KPMG - IERE

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INVISTA EUROPEAN REAL ESTATE TRUST SICAF Notes to the Consolidated Financial Statements as at 30 September 2006 20. Related party transactions The Group has related party transactions with its subsidiaries (see note 24), shareholders and directors. Directors of the Company and its subsidiaries were paid a total of A20,000 in directors’ fees during the period. This remuneration is included in general and administrative expenses. No director owns shares in the Company or any of its subsidiaries at the date of the balance sheet. Invista REIM acts as the Investment Manager of the Group. Both the Company and Invista REIM are controlled indirectly by Halifax Bank of Scotland plc as ultimate parent. Invista REIM were paid an investment management fee of A1,520,000 (see note 14.2). The Company entered into the Bank Facility with The Governor and the Bank of Scotland plc on 6 July 2005 which will be amended on Admission to make available a further two year term loan of A420 million until 31 December 2008. Both Bank of Scotland and the Company are controlled by Halifax Bank of Scotland plc. Furthermore, the Company has entered into interest swap transactions with Halifax Bank of Scotland Treasury Services Plc. In addition, the Company borrowed from its shareholders amounts under Shareholder Loan arrangements (see note 10). 21. Commitments During the period the Company has also entered into contracts to acquire investment properties after the balance sheet date in Lutterberg, (Germany), Prague (Czech Republic), Warsaw (Poland), Tiel (the Netherlands), Amsterdam (the Netherlands), Girona (Spain) and Rheda-Wiedenbruck (Germany) for an estimated total gross cost of A104.5 million. These commitments exclude the acquisitions referred to in the post balance sheet events note 22. 22. Events after the balance sheet date One of the Company’s principal subsidiaries, Solingen Logistik-Zentrum GmbH, was converted into a limited partnership, Solingen Logistik-Zentrum Gmbh & Co KG on 12 October 2006. On 26 October 2006 this partnership was dissolved and its assets and liabilities were merged into Insight European RE Solingen Propco S.àr.l. On 16 October 2006 the Company acquired two properties in Grenoble, France. On 19 October 2006 the Company committed to the purchase of an investment property in Riesa, Germany. On November 3, 2006 the Company also committed to the purchase of an investment property in Roth, Germany. The Company is due to complete the purchase of an investment property in Cergy, St Christophe, France on November 8, 2006. The estimated total gross cost of these assets is A154.6 million. On 19 October 2006 the Company hedged a further A20,786,000 of borrowings for a term of seven years at a rate of 3.90 per cent. The Shareholders plan to convert their Shareholder Loans (note 10) into Shares immediately prior to Admission in December 2006. The Shareholder Loans will be valued at face value. 23. Contingencies Dispute with tenant The Company has recently become involved in dispute with a tenant of one of the Group’s properties who has brought a claim on 17 September 2006 in respect of damages caused by defects in the leased property. An independent expert has yet to be appointed to establish an estimate of the defects, respective liabilities and the damage suffered by the tenant. It is the Directors’ intention to recover the cost of any such damages payable by the Group to the tenant from the seller of the original property, under the purchase agreement. 97
INVISTA EUROPEAN REAL ESTATE TRUST SICAF Notes to the Consolidated Financial Statements as at 30 September 2006 The Directors are of the opinion, given the early stage of the dispute that it is not possible to currently determine any net cost accruing to the Group and consequently no provision has been booked in the financial statements. 24. List of the fully consolidated subsidiaries * Invista European Real Estate Holdings S.à r.l., Luxembourg (100%) * Invista European Real Estate Finance S.à.r.l., Luxembourg (100%) * Invista European RE Heusenstamm Propco S.à.r.l., Luxembourg (100%) * Invista European RE Marseille Propco S.à.r.l., Luxembourg (100%) * Invista European RE Lyon Propco S.à.r.l., Luxembourg (100%) * Invista European RE Solingen Propco S.à.r.l., Luxembourg (100%) * Invista European RE Nanteuil Propco S.à.r.l., Luxembourg (100%) * Invista European RE Monheim Propco S.à.r.l., Luxembourg (100%) * Invista European RE Lutterberg Propco S.à.r.l., Luxembourg (100%) * Invista European RE Villeurbanne Holdco S.à r.l., Luxembourg (100%) * Invista European RE Villeurbanne Propco S.à r.l., Luxembourg (100%) * Invista European RE Delta Holdco S.à r.l., Luxembourg (100%) * Invista European RE Delta Propco S.à r.l., Luxembourg (100%) * Invista European RE Riesapark Propco S.à r.l., Luxembourg (100%) * Invista European RE Roth Propco S.àr.l., Luxembourg (100%) * Invista European RE Monbonnot Holdco 1 S.àr.l., Luxembourg (100%) * Invista European RE Monbonnot Holdco 2 S.àr.l., France (100%) * Insight European RE Dutch Holdings B.V., the Netherlands (100%) * Canal Business Park N.V., Belgium (100%) * Invista European RE Spanish Propco S.L., Spain (100%) * Invista European RE Delta Propco II S.àr.l., Luxembourg (100%) * Invista European RE Pocking Propco II S.àr.l., Luxembourg (100%) * Invista European RE Germany GmbH * Invista European RE Nova Propco S.àr.l. * Invista European RE Sun Propco S.àr.l. 98
