REGISTERED NUMBER: B FRASIA HOLDINGS S.A.

Transcription

1 REGISTERED NUMBER: B Consolidated Financial Statements for the year ended

2 CONSOLIDATED FINANCIAL STATEMENTS TABLE OF CONTENTS Page Number Company Information 1 Strategic Report 2-3 Directors' Report 4-5 Audit Report 6-7 Consolidated Statement of Comprehensive Income for the year ended 8 Consolidated Statement of Financial Position as at 9 Consolidated Statement of Cash Flows for the year ended Consolidated Statement of Changes in Equity Notes to the Consolidated Financial Statements 12-23

3 CONSOLIDATED FINANCIAL STATEMENTS COMPANY INFORMATION REGISTERED COMPANY NUMBER RCS Luxembourg B COMPANY'S REGISTERED OFFICE 21 Boulevard Grande Duchesse Charlotte L-1331 Luxembourg ASSET MANAGER AXA Real Estate Investment Managers UK Limited 8th Floor, 155 Bishopsgate London EC2M 3XJ INDEPENDENT AUDITORS PricewaterhouseCoopers Société coopérative Cabinet de révision agréé 2, rue Gerhard Mercator B.P L-1014 Luxembourg BANKERS IN U.K. Royal Bank of Scotland Plc. London Corporate SC PO Box /2 Devonshire Square London EC2M 4XJ BANKERS IN LUXEMBOURG Credit Agricole Private Banking Luxembourg 39 Allee Scheffer L-2520 Luxembourg CHANNEL ISLANDS STOCK EXCHANGE LEGAL ADVISORS Bedell Channel Islands Limited PO Box New Street Jersey JE4 8PP Page 1

4

5

6

7

8

9 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (in GBP) Notes Year to Rental and related income Net profit from fair value adjustment on investment property Management fees Administrative and set up costs Operating profit (a), 12(b) 12(c) Finance income Other finance costs Total net finance income 11 12(a) Profit before taxation Income tax expense 4(b) 15 February to 24,043, ,329,992 (1,216,325) (213,543) 122,943,178 18,967,447 2,521,103 (937,178) (154,508) 20,396,864 21,300 (1,189) 20, ,300 (3,443) 237, ,963,289 20,634,721 (15,542) - Profit for the period 122,947,747 20,634,721 Total comprehensive income for the period 122,947,747 20,634, p 4.78p Earnings per share (expressed as GBP pence per share) [1] All results shown above are from continuing activities. The accompanying notes form an integral part of these Consolidated Financial Statements. 1. Earnings per share attributable to the shareholders of the Company from the profit for the period. Page 8

10

11 CONSOLIDATED STATEMENT OF CASH FLOWS (in GBP) Notes Cash flows from operating activities Profit before taxation Adjustments for: Net profit from fair value adjustment on investment property 122,963,289 20,634,721 (100,329,992) (2,521,103) 22,633,297 18,113, ,504 (599,071) 8 (1,508,742) 10,126,346 21,431,059 27,640,893 (20,008) - (2,128,897) (472,000,000) (20,008) (474,128,897) (22,795,000) (22,795,000) 475,081,123 (11,686,221) 463,394,902 (1,383,949) 16,906,898 5 Operating cash flows before movements in working capital Decrease/(increase) in current assets Trade and other receivables (Decrease)/increase in current liabilities Trade and other payables Net cash generated from operating activities Cash flows from investing activities Acquisition of investment property Costs of acquiring investment property 5 Net cash used in investing activities Cash flows from financing activities Proceeds from Limited Partners Capital Contributions Distributions paid Net cash related to financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year 16,906,898 Cash and cash equivalents at the end of the year 13 The accompanying notes form an integral part of these Consolidated Financial Statements. Page 10 15,522,949 16,906,898

