Final Results

RNS Number : 6116L

Summit Germany Limited

29 April 2015

SUMMIT GERMANY LIMITED

FULL YEAR RESULTS

Summit Germany Limited ("Summit Germany" or "the Company") today announces its audited results for the year ended 31 December 2014 of Summit Germany Limited and its subsidiaries (together: the "Group") and the Group's annual report.

2014 was a successful and significant year for the Group. The results reflect our accomplishments in further improving our stable portfolio, aiming towards its further expansion. The highlights achieved were:

Results

· Net profit of €70.9 million compared to €23.8 million in 2013

· EPRA Net Asset Value (NAV¹) at 31 December 2014 increased to €255.4 million compared to €167.4 million in 2013. EPRA NAV per share increased 24% to 87c (2013:70c).

· Profit Before Tax (PBT) increased to €74.0 million (2013: €23.9 million)

· Earnings Per Share (EPS) almost tripled to 23.7c (2013: 8.1c)

· Funds From Operations (FFO) per share of 4.8c (2013: 4.2c on comparable basis)

· Profit from revaluations amounted to €34.7 million, including a €28 million valuation surplus on the acquired portfolio

_______________
¹ EPRA NAV is calculated based on the IFRS NAV excluding the effect of deferred tax and the fair value of hedging instruments

Improving Cash Flow through the Portfolio's Operations

· Investment portfolio of 95 properties with a gross asset value of €582.6 million, generating net rent of €47.1 million per annum, reflecting a rental yield of 8.1%.

· Signing of 237 new leases and renewals in 2014 (rent of €12 million p.a.)

· Occupancy rate reached90.4% across majority of the Group's portfolio and 87.4% across the whole portfolio

· Like for Like rental growth of 5.17%

· Increase of 7% in the rent per sqm over the Group's portfolio through successful reletting

· €0.7 million gain from disposal of interest in property in Berlin at a yield of 5.2%

· First JV's residential development project in Berlin is 96% sold

· Pipeline of further attractive acquisitions in various stages of negotiations

Improving Cash Flow through Financing

· Refinancing of the Group's €268 million main debt facility with a €13.5 million NAV uplift and low interest rate fixed over a seven year term. LTV decreased to 46% compared to 63% in 2013

· Expiration of legacy swaps resulting in a €7 million increase in annual future cash flows

· Further financing activity after the end of the reporting period:

o Refinancing 9 of 11 assets acquired in 2014 with a €31 million seven years debt facility provided at a low interest rate

o Early repayment of ca. €50m shareholders loan from resulting in ca. €4.75m of interest savings p.a. further strengthening the Group's cash flow

Significant events

· Admission to AIM and €35 million gross proceeds in February 2014

· Further fund raising of €120 million gross proceeds in February 2015

· Acquisition of a €73.5 million loan facility at a cost of €46 million regaining control of a portfolio of 11 properties across Germany:

Dividends

· Quarterly dividend payments amounted to 2.85c per share in 2014, reflecting an annualised yield of 5.42% on the IPO share price

· Dividend of 0.77 cent per share for Q1 2015 announced today reflecting capital increase pre deployment of funds raised

· Future dividends to reach target yield of 7% on IPO price of 63c as funds are deployed

Harry Hyman, Chairman, commented:

"2014 was significant for the major progress Summit has made in executing our strategy to deliver strong returns for our shareholders. Acknowledging the importance of dividends to our shareholders, Summit took active steps towards improving its cash flows and the potential for the Company to increase the dividends."

Zohar Levy, Executive Director and Managing Director, added:

"It has been a very successful year for Summit. We have made excellent progress and we are delighted with the major operational and financial accomplishments we have made. With a stable portfolio and a firm management platform we are well positioned to continue and move forwards towards our targeted expansion."

-ends-

Date: 29 April 2015

For further information please contact:

Summit Germany Limited

Zohar Levy, Managing Director

Itay Braun, Finance Director

Tel: +44 (0) 1481 700 300

Cenkos Securities plc

Ivonne Cantú (Nomad)/Selwyn Jones

Tel: +44 (0) 20 7397 8980

Liberum Capital Limited

Jill Li

Tel: +44 (0) 20 3100 2219

Broker Profile

Simon Courtenay

Harry Rippon

Tel: +44 (0) 20 7448 3244

Carey Group

Sara Bourne

Tel: +44 (0) 1481 700 300

Chairman's and Managing Director's Report

Summit made significant achievements in 2014 improving its operations and occupancy while fixing its long term debt on relatively low interest rates. The Company is looking forward to further increasing its portfolio of properties and free cash flow in order to increase the dividend returns to its shareholders.

Summit has almost tripled its net profit to €70.9 million for the year ended December 31 2014 compared to €23.8 million in 2013 and has more than tripled its PBT to €74 million (2013: €23.9 million).

Increase in NAV

The EPRA NAV per share as of 31 December 2014 has increased to 87c (2013: 70c, 24% increase), following several events which took place during the reporting period:

· In April 2014 the Group acquired a €73.5 million loan facility which was under breach of covenants for total acquisition costs of approximately €46 million. Following the acquisition, the Group regained control over 11 properties with a total of 90,000 sqm.

· The improved performance of the Group's portfolio and the portfolio acquisition as referred to above affected positively the Net Market Value ("NMV") of the properties contributing €34.7 million to the increase in the NAV, including a €28 million valuation surplus on the acquisition mentioned above. As of 31 December 2014 the NMV of the Groups portfolio was €582.6 million (2013: €501.2 million).

· Towards the end of the reporting period the Company successfully refinanced its main debt facility resulting in a NAV uplift of €13.5 million. The debt facility in the amount of €268 million has been replaced with a new seven year debt facility of €240 million provided by two German Banks.

· Summit's active asset management throughout the year improved the performance of the Group's portfolio contributing almost €15 million to the increase in NAV. Through intensive letting and re-letting activities we succeeded in reaching an occupancy rate of 90.4% across the majority of the portfolio and 87.4% across the whole portfolio, compared to 85.6% following the acquisition of the 11 properties mentioned above.

In February 2014, the Company completed successfully a placing of shares and Admission to trading on the AIM market of the London Stock Exchange raising €35 million by issuing 54,971,291 new shares at a share price of 63c.

Since the year end, in February 2015 we have completed successfully a second fund raising of €120 million through placing of shares on the AIM market, issuing 171,428,571 new shares at a share price of 70c.

Improving Cash Flow

Operations:

In 2014 we signed new lease agreements for 66,804 sqm and renewed existing lease agreements for an additional 118,342 sqm worth a total of €12 million in rental income.

The occupancy rate across the majority of the Group's portfolio reached 90.4%.

Our active marketing approach led to an increase of 7% in the rent per sqm over the Group's portfolio. The rental income for 2014 presented in the Group's Profit and Loss Statement included only a partial period for the acquired portfolio and some of the current lease agreements and amounted to €43.4 million. By annual consideration, the Group's portfolio generates €47.1 million of rental income, reflecting 3.7% increase on like for like basis (2013: €45.4 million).

In addition, we are currently in advanced stages of negotiations for additional lease agreements with a total worth of €0.8 million of rental income. Taking into consideration a total worth of €0.2 million of rental income, which is about to expire, the expected annual rent is €47.7 million which is 5.17% higher than the like for like rent.

Our strong performance throughout the year was further reflected in the increase of the Net Operating Income ("NOI"), which amounted to €39.8 million (2013: €36.8 million). The FFO per share amounted to 4.8 cent as of year-end (2013: 4.2 cent on comparable basis).

Financing:

In the last quarter of 2014 the legacy swaps of previous financings finally expired resulting in an annual €7 million decrease in future interest expenses and a similar increase in future cash flow.

In addition, we refinanced the Group's main credit facility of €268 million with a new seven year term loan provided by two German Banks. Due to the refinancing we have extended the duration of the Group's debt while fixing a low interest rate over the next seven years. The new interest rate of 3.14% is 0.76% lower than the previous rate and further contributes to the increase in the Group's cash flow by saving interest expense of ca. €1.8 million per annum.

Setting the goal of further decreasing the Group's interest expenses, Summit has resolved in 2014 to exercise an option granted by Summit Israel, its parent company, for an early repayment of its ca. €50 million shareholders loan, which bears an annual coupon of 9.5%. The repayment of the shareholders loan after the end of the reporting period results in further interest savings of €4.75 million per annum and an additional positive impact on the Group's net cash flows. Part of the proceeds for the repayment of the shareholders loan came from new financing of €30 million for the acquired portfolio in March 2015.

The Company continues to benefit from the current increasing demand in the residential market in Berlin through its joint venture ("JV") in residential development. While marketing of the third project is due to commence during the second quarter of 2015, the JV has already obtained sales of 96% in the first project and 33% in the second project.

Dividends

Since listing on AIM, the Company has paid quarterly dividends at growing rates of 0.50 cents for Q1 2014, 0.55 cents for Q2 2014 and 0.6 cents for Q3 2014. As a result of the events described above, the Company's improved cash flows in the last quarter of 2014 enabled it to increase its dividend rate and to distribute a dividend of 1.2c per share for Q4. This dividend is reflecting an annual yield of 7.6% on the amount of shares following the IPO and on the IPO share price of 63 cents. The payment of the Q4 2014 dividend took place after the end of the reporting period. In total, the Company distributed dividends of 2.85c per share for the year ended 31 December 2014 reflecting annual yield of 5.42% on the IPO share price.

The improvement in the cash flows generated by the Group's current portfolio provides stable means to keep its targeted above 7% dividend yield on its IPO share price of 63 cents, before the Admission of further shares in February 2015.

Pipeline

Following the Company's second equity placing on AIM at the beginning of 2015, the Group currently holds approximately €90 million of liquid funds available for immediate investments. The Company has a substantial pipeline of potential acquisitions, of which €100 million is at agreed prices with sellers and €150 million is in various stages of discussions. Although there is no guarantee that such negotiation will be completed, we believe that part of these transactions will be completed in the coming months.

The Board is confident that the Group's strong management platform enables the Group to progress efficiently towards the full deployment of the available funds in acquisitions which will be accretive to the Group's cash flow. Together with the stable base of the Group's existing strongly performing portfolio, the Group is well positioned in the positively trending German real estate market, to continue to achieve an attractive and growing divided yield for its investors.

Outlook

The Company's activities throughout 2014 comprised significant steps in the Company's goal to continue to deliver an enhanced value to its shareholders.

With the spotlight on strong internal asset management and an active marketing approach, Summit made it possible to further improve its portfolio's stable and diverse rental income while increasing occupancy and duration of leases.

The management's focus on identifying and maximising market opportunities has paid off as Summit accomplished the refinance of its debt, taking advantage of the low interest market environment to secure the Company's debt over the long term while significantly enhancing the Company's NAV and cash flows.

We are confident that Summit's efforts in improving its stable existing portfolio while creating a firm management platform which is capable of handling an expanding portfolio has positioned the Company well towards its targeted expansion.

