the "Code"), in a manner that would enable Shareholders to evaluate how the principles have been applied. Further, the report and accounts also need to include a statement as to whether the Company has: (i) complied throughout the accounting period with all relevant provisions set out in Section 1 of the Code; or (ii) not complied throughout the accounting period with all relevant provisions set out in Section 1 of the Code and if so, setting out those provisions it has not complied with; in the case of provisions whose requirements are of a continuing nature, the period within which, if any, it did not comply with some or all of those provisions; and the Company's reasons for non-compliance.

In addition, the Board has considered the principles and recommendations of the AIC's Code of Corporate Governance issued in March 2009 (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 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 Code).

Except as disclosed below, the Company complied throughout the year with the recommendations of the AIC Code and the relevant provisions of the Code. Since all the Directors are non-executive, and in accordance with the AIC Code and the preamble to the Code, the provisions of the 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.

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 £34,899 (2009: £31,422) for the Company for the year ended 30 June 2010 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 reviews the appropriateness of all service providers, including the Investment Manager's continuing appointment together with the terms and conditions thereof on a regular basis.

The table below sets out the number of Board meetings held during the year ended 30 June 2010 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	4	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	4	2	2	1	1

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 has 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

Any buy back of shares will be made subject to Guernsey law and within guidelines established from time to time by the Board (which will take into account the income and cash flow requirements of the Company) and the making and timing of any buy backs will be at the absolute discretion of the Board. Purchases of shares will only be made through the market for cash at prices below the prevailing Net Asset Value of the shares where the Directors believe such purchases will enhance shareholder value.

Such purchases will also only be made in accordance with the rules of the UK Listing Authority which sets a cap on the price that the Company can pay.

Independent auditors

During the financial year it was considered appropriate to review the appointment of KPMG Channel Islands Limited as auditors of the Company. The audit was put out to tender, in order to demonstrate that best practice had been observed. The review concluded that KPMG Channel Islands Limited should be retained as auditors to the Company.

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

21 October 2010 21 October 2010

Investment Policy

Diversification and Asset Allocation

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 exist 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 interests in the joint ventures at a time of the Company's choice. The Company will not invest in other investment companies.

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 Group's investment properties, valued on a market value basis by an independent valuer 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 Consolidated Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under the 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 apply them consistently;

- make judgments and estimates which 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 that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of 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 as at and for the year ended 30 June 2010.

(b) The financial report, which includes information detailed in the Chairman's Statement, Investment Manager's and Director's Reports and Notes to the Financial Statements which provides a fair review of the development and performance of the Group during the year; and includes a description of the principal risks and uncertainties that the Group faced as at and for the year ended 30 June 2010.

Charles Hunter John Marren

Chairman Director

21 October 2010 21 October 2010

Independent Auditors Report

We have audited the Group financial statements (the "financial statements") of AXA Property Trust Limited (the "Company") for the year ended 30 June 2010 which comprise Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Financial Position, 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 2010 and of the Group's loss for the year then ended;

- are in accordance with International Financial Reporting Standards; and

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

Ewan McGill

for and on behalf of KPMG Channel Islands Limited

Chartered Accountants and Recognised Auditors

Guernsey

21 October 2010

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2010

	Notes	Year ended 30 June 2010 £000s	Year ended 30 June 2009 £000s
Gross rental income	4	12,694	12,805
Service charge income		702	530
Property operating expenses		(1,798)	(2,338)
Net rental and related income		11,598	10,997

Net foreign exchange (loss)/gain		(569)	129
Net foreign exchange(loss)/gain		(569)	129

Valuation loss on investment properties		(9,395)	(28,037)
Impairment loss	11	(555)	(3,708)
Net valuation loss on investment properties and financial assets		(9,950)	(31,745)

Unrealised gain/(loss) on forward currency contracts	20	4,381	(5,164)
Unrealised gain on currency hedge	20	1,491	-
Unrealised loss on other derivatives		(41)	(236)
Investment management fees		(1,353)	(1,620)
Sponsor's fees	3	(46)	(56)
Administrative expenses	5	(1,411)	(1,401)
Total expenses		3,021	(8,477)

Net operating profit/(loss)		4,100	(29,096)

Financial income/expenses
Interest income from bank deposits		37	565
Interest income from loans to joint ventures		-	403
Finance costs		(4,018)	(3,750)
Loan facility commitment fees		(185)	(84)
Loss before tax		(66)	(31,962)
Income tax (expense)/income	17	(1,003)	1,821
Loss for the year		(1,069)	(30,141)

Loss for the year		(1,069)	(30,141)
Other comprehensive income
Effective portion of changes in fair value of cash flow hedges		2,098	(4,857)
Income tax relating to interest rate swap		(45)	-
Foreign exchange translation (loss)/gain		(3,437)	7,663
Other comprehensive (loss)/income for the year	2	(1,384)	2,806

Total comprehensive loss for the year		(2,453)	(27,335)
Basic and diluted loss per ordinary share (pence)	6	(1.07)	(30.14)

The accompanying notes below form an integral part of these financial statements.