12 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (in GBP) Share Capital Legal Reserve Retained Earnings Dividends Group Opening balance Transfer to retained earnings Capital contributions Legal reserve Comprehensive income for the period Distributions due in year 431,895,612-43,185,511 4,050-20,634,721 (11,687,000) (4,050) 122,947,747 - (11,687,000) 11,687,000 (22,795,000) 484,028, ,947,747 (22,795,000) Balance at 431,895,612 43,189, ,891,418 (22,795,000) 584,181,591 Opening balance Capital contributions Legal reserve Comprehensive income for the period Distributions due in period Balance at Share Capital Legal Reserve 475,081,123 (43,185,511) 431,895,612 43,185,511 43,185,511 Retained Earnings 20,634,721 20,634,721 The accompanying notes form an integral part of these Consolidated Financial Statements. Page 11 Dividends Group (11,687,000) (11,687,000) 475,081,123 20,634,721 (11,687,000) 484,028,844

13 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 1. General Information Frasia Holdings S.A. (the "Company") is a Luxembourg company established in the form of a Societe Anonyme for an unlimited period of time subject to Luxembourg company law. The Company was established to invest in property either directly or indirectly, in accordance with its investment strategy objectives as set out in the Joint Venture Agreement between its shareholders. The Company under the laws of the Grand-Duchy of Luxembourg, has its registered office at 21 Boulevard Grande Duchesse Charlotte, L-1331 Luxembourg. The Company and its subsidiaries (the "Group") invest into an investment property in London, United Kingdom. The owners of the Group a total commitment to the Company of 431,895,612 as share capital. All share capital has been drawn down and invested as of. Page 12

14 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 2. Summary of significant accounting policies These consolidated financial statements cover the year to. The business was established on 20 March 2013 when the Group's investment property was acquired. These financial statements have been prepared on a going concern basis, in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"). The consolidated financial statements have been prepared under the historical cost convention, as modified by valuation of investment property, financial assets and financial liabilities at fair value through the consolidated statement of comprehensive income. The principal accounting policies applied in the preparation of the consolidated financial statements are set out below. 2.1 Standards and interpretations The preparation of Consolidated Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Consolidated Financial Statements are disclosed in Note 4. (a) Early adoption of standards For the current financial period, the Group did not early adopt any new or amended standards and interpretations and do not plan to early adopt any of the standards issued not yet effective. (b) New and amended standards, and interpretations adopted by the Group The following standards have been adopted by the Group for the first time for the financial year beginning on or after 1 January 2014:. IFRIC 21, sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS 37 The interpretation addresses what the obligating event is that gives rise to pay a levy and when should a liability be recognised. The. IFRS 10, financial (Applicable for financial years beginning on or after 1 January 2014) builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated Financial Statements of the parent company. The standard provides additional guidance to assist in the determination. IFRS 11, (Applicable for financial years beginning on or after 1 January 2014) focuses on the rights and obligations of the parties to the arrangement rather than its legal form. There are two types of joint arrangements: joint operations and joint ventures. Joint operations arise where the investors have rights to the assets and obligations for the liabilities of an arrangement. A joint operator accounts for its share of the assets, liabilities, revenues and expenses. Joint venture arise where the investors have rights to the net assets of the arrangement; joint ventures are accounted for under the equity method. Proportional consolidation of joint arrangements is no longer permitted. The standard has no impact on the consolidated Financial Statements.. IFRS 12, of interests in other (Applicable for financial years beginning on or after 1 January 2014) includes the disclosure requirements for all forms of interest in other entities.. Amendments to IFRS 10 financial IFRS 12 of interests in other and IAS 27 financial Investment entities: the amendments define an investment entity and introduce an exception to consolidating particular subsidiaries for investment entities. These amendments require an investment entity to measure those subsidiaries at fair value through profit or loss in accordance with IFRS 9 in its consolidated and separate financial statements. The amendments also introduce new disclosure requirements for investment entities in IFRS 12 and IAS 27. Entities are required to apply the amendments for annual periods beginning on or after 1 January The standard has no Page 13