With no forecast for change in the extremely low interest rates and with Germany being the strongest economy in Europe, we believe that the German market is the most attractive real estate market in Europe. We expect the ever growing appetite for German real estate to continue pushing prices up and limiting investment opportunities. Against this backdrop we will maintain a disciplined approach to acquisitions.

We believe that there are still good opportunities in the German market from which Summit can benefit and that the placing at AIM at the beginning of 2015 will enable our professional management team to realise successfully Summit's expansion plan.

Harry Hyman Zohar Levy

Chairman Managing Director

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION


As of December 31		2014	2013
	Note	Euro (in thousands)
ASSETS

NON-CURRENT ASSETS:
Investment properties	5	582,572	501,154
Other long-term assets	6	10,898	10,054
Derivative financial assets	18	-	407
Deferred tax assets	17	565	690
Total non-current assets		594,035	512,305


CURRENT ASSETS:
Trade receivables, net	8	2,347	1,777
Prepaid expenses and other current assets	9	4,915	9,060
Receivables from related parties	13	191	271
Investment in marketable securities at fair value through profit or loss	18	1	9,345
Cash and cash equivalents	10	9,736	24,192
Investment property held for sale	5	1,760	-
Total current assets		18,950	44,645

Total assets		612,985	556,950

The accompanying notes are an integral part of the consolidated financial statements.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As of December 31		2014		2013
	Note	Euro (in thousands)
EQUITY AND LIABILITIES

:EQUITY:	11
Share capital		(*) -	(*) -
Distributable reserve		296,643	270,569
Reserves due to transactions with principal shareholder		2,216	2,216
Net unrealized gain reserve		(5,562)	(3,768)
Retained losses		(48,594)	(116,249)
Equity attributable to the owners of the Company		244,703	152,768
Non-controlling interests		10,326	7,363
Total equity		255,029	160,131

NON-CURRENT LIABILITIES:
Interest-bearing loans and borrowings	7	272,594	307,199
Shareholders' loans	13	36,232	41,920
Other long-term financial liabilities	6	2,220	2,226
Derivative financial liabilities	18	3,969	-
Deferred tax liability	17	6,188	3,396
Total non-current liabilities		321,203	354,741

CURRENT LIABILITIES:
Interest-bearing loans and borrowings	7	4,007	6,260
Derivative financial liabilities	18	1,086	12,316
Payables to related parties	13	8,438	225
Current tax liabilities		60	4,609
Trade and other payables	14	23,162	18,668
Total current liabilities		36,753	42,078

Total liabilities		357,956	396,819

Total equity and liabilities		612,985	556,950

NAV/Share (cent)	11	83	64
EPRA NAV/Share (cent)	11	87	70

(*) No par value.

The accompanying notes are an integral part of the consolidated financial statements.

April 28, 2015
Date of approval of the	Zohar Levy	Itay Braun
financial statements	Managing Director	Finance Director

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For The Year ended December 31				2014		2013
		Note		Euro (in thousands)


Rental income		43,363	39,523
Operating expenses		(3,505)	(2,674)

Gross profit		39,858	36,849

General and administrative expenses	15	(6,289)	(4,658)
Fair value adjustments of investment properties	5	34,669	(5,058)
Other income (expenses)		5,106	(1,155)

Operating profit		73,344	25,978

Financial income	16	30,085	35,928
Financial expenses	16	(29,450)	(38,016)
Total financial income (expenses)		635	(2,088)

Profit before taxes on income		73,979	23,890
Tax expenses	17	(3,098)	(65)
Profit for the year		70,881	23,825

Other comprehensive income and expenses:
Items that may be reclassified subsequently to profit or loss:
Net loss arising on revaluation of available-for-sale financial assets		(23)	(290)
Reclassification to profit and loss of ineffective hedging reserve, net		7,220	23,681
Net loss on hedging instruments entered into for cash flow hedges		(9,254)	(227)
Other comprehensive (loss) income for the year, net of tax		(2,057)	23,164

Total comprehensive income for the year		68,824	46,989

Profit for the year attributable to:
Owners of the Company		67,655	22,207
Non-controlling interests		3,226	1,618
		70,881	23,825

Total comprehensive income attributable to:
Owners of the Company		65,861	41,659
Non-controlling interests		2,963	5,330
		68,824	46,989
:Earnings Per Share
Basic (Euro per share)	12	0.237	0.081
Diluted (Euro per share)		0.237	0.081

The accompanying notes are an integral part of the consolidated financial statements.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Issued capital (Note 11)	Share premium (Note 11)	Distribution Reserve (Note 11)	Reserves due to transactions with principal shareholder	Net unrealized gain reserve	Retained Earnings (Deficit)	Total equity attributable to owners of the parent Company	Non-Controlling interests	Total equity
	Euro in thousands

Balance at January 1, 2013	- (*)	-	292,007	2,216	(23,220)	(138,456)	132,547	2,130	134,677

Profit for the year	-	-	-	-	-	22,207	22,207	1,618	23,825
Other comprehensive income for the year, net of income tax (**)	-	-	-	-	19,452	-	19,452	3,712	23,164
Total comprehensive profit	-	-	-	-	19,452	22,207	41,659	5,330	46,989

Share buyback (note 11)	-	-	(21,438)	-	-	-	(21,438)	-	(21,438)
Other	-	-	-	-	-	-	-	(97)	(97)

Balance at December 31, 2013	- (*)	-	270,569	2,216	(3,768)	(116,249)	152,768	7,363	160,131

Profit for the year	-	-	-	-	-	67,655	67,655	3,226	70,881
Other comprehensive loss for the year, net of income tax (**)	-	-	-	-	(1,794)	-	(1,794)	(263)	(2,057)
Total comprehensive profit (loss)	-	-	-	-	(1,794)	67,655	65,861	2,963	68,824

Dividend distribution (note 11e)	-	-	(4,850)	-	-	-	(4,850)	-	(4,850)
Issue of shares, net of expenses (note 11d)	-	-	30,924	-	-	-	30,924	-	30,924

Balance at December 31, 2014	- (*)	-	296,643	2,216	(5,562)	(48,594)	244,703	10,326	255,029

(*) No par value.

(**) Mainly other comprehensive profit results from the ineffectiveness of certain derivatives for more information see note 16.

The accompanying notes are an integral part of the consolidated financial statements

CONSOLIDATED STATEMENTS OF CASH FLOWS

For The Year ended December 31	2014	2013
	Euro (in thousands)
Cash flows from operating activities:
Profit for the year	70,881	23,825
Adjustments for:
Deferred taxes	2,928	39
Sale of subsidiaries	(593)	-
Financial expenses (income), net	(42)	1,593
Fair value adjustment of investment properties	(34,669)	5,058
Gain from disposal of property	-	(430)
Loss from available for sale financial assets	-	495
Depreciation of property, plant and equipment	48	64
Amortisation and impairment of intangible assets	(839)	316
	(33,167)	7,135
Changes in operating assets and liabilities:
Decrease (increase) in trade receivables	(570)	196
(Decrease) increase in trade and other payables	(203)	408
Increase (decrease) in payables to related parties and shareholders	3,545	(253)
Decrease (Increase) in prepaid expenses and other current assets	807	(7,221)
Decrease in other non-current liabilities	(668)	(11)
	(2,911)	(6,881)

Net cash flows provided by operating activities	40,625	24,079

Cash flows from investing activities:
Payments for property, plant and equipment	(34)	(41)
Payments for intangible assets	-	(5)
Proceeds from sale of marketable securities	3,973	35,520
Proceeds from the sale of financial participations	1,075	-
Change in deposits	5,795	(566)
Increase in loan to third party	(1,108)	(4,607)
Payments for acquisitions of investment properties	(48,509)	(2,532)
Proceeds from sale of investment property	-	11,955
Interest income received	105	61
Net cash flows (used) provided by investing activities	(38,703)	39,785

Cash flows from financing activities:
Proceeds from borrowings from banks	240,000	281,173
Net proceeds from borrowings from related parties	2,799	42,523
Repayment of borrowings	(265,666)	(383,035)
Interest expense paid	(16,742)	(21,564)
Net proceeds from issue of shares	30,924	-
Dividend distribution	(3,465)	-
Cost of raising loans paid	(4,229)	(342)

Net cash flows used in financing activities	(16,378)	(81,245)


Decrease in cash and cash equivalents	(14,456)	(17,381(
Cash and cash equivalents at beginning of the year	24,192	41,573
Cash and cash equivalents at end of the year	9,736	24,192

The accompanying notes are an integral part of the consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2014

NOTE 1: GENERAL

A. Summit Germany Limited (the "Company") and its subsidiaries (together: the "Group") is a German property specialist fund. The Company was incorporated and registered in Guernsey on April 19, 2006. The parent company of the Group is Summit Real Estate Holdings Ltd (hereinafter: "SHL"), a company registered in Israel.

The Group owns, enhances and operates commercial real estate assets in Germany including office buildings, logistic centers and others, which are leased to numerous commercial and industrial tenants. The Group invests primarily in such properties that provide substantial income flows and potential for value increase through asset management. The Group does not acquire properties for speculative purposes.

The Company was a closed ended authorised investment scheme registered under The Protection of Investors Law (Bailiwick of Guernsey) 1987. In December 2013, the Company and its shareholders approved to apply to the Guernsey Financial Services Commission (the "GFSC") for consent to deregister as a closed ended authorised investment scheme under The Protection of Investors Law (Bailiwick of Guernsey) 1987. This request was approved by the GFSC on January 21, 2014.

In February 2014, the Company issued 54,971,291 new ordinary shares at a price of 63c on the AIM Market of London Stock Exchange. Out of the new shares, 1,438,252 shares were issued to the Group's advisors for their services in connection with the admission. The net proceeds amounted to €31 million.

After the end of the reporting period, the Company raised additional €120 million (excluding raising costs) through a placing of 171,428,571 new ordinary shares which were issued at a price of 70c on the AIM market of London Stock Exchange.

B. Major financing arrangements

1. As at December 31, 2014, the Group's bank borrowings amounted to €277 million, excluding the value of derivative instruments (in 2013: €313 million). The decrease in the bank borrowings in comparison to December 31, 2013 is mainly due to a refinancing transactioncompleted in December 2014 as detailed below.

2. In December 2014, the Group refinanced the majority of its bank debt in the amount of €270 million (the: "Old Loans") partially by a new 7 year debt facility (the: New Loans) in the amount of €240 million received from two German financial institutions at an interest rate of 3.14% in the amount of €240 million and partially by the acquisition of the remaining debt using the Group's own funds (the: Acquired Debt).

The uncovered loan difference of approximately €33 million (due to applied financing costs) has been purchased by the Group for resulting in an increase of the Company's NAV by €13.5 million included the profit and loss statements of the company under the financing income. It is to be noted that the financing transaction has released the Group from its obligation towards the prior debt provider for the disposal of investment properties in the amount of €100 million until the end of 2017. For further details see note 7.

