Tritax Polska No.1 Fund Limited

Transcription

1 Tritax Polska No.1 Fun Limite Annual Report an Auite Consoliate Financial Statements For the year ene 5 April Company registration number: 46273

2 Contents 02 Officers an Professional Avisers Chairman s Statement Fun Manager s Report 11 Boar of Directors Directors Report 15 Inepenent Auitor s Report 16 Consoliate Statement of Comprehensive Income 17 Consoliate Statement of Financial Position 18 Consoliate Statement of Cash Flows 19 Consoliate Statement of Changes in Equity Notes to the Consoliate Financial Statements Notice of Annual General Meeting Tritax Polska No.1 Fun Limite Page 01 Annual report an auite consoliate financial statements for the year ene 5 April

3 Officers an Professional Avisers Directors Anrew Howat Michael McKean Mark Shaw Aministrator, Company Secretary, Designate Manager an Registrar JTC (Guernsey) Limite Frances House Sir William Place St Peter Port Guernsey GY1 4EU Asset Manager an Property Manager Jones Lang LaSalle (appointe on 1 August ) ul. Krolewska Warsaw Asset Manager (Interim appointment) TFS (Polska 1) Limite (resigne on 1 August ) The Loge, Oell Befor MK43 7BB Promoter, Sponsor an Distributor Tritax Securities 1 Limite The Loge, Oell Befor MK43 7BB Banker Royal Bank of Scotlan International Legal an Tax Avisers Carey Olsen (Guernsey) Oostvogels Pfister Roemers (Luxembourg) Warynski & Partners (Polan) Registere Office Frances House Sir William Place St Peter Port Guernsey GY1 4EU Company Registration Number Property Manager NAI Estate Fellows (resigne on 1 August ) ul. Pankiewicza Warsaw Auitor Saffery Champness La Tonnelle House Les Banques St Sampson Guernsey GY1 3HS Fun Manager TFS (Polska 1) Limite The Loge, Oell Befor MK43 7BB Tritax Polska No.1 Fun Limite Page 02 Annual report an auite consoliate financial statements for the year ene 5 April

4 Chairman s Statement Introuction I am please to announce the full year results of Tritax Polska No.1 Fun Limite (the Fun ) for the year ene 5 April. The financial results reflect the continue stagnation in the Polish economy an the resulting ifficulties in the property markets. The economic outlook for / for Polan was anticipate to be more favourable an whilst limite GDP growth has been witnesse, it has been accompanie by a perio of eflation. In an attempt to alleviate the situation, the Central Bank Committee has successively cut interest rates, reaching a historic low of 1.5% in March an this very much reflects the continue fiscal fragility. There remains a significant imbalance between supply an eman for property stock, with high levels of vacancies across all sectors an locations. This prolonge perio of economic inertia has ha a irect impact across the portfolio with occupiers failing an some international companies closing operations in Polan. This has require a very active an tenacious approach to the management of the Fun an property portfolio, by the Fun Manager an respective professionals. Jones Lang LaSalle ( JLL ) were appointe as both Asset an Property Manager to the Fun in July an over the course of the year have establishe a goo working knowlege of the assets, builing relationships with the tenants an ientifying opportunities to a value. Similarly, TFS (Polska 1) Limite remain fully engage with the management of the Fun, irecting the professional team, interacting with the lening banks an attening almost monthly meetings in Polan, in aition to formal weekly an a hoc vieo conferences as require. It is now expecte that the seconary commercial property market in Polan will take longer to improve an stabilise, hence the team continue to aopt initiatives, practices an proceures so as to protect an where possible enhance value. The future economic projections remain cautiously positive an hopefully this shall result in an increase in eman for property, both as an operational item an as an investment. Whilst the existing lening banks remain supportive an appreciative of the concerte efforts of the Fun Manager, both are keen for an exit enabling full repayment of their respective loans as quickly as possible; an also to fulfil the aim of rationalising the Fun s assets to a smaller, self-supporting portfolio of properties, which can benefit from future yiel compression. The lening banks may then be in a position to iscuss lening terms with an elongate timescale, so as to enable an exit at a better point in the market cycle. In orer to retain the flexibility so as to potentially obtain the best performance, it is envisage that Investors shall be approache in early 2016 to exten the Fun life by a further two years. CBRE has value the properties as at April, inicating a ecrease in valuation since April of approximately 3%, estimating a revise portfolio value of 48.2m. These latest valuations have inicate an improvement in the value of three of the nine assets, in aition, it shoul be note that a fourth asset has recently exchange contracts for a sale at a level above the valuation. It is anticipate that yiel compression an a more active market place for seconary assets is likely to return to Warsaw more quickly than to the regional cities, however, as yet, the lack of transactions has meant that it is very ifficult to properly assess or appreciate market conitions. This has create ifferences of avice amongst both Valuers an investment agents in respect of accurate pricing, as the lack of irect comparables, which means that avice is base principally on subjective opinion as oppose to irect evience. The NAV has been calculate at 0.07, which whilst a rop since, can be explaine as follows: The property valuations have ecrease by approximately 3% in aggregate One asset is traing at a loss, following the eparture of an anchor tenant There has been a revision to the accounts so as to inclue for an accrual of contractual management fees, which were not taken into account in the 2013/ accounts an NAV calculation. The Fun s strategy remains to enhance value through very active asset management, with the aim of recovering the acute falls in value since the significantly more buoyant investment market conitions which prevaile at the point when the assets were acquire. Fun Performance Whilst in aggregate the valuations have roppe slightly from, isposals of assets are only consiere on the basis that the optimum lease profile make up has been achieve, or if an asset is unlikely to improve in value, for example, if lettings are unlikely to be achieve or the terms woul not enhance value an cash flow is not supporting the continue retention of the asset. Contracts have just exchange for the sale of City Park in Poznan at 4m. This offer was obtaine by a irect approach by Tritax to a special purchaser who owns ajoining properties. This offer is significantly above the last inication of value an is an asset where retaining existing tenants an attracting new ones has prove ifficult. Unfortunately, the City of Poznan has been flooe by new retail evelopments over the course of the last few months an whilst City Park is a bespoke retail parae, the footfall for the exclusive shops locate within this scheme ha iminishe uring the economic slowown. Aitionally, a number of tenants have expresse their intention to vacate at the point at which their lease expiries, or inicate traing ifficulties. Prior to approaching the prospective City Park purchaser, investment agent avice was obtaine in respect of conucting an open market campaign; however the avice inicate that the marketing coul be protracte an result in offers at a level below that of the latest valuation. Whilst the sale price is significantly below the acquisition price, isposal of this regional retail asset at an offer above valuation enable protection from further capital loss an is beneficial from a cash flow perspective. A further retail asset, Gallery Foron, in Bygoszcz, is propose to be put to the market in September, following the completion of an anticipate lease extension with one of the main tenants. This lease extension shoul both enhance value an attract prospective purchasers. JLL are appointe to market this regional retail asset, which has struggle Tritax Polska No.1 Fun Limite Page 03 Annual report an auite consoliate financial statements for the year ene 5 April

5 to attract new tenants, against a backrop of extensive new out of town retail evelopments. A high proportion of voi space has le to increase non recoverable voi costs for the Lanlor, which results in limite prospects of securing lettings to either assist cash flow or enhance value, the intention is to ispose at a level at or above valuation. Disposals of the other assets will be consiere at a point when asset management initiatives are further progresse or complete. Appetite for regional stock with mixe occupancy levels an relatively short unexpire lease lengths remains limite, so uring this stagnant market, every effort is being mae to improve asset creentials. As regars to lettings, supply continues to outstrip eman an therefore, both new an existing Tenants are able to take an aggressive stance in relation to negotiations, as Lanlors compete to retain an attract occupiers. Lease terms have become more flexible, with occupiers requiring shorter lease lengths or the availability of break options. Competitive incentive packages remain a requirement to secure lettings. Rental growth is limite whilst the imbalance of supply an eman subsists. Shorter lease lengths reuce the anticipate guarantee income an hence o little to create enhance investment value, however these lettings o reuce the voi cost exposure, thereby improving the Fun s cash flow. Iniviual assets have secure new lettings an lease extensions over the last year an this is iscusse in more etail within the Fun Manager s upate on each property. Over the course of the next year, there are a high proportion of lease expiries, which will further perios of active negotiations with both existing an new occupiers. Where possible weak covenant Tenants shall be replace by those with improve financial creentials on competitive lease terms. A rationalisation of the structure, so as to reuce Fun costs, has continue, with the removal of the Polish close ene fun, CC1, so as to enable Luxco to become the irect investor in the Polish operating companies. The transition has taken consierably longer than anticipate, owing to elays with corporate an tax avice, an obtaining Bank consents, however the reuction in operating costs is estimate at approximately 150k per annum, with significant tax savings on property isposals. We hope that the next year brings more heartening news. Yours sincerely Mark Shaw Chairman Tritax Polska No.1 Fun Limite Page 04 Annual report an auite consoliate financial statements for the year ene 5 April

6 Fun Manager s Report TFS (Polska 1) Lt as Fun Manager to the Tritax Polska No. 1 Fun is please to provie investors with an upate in respect of the portfolio. Macroeconomic overview Whilst economic ata suggests financial improvements, with real GDP growth, the perio also witnesse a rise in unemployment an the move into a perio of eflation. The Ukrainian conflict, which starte in, continues to have a negative effect on the economy, with continuing sanctions impose by Russia on proucts such as fruit, vegetables, airy, meat, poultry, fish an milk. As a result, interest rates have been cut to a historically low level an it is not anticipate that rises will occur before the en of Forthcoming parliamentary elections in October are compouning the uncertainty an instability felt within the business community in Polan, as there is an expectation that there shall be a change in Government, hence prompting ambiguity over future policies an approaches, which coul have a material impact on the anticipate growth trajectory. Accoring to the Central Statistical Office, the Consumer Price Inex ( CPI ) in Polan starte to compress in The most important factor influencing the low level of CPI was the relatively low pace of consumption growth, which was attribute to the uncertainties within the EU. Business conitions in Polan remain attractive to other European economies an forecasters consier that the economy is still operating below capacity. Economic inicators suggest a graual improvement, with projections above anticipate GDP growth for other Eurozone countries; however, financial performance, within the next five years, is not anticipate to match the more buoyant figures recore in 2007 an Polan continues to receive substantial funing from the EU for infrastructure projects, such as the further expansion an improvement of the national roa network, linking an extening numerous motorway routes across Europe. Throughout the reporting perio the exchange rate of the Polish Zloty ( PLN ) to the Euro ( EUR ) has remaine relatively stable, fluctuating across the range of PLN: 1 EUR. The main fluctuation was witnesse in January, at the point when the Swiss National Bank suenly announce that it woul no longer hol the Swiss Franc at a fixe exchange rate with the Euro. This raise concern in Polan, where it is reporte that 50% of Polish homeowners have mortgages enominate in Swiss Francs. During the same perio, the GB Poun ( GBP ) has steaily strengthene against the Euro, with the range from EUR: 1 GBP. The currency fluctuations o have relevance to the Fun s performance, in that the majority of rents are pai in Polish Zloty, however all but one loan is service in Euros an similarly, valuations are initially recore in Polish Zloty an then converte to Euros. Commercial property market Challenging commercial property market conitions continue to prevail across Polan, specifically within the arena of seconary, regional stock, akin to the types of assets within the portfolio. Potential purchasers for assets of this type remain limite, with vulture opportunists still attempting to achieve bargains. The interest from institutional funs in acquiring trophy assets let to unoubte covenants has abate, with overall transaction volumes reucing in compare with. Throughout the protracte perio of economic inertia, evelopers continue to buil across all sectors, hence substantially increasing the amount of available space, uring a perio when eman was not alreay meeting the existing supply. This continue evelopment of Grae A retail an office space, across the country, has further accentuate the imbalance between supply an eman, with these evelopers courting occupiers, who woul usually support the seconary market place. Occupiers have emane greater flexibility within lease terms, which has generally meant shorter lease lengths, proviing little security of long term income or value creation. Enquiries for office space in Warsaw have increase over the past few months, however enquiries in relation to office space in the regions remains infrequent. Investment transactions across Polan have been limite, with the principal isposals being of big ticket trophy assets. Whilst by value the transactions for appear to suggest a healthy market place, when the results are analyse, it inicates that there have been few iniviual transactions, albeit those which have progresse are of high value. The number of transactions reuce uring the first two quarters of. Transactions of seconary assets, both in Warsaw an the regions remain highly limite. Private equity companies have shown some interest in istresse assets, irectly approaching banks, in the hope of acquiring bargains, however banks generally appear to wish to continue to work with borrowers with the aim of achieving a higher proportion of repayment of their ebt. Whilst reuctions in interest rates have increase the availability of creit, leners remain highly cautious in relation to new commercial property lening, requiring high levels of security an imposing stringent, financial covenant tests. Tritax Polska No.1 Fun Limite Page 05 Annual report an auite consoliate financial statements for the year ene 5 April