15 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 2. Summary of significant accounting policies (continued) 2.1 Standards and interpretations (continued) (c) New standards, amendments and interpretations issued, not yet adopted by the Group: A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2014, and have not been applied in preparing these consolidated Financial Statements. None of these is expected to have a significant effect on the consolidated Financial statements of the Group : IFRS 9, addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through OCI and fair value through P&L. The basis of classification depends on the business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and meale is uncollectible, it is written off against the allowance account for receivables. Subsequent recoveries of amounts previously written off are credited in the consolidated statement of comprehensive income.tiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under IAS 39. The standard is effective for accounting periods beginning on or after 1 January Early adoption is permitted, subject to EU endorsement. IFRS 15, from contracts with deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 and IAS 11 and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is permitted, subject to EU adoption. (d) There are no other new standards, amendments and interpretations issued not effective for the current financial period Page 14

16 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 2. Summary of significant accounting policies (continued) 2.2 Consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries (together the "Group"). Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date on which control ceases. Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed, where necessary, to ensure consistency with the policies adopted by the Group. The acquisition of a subsidiary is treated as an asset acquisition, the identifiable assets and liabilities acquired are measured initially at their fair values as of the acquisition date. The difference of the cost of acquisition including direct acquisition costs, over the fair value of the share of the identifiable net assets acquired is allocated over the relative fair values of the assets acquired, and no gain or loss on acquisition nor goodwill is recognised. The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. 2.3 Foreign currency translation (a) Functional and presentation currency Items included in the consolidated financial statements of each of the entities are measured using the currency of the primary economic environment in which the entity operates (the The consolidated financial statements are presented in GBP (), which is the Group's functional and presentation currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of comprehensive income. 2.4 Leases All property leases entered into by the Group are deemed to be operating leases as all the risks and rewards of ownership remain with the Group. These properties are included in investment property (note 5). Please refer to Note 2.8 for the revenue recognition policy in respect of lease income. Page 15

17 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 2. Summary of significant accounting policies (continued) 2.5 Investment property Investment properties mainly comprise the investment in land and buildings in the form of properties which are not for use in the operations of the Group, nor for sale in the ordinary course of business, but are held primarily to earn rentals by leasing to third parties under long term operating leases, or for capital appreciation or both. Investment properties in operation are initially measured at acquisition cost. All costs directly attributable to the acquisition of an investment property (professional fees for legal services and due diligence, property transfer taxes and other transaction costs) and all subsequent capital expenditures that qualify as acquisition costs are capitalised. Administration costs and other general overhead costs are not included as costs of property. After initial recognition investment properties are carried at fair value. Changes in fair value are recognised through the statement of comprehensive income. For fair value measurement, the Company appoints an independent appraiser to appraise to fair value at the financial position date. The Company appointed CBRE Limited as its independent appraiser who hold a recognised and relevant professional qualification and have recent experience with the location and category of asset being valued. They apply the methodology and valuation guidelines in compliance with IAS 40 to determine the fair value of the investment properties ("fair value"). The fair value measurement of the investment property complies with the requirements of IFRS 13 Fair Value Measurement. The fair value is not meant to represent the liquidation value of the properties, which would be dependent upon the price negotiated at the time of sale less any associated selling costs. The fair value is largely based on estimates using real estate appraisal techniques and other valuation methods as outlined above. Such estimates are inherently subjective and actual values can only be determined in a sales transaction. 2.6 Receivables Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy or financial reorganisation, and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the receivable's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the receivable is reduced through the use of an allowance account, and the amount of the loss is recognised in the consolidated statement of comprehensive income. When a receivable is uncollectible, it is written off against the allowance account for receivables. Subsequent recoveries of amounts previously written off are credited in the consolidated statement of comprehensive income. 2.7 Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less. 2.8 Revenue recognition Revenue includes rental income from properties, and income from property disposals, as applicable. Rental income from operating leases is recognised in the consolidated statement of comprehensive income on a straight line basis over the lease term. When the Group provides incentives to its tenants, the cost of incentives are recognised over the lease term, on a straight line basis, as a reduction of rental income. Service and management charges are recognised in the accounting period in which the services are rendered. 2.9 Dividend distribution Dividend distributions paid to the shareholders of the Company are recognised as a reduction in the equity attributable to the shareholders of the Company. Page 16