Consolidated Statement of Changes in Equity

For the year ended 30 June 2010

	Revaluation reserve £000s	Hedging reserve £000s		Revenue reserve £000s		Distributable reserve £000s		Foreign currency reserve £000s		Total £000s
	Note 21	Note 21				Note 21		Note 21
Balance at 1 July 2009	(25,568)	(5,696)		-		92,948		21,778		83,462
Net loss	(9,991)	-		8,922		-		-		(1,069)
Other comprehensive loss	-	2,053		-		-		(3,437)		(1,384)
Total comprehensive loss for the year	(9,991)	2,053		8,922		-		(3,437)		(2,453)
Contributions by and distributions to owners
Dividends to equity holders	-	-		(3,000)		-		-		(3,000)
Balance at 30 June 2010	(35,559)	(3,643)		5,922		92,948		18,341		78,009

For year ended 30 June 2009

	Revaluation reserve £000s	Hedging reserve £000s	Revenue reserve £000s		Distributable reserve £000s		Foreign currency reserve £000s		Total £000s
	Note 21	Note 21			Note 21		Note 21
Balance at 1 July 2008	6,413	(839)	639		94,469		14,115		114,797
Net loss	(31,981)	-	1,840		-		-		(30,141)
Other comprehensive income	-	(4,857)	-		-		7,663		2,806
Total comprehensive loss for the year	(31,981)	(4,857)	1,840		-		7,663		(27,335)
Contributions by and distributions to owners
Dividends to equity holders	-	-	(2,479)		(1,521)		-		(4,000)
Balance at 30 June 2009	(25,568)	(5,696)	-		92,948		21,778		83,462

The accompanying notes below form an integral part of these financial statements.

Consolidated Statement of Financial Position

As at 30 June 2010

	Notes	30 June 2010 £000s	30 June 2009 £000s
Non-current assets
Investment properties	8	132,951	146,988
Loan receivable	11	6,969	7,789

Derivative financial instruments	20	1	40
Other assets		-	65
Deferred tax assets	17	135	118

Current assets
Cash and cash equivalents	12	15,473	17,324
Trade and other receivables	13	1,257	1,670
Total assets		156,786	173,994

Current liabilities
Trade and other payables	14	2,605	3,641
Current portion of long-term loans	15	64,012	-

Non-current liabilities
Deferred tax liability	17	1,068	629
Long-term loans	16	7,412	74,606
Derivative financial instruments	20	3,680	11,656
Total liabilities		78,777	90,532

Net assets		78,009	83,462
Share capital	18	-	-
Reserves	21	78,009	83,462

Total equity		78,009	83,462
Number of ordinary shares		100,000,000	100,000,000

Net asset value per ordinary share (pence)	19	78.01	83.46

The accompanying notes below form an integral part of these financial statements.

By order of the Board

Charles Hunter John Marren

Chairman Director

21 October 2010 21 October 2010

Consolidated Statement of Cash Flows

For the year ended 30 June 2010

	Year ended 30 June 2010 £000s	Year ended 30 June 2009 £000s
Operating activities
Loss before tax	(66)	(31,962)
Adjustments for:
Unrealised loss on revaluation of investment properties and financial assets	9,950	31,745
Unrealised (gain)/loss on forward currency contracts	(4,381)	5,164
Unrealised gain on currency hedge	(1,491)	-
Unrealised loss on other derivatives	41	236
Decrease in trade and other receivables	723	1,290
Decrease in trade and other payables	(763)	(738)
Investment income	-	(403)
Bank interest	(37)	(565)
Interest expense	4,018	3,750
Foreign exchange loss/(gain)	569	(129)
Amortisation of loan facility fees	185	84
Net cash generated from operations	8,748	8,472

Interest income received	48	658
Interest paid	(4,103)	(3,988)
Investment income received	-	403
Tax paid	(673)	(163)
Net cash inflow from operating activities	4,020	5,382

Investing activities
Acquisition of property, plant and equipment	(1,037)	(563)
Net cash outflow from investing activities	(1,037)	(563)

Financing activities
Credit Agricole loan facility repaid	-	(4,061)
Dividends paid	(3,000)	(4,000)
Net cash outflow from financing activities	(3,000)	(8,061)

Effect of exchange rate fluctuations	(1,834)	455
Decrease in cash and cash equivalents	(1,851)	(2,787)

Cash and cash equivalents at start of the year	17,324	20,111
Cash and cash equivalents at year end	15,473	17,324

The accompanying notes below form an integral part of these financial statements.

Notes to the Financial Statements

For the year ended 30 June 2010

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 2010 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 ("IFRS"), 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 21 October 2010.