3. In April 2014, the Company completed an acquisition of a loan facility which was secured by a portfolio of 11 commercial properties in Germany, previously controlled by the Group. The cost of the acquisition was approximately €45 million plus transaction costs. As a result of the acquisition of the loan facility, the Group gained full control over the properties, which were valued at €73 million, commencing the second quarter of 2014 (see note 3 for details of the accounting treatment). The profit from the revaluation of properties of approximately €28 million was recognised in profit or loss, in Fair Value of Investment Properties line item. The acquisition was first financed by the Group's own funds, which has been replaced after the end of the current reporting period by a bank debt facility of approximately €33 million for 9 of the 11 acquired properties.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Going concern

As of December 31, 2014, the Group had a negative working capital of €18 million (2013: €2.6 million working capital). The working capital deficiency resulted mainly due to the acquisition of loans using the Group's funds during the reporting period as detailed in note 1 B 3 whereas new bank debt facility was first to be received after the reporting period has ended.

After the end of the reporting period, the Group used part of the €120 million (excluding raising costs) proceeds raised on the AIM market of the London Stock Exchange to repay its shareholders' loans (SHL loan), according to previous resolutions of the Group made in February 2015.

As a result of events that occurred during the reporting period and after, as detailed in Note 1 above, the Group has managed to strengthen its equity and prolong its major debt facilities while also being released from the obligation to sell its assets and shareholders loan (and Bonds) covenants. The Group's property portfolio continues to generate a positive and stable cash flow that enables the Group to meet all its obligations.

The Group has to comply with various covenants set in the financing agreements with the banks. The management reviews the covenants ahead and monitors the Group's financial position and cash flow forecasts in light of the market indicators and business plans. As at the date of this report, the Group is in compliance with the aforementioned covenants.

On the basis of the aforesaid analysis, the management and the Directors believe that the Group maintains sufficient resources to continue its operations and the going concern assumption remains pertinent. The Directors believe the Group benefits from a strong platform to continue its activity to enhance value.

Basis of preparation

After careful consideration of all of the above factors, the Board has concluded that it is appropriate to prepare the Consolidated Financial Statements on the going concern basis.

The consolidated financial statements have been prepared on the historical cost basis except for investment properties and financial instruments that are measured at revalued amounts or fair values at the end of each reporting period, as explained in the accounting policies below.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, expect for share-based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

Reportable segments - The Group operates in one segment, being a commercial real estate in Germany. Therefore, no further segments information is presented.

Statement of compliance:

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS") and The Companies (Guernsey) Law, 2008.

Basis of consolidation:

The consolidated financial statements comprise the financial statements of the Company and entities controlled by the Company (and its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

The results of subsidiaries are included in the consolidated statements of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate.

All intra-group balances and transactions are eliminated in full on consolidation.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

Business combinations and goodwill:

If, after reassessment, the Group's interest in the fair value of the acquirer's identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquire and the fair value of the acquirer's previously held equity interest in the acquire (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Revenue recognition:

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, and similar allowances. The following specific recognition criteria must also be met before revenue is recognised:

Interest income:

Interest revenue is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably. Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.

Interest income is presented in finance revenue in the statement of comprehensive income.

Rental income:

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

Foreign currencies:

In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in profit or loss in the period in which they arise.

Taxes:

Income tax expense represents the sum of tax currently payable and deferred tax.

Current Taxes:

The Company is subject to taxation under the laws of Guernsey. The Company qualifies for exempt status, which results in no Guernsey taxation on income it receives, including interest and dividends received, or capital gains from the disposal of investments. Exempt status is achieved by application. Application is made to the Director of Income Tax in Guernsey for confirmation that the Company is eligible for exempt status under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989. The exemption must be reapplied on an annual basis. The subsidiaries are subject to income taxes in their country of domicile in respect of their income. The ordinary corporate income tax rate in Germany as of December 31, 2013 is 15.825% (December 31, 2012: 15.825%).The majority of the Group subsidiaries are subject to German tax which will include RETT on property transactions, where applicable.

Deferred tax:

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced 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 recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Financial assets

Initial recognition:

Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables and available-for-sale financial assets. The Company determines the classification of its financial assets at initial recognition.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way purchases) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

The Company's financial assets include cash and short-term deposits, trade and other receivables, unquoted financial instruments, and derivative financial instruments.

Subsequent measurement:

The subsequent measurement of financial assets depends on their classification as follows:

Loans and receivables:

Loans and receivables are non‑derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such financial assets are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in the consolidated income statement when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

Available-for-sale financial assets:

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any of the three other categories of financial assets (Fair Value through profit or loss, held to maturity or loans and receivables). After initial measurement, available-for-sale financial assets are measured at fair value with unrealised gains or losses recognised directly in equity until the investment is derecognised, at which time the cumulative gain or loss recorded in equity is recognised in the income statement, or determined to be impaired, at which time the cumulative loss recorded in equity is recognised in the consolidated statement of comprehensive income.

Financial Assets at Fair Value through Profit or Loss ("FVTPL"):

Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL.

A financial asset is classified as held for trading if:

· it has been acquired principally for the purpose of selling it in the near term; or

· on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

· it is a derivative that is not designated and effective as a hedging instrument.

A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:

· such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

· the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

· It forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in the consolidate statement of comprehensive income. Fair value is determined in the manner described in note 18.

Derecognition of financial assets

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.

On derecognition of a financial asset other than in its entirety (e.g. when the Group retains an option to repurchase part of a transferred asset), the Group allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.

Financial liabilities

Initial recognition:

Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.

Financial liabilities are recognised initially at fair value and in the case of loans and borrowings, net of directly attributable transaction costs.

The Group's financial liabilities include trade and other payables, bank overdrafts, loans and borrowings and derivative financial instruments.

Subsequent measurement:

The measurement of financial liabilities depends on their classification as follows:

Loans and borrowings:

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method.

Gains and losses are recognised in the statement of comprehensive income when the liabilities are derecognised as well as through the amortisation process.

Offsetting of financial instruments:

Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is either an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

Fair value of financial instruments:

The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the statement of financial position date. For financial instruments where there is no active market, fair value is determined using valuation techniques. Such techniques may include using recent arm's length market transactions; reference to the current fair value of another instrument that is substantially the same; discounted cash flow analysis or other valuation models.

Amortised cost of financial instruments:

Amortised cost is computed using the effective interest method less any allowance for impairment and principal repayment or reduction. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate.

Impairment of financial assets:

The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred 'loss event') and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Due from loans and receivables:

For amounts due from loans and receivables carried at amortised cost, the Group first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the consolidated statement of comprehensive income.

Interest income continues to be accrued on the reduced carrying amount based on the original effective interest rate of the asset. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group.

If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is recognised in the consolidated statement of comprehensive income.

The present value of the estimated future cash flows is discounted at the financial asset's original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.

Available-for-sale financial investments:

For available-for-sale financial investments, the Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired.

In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. Where there is evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the consolidated statement of comprehensive income - is removed from equity and recognised in the consolidated statement of comprehensive income. Impairment losses on equity investments are not reversed through the consolidated statement of comprehensive income; increases in their fair value after impairment are recognised directly in equity.

Derivative financial instruments and hedge accounting

Initial recognition and subsequent measurement:

The Group uses derivative financial instruments such as interest rate swaps to hedge its risks associated with interest rate, and foreign currency exchange hedge of the shareholder loan. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value.

Any gains or losses arising from changes in fair value on derivatives during the year that are qualified for hedge accounting are taken directly to equity. Any gain or loss which not qualified for hedge accounting are taken directly to profit and loss.

The fair value of interest rate swap contracts is determined by reference to market values for similar instruments.

Derivative financial instruments and hedge accounting

Initial recognition and subsequent measurement:

At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument's effectiveness in offsetting the exposure to changes in the hedged item's fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

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

Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in the 'other gains and losses' line item.

Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item is recognised in profit or loss, in the same line of the consolidated statement of comprehensive income as the recognised hedged item. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.

Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss.

Property, plant and equipment

Plant and equipment is stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any.

Depreciation is calculated on a straight-line basis over the useful life of the asset as follows:

· Fixtures and furniture - 3 to 23 years.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated statement of comprehensive income in the year the asset is derecognised.

The assets' residual values, useful lives and methods of depreciation are reviewed at each financial year end, and adjusted prospectively if appropriate.

Investment properties

Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day to day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the statement of financial position date. Gains or losses arising from changes in the fair values of investment properties are included in the profit or loss in the year in which they arise.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the consolidated statement of comprehensive income in the period of derecognition.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.

Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the consolidated statements of comprehensive income in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of comprehensive income in the expense category consistent with the function of the intangible asset.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually either individually or at the cash generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the consolidated statement of comprehensive income when the asset is derecognised.

Impairment of assets:

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount.

Goodwill

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than their carrying amount an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.

Cash and short-term deposits:

Cash and short-term deposits in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less.

For the purpose of the consolidated statement of cash flow, cash and cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts.

Trade and other receivables:

Trade receivables, which generally have 30-90 days' terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. Provision is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.

Provisions:

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the consolidated statement of comprehensive income net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

NOTE 3: CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of Group's accounting policies which are described in Note 2 above, management is required to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities that are not readily apparent from other sources. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Key sources of estimation uncertainty:

The key assumptions concerning the future and other key sources of estimation uncertainty at the consolidated statement of financial position date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Revaluation of investment properties:

The Group carries its investment properties at fair value, with changes in fair values being recognised in the profit or loss. The Group engages independent valuation specialists to determine fair value of investment properties on an annual basis. The valuation technique used to determine fair value of investment properties is based on a discounted cash flow model as well as comparable market data.

The determined fair value of the investment properties is sensitive to the estimated yield as well as the long term vacancy rate. The key assumptions used to determine the fair value of the investment properties, are further explained in Note 5.

Taxation

Uncertainties might exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the Group's international business relationships and the nature of contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. In previous years the Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective countries in which it operates. In 2014 the provision was reversed as these tax years concerned can no longer be challenged (2013: €4.1million).

Deferred taxes

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. (See also Note 17).

Acquisition of assets

In regard to the transaction detailed in note 5, the Group management and the Directors have reviewed the characteristics of the transaction and the properties over which control was regained by the Group, in accordance with the requirements of IRFS3(R). Although control over corporate entities was gained as a result of the transaction, these entities were special purpose vehicles for holding properties rather than separate business entities - this judgment was made mainly due to the absence of business processes inherent in these entities. Consequently, the Directors consider that the transaction meets the criteria of acquisition of assets and liabilities rather than business combination, and accounted for the transaction as such.

NOTE 4: ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS

A. Application of new and revised international Financial Reporting Standards (IFRSs)

1. Amendments to IFRSs and the new Interpretation that are mandatorily effective for the current year

In the current year, the Group has applied a number of amendments to IFRSs and a new Interpretation issued by the International Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after January 1, 2014.

Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities

The Group has applied the amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities for the first time in the current year. The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of 'currently has legally enforceable right of set-off' and 'simultaneous realisation and settlement'.

The amendments have been applied retrospectively. As the Group does not have any financial assets and financial liabilities that qualify for offset, the application of the amendments has had no impact on the disclosures or on the amounts recognised in the Group's consolidated financial statements. The Group has assessed whether certain of its financial assets and financial liabilities qualify for offset based on the criteria set out in the amendments and concluded that the application of the amendments has had no impact on the amounts recognised in the Group's consolidated financial statements.

Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets

The Group has applied the amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets for the first time in the current year. The amendments to IAS 36 remove the requirement to disclose the recoverable amount of a cash-generating unit (CGU) to which goodwill of other intangible assets with indefinite lives has been allocated when there has been on impairment or reversal of impairment of the related CGU. Furthermore, the amendments introduce additional disclosure requirements applicable to when the recoverable amount of an asset or a CGU is measured at fair value less costs of disposal. These new disclosures include the fair value hierarch, key assumptions and valuation techniques used which are in line with the disclosure required by IFRS 13 Fair Value Measurements.

The application of these amendments has had no material impact on the disclosures in the Group's consolidated financial statements.

Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting

The Group has applied the amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting for the first time in the current year. The amendments to IAS 39 provide relief from the requirement to discontinue hedge accounting when a derivative designated as a hedging instrument is novated under certain circumstances. The amendments also clarify that any change to fair value of the derivative designated as hedging instrument arising from the novation should be included in the assessment and measurement of hedge effectiveness.

The amendments have been applied retrospectively. As the Group does not have any derivatives that are subject to novation, the application of these amendments has had no impact on the disclosures or on the amounts recognised in the Group's consolidated financial statements.

IFRIC 21 Levies

The Group has applied IFRIC 21 Levies for the first time in the current year. IFRIC 21 addresses the issue as when to recognise a liability to pay a levy imposed by a government. The Interpretation defines a levy, and specifies that the obligating event that gives rise to the liability is the activity that triggers the payment of the levy, as identified by legislation. The Interpretation provides guidance on how different levy arrangements should be accounted for, in particular, it clarifies that neither economic compulsion nor the going concern basis of financial statements preparation implies that an entity has a present obligation to pay a levy that will be triggered by operating in a future period.

IFRIC 21 has applied retrospectively. The application of this Interpretation has no material impact on the disclosures or on the amounts recognised in the Group's consolidated financial statements.

2. New and revised IFRSs in issue but not yet effective

The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective:

· IFRS 9 Financial Instruments⁵

· IFRS 15 Revenue from Contracts with Customers⁴

· Amendments to IFRS 11

And IAS 38 Accounting for Acquisitions of Interests in Joint Operations³

· Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants³

· Amendments to IAS 19 Defined Benefit Plans: Employee Contributions¹

· Amendments to IFRSs Annual Improvements to IFRSs 2010-2012 Cycle²

· Amendments to IFRSs Annual Improvements to IFRSs 2011-2013 Cycle¹

1 Effective for annual periods beginning on or after July 1 2014, with earlier application permitted.

2 Effective for annual periods beginning on or after July 1 2014, with limited exceptions. Earlier application permitted.

3 Effective for annual periods beginning on or after July 1 2016, with earlier application permitted.

4 Effective for annual periods beginning on or after July 1 2017, with earlier application permitted.

5 Effective for annual periods beginning on or after July 1 2018, with earlier application permitted.

IFRS 9 Financial Instrument

IFRS 9 issued in November 2009 introduced new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition, and in November 2013 to include the new requirements for general hedge accounting. Another revised of IFRS 9 was issued in July 2014 mainly to include a) impairment requirements for financial assets and b) limited amendments to the classification and measurement requirements by introducing a 'fair value through other comprehensive income' (FVTOCI) measurement category for certain simple debt instruments.

Key requirements of IFRS 9:

· All recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured at FVTOCI. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods. In addition, under IFRS9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.

· With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liablitity is presented in other comprehensive income, unless the recognition of the effects of changes in the liability's credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability's credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss is presented in profit or loss.

· In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model, as opposed to an incurred loss model under IAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event th have occurred before credit losses are recognised.

· The new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available in IAS 39. Under IFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an 'economic relationship'. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity's risk management activities have also been introduced.

The directors of the Company anticipate that the application of IFRS 9 in the future may have a material impact on amounts reported in respect of the Group's financial assets and financial liabilities. However, it is not practicable to provide a reasonable estimate of the effect of IFRS 9 until the Group undertakes a detailed review.

IFRS 15 Revenue from Contracts with Customers

In May 2014, IFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related interpretations when it becomes effective.

The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue recognition.

· Step 1: Identify the contracts(s) with a customer.

· Step 2: Identify the performance obligations in the contract.

· Step 3: Determine the transaction price.

· Step 4: Allocate the transaction price to the performance obligations in the contract.

· Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.

Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when 'control' of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by IFRS 15.

The directors of the Company anticipate that the application of IFRS 15 in the future may have a material impact on the amounts reported and disclosures made in the Group's consolidated financial statements. However, it is not practicable to provide a reasonable estimate of the effect of IFRS 15until the Group performs a detailed review.

Annual Improvements to IFRSs 2010-2012 Cycle

The Annual Improvements to IFRSs 2010-2012 Cycle include a number of amendments to various IFRSs, which are summarised below.

The amendments to IFRS 3 clarify that consideration that is classified as an asset or a liability should be measured at fair value at each reporting date, irrespective of whether the contingent consideration is a financial instrument within the scope of IFRS 9 or IAS 39 or a non-financial asset or liability. Changes in fair value (other than measurement period adjustments) should be recognised in profit or loss. The amendments to IFRS 3 are effective for business combinations for which the acquisition date in on or after July 1 2014.

The amendments to the basis for conclusions of IFRS 13 clarify that the issue of IFRS 13 and consequential amendments to IAS 39 and IFRS 9 did not remove the ability to measure short-term receivables and payables with no stated interest rate at their invoice amounts without discounting, if the effect of discounting is immaterial. As the amendments do not contain any effective date, they are considered to be immediately effective.

The amendments to IAS 24 clarify that a management entity providing key management personnel services to a reporting entity is a related party of the reporting entity. Consequently, the reporting entity should disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. However, disclosure of the components of such compensation is not required.

The directors of The Company do not anticipate that the application of these amendments will have a significant impact on the Group's consolidated financial statements.

Annual Improvements to IFRSs 2011-2013 Cycle

The Annual Improvements to IFRSs 2011-2013 Cycle include a number of amendments to various IFRSs, which are summarised below.

The amendments to IFRS 3 clarify that the standard does not apply to the accounting for the formation of all types of joint arrangement in the financial statements of the joint arrangement itself.

The amendments to IFRS 13 clarify that the scope of the portfolio exception exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis includes all contracts that are within the scope of, and accounted for in accordance with, IAS 39 or IFRS 9, even if those contracts do not meet the definitions of financial assets or financial liabilities within IAS 32.

The amendments to IAS 40 clarify that IAS 40 and IFRS 3 are not mutually exclusive and application of both standards may be required. Consequently, an entity acquiring investment property must determine whether:

a) The property meets the definition of investment property in terms of IAS 40; and

b) The transaction meets the definition of a business combination under IFRS 3.

The directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group's consolidated financial statements.

NOTE 5: INVESTMENT PROPERTIES

A. Changes in years 2013 and 2014

		Euro in thousands

Balance at January 1, 2013		515,205

Disposal during the year (C)		(11,525)
Additions during the year		2,532
Fair value adjustments during the year		(5,058)
Balance at December 31, 2013		501,154

Additions during the year (D)		48,509
Reclassification to property held for sale (C)		(1,760)
Fair value adjustments during the year (*)		34,669
Balance at December 31, 2014		582,572

(*) Out of this an amount of €28 million is revaluation of assets which control was regained, for additional information see note 5D.

B. Fair value measurement of investment properties (Level 3 classification)

1. The fair value of investment property is determined at least once a year or when indications of value changes arise at the earliest, based on a valuation performed by independent reputable experts.

The valuation is performed using the income capitalisation method, which is a valuation based model on the present value of expected Net Operating Income per property. Real estate valuations are based on the net annual cash flows after capitalisation on discounted rates that reflects the specific risks inherent in property activity.

The valuations reflect the profile of the tenants which are legally committed to the lease agreement and the remaining economic life of the asset. The market rents used in the valuation vary per location, uses and condition of the property, age and level of finishing of various assets, even in the same building. Average rent in respect of office space can range from €4-22 per month per square meter; for retail properties, between €4-26 per month per square meter; for logistics properties between €2-16 per month per square meter. For office, commercial and logistics properties, discounted rates were ranging between 6.20 % -9.5%.

A number of factors contribute to the value of retail properties, such as national and local economic development, investment demand created by property investors, and interest rates.

While changes in investment properties' fair value have an effect on the Group's profit for the financial year, they do not have an immediate impact on cash flow.

The significant unobservable inputs used in the fair value measurement of the entity's investment properties are rents achieved at market (when these increase, an increase in properties value may occur), discount rates (when these increase, a decrease in properties value may occur) and occupancy rates (when these increase, an increase in property values may occur). Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value measurement. Sensitivity to change in the properties' fair value, or the risk associated with fair value, can be tested by altering the above key parameters. Furthermore, the effect of the change in each parameter is not necessarily similar - as such, changes in the rents and discount rates might have a more significant effect on the properties' value than similar change of the occupancy rates. In addition it is noted that changes in different parameters might occur simultaneously. For example a change in occupancy may connect to a change in market rents when they impact fair value simultaneously.

2. Supplemental information

Lettable area

	As December 31, 2014				As December 31, 2013
	Offices	Logistic	Retail	Total	Offices	Logistic	Retail	Total
	Sqm				Sqm

	375,485	257,125	97,676	730,286	302,561	262,873	81,461	646,895

Percent of total assets	52%	35%	13%	100%	47%	41%	12%	100%

Fair value - analysis by use

	As December 31, 2014				As December 31, 2013
	Offices	Logistic	Retail	Total	Offices	Logistic	Retail	Total
	Euro in thousands				Euro in thousands

	385,072	113,314	85,946	584,332	310,775	112,433	77,946	501,154

Percent of total assets	66%	19%	15%	100%	62%	22%	16%	100%

NOI - analysis by use

	As December 31, 2014				As December 31, 2013
	Offices	Logistic	Retail	Total	Offices	Logistic	Retail	Total
	Euro in thousands				Euro in thousands

	24,533	8,382	6,943	39,858	19,819	9,438	7,592	36,849

Percent of total assets	62%	21%	17%	100%	54%	26%	20%	100%

Adjustment to fair value - analysis by use

	As December 31, 2014				As December 31, 2013
	Offices	Logistic	Retail	Total	Offices	Logistic	Retail	Total
	Euro in thousands				Euro in thousands

	31,834	97	2,738	34,669	6,792	(3,891)	(8,114)	(5,213)

Percent of total assets	92%	-	8%	100%	(130%)	75%	155%	100%

Average rent

	Offices		Logistic		Retail
	As December 31,
	2014	2013	2014	2013	2014	2013

€/sqm/month	8	7.5	3.3	3.4	7.9	8.7

Range €	(3.5-21.6)	(3.5-20.9)	(2.3-15.7)	(2.2-15.7)	(3.9-25.7)	(3.5-25.7)

C. Disposals

In July, 2013 the Group sold a real estate property in Frankfurt, Germany, for approximately €10.6 million. The property of approximately 3,000 sqm was for commercial and office use.