7 Fun Manager s Report (continue) Portfolio The general strategy has remaine to improve the investment creentials for each property, thereby maximising the exit potential, so as to coincie with the point when property market conitional are more favourable. Where assets have been unable to support non recoverable expeniture an loan servicing, asie for aiming for an improvement in property valuation, there has been the nee to focus preominantly on cash flow management. Where possible, special purchasers for assets have been approache by Tritax an for one asset this has resulte in an off market offer at a level above valuation. The portfolio has been affecte irectly by the pressures create by the oversupply of both office an retail space in aition to occupier efaults an contraction with companies closing their Polish operations or consoliating locations. The prevailing market conitions have in some cases enable opportunities for occupiers of the Portfolio, who have taken avantage of these market conitions an bought either their own builing plots or premises, hence vacating lease premises. These types of ecisions have preominantly involve occupiers amalgamating aitional premises to those within the portfolio an in spite of best eneavours to retain these occupiers, their corporate strategy has irecte ecisions otherwise. A proactive approach in cementing goo relations with occupiers an unerstaning their business plan has enable the retention an successful renewal of leases, hence achieving a reuction in the voi rate by approximately 2% over the last twelve months. The portfolio voi rate is currently 24% an the majority of this available space is locate in the regional assets. Property Piekna 68, Warsaw Wola Plaza, Warsaw Szajnochy 11, Bygoszcz Ratajczaka 19, Poznan Hamburksi, Poznan Sector Office Retail Office Retail Office Warehouse Office Retail Office Retail Total Lettable Area (m 2 ) Valuation ( ) April Valuation ( ) April Variance 1,612 3,289,000 3,502,000 (213,000) 8,500 12,740,000 13,380,000 (640,000) 2, ,000 1,006,323 (75,323) 2,370 3,316,000 3,656,000 (340,000) 3,409 5,558,000 5,544,000 14,000 City Park*, Poznan Retail 2,271 3,451,000 3,579,000 (128,000) Dzialkowa 85, Warsaw Warehouse Office Warehouse Office 5,562 2,939 6,290,000 5,676, ,000 Galeria Foron, Bygoszcz Retail 5,041 6,534,827 7,573,520 (1,038,693) Office Jasna 24, Warsaw Restaurant 2,427 6,141,000 6,131,000 10,000 TOTAL: 36,331 48,250,827 50,047,843 (1,797,016) *Applying City Park valuation at sale price of 4m. 48,799,827 (1,248,016) Tritax Polska No.1 Fun Limite Page 06 Annual report an auite consoliate financial statements for the year ene 5 April

8 Fun Manager s Report (continue) Upate on iniviual assets Dzialkowa, Warsaw The property consists of a warehouse an office complex known as Airport House, locate relatively close to Chopin Airport, Warsaw. The site extens to 20,377 sq. m, evelope into two warehouse/ office builings. Over the course of the last year, two lettings have been achieve, thereby enabling a reuction in voi space from 62% to 31% an creating an improvement in value of over 600,000. The weighte average unexpire lease term is three years. JLL are appointe to market an manage the space. It is anticipate that further lettings shall be achieve over the course of the next six months, however there is strong competition from other more moern warehouses in the vicinity. Aitional warehouse space of over 1 m sq. m complete in Polan in an whilst achieve a high number of lettings, the average warehouse vacancy rate across Warsaw remains at 11.7%. A further 51,000 sq. m of warehouse space is currently uner construction in Warsaw. Whilst rents have remaine stable at / sq. m, the Valuers inicate that evelopers have offere attractive incentive packages so as to retain these healine rates an net effective rents are at a consierably lower rate. Unlike other sectors, the istribution sector in key locations is receiving interest from investment purchasers an hence once a further goo letting is achieve, investment agency avice shall be upate to ascertain whether market conitions are sufficiently avantageous to consier a isposal. Wola Plaza, Warsaw Wola Plaza forms a site of 3,350 sq. m, evelope as an office an retail builing. The property was originally built in 1956 an reevelope in The property is strategically locate on one of the major roas of the city, benefitting from goo transport links, albeit at the fringe of the city centre. The total lettable area is 8,500 sq. m, of which 25% is currently vacant an has an average unexpire lease term of two years an eight months. JLL are appointe to market the voi area to let an are progressing a number of lease renewal iscussions with those tenants with leases expiring in At this stage no Tenant has inicate a esire to vacate. Over the course of the last year, one tenant who occupie 831 sq. m, has vacate owing to the company terminating operations in Polan an a surrener premium was achieve. A renewal covering 400 sq. m was achieve with another Tenant to exten the term by a further 65 months. The high vacancy rate, together with high proportion of leases expiring in 2016, against the back rop of an office vacancy rate of 15% for Warsaw, has brought about a reuction in valuation from. The aim remains to achieve further lettings, however it shall be challenging to achieve goo terms as further new office evelopments are planne to complete over the course of the next twelve months, hence the vacancy rate for the City is expecte to increase further. Twenty six new office evelopments totalling 281,000 sq. m complete in Warsaw in, with a further 51 projects, totalling 800,000 sq. m currently uner construction. The office vacancy rate is projecte to rise to 20% by the en of. Achieving further lettings an concluing successful negotiations of lease extensions with existing occupiers is essential in orer to engineer the potential for a successful isposal of this asset in the future. Jasna, Warsaw Principally an office builing locate at 24 Jasna, Warsaw, which was evelope in 1940 s. The property has a very goo city centre location, benefitting from a high stanar fit out with full air conitioning. Lettings were achieve throughout the year an full occupancy was achieve in January. Further initiatives have inclue the replacement of the restaurant Tenant with a new lease until 2026 to a stronger restaurant operator, with a successful chain of restaurants across the Capital. The CBRE valuation was complete prior to the completion of this letting an hence this has improve the weighte average unexpire lease term consierably. Two of the main tenants of the property have leases which expire in December an JLL are currently negotiating with these occupiers with the aim of achieving lease extensions. Either the lease renewal or re-lettings of these emises shoul enable an improvement in both value an liquiity. At this point, upate investment agency avice shall be obtaine to consier the potential for a future isposal. Piekna, Warsaw The property is locate at 68, Piekna Street. It is principally office accommoation, with a lettable area of 1,612 sq. m, let to three Tenants, representing meium covenant strength. The property is locate in Warsaw s city centre. The property currently has a vacancy rate of approximately 15%, which represents the fourth floor office space an some basement storage areas. In spite of the loss of a tenant in May, the voi rate has reuce by 4% following successful negotiations with existing Tenants to exten lease terms an expan into aitional space. The high availability of office space in Warsaw is affecting the ability to secure a letting for this voi space. Whilst competitive terms have continuously been offere to prospective Tenants, as yet no serious interest has been secure. JLL are appointe to market this space. Tritax Polska No.1 Fun Limite Page 07 Annual report an auite consoliate financial statements for the year ene 5 April

9 Fun Manager s Report (continue) Upate on iniviual assets (continue) Ratajczaka, Poznan This asset is an office builing locate in the city centre of Poznan. The builing was originally evelope in the 1950 s an renovate in The total area is 2, sq. m. The voi rate remains high at approximately 30% an whilst the extremely high vacancy rate in Poznan continues to create fierce competition from competing lanlors an evelopers, attempting to poach occupiers. The property presents well, with the voi space benefitting from a moern an stylish fit out an configuration. Successful lease extension negotiations have conclue with ING, extening the lease to May This lease extension was not complete in time to be taken into account in CBRE s valuation in April. JLL are appointe to market this space, however in spite of offering highly competitive terms, there has been limite interest. Office vacancy rates in Poznan remain very high at over 12.8% following extensive evelopment in the last three years, coinciing with a marke reuction in eman an take-up. Hamburski, Poznan Constructe in 1997, this office builing is centrally locate in Poznan, with access to goo transport links. The property extens to 3, sq. m, of which 20% is currently vacant. The weighte unexpire lease term is two years an six months. The main tenant is T Mobile, who occupies 52% of the builing, has extene its lease term until November 2017, which enable an improvement in valuation, in spite of a softening of yiels an lack of eman for the remaining voi space. As previously reporte, significant competition from planne an existing office projects in Poznan, incluing high vacancy rates in the surrouning offices, has meant that terms have neee to be highly competitive, albeit this has not resulte in any serious prospective new occupiers. JLL are appointe to market the voi space. City Park, Poznan City Park is a retail scheme, with a lettable area of 2,271 sq. m, let to approximately 21 iniviual tenants who represent a iverse covenant strength. The scheme is locate approximately 2 km south of the city centre an is a high quality evelopment, with the potential to convert retail space into office accommoation. This bespoke complex ajoins a highly regare boutique hotel an service apartment evelopment. Footfall to the retail units has winle over the course of the last 18 months with a marke reuction in spening creating ifficulties for a number of the inepenent retailers. In spite of approaching specific retailers or service proviers to compliment the hotel, new viable tenants have not been secure an the main anchor tenant for the scheme has inicate a esire to vacate. Tritax approache the ajoining hotel owner an he expresse interest in acquiring the retail element. This resulte in a series of meetings in both Lonon an Poznan. Tritax negotiate a sale price of 4m, which was approximately 500k above the latest CBRE valuation an contracts for sale exchange in September, with completion anticipate before the en of November. The sale price has been reflecte in the Financial Statements. Szajnochy, Bygoszcz This asset consists of two retail, office an warehouse builings covering an area of 2, sq. m, of which 60% is currently voi. The properties were originally evelope in the 1970 s an was rebuilt in 1999 an 2004/05. The majority of tenants occupy on inefinite lease agreements, which means that there is no fixe length of term an occupiers can vacate easily on short notice provisions. The eleven tenants represent meium to poor covenant strength an the weighte average unexpire lease term is four months. This form of agreement provies limite assurance of future guarantee income, hence with high non recoverable costs an a lack of active enquiries from prospective new tenants, the impact on value is significant. Analysis has been unertaken to ascertain whether it woul be financially more beneficial to hol the property as fully vacant, as oppose to partially let, however currently it is not. Similarly, research has been unertaken to consier the potential for reevelopment for either the existing or an alternative use. Thus far, investment market ynamics within this location for alternative uses has not inicate an improvement in either value or liquiity. JLL are appointe to market an manage the space. In spite of offering highly competitive terms, availability of both warehouse an office space continues to be significantly in excess of current or projecte eman. Tritax Polska No.1 Fun Limite Page 08 Annual report an auite consoliate financial statements for the year ene 5 April