Adoption of new and revised standards

(i) Determination and presentation of operating segments

The Board of Directors is charged with setting the Company's investment strategy in accordance with the Prospectus. They have delegated the day to day implementation of this strategy to its Investment Manager but retain responsibility to ensure that adequate resources of the Company are directed in accordance with their decisions. The investment decisions of the Investment Manager are reviewed on a regular basis to ensure compliance with the policies and legal responsibilities of the Board. The Investment Manager has been given full authority to act on behalf of the Company. Under the terms of the Investment Management Agreement dated 18 April 2005, subject to the overall supervision of the Board, the Investment Manager advises on the general allocation of the assets of the Company between different investments, advises the Company on its borrowing policy and geared investment position, manages the investment of the Company's subscription proceeds and short-term liquidity in fixed income instruments and advises on the use of (and management of) derivatives and hedging by the Company. Whilst the Investment Manager may make the investment decisions on a day to day basis regarding the allocation of funds to different investments, any changes to the investment strategy or major allocation decisions have to be approved by the Board, even though they may be proposed by the Investment Manager. The Board therefore retains full responsibility as to the major allocations made on an ongoing basis. The Investment Manager will always act under the terms of the Prospectus and the Investment Management Agreement dated 18 April 2005 which can not be radically changed without the approval of the Board of Directors.

The Board has considered the requirements of IFRS 8, 'Operating Segments'. The Board is of the view that the Company is engaged in a single segment of business, being investment in properties in Europe including the United Kingdom.

(ii) Presentation of financial statements

The Group applies revised IAS 1 Presentation of Financial Statements (2007), which became effective as of 1 January 2009. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. This presentation has been applied in these financial statements as of and for the year ended on 30 June 2010.

Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.

(iii) IFRS Financial Instruments: Disclosures

The amended IFRS 7 standard requires additional disclosures about fair value measurement and liquidity risk. Fair value measurements related to items recorded at fair value are to be disclosed by source of inputs using a three level fair value hierarchy, by class, for all financial instruments recognised at fair value, as presented in note 20. In addition, reconciliation between the beginning and ending balance for level 3 fair value measurements is now required, as well as significant transfers between levels in the fair value hierarchy. The amendments also clarify the requirements for liquidity risk disclosures with respect to derivative transactions and assets used for liquidity management. The fair value measurement disclosures are presented in note 20. The liquidity risk disclosures are not significantly impacted by the amendments and are presented in note 20.

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:

- IFRS 1 (Amended) First time adoption of IFRS as a result of Additional Exemptions for First-time Adopters (Effective date - 1 January 2010)

- IFRS 2 (Amended) Share-based Payments as a result of Group Cash-settled Share-based Payment Transactions (Amendments to IFRS 2) (Effective date - 1 January 2010)

- IFRS 3 (Revised) Business Combinations - Comprehensive revision on applying the acquisition method (Effective date 1 July 2010)

- IFRS 5 (Amended) Non-current Assets held for Sale and Discontinued Operations as a result of Improvements to IFRSs 2009 (Effective date - 1 January 2010)

- IFRS 7 (Amended) Financial Instruments: Disclosures as a result of Improving Disclosures about Financial Instruments (Effective date - 1 July 2010)

- IFRS 8 (Amended) Operating Segments as a result of Improvements to IFRSs 2009 (Effective date - 1 January 2010)

- IFRS 9 Financial Instruments (Effective 1 January 2013)

- IAS 1 (Amended) Presentation of Financial Statements as a result of Improvements to IFRSs 2009 (Effective date - 1 January 2010)

- IAS 7 (Amended) Statement of Cash Flows as a result of Improvements to IFRSs 2009 (Effective date - 1 January 2010)

- IAS 17(Amended) Leases as a result of Improvements to IFRSs 2009 (Effective date - 1 January 2010)

- IAS 24 (Revised) Related Party Disclosures as a result of IAS 1 Presentation of Financial Assets (Effective date - 1 January 2011)

- IAS 28 (Amended) Investments in Associates as a result of Improvements to IFRSs 2008 (Effective date - 1 July 2010)

- IAS 31 (Amended) Interest in Joint Ventures as a result of Improvements to IFRSs 2008 (Effective date - 1 July 2010)

- IAS 32 (Amended) Financial Instruments: Presentation as a result of Improvements to IFRSs 2008 (Effective date - 1 February 2010)

- IAS 36 (Amended) Impairment of Assets as a result of Improvements to IFRSs 2009 (Effective date - 1 January 2010)

- IAS 39 (Amended) Financial Instruments: Recognition and Measurement as a result of Improvements to IFRSs 2009 (Effective date: 1 January 2010)

- IFRIC 13 Customer Loyalty Programmes (Effective date 1 January 2011)

- IFRIC 14 (Amended) The Limit on a Defined Asset, Minimum Funding Requirements and their Interaction as a result of IAS 1 Presentation of Financial Statements (Effective date 1 January 2011)

- IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments (Effective date - 1 July 2010)

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. 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 judgement, 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.

Changes in relation to previously published notes to the financial statements

The comparative information for the year ended 30 June 2010 has been restated as follows:

Note 20:

(i) Forward foreign exchange contracts have been restated at their notional value instead of their fair value; this has resulted in the net exposure being revised accordingly.

(ii) Foreign exchange risk sensitivity has been recalculated to include only monetary items and non-sterling amounts; thereby causing the effect on equity to be revised from -ve £10.112 million to -ve £2.31 million.