In addition, the Group sold a non-yielding plot of unused land situated close to another Group property for about €430 thousand. The Group recorded profit in amount of €430 thousand (Included in other income in the profit and loss).

In November 2013 the Group sold a real estate property located in former East Germany, for €925 thousand.

In 2014 no properties were sold. A classification for held for sale was made in amount of approximately €1.8 million for further information see note 20E.

D. Additions during the year

The Group previously owned two portfolios over which, in 2012, the Group lost control due to breach of covenants (LTV). The relevant properties, which have been structurally ring-fenced, were then deconsolidated. In April 2014, the Group completed an acquisition of a loan facility that financed one of these previously owned portfolios, which was secured by 11 commercial properties in Germany. The total cost of the acquisition was approximately €45 million plus transaction costs. On acquisition of the loan facility, the Group gained full control over the 11 properties which were then revaluated to €73 million and it consolidated these from the second quarter of 2014 (see note 3 for details of the accounting treatment). Profit from revaluation of properties of approximately €28 million was recognized in profit or loss, in the Fair Value of Investment Properties line item.

On acquisition, the portfolio comprised mainly office properties throughout Germany. It has an aggregate Net Lettable Area of ca. 90,000 sqm and a current occupancy rate of 71%. The properties generate an aggregate Net Annual Rent of approximately €6.3 million.

The above transaction was first financed by Group funds which were then replaced in March 2015 with a 7 year term debt facility received by a German bank for 9 of the 11 portfolio properties. The new debt facility in the amount of €33m (of which €2.5m are subject to the future extension of certain leases) bears an interest rate of 1.96%.

NOTE 6: OTHER LONG-TERM ASSETS

A. OTHER FINANCIAL ASSETS AND FINANCIAL LIABILITIES

	December 31,
	2014	2013
	Euro in thousands
Other long-term financial assets:
Deposits in escrow ⁽¹⁾	-	266
Available-for-sale investment - unquoted equity shares ⁽²⁾	2,456	2,962
Long-term loans receivable ⁽³⁾	7,221	5,432
Other financial assets	1,099	1,258
Total long term financial assets	10,776	9,918

Other long-term financial liabilities:
Other Financial liabilities	2,220	2,226

(1) Deposits in escrow:

In 2013, the Group deposited amounts with a notary, in connection with acquisitions, until certain conditions are fulfilled. The deposits do not bear interest.

(2) Available-for-sale investment -unquoted equity shares:

Investments in Ordinary shares in related companies. Group interests in these companies were not accounted for using the equity method because of lack of significant influence (the Group has neither voting rights, nor representation in the management of these companies). The fair value of the investments at the end of the reporting period is based on the market values of the companies' investments in real estate.

In April, 2014 the Group sold part of this investment for a consideration of €1.1 million. The carrying amount of the relevant investment was €0.7 million.

(3) Long-term loans receivable

A subsidiary of the Group has an agreement to provide funding for three residential projects in Berlin up to a sum of €6.2 million (€1.7 million for the first project, € 1.9 million for the second and € 2.6 million for the third). The Group is entitled to a minimum interest rate of 15% plus a share in the projects' profits. The loans and accrued interest are repayable from the revenues of the projects, not later than May 2016.

Up to the December 31, 2014, the Group provided the above funding at its maximum amount and accrued the relating interest so that at the end of the reporting period the amounts receivable are €7 million.

To secure the recoverability of these loans, the Group received a lien over the shares of the entrepreneurial companies and lien rights over the projects and their income. In addition, the loans are secured by personal guarantees of shareholders of the entrepreneurial companies and the developers are obliged not to grant a lien naming rights over the project, except a lien in favour of the financing bank, and not to allot any securities of entrepreneurial companies without the consent of the Group.

During the reporting period the Group agreed to subordinate the loans it provided, in favour of a bank financing which was required for the projects.

The projects are in different stages of development. One of the projects reported actual sales of 96% of its units and the second has reported actual sales of 33% of its units. For the third project the sale has not yet begun.

B. INTANGIBLE ASSETS

The intangible assets including IT software and good will amounted in 2014 to €13 thousand (2013: €12 thousand).

C. PROPERTY, PLANT AND EQUIPMENT

The property, plant and equipment sum up at December 31, 2014 to 109€ (2013: 124€).

NOTE 7: INTEREST - BEARING LOANS AND BORROWING

Interest-bearing loans and borrowings (net of cost of raising loans):

			31 December
	Effective interest rate	Maturity	2014	2013
	%		Euro in thousands

Current:
Current maturities of long term loans	(*) 1.75-3.13	2015	4,007	6,260

Non-current:
Secured bank loans	(*) 1.75-3.13	2016-2021(**)	272,594	307,199

(*) Includes the effects of related interest rate swap as discussed hereunder.

(**) Amount of €204 million matures in 2021.

A. In February, 2013 the Company and Royal Bank of Scotland ("RBS") completed a re-financing of non-recourse debt of €401 million at refinancing date (and which included € 95 million due to be repaid during 2013). This debt financed 3 asset portfolios that included 88 assets of the Group (the: "RBS Facilities").

As a part of the transaction with RBS, the Company acquired through a subsidiary ("Gallia") a portion of RBS bank loan in the amount of €120 million ("B-NOTE" or "Junior Tranche") for a consideration of €90 million. As a result, Gallia became a creditor of the holding property subsidiaries ("property companies") holding the Junior Tranche of €120 million and RBS held the Senior Tranche of €281 million.

The Group liability to RBS was reduced by €120 million for a consideration of €90 million therefore the Group recorded a profit in 2013 of approximately €30 million. The interest rate swaps on these facilities (the "Old Swaps") became ineffective after the refinancing described above when their remaining notional matured in 2014. The hedging reserve related to the old swaps (€23 million) was recognised in profit and loss (financial expenses). Starting from the refinancing date (February 2013), the revaluation gain of the old swaps is recognised in profit and loss. New interest rate swaps were put in place to hedge against the floating interest of RBS loans.

The Group financed this transaction partly by a loan received from SHL in the amount of €46.5 million (the: "Shareholder Loan" or "SHL loan"). To finance the Shareholder Loan, SHL issued bonds (the: "Bonds") to the public with recourse. The terms of the Shareholders loans were back to back with the terms of the bonds, the shareholder loan agreement as well as the Bonds included various financial covenants.

The loan agreements included various covenants, including LTV, ICR, DSCR. The Group was also committed to sell or refinance with other lenders real estate properties valued at approximately €100 million until 2017, and certain restrictions of withdrawal from rent accounts were in place.

B. In December 2014 the Group refinanced the RBS loans detailed above with two German banks ("New Loans"), as follows:

1. New Loans have been received from two German financial institutions, in the amount of €240 million. The loans terms are detailed in paragraph 4 below.

2. The uncovered loan difference of approximately €33 million. has been acquired by the Company resulting in an increase of the Company's NAV by €13.5 million included in the Profit and Loss Statement of the Group under financing income.

3. The Group entered new hedging arrangements with the lenders (as per the requirement of the financing agreements) for a full cash flow hedge of floating interest. As a result of the repayment of the Old Loans, the hedging reserve accumulated due to prior hedging arrangements was reclassified to profit and loss resulting financing expense of €7.2 million.

4. The new loans have been provided under the following terms:

· A 7 years term with an amortisation rate of 3% resulting in a repayment amount of approximately €204 million in December 31, 2021.

· LTV (Loan to Value) 70%-75% until December 2018 and thereafter 70% should apply.

· Debt-To-Rent Ratio was fixed between 7.65-8.44.

· WAULT -a weighted average lease remaining term (WAULT) of at least 3 years has to be kept throughout the term of the loan.

To the date of this report the Company complies with all the Covenants above.

C. In 2014, the Group has made a partial early repayment of the shareholder loan in the amount of €3 million. The remaining shareholder loan amount of €44.5 million was repaid after the end of the reporting period. As a result, at the date of the approval of these financial statements the Group is no longer subject to the shareholder loan covenants.

The Group provided a bank guarantee of €2.1 million as of December 31, 2014 for the benefit of the bondholders, as required by the Deed of Trust. After the balance sheet date the guarantee was canceled, as a result of full repaid of the Series E bonds by the Company. (2013: €4.9 million)

D. The outstanding costs of raising loans as of December 31, 2014 are €4 million (2013: €1.1 million). These are presented net of interest-bearing loans and borrowings and amortised over the period of the loans.

E. In November 2013, the Company has refinanced a loan of €24 million which was due in 2014, to be payable on September 2018.

NOTE 8: TRADE RECEIVABLES

	December 31,
	2014	2013
	Euro in thousands

Trade receivables	4,793	3,030
Provision for doubtful debts	(2,446)	(1,253)
	2,347	1,777

Trade receivables are non-interest bearing and are generally 30-90 day terms.

As at 31 December, the ageing analysis of trade receivables is as follows:

	Total	< 30 days	30 - 60 days	60 - 90 day	90 - 120 day	>120 days
	Euro in thousands

2014	2,347	1,462	361	264	99	161
2013	1,777	375	304	419	173	506

Movements in the provision for doubtful debts:

		Euro in thousands

At January 1, 2013		1,832

Charge for the year		135
Utilised		(714)
At December 31, 2013		1,253

Charge for the year		1,200
Utilised		(37)
Acquisition of portfolio assets		30
At December 31, 2014		2,446

NOTE 9: PREPAID EXPENSES AND OTHER CURRENT ASSETS

	December 31,
	2014	2013
	Euro in thousands

Prepaid expenses	1,065	918
Service charge	3,850	2,347
Designated cash (*)	-	5,795
	4,915	9,060

(*) The balance was outstanding due to restrictions on rent accounts set in the financing agreements. This restriction was released following the refinancing in December 2014 as detailed in note 7.

NOTE 10: CASH AND CASH EQUIVALENTS

		December 31,
		2014		2013
		Euro in thousands

Cash at banks and on hand	9,736		21,263
Short-term deposits (*)	-		2,929
	9,736		24,192

(*) Deposits for varying periods of between one day and three months, depending on the immediate cash requirements of the Group.

NOTE 11: SHARE CAPITAL

a. The authorised share capital of the Group is represented by an unlimited number of Ordinary shares with no par value:

		Issued and outstanding
		Number of shares

At January 1, 2013		275,000,000
Share buyback ^(c)		(36,000,000)
At December 31, 2013		239,000,000
Issue of shares^(d)		54,971,291
At December 31, 2014		293,971,291

b. Distributable reserve:

The directors have elected to transfer all premiums arising from the issue of ordinary shares by the Company to a distributable reserve. This type of reserve is not specifically recognised within the Companies (Guernsey) Law, 2008.