18 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 2. Summary of significant accounting policies (continued) 2.10 Taxes The Company is incoporated in Luxembourg but resident in the U.K. for tax purposes as a U.K. Real Estate Investment Trust ("REIT"). Under the current laws of the U.K. and Luxembourg the Company is not liable to certain income, estate, corporation, capital gains or other taxes. The shareholders of the Company may suffer withholding tax imposed by the U.K. on distributions they receive, which is recorded as gross of withholding tax in the Statement of Changes in Equity Trade and other payables Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Note 3. Financial risk management 3.1 Financial risk factors The Group's activities expose it to a variety of financial risks: foreign exchange risk, market price risk, credit risk and liquidity risk. The financial risks relate to the following financial instruments : trade and other receivables, cash and cash equivalents, trade and other payables. (a) Foreign exchange risk Currency risk is limited as the Group operates predominantly within the U.K. and most of the transactions and balances in the consolidated financial statements are GBP denominated. (b) Credit risk Under the Group's credit risk policy, rental contracts are undertaken as far as possible with tenants with an appropriate credit history with Dun & Bradstreet A - D ratings (or the equivalent). If there is no independent rating available, an assessment of the credit quality of the tenant is undertaken, taking into account its financial position, past experience and other factors. Page 17

19 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 4. Critical accounting estimates and judgements The preparation of the consolidated financial statements requires directors of the Company to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidation on financial statements and the reported amount of the revenue, expenses and unrealised gain or losses during the reporting period. Actual results could differ from these estimates. 4.1 Critical accounting estimates and assumptions Estimates and judgements are continually evaluated and based on historical experience, current market conditions and other relevant factors. These other relevant factors include expectations of future events that are believed to be reasonable under the circumstances. Management makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have material risk of causing a material adjustment to the carrying amounts of assets and liabilities are outlined below: (a) Valuation of investment property The valuation of the investment property has been classified as level 3 as defined by IFRS 13 Fair Value Measurement. Level 3 means that the valuation model cannot rely on inputs that are directly available from an active market. All other factors remaining constant, an increase in rental income would increase valuation, whilst an increase in equivalent nominal yield would result in a fall in value and vice versa. The fair value hierarchy has the following levels: Level 1 quoted prices (unadjusted) in active markets for identical assets and liabilities. Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are for the asset or liability that are not based on observable market data (unobservable inputs). Further detail in relation to the valuation of the investment property is detailed in note 5. Page 18