(iii) Under Interest re-pricing, the effective interest rate on long-term loans has been corrected to 2.2%-5% instead of 2.2% -2.3%. In addition the Porto Kali loan receivable has been correctly classified as floating rate debt and
£80 thousand of long-term loan classified as fixed rate debt.

Note 22:

(iii) The Investment Managers' and Real Estate Advisers' fees that remain payable at the year has been adjusted to reflect the true figure of £1.04 million instead of £1.06 million.

As a result of these changes there have been no change to the net result or net assets of the Group as previously reported.

(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 statement of financial position date are translated to Sterling at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the statement of comprehensive income. 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 statement of financial position 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. Subsidiaries are accounted for at cost less impairment in the Company's financial statements.

(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 ventures. 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 statement of comprehensive income 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 carried at cost. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(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. Final dividends are recognised once they are approved by shareholders.

(i) Provisions

A provision is recognised in the statement of financial position when the Group has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation.

(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 statement of financial position. Acquisition costs on properties under offer which had not exchanged by 30 June 2010 are expensed in the statement of comprehensive income.

After initial recognition, investment properties are measured at fair value using the fair value model with unrealised gains and losses recognised in the statement of comprehensive income. Realised gains and losses upon disposal of properties are recognised in the statement of comprehensive income. 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 statement of comprehensive income 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 equity 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 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 statement of financial position, they are derecognised on disposal with any realised gains or losses being included on the statement of comprehensive income.

(o) Impairment

The carrying amounts of the Group's assets, other than investment property, are reviewed at each statement of financial position 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 statement of comprehensive income.

(p) 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 statement of financial position date, and any adjustment to tax payable in respect of previous periods.

Deferred income tax is provided using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the statement of financial position 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 17.

(q) 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. Properties are valued quarterly by external independent valuers as at the end of each calendar quarter. Their valuations are reviewed quarterly by the Board.

Quarterly valuations of investment properties are carried out by Knight Frank LLP, external independent valuers to the Company, in accordance with the Royal Institution of Chartered Surveyors' ("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.

In view of market instability, the valuers refer to the RICS Valuation Standards Guidance Note 5 (Valuation Uncertainty). Investor sentiment towards property investment has weakened considerably since 2009. Far fewer negotiations are resulting in transactions as many investors wait to see how market pricing will ultimately adjust to changing economic and restrictive credit conditions. In consequence, there are a limited number of comparable transactions. Knight Frank LLP's opinion of Market Value is provided in light of these conditions.

(r) 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 cost which is also deemed to be fair value. 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 (s).

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 statement of financial position date, taking into account current interest rates and the current creditworthiness of the swap counterparties.

(s) 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 statement of financial position 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.

Investments in other unlisted open-ended investment funds are recorded at the Net Asset Value per share as reported by the managers of such funds.

Hedges which meet the 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 translation 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 a forecast transaction is no longer expected to occur, the cumulative gain or loss that was deferred in equity is recognised immediately in profit or loss.

Note 20 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 Investment Real Estate Adviser and Investment Manager will not exceed 90 basis points per annum. Either party may terminate the Investment Management Agreement with not less than 12 months' notice in writing.

(ii) Oriel Securities Limited is sponsor and broker to the Company. The Company will pay a retainer of £50,000 per annum payable in four equal trenches 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 2010 amounted to £12.69 million (2009: £12.81 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.

	30 June 2010	30 June 2009
	Rental income £000s	Rental income £000s
0-1 year	12,532	12,957
1-5 years	35,092	36,391
5+ years	23,341	32,054

5. Administrative expenses

	30 June 2010 £000s	30 June 2009 £000s
Administration fees	(488)	(363)
General expenses	(423)	(102)
Audit fees	(189)	(224)
Legal and professional fees	(161)	(562)
Directors' fees	(107)	(108)
Insurance fees	(43)	(42)
Total	(1,411)	(1,401)

Each of the Directors receives a fee of £15,000 (2009: £15,000) per annum from the Company. The chairman receives a fee of £20,000 (2009: £20,000) per annum. The aggregate remuneration and benefits in kind of the Directors in respect of the Company's period ending on 30 June 2010 amounted to £80,000 (2009: £80,000) in respect of the Company and £106,813 (2009: £107,844) 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 £1.07 million (2009: £30.14 million) and the weighted average number of Ordinary Shares in issue during the year of 100,000,000 (2009: 100,000,000).

7. Dividends

A further dividend of £750,000 (0.75 pence per share) was approved by the Board of Directors on 3 August 2010. The ex-dividend date was 11 August and the payment date was 27 August 2010.

Dividend payment date	No. of Ordinary Shares	Rate pence	30 June 2010 £000s	30 June 2009 £000s
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
28 August 2009	100,000,000	0.75	750	-
27 November 2009	100,000,000	0.75	750	-
26 February 2010	100,000,000	0.75	750	-
28 May 2010	100,000,000	0.75	750	-
Total			3,000	4,000

8. Investment properties

	30 June 2010 £000s	30 June 2009 £000s
Cost at the beginning of year	134,277	133,809
Capital expenditure	412	468
Cost of investment properties	134,689	134,277

Fair value adjustments	(30,596)	(21,201)
Foreign exchange translation	28,858	33,912
Market value	132,951	146,988

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 statement of comprehensive income. A 5% increase in the value of the direct properties (after deferred tax) at 30 June 2010 would have increased net assets and income for the year by £5.32 million (2009: £5.88 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 2010 would have increased net assets and income for the year by £0.82 million (2009: £0.97 million). A decrease of 5% would have had nil impact (2009: nil).