10 Fun Manager s Report (continue) Upate on iniviual assets (continue) Galeria Foron, Bygoszcz This regional shopping centre has a net lettable area of 5,041 sq. m. The property is let to approximately 25 tenants an locate within a resiential istrict of Bygoszcz. The centre has goo accessibility, with the anchor Tenants Piotr i Pawel an Rossmann. Lease renewal terms have been negotiate with Piotr i Pawel to exten the lease to 2026 (the current lease expires in 2018). An existing shoe retailer, CCA has lease aitional space of 108 sq. m. The fall in valuation is attributable to a reuction in the rental value estimate projecte by the Valuers. Similarly, a high proportion of occupiers occupy space on the basis of inefinite lease terms, hence this provies limite assurance of long term guarantee income, which is factore in to a Valuer s appraisal. The oversupply of new out of town retail space in Bygoszcz has create a highly competitive market place with a perception that Galleria Foron is seconary to some of the new retail centres which have been evelope within its environs. The centre has struggle to attract occupiers to the upper floors of the centre an in spite of an active marketing campaign to attract service proviers, who may not require a groun floor, highly visible unit, it has been ifficult to reassure prospective occupiers that customers will visit the upper floors. Marketing events are regularly unertaken at the centre so as to attract customers. Investment agency avice has been receive from CBRE an JLL, with the aim of progressing the marketing of the centre for sale following completion of the lease extension with Piotr i Pawel. The lener to this asset, HSBC is keen to see the isposal of the property, which woul enable full repayment of the loan secure against this asset. Finance The portfolio is finance by way of two loans, provie by HSBC an BZWBK. In, both loans were extene. The facility provie by HSBC was extene until 31 March 2016 an the loan provie by BZWBK was extene until 31 December. The assets finance by HSBC are Piekna an Foron. The loan balance with HSBC (as at 5th April ) is 7,525,918. All other assets are finance by BZWBK an the loan balance is 37,792,780. Both lening Banks are keen to receive full repayment of the respective loans as quickly as possible either through procees from a isposal or through re financing. Both Banks are appreciative of the current market conitions an the lack of transactions completing, especially within the seconary sectors. Similarly, both are appreciative that previous attempts to re-finance with alternative leners were unsuccessful an the current level of Loan to Value woul still rener a re-finance extremely challenging. Tritax regularly meet with representatives of both lening banks in Warsaw so as to provie them with an upate in respect of the asset management initiatives being progresse an to provie upate cash flow projections. The forthcoming marketing of Foron will enable a substantial repayment to HSBC an analysis shall then be unertaken to ascertain whether it is the appropriate, from an investment perspective to either ispose or re-finance Piekna prior to expiry of the current loan in March The cash flow projections for the assets finance by BZWBK inicate to the Bank that initiatives enabling repayment of all of the iniviual loans is unlikely to be achieve by December an hence iscussions are alreay unerway in respect of a further extension of this loan. It is anticipate that terms shall be agree to exten for a further twelve month perio on comparable lening terms to those currently in place. Assuming this is agree, Investors shall be approache with a request to exten the Fun life by a further two years. The Fun Manager continues to efer payment of its management fee plus expenses. Tritax Polska No.1 Fun Limite Page 09 Annual report an auite consoliate financial statements for the year ene 5 April

11 Fun Manager s Report (continue) Strategy The strategy remains highly comparable to the approach previously aopte an continues to require a very active approach: Complete the further loan extension with BZWBK. Reuce the voi area of each asset, with aim of improvement to cash flow. Enhance value through active negotiations with existing tenants an new occupiers, so as improve portfolio investment creentials an thereby liquiity. Where appropriate, progress isposals of assets. Continue to review an where possible rationalise non recoverable costs to the Fun. TFS (Polska 1) Lt October Tritax Polska No.1 Fun Limite Page 10 Annual report an auite consoliate financial statements for the year ene 5 April

12 Boar of Directors Anrew Howat has over 25 years of experience within the financial services arena. Anrew was Managing Director of Butterfiel Fulcrum (Guernsey), having previously been Managing Director of Capita Financial Group in the Channel Islans an Investec Aministration Services in Guernsey. Prior to this he spent over a ecae living an working in Asia, base in Hong Kong. During this perio Anrew was Operations Director for ING Financial Markets, responsible for activities across the Asia Pacific region, before completing his Asian tour at UBS. Anrew has extensive experience acting as a Director of a number of offshore funs an management companies specialising in investments across a variety of sectors. Anrew is a Chartere Member of the Chartere Institute for Securities an Investments. Michael McKean is an English solicitor who, after many years of practice in Englan, establishe Welake Bell McKean in Guernsey. He retire from that firm in He has been involve in a number of major town centre an other significant property evelopments an also has extensive experience both as a solicitor an irector of several funs. In aition he hols a number of acaemic appointments. Mark Shaw is a Chartere Accountant who has a backgroun in property evelopment investment, merchant banking an investment management. Mark became involve in tax base property investments in 1985, working uner the umbrella of Lonon & Einburgh Trust Plc ( LET ), in eveloping an popularising the investment market for Enterprise Zone Property Unit Trusts. In 1990, LET was sol to a Sweish institution an Mark forme Tritax (formerly CIL) to continue with this activity an to evelop other property base investment proucts. Tritax Polska No.1 Fun Limite Page 11 Annual report an auite consoliate financial statements for the year ene 5 April

13 Tritax Polska No.1 Fun Limite Page 12 Annual report an auite consoliate financial statements for the year ene 5 April

14 Directors Report The Boar of Directors presents its annual report an auite consoliate financial statements (the financial statements ) for the year ene 5 April. Company status an principal activity Tritax Polska No.1 Fun Limite (the Company ) was incorporate in Guernsey on 23 January 2007 an was grante Guernsey exempt company status for taxation purposes. In accorance with the Articles of the Company, the Company ha an initial life of seven years from the closing ate of 31 March On the 25 March an extraorinary resolution was passe with a 96.99% majority to exten the life of the Company until 31 March At any time on or prior to 31 March 2016 (an, if appropriate, every two years thereafter), an extraorinary resolution, requiring a 75% majority of those voting, can be put to shareholers proposing to exten the life of the Company for a further two years. The Company is a Guernsey authorise close-ene investment scheme an is subject to the Authorise Close-Ene Investment Schemes Rules The principal activity of the Company an its subsiiaries (together the Group ) is investing in property in Polan. Results an iviens The results of the Group are state on page 16. The Company i not pay an interim ivien uring the year (: nil) an the Boar of Directors has not recommene a final ivien for the year (: nil). Going concern The financial statements are prepare on a going concern basis, notwithstaning the fact that the continuation of the Company is epenent upon the renewal of the loan facilities with BZWBK an HSBC. The Directors are regularly upate in respect of iscussions which are progressing between the Fun Manager an the Banks regaring the strategy for each iniviual asset, together with loan extension requirements. As an agree form of ocumentation is alreay in place with both Banks, it is anticipate that it shoul be relatively swift to exten or renew terms. The Banks remain supportive of the management an marketing strategy. Once new lening terms have been negotiate with the Banks, Shareholers will be upate an formal ocumentation pertaining to a further extension of the Company shall be circulate. Directors The Directors who hel office uring the year an to ate are shown on page 11. Directors interests Mark Shaw is a shareholer of Tritax Securities 1 Limite, the promoter, sponsor an istributor of the Company. Directors responsibilities The Directors are responsible for keeping proper accounting recors, which isclose with reasonable accuracy at any time the financial position of the Company an of the Group, for safeguaring the assets of the Company, for taking reasonable steps for the prevention an etection of frau an other irregularities an for the preparation of a Directors Report, which complies with the requirements of The Companies (Guernsey) Law, The Directors are responsible for preparing the annual report an consoliate financial statements in accorance with The Companies (Guernsey) Law, 2008 an The Protection of Investors (Bailiwick of Guernsey) Law, The Directors have chosen to prepare consoliate financial statements for the Group in accorance with International Accounting Stanars ( IFRSs ) as aopte for use by the European Union. International Accounting Stanar 1 Presentation of financial statements requires that consoliate financial statements present fairly for each financial year the Group s financial position, financial performance an cash flows. This requires the faithful representation of the effects of transactions, other events an conitions in accorance with the efinitions an recognition criteria for assets, liabilities, income an expenses set out in the International Accounting Stanars Boar s Framework for the preparation an presentation of consoliate financial statements. In virtually all circumstances, a fair presentation will be achieve by compliance with all applicable IFRSs. A fair presentation also requires the Directors to: select suitable accounting policies an then apply them consistently; make jugements an estimates that are reasonable an pruent; state whether applicable IFRS Accounting Stanars have been followe, subject to any material epartures isclose an explaine in the financial statements; an prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors confirm that they have complie with the above requirements in preparing the financial statements. The Directors further confirm that: so far as each Director is aware, there is no relevant auit information of which the Company s auitor is unaware; each Director has taken all the steps he ought to have taken as a Director to make himself aware of any relevant auit information an to establish that the Company s auitor is aware of that information; an the financial statements give a true an fair view an have been prepare in accorance with International Financial Reporting Stanars (as aopte by the European Union), The Companies (Guernsey) Law, 2008 an The Protection of Investors (Bailiwick of Guernsey) Law, Tritax Polska No.1 Fun Limite Page 13 Annual report an auite consoliate financial statements for the year ene 5 April

15 Directors Report (continue) Corporate governance Following the publication by the Guernsey Financial Services Commission of the Finance Sector Coe of Corporate Governance in September 2011 (the Coe ), the Directors have consiere the effectiveness of their corporate governance practices with regar to the principles set out in the Coe. Subsequently, the Directors are satisfie with their egree of compliance with the principles set out in the Coe in the context of the nature, scale an complexity of the business. Anti-bribery an corruption The Company aheres to the requirements of the Prevention of Corruption (Bailiwick of Guernsey) Law, In consieration of the UK Bribery Act 2010, which came into force on 1 July 2011, the Boar abhors bribery an corruption of any form an expects all the Company s business activities to be unertaken, whether irectly by the Directors themselves or on the Company s behalf by thir parties to be transparent, ethical an beyon reproach. On iscovery of any activity or transaction that breaches the requirements of the Prevention of Corruption (Bailiwick of Guernsey) Law, 2003 or the UK Bribery Act 2010, such iscovery will be reporte to the relevant authorities in accorance with prescribe proceures. The Company is committe to regularly reviewing its policy an proceures to uphol goo business practice. Auitor The auitor of the Company, Saffery Champness, has expresse its willingness to continue in office an a resolution giving authority to the Boar of Directors to fix its remuneration will be propose at the Annual General Meeting. Approve on behalf of the Boar Michael McKean Director 29 September Tritax Polska No.1 Fun Limite Page 14 Annual report an auite consoliate financial statements for the year ene 5 April