20 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (in GBP) Note 5. Investment property Investment property - Freehold Balance brought forward at start of the year Additions of investment property during the year/period Acquisition costs Net profit from fair value adjustment on investment property 476,650,000 20, ,329,992 Balance carried forward at the end of the year/period 472,000,000 2,128,897 2,521, ,000, ,650,000 The Group's investment property is located at Ropemaker Place, 25 Ropemaker Street, London EC2Y 9AS and was acquired on 20 March As set out in section c) of the Joint Venture Deed of Agreement between the shareholders of the Company an estimate of the Market Value of the investment property will be prepared by CBRE Limited, the Group's independent valuer at the end of each financial year. The investment property was valued as at by CBRE Limited, the Group's independent valuer, a professionally qualified independent valuer. The valuation was prepared based on Fair Value which for the purpose of financial reporting under IFRS is the same as Market Value. The valuation carried out by the Group's independent valuer has been prepared in accordance with the Royal Institute of Chartered Surveyors ("RICS") Valuation Professional Standards (2012) ("the Red Book"). Market Value has been determined by the Group's independent valuer on the assumption of being 'the estimated amount for which an asset or liability should exchange on the date of the valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion'. The current use of the investment property equates to the highest and best use. There has been no transfer into or out of levels in the hierachy. The Asset Manager reviews the independent valuation on an annual basis and specifically verifies all major inputs to the independent valuation report; assesses the property valuation movement to the previous year and holds discussions with the independent valuer. The investment property is valued using the direct income capitalisation approach. Using this approach the net rent, there are no operating costs, at the balance sheet date is divided by an overall Net Initial Yield of around %% to get to a gross valuation from which a purchasers' estimated costs (agent and legal fees at 0.55% of gross value) and stamp duty land tax (4.0% of gross value) are deducted. The significant unobservable inputs include: (i) Estimated rental value based on the location, type and quality of the property supported by the terms of exisiting leases and external evidence such as current market rents for similar properties. (ii) Net Initial Yield based on location, size and quality of the property and taking into account market data. The investment property measured at Fair Value in the statement of financial position is classified as level 3 in the fair value hierarchy. Significant unobservable inputs in Level 3 fair value measurement of the Group's investment property are as follows: Class Input Office Net Initial Yield Net rent 4.20% 4.82% 25,387,868 24,049,885 Significant increases or decreases in any of these inputs in isolation could result in a significantly lower or higher fair value. The net effective ERV for the offices of to 54.75/sq. ft. compares to the minimum uplift ERV of to 52.50/sq. ft. Sensitivity Analysis of investment property valuation Yield Rent -0.5% 0.0% 0.5% -5.0% 550,802, ,048, ,322, % 579,792, ,000, ,023, % 608,781, ,737, ,724,366 Note 6. Shares in Group Undertakings The Company has an investment in the subsidiary undertaking Frasia Intermediate Sarl. The percentage held by the Company is 100.0%. Balance brought forward at start of the year Addition in the year/period Balance carried forward at the end of the year/period The shares in the subsidiary undertaking are stated at cost. Page ,282, ,282, ,282, ,282,735

21 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (in GBP) Note 7. Trade and other receivables 270,744 21, , ,105 10, ,071 Trade receivables Other receivables Trade receivables are composed of receivables for rent, service charge and other charges from tenants as of. All trade receivables have been collected after the balance sheet date. Credit risk is concentrated within the UK wherein the Group's operations are primarily conducted. There are several tenants and there is no single tenant from who the Group derives the majority of its revenue. Note 8. Trade and other payables Trade payables Deferred income Net amount owed to investment property managing agent Accrued legal and professional fees Management fees accrued and payable (see Note 14a) Other tax payable Withholding tax on distributions VAT payable 23,407 5,609,856 1,954,696 86, ,606 15, ,874 8,633,925 1,427 5,553, ,822 67, , ,000 2,181,704 10,127,125 Trade and other payables are interest free and have settlement dates within one year. Trade payables include administration fees payable to third party service providers, costs incurred in relation to various other general amounts pertaining to the operation of the subsidiaries. Note 9. Financial instruments - risk management The Group's principal financial instruments comprise of cash. It has other financial assets and liabilities such as receivables and payables, which arise directly from its operations. The main risks arising from the Group's financial instruments are liquidity and credit risk the management of which are disclosed in note 3 - Financial risk management. The policies for managing each of these risks is summarised below: (a). Liquidity risk Liquidity risk arises from the Group's management of working capital and it is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The table below analyses the Group's non-derivative financial instruments into relevant maturity groupings based on the remaining period at the statement of financial position date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. At On demand < 1 month 1 to 3 months Total Assets Cash and cash equivalents 15,522,949 Trade and other receivables 15,522, , ,567 Liabilities Trade and other payables 2,418,195 6,215,730 8,633,925 (a). Credit risk Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligations. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions. To manage the exposure, the Group has policies in place to ensure that deposits are placed with high-credit quality banks. The Group does not enter into derivatives to manage credit risk. Page 20