9. Joint ventures

On 16 October 2006 the Group disposed of 50% of the equity in the Italian subsidiary Property Trust Agnadello S.r.l. which holds a logistics warehouse in Agnadello, Italy. The equity was acquired by European Added Value Fund Sarl, a subsidiary of European Added Value Fund Limited ("EAVF"). The Manager of EAVF is Partnership Incorporations Limited, which has appointed AXA Real Estate Investment Managers UK Limited to act as real estate adviser to EAVF. The transaction was at arms length, at no gain or loss and the sale price represented market value. The underlying property value was confirmed by Knight Frank LLP, independent valuers to the Company.

The Group is entitled to a proportionate share 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 2010 £000s	30 June 2009 £000s
Current assets	395	358
Non-current assets	12,527	12,959
Current liabilities	392	448
Non-current liabilities	10,760	11,539

	30 June 2010 £000s	June 30, 2009 £000s
Income	1,154	1,043
Expenses including valuation gains and losses on investment property and derivatives	754	2,580

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 2010 the fair value of the investment was nil (2009: nil) 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.

11. Loan receivable

The Porto Kali joint investment was funded by equity of £1.02 million (€1.50 million) (see note 10) and a Euro-denominated shareholder loan (non-Group loan receivable) of £9.11 million (€13.53 million). The loan is unsecured, bears interest at Euribor plus 2.25% per annum and is repayable on 18 June 2017.

Based on the new financing terms agreed in December 2009 and the revised business plan of the Porto Kali portfolio, the estimated recoverable value of the Company's loan receivable related to the Porto Kali investment as at 30 June 2010, using a discounted cash flow model in the Group accounts has been reduced to £6.97 million (€8.5 million). The related impairment expense was £0.55 million (€0.63 million), resulting in a total impairment allowance of £4.25 million
(€4.98 million) (2009: £3.70 million, €4.35 million).

The discounted cash flow model involves the projection of expected cash receipts such as gross income less vacancy and collection losses and less operating and financial expenses for a period of 3 years starting from January 2010 along with an estimate of the exit value. To this projected cash flows series, a discount rate of 3% was applied, based on current short-term Eurozone interest rates plus a risk margin, to establish an indication of the present value of the loan.

12. Cash and cash equivalents

	30 June 2010 £000s	30 June 2009 £000s
Bank balances	5,514	5,400
Fixed deposits	9,959	11,924
Total	15,473	17,324

13. Trade and other receivables

	30 June 2010 £000s	30 June 2009 £000s
Witholding tax receivable	613	270
Other receivable	32	18
VAT receivable	208	852
Rent receivable	164	218
Accrued income	150	256
Prepayments	87	56
Interest on deposits	3	-
Total	1,257	1,670

14. Trade and other payables

	30 June 2010 £000s	30 June 2009 £000s
Investment manager's fee	379	1,038
Property manager's fee	28	23
Other	755	778
Tax	477	403
Interest payable on loan facility	320	376
Legal and professional fees	154	349
VAT payable	153	325
Audit fee	154	194
Administration and Company Secretarial fees	107	107
Property acquisition costs	24	31
Rent prepaid	19	10
Directors' fees	10	7
Sponsor fees	25	-
Total	2,605	3,641

15. Current portion of long-term loans

30 June 2010

£000s

30 June 2009

£000s

Secured bank loan

64,012

As at 30 June 2010, the Group's main loan facility with Credit Agricole was fully drawn to £64.01 million (€78.64 million) (2009: £66.86 million, €78.64 million). The loan matures on 3 April 2011.

Following completion of the debt restructuring (execution of waiver documentation and entering into a Restatement Agreement dated 28 May 2010 ), the existing Loan to Value breach of the main loan facility with Credit Agricole is now waived and the Company is no longer in breach of any covenants in the loan facility. As part of the restructuring Berlin Landesbank who were previously a syndicate bank, were afforded equal creditor ranking in all respects with Credit Agricole, thus both banks are now co-lenders ("Lenders") to the Company.

The loans drawn under the main loan facility are now secured through both mortgages and through share pledges on the property vehicles and their holding companies.

16. Long-term loans

	30 June 2010 £000s	30 June 2009 £000s
Non-current liabilities
Secured bank loan	7,331	74,526
Loan due to third party	81	80
Total	7,412	74,606

In addition to the main loan facility (see note 15), the Group has a 50% interest in the joint venture Property Trust Agnadello S.r.l. which holds long-term bank debts of £7.33 million (€9.0 million) as at 30 June 2010 secured over the property and assets of the joint venture.