In accordance with the Companies (Guernsey) law, 2008, any distribution is subject to a solvency test to determine whether the Company is able to distribute funds to shareholders.

c. In December 2013, the board of directors approved a buyback of 36,000,000 shares from Unifinter Administratiekantoor B.V at a share price of 59.55 cents. The parties agreed the consideration of this purchase to be offset against the outstanding receivables from Unifinter Administratiekantoor B.V. in amount of €21.4 million.

d. In February 2014, the Company issued 54,971,291 new ordinary shares at a price of 63c on the AIM Market of London Stock Exchange. Out of the new shares, 1,438,252 shares were issued to the Group's advisors for their services in connection with the admission. The net proceeds (net of issuance costs) amounted to €31 million.

After the end of the reporting period, the Company issued 171,428,571 ordinary shares at a price of 70c by matter of placing on the AIM market of the London Stock Exchange resulting in a raise of €120 million (excluding raising costs).

e. Dividends:

Following the Company's Admission to AIM, the Company has adopted a quarterly dividend policy.

During 2014 the Company distributed dividends in amount of €4.8 million (no dividends distributions were made during 2013).

After the end of the reporting period, the Company announced and distributed dividend of 1.2c per share. The total amount of €3.528 million has been paid to the shareholders in March 2015.

f. NAV and EPRA NAV:

	As of December 31, 2014		As of December 31, 2013
	€, thousands	€, per share	€, thousands	€, per share
NAV (*)	244,703	0.83	152,736	0.64
Financial derivative instruments (***)	5,055		11,909
Deferred Tax, net	5,623		2,707
EPRA NAV (**)	255,381	0.87	167,352	0.70

(*) Net Asset Value

(**) EPRA NAV is calculated based on the NAV excluding the effect of deferred taxes and the value of hedging instruments.

(***) Excluding Forex in respect of the shareholder's loan repaid after the end of the reporting period.

NOTE 12: EARNINGS PER-SHARE

The calculation of the basic and diluted earnings per share is based on the following data:

	Year ended December 31,
	2014	2013
	Euro in thousands
Earnings
Earnings for the purposes of basic earnings per share being net profit attributable to owners of the Company	67,655	22,207

	Year ended December 31,
	2014	2013
	In thousands

Number of shares
Weighted average number of ordinary shares for the purposes of the basic earnings per share	285,514	274,901

Earnings Per Share:	Year ended December 31,
	2014	2013
Basic (Euro per share)	0.237	0.081
Diluted (Euro per share)	0.237	0.081

There is no difference in the current year or the previous year between basic and diluted earnings per share.

NOTE 13: BALANCES AND TRANSACTIONS WITH RELATED PARTIES

	Amounts owed by related parties		Amounts owed to related parties
	December 31		December 31
	2014	2013	2014	2013
	Euro in thousands		Euro in thousands

Loan from related party (a)	-	-	44,464	44,675
Related parties (b)	191	271	8,438	225
	191	271	52,902	44,900

(a) The loan has been provided by SHL in 2013 in order to finance the acquisition of part of the RBS debt. The loan bears 9.5% interest as disclosed in note 7A. The balance including as at December 31, 2014, €1.7 million interest accrued on the SHL loan (see note 13 for further details). As of December 31, 2014 other trade payables include current maturities of SHL loan in the amount of €6.5 million.

After the end of the reporting period, the Group has resolved to exercise the given option for an early repayment of the shareholders loan and to repay the remaining loan amount of €44.5 million using part of the proceeds received as a result of the placing of shares in the AIM market of the London Stock Exchange in the beginning of 2015 as detailed in note 11 d above. The repayment included an early repayment fee amounting to approximately €4.5 million.

(b) The balance as at 31 December 2014 includes:

1. Amounts due to SHL, of approximately €7.5 million, out of which:

· €4.5 million are due to SHL from a cash injection to SGL, to finance the RBS refinancing transaction discussed in note 7.

· €1.4 million due to dividends payable in 2014.

· €1.6 million due to other transactions with SHL during 2014.

2. Provision for management fees to the management company, including performance based compensation (according to management agreement detailed in (d) below), in the amount of €970 thousand.

(c) In April 2014, the company Board of Directors approved a one-time bonus to the Company's Finance Director and to one of the Company's Directors in amount of €50 thousand Euros each, for their contribution to the IPO in February 2014.

(d) Compensation of key management personnel of the Company :

	2014	2013
	Euro in thousands

Professional fees to directors	170	90
Management fees	1,805	2,528
Total compensation paid to key management personnel	1,975	2,618

Assets Management Company and ultimate controlling party:

At the date of this report Summit Real Estate Holdings Ltd which holds approximately 79.17% of the Ordinary shares in the Company. SHL is under the control of Mr. Zohar Levy, a director of the Group. Summit Management CO S.A. ("SMC"), a company controlled by Zohar Levy, was appointed as an Asset Manager on 19 May 2006. The terms of this appointment were revised in February 2014.

Terms and conditions of the management agreement

The management agreement was amended in February 14, 2014 in preparation for Admission to AIM. According to the amendment of the agreement, SMC is responsible for providing certain public company services and advisory services to the Group, including the services of the Group's Managing Director and Finance Director, Zohar Levy and Sharon Marckado Erez respectively.

During the fourth quarter of 2014 Sharon Marckado Erez has resigned and Mr Itay Braun has been appointed as Finance Director of the Company.

Since the Admission of the company, SMC is entitled to an advisory fee equal to €750,000 per annum, payable quarterly, and to a performance-based bonus of up to €750,000 per annum depending on certain performance criteria (as detailed below). The advisory fee reflects the asset management costs on the level of SMC including the cost of employment of the Managing Director and the Finance Director.

The annual bonus may be payable in each accounting year, where the amount of €750,000 is the "Maximum Bonus" based on hurdles to be determined by the remuneration and nomination committee of the Group, save that in respect of the accounting year ending December 31, 2014 the bonus shall be payable if the Group's Funds From Operations ("FFO") is equal to or greater than 112% of the FFO for the year ending December 31, 2013 ("Base FFO"). Where the Company's FFO in the accounting year ending December 31, 2014 is above the Base FFO but less than 112% of the Base FFO, SMC shall be entitled to an amount equal to the pro-rata proportion of the Maximum Bonus. Any Bonus which SMC is entitled to receive in any relevant accounting year shall be reduced by an amount equal to any carried interest amount paid to SMC pursuant to the articles of association of SFL in respect of the same accounting year, provided that any Bonus shall not be reduced to less than zero.

As at December 31, 2014 the performance criteria were met and the Group included a provision for a performance-based bonus of €750,000 in the amounts due to related parties.

Terms and conditions of the management agreement (Cont.)

The articles of association of SFL ("SFL Articles") contain certain provisions which relate to SMC's carried interest entitlement in respect of their services provided under the initial Portfolio Management Agreement from 2006. SMC holds special B shares in Summit Finance Limited which will give it the right to receive a carried interest if the Company distributes a cash return on shareholders' equity of at least 8% in any financial year ("the Hurdle"). SMC will be entitled to receive 25% of the cash return in that year in excess of the Hurdle after deducting the carried interest entitlement. If the Company has not achieved a cash return on shareholders' equity of at least 8% in any previous year ("a Shortfall"), the carried interest will not be paid until the Shortfall has been made up. Where such fees arise, they are charged to the consolidated statement of comprehensive income. No amounts were ever due in respect of aforementioned. As of December 31, 2014, the Shortfall is approximately €168.6 million. Therefore, the likelihood that SMC would be entitled to receive any carried interest is extremely low.

SFL articles were amended so SMC's entitlement to receive any carried interest payable is by virtue of its ownership of B shares in SFL. The SFL Articles and the amended Portfolio Management Agreement provide that the B shares may be held by whoever is the appointed asset manager under the Portfolio Management Agreement or any other asset or portfolio management agreement to which the Group is a party from time to time.

NOTE 14: TRADE AND OTHER PAYABLES

	December 31,
	2014	2013
	Euro in thousands

Accrued expenses	2,726	1,947
Accrued interest (*)	1,995	4,247
Service charge prepayments	3,648	1,589
VAT	648	515
Provision for maintenance	4,336	4,016
Other trade payables (*)	9,809	6,354
	23,162	18,668

(*) As at December 31, 2014, €1.7 million interest accrued on the SHL loan (see note 13 for further details). As of December 31, 2014 other trade payables include current maturities of SHL loan in the amount of €6.5million. After the reporting date, the SHL loan, as described in note 13 was fully repaid.

NOTE 15: GENERAL AND ADMINISTRATIVE EXPENSES

	Year ended December 31,
	2014	2013
	Euro in thousands

Management and directors' fees (a)	1,975	2,618
Professional fees (b)	1,005	1,084
Salaries	2,442	2,343
Administration fees	89	102
Other expenses (income) (c)	607	(1,654)
Office expenses	171	165
	6,289	4,658

(a) See note 13 for details of the amendment to the management agreement signed in February 2014.

(b) Professional fees include audit fees in the amount of €360 thousand (2013: €327 thousand).

NOTE 16: FINANCIAL EXPENSES (INCOME)

	Year ended December 31,
	2014	2013
	Euro in thousands
Financial expenses:
Interest on bank borrowings	20,903		25,637
Cost of raising loans -amortization	690		1,048
Ineffective hedging instruments reserve (a)	7,220		10,887
Other	637		444
Total financial expenses	29,450		38,016

:Financial income
Interest income on short-term deposits	105		64
Income from refinancing (see note 7B)	13,496		30,000
Hedging reserve (b)	11,661		-
Income from marketable securities	1,340		4,426
Income on currency exchange	1,913		710
Other	1,570		728
Total financial income	30,085		35,928

(a) In 2013, the hedging reserve related to the old ineffective hedging instruments (see note 7A) was recognised in the financial expenses in the profit and loss, in amount of €11.7 million.

(b) As a result of new hedging agreements signed in December 2014 as part of the refinancing transaction (note 7B 3) the hedging reserve which was outstanding as of the refinancing transaction date was reclassified to the profit and loss, in amount of €7.2 million. The total effect of the swap transactions detailed above on the financial statements sum up to ca. €4.5 million financial income.