16 Inepenent Auitor s Report to the Shareholers We have auite the financial statements of Tritax Polska No. 1 Fun Limite for the year ene 5 April, which comprise the Consoliate Statement of Comprehensive Income, Consoliate Statement of Financial Position, Consoliate Statement of Cash Flows, Consoliate Statement of Changes in Equity an relate notes. The financial reporting framework that has been applie in their preparation is applicable law an International Financial Reporting Stanars as aopte by the European Union. This report is mae solely to the Company s members, as a boy, in accorance with Section 262 of The Companies (Guernsey) Law, Our auit work has been unertaken so that we might state to the company s members those matters we are require to state to them in an auitor s report an for no other purpose. To the fullest extent permitte by law, we o not accept or assume responsibility to anyone other than the company an the company s members as a boy, for our auit work, for this report, or for the opinions we have forme. Respective responsibilities of Directors an auitor As explaine more fully in the Statement of Directors Responsibilities set out on page 13, the irectors are responsible for the preparation of the financial statements an for being satisfie that they give a true an fair view. Our responsibility is to auit an express an opinion on the financial statements in accorance with applicable law an International Stanars on Auiting (UK an Irelan). Those stanars require us to comply with the Unite Kingom Auiting Practices Boar s Ethical Stanars for Auitors. Scope of the auit of the financial statements An auit involves obtaining evience about the amounts an isclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether cause by frau or error. This inclues an assessment of: whether the accounting policies are appropriate to the company s circumstances an have been consistently applie an aequately isclose; the reasonableness of significant accounting estimates mae by the irectors; an the overall presentation of the financial statements. In aition, we rea all the financial an non-financial information in the annual report to ientify material inconsistencies with the auite financial statements an to ientify any information that is apparently materially incorrect base on, or materially inconsistent with, the knowlege acquire by us in the course of performing the auit. If we become aware of any apparent material misstatements or inconsistencies, we consier the implications for our report. Emphasis of matter Going concern In forming our opinion on the financial statements, which is not moifie, we have consiere the aequacy of the isclosure mae in note 2 to the financial statements concerning the Company s ability to continue as a going concern. The Company currently hols loan facilities with Bank Zachoni WBK S.A an HSBC amounting to 45,318,398 at the year en, which are subject to renewal within the next 12 months. In aition, the life of the Company is ue to expire on 31 March 2016 an extension of the life of the Company is subject to 75% shareholer approval. The fact that renewal of the loan facilities beyon the next 12 months is contingent upon approval from the Bank s an that extension of the life of the Company is epenent upon shareholer approval inicates a material uncertainty, which may cast significant oubt about the Company s ability to continue as a going concern. The financial statements o not inclue the ajustments that woul result if the Company was unable to continue as a going concern. Opinion on financial statements In our opinion the financial statements: give a true an fair view; are in accorance with International Financial Reporting Stanars as aopte by the European Union; an comply with The Companies (Guernsey) Law, Matters on which we are require to report by exception We have nothing to report in respect of the following matters where The Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion: proper accounting recors have not been kept by the company; the financial statements are not in agreement with the accounting recors; or we have faile to obtain all the information an explanations, which, to the best of our knowlege an belief, are necessary for the purposes of our auit. SAFFERY CHAMPNESS CHARTERED ACCOUNTANTS GUERNSEY 30 September Tritax Polska No.1 Fun Limite Page 15 Annual report an auite consoliate financial statements for the year ene 5 April

17 Consoliate Statement of Comprehensive Income For the year ene 5 April Notes Revenue 5 5,413,226 6,041,390 Property operating expenses 7 (2,285,901) (2,171,921) Operating profit before aministrative expenses 3,127,325 3,869,469 Aministrative expenses 7 (1,995,091) (1,618,217) Operating profit before loss on changes in fair values 1,132,234 2,251,252 Loss on change in fair value of investment properties 10, 12 (1,248,016) (16,971,100) Operating loss (115,782) (14,719,848) Finance income 53,514 10,376 Finance costs (1,418,264) (1,865,631) Operating loss after net finance costs (1,480,532) (16,575,103) (Losses)/gains on erivatives 17 (111,267) 498,796 Losses on foreign exchange (104,964) (47,478) Other (losses)/gains (216,231) 451,318 Loss for the year before taxation (1,696,763) (16,123,785) Taxation 8 17,287 (1,270,329) Loss for the year (1,679,476) (17,394,114) Basic an ilute loss per share 9 y(0.060) y(0.621) Other comprehensive income/(expense) Exchange ifferences arising on foreign currency translation 290,519 (138,884) Other comprehensive income/(expense) for the year 290,519 (138,884) Total comprehensive expense for the year (1,388,957) (17,532,998) The accompanying notes form an integral part of these financial statements. Results for the year arise entirely from continuing operations. Tritax Polska No.1 Fun Limite Page 16 Annual report an auite consoliate financial statements for the year ene 5 April

18 Consoliate Statement of Financial Position As at 5 April Notes Non-current assets Investment property Plant an equipment ,799, ,047, Current assets Trae an other receivables Loans receivable Cash an cash equivalents ,800,161 50,048,755 1,235,434 1,508,404 16,078 14,730 1,391,888 1,355,643 2,643,400 2,878,777 Total assets 51,443,561 52,927,532 Equity Share capital 21 Share premium 21 36,078,224 36,078,224 Retaine earnings (32,463,775) (30,784,299) Translation reserve (1,688,595) (1,979,114) Total equity 1,925,854 3,314,811 Non-current liabilities Deferre Tax 8 1,246,461 1,197,878 1,246,461 1,197,878 Current liabilities Bank loans Loans payable Derivative liabilities Trae an other payables ,318,398 45,784,533 7, ,267 2,841,581 2,622,612 48,271,246 48,414,843 Total liabilities 49,517,707 49,612,721 Total equity an liabilities 51,443,561 52,927,532 Net asset value per share y0.07 y0.12 The financial statements on pages 16 to 37 were approve an authorise for issue by the Boar of Directors an signe on its behalf on 29 September by: Michael McKean Director Anrew Howat Director The accompanying notes form an integral part of these financial statements. Tritax Polska No.1 Fun Limite Page 17 Annual report an auite consoliate financial statements for the year ene 5 April

19 Consoliate Statement of Cash Flows For the year ene 5 April Notes Loss for the year after taxation (1,679,476) (17,394,114) Ajustments for: Unrealise loss of investment properties Loss/(gain) on erivative financial liability Depreciation Income tax (creit)/charge Losses on foreign exchange Finance income Finance expenses ,248, , (17,287) 104,964 (53,514) 1,418,264 16,971,100 (498,796) 563 1,270,329 47,478 (10,376) 1,865,631 Operating cash flows before movements in working capital 1,132,816 2,251,815 Decrease in operating trae an other receivables Increase in operating trae an other payables Income tax receive/(pai) 272, ,429 1, ,000 82,879 (7,620) Net cash inflow from operating activities 1,690,625 2,820,074 Cash flows from investing activities Capitalise investment costs 10 (114,782) Net cash outflow from investing activities (114,782) Cash flows from financing activities Repayments of loans Finance income Finance expenses (475,181) 53,514 (1,418,264) (1,172,783) 10,376 (1,865,631) Net cash outflow from financing activities (1,839,931) (3,028,038) Net ecrease in cash an cash equivalents (149,306) (322,746) Effect of foreign exchange rate movements Cash an cash equivalents at the start of the year 185,551 1,355,643 (11,031) 1,689,420 Cash an cash equivalents at the en of the year 1,391,888 1,355,643 The accompanying notes form an integral part of these financial statements. Tritax Polska No.1 Fun Limite Page 18 Annual report an auite consoliate financial statements for the year ene 5 April

20 Consoliate Statement of Changes in Equity For the year ene 5 April For the year ene 5 April Share Premium Retaine Earnings Translation Reserve Total Balance at 6 April 36,078,224 (30,784,299) (1,979,114) 3,314,811 Total comprehensive loss for the year (1,679,476) 290,519 (1,388,957) Balance at 5 April 36,078,224 (32,463,775) (1,688,595) 1,925,854 For the year ene 5 April Share Premium Retaine Earnings Translation Reserve Total Balance at 6 April ,078,224 (13,390,185) (1,840,230) 20,847,809 Total comprehensive loss for the year (17,394,114) (138,884) (17,532,998) Balance at 5 April 36,078,224 (30,784,299) (1,979,114) 3,314,811 The accompanying notes form an integral part of these financial statements. Tritax Polska No.1 Fun Limite Page 19 Annual report an auite consoliate financial statements for the year ene 5 April

21 Notes to the Consoliate Financial Statements For the year ene 5 April 1. Incorporation an principal activity Tritax Polska No.1 Fun Limite (the Company ) was incorporate in Guernsey on 23 January The principal activity of the Company an its subsiiaries (together the Group ) is investing in property in Polan. The Company s subsiiaries are etaile in note 13. In accorance with the Articles of the Company, the Company ha an initial life of seven years from the closing ate of 31 March On 25 March an extraorinary resolution was passe with a 96.99% majority to exten the life of the Company until 31 March At any time on or prior to 31 March 2016 (an, if appropriate, every two years thereafter), an extraorinary resolution, requiring a 75% majority of those voting, can be put to shareholers proposing to exten the life of the Company for a further two years. 2. Significant accounting policies Basis of preparation The consoliate financial statements (the financial statements ) have been prepare in accorance an comply with International Financial Reporting Stanars ( IFRS ) as aopte by the European Union an International Financial Reporting Interpretations Committee ( IFRIC ) Interpretations that remain in effect, The Companies (Guernsey) Law, 2008 an the Protection of Investors (Bailiwick of Guernsey) Law, 1987 as amene. The principal accounting policies applie in the preparation of these financial statements are set out below. These policies have been consistently applie in the current an prior year, unless otherwise state. Going concern The financial statements are prepare on a going concern basis, notwithstaning the fact that the continuation of the Company is epenent upon the renewal of the loan facilities with BZWBK an HSBC. The Directors are regularly upate in respect of iscussions which are progressing between the Fun Manager an the Banks regaring the strategy for each iniviual asset, together with loan extension requirements. As an agree form of ocumentation is alreay in place with both Banks, it is anticipate that it shoul be relatively swift to exten or renew terms. The Banks remain supportive of the management an marketing strategy. Once new lening terms have been negotiate with the Banks, Shareholers will be upate an formal ocumentation pertaining to a further extension of the Company shall be circulate. Application of new, revise an amene stanars Application of new an revise International Financial Reporting Stanars All stanars, amenments an interpretations which are effective for the financial year beginning 6 April are not material to the Group. At the ate of approval of these financial statements, the following stanars an interpretations, which have not been applie, were in issue but not yet effective: IFRS 9, Financial Instruments - Classification an Measurement. Effective for accounting perios commencing on or after 1 January 2018; Amenments to IFRS 7 an IFRS 9 Manatory Effective Date an Transition Disclosures. These amenments are effective for accounting perios commencing on or after 1 January ; IFRS 15, Revenue from contracts with customers. Effective for accounting perios commencing on or after 1 January 2017 (EU enorsement is outstaning); an Amenments to IAS 1 Disclosure initiatives. Effective for accounting perios commencing on or after 1 January These stanars an interpretations will be aopte when they become effective. The Directors are currently assessing the impact of these stanars an interpretations on the financial statements an anticipate that the aoption of the majority of these stanars an interpretations in future perios will not have a material impact on the financial statements or results of the Company. Basis of consoliation The consoliate financial statements incorporate the financial statements of the Company an the entities controlle by the Company (i.e. its subsiiaries) mae up to 5 April each year. Control is achieve where the Company has the power to govern the financial an operating policies of an investee company so as to obtain benefits from its activities. A subsiiary is econsoliate on the ate that control ceases. On acquisition, the assets, liabilities an contingent liabilities of a subsiiary are measure at their fair values at the ate of acquisition. Any excess of the cost of acquisition over the fair values of the ientifiable net assets acquire is recognise as goowill. Any eficiency in the cost of acquisition below the fair values of the ientifiable net assets acquire (i.e. iscount on acquisition) is creite to the Consoliate Statement of Comprehensive Income in the perio of acquisition. The results of subsiiaries acquire or ispose of uring the perio are inclue in the Consoliate Statement of Comprehensive Income from the effective ate of acquisition or up to the effective ate of isposal, as appropriate. Where necessary, ajustments are mae to the financial statements of subsiiaries to bring the accounting policies use into line with those use by the Group. All intra-group transactions, balances, income, expenses, profits an losses are eliminate on consoliation. Where necessary, the accounting policies of subsiiaries are change to ensure consistency across the Group. See note 13 for etails of the subsiiary unertakings. Income recognition Rental revenues are accounte for on a straight line basis. Amenments to rental revenues ue to rent reviews are recognise once the rent reviews have been formally agree. Tritax Polska No.1 Fun Limite Page 20 Annual report an auite consoliate financial statements for the year ene 5 April