17. Taxation

	30 June 2010 £000s	30 June 2009 £000s
Reconciliation of effective tax rate
Effect of:
Current tax
Italy	207	129
Netherlands	82	(72)
Germany	288	407
Total current tax	577	464

Deferred tax
Investment property	483	(2,733)
Loss on fair value of financial assets	-	(1)
Gain on derivatives	-	(25)
Tax value of loss carried forwards recognised	(57)	474
Total deferred tax	426	(2,285)

Tax charge/(credit) during the year	1,003	(1,821)

Payment on account	(673)	(163)
Taxation payable/(paid in advance)	330	(1,984)

Recognised deferred tax and liabilities

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

	30 June 2010
	Assets £000s	Liabilities £000s	Net £000s
Investment property	-	(1,023)	(1,023)
Gain on derivatives	-	(45)	(45)
Tax value of loss carry forwards recognised	135	-	135
Tax assets/(liabilities)	135	(1,068)	(933)

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

Movement in temporary differences

	1 July 2009 £000s	Recognised in statement of comprehensive income £000s	Foreign exchange translation £000s	30 June 2010 £000s
Investment property	(1,514)	(483)	91	(1,906)
Investment property - change in tax rate	918	-	(36)	882
Gain on derivatives	-	(45)	-	(45)
Tax value of loss carry forwards recognised	234	57	2	293
Tax value of loss carry forwards recognised - change in tax rate	(149)	-	(8)	(157)
Tax assets/(liabilities)	(511)	(471)	49	(933)

	1 July 2008 £000s	Recognised in statement of comprehensive income £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	652	(474)	56	234
Tax value of loss carry forwards recognised - change in tax rate	(133)	0	(16)	(149)
Tax assets/(liabilities)	(2,597)	2,285	(199)	(511)

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

18. Share capital

30 June 2010

30 June 2009

Number of shares

Share premium

£000s

Number of shares

Share premium

£000s

Shares of no par value issued and fully paid

100,000,000

100,000

100,000,000

100,000

Capital risk management

The Company's capital is represented by the Ordinary Shares, revaluation reserves, capital 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 16 December 2009 to make market purchases of up to 14.99% of its Ordinary Shares until the earlier of the next AGM or 16 December 2010. 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.

19. Net asset value per ordinary share

The Net Asset Value per Ordinary Share at 30 June 2010 is based on the net assets attributable to the ordinary shareholders of £78.01 million (2009: £83.46 million) and on 100,000,000 (2009: 100,000,000) ordinary shares in issue at the statement of financial position date.

20. 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 period 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 and Company's exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approve 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 2010	Within one year £000s	1-2 years £000s	2-5 years £000s	More than 5 years £000s	Total £000s
Cash and cash equivalents	15,473	-	-	-	15,473
Rents receivable	164	-	-	-	164
Trade and other receivables	1,093	-	-	-	1,093
Derivative financial instruments	-	1	-	-	1
Loan receivable	-	-	-	6,969	6,969
Total	16,730	1	-	6,969	23,700

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
Loan receivable	-	-	-	7,789	7,789
Total	18,994	-	-	7,829	26,823

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 2010	Less than 3 months £000s	3-12 months £000s	1-5 years £000s	Total £000s
Interest bearing loans	-	64,012	7,412	71,424
Trade and other payables	1,444	1,161	-	2,605
Derivative financial instruments
Interest rate swaps	661	-	-	661
Cross currency swaps	-	-	1,420	1,420
Forwards	-	-	1,599	1,599
Total	2,105	65,173	10,431	77,709

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

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 Credit Agricole at floating interest rates. The Group manages this risk by using interest rate swaps and caps denominated in Euro. Following maturity of the swaps on 15 January 2010 (joint venture Property Trust Agnadello loan facility) and 30 July 2010 (main loan facility), interest rate caps with a strike rate of 4.5% have become effective until the maturity of the related loans. At 30 June 2010, the Group had interest rate swaps with a notional contract amount of £64.38 million (€78.64 million) (2009: £74.64 million (€87.64 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 2010	+1%	600
At 30 June 2010	-1%	600
At 30 June 2009	+1%	683
At 30 June 2009	-1%	(478)

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 2010		30 June 2009
	Assets £000s	Liabilities £000s	Assets £000s	Liabilities £000s
Non-current
Interest rate swaps	1	661	40	2,922
Cross currency swaps	-	1,420	-	2,754
	1	2,081	40	5,676

The following table details the notional principal amounts and remaining items 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 2010 %	30 June 2009 %	30 June 2010 €000s	30 June 2009 €000s	30 June 2010 €000s	30 June 2009 €000s
Interest rate swaps
2 to 5 years	3.82% - 4.72%	3.82% - 4.72%	78,635	87,636	(660)	(2,881)
Cross currency swaps
2 to 5 years	4.18% - 4.63%	4.18% - 4.63%	148,568	148,568	(1,420)	(2,754)

The interest rate swaps settle on a quarterly basis. The basis of floating rate is 3-month Euribor which at the year end was 0.77% (2009: 1.10%). The Group will settle the difference between the fixed and floating rate on a net basis.