NOTE 17: TAXATION

A) Taxes on income recognized in the consolidated statement of comprehensive income:

	Year ended December 31,
	2014	2013
	Euro in thousands

Current income tax:
Current income tax charge	171	20

Deferred income tax (See C):
Relating to origination and reversal of temporary differences	2,927	45

Income tax expense reported in the statement of comprehensive income	3,098	65

B) A reconciliation between the tax benefit in the consolidated statement of comprehensive income and the profit before taxes multiplied by the current tax rate can be explained as follows:

	Year ended December 31,
	2014	2013
	Euro in thousands

Profit before taxes on income	73,979	23,890

Tax at the statutory tax rate in Germany (15.825%)	11,707	3,781
Increase (decrease) in respect of:
Losses for which deferred taxes were not recorded	14,356	2,448
Utilisation of tax losses for which deferred tax were not recorded in the past	(1,231)	(2,903)
Effect of lower tax rate	(12,908)	(2,202)
Deferred taxes not recognised due to revaluation of investment properties and other income	(4,394)	3,166
Non-deductible expense	(2,752)	(3,534)
Deferred tax reverse	815	-
Difference between tax and reporting GAAP	(3,286)	(966)
Adjustments in respect to current income tax of previous years	-	138
Other	791	137
Income tax expense	3,098	65

C) Deferred income tax:

	Consolidated statement of financial position
	2014	2013
	Euro in thousands
Deferred tax asset (liability)
Revaluations of investment properties to fair value	(12,095)	(9,410)
Losses carried forward	5,272	4,112
Revaluations of financial instruments	196	1,360
Provisions	706	743
Other	298	489
Deferred tax assets (liabilities), net	(5,623)	(2,706)

The Group offsets deferred tax assets and liabilities when these are originated by the same tax entity. After offsetting such assets and liabilities, the net balances are:

	Consolidated statement of financial position
	2014	2013
	Euro in thousands
Deferred tax asset	565	690
Deferred tax liability	(6,188)	(3,396)

	Consolidated statement of comprehensive loss (income)
	2014	2013
	Euro in thousands
Deferred tax asset (liability)
Revaluations of investment properties to fair value	2,592	766
Losses carried forward	(949)	(592)
Revaluations of intangible assets	100	100
Revaluations of financial instruments	1,056	7
Provisions	128	(43)
Other	-	(193)
Increase in deferred tax, net	2,927	45

	Other comprehensive loss
	2014	2013
	Euro in thousands
Deferred tax asset (liability)
Revaluations of financial instruments	196	1,486
Ineffective swap	-	13
Increase in deferred tax, net	196	1,499

D) Based on the Group's expectations, future sales of investment properties will be implemented through a sale of the shares of the company owning the assets, rather than a direct sale of the assets. Therefore, for the purpose of calculating deferred taxes the tax rate applicable to the sale of shares was used. This policy was implemented regarding all of the Company's holdings in investment properties, except for its holding through "Deutsche Real Estate AG" (a subsidiary purchased in August 2007), for which the Group has a different legal structure

E) Group's carried forward tax losses which deferred taxes were not created for, are €81 million, (during 2013: €49 million).

No deferred tax assets were recognized with respect to those tax losses carry forward since their utilisation is uncertain.

NOTE 18: FINANCIAL INSTRUMENTS

The Group's principal financial liabilities, other than derivatives, comprise mainly bank loans, and trade payables. The main purpose of these financial liabilities is to raise finance for the Group's operations. The Company has various financial assets such as trade receivables and cash and short-term deposit. As to derivative transactions, see Note 7.

The main risks arising from the Group's financial instruments are market risk, credit risk and liquidity risk as summarized below.

Market risk:

Market risk is the risk that the fair value of future cash flows of financial instruments will fluctuate because of changes in market prices. Market prices comprise two types of risks that are relevant to the Company: Interest rate risk and Price risk.

· Interest rate risk:

The Group's exposure to the risk of changes in market interest rates relates primarily to the Group's long-term debt obligations with floating interest rates.

The Group's policy is to fix the interest rate of its bank loans by entering into fixed interest rate loan agreements and by entering into interest rate swaps, in which the Group agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount. At December 31, 2014 after taking into account the effect of interest rate swaps, the majority of the Group's borrowings are at a fixed rate of interest. All interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest amounts are designated as cash flow hedges in order to reduce the Group's cash flow exposure resulting from variable interest rates on borrowings. The interest rate swaps and the interest payments on the loan occur simultaneously and the amount accumulated in equity is reclassified to profit or loss over the period that the floating rate interest payments on debt affect profit or loss.

However, fixing the interest rates of bank loan agreements exposes the Group to market risk on changes in fair value of the swap.

Sensitivity of changes in swap interest rate

	effect
	5% increase in swap interest rate	5% decrease in swap interest rate
	Euro in thousands

2014	(850)	850
2013	512	(512)

· Price risk:

The Group's marketable securities and available for sale financial instruments are susceptible to price risk arising from uncertainties about future values of the investment in those instruments. The Group manages the equity price risk through diversification and placing limits on individual and total equity instruments. The Company's senior management monitors value and extent of such investments on an ongoing basis.

The sensitivity analysis below has been determined based on the exposure to equity price risks at the end of the reporting period:

Sensitivity of changes in equity price

	Profit (losses) impact
	5% increase in equity price	5% decrease in equity price
	Euro in thousands

2014	62	(62)
2013	486	(486)

· Credit risk:

Credit risk is the risk that counterparty will not meet its obligations, as reflected as of the period end in Group's financial statements, under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities.

The Group performs ongoing credit evaluations of its lessees and the financial statements include specific allowances for doubtful accounts which, in management's estimate, adequately reflect the underlying loss of debts whose collection is doubtful.

The Group does not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are related entities.

Credit risk on investments in marketable securities is limited as investments are in high credit rating and usually represent asset backed securities or guarantees. Diversity and credit rating are monitored on an ongoing basis.

The carrying amount of financial assets recognised in financial statements net of impairment losses represents Group's maximum exposure to credit risk, without taking into account collateral or other credit enhancements held.

Collateral and other credit enhancements are obtained in most cases, pursuant to management assessment of the client's credit quality and an assignment of its credit limits.

Liquidity risk:

The table below summarises the maturity profile of the Group's financial liabilities at December 31 2014 based on contractual undiscounted payments.

	As at December 31, 2014
	Up to 1 year	1-2 years	2-3 years	3-4 years	> 4 years	Total
	Euro in thousands

Interest bearing loans and borrowings	20,561	21,511	23,750	45,251	256,667	367,740
Trade and other payables	24,248	-	-	-	-	24,248
Other liabilities	60	-	-	-	-	60
Payables to related parties and shareholders	8,438	-	-	-	-	8,438
	53,307	21,511	23,750	45,251	256,667	400,486

The tables below summarises the maturity profile of the Group's financial liabilities at 31 December 2013 based on contractual undiscounted payments.

	As at December 31, 2013
	Up to 1 year	1-2 years	2-3 years	3-4 years	> 4 years	Total
	Euro in thousands

Interest bearing loans and borrowings	20,773	18,919	20,076	273,776	39,165	372,709
Trade and other payables	30,984	-	-	-	-	30,984
Other liabilities	4,609	-	-	-	-	4,609
Payables to related parties and shareholders	225	-	-	-	-	225
	56,591	18,919	20,076	273,776	39,165	408,527

Capital management:

The primary objective of the Group's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

The Group is not subject to any externally imposed capital requirements.

No changes were made in the objectives, policies or processes during the years end December 31, 2014 and December 31, 2013.

The gearing ratios at 31 December 2014 and 31 December 2013 were as follows:

	2014	2013
	Euro in thousands

Non current interest bearing loans and borrowings	312,795	349,119
Current liabilities	11,599	21,331
Less cash and short term deposits	(9,736)	(24,192)

Net debt	314,658	346,258

Equity	255,029	160,131

Total capital	569,687	506,390

Gearing ratio	55.2%	68.4%

Fair value of financial instruments and non financial instruments:

Fair value of financial instruments carried at amortised cost:

The directors consider that the carrying amounts of financial assets and financial liabilities recognised at amortised cost in the financial statements approximate their fair values.

Fair value measurements recognised in the statement of financial position:

The financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 2 and 3 based on the degree to which the fair value is observable.

· Level 1 fair value measurements marketable securities are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

· Level 2 fair value measurements (swaps) are derived from inputs other than quoted prices that are observable for those instruments directly (i.e. as prices).

· Level 3 fair value measurements (available-for-sale investment - unquoted equity share) are derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

	December 31, 2014
	Level 1	Level 2	Level 3	Total
	Euro in thousands
Non - Financial assets:
Investment properties (see note 5)	-	-	584,332	584,332
Available-for-sale financial assets
Unquoted equity shares ^(a)	-	-	2,456	2,456

Hedging instruments:
Foreign currency exchange instruments	-	774	-	774

Financial Assets carried at fair value through profit or loss
Marketable securities ^(b)	1	-	-	1
Total	1	774	586,788	587,563
Financial liabilities
Derivative instruments - swaps ^(c)	-	5,055	-	5,055

(a) The change in unquoted equity shares from December 31, 2014 resulted mainly from the sale of a 50% financial participation for amount of €1.1 million. During 2014 the Group has recorded an increase in value of investment in the unquoted equity in the amount of €569 thousand (During 2013: €355 thousand) presented in other comprehensive income - net profit (loss) arising on revaluation of available for sale financial asset.

(b) In November 2014 the Company sold its securities of Summit Real Estate Holdings to a related party at fair value, the proceeds used to finance partly repayment of the shareholders loan as detail in note 13.

During 2014, the Group recorded income from Marketable Securities in the amount of €1.3 million (During 2013: €4.4 million).

While entering the original credit facilities in 2006, the Group contracted hedging instruments under the form of "Interest rate swaps" at a fixed rate of 0.9%-1.2% up to the initial repayment date.

The interest rate swap agreements had been contracted in order to protect the Group from an increase in the interest rate. The interest rate swaps meets the criteria of hedging instrument under IAS 39 and are therefore reported at fair value through other comprehensive income.

The calculation of fair value for derivative financial instruments depends on the type of instruments: Derivative interest rate contracts - The fair value of derivative interest rate contracts (e.g., interest rate swap agreements) are estimated by discounting expected future cash flows using current market interest rates and yield curve over the remaining term of the instrument.

Following the refinancing of the major 3 credit facilities of the group (as detailed in note 1), the Group contracted new hedging instruments under the form of "Interest rate swaps" at a fixed rate of 0.9%-1.2% from the initial repayment date to the new repayment date at the end of 2021.

€1,086 thousand (2013: €12,316 thousand) of the balance is presented in current liabilities, and €3,969 thousand in non-current liabilities (2013: €407 thousand in other long-term financial assets).

	December 31, 2013
	Level 1	Level 2	Level 3	Total
	Euro in thousands
Non - Financial assets:
Investment properties (see note 5)	-	-	501,154	501,154
Available-for-sale financial assets
Unquoted equity shares	-	-	2,962	2,962

Hedging instruments:
Foreign currency exchange instruments	-	1,236	-	1,236
Derivative instruments	-	407	-	407

Financial Assets carried at fair value through profit or loss
Marketable securities	9,345	-	-	9,345
Total	9,345	1,643	504,116	515,104
Financial liabilities
Derivative instruments - swaps	-	(12,316)	-	(12,316)

NOTE 19: OPERATING LEASE

Operating Lease- Group as Lessor

The Group has entered into commercial property leases on its investment property portfolio. These non-cancellable leases have remaining average terms of between 1 and 20 years (the average non-cancellable lease length is 4 years). The majority of the leases include a clause to enable upward revision of the rental charge on an annual basis according to the price index or a fixed increase rate.

Future minimum rentals receivable under non-cancellable operating leases are as follows:

	Euro in thousands
	For the year ended December 31, 2014	For the year ended December 31, 2013

Within one year	46,559	35,439
After one year but not more than five years	112,376	86,595
More than five years but not more than ten years	39,423	34,552
More than ten years but not more than fifteen years	4,136	5,050
More than fifteen years	1,699	78
	204,193	161,714

The increase in future minimum rentals receivable is mainly due to the acquisition of a portfolio of 11 commercial properties as detailed in Note 5.