22 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 2. Significant accounting policies (continue) Income recognition (continue) Service charge revenues are bille in avance an then allocate to the perio to which they relate. Revenue is recognise when it is probable that the economic benefits associate with the transaction will flow to the Group an the amount of revenue can be measure reliably. Leases Leases are classifie as finance leases whenever the terms of the lease transfer substantially all the risks an rewars of ownership to the lessee. All other leases are classifie as operating leases. Rental income from operating leases is recognise on a straight-line basis over the term of the relevant lease. Foreign currency translation The Directors consier that the Group s functional currency is the Polish Zloty ( PLN ), as this is the currency in which the majority of the Group s assets an liabilities an significant transactions are enominate. The Directors have selecte the Euro ( ) as the Group s presentation currency. Transactions in currencies other than the Euro are recore at the rates of exchange prevailing on the ates of the transactions. At each year en ate, monetary assets an liabilities that are enominate in foreign currencies are revalue at the rates prevailing at the year en ate. Non-monetary assets an liabilities carrie at fair value which are enominate in foreign currencies are revalue at the rates prevailing at the ate when the fair value was etermine. Gains an losses arising on revaluation are recognise in the Consoliate Statement of Comprehensive Income. On consoliation, the assets an liabilities of the Group s overseas operations are translate at exchange rates prevailing on the year en ate. Income an expenses are translate at the average exchange rates for the perio unless exchange rates fluctuate significantly, in which case items of income an expeniture are translate at the rate ruling on the ate of the transaction. Exchange ifferences arising, if any, are recognise as other comprehensive income in the Consoliate Statement of Comprehensive Income an are transferre to the Group s translation reserve. Taxation The Company is exempt from taxation in Guernsey uner the provisions of the Income Tax (Exempt Boies) (Guernsey) Orinance (Amenment), The Polish subsiiaries were exempt from Polish corporation tax until 31 December On 1 January, a corporation tax on limite joint stock partnerships of 19% was introuce in Polan. The tax expense represents the sum of the tax currently payable an eferre tax for the Group. The tax currently payable is base on taxable profit for the year. Taxable profit iffers from net profit as reporte in the Consoliate Statement of Comprehensive Income because it exclues items of income an expense that are taxable or euctible in other perios or that are never taxable or euctible. The Group s liability for current tax is calculate using tax rates that have been enacte by the year en ate. Deferre tax is the tax arising on ifferences on the carrying amounts of assets an liabilities in the financial statements an the corresponing tax bases use in the computation of taxable profit, an is accounte for using the liability metho. Deferre tax liabilities are generally recognise for all taxable temporary ifferences an eferre tax assets are recognise to the extent that it is probable that taxable profits will be available against which euctible temporary ifferences can be utilise. Such assets an liabilities are not recognise if the temporary ifference arises from goowill or from the initial recognition (other than in a business combination) of other assets an liabilities in a transaction that affects neither the tax profit nor the accounting profit. Deferre tax liabilities are recognise for taxable temporary ifferences arising on investments in subsiiaries, except where the Group is able to control the reversal of the temporary ifference an it is probable that the temporary ifference will not reverse in the near future. The carrying amount of eferre tax assets is reviewe at each year en ate an reuce to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovere. Deferre tax is calculate at the tax rates that are expecte to apply in the perio when the liability is settle or the asset realise. Deferre tax is charge or creite in the Consoliate Statement of Comprehensive Income, except when it relates to items charge or creite irectly to equity, in which case the eferre tax is also ealt with in equity. Investment property Investment property, which is property hel to earn rentals an/or for capital appreciation, is state at its fair value at the year en ate. Fair value is etermine as either the market value as etermine by professionally qualifie inepenent external valuers or where a firm thir party offer has been agree to purchase a property, then the Group may use the offer price as the basis for the valuation. Gains or losses arising from changes in fair value of investment property are inclue in the Consoliate Statement of Comprehensive Income for the perio in which they arise. Impairment Assets that have an inefinite useful life are not subject to amortisation an are teste annually for impairment. Assets that are subject to amortisation or epreciation are reviewe for impairment whenever events or changes in circumstance inicate that the carrying amount may not be recoverable. An impairment loss is recognise for the amount by which the asset s carrying amount excees its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs to sell an value in use. For the purposes of assessing impairment, assets are groupe at the lowest levels for which there are separately ientifiable cash flows (cash-generating units). Tritax Polska No.1 Fun Limite Page 21 Annual report an auite consoliate financial statements for the year ene 5 April

23 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 2. Significant accounting policies (continue) Borrowing costs Borrowing costs are recognise in the Consoliate Statement of Comprehensive Income in the perio in which they are incurre. Interest bearing bank loans an borrowings Interest bearing bank an other loans are recore as the procees receive, net of irect issue costs. Finance charges, incluing premiums payable on settlement or reemption an irect issue costs, are accounte for on an accruals basis in the Consoliate Statement of Comprehensive Income using the effective interest metho an are ae to the carrying amount of the instrument to the extent that they are not settle in the perio in which they arise. Expenses Expenses are accounte for on an accruals basis. The Group s property management an aministration fees, finance costs an all other expenses are charge through the Consoliate Statement of Comprehensive Income. Segmental reporting The Directors are of the opinion that the Group is engage in the current an prior year in a single segment of business being property investment, an in one geographical area being Polan. Financial assets The Group classifies its financial assets as loans an other receivables. Financial assets are recognise in the Consoliate Statement of Financial Position when the Group becomes party to the contractual provisions of the instrument. Loans an receivables are financial assets with fixe or eterminable payments that are not quote in an active market. Such assets are initially recognise at fair value an subsequently carrie at amortise cost using the effective interest metho, less any provisions for oubtful ebts. The effect of iscounting on these financial instruments is not consiere to be material. Fair value is efine as the amount for which an asset or liability coul be exchange between knowlegeable willing parties in an arm s length transaction. Cash an cash equivalents Cash an cash equivalents consist of cash in han, balances with banks an investments in money market instruments, which are reaily realisable. A proportion of the bank balances hel with Bank Zachoni WBK S.A. are in restricte ebt service reserve accounts. See note 18 for further etails. Non erivative financial liabilities Non-erivative financial liabilities consist of trae an other payables an bank loans. Trae an other payables are initially recognise at fair value an subsequently carrie at amortise cost using the effective interest rate metho. Bank loans are initially recognise at fair value net of attributable transaction costs incurre. Such interest bearing liabilities are subsequently measure at amortise cost using the effective interest rate metho. Derivative financial instruments The Group may use interest rate swaps to manage its exposure to movements in interest rates on a portion of each ebt incurre to acquire investment property. Such erivative financial instruments are initially recognise as assets or liabilities at fair value an subsequently revalue on each year en ate accoring to market conitions. Changes in the fair value of erivatives, which have not been esignate as heges for hege accounting purposes are taken irectly to the Consoliate Statement of Comprehensive Income as part of finance income or expenses. The Group oes not use erivative financial instruments for speculative purposes. The use of erivative instruments is subject to limits an the positions are regularly monitore an reporte to senior management. Equity instruments Equity instruments issue by the Company are recore at the procees receive, net of irect issue costs. 3. Financial instruments an risk profile The Group is expose to creit risk, currency risk, liquiity risk, capital risk an interest rate risk arising from the financial instruments it hols. The risk management policies employe by the Group to manage these risks are iscusse below. The Group s principal financial liabilities comprise bank loans an trae payables. The main purpose of these financial liabilities is to raise finance for the Group s acquisitions of assets an investments in subsiiaries. The Group has various financial assets such as cash an cash equivalents an receivables. Creit risk Creit risk arises when a failure by counterparties to ischarge their obligations coul reuce the amount of future cash flows from financial assets on han at the year en ate. Rent receivables are ue from iverse government an corporate tenants with strong creit ratings. Accoringly, the Directors o not anticipate losses in respect of these receivables. In the event of a efault by a tenant in occupation, the Group will suffer a rental shortfall an incur aitional costs, incluing legal expenses in maintaining, insuring an reletting the property until it is relet. The Group utilises property managers to monitor the tenants in orer to anticipate, an minimise the impact of efaults by tenants in occupation. The maximum exposure relating to efault by tenants an other ebtors at the year en ate was 890,168 (: 231,762). Cash, cash equivalents an bank eposits are investe with major banks. The Directors believe that the financial institutions that hol the Group s investments are financially soun an, accoringly, minimal creit risk exists with respect to these investments. Derivative instruments are hel at 5 April for heging purposes with the banks proviing ebt finance. The Directors believe that these financial institutions are financially soun, an, accoringly, minimal creit risk existe in respect of those contracts. Tritax Polska No.1 Fun Limite Page 22 Annual report an auite consoliate financial statements for the year ene 5 April

24 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 3. Financial instruments an risk profile (continue) Currency risk Currency risk is the risk that the value of financial instruments will fluctuate ue to changes in foreign exchange rates. Currency risk arises when future commercial transactions an recognise assets an liabilities are enominate in a currency that is not the Group s reporting currency. The Group s subsiiaries finance the acquisition of property assets in the currency in which the asset is enominate so that the Group s exposure to changes in the Euro value of its assets is minimise. The Group is expose to foreign exchange risk arising from currency exposures with respect to the Polish Zloty an Sterling. The Group s management monitors exchange rate fluctuations on a continuous basis an, if appropriate, may use forwar foreign exchange contracts to hege the currency exposure. However, ue to continue cash flow constraints, it has been unable to consier the use of forwar foreign exchange contracts to hege the currency exposure. The tables below summarise the Group s exposure to foreign currency risk at the year en ate. The Group s assets an liabilities are shown at their Euro carrying amounts, categorise by their currency of enomination. Currency of enomination Euro Polish Zloty Sterling Total As at 5 April Investment property 48,799,827 48,799,827 Plant an equipment Trae an other receivables 29,722 1,168,642 37,070 1,235,434 Loans receivable 16,078 16,078 Cash an cash equivalents 700, ,054 5,954 1,391,888 Total assets 49,546,507 1,854,030 43,024 51,443,561 Derivative liabilities Deferre tax Bank loans Trae an other payables 40,369, , ,267 1,246,461 4,948,918 2,060,520 80, ,267 1,246,461 45,318,398 2,841,581 Total liabilities 41,070,000 8,367,166 80,541 49,517,707 Net assets/(liabilities) 8,476,507 (6,513,136) (37,517) 1,925,854 Tritax Polska No.1 Fun Limite Page 23 Annual report an auite consoliate financial statements for the year ene 5 April