Interest re-pricing

	As at 30 June 2010
	Effective interest rate %	Total as per statement of financial position £000s	Fixed rate £000s	Floating rate 3 months or less £000s
Financial assets
Loan receivable		6,969	-	6,969
Cash and cash equivalents		15,473	-	15,473
Total		22,442	-	22,442

Financial liabilities
Current portion of long-term loans	2.05%	64,012	-	64,012
Long-term loans	1.49% - 5.0%	7,412	81	7,331
Total		71,424	81	71,343

	As at 30 June 2009
	Effective interest rate %	Total as per statement of financial position £000s	Fixed rate £000s	Floating rate 3 months or less £000s
Financial assets
Loan receivable		7,789	-	7,789
Cash and cash equivalents		17,324	-	17,324
Total		25,113	-	25,113

Financial liabilities
Long-term loans	2.20% - 5.0%	74,606	80	74,526
Total		74,606	80	74,526

Foreign currency risk

The European subsidiaries will invest in properties using currencies other than Sterling, the Company's functional and presentational currency, and the statement of financial position 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 (€1.60 million) quarterly interest receipts in Euro over the next two years through the use of cross currency swaps. All cross currency swap contracts are designated as cash flow hedges in order to reduce the Group's cash flow exposure resulting from movement in exchange rates of the Euro against Sterling.

At the year ended 30 June 2010, the Company's cash flow hedges in relation to cross currency swaps were tested for ongoing effectiveness for accounting purposes and were found to have become ineffective, due primarily to differences between the hedged amount and the underlying cash flows which are no longer comparable. As a result, in accordance with the Company's accounting policy, the unrealised gain of £1.49 million relating to the ineffective portion of the cash flow hedges has been recognised in the statement of comprehensive income. The cumulative amount of £2.91 million previously reported in equity remains in equity until the instrument is closed out. The divergence between the hedged amount and the underlying cash flows will be addressed in financial year 2011 as part of the refinancing of the main loan facility in order to mitigate any ineffectiveness of the cross currency hedging.

Foreign currency hedging

The Group uses 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 €120 million, representing 126% of the Company's net investment in Euros as at 30 June 2010. Hedge accounting is no longer applied to the forward contracts due primarily to the differences between the hedged amount and the Company's net investment in Euros. As a result, in accordance with the Company's accounting policy, the unrealised gain of £4.38 million for the year relating to the forward contracts has been recognised in the statement of comprehensive income.

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

Monetary assets £000s

Monetary liabilities £000s

Forward foreign exchange contracts £000s

Net exposure

£000s

At 30 June 2010

23,594

(74,029)

96,649

46,214

At 30 June 2009

26,534

(78,247)

96,226

44,513

Foreign currency risk sensitivity

The following table demonstrates the sensitivity to potential fluctuations in the Euro exchange rate (ceteris paribus) of the Group's equity.

	Increase/decrease in Euro exchange rate	Effect on equity £000s
At 30 June 2010	+5%	(2,311)
At 30 June 2010	-5%	2,311
At 30 June 2009	+5%	(2,226)
At 30 June 2009	-5%	2,226

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included within Level 1 that are observable for asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);

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

June 30, 2010	Level 1 £000s	Level 2 £000s	Level 3 £000s
Assets measured at fair value
Interest rate swaps	-	1	-
Liabilities measured at fair value
Interest rate swaps	-	661	-
Currency hedges	-	1,420	-
Forwards	-	1,599	-
Total	-	3,680	-

June 30, 2009	Level 1 £000s	Level 2 £000s	Level 3 £000s
Assets measured at fair value
Interest rate swaps	-	40	-
Liabilities measured at fair value
Interest rate swaps	-	2,922	-
Currency hedges	-	2,754	-
Forwards	-	5,980	-
Total	-	11,656	-

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

	30 June 2010
Counterparty	Settlement date	Average exchange rate	Foreign currency €000s	Fair value £000s
Forward currency contracts
Credit Agricole	30/6/15	1.19 - 1.25	120,000	(1,599)

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

	30 June 2010
Counterparty	Settlement date	Average exchange rate	Notional amount €000s	Fair value £000s
Cross currency swap
National Australia Bank Ltd.	30/4/12	1.42 - 1.44	101,861	(1,106)
Credit Agricole	30/4/12	1.23 - 1.44	46,707	(314)

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

	30 June 2010
Counterparty	Settlement date	Fixed interest rate	Notional amount €000s	Fair value £000s
Interest rate swaps
Credit Agricole	30/7/10	3.82% - 4.72%	78,635	(600)
Interest rate caps
Credit Agricole	02/1/12	4.50%	87,636	(21)

	30 June 2009
Counterparty	Settlement date	Fixed interest rate	Notional amount €000s	Fair value £000
Interest rate swaps
Credit Agricole	30/7/10	3.82% - 4.72%	87,636	(2,605)
Interest rate caps
Credit Agricole	02/1/12	4.50%	87,636	(277)

21. Reserves

(a) Revaluation reserves

Revaluation reserves of the Group arose from the revaluation of investment properties, financial assets 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 hedging instruments.