NOTE 20: SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

A. Distribution of Dividends

After the reporting date, the Company distributed dividend of 1.2c per share. For further details please see note 11(e).

B. After the reporting date, the Company successfully completed a capital raise of €120 million through a placing on the AIM Market of London Stock Exchange. For further details please see note 11(d).

C. In March 2015, the Group successfully completed the financing of 9 out of 11 commercial properties by a German bank amounting to €33m of which €2.5m are subject to the future extension of certain leases, with a seven year facility at an interest rate of 1.96%. See also note 5(D).

The new loans have been provided under the following terms:

• A 7 years term with an amortization rate of 3% resulting in a repayment amount of approximately €24 million in March 31, 2022.

• LTV (Loan to Value) covenant of 65% should apply.

• Debt service coverage ratio ("DSCR") was fixed at 125%.

• WAULT -a weighted average lease remaining term (WAULT) of at least 3 years has to be kept throughout the term of the loan.

D. After the reporting date, the SHL loan, as described in note 13 was fully repaid.

E. Disposals

On January 26, 2015 a Group subsidiary sold a real estate asset located in Baiersbronn. The asset was vacant since July 2013, and yielded a rent income in 2013 of €35 thousands. The real estate asset was sold at its book value.

On February 10, 2015 a Group subsidiary sold an asset in Selters, Germany, for its book value. The property of approximately 3,736 sqm was for retail use, the net rental income in 2014 was €145 thousand.

NOTE 21: THE COMPANY'S HOLDINGS AS OF DECEMBER 31, 2014

Principal activity

Country of incorporation

Direct and indirect holdings %

Summit Finance Limited

Intermediate holding company

Guernsey

100%

Neston (International) Limited

Intermediate holding company

Gibraltar

100%

Summit Luxco s.a.r.l

Intermediate holding company

Luxembourg

100%

Summit LoanCo LTD

Inter group financing company

Guernsey

100%

Gallia invest Sarl

Inter group financing company

Luxembourg

100%

Summit Stern Guernsey Ltd.

Intermediate holding company

Guernsey

100%

Summit RE Two GmbH

Intermediate holding company

Germany

100%

Summit Real Estate Gold GmbH

Intermediate holding company

Germany

94.8%

Summit Re One GmbH

Intermediate holding company

Germany

100%

Summit Real Estate Silver GmbH

Intermediate holding company

Germany

94.8%

Summit RE Three GmbH

Intermediate holding company

Germany

100%

Summit Real Estate Bronze GmbH

Intermediate holding company

Germany

94.8%

Summit Real Estate Magdebug GmbH (*)

Intermediate holding company

Germany

100%

Summit Real Estate Hauau GmbH (*)

Intermediate holding company

Germany

100%

Summit RE Four GmbH

Inter group financing company

Germany

100%

Summit RE Five GmbH

Intermediate holding company

Germany

100%

Summit Real Estate Platinum GmbH

Shelf company

Germany

94.8%

Summit Real Estate Titanum GmbH

Shelf company

Germany

94.8%

M.S.C Objekt Magdeburg GmbH & (*)

Real Estate company

Germany

99.7%

M.S.C Objekt Hanau GmbH (*)

Real Estate company

Germany

99.7%

RE One Finance GmbH

Inter Group Financing company

Germany

100%

RE Tree Finance GmbH

Inter Group Financing company

Germany

100%

Summit Real Estate Hirundo GmbH

Shelf company

Germany

94.8%

Summit Real Estate Blue GmbH

Real Estate company

Germany

99.7%

Summit Real Estate Orange GmbH

Real Estate company

Germany

99.7%

Summit Real Estate Yellow GmbH

Real Estate company

Germany

99.7%

Summit Real Estate White GmbH

Real Estate company

Germany

99.7%

Summit Real Estate Red GmbH

Real Estate company

Germany

99.7%

Summit Real Estate Purple GmbH

Real Estate company

Germany

99.7%

Summit Real Estate Black GmbH

Real Estate company

Germany

99.7%

Summit RE GmbH & Co. Black 1KG

Real Estate company

Germany

99.7%

Summit RE GmbH & Co. Black 2KG

Real Estate company

Germany

99.7%

Summit RE GmbH & Co. Black 3KG

Real Estate company

Germany

99.7%

BDPE S.a.r.l (*)

Real Estate company

Luxembourg

99.7%

Summit Real Estate Cammarus GmbH

Intermediate holding company

Germany

99.7%

Summit Real Estate Brown GmbH

Real Estate company

Germany

99.7%

Summit Real Estate Indigo GmbH

Real Estate company

Germany

99.7%

Summit Real Estate Maroon GmbH

Real Estate company

Germany

99.7%

Summit Real Estate Lime GmbH

Real Estate company

Germany

99.7%

Summit Real Estate Azure GmbH

Real Estate company

Germany

99.7%

Summit Real Estate Alpha GmbH

Real Estate company

Germany

99.7%

Summit Real Estate Lilac GmbH

Real Estate company

Germany

99.7%

Summit Real Estate Delta GmbH

Real Estate company

Germany

99.7%

Summit Real Estate Gamma GmbH

Real Estate company

Germany

99.7%

Lommy GmbH

Real Estate company

Germany

99.7%

(*) From December 2012 these companies weren't included in the consolidated financial statements of the company.

	Principal activity	Country of incorporation	Direct and indirect holdings %

Summit Real Estate Amber GmbH	Real Estate company	Germany	99.7%
Summit Real Estate Lavender GmbH	Real Estate company	Germany	99.7%
Summit Real Estate Magenta GmbH	Real Estate company	Germany	99.7%
Summit Real Estate Ruby GmbH	Real Estate company	Germany	99.7%
Summit Real Estate Epsilon GmbH	Real Estate company	Germany	99.7%
Summit Real Estate Krypton GmbH	Real Estate company	Germany	99.7%
Summit Real Estate BOS GmbH	Real Estate company	Germany	99.7%
Summit Real Estate Delphinus GmbH	Real Estate company	Germany	99.7%
Summit Real Estate Formica GmbH	Real Estate company	Germany	99.7%
Summit Real Estate Grey GmbH	Real Estate company	Germany	99.7%
Grundstucksgesellschaft Gewerbepark Hansalinie GmbH	Real Estate company	Germany	99.7%
Summit Real Estate Kappa GmbH	Real Estate company	Germany	99.7%
Summit Real Estate Lupus GmbH	Real Estate company	Germany	99.7%
Summit Real Estate Omega GmbH	Real Estate company	Germany	99.7%
Summit Real Estate Papilio GmbH	Real Estate company	Germany	99.7%
Summit Real Estate Salmo GmbH	Real Estate company	Germany	99.7%
Summit Real Estate Ursus GmbH	Real Estate company	Germany	99.7%
Summit Real Estate Zeta GmbH	Real Estate company	Germany	99.7%
Gadelander Str. 77 Projekt GmbH	Real Estate company	Germany	99.7%
Cottbuser Str. 1 Projekt GmbH	Real Estate company	Germany	5.2%
Summit Real Estate Camelus GmbH	Real Estate company	Germany	99.7%
Summit Real Estate Hamburg GmbH	Real Estate company	Germany	99.7%
Deutsche Real Estate AG	Intermediate holding company	Germany	78.47%
Summit Real Estate Lambda GmbH	Intermediate holding company	Germany	100%
W2005 Projectpauli GmbH	Intermediate holding company	Germany	99.33%
W2005 Pauli 1 BV	Intermediate holding company	Netherlands	94.90%
DRESTATE Objekt Berlin, Friedrichstraße GmbH & Co. KG	Real Estate company	Germany	78.47%
GET Grundstücksgesellschaft mbH	Intermediate holding company	Germany	47.08%
DRESTATE Objekt Hamburg, Mendelssohnstraße GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Objekt Stuttgart, Rosensteinstraße GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Objekt Berlin, Hauptstraße GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Objekt Düsseldorf, Bonner Straße GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Objekt Limburgerhof, Burgunderplatz GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Objekt Ludwigshafen, Carl-Bosch-Straße GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Objekt Böblingen, Otto-Lilienthal-Straße GmbH & Co. KG	Real Estate company	Germany	78.47%
GbR Heidelberg, Mannheimer Straße	Real Estate company	Germany	68.66%
DRESTATE Objekte Erste GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Objekt Saarbrücken, Kaiserstraße GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Objekt Saarbrücken, Hafenstraße GmbH & Co. KG	Real Estate company	Germany	78.47%

	Principal activity	Country of incorporation	Direct and indirect holdings %

DRESTATE Objekt Berlin-Teltow, Potsdamer Straße GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Objekt Norderstedt, Kohfurth GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Objekte Hamburg Vierundzwanzigste GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Objekte Zweite GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Objekt München, Maria Probst Straße GmbH & Co. KG	Real Estate company	Germany	78.47%
Achte TAXXUS Real Estate GmbH	Intermediate holding company	Germany	78.47%
DRESTATE Objekt Seesen, Rudolf-Diesel-Straße GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Carreé Seestraße GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Services GmbH	Real Estate company	Germany	78.47%
Objekt Verwaltungs GmbH Deutsche Real Estate	Intermediate holding company	Germany	39.24%
DRESTATE Objekte Dritte GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Objekte Vierte GmbH & Co. KG	Real Estate company	Germany	78.47%
Deutsche Shopping GmbH & Co. KG	Intermediate holding company	Germany	78.47%
Verwaltungsgesellschaft Objekte DRESTATE mbH	Intermediate holding company	Germany	39.24%
K-Witt Kaufzentrum Wittenau GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Objekt Worms, Am Ochsenplatz GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Objekt Gießen-Linden, Robert-Bosch-Straße GmbH & Co. KG	Real Estate company	Germany	78.47%
K-Witt Kaufzentrum Wittenau II GmbH & Co. KG	Real Estate company	Germany	78.47%
DRESTATE Objekt Hamburg, Osterfeldstraße GmbH & Co. KG	Real Estate company	Germany	48.97%
DRESTATE Objekt Hamburg Pinkertweg GmbH	Real Estate company	Germany	78.47%
Grit 68. Vermögensverwaltungs GmbH	Intermediate holding company	Germany	78.47%
Verwaltung K-Witt Kaufzentrum Wittenau II GmbH	Intermediate holding company	Germany	78.47%
Beteiligungsgesellschaft Pinkertweg GmbH & Co. KG	Intermediate holding company	Germany	78.47%
Verwaltungsgesellschaft DRESTATE mbH	Residual Company	Germany	78.47%
DRESTATE Wohnen GmbH	Residual Company	Germany	78.47%
Verwaltungsgesellschaft Deutsche Real Estate mbH	Residual Company	Germany	78.47%
Object Verwaltungsgesellschaft 2013 Drestate mbH	Intermediate holding company	Germany	39.24%
DRESTATE Finance GmbH	Inter group financing company	Germany	78.47%
BAKOLA Miteigentumsfonds I Objekt Duisburg - Averdunk	Financial Participation	Germany	54.98%

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