25 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 3. Financial instruments (continue) Currency risk (continue) Currency of enomination Euro Polish Zloty Sterling Total As at 5 April Investment property 41,468,010 8,579,833 50,047,843 Plant an equipment Trae an other receivables 92,183 1,415, ,508,404 Loans receivable 14, ,730 Cash an cash equivalents 866, , ,214 1,355,643 Total assets 42,440,835 10,366, ,921 52,927,532 Deferre tax Bank loans Loans payable Trae an other payables 40,751, ,184 1,197,878 5,033,120 7,698 1,976,272 75,156 1,197,878 45,784,533 7,698 2,622,612 Total liabilities 41,322,597 8,214,968 75,156 49,612,721 Net assets 1,118,238 2,151,808 44,765 3,314,811 The sensitivity analyses below are base on a change in one assumption while holing all other assumptions constant. In practice this is unlikely to occur an changes in some of the assumptions may be correlate, for example, change in interest rate an change in foreign exchange rates. The Group monitors foreign currency risk. The sensitivity analysis prepare by management for foreign currency risk illustrates how changes in the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign currency rates. If the Euro weakene/strengthene by 10% against the Polish Zloty with all other variables hel constant, the net asset value at the year en ate woul be 468,682 higher/lower (: 301,119 higher/lower). If the Euro weakene/strengthene by 10% against Sterling with all other variables hel constant, the net asset value at the year en ate woul be 3,411 higher/lower (: 4,070 higher/lower). No other currencies have a material effect upon the profitability of the Group. Liquiity risk Liquiity risk is the risk that arises when the maturity of assets an liabilities oes not match. An unmatche position potentially enhances profitability, but can also increase the risk of losses. The Group has proceures with the object of minimising such losses, such as maintaining sufficient cash an by having available an aequate amount of committe creit facilities. The Group s liquiity position is monitore on a monthly basis by Tritax Financial Services (Polska 1) Limite (the Fun Manager ), an is reviewe on a quarterly basis by the Boar of Directors. A summary table with maturity of financial assets an liabilities presente below is use by key management personnel to manage liquiity risks. Tritax Polska No.1 Fun Limite Page 24 Annual report an auite consoliate financial statements for the year ene 5 April

26 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 3. Financial instruments (continue) Liquiity risk (continue) Financial assets Trae an other receivables (excluing prepayments) maturity within one year Loans receivable maturity within one year Cash an cash equivalents maturity within one year 1,057,231 16,078 1,391,888 1,508,404 14,730 1,355,643 2,465,197 2,878,777 Financial liabilities Borrowings maturity within one year Loans payable maturity within one year Derivative liabilities maturity within one year Trae an other payables (excluing eferre income) maturity within one year 45,318, ,267 2,731,687 45,784,533 7,698 2,622,612 48,161,352 48,414,843 Capital risk The Group s objectives when managing capital are to safeguar the Group s ability to continue as a going concern in orer to provie returns for shareholers an benefits for other stakeholers an to maintain an optimal capital structure to reuce the cost of capital. In orer to maintain or ajust the capital structure, the Group may ajust the amount of iviens pai to shareholers, return capital to shareholers, issue new shares or sell assets to reuce ebt. Consistent with others in the inustry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculate as net ebt ivie by total capital. Net ebt is calculate as total borrowings, as shown in the Consoliate Statement of Financial Position, less cash an cash equivalents. Total capital is calculate as equity, as shown in the Consoliate Statement of Financial Position, plus net ebt. The gearing ratio at the year en ate was as follows: Total borrowings Less: cash an cash equivalents 45,318,398 (1,391,888) 45,792,231 (1,355,643) Net ebt 43,926,510 44,436,588 Total equity 1,925,854 3,314,811 Total capital 45,852,364 47,751,399 Gearing ratio 96% 93% Tritax Polska No.1 Fun Limite Page 25 Annual report an auite consoliate financial statements for the year ene 5 April

27 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 3. Financial instruments (continue) Interest rate risk Interest rate risk is the risk that the value of financial instruments will fluctuate ue to changes in market interest rates. The Group is expose to interest rate risk in relation to its borrowings. Borrowings issue at variable rates expose the Group to cash flow interest rate risk. Borrowings issue at fixe rates expose the Group to fair value interest rate risk. The Group may seek to mitigate cash flow interest rate risk by means of interest rate swap contracts, to effectively fix the interest rates on the Group s variable rate rawn-own borrowings. As a result of this the Group s exposure to cash flow interest rate risk can be limite, however this oes expose the Group to fair value interest rate risk. At 5 April, 26,530,979 (: nil) of the Group s borrowings were at effectively fixe rates of interest an 18,787,419 (: 45,784,533) were at variable rates of interest. Ha these balances existe for the whole of the year, the effect on the Consoliate Statement of Comprehensive Income of an increase of 1%/ecrease of 0.5% in short term interest rates woul have been a ecrease of 187,874/increase of 93,937 in post tax profit for the year (: ecrease of 457,845/increase of 228,923) in relation to the Group s variable rate borrowings, an an increase of 265,310/ecrease of 132,655, in post-tax profit for the year (: increase of nil/ecrease of nil) in relation to the Group s fixe rate borrowings. 4. Critical accounting estimates an jugements The Group makes jugements, estimates an assumptions concerning the future. The resulting accounting estimates will, by efinition, selom equal the relate actual results. Revisions to accounting estimates are recognise in the year in which the estimate is revise if the revision only affects that year, or in the year of the revision an future years if the revision affects both current an future years. The estimates an assumptions that have a significant risk of causing a material ajustment to the carrying amount of assets an liabilities within the next financial year are aresse below: Estimate of fair value of investment properties The Group engage the services of CBRE Sp. z.o.o., Chartere Surveyors, to assist in their assessment of the fair values of investment properties as at 5 April an at 5 April. The best evience of fair value is market value which is efine as the estimate amount for which an asset or liability shoul exchange on the valuation ate between a willing buyer an a willing seller in an arm s length transaction after proper marketing an where the parties ha each acte knowlegeably, pruently an without compulsion. All properties are revalue on an annual basis by appropriately qualifie, inepenent valuers. Valuations are prepare in accorance with the Royal Institute of Chartere Surveyors Appraisal an Valuation Stanars. The valuation basis use is the income approach an investment metho (capitalisation technique). There was no change to the valuation metho in the year. The principal assumptions unerlying the estimation of fair value are those relate to: the receipt of contractual rentals; expecte future market rentals; voi perios; an the conition of the builings an sites. Any assumptions mae by the valuer are reviewe by the Boar an the Investment Manager for their reasonableness. Taxation The Group is potentially subject to corporation tax in ifferent jurisictions. Significant estimates are require in etermining the worlwie provision for corporation tax. There are some transactions an calculations for which the ultimate tax etermination is uncertain. The Group recognises liabilities for anticipate tax issues base on estimates of whether aitional taxes will be ue. Where the final tax outcome of these matters is ifferent from the amounts which were originally recore, such ifferences will impact the corporation tax an eferre tax provisions in the perio in which such etermination is mae. The critical jugements that the Directors have mae in applying the Group s accounting policies are aresse below: Control over Tritax Polska No.1 Investment Company S.à.r.l. As etaile in note 13, the Company owns 100% of it s irect subsiiary Tritax Polska No.1 Investment Company S.à.r.l. an the Directors of the Company consier that the Group has control over its subsiiary an has therefore prepare consoliate accounts. Deferre taxation As etaile in note 8, the Company is in the process of transferring ownership of the iniviual property owning SPV s from the Polish close-ene fun CC1 Funusz Inwestycyjny Zamknięty to the Luxembourg omicile entity Tritax Polska No.1 Investment Company S.à.r.l. The eferre taxation calculation has been etermine by the Directors on the basis that the transformation has alreay been complete. Tritax Polska No.1 Fun Limite Page 26 Annual report an auite consoliate financial statements for the year ene 5 April

28 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 5. Revenue The Group s revenue erives principally from rental income an lease-relate aministration service charges as follows: Rental income Service charge income Other income 3,802,657 1,109, ,021 4,170,600 1,270, ,486 5,413,226 6,041, Operating lease receivables Not later than 1 year Between 1 an 5 years Later than 5 years 3,608,708 6,429,263 1,770,817 4,079,198 8,531, ,170 11,808,788 13,564,758 The Company ha an initial life of seven years from the closing ate of 31 March 2007, being 31 March, which was extene to 31 March 2016 an can be further extene beyon this ate as etaile in note 1. The subsiiary companies which hol the properties from which the above operating lease receivables relate to are not subject to the same terms an are expecte to be in operation for the foreseeable future. 7. Aministrative expenses an other operating expenses Direct property operating expenses Heat an light Other irect property operating expenses 658,498 1,627, ,074 1,430,847 2,285,901 2,171,921 Aministrative an operating expenses Auit fees Directors fees Legal an professional fees Provisions for ba ebts Other aministrative an operating expenses 69,663 26, , ,400 1,259,663 57,629 23, , , ,813 1,995,091 1,618,217 4,280,992 3,790,138 The irect property operating expenses shown above inclue a significant proportion of costs which are rechargeable to tenants. These costs are recovere from tenants through the raising of a service charge (see note 5). Tritax Polska No.1 Fun Limite Page 27 Annual report an auite consoliate financial statements for the year ene 5 April

29 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 8. Taxation The tax (creit) / charge for the year comprises: Current tax Deferre tax movement (65,870) 48,583 72,451 1,197,878 (17,287) 1,270,329 The tax on the Group s loss before tax iffers from the theoretical amount that woul arise using the weighte average tax rate of the consoliate companies of 19.8% (2013: 5.2%) as follows: Loss before tax (1,696,763) (16,123,785) Loss before tax multiplie by the omestic tax rates applicable in the respective countries Effects of: Utilisation of previously unrecognise tax losses Losses not allowable for tax Ajustment in respect of foreign tax rates (336,257) (184,652) 455,039 (846,508) 918,959 Total current tax (65,870) 72,451 The Company is exempt from taxation in Guernsey uner the provisions of the Income Tax (Exempt Boies) (Guernsey) Orinance (Amenment), The Polish subsiiaries were exempt from Polish corporation tax until 31 December On 1 January, a corporation tax on limite joint stock partnerships of 19% was introuce in Polan. The Company is in the process of transferring ownership of the iniviual property owning SPV s from the Polish close-ene fun CC1 Funusz Inwestycyjny Zamknięty to the Luxembourg omicile entity Tritax Polska No.1 Investment Company S.à.r.l.. Uner current tax legislation in Polan the SPV s as joint stock limite partnerships are taxable entities in their own right an there is no possibility of relieving losses of one against the profits of another. The SPV s will be shortly converte to joint stock partnerships which are not taxable entities in their own right. Upon transformation of the Special Purpose Vehicles (the SPVs ) the taxable entity in Polan will become Tritax Polska No.1 Investment Company S.à.r.l. which will be able to offset losses against profits in its calculation of Polish Corporate Tax liability. Uner Polish law capital gains an losses are treate as part of taxable profits an losses on normal traing transactions. The provision for eferre tax arising from revaluation of investment properties has been calculate at the Company level on the assumption that only the net capital gain of the Company on isposal of investment properties woul be taxable an accoringly losses on some of the properties have been offset against profits of others. The Directors of the Company o not consier that any material eferre tax asset or liability arises on any timing ifferences other than those arising as a consequence of investment property revaluations an accoringly the eferre tax provision calculation has been limite to the effect of investment property revaluations. The eferre tax liability on revaluation of investment properties has been calculate at a rate of 19% which is the current an expecte future rate of Corporation Tax in the Republic of Polan. Deferre tax liabilities arising as follows have been recognise at the year en ate: Balance brought forwar Charge to other comprehensive income Investment property revaluation provision 1,197,878 48,583 1,197,878 Total eferre tax liability 1,246,461 1,197,878 Tritax Polska No.1 Fun Limite Page 28 Annual report an auite consoliate financial statements for the year ene 5 April