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Invista European Real Estate Trust
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JPMorgan Cazenove and Citigroup, ea
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Summary This summary should be read
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The Group currently owns, and inten
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Risk Factors Investing in the Share
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If actual financial data differ fro
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assumptions or flawed assessments u
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loss of revenue, which could materi
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The Group’s performance is depend
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less than the costs of the leverage
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Future Share issues could dilute th
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The holding company structure for t
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Important Information Investment in
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investors in Germany are urged to c
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made by broker-dealers who are regi
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* the tax treatment of the Group an
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Directors and Advisers Directors To
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Part I Information on the Company I
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and expanding analysis of property
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Where properties have achieved thei
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payable. To the extent that the Net
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The Company will also publish semi-
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Part II Directors, Management & Adm
Page 47 and 48: Mark Long* - Director, Strategy, Re
Page 49 and 50: The Custodian may entrust the safek
Page 51 and 52: Part III The Offer The Offer A tota
Page 53 and 54: period of 180 days from Admission,
Page 55 and 56: Part IV Background to the Continent
Page 57 and 58: Continental European Listed Propert
Page 59 and 60: The 5 largest properties account fo
Page 61 and 62: 10 Largest Tenants Tenant Net Annua
Page 63 and 64: 4 Purpose of the valuation report W
Page 65 and 66: 7.3 Environmental matters We have r
Page 67 and 68: German Properties C104,700,000: Pro
Page 69 and 70: Property Sector Description, Age &
Page 73 and 74: Belgian Properties C18,500,00: Prop
Page 77 and 78: French Properties C22,100,000: Prop
Page 79 and 80: Czech Republic Properties C12,900,0
Page 81 and 82: Polish Properties A8,750,000: Prope
Page 83 and 84: INVISTA EUROPEAN REAL ESTATE TRUST
Page 93 and 94: ecognised in the financial statemen
Page 97: 16. Finance expenses 2006 B Amortis
Page 101 and 102: We planned and performed our work s
Page 103 and 104: (2) No account has been taken of th
Page 105 and 106: * a logistics property in Nanteuil,
Page 107 and 108: important to an understanding of th
Page 109 and 110: Availability of financing During th
Page 111 and 112: The Group’s diversification by ma
Page 113 and 114: higher immediately following Admiss
Page 115 and 116: At 30 September 2006 the Group had
Page 117 and 118: temporary difference is controlled
Page 119 and 120: currency swaps and foreign exchange
Page 121 and 122: (q) where voids currently exist or
Page 123 and 124: in the Group carries on a trade in
Page 125 and 126: taxable as a corporation) organised
Page 127 and 128: PFIC - Default Excess Distribution
Page 129 and 130: these proposed Treasury Regulations
Page 131 and 132: Part XII General Information 1. Inc
Page 133 and 134: 2.11 All of the Shares will be in r
Page 135 and 136: Name Current Directorships and Part
Page 137 and 138: Name Current Directorships and Part
Page 139 and 140: The general meeting of Shareholders
Page 141 and 142: (a) Shares of the Company to be red
Page 143 and 144: The Company will be bound towards t
Page 145 and 146: Every Shareholder may take part in
Page 147 and 148: which fall within the scope of the
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The Bank Facility also provides for
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performance by the Depositary of it
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The primary tasks of the Company’
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In relation to the investment restr
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doubt as to whether courts outside
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Part XIII Definitions The following
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‘‘Invista Group’’ Invista a
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‘‘uncertificated’’ or ‘
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1.6 1.5.2 pending investigation of
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transfer or other taxes due in conn
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contravention of any registration o
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Notes On How To Complete The Applic
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I I I I I I I I I I I I I I I I I I
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I I I I I I I I I I I I I I I I I I
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