	30 June 2010 £000s	30 June 2009 £000s
Balance at beginning of financial year	(5,696)	(839)
Gain/(loss) recognised on cash flow hedges:
Interest rate swaps	2,210	(4,319)
Currency swaps	(157)	(538)
Balance at end of financial year	(3,643)	(5,696)

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.

22. 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 Mourant Ozannes, the Guernsey legal advisers to the Company. The total charge to the income statement during the period in respect of Mourant Ozannes legal fees were £7,604 (2009: £nil) which was settled during the year.

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 statement of comprehensive income in respect of Northern Trust administration fees is £216,489 (2009: £165,915) for the year of which £nil (2009: £28,590) 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 £1.35 million (2009: £1.62 million) were expensed to the statement of comprehensive income of which £0.38 million (£1.04 million) remained payable at the year end.

All the above transactions were undertaken at arms length.

23. 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:

Subsidiaries	Investment in subsidiaries £000s	Country of incorporation	Date of incorporation	Ownership interest %	Principal activities
Property Trust Luxembourg 1 Sarl	1,292	Luxembourg	Wednesday, July 20, 2005	100	Holding Company
Property Trust Luxembourg 2 Sarl	1,251	Luxembourg	Thursday, November 24, 2005	100	Holding Company
Property Trust Luxembourg 3 Sarl	152	Luxembourg	Friday, June 02, 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 insterest %
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

24. Commitments

Guarantees

The Company has provided mortgages over the properties in the amount of €78.64 million in favour of the Lenders as security for the main loan facility.

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 £14.74 million (€18.0 million) secured over the property and shares of the joint venture. The Company has provided a guarantee to the lender, Credit Agricole, for £7.37 million (€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

On 19 November 2009, the Group entered into a lease with the German supermarket retailer Edeka for a new anchor store at its Phoenix Center retail park at Fuerth in Bavaria, Germany. The lease with Edeka Grundstücksgesellschaft Nordbayern-Sachsen-Thüringen mbH is for a fixed term of 15 years and six months. The building permit to develop the 3,737m² unit was granted in early August 2010 and construction works have commenced on site. Delivery of the new unit is now expected in the second quarter of 2011.

Edeka currently occupy a 2,500m² unit, which will be refurbished and marketed to other existing tenants wanting to expand within the retail park, as well as to new occupiers who will improve the tenant mix and the retail destination for the catchment population. The development project and the new lease to Edeka will secure the long-term prospects of the wider centre and is expected to have a positive impact on rental levels across the scheme.

The budgeted cost for the development of the 3,737m² unit and refurbishment of the 2,500m² unit is £4.01 million (€4.9 million, previously budgeted at €4.8), of which £3.24 million (€3.65 million) is committed under the terms of the Edeka lease. The project shows a yield on total cost (including current valuation of land and the former Edeka unit) of 9.43%. The Investment Manager believes that implementation of this project will provide exciting capital and income growth potential.

25. Subsequent events

Refinancing of main loan facility

On 30 September 2010, the Company agreed heads of terms for a new medium-term loan facility to refinance its existing loan of €78.64 million. The proposed new facility, agreed with Credit Agricole Corporate and Investment Bank ("Credit Agricole") and Landesbank Berlin / BerlinHyp, extends for a period of five years from the date of drawdown.

The main financial covenants applicable as part of the facility are as follows:

- 55% LTV on drawdown to maximum of €78.64 million;

- LTV test at 50% at end of year 1, thereafter 60%;

- Global LTV test at 60% at end of year 1, thereafter 70%. The Global LTV is the loan value plus
mark-to-market changes under hedges as a percentage of the market value of the properties;

- Interest Cover Ratio Covenant - 185% (1 year look forward and back);

- Margin of 200bps;

- Arrangement Fee of 90bps;

- Prepayment Fees of 125bps (year 1) and 100bps (year 2).

Signing of full documentation with the lenders is anticipated by the end of November 2010.

Hedging strategy

On 2 July 2010, the Company's Board, following the advice of the Investment Manager, approved a new hedging strategy which more closely offsets short-term foreign currency fluctuations, matches the Company's net assets exposed to foreign currency and allows the Company to be more proactive if exchange rates remain volatile. This new strategy will be implemented through the use of derivatives with maturities of between three and twelve months with a nominal value approximate to the Company's Net Asset Value ("NAV").

As such on 12 August 2010 the Company closed out two of the original three long-term forward rate hedging arrangements ("FRAs") in place with Credit Agricole for a total face value of €80.0 million of the total €120.0 million. The third FRA with a face value of €40 million is planned to be closed as part of refinancing the main loan facility. In addition, on 6 September the Company executed a forward rate hedging instrument with Citibank N.A., at a €/£ forward rate of 1.202 with a total face value of €50.0 million. The new hedging instrument (in addition to the remaining €40.0 million FRA) represents 94.5% foreign currency hedging of the Company's NAV of £78.01 (€95.28 million) as at 30 June 2010. The mark-to-market valuation of the new hedging instrument will be settled in cash with the bank upon expiry of the instrument on 15 November 2010.

Upon completion of the refinancing the Company will be implementing short-term foreign currency hedging instruments consistent with the above strategy.

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 EC1A 7NX

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

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