30 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 9. Basic an ilute loss per share Loss attributable to the shareholers of the parent (1,679,476) (17,394,114) Weighte average number of shares uring the year 28,029,365 28,029,365 Basic an ilute loss per share t(0.060) t(0.621) 10. Investment property Balance brought forwar Transfer from investment property uner construction Capitalise costs uring the year Fair value ajustment in the year 50,047,843 (1,248,016) 66,461, , ,782 (16,971,100) 48,799,827 50,047,843 The Directors have engage CBRE SP. Z.o.o., Chartere Surveyors, as valuers of the investment properties as at 5 April. The Directors have etermine the fair value of the investment properties with reference to the valuers valuations at the year en ate. As at 5 April, the Group owne the following investment properties: Office builing at ul. Piekna 68, Warsaw; Wola Plaza office builing at ul. Mlynarska 8/12, Warsaw; Storage/office builing at ul. Szajnochy 11, Bygoszcz; Office builing at ul. Ratajczaka 19, Poznan; Office builing at ul. Wierzbiecice 1, Poznan; City Park shopping centre at ul. Stanislawa Wyspianskiego 26, Poznan; Office builing at ul. Jasna 24, Warsaw; Warehouse builings at ul. Dzialkowa 85, Warszawa; an Galeria Foron shopping centre at ul. Skazynskiego, Bygoszcz. 11. Investment property uner construction Balance brought forwar Transfer to investment property 442,373 (442,373) As at 6 April 2013, investment property uner construction comprise of a lan site at ul. Szajnochy 11, Bygoszcz. This was transferre to investment property uring the prior year. Tritax Polska No.1 Fun Limite Page 29 Annual report an auite consoliate financial statements for the year ene 5 April

31 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 12. Fair values of assets an liabilities Fair value hierarchy IFRS 13 Fair Value Measurement requires isclosures relating to fair value measurements using a three-level fair value hierarchy. The level within which the fair value measurement is categorise in its entirety is etermine on the basis of the lowest level input that is significant to the fair value measurement. Assessing the significance of a particular input requires jugement, consiering factors specific to the asset or liability. The following table shows assets an liabilities recognise at fair value, categorise between those whose fair value is base on: (a) Level 1- Quote (unajuste) market prices in active markets for ientical assets or liabilities; (b) Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is irectly or inirectly observable; an (c) Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. The following table shows how assets an liabilities measure at fair value are groupe into the fair value hierarchy: As at 5 April Level 1 Level 2 Level 3 Total Assets Investment property 48,799,827 48,799,827 48,799,827 48,799,827 Liabilities Derivative liabilities (111,267) (111,267) (111,267) (111,267) As at 5 April Level 1 Level 2 Level 3 Total Assets Investment property 50,047,843 50,047,843 50,047,843 50,047,843 Valuation process for Level 2 valuations Interest rate swaps have been value by the issuing bank. The valuations have been etermine using a moel which calculates the iscounte cash flows of the fixe an floating legs. The valuation of each swap is calculate as the ifference between the value of its fixe an floating leg. Valuation process for Level 3 valuations Valuations are the responsibility of the Boar of Directors. The valuation of City Park, the property hel by Number 7 Tritax Polska (GP) Sp. z o.o. S.K.A. at 5 April is base on a non bining offer to purchase the property that was receive from a thir party in April. The sale is expecte to complete by 30 November. Tritax Polska No.1 Fun Limite Page 30 Annual report an auite consoliate financial statements for the year ene 5 April

32 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 12. Fair values of assets an liabilities (continue) Valuation techniques Investment property For all of the other properties owne by the Group, the Investment Manager engage the services of CBRE Sp. z.o.o., Chartere Surveyors, to assist in their assessment of the fair values of investment properties as at 5 April an 5 April. The properties are revalue on an annual basis by appropriately qualifie, inepenent valuers. Valuations are prepare in accorance with the Royal Institute of Chartere Surveyors Appraisal an Valuation Stanars. The valuation basis use at 5 April was the income approach an investment metho (capitalisation technique). The income approach an investment metho (capitalisation technique) involves the conversion of a rental income flow from property into an appropriate capital sum. The income flow can be actual or notional. If the property is not let, the full rental value can be estimate from an analysis of rental transactions in respect of similar properties in the market. Once the rental income has been calculate the capital value will be proportional to it in a ratio, which will epen upon the quality of the property as an investment. Any assumptions mae by the valuer are reviewe by the Boar an the Investment Manager for their reasonableness. There was no change to the valuation metho in the year. Quantitative information of significant unobservable inputs Level 3 The following table etails the unobservable inputs mae in etermining the Level 3 valuations: Description Valuation technique Estimate Rental Value per m 2 Equivalent yiel Complete investment property 48,799,827 income approach an investment metho (capitalisation technique) p.a. to p.a. 7.89% to 10.61% Complete investment property 4,000,000 Offer price n/a n/a Total 52,799,827 All other factors being equal, a higher equivalent yiel or iscount rate woul lea to a ecrease in the valuation of a property, an an increase in the current or estimate future rental stream woul have the effect of increasing the capital value, an vice versa. However, there are interrelationships between the unobservable inputs which are partially etermine by market conitions, which woul impact these changes. Level 3 reconciliation The Directors have re-assesse the investment properties value at fair value for the year ene 5 April an have etermine that there is no change in the level at which the investment properties above were classifie uring the year ene 5 April. Consequently, no transfers between levels of the fair value hierarchy are eeme to have occurre from the beginning to the en of the reporting perio. The following table shows a reconciliation of all movements in the fair value of investment properties categorise within Level 3 between the beginning an the en of the reporting perio: As at 5 April Complete investment property Total Balance at 6 April Losses in Consoliate Statement of Comprehensive Income: unrealise losses 50,047,843 (1,248,016) 50,047,843 (1,248,016) Balance at 5 April 48,799,827 48,799,827 Tritax Polska No.1 Fun Limite Page 31 Annual report an auite consoliate financial statements for the year ene 5 April

33 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 12. Fair values of assets an liabilities (continue) Level 3 reconciliation (continue) As at 5 April Investment property uner construction Complete investment property Total Balance at 6 April ,373 66,461,788 66,904,161 Losses in Consoliate Statement of Comprehensive Income: unrealise losses (16,971,100) (16,971,100) Purchases at cost 114, ,782 Transfers (from)/to investment property uner construction (442,373) 442,373 Balance at 5 April 50,047,843 50,047, Subsiiaries Details of the subsiiary unertakings which the company hel as at 5 April are liste below: Jurisiction Ownership Principal activity Direct Tritax Polska No.1 Investment Company S.à.r.l. Luxembourg 100% Holing company Inirect CC1 Funusz Inwestycyjny Zamknięty Number 1 Tritax Polska (GP) Sp. z o.o. S.K.A. Number 2 Tritax Polska (GP) Sp. z o.o. S.K.A. Number 3 Tritax Polska (GP) Sp. z o.o. S.K.A. Number 4 Tritax Polska (GP) Sp. z o.o. S.K.A. Number 5 Tritax Polska (GP) Sp. z o.o. S.K.A. Number 6 Tritax Polska (GP) Sp. z o.o. S.K.A. Number 7 Tritax Polska (GP) Sp. z o.o. S.K.A. Number 8 Tritax Polska (GP) Sp. z o.o. S.K.A. Number 9 Tritax Polska (GP) Sp. z o.o. S.K.A. Number 11 Tritax Polska (GP) Sp. z o.o. S.K.A. Wola Plaza Sp. z o.o. Polan Polan Polan Polan Polan Polan Polan Polan Polan Polan Polan Polan 100% 99% 99% 99% 99% 99% 99% 99% 99% 99% 99% 100% Investment fun Investment property holing Holing company Investment property holing Investment property holing Investment property holing Investment property holing Investment property holing Investment property holing Investment property holing Investment property holing Holing company Tritax Polska No.1 Fun Limite Page 32 Annual report an auite consoliate financial statements for the year ene 5 April

34 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 14. Plant an equipment Cost: As at 5 April 2,881 Foreign exchange ifferences 64 As at 5 April 2,945 Depreciation: As at 5 April Charge for the year Foreign exchange ifferences As at 5 April 2,611 Net book value: As at 5 April 334 As at 5 April 912 1, Trae an other receivables Trae ebtors VAT receivable Accrue income Sunry ebtors an prepayments 872, , , ,808 46, ,402 The fair values of trae an other receivables ue within one year approximate to their carrying amounts as shown above. 1,235,434 1,508, Loans receivable Tritax Polska (GP) Sp. z o.o. 16,078 14,730 The loan receivable from Tritax Polska (GP) Sp. z o.o. is unsecure, interest free an repayable on eman. 16,078 14,730 Tritax Polska No.1 Fun Limite Page 33 Annual report an auite consoliate financial statements for the year ene 5 April

35 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 17. Derivative liabilities Uner the terms of its bank loan agreements with Bank Zachoni WBK S.A., the Group is require to utilise interest rate swaps to hege a fixe proportion of its loan balances against movements in interest rates. Interest rate swap contracts hel at the year en are value by iscounting the anticipate future cash flows, base on the market interest rates applicable for the remaining term of the contract. Changes in the fair value of erivatives were isclose in the Consoliate Statement of Comprehensive Income. The Group oes not apply hege accounting. At the year en ate the fair values of unsettle contracts were as follows: Derivative liabilities 111,267 As a result of movements in market interest rates uring the year, principally 1 month EURIBOR, (losses) / gains have arisen uring the year on the expiry or revaluation of these interest rate swap contracts as follows: (Losses)/gains on expiry or revaluation of interest rate swaps (111,267) 498,796 The following erivative contracts were open at the year en: Interest rate swap contracts At the year en, various interest rate swap contracts with a total principal amount of 26,530,979 were hel with Bank Zachoni WBK S.A.. Uner these contracts the Group agree to pay fixe rate interest of 0.5% each month an receive floating rate interest at the 1 month EURIBOR rate applicable at the en of the previous month. The contracts in place at the year en have a maturity ate of 31 December. 18. Bank loans HSBC Bank Polska S.A. Bank Zachoni WBK S.A. 7,525,918 37,792,480 7,692,665 38,091,868 45,318,398 45,784,533 The loans are repayable as follows: Within one year 45,318,398 45,784,533 45,318,398 45,784,533 The weighte average effective interest rate at the year en ate is % (: %). In the opinion of the Directors, the carrying amounts of the loans are not materially ifferent to their fair value. Tritax Polska No.1 Fun Limite Page 34 Annual report an auite consoliate financial statements for the year ene 5 April