22 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (in GBP) Note 10. Rental income Gross rental income for the period amounts to 24,043,054. The Group leases out its investment property under operating leases. The average weighted unexpired lease term for the Group's investment property portfolio is years and years to tenant breaks. There are no contingent rents included in rental income. The future aggregate minimum rentals receivable under non-cancellable operating leases are as follows: No later than 1 year Later than 1 year and no later than 5 years Later than 5 years Total Note 11. Finance income 27,386, ,380, ,308, ,075,115 24,030, ,421, ,653, ,105,834 21,300 21,300 Interest from bank deposits 241, ,300 Note 12. Other finance costs, Management Fees and Administrative and set up costs (a) Other finance costs Bank charges Other expenses ,189 (b) Management fees 1,216,325 1,216,325 Asset management fees (see note 14(a)) (c) Administrative and set up costs 36,032 51,354 30, , ,543 Audit fees Tax advisor fees and accounting fees Legal fees Corporate set up costs Other professional fees 2, , , ,178 35,055 41,857 17,045 21,769 38, ,508 The Group had two employees during the year. Note 13. Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents comprise the following balances with original maturities of less than 90 days: Current account Short term deposits (less than 30 days) 15,522, ,522,949 14,773,637 2,133,261 16,906,898 2,760,231 of the cash held in the current account is set aside for future service charges costs and VAT liabilities. Note 14. Immediate and ultimate parent entities The immediate parent entities of the Company are Frasia Property Limited Partnership registered in the UK, IGIS KORIF Private Placement Real Estate Investment Trust No. 17-1, IGIS KORIF Private Placement Real Estate Investment Trust No. 17-2, IGIS KORIF Private Placement Real Estate Investment Trust No. 17-3, IGIS KORIF Private Placement Real Estate Investment Trust No registered in South Korea. The immediate parent companies of Frasia Property Limited Partnnership are Cordeliere 1 B.V., Cordeliere 2 B.V., Cordeliere 3 B.V., Cordeliere 4 N.V. companies incorporated in The Netherlands and Amaho Juto Investment Limited a company incorporated in the British Virgin Islands. The Company's ultimate parent and controlling parties as at are AXA France Assurance SA which is registered in France, the Korea. Page 21

23 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 15. Related Party Transactions Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial or operating decisions or vice versa or where the Group and other parties are subject to common control or common significant influence. Related parties may be individuals or entities. The Group is a related party to the AXA Group of companies. (a) Management Fee The Company appointed AXA Real Estate Investment Managers UK Limited as the Asset Manager (the "Asset Manager") to provide advisory services to the Group in respect of the Group's real estate portfolio. The Asset Manager receives in return a fee of 0.25% of the fair market value of the property (the "Annual Fee") payable quarterly in advance together with reasonable expenses. Total Annual Fee for the period year amounted to 1,216,325 of which 337,606 was outstanding as management fee accrued and payable to the Asset Manager at the end of the period (Note 7). (b) Transaction Fees The Company appointed the Asset Manager to provide advisory services to the Group specifically in connection with the acquisition and disposal of property. The Asset Manager receives in return a fee based on the net purchase price of a property, payable at the time of the acquisition at the rate of between 0.50% and 1.0%. In addition the Asset Manager receives in return a fee based on the net disposal price of a property, payable at the time of the disposal at the rate of between 0.50% and 2.0%. There were no transaction fees in the period. (c) Administration Services Fees The Company appointed AXA Real Estate Investment Managers UK Limited (the "UK Service Provider") and AXA REIM Luxembourg GIE (the "Luxembourg Service Provider") to provide administration services to the Group. In return the UK (d) Board of Directors' remuneration No remuneration was paid by the Group to the directors of the Company or companies in the Group. Page 22

24