36 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 18. Bank loans (continue) The loans payable comprise separate facilities as follows: HSBC Bank Polska S.A. 2,880,000 loan facility at a rate of interest of 7% plus a margin of 2.85% per annum, repayable on 31 March The above facility is secure on the assets of the Company s subsiiary Number 1 Tritax Polska (GP) Sp. z.o.o. S.K.A. The total balance outstaning on the above facility at 5 April was 2,577,000 (: 2,659,545). PLN 22,062,622 loan facility at a rate of interest of 7% plus a margin of 3.5% per annum, repayable on 31 March The above facility is secure on the assets of the Company s subsiiary Number 9 Tritax Polska (GP) Sp. z.o.o. S.K.A.. The total balance outstaning on the above facility at 5 April was PLN 20,165,852 (: PLN 20,966,462) ( 4,948,918 (: 5,033,120)). As at 5 April, the Group are in breach of the 70% loan to value covenant require by the loan agreement with HSBC Bank Polska S.A. As at the year en, the bank has not impose any penalties for these breaches or enforce any of the conition of the terms of the loan agreements. Bank Zachoni WBK S.A. 12,642,000 loan facility at a rate of interest equivalent to the 1 month EURIBOR rate plus a margin of 2.55%, repayable on 31 December. The above facility is secure on the assets of the Company s subsiiary Number 6 Tritax Polska (GP) Sp. z.o.o. S.K.A. an on the other properties in the Bank Zachoni WBK portfolio. The balance outstaning on the above facility at 5 April was 11,731,618 (: 11,820,272). 1,015,000 loan facility at a rate of interest equivalent to the 1 month EURIBOR rate plus a margin of 2.55%, repayable on 31 December. The above facility is secure on the assets of the Company s subsiiary Number 3 Tritax Polska (GP) Sp. z.o.o. S.K.A. an on the other properties in the Bank Zachoni WBK portfolio. The balance outstaning on the above facility at 5 April was 942,005 (: 949,025). 4,452,000 loan facility at a rate of interest equivalent to the 1 month EURIBOR rate plus a margin of 2.55%, repayable on 31 December. The above facility is secure on the assets of the Company s subsiiary Number 4 Tritax Polska (GP) Sp. z.o.o. S.K.A. an on the other properties in the Bank Zachoni WBK portfolio. The balance outstaning on the above facility at 5 April was 4,131,400 (: 4,162,621). 6,549,000 loan facility at a rate of interest equivalent to the 1 month EURIBOR rate plus a margin of 2.55%, repayable on 31 December. The above facility is secure on the assets of the Company s subsiiary Number 5 Tritax Polska (GP) Sp. z.o.o. S.K.A. an on the other properties in the Bank Zachoni WBK portfolio. The balance outstaning on the above facility at 5 April was 6,106,936 (: 6,166,976). 5,108,000 loan facility at a rate of interest equivalent to the 1 month EURIBOR rate plus a margin of 2.55%, repayable on 31 December. The above facility is secure on the assets of the Company s subsiiary Number 7 Tritax Polska (GP) Sp. z.o.o. S.K.A. an on the other properties in the Bank Zachoni WBK portfolio. The balance outstaning on the above facility at 5 April was 4,702,137 (: 4,737,671). 6,039,691 loan facility at a rate of interest equivalent to the 1 month EURIBOR rate plus a margin of 2.55%, repayable on 31 December. The above facility is secure on the assets of the Company s subsiiary Number 8 Tritax Polska (GP) Sp. z.o.o. S.K.A. an on the other properties in the Bank Zachoni WBK portfolio. The balance outstaning on the above facility at 5 April was 5,512,373 (: 5,554,030). 5,124,000 loan facility at a rate of interest equivalent to the 1 month EURIBOR rate plus a margin of 2.55%, repayable on 31 December. The above facility is secure on the assets of the Company s subsiiary Number 10 Tritax Polska (GP) Sp. z.o.o. S.K.A. an on the other properties in the Bank Zachoni WBK. The balance outstaning on the above facility at 5 April was 4,666,011 (: 4,701,271). The loan agreements with Bank Zachoni WBK S.A. require a minimum of three months of the projecte ebt service payments of the loans to be hel in restricte ebt service reserve accounts. As at 5 April, Bank Zachoni WBK S.A. have retaine 700,892 of the Group s total cash balance of 1,391,888 per the consoliate statement of financial position in these accounts. Tritax Polska No.1 Fun Limite Page 35 Annual report an auite consoliate financial statements for the year ene 5 April

37 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 19. Loans payable Tritax Polska (GP) Sp. z o.o. 7,698 7,698 The loan payable to Tritax Polska (GP) Sp. z o.o. was repai uring the year. The loan hel at the prior year en was unsecure, interest free an repayable on eman. 20. Trae an other payables Trae creitors Tenants eposits Taxation Deferre income Sunry creitors an accruals 837, , ,895 1,383, , ,664 65, ,766 1,396,982 The fair values of trae an other payables ue within one year approximate to their carrying amounts as shown above. 2,841,581 2,622, Share capital Authorise share capital The authorise share capital of the Company is mae up of an unlimite number of shares of no par value, which may be enominate in any currency an issue as voting reeemable participating shares, non-voting non-participating reeemable performance shares or non-voting non participating non-reeemable orinary shares. Issue an fully pai share capital: 2 orinary shares of no par value 28,029,363 participating shares of no par value 1,000 performance shares of no par value The orinary shares carry no right to iviens or other istributions. Participating shares carry the right to receive istributions at the iscretion of the Directors. Participating shares can only be reeeme at the iscretion of the Directors. Share premium Balance brought forwar 36,078,224 36,078,224 Balance carrie forwar 36,078,224 36,078,224 Tritax Polska No.1 Fun Limite Page 36 Annual report an auite consoliate financial statements for the year ene 5 April

38 Notes to the Consoliate Financial Statements (continue) For the year ene 5 April 22. Diviens No final ivien has been eclare or pai for the year ene 5 April (: nil). 23. Relate party transactions Tritax Polska (GP) Sp. z.o.o. is a relate party to the Group. At the year en, the Group has a loan receivable balance of 16,078 (: loan payable balance of 7,698) with Tritax Polska (GP) Sp. z.o.o. During the year, the Group issue a loan of 16,078 to Tritax Polska (GP) sp. z.o.o. an repai a loan of 7,698 from Tritax Polska (GP) sp. z.o.o. The Group receive interest income uring the year of 977 (: 921) from Tritax Polska (GP) sp. z.o.o. All intra-group transactions, balances, income an expenses are eliminate on consoliation. 24. Ultimate controlling party In the opinion of the Directors, no one party has ultimate control of the Company. 25. Subsequent events In April, the Group receive an offer from a thir party to purchase City Park, the property hel by Number 7 Tritax Polska (GP) Sp. z o.o. S.K.A. The offer has been accepte an the sale is expecte to complete by 30 November. The offer price is not materially ifferent to the valuation of the property in the financial statements as at 5 April. Tritax Polska No.1 Fun Limite Page 37 Annual report an auite consoliate financial statements for the year ene 5 April

39 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any oubt as to any aspect of this notice, you shoul consult your stockbroker or other registere ealer in securities, bank manager, solicitor, professional accountant or other professional avisor. When consiering what action you shoul take, you are recommene to seek your own personal financial avice from a suitable aviser. If you sell or have sol or transferre all your shares in Tritax Polska No 1 Fun Limite, you shoul han this ocument an the ocuments accompanying it to the purchaser or agent through whom the sale was effecte for transmission to the purchaser. TRITAX POLSKA NO 1 FUND LIMITED (Company Registration Number 46273) NOTICE OF ANNUAL GENERAL MEETING Tritax Polska No.1 Fun Limite Page 38 Annual report an auite consoliate financial statements for the year ene 5 April

40 TRITAX POLSKA NO 1 FUND LIMITED (Company Number: 46273) NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT an Annual General Meeting of the shareholers of Tritax Polska No 1 Fun Limite (the Company ) will be hel at Frances House, Sir William Place, St Peter Port, Guernsey, GY1 4EU on Tuesay 24 November at 12.00pm for the purpose of consiering an, if thought fit, passing the following resolutions: ORDINARY BUSINESS 1. To receive an aopt the Financial Statements an Directors Report for the year ene 5th April 2. To re-appoint Mr Michael McKean as a Director of the Company 3. To re-appoint Saffery Champness as auitors of the Company 4. To authorise the Directors to fix the remuneration of the Company s auitors By Orer of the Boar... For an on behalf of JTC (Guernsey) Limite Company Registration Number: As Company Secretary Date: 2 October Registere office: Frances House, Sir William Place, St Peter Port, Guernsey, GY1 4EU, Channel Islans Notes: 1. Any shareholer entitle to atten an vote at the meeting is entitle to appoint one or more proxies to atten an vote instea of him. A proxy nee not be a shareholer of the Company. 2. The form of proxy, together, if appropriate, with the power of attorney or other authority (if any) uner which it is signe, must be eposite at the office of the Company s registere office not later than forty-eight hours before the time appointe for holing the meeting. 3. Return of a complete form of proxy will not preclue a shareholer from attening an voting personally at the meeting. 4. The notice sets out the resolutions to be propose at the meeting. The meeting will be chaire by a person nominate by the shareholers present in person or by proxy at the meeting. It is anticipate that the Chairman of the meeting will be Mr Anrew Howat or, in his absence, Mr Michael McKean. 5. The quorum for a general meeting shall be four members present in person or by proxy. 6. If, within fifteen minutes from the appointe time for the meeting, a quorum is not present, then the meeting will be ajourne for seven ays at the same aress or to such other ay an at such other time an place as the Boar may etermine an no notice of ajournment nee be given. At that meeting, those shareholers present in person or by proxy will form a quorum whatever their number an the number of shares hel by them. Tritax Polska No.1 Fun Limite Page 39 Annual report an auite consoliate financial statements for the year ene 5 April

41 TRITAX POLSKA NO 1 FUND LIMITED (Company Number: 46273) FORM OF PROXY Form of proxy for use by holers of Orinary Shares at the Annual General Meeting of the Company convene for 24 November at 12.00pm. I/We (Please complete the full name of your investment in block capitals) of (Please complete your full aress in block capitals) hereby appoint/s 1 the Chairman of the meeting (see note 1 overleaf) or 2 (Shoul you wish to appoint a representative, please complete the name an aress of proxy/representative in block capitals) as my/our proxy to atten, an on a poll, vote for me/us an on my/our behalf at the Annual General Meeting of the Company to be hel on 24 November at 12.00pm an at any ajournment thereof. I/We wish my/our proxy to vote as inicate below in respect of the resolutions to be propose at the meeting. Please inicate which way you wish your proxy to vote by ticking the appropriate box alongsie each resolution. (see note 2 overleaf). ORDINARY RESOLUTIONS FOR AGAINST VOTE WITHHELD DISCRETIONARY 1. That the Financial Statements an Directors Report for the year ene 5th April be receive an aopte. 2. That Michael McKean be re-appointe as a Director of the Company. 3. That Saffery Champness be re-appointe as auitors of the Company. 4. That the Directors be authorise to fix the remuneration of the Company s auitors. Signature... (see note 3 overleaf) Date.... Tritax Polska No.1 Fun Limite Page 40 Annual report an auite consoliate financial statements for the year ene 5 April

42 TRITAX POLSKA NO 1 FUND LIMITED (Company Number: 46273) FORM OF PROXY Notes: 1. If you wish to appoint as your proxy someone other than the Chairman of the meeting, cross out the wors the Chairman of the meeting an write on the line the full name an aress of your proxy. The change can be initialle. 2. In the absence of instructions, the person appointe by proxy may vote or abstain from voting as he or she thinks fit on the specifie resolutions an, unless instructe otherwise, the person appointe by proxy may also vote or abstain from voting as he or she thinks fit on any other business (incluing amenments to resolutions) which may properly come before the meeting. 3. This form must be signe an ate by the shareholer or his/her attorney uly authorise in writing. If the shareholer is a company, it may execute uner its common seal or by the signature of a uly authorise officer or attorney. In the case of joint holings, any one holer may sign this form. The vote of the senior joint holer who teners a vote, whether in person or by proxy, will be accepte to the exclusion of the votes of the other joint holers an for this purpose seniority will be etermine by the orer in which the names stan in the register of members in respect of the joint holing. 4. To be vali, this form must be complete an loge with JTC (Guernsey) Limite, PO Box 156, Frances House, Sir William Place, St Peter Port, Guernsey GY1 4EU, together with the power of attorney or other authority (if any) uner which it is signe or a copy of such authority certifie notarially, not less than 48 hours before the time fixe for holing the meeting. 5. The vote withhel option is provie to enable you to abstain on any particular resolution however it shoul be note that a vote withhel is not a vote in law an will not be counte in the calculation of the proportion of the votes for an against a resolution. 6. To appoint more than one proxy you may photocopy this form. Please inicate the proxy holer s name an number of shares in relation to which they are authorise to act as your proxy (which, in aggregate, shoul not excee the number of shares hel by you). Please also inicate if the proxy instruction is one of multiple instructions being given. Tritax Polska No.1 Fun Limite Page 41 Annual report an auite consoliate financial statements for the year ene 5 April

43 Tritax Polska No.1 Fun Limite Page 42 Annual report an auite consoliate financial statements for the year ene 5 April

44 Tritax Securities 1 Lt The Loge, Oell, Befor MK43 7BB t f Authorise an Regulate by the Financial Services Authority. Registere Office: The Loge, Oell, Befor, MK43 7BB. Company No